WHIPPANY, N.J., May 4, 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 earnings for its
second quarter ended March 25,
2017.
Net income for the second quarter of fiscal 2017 was
$83.8 million, or $1.37 per Common Unit, compared to net income of
$92.0 million, or $1.51 per Common Unit, in the prior year second
quarter.
Net income and earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the second quarters of fiscal 2017 and
2016 included losses on debt extinguishment of $1.6 million and $0.3
million, respectively. Excluding the effects of the
foregoing items and unrealized (non-cash) mark-to-market
adjustments on derivative instruments in both periods, Adjusted
EBITDA (as defined and reconciled below) amounted to $138.0 million for the second quarter of fiscal
2017, compared to $145.1 million in
the prior year second quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"The propane industry as a whole has just endured an unprecedented
stretch of back-to-back record warm winters. The fiscal 2017
heating season was a bit more challenging than the prior year, with
four out of six months reported as record warm, and two separate
three-week stretches of cold weather toward the end of each of the
first and second quarters. Nonetheless, we are proud of the
way our operating personnel managed through the challenges
presented by this sustained warm weather trend. We remain
focused on the things we can control – delivering exceptional
customer satisfaction in every market we serve, driving further
operating efficiencies, controlling costs and capital spending
levels, managing margins in a challenging commodity price
environment and executing on our customer base growth and retention
initiatives. During the short bursts of cold weather that did
arrive, our volumes and earnings responded as expected, which is a
testament to the strength and readiness of our platform."
Mr. Stivala continued, "As a result, we are pleased to report an
improvement of $10 million, or nearly
5%, in Adjusted EBITDA for the first half of fiscal 2017 compared
to the prior year. We also took proactive steps to lower our
interest costs and enhance liquidity. During the second
quarter of fiscal 2017, we successfully refinanced our previous 7
3/8% Senior Notes due 2021 with the issuance of 5 7/8% Senior Notes
due 2027, effectively extending maturities on $350.0 million of our debt by six years at a very
attractive interest rate, and reducing our cash interest
requirement by nearly $5.0 million
annually."
On May 1, 2017, the Partnership
secured an amendment to its revolving credit facility whereby the
maximum consolidated leverage ratio covenant has been increased
from 5.50 to 5.95 starting with the fiscal quarter ending
June 2017 and continuing through each
of the fiscal quarters ending June
2018, stepping down to 5.75 for the quarter ending
September 2018 and then returning to
the pre-amendment level of 5.50 for the fiscal quarter ending
December 2018, which is the
Partnership's first quarter of fiscal 2019.
Discussing the amendment, Mr. Stivala said, "Our decision to
secure this amendment was to proactively enhance our liquidity
position in light of the recent warm weather trends. The
amendment provides added cushion under our consolidated leverage
test, which we believe is a prudent measure that gives us added
flexibility to support our cash needs and continue to invest in our
long-term, strategic growth initiatives. We received strong
support from our bank group for this amendment, which is a
testament to their confidence in our operating philosophy and
business fundamentals."
Retail propane gallons sold in the second quarter of fiscal 2017
of 153.9 million gallons decreased 7.7 million gallons, or 4.8%,
compared to the prior year second quarter. Sales of fuel oil and
other refined fuels decreased 0.3 million gallons, or 2.3%,
compared to the prior year. 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 2017 were 15% warmer
than normal, and 2% warmer than the prior year second quarter. In
certain markets, principally the Partnership's Midwest and
Southeast service territories, average temperatures were
approximately 30% warmer than normal and 16% warmer than the prior
year second quarter. In the Partnership's Northeast and West
Coast regions, the Partnership experienced cooler weather compared
to the prior year which helped contribute to an increase in volumes
sold in those markets.
Revenues in the second quarter of fiscal 2017 of $450.6 million increased $46.4 million, or 11.5%, compared to the prior
year second quarter, primarily due to higher retail selling prices
associated with higher wholesale product costs, offset to an extent
by lower volumes sold. Average posted propane prices (basis
Mont Belvieu, Texas) and fuel oil
prices were 84.6% and 48.9% higher than the prior year,
respectively. Cost of products sold for the second quarter of
fiscal 2017 of $192.5 million
increased $55.5 million, or 40.5%,
compared to $137.0 million in the
prior year, primarily due to higher wholesale product costs. Cost
of products sold included a $2.5
million unrealized (non-cash) loss attributable to the
mark-to-market adjustment for derivative instruments used in risk
management activities, compared to a $0.7
million unrealized (non-cash) loss in the prior year second
quarter. These unrealized losses are excluded from Adjusted EBITDA
for both periods in the table below.
Combined operating and general and administrative expenses of
$122.6 million for the second quarter
of fiscal 2017 were essentially flat with the prior year second
quarter. Savings in fixed costs due to steps taken in the prior
fiscal year to streamline operations and achieve operating
efficiencies were offset by higher general insurance expenses,
vehicle fuel costs, and higher provisions for potential
uncollectible accounts as a result of higher commodity prices.
Depreciation and amortization expense of $32.7 million decreased $0.5 million, or 1.5%, compared to the prior year
second quarter. Net interest expense of $17.5 million decreased $1.4 million compared to the prior year second
quarter, primarily due to savings from the refinancing of the
Partnership's previously outstanding 2021 Senior Notes.
During the second quarter of fiscal 2017, the Partnership funded
working capital, capital expenditures and costs associated with the
repurchase of its 2021 Senior Notes from operating cash flow and
$26.4 million of incremental
borrowings under its revolving credit facility.
