Click here to close now.

SYS-CON MEDIA Authors: Ian Goldsmith, Ed Featherston, Elizabeth White, Pat Romanski, Liz McMillan

News Feed Item

Suburban Propane Partners, L.P. Announces Third Quarter Earnings

WHIPPANY, N.J., Aug. 7, 2014 /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 28, 2014.

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 2014 was $59.0 million, or $0.98 per Common Unit, compared to a net loss of $45.2 million, or $0.77 per Common Unit, in the prior year third quarter. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter of fiscal 2014 amounted to a loss of $5.2 million, compared to EBITDA of $10.9 million in the prior year third quarter. 

Net income and EBITDA for the third quarter of fiscal 2014 included a loss on debt extinguishment of $11.6 million and expenses of $4.3 million related to the ongoing integration of Inergy Propane. Net income and EBITDA for the third quarter of fiscal 2013 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 acquisition of Inergy Propane, as well as $2.2 million in expenses related to the integration of Inergy Propane.

Excluding the effects of these items, 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 $10.0 million for the third quarter of fiscal 2014, compared to Adjusted EBITDA of $19.2 million in the prior year third quarter.

In announcing these results, President Michael A. Stivala said, "Following a winter heating season in which consumers experienced significantly higher energy bills, as a result of both greater usage and higher average prices, customer demand slowed during the third quarter as customers delayed deliveries while making payments on their winter usage. In addition, our own efforts to manage exposure to higher than normal customer receivable balances resulted in lower volumes and higher provisions for potential bad debts during the third quarter of fiscal 2014. With the heating season behind us, we resumed our integration activities and have made substantial progress executing on our system conversion plans, further refining our operating model and providing enhanced employee training. As the new fiscal year approaches, we will be substantially completed with our system conversions and physical blending activities and will continue to fine-tune our operating model to maximize operating efficiencies within the combined footprint."

Retail propane gallons sold in the third quarter of fiscal 2014 decreased 8.9 million, or 9.7%, to 83.2 million, compared to 92.1 million in the prior year third quarter. Sales of fuel oil and other refined fuels decreased 1.3 million gallons, or 15.7%, to 7.0 million gallons compared to 8.3 million gallons in the prior year third quarter. The decrease in volumes was primarily due to the lingering effects of this year's heating season on customer buying habits. In addition, 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 prior year third quarter benefitted from a late burst of cold weather that contributed to higher volumes in April 2013 compared to April 2014. 

According to the National Oceanic and Atmospheric Administration, average temperatures (as measured by heating degree days) across all of the Partnership's service territories during April 2014 were 5% warmer than normal and 7% warmer than the comparable prior year period. Overall, average temperatures for the third quarter of fiscal 2014 were 10% warmer than normal and 4% warmer than the prior year third quarter.

Revenues of $297.1 million increased $6.3 million, or 2.2%, 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 posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices for the third quarter of fiscal 2014 were 16.6% and 2.1% higher than the prior year third quarter, respectively.  Cost of products sold for the third quarter of fiscal 2014 of $161.5 million increased $13.3 million, or 9.0%, compared to $148.2 million in the prior year third quarter, primarily due to higher wholesale product costs, offset to an extent by lower volumes sold. Cost of products sold for the third quarter of fiscal 2014  included a $0.7 million unrealized (non-cash) gain 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 gains and losses are excluded from Adjusted EBITDA for both periods in the table below. 

Combined operating and general and administrative expenses of $129.2 million for the third quarter of fiscal 2014 were $2.5 million, or 1.9%, lower than the prior year third quarter, primarily due to operating efficiencies and synergies realized as a result of the integration of Inergy Propane; including lower payroll and benefit-related expenses attributable to lower headcount and lower vehicle expenses from a reduction in the quantity of vehicles in use, offset to an extent by higher bad debt expense as a result of an increase in the allowance for potential uncollectible accounts.

