WHIPPANY, N.J., May 8, 2014 /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 earnings for its
second quarter ended March 29,
2014.
Net income for the second quarter of fiscal 2014 was
$149.5 million, or $2.47 per Common Unit, compared to net income of
$129.5 million, or $2.26 per Common Unit, in the prior year second
quarter. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the second quarter of fiscal 2014
amounted to $204.3 million, compared
to $185.3 million in the prior year
second quarter.
Net income and EBITDA for the second quarter of fiscal 2014 and
2013 included expenses of $2.2
million and $2.7 million,
respectively, related to the ongoing integration of Inergy Propane.
Excluding the effects of these charges, as well as the unrealized
(non-cash) mark-to-market adjustments on derivative instruments in
both quarters, Adjusted EBITDA (as defined and reconciled below)
amounted to $206.3 million for the
second quarter of fiscal 2014, an increase of $15.6 million, or 8.2%, compared to Adjusted
EBITDA of $190.7 million in the prior
year second quarter.
In announcing these results, President Michael A. Stivala said, "While this year's
heating season was one of the most challenging this industry has
experienced in decades, resulting from the widely reported,
industry-wide supply and logistics issues; rapidly rising wholesale
prices; harsh winter storms and, in many parts of the country,
sustained colder than normal temperatures, our people met the
challenge. We are extremely proud of the efforts of all of our
employees, who worked tirelessly, while continuing to stay focused
on the comfort and safety of our customer base. This improvement in
year-over-year operating performance is a testament to their hard
work and dedication."
Retail propane gallons sold in the second quarter of fiscal 2014
increased 3.4 million gallons, or 1.6%, to 213.7 million gallons
from 210.3 million gallons in the prior year second quarter. Sales
of fuel oil and other refined fuels decreased 0.6 million gallons,
to 22.6 million gallons compared to 23.2 million gallons in the
prior year second quarter. According to the National Oceanic and
Atmospheric Administration, average temperatures (as measured by
heating degree days) across all of the Partnership's service
territories for the second quarter of fiscal 2014 were 9% colder
than normal and 11% colder than the prior year second quarter.
However, the weather pattern was characterized by considerably
colder than normal temperatures in the Partnership's service
territories in the east and midwest regions, whereas the
Partnership's service territories in the west experienced
unseasonably warm temperatures throughout the quarter. In
fact, average temperatures in the western territories were 16%
warmer than normal and 17% warmer than the prior year second
quarter which negatively impacted volumes sold in those
territories. Additionally, the supply and logistics issues that
plagued the entire industry throughout much of the quarter, coupled
with rising wholesale product costs, weighed on volumes for the
fiscal 2014 second quarter.
Revenues of $873.8 million
increased $195.3 million, or 28.8%,
compared to the prior year second quarter, primarily due to higher
retail selling prices associated with significantly higher
wholesale product costs and, to a lesser extent, an increase in
retail propane volumes sold. Average posted propane prices for the
second quarter of fiscal 2014 were 51.1% higher than the prior year
second quarter, basis Mont Belvieu,
Texas, and, at other supply points, posted prices increased
at an even greater rate. Average posted prices for fuel oil
for the second quarter of fiscal 2014 were 1.0% lower than the
prior year second quarter. Cost of products sold for the second
quarter of fiscal 2014 of $517.2
million increased $170.2
million, or 49.0%, compared to $347.0
million in the prior year second quarter, primarily due to
higher wholesale propane costs and, to a lesser extent, higher
propane volumes sold. In addition to the dramatic increase in
posted propane prices, cost of products sold increased due to
higher transportation costs associated with extraordinary measures
taken by the Partnership to ensure that adequate propane supplies
were delivered to its customer service centers to meet customer
demand. Cost of products sold for the second quarter of fiscal 2014
also included a $0.3 million
unrealized (non-cash) gain attributable to the mark-to-market
adjustment for derivative instruments used in risk management
activities, compared to a $2.6
million unrealized (non-cash) loss in the prior year second
quarter. 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
$152.2 million for the second quarter
of fiscal 2014 were $6.1 million, or
4.2%, higher than the prior year second quarter, primarily due to
higher overtime and vehicle expenses associated with increased
activity, as well as increased variable compensation attributable
to higher earnings. Depreciation and amortization expense of
$33.3 million increased $2.0 million, or 6.3%, primarily due to the
acceleration of depreciation expense on assets taken out of service
as a result of integration activities. Net interest expense of
$21.2 million decreased $3.1 million, or 12.8%, due to the reduction of
$157.3 million in long-term
borrowings during the fourth quarter of fiscal 2013.
