WHIPPANY, N.J., May 6, 2021 /PRNewswire/ -- Suburban Propane
Partners, L.P. (NYSE:SPH), today announced earnings for its second
quarter ended March 27, 2021.
Net income for the second quarter of fiscal 2021 was
$127.2 million, or $2.03 per Common Unit, compared to net income of
$77.4 million, or $1.24 per Common Unit, in the prior year second
quarter. Adjusted EBITDA (as defined and reconciled below)
increased $41.4 million, or 31.7%, to
$172.0 million for the second quarter
of fiscal 2021, compared to $130.6
million in the prior year second quarter.
In announcing these results, President and Chief Executive
Officer Michael A. Stivala said,
"The fiscal 2021 second quarter presented some of the most
sustained and widespread cold weather that our service territories
have experienced since 2015. As a result, propane volumes
increased more than 16% compared to the prior year second quarter,
as customer demand for heating purposes surged at a time when
commercial and industrial volumes also benefitted from the easing
of COVID-19 related business restrictions. Our operating
personnel were well prepared to meet the challenges of the spike in
demand, while continuing to adhere to COVID-19 related safety
protocols, maintaining the highest level of safety standards and
delivering outstanding service to our customers when they needed us
most. I am truly proud of the more than 3,200 employees of Suburban
Propane for their efforts in maintaining their focus and driving
the performance for the quarter."
Mr. Stivala continued, "In addition to the increased demand,
earnings for the quarter were favorably impacted by excellent
margin management in a rising commodity price environment, positive
trends in our customer base growth and retention efforts, and lower
operating expenses despite the impact of higher demand.
Adjusted EBITDA of $172 million for
the second quarter was our highest second quarter performance since
2015, and represented an improvement of more than $41 million compared to the prior year second
quarter. We utilized excess cash flows to reduce total debt
by nearly $70 million during the
quarter, bringing our total leverage metric closer to our target
level of mid 3x. With the steps taken, both operationally and
financially, to improve earnings and cash flows, we continue to
execute on our stated goals of bringing leverage down,
strengthening our balance sheet and enhancing our financial
flexibility to aggressively pursue our long-term strategic growth
objectives."
Retail propane gallons sold in the second quarter of fiscal 2021
of 169.1 million gallons increased 16.5%, compared to the prior
year second quarter, primarily due to an increase in
weather-related customer demand, improving economic conditions and
organic customer base growth. Average temperatures across all
of the Partnership's service territories for the second quarter of
fiscal 2021 were comparable to the ten-year average and 9% cooler
than the prior year second quarter, yet 7% warmer than normal (as
measured by the thirty-year average of heating degree days utilized
by the National Oceanic and Atmospheric Administration). A
sustained and widespread cooler weather pattern throughout most of
the second quarter, particularly during the month of February where
average temperatures were 3% colder than normal and 16% cooler than
February 2020, contributed to an
increase in heat-related demand and volumes sold.
Revenues in the second quarter of fiscal 2021 of $537.2 million increased $136.2 million, or 34.0%, compared to the prior
year second quarter, primarily due to higher volumes sold, coupled
with higher retail selling prices associated with higher wholesale
product costs. Average posted propane prices (basis
Mont Belvieu, Texas) were 142.8%
higher than the prior year second quarter. Cost of products
sold for the second quarter of fiscal 2021 of $231.6 million increased $81.5 million, or 54.3%, compared to the prior
year, primarily due to higher volumes sold and higher wholesale
product costs. Cost of products sold included a $1.6 million unrealized non-cash gain
attributable to the mark-to-market adjustment for derivative
instruments used in risk management activities, compared to a
$4.7 million unrealized non-cash loss
in the prior year second quarter. These unrealized gains and
losses were excluded from Adjusted EBITDA for both periods in the
table below.
Combined operating and general and administrative expenses of
$131.2 million increased $7.1 million, or 5.8%, compared to the prior year
second quarter, primarily due to higher volume-related variable
operating costs, higher variable compensation, and a non-cash
pension settlement charge that was excluded from Adjusted EBITDA in
the table below.
During the second quarter of fiscal 2021, the Partnership
utilized cash flows from operating activities to repay $68.6 million of debt. As a result of the
debt repayment and the increase in Adjusted EBITDA during the
second quarter, the Consolidated Leverage Ratio for the trailing
twelve-month period ending March 27,
2021 improved to 3.95x.
As previously announced on April 22,
2021, the Partnership's Board of Supervisors declared a
quarterly distribution of $0.30 per
Common Unit for the three months ended March
27, 2021. On an annualized basis, this distribution
rate equates to $1.20 per Common
Unit. The distribution is payable on May 11, 2021 to Common Unitholders of record as
of May 4, 2021.
About Suburban Propane Partners, L.P.
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 1.0 million residential,
commercial, industrial and agricultural customers through
approximately 700 locations in 41 states.
