WHIPPANY, N.J., Nov. 16, 2017
/PRNewswire/ -- Suburban Propane Partners, L.P. (NYSE:SPH), a
nationwide distributor of propane, fuel oil and related products
and services, as well as a marketer of natural gas and electricity,
today announced results for its full year and fourth quarter ended
September 30, 2017.
Fiscal Year 2017 Results
Net income for fiscal 2017 was $38.0
million, or $0.62 per Common
Unit, compared to $14.4 million, or
$0.24 per Common Unit, in fiscal
2016.
Fiscal 2017 included 53 weeks of operations, compared to 52
weeks in the prior year. Net income and EBITDA (as defined
and reconciled below) for fiscal 2017 included: (i) a pension
settlement charge of $6.1 million;
and (ii) a loss on debt extinguishment of $1.6 million.
Net income and EBITDA for fiscal 2016 included: (i) a
$9.8 million gain from the sale of
certain assets and operations in a non-strategic market of the
propane segment; (ii) a $6.6 million
charge related to the Partnership's voluntary full withdrawal from
a multi-employer pension plan covering certain employees acquired
in the 2012 acquisition of Inergy Propane; (iii) a $3.0 million charge related to the settlement of
a product liability matter; (iv) a pension settlement charge of
$2.0 million; and (v) a loss on debt
extinguishment of $0.3 million.
Excluding the effects of the foregoing items and unrealized
(non-cash) mark-to-market adjustments on derivative instruments in
both years, Adjusted EBITDA (as defined and reconciled below)
increased $20.0 million, or 9.0%, to
$243.0 million in fiscal 2017 from
$223.0 million in the prior year.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"Fiscal 2017 presented another challenging operating environment as
a result of the impact on customer demand arising from the
unprecedented, second consecutive record warm winter heating
season, as well as the devastating effects of the two Category 4
hurricanes. Through it all, the resiliency of our people, and
our preparedness coming into the year, contributed to a meaningful
improvement in our operating performance; including a 9% increase
in Adjusted EBITDA compared to the prior year."
Mr. Stivala continued, "Along with the improvement in earnings,
during fiscal 2017 we had some notable achievements that will
provide further support for our long-term strategic growth
initiatives. During the second quarter, we took advantage of
the continued low interest rate environment to refinance our
previously outstanding 7 3/8% senior notes due to mature in 2021
with a new issuance of 5 7/8% senior notes due in 2027 – extending
maturities and providing a reduction in our annual interest
requirements by approximately $5.0
million. We proactively worked with our bank group to amend
our revolving credit facility to provide added financial
flexibility through September 2018 in
managing our leverage and liquidity. Our operations personnel
continued to make significant strides in our customer base growth
and retention initiatives, and continued to drive operating
efficiencies and reduce costs."
Concluding his remarks, Mr. Stivala said, "As we enter fiscal
2018, one of our goals will be to focus on restoring our balance
sheet strength to best position the business for long-term
profitable growth. With the previously announced reduction in
our annualized distribution rate, we have reduced our annual cash
requirements to a level that provides added downside protection in
the event of a sustained period of warm weather and, with an
improvement in weather, should provide enhanced flexibility to
reduce debt and make investments in line with our strategic
initiatives. We have adapted our business model to the recent
warm weather trends, as evidenced by the improvement in earnings
for fiscal 2017 and, as we enter a new heating season, our people
are prepared to continue providing the highest level of service
quality and total value to our customers in each market we
serve."
Retail propane gallons sold in fiscal 2017 increased 6.0 million
gallons, or 1.4%, to 420.8 million gallons. Sales of fuel oil and
other refined fuels of 30.9 million gallons in fiscal 2017 were
essentially flat year over year. According to the National Oceanic
and Atmospheric Administration, the winter of 2016-2017 was the
second warmest on record in the contiguous United States.
Average temperatures (as measured by heating degree days) across
all of the Partnership's service territories for fiscal 2017 were
15% warmer than normal and 2% cooler than the prior year.
During the heating season (October through March), the Partnership
experienced unseasonably warm weather throughout much of the period
in nearly all of its service territories, with cooler weather
arriving during brief bursts in the final three weeks of each of
the first and second
quarters.
Revenues for fiscal 2017 of $1,187.9
million increased $141.8
million, or 13.6%, compared to the prior year, primarily due
to higher retail selling prices associated with higher wholesale
costs, combined with higher volumes sold.