Depreciation and amortization expense of $33.0 million increased $1.5 million, or 4.7%, primarily due to the acceleration of depreciation expense on assets taken out of service as a result of integration activities. Net interest expense of $20.7 million decreased $3.7 million, or 15.3%, due to the reduction of $157.3 million in long-term borrowings during the fourth quarter of fiscal 2013 and, to a lesser extent, the refinancing of $496.6 million in aggregate principal amount of 7.5% Senior Notes due 2018 with $525.0 million in aggregate principal amount of 5.5% Senior Notes due 2024 in the third quarter of fiscal 2014.

Concluding his remarks, Mr. Stivala said, "During the third quarter of fiscal 2014, we also took steps to further strengthen our balance sheet with the successful refinancing of our 7.5% Senior Notes due 2018 with 5.5% Senior Notes due 2024, effectively extending maturities on this portion of our debt by six years at a very attractive interest rate, and reducing our cash interest requirement by more than $8 million annually."

As previously announced on July 23, 2014, the Partnership's Board of Supervisors has declared a quarterly distribution of $0.8750 per Common Unit for the three months ended June 28, 2014. 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 12, 2014 to Common Unitholders of record as of August 5, 2014.

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 1.2 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 acquisition of the retail operations formerly owned by Inergy, L.P. (the "Inergy Propane Acquisition") may not be fully realized or realized within the expected timeframe;
  • The revenue gained by the Partnership 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 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 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, including, but not limited to, Inergy Propane;
  • 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 28, 2013 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 28, 2014 and June 29, 2013

(in thousands, except per unit amounts)

(unaudited)




































Three Months Ended


Nine Months Ended



June 28,
2014



June 29,
2013


June 28,
2014



June 29,
2013












Revenues











  Propane


$   242,173



$   230,777


$   1,409,271



$   1,164,099

  Fuel oil and refined fuels


26,898



31,026


174,888



185,967

  Natural gas and electricity


16,912



16,132


74,311



64,253

  All other 


11,160



12,870


38,501



45,615



297,143



290,805


1,696,971



1,459,934












Costs and expenses











  Cost of products sold


161,482



148,176


959,206



740,275

  Operating


115,991



118,314


361,035



359,621

  General and administrative


13,253



13,465


51,105



51,060

  Depreciation and amortization


32,992



31,505


101,101



93,347



323,718



311,460


1,472,447



1,244,303












Operating (loss) income


(26,575)



(20,655)


224,524



215,631

Loss on debt extinguishment


11,589



-


11,589



-

Interest expense, net


20,662



24,385


63,095



73,284












(Loss) income before provision for income taxes


(58,826)



(45,040)


149,840



142,347

Provision for income taxes


163



148


611



430












Net (loss) income


$   (58,989)



$   (45,188)


$      149,229



$      141,917












Net (loss) income per Common Unit - basic


$       (0.98)



$       (0.77)


$            2.47



$            2.46

Weighted average number of Common Units outstanding - basic


60,462



58,730


60,448



57,718












Net (loss) income per Common Unit - diluted


$       (0.98)



$       (0.77)


$            2.46



$            2.45

Weighted average number of Common Units outstanding - diluted


60,462



58,730


60,710



57,924























Supplemental Information:











EBITDA (a)


$     (5,172)



$     10,850


$      314,036



$      308,978

Adjusted EBITDA (a)


$     10,023



$     19,171


$      334,000



$      327,312

Retail gallons sold:











    Propane


83,155



92,109


454,702



456,356

    Refined fuels


6,981



8,331


43,595



47,439

Capital expenditures:











    Maintenance


$       5,167



$       2,463


$        12,972



$          6,301

    Growth


$       2,118



$       5,810


$          8,670



$        14,866












(more)

 

(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 certain other items, as applicable, as provided in the table below. Our management uses EBITDA and Adjusted EBITDA as measures of liquidity and we are including them because we believe that they provide our investors and industry analysts with additional information to evaluate our ability to meet our debt service obligations and to pay our quarterly distributions to holders of our Common Units.