Forward-Looking Statements
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;
- The impact of the COVID-19 pandemic and the corresponding
government response, including the impact across the Partnership's
businesses on demand and operations, as well as on the operations
of the Partnership's suppliers, customers and other business
partners, and the effectiveness of the Partnership's actions taken
in response to these risks;
- 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, including the economic
instability resulting from natural disasters such as pandemics,
including the COVID-19 pandemic;
- 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 ability of the Partnership to continue to combat
cybersecurity threats to our networks and information
technology;
- 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, 2020
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 27, 2021 and March 28, 2020
|
(in thousands,
except per unit amounts)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
March 27,
2021
|
|
|
March 28,
2020
|
|
|
March 27,
2021
|
|
|
March 28,
2020
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
$
|
481,328
|
|
|
$
|
347,686
|
|
|
$
|
749,952
|
|
|
$
|
633,111
|
|
Fuel oil and refined
fuels
|
|
|
32,011
|
|
|
|
31,502
|
|
|
|
47,761
|
|
|
|
57,393
|
|
Natural gas and
electricity
|
|
|
10,750
|
|
|
|
10,198
|
|
|
|
17,626
|
|
|
|
18,919
|
|
All other
|
|
|
13,149
|
|
|
|
11,669
|
|
|
|
27,090
|
|
|
|
25,510
|
|
|
|
|
537,238
|
|
|
|
401,055
|
|
|
|
842,429
|
|
|
|
734,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
|
231,567
|
|
|
|
150,118
|
|
|
|
334,946
|
|
|
|
268,718
|
|
Operating
|
|
|
109,188
|
|
|
|
110,588
|
|
|
|
207,167
|
|
|
|
217,464
|
|
General and
administrative
|
|
|
21,980
|
|
|
|
13,436
|
|
|
|
40,110
|
|
|
|
32,710
|
|
Depreciation and
amortization
|
|
|
27,346
|
|
|
|
29,288
|
|
|
|
55,363
|
|
|
|
58,562
|
|
|
|
|
390,081
|
|
|
|
303,430
|
|
|
|
637,586
|
|
|
|
577,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
147,157
|
|
|
|
97,625
|
|
|
|
204,843
|
|
|
|
157,479
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
|
109
|
|
|
|
—
|
|
|
|
109
|
|
Interest expense,
net
|
|
|
18,092
|
|
|
|
19,176
|
|
|
|
36,227
|
|
|
|
38,248
|
|
Other, net
|
|
|
1,582
|
|
|
|
979
|
|
|
|
2,660
|
|
|
|
1,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
provision for (benefit from) income
taxes
|
|
|
127,483
|
|
|
|
77,361
|
|
|
|
165,956
|
|
|
|
117,165
|
|
Provision for
(benefit from) income taxes
|
|
|
267
|
|
|
|
-
|
|
|
|
763
|
|
|
|
(359)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
127,216
|
|
|
$
|
77,361
|
|
|
$
|
165,193
|
|
|
$
|
117,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - basic
|
|
$
|
2.03
|
|
|
$
|
1.24
|
|
|
$
|
2.64
|
|
|
$
|
1.89
|
|
Weighted average
number of Common Units
outstanding -
basic
|
|
|
62,744
|
|
|
|
62,325
|
|
|
|
62,643
|
|
|
|
62,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per Common
Unit - diluted
|
|
$
|
2.02
|
|
|
$
|
1.23
|
|
|
$
|
2.62
|
|
|
$
|
1.88
|
|
Weighted average
number of Common Units
outstanding -
diluted
|
|
|
63,088
|
|
|
|
62,668
|
|
|
|
62,971
|
|
|
|
62,578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (a)
|
|
$
|
172,921
|
|
|
$
|
125,825
|
|
|
$
|
257,546
|
|
|
$
|
213,975
|
|
Adjusted EBITDA
(a)
|
|
$
|
172,038
|
|
|
$
|
130,648
|
|
|
$
|
252,059
|
|
|
$
|
216,022
|
|
Retail gallons
sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Propane
|
|
|
169,059
|
|
|
|
145,098
|
|
|
|
280,741
|
|
|
|
266,249
|
|
Refined
fuels
|
|
|
11,041
|
|
|
|
10,120
|
|
|
|
17,447
|
|
|
|
18,557
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance
|
|
$
|
3,817
|
|
|
$
|
3,515
|
|
|
$
|
6,605
|
|
|
$
|
7,900
|
|
Growth
|
|
$
|
4,642
|
|
|
$
|
3,930
|
|
|
$
|
7,666
|
|
|
$
|
12,584
|
|
|
|
(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 27,
2021
|
|
|
March 28,
2020
|
|
|
March 27,
2021
|
|
|
March 28,
2020
|
|
Net income
|
|
$
|
127,216
|
|
|
$
|
77,361
|
|
|
$
|
165,193
|
|
|
$
|
117,524
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit
from) income taxes
|
|
|
267
|
|
|
|
—
|
|
|
|
763
|
|
|
|
(359)
|
|
Interest expense,
net
|
|
|
18,092
|
|
|
|
19,176
|
|
|
|
36,227
|
|
|
|
38,248
|
|
Depreciation and
amortization
|
|
|
27,346
|
|
|
|
29,288
|
|
|
|
55,363
|
|
|
|
58,562
|
|
EBITDA
|
|
|
172,921
|
|
|
|
125,825
|
|
|
|
257,546
|
|
|
|
213,975
|
|
Unrealized non-cash
(gains) losses on changes in fair
value of derivatives
|
|
|
(1,638)
|
|
|
|
4,714
|
|
|
|
(6,493)
|
|
|
|
1,938
|
|
Equity in earnings of
unconsolidated affiliate
|
|
|
185
|
|
|
|
—
|
|
|
|
436
|
|
|
|
—
|
|
Pension settlement
charge
|
|
|
570
|
|
|
|
—
|
|
|
|
570
|
|
|
|
—
|
|
Loss on debt
extinguishment
|
|
|
—
|
|
|
|
109
|
|
|
|
—
|
|
|
|
109
|
|
Adjusted
EBITDA
|
|
$
|
172,038
|
|
|
$
|
130,648
|
|
|
$
|
252,059
|
|
|
$
|
216,022
|
|
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.
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SOURCE Suburban Propane Partners, L.P.