Chief Executive Officer, Michael J.
Dunn, Jr., added, "Overall, we are very pleased with these
results, particularly in light of the operating challenges
faced. While the increased activity and operating challenges
resulted in higher variable operating expenses, we continue to
achieve our anticipated synergies from the integration of Inergy
Propane. Now, with the heating season behind us, we have
resumed our integration activities, which includes, among other
things, finalizing our system conversions, further refinements to
our operating model and routing activities and enhanced employee
training. By the end of this fiscal year, we expect to be
substantially completed with our systems and physical blending
activities, and as we enter the new fiscal year, we will begin to
fine-tune our combined operating platform."
As previously announced on April 24,
2014, the Partnership's Board of Supervisors has declared a
quarterly distribution of $0.8750 per
Common Unit for the three months ended March
29, 2014. On an annualized basis, this distribution rate
equates to $3.50 per Common Unit. The
$0.8750 per Common Unit distribution
is payable on May 13, 2014 to Common
Unitholders of record as of May 6,
2014.
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 more than
1.2 million residential, commercial, industrial and agricultural
customers through more than 750 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 and natural gas, 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 cost savings expected from the Partnership's acquisition
of the retail operations formerly owned by Inergy, L.P. (the
"Inergy Propane Acquisition") may not be fully realized or realized
within the expected timeframe;
- The revenue gained by the Partnership from the Inergy
Propane Acquisition may be lower than expected;
- The costs of integrating the business acquired in the Inergy
Propane Acquisition into the Partnership's existing operations may
be greater than expected;
- 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 global warming, 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, including, but not limited to, Inergy
Propane;
- 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 28, 2013
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
Six Months Ended March 29, 2014 and March 30, 2013
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
March 29,
2014
|
|
March 30,
2013
|
|
March 29,
2014
|
|
March 30,
2013
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
Propane
|
$
728,504
|
|
$
540,537
|
|
$
1,167,098
|
|
$
933,322
|
Fuel oil and
refined fuels
|
93,722
|
|
92,795
|
|
147,990
|
|
154,941
|
Natural gas
and electricity
|
39,083
|
|
29,732
|
|
57,399
|
|
48,121
|
All
other
|
12,463
|
|
15,362
|
|
27,341
|
|
32,745
|
|
|
873,772
|
|
678,426
|
|
1,399,828
|
|
1,169,129
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
Cost of
products sold
|
517,198
|
|
346,999
|
|
797,724
|
|
592,099
|
Operating
|
131,731
|
|
126,371
|
|
245,044
|
|
241,307
|
General and
administrative
|
20,517
|
|
19,763
|
|
37,852
|
|
37,595
|
Depreciation
and amortization
|
33,282
|
|
31,316
|
|
68,109
|
|
61,843
|
|
|
702,728
|
|
524,449
|
|
1,148,729
|
|
932,844
|
|
|
|
|
|
|
|
|
|
Operating
income
|
171,044
|
|
153,977
|
|
251,099
|
|
236,285
|
Interest expense,
net
|
21,226
|
|
24,343
|
|
42,433
|
|
48,899
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
149,818
|
|
129,634
|
|
208,666
|
|
187,386
|
Provision for income
taxes
|
271
|
|
150
|
|
