Suburban Propane Partners LP, a distributor of propane, fuel oil, and other refined fuels, announced its third-quarter earnings for the period ending June 29, 2024. The company reported a net loss of $17.2 million, or $0.27 per Common Unit, missing the analyst estimate of -$0.17 per share. Revenue for the quarter was $254.6 million, falling short of the estimated $277.00 million.
Company Overview
Suburban Propane Partners LP distributes propane, fuel oil, and other refined fuels to customers in the East Coast and West Coast regions of the United States. The company operates in three segments: Propane; Fuel Oil and Refined Fuels; and Natural Gas and Electricity. It generates maximum revenue from the Propane segment.
Performance and Challenges
Consistent with the seasonal nature of its business, Suburban Propane typically experiences a net loss in the third quarter. The net loss for Q3 2024 was $17.2 million, compared to a net loss of $5.3 million in Q3 2023. Adjusted EBITDA for Q3 2024 was $27.0 million, down from $33.0 million in the prior year.
President and CEO Michael A. Stivala commented,
“Widespread unseasonably warm temperatures experienced during the peak winter heating months in our fiscal 2024 second quarter continued into the third quarter of fiscal 2024, with periods of extreme heat in certain parts of the country. By contrast, the prior year third quarter benefited from colder average temperatures that generated a late burst of heat-related customer demand from our residential customer base.”
Financial Achievements
Despite the challenges, Suburban Propane made strategic investments and reduced debt. The company completed two propane acquisitions in Nevada and Florida, investing over $12.0 million, and reduced debt by $10.5 million using excess cash flows from operations. Additionally, the company made progress in its renewable natural gas (RNG) operations, enhancing feedstock intake and production levels.
Income Statement Highlights
| Three Months Ended | June 29, 2024 | June 24, 2023 |
|---|---|---|
| Revenues | $254.6 million | $278.6 million |
| Net (Loss) Income | $(17.2) million | $(5.3) million |
| Adjusted EBITDA | $27.0 million | $33.0 million |
Balance Sheet and Cash Flow
Suburban Propane utilized cash flows from operating activities to acquire two retail propane businesses and make additional investments in Oberon Fuels and Independence Hydrogen. The company also repaid $10.5 million in borrowings under the revolving credit facility. The Total Consolidated Leverage Ratio for the twelve-month period ending June 29, 2024, was 4.68x.
Distribution
As previously announced on July 25, 2024, the Board of Supervisors declared a quarterly distribution of $0.325 per Common Unit for the three months ended June 29, 2024. This distribution is payable on August 13, 2024, to Common Unitholders of record as of August 6, 2024.
Analysis
Suburban Propane's performance in Q3 2024 reflects the impact of unseasonably warm weather, which reduced demand for heating fuels. However, the company's strategic acquisitions and investments in renewable energy indicate a focus on long-term growth and diversification. The reduction in debt and effective management of selling prices and expenses are positive signs for the company's financial health.
For more detailed information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from Suburban Propane Partners LP for further details.
