WHIPPANY, N.J., Aug. 4,
2016 /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 25, 2016.
Consistent with the seasonal nature of the propane and fuel oil
businesses, the Partnership typically experiences a net loss in the
third quarter of its fiscal year. Net loss for the third
quarter of fiscal 2016 was $29.6
million, or $0.49 per Common
Unit, compared to a net loss of $41.0
million, or $0.67 per Common
Unit, in the prior year third quarter.
Net loss and earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the third quarter of fiscal 2016
included a $9.8 million gain from the
sale of certain assets and operations in a non-strategic market of
the propane segment; partially offset by 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 Inergy Propane
acquisition. Net loss and EBITDA for the third quarter of fiscal
2015 included expenses of $1.1
million related to the integration of Inergy Propane.
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)
amounted to $18.4 million for the
third quarter of fiscal 2016, compared to Adjusted EBITDA of
$12.1 million in the prior year third
quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said, "We
are very pleased to report an increase in our Adjusted EBITDA by
$6.3 million, or 52%, compared to the
prior year third quarter. As we exited what was reported as the
warmest winter on record, we continued to focus on the things
within our control – solid customer base management, prudent margin
management and further operating efficiencies to drive cost
savings. The improvement in earnings for the quarter was
driven by a combination of higher volumes sold and continued
expense reductions. In addition, once again we funded all
working capital requirements from cash on hand without the need to
borrow under our revolving credit facility, and ended the quarter
with more than $67.0 million of
cash."
Retail propane gallons sold of 80.2 million gallons in the third
quarter of fiscal 2016 increased 2.6 million gallons, or 3.4%,
compared to the prior year third quarter. Sales of fuel oil and
other refined fuels of 5.8 million gallons in the third quarter of
fiscal 2016 decreased 0.4 million gallons compared to the prior
year third quarter. Although weather during the third quarter
typically has less of an impact on volumes sold than it does during
the heating season, volumes for the third quarter of fiscal 2016
benefitted from cooler average temperatures compared to the prior
year third quarter. From an overall weather perspective,
average temperatures across all of our service territories (as
measured by heating degree days) for the third quarter of fiscal
2016 were 9% warmer than normal and 7% cooler than the prior year
third quarter, according to the National Oceanic and Atmospheric
Administration.
Revenues of $205.1 million for the
third quarter of fiscal 2016 decreased $15.2
million, or 6.9%, compared to the prior year third quarter,
primarily due to lower average selling prices, offset to an extent
by higher volumes sold. Average posted propane prices (basis
Mont Belvieu, Texas) and fuel oil
prices were 5.0% higher and 26.7% lower than the prior year third
quarter, respectively. Cost of products sold for the third quarter
of fiscal 2016 of $75.5 million
decreased $18.7 million, or 19.9%,
compared to $94.2 million in the
prior year third quarter, primarily due to lower average costs of
inventory coming into the quarter. Cost of products sold for the
third quarter of fiscal 2016 included a $0.1
million unrealized (non-cash) loss attributable to the
mark-to-market adjustment for derivative instruments used in risk
management activities, compared to a nominal unrealized (non-cash)
loss in the prior year third quarter. These unrealized losses are
excluded from Adjusted EBITDA for both periods in the table
below.
Combined operating and general and administrative expenses of
$117.9 million for the third quarter
of fiscal 2016 were $2.7 million, or
2.3%, higher than the prior year third quarter. Excluding the
impact of the items discussed above in the computation of Adjusted
EBITDA from both periods, combined operating and general and
administrative expenses decreased $2.8
million, or 2.5%, compared to the prior year third
quarter. The savings were due to lower payroll and benefit
related expenses attributable to a lower headcount and lower
vehicle expenses stemming from a reduction in the quantity of
vehicles in use.
Depreciation and amortization expense of $32.3 million was $0.4
million, or 1.2%, lower than the prior year third quarter.
Net interest expense of $18.6 million
decreased $0.3 million, or 1.6%,
primarily due to savings from the refinancing of the Partnership's
revolving credit facility during the second quarter of fiscal
2016.
Mr. Stivala concluded, "Despite the challenges presented by
record warm temperatures in our first and second fiscal quarters of
2016, our balance sheet and liquidity position remain strong and
the fundamentals of our business are unchanged. We continue
to be well positioned to focus on our growth initiatives – both
internally through refinements to our business model and externally
through strategic acquisitions."
As previously announced on July 21,
2016, the Partnership's Board of Supervisors had declared a
quarterly distribution of $0.8875 per
Common Unit for the three months ended June
25, 2016. On an annualized basis, this distribution rate
equates to $3.55 per Common Unit. The
distribution is payable on August 9,
2016 to Common Unitholders of record as of August 2, 2016.
