SPH Suburban Propane

WHIPPANY, N.J., Aug. 8, 2013 /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 third quarter ended June 29, 2013.

Consistent with the seasonal nature of the propane and fuel oil businesses, the Partnership typically experiences a net loss in the third quarter. For comparative purposes, the variances in year-over-year results were primarily attributable to the inclusion of the retail propane operations of Inergy, L.P. ("Inergy Propane") acquired on August 1, 2012, as well as improvements in the operating performance in the Partnership's legacy operations. Net loss for the three months ended June 29, 2013 was $45.2 million, or $0.77 per Common Unit, compared to a net loss of $9.3 million, or $0.26 per Common Unit, in the prior year third quarter.  Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter of fiscal 2013 amounted to $10.9 million, compared to $5.7 million in the prior year third quarter. 

Net income and EBITDA for the fiscal 2013 third quarter included a charge of $6.0 million related to the Partnership's voluntary withdrawal from multi-employer pension plans covering certain employees acquired in the Inergy Propane acquisition, as well as $2.2 million in expenses related to the ongoing integration of Inergy Propane. Net income and EBITDA for the fiscal 2012 third quarter included $6.0 million in acquisition-related costs associated with the acquisition 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 $19.2 million for the fiscal 2013 third quarter, compared to Adjusted EBITDA of $3.5 million in the prior year third quarter.

In announcing these results, President and Chief Executive Officer Michael J. Dunn, Jr., said, "The third quarter benefitted from the presence of colder than normal average temperatures that began toward the end of the second quarter of fiscal 2013 and lasted through April. Our combined operations continue to perform very well; responding when the weather arrived and providing our customer base with the level of customer service and comfort that they have come to expect from us."

Retail propane gallons sold in the third quarter of fiscal 2013 increased 43.1 million gallons, to 92.1 million gallons from 49.0 million gallons in the prior year third quarter. Sales of fuel oil and other refined fuels increased 4.0 million gallons, to 8.3 million gallons compared to 4.3 million gallons in the prior year third quarter. The increase in volumes sold was primarily attributable to the inclusion of the Inergy Propane operations, as well as increases in the Partnership's legacy operations resulting from colder average temperatures in the month of April 2013 compared to April 2012.  According to the National Oceanic and Atmospheric Administration ("NOAA"), average temperatures (as measured by heating degree days) across all of the Partnership's service territories during April 2013 were 4% colder than normal.

Addressing the ongoing Inergy Propane integration efforts, Mr. Dunn said, "Our integration efforts kicked into high gear at the end of the fiscal 2013 heating season. We have refined our regional management structure, defined our local operating footprint and identified the management teams across our entire platform. In addition, we have made substantial progress on our retail system conversions that support our new operating footprint. It is remarkable how much our people have accomplished in a relatively short period of time. Our field integration efforts will continue through October 2013 before taking a break for the upcoming heating season, and will resume again in March 2014.  Throughout this period of change, our employees remain focused on providing our combined customer base with unsurpassed customer service while looking to continually improve operating efficiencies."

Concluding his remarks, Mr. Dunn said, "Despite the increased size of our business and higher working capital requirements, we once again funded all working capital needs from cash on hand without the need to borrow under our revolving credit facility. Additionally, during the third quarter, we took steps to further strengthen our balance sheet with the successful completion of a secondary public offering of Common Units, which raised net proceeds of $143.4 million. On August 2, 2013, we redeemed $133.4 million of outstanding borrowings under our 7.375% Senior Notes due 2021. Excluding the net proceeds of this offering from our cash balance as of June 29, 2013, we ended the quarter with more than $176.5 million of cash."

As previously announced on July 25, 2013, the Partnership's Board of Supervisors has declared a quarterly distribution of $0.8750 per Common Unit for the three months ended June 29, 2013. On an annualized basis, this distribution rate equates to $3.50 per Common Unit. The $0.8750 per Common Unit distribution is payable on August 13, 2013 to Common Unitholders of record as of August 6, 2013.

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 most recent acquisition of Inergy Propane may not be fully realized or realized within the expected timeframe;
• The Partnership's revenue 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 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;
• 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 29, 2012 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.

SOURCE Suburban Propane Partners, L.P.