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 (i) our calculations of EBITDA and Adjusted EBITDA and (ii) a reconciliation of Adjusted EBITDA, as so calculated, to our net cash provided by operating activities:


 


















Three Months Ended


Nine Months Ended





June 28,
2014



June 29,
2013


June 28,
2014



June 29,
2013















Net (loss) income


$ (58,989)



$ (45,188)


$ 149,229



$ 141,917


Add:












    Provision for income taxes


163



148


611



430


    Interest expense, net


20,662



24,385


63,095



73,284


    Depreciation and amortization


32,992



31,505


101,101



93,347


EBITDA


(5,172)



10,850


314,036



308,978


    Unrealized (non-cash) (gains) losses on changes in fair value of derivatives


(707)



73


(708)



6,333


    Integration-related costs


4,313



2,248


9,083



6,001


    Multi-employer pension plan withdrawal charge


-



6,000


-



6,000


    Loss on debt extinguishment


11,589



-


11,589



-


Adjusted EBITDA


10,023



19,171


334,000



327,312


Add / (subtract):












    Provision for income taxes


(163)



(148)


(611)



(430)


    Interest expense, net


(20,662)



(24,385)


(63,095)



(73,284)


    Unrealized (non-cash) gains (losses) on changes in fair value of derivatives


707



(73)


708



(6,333)


    Integration-related costs


(4,313)



(2,248)


(9,083)



(6,001)


    Multi-employer pension plan withdrawal charge


-



(6,000)


-



(6,000)


    Loss (gain) on disposal of property, plant and equipment, net


179



(301)


(340)



(2,891)


    Compensation cost recognized under Restricted Unit Plans


2,074



840


5,663



3,253


    Changes in working capital and other assets and liabilities


136,738



79,649


(122,272)



(35,158)















    Net cash provided by operating activities


$ 124,583



$ 66,505


$ 144,970



$ 200,468














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.

 

SOURCE Suburban Propane Partners, L.P.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
Want to enable self-service provisioning of application environments in minutes that mirror production? Can you automatically provide rich data with code-level detail back to the developers when issues occur in production? In his session at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how to accomplish this and more utilizing technologies such as Microsoft Azure, Visual Studio online, and Application Insights in this demo-heavy session.
DevOps Summit, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developmen...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
Over the years, a variety of methodologies have emerged in order to overcome the challenges related to project constraints. The successful use of each methodology seems highly context-dependent. However, communication seems to be the common denominator of the many challenges that project management methodologies intend to resolve. In this respect, Information and Communication Technologies (ICTs) can be viewed as powerful tools for managing projects. Few research papers have focused on the way...
As the world moves from DevOps to NoOps, application deployment to the cloud ought to become a lot simpler. However, applications have been architected with a much tighter coupling than it needs to be which makes deployment in different environments and migration between them harder. The microservices architecture, which is the basis of many new age distributed systems such as OpenStack, Netflix and so on is at the heart of CloudFoundry – a complete developer-oriented Platform as a Service (PaaS...
In high-production environments where release cycles are measured in hours or minutes — not days or weeks — there's little room for mistakes and no room for confusion. Everyone has to understand what's happening, in real time, and have the means to do whatever is necessary to keep applications up and running optimally. DevOps is a high-stakes world, but done well, it delivers the agility and performance to significantly impact business competitiveness.
As cloud gives an opportunity to businesses to buy services externally – how is cloud impacting your customers? In his General Session at 15th Cloud Expo, Fabio Gori, Director of Worldwide Cloud Marketing at Cisco, provided answers to big questions: Do you see hybrid cloud as where the world is going? What benefits does it bring? And how does Cisco connect all of these clouds? He also discussed Intercloud and Cisco’s investment on it.
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises a...
There is no question that the cloud is where businesses want to host data. Until recently hypervisor virtualization was the most widely used method in cloud computing. Recently virtual containers have been gaining in popularity, and for good reason. In the debate between virtual machines and containers, the latter have been seen as the new kid on the block – and like other emerging technology have had some initial shortcomings. However, the container space has evolved drastically since coming on...
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
Enterprises are fast realizing the importance of integrating SaaS/Cloud applications, API and on-premises data and processes, to unleash hidden value. This webinar explores how managers can use a Microservice-centric approach to aggressively tackle the unexpected new integration challenges posed by proliferation of cloud, mobile, social and big data projects. Industry analyst and SOA expert Jason Bloomberg will strip away the hype from microservices, and clearly identify their advantages and d...