Cost of products sold for fiscal 2017 of $476.7 million increased $114.7 million, or 31.7%, compared to the prior
year, primarily due to higher wholesale propane costs and, to a
lesser extent, higher volumes sold. Average propane prices
(basis Mont Belvieu, Texas) and
fuel oil prices for fiscal 2017 were 51.8% and 20.7% higher than
the prior year, respectively. Cost of products sold for
fiscal 2017 included a $6.3 million
unrealized (non-cash) gain attributable to the mark-to-market
adjustment for derivative instruments used in risk management
activities, compared to a $1.2
million unrealized (non-cash) loss for fiscal 2016.
These unrealized gains and losses are excluded from Adjusted EBITDA
for both periods in the table below.
Combined operating and general and administrative expenses of
$468.0 million for fiscal 2017 were
$5.9 million, or 1.2%, lower than
fiscal 2016, primarily due to savings from operating efficiencies
identified and the charges in the prior year discussed
above.
Depreciation and amortization expense of $127.9 million for fiscal 2017 decreased
$1.7 million, or 1.3%, primarily due
to the acceleration of depreciation expense recorded in the prior
year for assets taken out of service. Net interest expense of
$75.3 million for fiscal 2017
increased $0.2 million, or 0.2%,
primarily due to incremental borrowings under the Partnership's
revolving credit facility during fiscal 2017, substantially offset
by savings from the refinancing of certain of the Partnership's
senior notes completed in the second quarter of fiscal 2017.
Fourth Quarter 2017 Results
Consistent with the seasonal nature of the propane and fuel oil
businesses, the Partnership typically reports a net loss for its
fiscal fourth quarter. The fourth quarter of fiscal 2017
included 14 weeks of operations, compared to 13 weeks in the prior
year fourth quarter. Net loss for the fourth quarter of
fiscal 2017 was $50.6 million, or
$0.83 per Common Unit, compared to a
net loss of $60.2 million, or
$0.99 per Common Unit, for the fourth
quarter of fiscal 2016. Net loss and EBITDA for the fourth quarters
of fiscal 2017 and fiscal 2016 included pension settlement charges
of $6.1 million and $2.0 million, respectively.
Excluding these items and the effects of unrealized (non-cash)
mark-to-market adjustments on derivative instruments used in risk
management activities in both quarters, Adjusted EBITDA for the
fourth quarter of fiscal 2017 amounted to a loss of $0.7 million, representing an improvement of
nearly $7.0 million from the Adjusted
EBITDA loss of $7.6 million for the
fourth quarter of fiscal 2016. The improvement in earnings was
primarily due to higher volumes sold and higher average propane
margins, offset to an extent by an increase in expenses
attributable to a higher number of propane deliveries and higher
variable compensation associated with higher earnings. Retail
propane gallons sold of 70.6 million gallons in the fourth quarter
of fiscal 2017 increased 7.4 million gallons, or 11.7%, compared to
the prior year fourth quarter.
As previously announced on October 26,
2017, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.60 per
Common Unit for the three months ended September 30, 2017. On an annualized basis,
this distribution rate equates to $2.40 per Common Unit. The distribution was paid
on November 14, 2017 to Common
Unitholders of record as of November 7,
2017.
Suburban Propane Partners, L.P. is a publicly-traded master
limited partnership listed on the New York Stock Exchange.
Headquartered in Whippany, New
Jersey, Suburban has been in the customer service business
since 1928. The Partnership serves the energy needs of
approximately 1.0 million residential, commercial, industrial and
agricultural customers through 668 locations in 41 states.