As previously announced on April 20,
2017, the Partnership's Board of Supervisors has declared a
quarterly distribution of $0.8875 per
Common Unit for the three months ended March
25, 2017. On an annualized basis, this distribution rate
equates to $3.55 per Common Unit. The
distribution is payable on May 9,
2017 to Common Unitholders of record as of May 2, 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 1.1 million residential, commercial, industrial and
agricultural customers through 675 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 sold 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
Six Months Ended March 25, 2017 and March 26, 2016
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
March
25,
2017
|
|
|
March
26,
2016
|
|
|
March
25,
2017
|
|
|
March
26,
2016
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
385,654
|
|
|
$
|
348,216
|
|
|
$
|
655,113
|
|
|
$
|
579,691
|
|
Fuel oil and refined
fuels
|
|
|
34,630
|
|
|
|
28,814
|
|
|
|
56,726
|
|
|
|
49,502
|
|
Natural gas and
electricity
|
|
|
19,239
|
|
|
|
15,962
|
|
|
|
32,306
|
|
|
|
27,636
|
|
All other
|
|
|
11,055
|
|
|
|
11,148
|
|
|
|
23,740
|
|
|
|
23,168
|
|
|
|
|
450,578
|
|
|
|
404,140
|
|
|
|
767,885
|
|
|
|
679,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
192,467
|
|
|
|
137,009
|
|
|
|
310,632
|
|
|
|
229,515
|
|
Operating
|
|
|
110,420
|
|
|
|
107,560
|
|
|
|
209,769
|
|
|
|
212,431
|
|
General and
administrative
|
|
|
12,164
|
|
|
|
15,208
|
|
|
|
27,211
|
|
|
|
30,706
|
|
Depreciation and
amortization
|
|
|
32,670
|
|
|
|
33,150
|
|
|
|
63,931
|
|
|
|
64,788
|
|
|
|
|
347,721
|
|
|
|
292,927
|
|
|
|
611,543
|
|
|
|
537,440
|
|
Operating
income
|
|
|
102,857
|
|
|
|
111,213
|
|
|
|
156,342
|
|
|
|
142,557
|
|
Loss on debt
extinguishment
|
|
|
1,567
|
|
|
|
292
|
|
|
|
1,567
|
|
|
|
292
|
|
Interest expense,
net
|
|
|
17,487
|
|
|
|
18,852
|
|
|
|
36,318
|
|
|
|
37,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for income taxes
|
|
|
83,803
|
|
|
|
92,069
|
|
|
|
118,457
|
|
|
|
104,520
|
|
Provision for income
tax (benefit) expense
|
|
|
(9)
|
|
|
|
58
|
|
|
|
156
|
|
|
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
83,812
|
|
|
$
|
92,011
|
|
|
$
|
118,301
|
|
|
$
|
104,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
1.37
|
|
|
$
|
1.51
|
|
|
$
|
1.94
|
|
|
$
|
1.72
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
61,203
|
|
|
|
60,857
|
|
|
|
61,127
|
|
|
|
60,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
1.36
|
|
|
$
|
1.51
|
|
|
$
|
1.93
|
|
|
$
|
1.71
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
61,503
|
|
|
|
61,135
|
|
|
|
61,386
|
|
|
|
61,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
133,960
|
|
|
$
|
144,071
|
|
|
$
|
218,706
|
|
|
$
|
207,053
|
|
Adjusted EBITDA
(a)
|
|
$
|
138,039
|
|
|
$
|
145,102
|
|
|
$
|
222,326
|
|
|
$
|
212,294
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
153,875
|
|
|
|
161,597
|
|
|
|
272,476
|
|
|
|
271,361
|
|
Refined
fuels
|
|
|
12,996
|
|
|
|
13,296
|
|
|
|
22,008
|
|
|
|
21,861
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
3,012
|
|
|
$
|
5,831
|
|
|
$
|
6,130
|
|
|
$
|
10,517
|
|
Growth
|
|
$
|
7,365
|
|
|
$
|
5,922
|
|
|
$
|
11,075
|
|
|
$
|
14,188
|
|
|
|
(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
|
|
|
Six Months
Ended
|
|
|
|
March
25,
2017
|
|
|
March
26,
2016
|
|
|
March
25,
2017
|
|
|
March
26,
2016
|
|
Net income
|
|
$
|
83,812
|
|
|
$
|
92,011
|
|
|
$
|
118,301
|
|
|
$
|
104,277
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
tax (benefit) expense
|
|
|
(9)
|
|
|
|
58
|
|
|
|
156
|
|
|
|
243
|
|
Interest expense,
net
|
|
|
17,487
|
|
|
|
18,852
|
|
|
|
36,318
|
|
|
|
37,745
|
|
Depreciation and
amortization
|
|
|
32,670
|
|
|
|
33,150
|
|
|
|
63,931
|
|
|
|
64,788
|
|
EBITDA
|
|
|
133,960
|
|
|
|
144,071
|
|
|
|
218,706
|
|
|
|
207,053
|
|
Unrealized (non-cash)
losses on changes in
fair value of
derivatives
|
|
|
2,512
|
|
|
|
739
|
|
|
|
2,053
|
|
|
|
1,949
|
|
Loss on debt
extinguishment
|
|
|
1,567
|
|
|
|
292
|
|
|
|
1,567
|
|
|
|
292
|
|
Product liability
settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
Adjusted
EBITDA
|
|
$
|
138,039
|
|
|
$
|
145,102
|
|
|
$
|
222,326
|
|
|
$
|
212,294
|
|
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-second-quarter-earnings-300451179.html
SOURCE Suburban Propane Partners, L.P.