WHIPPANY, N.J., Aug. 3, 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
third quarter ended June 24,
2017.
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 2017 was $29.7
million, or $0.48 per Common
Unit, compared to a net loss of $29.6
million, or $0.49 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. Excluding the effects of the foregoing items in the
prior year and unrealized (non-cash) mark-to-market adjustments on
derivative instruments in both years, Adjusted EBITDA (as defined
and reconciled below) increased to $21.4
million for the third quarter of fiscal 2017 from
$18.4 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
$3.0 million, or 16.4%, compared to
the prior year third quarter. These results are a testament to our
solid operating platform and the ability of our people to focus on
the things within their control -- providing exceptional customer
service in every market we serve, prudently managing margins,
driving cost savings through operating efficiencies, and
concentrating on our growth and retention initiatives."
Retail propane gallons sold in the third quarter of fiscal 2017
of 77.7 million gallons decreased 2.5 million gallons, or 3.1%,
compared to the prior year third quarter. Sales of fuel oil and
other refined fuels decreased approximately 0.5 million gallons,
compared to the prior year. Although weather during the third
quarter typically has less of an impact on volumes sold than it
does during the heating season, volumes in the third quarter of
fiscal 2017 were adversely impacted by warmer than normal
temperatures, particularly during the month of April where average
temperatures across all of the Partnership's service territories
(as measured by heating degree days) were 23% warmer than normal
and 12% warmer than April 2016,
according to the National Oceanic and Atmospheric
Administration. From an overall weather perspective, average
temperatures across all of the Partnership's service
territories for the third quarter of fiscal 2017 were 18%
warmer than normal and 9% warmer than the prior year third
quarter.
Revenues in the third quarter of fiscal 2017 of $222.9 million increased $17.8 million, or 8.7%, compared to the prior
year third quarter, primarily due to higher retail selling prices
associated with higher wholesale product costs, offset to an extent
by lower volumes sold. Average propane prices (basis Mont Belvieu, Texas) and fuel oil prices were
27.9% and 8.6% higher than the prior year third quarter,
respectively. Cost of products sold for the third quarter of fiscal
2017 of $92.1 million increased
$16.6 million, or 22.0%, compared to
the prior year third quarter, primarily due to higher wholesale
product costs. Cost of products sold included a $0.7 million unrealized (non-cash) loss
attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$0.1 million 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
$110.0 million for the third quarter
of fiscal 2017 were $7.8 million, or
6.6%, lower than the prior year third quarter, primarily due to
lower payroll and benefit-related expenses attributable to a
reduced headcount, and the charge recorded in the prior year third
quarter for the multi-employer pension plan withdrawal discussed
above.
Depreciation and amortization expense of $31.8 million decreased $0.5 million, or 1.4%, compared to the prior year
third quarter. Net interest expense of $18.5
million decreased $0.1 million
compared to the prior year third quarter. During the third quarter
of fiscal 2017, the Partnership funded a portion of its cash needs
with $11.3 million of incremental
borrowings under its revolving credit facility.
As previously reported, the Partnership took proactive steps
during the third quarter of fiscal 2017 to further strengthen its
liquidity position by securing an amendment to its revolving credit
facility. Under this amendment, the maximum consolidated leverage
ratio was increased from 5.50 to 5.95 starting with the recently
concluded quarter stepping down over time to the pre-amendment
level of 5.50 by the fiscal quarter ending December 2018. For
the recently concluded quarter, the actual consolidated leverage
ratio was 5.19, which was below both the 5.95 maximum in effect and
the 5.50 maximum in effect prior to this amendment.
As previously announced on July 20,
2017, the Partnership's Board of Supervisors has declared a
quarterly distribution of $0.8875 per
Common Unit for the three months ended June
24, 2017. The distribution is payable on August 8, 2017 to Common Unitholders of record as
of August 1, 2017.
Mr. Stivala stated, "As we reported at the end of the second
quarter of fiscal 2017, our goals as we plan for fiscal 2018
include restoring our balance sheet strength to provide a better
path toward long-term profitable growth. We also indicated that we
would be undertaking a thorough assessment of customer demand
trends and expectations under varying weather scenarios, following
record warm winters in the past two seasons. As a result, pending
finalization of our business plans for fiscal 2018, at its meeting
on August 1, 2017 our Board of
Supervisors discussed reducing the distribution level by up to 33%
beginning with the quarterly distribution to be paid in
November 2017 in respect of the
fourth quarter of fiscal 2017. A final decision on the
amount of the reduction in the distribution level will not be made
until the Board meets again in October to declare the fourth
quarter distribution."
Mr. Stivala concluded, "This has been, and continues to be, a
deliberate and thorough process to evaluate the business under many
different circumstances, all with the goal of best positioning the
business for long-term profitable growth, starting with a return to
strong financial metrics. A reduction in the annualized
distribution would enhance our distribution coverage ratio, provide
excess liquidity to reduce leverage and, more importantly, provide
enhanced financial flexibility to support our growth
initiatives."