This press release contains certain forward-looking
statements relating to future business expectations and financial
condition and results of operations of the Partnership, based on
management's current good faith expectations and beliefs concerning
future developments. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those discussed or implied in
such forward-looking statements, including the following:
- The impact of weather conditions on the demand for propane,
fuel oil and other refined fuels, natural gas and
electricity;
- Volatility in the unit cost of propane, fuel oil and other
refined fuels, natural gas and electricity, the impact of the
Partnership's hedging and risk management activities, and the
adverse impact of price increases on volumes as a result of
customer conservation;
- The ability of the Partnership to compete with other
suppliers of propane, fuel oil and other energy sources;
- The impact on the price and supply of propane, fuel oil and
other refined fuels from the political, military or economic
instability of the oil producing nations, global terrorism and
other general economic conditions;
- The ability of the Partnership to acquire sufficient volumes
of, and the costs to the Partnership of acquiring, transporting and
storing, propane, fuel oil and other refined fuels;
- The ability of the Partnership to acquire and maintain
reliable transportation for its propane, fuel oil and other refined
fuels;
- The ability of the Partnership to retain customers or
acquire new customers;
- The impact of customer conservation, energy efficiency and
technology advances on the demand for propane, fuel oil and other
refined fuels, natural gas and electricity;
- The ability of management to continue to control
expenses;
- The impact of changes in applicable statutes and government
regulations, or their interpretations, including those relating to
the environment and climate change, derivative instruments and
other regulatory developments on the Partnership's
business;
- The impact of changes in tax laws that could adversely
affect the tax treatment of the Partnership for income tax
purposes;
- The impact of legal proceedings on the Partnership's
business;
- The impact of operating hazards that could adversely affect
the Partnership's operating results to the extent not covered by
insurance;
- The Partnership's ability to make strategic acquisitions and
successfully integrate them;
- The impact of current conditions in the global capital and
credit markets, and general economic pressures;
- The operating, legal and regulatory risks the Partnership
may face; and
- Other risks referenced from time to time in filings with the
Securities and Exchange Commission ("SEC") and those factors listed
or incorporated by reference into the Partnership's Annual Report
under "Risk Factors."
Some of these risks and uncertainties are discussed in more
detail in the Partnership's Annual Report on Form 10-K for its
fiscal year ended September 24, 2016
and other periodic reports filed with the SEC. Readers are
cautioned not to place undue reliance on forward-looking
statements, which reflect management's view only as of the date
made. The Partnership undertakes no obligation to update any
forward-looking statement, except as otherwise required by law.
Suburban Propane
Partners, L.P. and Subsidiaries Consolidated Statements
of Operations For the Three and Twelve Months Ended
September 30, 2017 and September 24, 2016 (in thousands,
except per unit amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
September 30,
2017
|
|
|
September 24,
2016
|
|
|
September 30,
2017
|
|
|
September 24,
2016
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
167,559
|
|
|
$
|
132,156
|
|
|
$
|
1,011,078
|
|
|
$
|
884,169
|
|
Fuel oil and refined
fuels
|
|
|
8,514
|
|
|
|
6,798
|
|
|
|
78,126
|
|
|
|
68,759
|
|
Natural gas and
electricity
|
|
|
10,874
|
|
|
|
12,531
|
|
|
|
55,103
|
|
|
|
50,763
|
|
All other
|
|
|
10,159
|
|
|
|
9,530
|
|
|
|
43,579
|
|
|
|
42,420
|
|
|
|
|
197,106
|
|
|
|
161,015
|
|
|
|
1,187,886
|
|
|
|
1,046,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
73,935
|
|
|
|
56,941
|
|
|
|
476,661
|
|
|
|
361,953
|
|
Operating
|
|
|
103,826
|
|
|
|
97,009
|
|
|
|
410,665
|
|
|
|
412,756
|
|
General and
administrative
|
|
|
17,159
|
|
|
|
15,896
|
|
|
|
57,338
|
|
|
|
61,149
|
|
Depreciation and
amortization
|
|
|
32,182
|
|
|
|
32,540
|
|
|
|
127,938
|
|
|
|
129,616
|
|
|
|
|
227,102
|
|
|
|
202,386
|
|
|
|
1,072,602
|
|
|
|
965,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,769
|
|
Operating (loss)
income
|
|
|
(29,996)
|
|
|
|