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 700 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 26, 2015
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
Nine Months Ended June 25, 2016 and June 27, 2015
(in thousands,
except per unit amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
June
25,
2016
|
|
June
27,
2015
|
|
June
25,
2016
|
|
June
27,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
$
|
172,322
|
|
$
|
181,259
|
|
$
|
752,013
|
|
$
|
1,034,525
|
Fuel oil and refined
fuels
|
|
12,459
|
|
|
17,043
|
|
|
61,961
|
|
|
116,399
|
Natural gas and
electricity
|
|
10,596
|
|
|
11,861
|
|
|
38,232
|
|
|
56,109
|
All other
|
|
9,722
|
|
|
10,139
|
|
|
32,890
|
|
|
35,602
|
|
|
205,099
|
|
|
220,302
|
|
|
885,096
|
|
|
1,242,635
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
75,497
|
|
|
94,198
|
|
|
305,012
|
|
|
535,786
|
Operating
|
|
103,316
|
|
|
100,168
|
|
|
315,747
|
|
|
327,750
|
General and
administrative
|
|
14,547
|
|
|
15,040
|
|
|
45,253
|
|
|
54,786
|
Depreciation and
amortization
|
|
32,288
|
|
|
32,730
|
|
|
97,076
|
|
|
98,588
|
|
|
225,648
|
|
|
242,136
|
|
|
763,088
|
|
|
1,016,910
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business
|
|
9,769
|
|
|
-
|
|
|
9,769
|
|
|
-
|
Operating (loss)
income
|
|
(10,780)
|
|
|
(21,834)
|
|
|
131,777
|
|
|
225,725
|
Loss on debt
extinguishment
|
|
-
|
|
|
-
|
|
|
292
|
|
|
15,072
|
Interest expense,
net
|
|
18,638
|
|
|
18,933
|
|
|
56,383
|
|
|
58,643
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
(29,418)
|
|
|
(40,767)
|
|
|
75,102
|
|
|
152,010
|
Provision for income
taxes
|
|
180
|
|
|
185
|
|
|
423
|
|
|
521
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(29,598)
|
|
$
|
(40,952)
|
|
$
|
74,679
|
|
$
|
151,489
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
$
|
(0.49)
|
|
$
|
(0.67)
|
|
$
|
1.23
|
|
$
|
2.50
|
Weighted average
number of Common Units outstanding - basic
|
|
61,004
|
|
|
60,699
|
|
|
60,947
|
|
|
60,632
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
$
|
(0.49)
|
|
$
|
(0.67)
|
|
$
|
1.22
|
|
$
|
2.49
|
Weighted average
number of Common Units outstanding - diluted
|
|
61,004
|
|
|
60,699
|
|
|
61,127
|
|
|
60,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
$
|
21,508
|
|
$
|
10,896
|
|
$
|
228,561
|
|
$
|
309,241
|
Adjusted EBITDA
(a)
|
$
|
18,395
|
|
$
|
12,067
|
|
$
|
230,689
|
|
$
|
327,388
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
80,184
|
|
|
77,633
|
|
|
351,545
|
|
|
411,857
|
Refined
fuels
|
|
5,771
|
|
|
6,181
|
|
|
27,632
|
|
|
37,340
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
$
|
3,186
|
|
$
|
5,763
|
|
$
|
13,703
|
|
$
|
14,609
|
Growth
|
$
|
4,370
|
|
$
|
5,335
|
|
$
|
18,558
|
|
$
|
16,392
|
(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
|
|
Nine Months
Ended
|
|
June
25,
2016
|
|
June
27,
2015
|
|
June
25,
2016
|
|
June
27,
2015
|
Net (loss)
income
|
$
|
(29,598)
|
|
$
|
(40,952)
|
|
$
|
74,679
|
|
$
|
151,489
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
180
|
|
|
185
|
|
|
423
|
|
|
521
|
Interest expense,
net
|
|
18,638
|
|
|
18,933
|
|
|
56,383
|
|
|
58,643
|
Depreciation and
amortization
|
|
32,288
|
|
|
32,730
|
|
|
97,076
|
|
|
98,588
|
EBITDA
|
|
21,508
|
|
|
10,896
|
|
|
228,561
|
|
|
309,241
|
Gain on sale of
business
|
|
(9,769)
|
|
|
-
|
|
|
(9,769)
|
|
|
-
|
Multi-employer pension
plan withdrawal charge
|
|
6,600
|
|
|
-
|
|
|
6,600
|
|
|
-
|
Unrealized (non-cash)
losses (gains) on changes in fair value of derivatives
|
|
56
|
|
|
37
|
|
|
2,005
|
|
|
(2,035)
|
Product liability
settlement
|
|
-
|
|
|
-
|
|
|
3,000
|
|
|
-
|
Integration-related
costs
|
|
-
|
|
|
1,134
|
|
|
-
|
|
|
5,110
|
Loss on debt
extinguishment
|
|
-
|
|
|
-
|
|
|
292
|
|
|
15,072
|
Adjusted
EBITDA
|
$
|
18,395
|
|
$
|
12,067
|
|
$
|
230,689
|
|
$
|
327,388
|
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-third-quarter-earnings-300308890.html
SOURCE Suburban Propane Partners, L.P.