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 Nine Months Ended June
24, 2017 and June 25, 2016 (in thousands, except per unit
amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
June
24,
2017
|
|
|
June
25,
2016
|
|
|
June
24,
2017
|
|
|
June
25,
2016
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
188,406
|
|
|
$
|
172,322
|
|
|
$
|
843,519
|
|
|
$
|
752,013
|
|
Fuel oil and refined
fuels
|
|
|
12,886
|
|
|
|
12,459
|
|
|
|
69,612
|
|
|
|
61,961
|
|
Natural gas and
electricity
|
|
|
11,923
|
|
|
|
10,596
|
|
|
|
44,229
|
|
|
|
38,232
|
|
All other
|
|
|
9,680
|
|
|
|
9,722
|
|
|
|
33,420
|
|
|
|
32,890
|
|
|
|
|
222,895
|
|
|
|
205,099
|
|
|
|
990,780
|
|
|
|
885,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
92,094
|
|
|
|
75,497
|
|
|
|
402,726
|
|
|
|
305,012
|
|
Operating
|
|
|
97,070
|
|
|
|
103,316
|
|
|
|
306,839
|
|
|
|
315,747
|
|
General and
administrative
|
|
|
12,968
|
|
|
|
14,547
|
|
|
|
40,179
|
|
|
|
45,253
|
|
Depreciation and
amortization
|
|
|
31,825
|
|
|
|
32,288
|
|
|
|
95,756
|
|
|
|
97,076
|
|
|
|
|
233,957
|
|
|
|
225,648
|
|
|
|
845,500
|
|
|
|
763,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of
business
|
|
|
-
|
|
|
|
9,769
|
|
|
|
-
|
|
|
|
9,769
|
|
Operating (loss)
income
|
|
|
(11,062)
|
|
|
|
(10,780)
|
|
|
|
145,280
|
|
|
|
131,777
|
|
Loss on debt
extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
1,567
|
|
|
|
292
|
|
Interest expense,
net
|
|
|
18,502
|
|
|
|
18,638
|
|
|
|
54,820
|
|
|
|
56,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
|
(29,564)
|
|
|
|
(29,418)
|
|
|
|
88,893
|
|
|
|
75,102
|
|
Provision for income
taxes
|
|
|
152
|
|
|
|
180
|
|
|
|
308
|
|
|
|
423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(29,716)
|
|
|
$
|
(29,598)
|
|
|
$
|
88,585
|
|
|
$
|
74,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - basic
|
|
$
|
(0.48)
|
|
|
$
|
(0.49)
|
|
|
$
|
1.45
|
|
|
$
|
1.23
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
61,290
|
|
|
|
61,004
|
|
|
|
61,227
|
|
|
|
60,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
Common Unit - diluted
|
|
$
|
(0.48)
|
|
|
$
|
(0.49)
|
|
|
$
|
1.44
|
|
|
$
|
1.22
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
61,290
|
|
|
|
61,004
|
|
|
|
61,410
|
|
|
|
61,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
20,763
|
|
|
$
|
21,508
|
|
|
$
|
239,469
|
|
|
$
|
228,561
|
|
Adjusted EBITDA
(a)
|
|
$
|
21,418
|
|
|
$
|
18,395
|
|
|
$
|
243,744
|
|
|
$
|
230,689
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
77,712
|
|
|
|
80,184
|
|
|
|
350,188
|
|
|
|
351,545
|
|
Refined
fuels
|
|
|
5,243
|
|
|
|
5,771
|
|
|
|
27,251
|
|
|
|
27,632
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
2,299
|
|
|
$
|
3,186
|
|
|
$
|
8,429
|
|
|
$
|
13,703
|
|
Growth
|
|
$
|
2,500
|
|
|
$
|
4,370
|
|
|
$
|
13,575
|
|
|
$
|
18,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
24,
2017
|
|
|
June
25,
2016
|
|
|
June
24,
2017
|
|
|
June
25,
2016
|
|
Net (loss)
income
|
|
$
|
(29,716)
|
|
|
$
|
(29,598)
|
|
|
$
|
88,585
|
|
|
$
|
74,679
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
152
|
|
|
|
180
|
|
|
|
308
|
|
|
|
423
|
|
Interest expense,
net
|
|
|
18,502
|
|
|
|
18,638
|
|
|
|
54,820
|
|
|
|
56,383
|
|
Depreciation and
amortization
|
|
|
31,825
|
|
|
|
32,288
|
|
|
|
95,756
|
|
|
|
97,076
|
|
EBITDA
|
|
|
20,763
|
|
|
|
21,508
|
|
|
|
239,469
|
|
|
|
228,561
|
|
Unrealized (non-cash)
losses on changes in
fair
value of derivatives
|
|
|
655
|
|
|
|
56
|
|
|
|
2,708
|
|
|
|
2,005
|
|
Loss on debt
extinguishment
|
|
|
-
|
|
|
|
-
|
|
|
|
1,567
|
|
|
|
292
|
|
Gain on sale of
business
|
|
|
-
|
|
|
|
(9,769)
|
|
|
|
-
|
|
|
|
(9,769)
|
|
Multi-employer pension
plan withdrawal charge
|
|
|
-
|
|
|
|
6,600
|
|
|
|
-
|
|
|
|
6,600
|
|
Product liability
settlement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
Adjusted
EBITDA
|
|
$
|
21,418
|
|
|
$
|
18,395
|
|
|
$
|
243,744
|
|
|
$
|
230,689
|
|
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.
View original
content:http://www.prnewswire.com/news-releases/suburban-propane-partners-lp-announces-third-quarter-earnings-300498764.html
SOURCE Suburban Propane Partners, L.P.