(41,371)
|
|
|
|
115,284
|
|
|
|
90,406
|
|
Loss on debt
extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
1,567
|
|
|
|
292
|
|
Interest expense,
net
|
|
|
20,443
|
|
|
|
18,703
|
|
|
|
75,263
|
|
|
|
75,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
|
(50,439)
|
|
|
|
(60,074)
|
|
|
|
38,454
|
|
|
|
15,028
|
|
Provision for income
taxes
|
|
|
151
|
|
|
|
165
|
|
|
|
459
|
|
|
|
588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(50,590)
|
|
|
$
|
(60,239)
|
|
|
$
|
37,995
|
|
|
$
|
14,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
|
(0.83)
|
|
|
$
|
(0.99)
|
|
|
$
|
0.62
|
|
|
$
|
0.24
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
61,290
|
|
|
|
61,006
|
|
|
|
61,224
|
|
|
|
60,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
|
(0.83)
|
|
|
$
|
(0.99)
|
|
|
$
|
0.62
|
|
|
$
|
0.24
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
61,290
|
|
|
|
61,006
|
|
|
|
61,542
|
|
|
|
61,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
2,186
|
|
|
$
|
(8,831)
|
|
|
$
|
241,655
|
|
|
$
|
219,730
|
|
Adjusted EBITDA
(a)
|
|
$
|
(699)
|
|
|
$
|
(7,646)
|
|
|
$
|
243,045
|
|
|
$
|
223,043
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
70,582
|
|
|
|
63,231
|
|
|
|
420,770
|
|
|
|
414,776
|
|
Refined
fuels
|
|
|
3,644
|
|
|
|
3,246
|
|
|
|
30,895
|
|
|
|
30,878
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
2,846
|
|
|
$
|
2,856
|
|
|
$
|
11,275
|
|
|
$
|
16,559
|
|
Growth
|
|
$
|
3,318
|
|
|
$
|
3,257
|
|
|
$
|
16,893
|
|
|
$
|
21,815
|
|
|
|
(a)
|
EBITDA represents net
income before deducting interest expense, income taxes,
depreciation and amortization. Adjusted EBITDA represents EBITDA
excluding the unrealized net gain or loss on mark-to-market
activity for derivative instruments and other items, as applicable,
as provided in the table below. Our management uses EBITDA and
Adjusted EBITDA as supplemental measures of operating performance
and we are including them because we believe that they provide our
investors and industry analysts with additional information that we
determined is useful to evaluate our operating results.
|
EBITDA and Adjusted EBITDA are not recognized terms under
accounting principles generally accepted in the United States of America ("US GAAP") and
should not be considered as an alternative to net income or net
cash provided by operating activities determined in accordance with
US GAAP. Because EBITDA and Adjusted EBITDA as determined by
us excludes some, but not all, items that affect net income, they
may not be comparable to EBITDA and Adjusted EBITDA or similarly
titled measures used by other companies.
The following table sets forth our calculations of EBITDA and
Adjusted EBITDA:
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
September 30,
2017
|
|
September 24,
2016
|
|
September 30,
2017
|
|
September 24,
2016
|
|
Net (loss)
income
|
|
$
|
(50,590)
|
|
$
|
(60,239)
|
|
$
|
37,995
|
|
$
|
14,440
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
151
|
|
|
165
|
|
|
459
|
|
|
588
|
|
Interest expense,
net
|
|
|
20,443
|
|
|
18,703
|
|
|
75,263
|
|
|
75,086
|
|
Depreciation and
amortization
|
|
|
32,182
|
|
|
32,540
|
|
|
127,938
|
|
|
129,616
|
|
EBITDA
|
|
|
2,186
|
|
|
(8,831)
|
|
|
241,655
|
|
|
219,730
|
|
Unrealized (non-cash)
(gains) losses on changes in fair
value of derivatives
|
|
|
(8,985)
|
|
|
(815)
|
|
|
(6,277)
|
|
|
1,190
|
|
Pension settlement
charge
|
|
|
6,100
|
|
|
2,000
|
|
|
6,100
|
|
|
2,000
|
|
Loss on debt
extinguishment
|
|
|
-
|
|
|
-
|
|
|
1,567
|
|
|
292
|
|
Gain on sale of
business
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(9,769)
|
|
Multi-employer pension
plan withdrawal charge
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,600
|
|
Product liability
settlement
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,000
|
|
Adjusted
EBITDA
|
|
$
|
(699)
|
|
$
|
(7,646)
|
|
$
|
243,045
|
|
$
|
223,043
|
|
The unaudited financial information included in this document
is intended only as a summary provided for your convenience, and
should be read in conjunction with the complete consolidated
financial statements of the Partnership (including the Notes
thereto, which set forth important information) contained in its
Annual Report on Form 10-K to be filed by the Partnership with the
United States Securities and Exchange Commission ("SEC").
Such report, once filed, will be available on the public EDGAR
electronic filing system maintained by the SEC.
View original
content:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-full-year-and-fourth-quarter-results-300557568.html
SOURCE Suburban Propane Partners, L.P.