448
|
|
282
|
|
|
|
|
|
|
|
|
|
Net income
|
$
149,547
|
|
$
129,484
|
|
$
208,218
|
|
$
187,104
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
$
2.47
|
|
$
2.26
|
|
$
3.45
|
|
$
3.27
|
Weighted average
number of Common Units outstanding - basic
|
60,425
|
|
57,185
|
|
60,409
|
|
57,169
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
$
2.46
|
|
$
2.25
|
|
$
3.43
|
|
$
3.26
|
Weighted average
number of Common Units outstanding - diluted
|
60,692
|
|
57,441
|
|
60,668
|
|
57,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
EBITDA (a)
|
$
204,326
|
|
$
185,293
|
|
$
319,208
|
|
$
298,128
|
Adjusted EBITDA
(a)
|
$
206,269
|
|
$
190,668
|
|
$
323,977
|
|
$
308,141
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
Propane
|
213,689
|
|
210,314
|
|
371,547
|
|
364,247
|
|
Refined
fuels
|
22,617
|
|
23,223
|
|
36,614
|
|
39,108
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
Maintenance
|
$
2,770
|
|
$
2,404
|
|
$
7,805
|
|
$
3,838
|
|
Growth
|
$
2,263
|
|
$
3,729
|
|
$
6,552
|
|
$
9,056
|
|
|
|
|
|
|
|
|
|
(more)
|
|
|
|
|
|
|
|
|
|
(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 certain
other items, as applicable, as provided in the table below.
Our management uses EBITDA and Adjusted EBITDA as measures of
liquidity and we are including them because we believe that they
provide our investors and industry analysts with additional
information to evaluate our ability to meet our debt service
obligations and to pay our quarterly distributions to holders of
our Common Units.
|
|
|
|
|
|
|
|
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 (i) our calculations of EBITDA and Adjusted EBITDA
and (ii) a reconciliation of Adjusted EBITDA, as so calculated, to
our net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
March 29,
2014
|
|
March 30,
2013
|
|
March 29,
2014
|
|
March 30,
2013
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
149,547
|
|
$
129,484
|
|
$
208,218
|
|
$
187,104
|
|
Add:
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
271
|
|
150
|
|
448
|
|
282
|
|
Interest
expense, net
|
21,226
|
|
24,343
|
|
42,433
|
|
48,899
|
|
Depreciation
and amortization
|
33,282
|
|
31,316
|
|
68,109
|
|
61,843
|
|
EBITDA
|
204,326
|
|
185,293
|
|
319,208
|
|
298,128
|
|
Unrealized
(non-cash) (gains) losses on changes in fair value of
derivatives
|
(291)
|
|
2,646
|
|
(1)
|
|
6,260
|
|
Integration-related costs
|
2,234
|
|
2,729
|
|
4,770
|
|
3,753
|
|
Adjusted
EBITDA
|
206,269
|
|
190,668
|
|
323,977
|
|
308,141
|
|
Add /
(subtract):
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
(271)
|
|
(150)
|
|
(448)
|
|
(282)
|
|
Interest
expense, net
|
(21,226)
|
|
(24,343)
|
|
(42,433)
|
|
(48,899)
|
|
Unrealized
(non-cash) gains (losses) on changes in fair value of
derivatives
|
291
|
|
(2,646)
|
|
1
|
|
(6,260)
|
|
Integration-related costs
|
(2,234)
|
|
(2,729)
|
|
(4,770)
|
|
(3,753)
|
|
(Gain) on
disposal of property, plant and equipment, net
|
(282)
|
|
(323)
|
|
(519)
|
|
(2,590)
|
|
Compensation
cost recognized under Restricted Unit Plans
|
1,951
|
|
1,173
|
|
3,589
|
|
2,413
|
|
Changes in
working capital and other assets and liabilities
|
(168,272)
|
|
(89,224)
|
|
(259,010)
|
|
(114,807)
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
16,226
|
|
$
72,426
|
|
$
20,387
|
|
$
133,963
|
|
|
|
|
|
|
|
|
|
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 Quarterly Report on Form
10-Q 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.
|
SOURCE Suburban Propane Partners, L.P.