Suburban Propane Partners Q3 2025 Earnings Report

Suburban Propane Partners EPS Results

• Actual EPS: -$0.23
• Consensus EPS: -$0.17
• Beat/Miss: Missed by -$0.06
• One Year Ago EPS: N/A

Suburban Propane Partners Revenue Results

• Actual Revenue: $260.15 million
• Expected Revenue: $270.00 million
• Beat/Miss: Missed by -$9.85 million
• YoY Revenue Growth: N/A

Suburban Propane Partners Announcement Details

• Quarter: Q3 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 9:00AM ET

Suburban Propane Partners (NYSE:SPH), through its subsidiaries, engages in the retail marketing and distribution of propane, renewable propane, fuel oil, and refined fuels in the United States. The company operates through four segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. The Propane segment is involved in the retail distribution of propane for space heating, water heating, cooking, and clothes drying for use as a motor fuel in internal combustion engines to power over-the-road vehicles, forklifts, and stationary engines, as well as to fire furnaces as a cutting gas to the industrial customers; and for tobacco curing, crop drying, poultry brooding, and weed control in the agricultural markets. It also engages in the wholesale distribution of propane to industrial end users. Its Fuel Oil and Refined Fuels segment engages in the retail distribution of fuel oil, diesel, kerosene, and gasoline to residential and commercial customers for use in primarily as a source of heat in homes and buildings. The Natural Gas and Electricity segment markets natural gas and electricity to residential and commercial customers in the deregulated energy markets in New York and Pennsylvania. The All Other segment sells, installs, and services a range of home comfort equipment, including whole-house heating products, air cleaners, humidifiers, and space heaters. The company serves residential, commercial, industrial, and agricultural customers primarily in the east and west coast regions of the United States, as well as portions of the Midwest region of the United States and Alaska. Suburban Propane Partners, L.P. was founded in 1945 and is based in Whippany, New Jersey.

Suburban Propane Partners Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Resilient Q3 Results: Despite unseasonably warm weather, retail propane gallons rose slightly year-over-year and adjusted EBITDA remained steady at $27 million.
• Positive Sentiment: Balance Sheet Improvement: Used excess cash flow and ATM equity proceeds to repay $69 million of debt, lowering leverage to 4.33× and maintaining a 2.16× distribution coverage.
• Positive Sentiment: RNG Capacity Expansion: Ongoing operational upgrades at Stanfield and capital projects in Columbus, Ohio and Upstate New York are on track to increase future RNG injection and sales.
• Negative Sentiment: Commodity Credit Headwinds: Stanfield revenues were pressured by a 21% drop in Federal D3 RIN prices and persistently low LCFS credit prices until a recent 30% post-amendment rally.
• Positive Sentiment: Strategic Growth Pipeline: Integration of the New Mexico acquisition is delivering benefits, while the partnership in Independence Hydrogen and ongoing M&A pipeline support long-term diversification.

Presentation

[Operator]

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Suburban Propane Partners Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

I would now like to turn the call over to Davin D'Ambrosio, Vice President and Treasurer. Please go ahead.

[Davin D'Ambrosio, VP & Treasurer at Suburban Propane Partners]

Thanks, Eric. Good morning, and thank you for joining us for our fiscal twenty twenty five third quarter earnings conference call. I'm here with Mike Stivalla, our President and Chief Executive Officer Mike Kuglin, our Chief Financial Officer and Alex Centeno, Senior Vice President of Operations. This morning, we will review our third quarter financial results along with our outlook for the business. Once we concluded our prepared remarks, we will open the session to questions.

[Davin D'Ambrosio, VP & Treasurer at Suburban Propane Partners]

Our conference call contains forward looking statements within the meaning of Section 21E of the Securities Exchange Act 1934, as amended, relating to the partnership's future business expectations and predictions, financial condition and results of operations. These forward looking statements involve certain risks and uncertainties. We have listed some of the important factors that could cause actual results to differ materially from those discussed in such forward looking statements, which are referred to as cautionary statements in our earnings press release, which can be viewed on our website at suburbanpropane.com. All subsequent written and oral forward looking statements attributed to the partnership or persons acting on its behalf are expressly qualified in their entirety by such cautionary statements. Our Form 10 Q for the quarterly period ended 06/28/2025, which will be filed by the end of business today, contains additional disclosure regarding forward looking statements and risk factors.

[Davin D'Ambrosio, VP & Treasurer at Suburban Propane Partners]

Copies may be obtained by contacting the partnership or the SEC. Certain non GAAP measures will be discussed on this call. We have provided a description of those measures as well as a discussion of why we believe this information to be useful in our Form eight ks, which was furnished to the SEC this morning. The Form eight ks will be available through a link in the Investor Relations section of our website. At this time, I will turn the call over to Mike Stavalla for some opening remarks. Mike?

[Michael Stivala, President & CEO at Suburban Propane Partners]

Thanks, Davin. Good morning.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Thank you all for joining us today. Following a strong fiscal second quarter performance, we were very pleased to deliver another solid counter seasonal quarter despite unseasonably warm temperatures and volatility in the commodity price environment. Additionally, coming into the third fiscal quarter, customer tank inventories were generally on the higher end as a result of the strong weather driven volume performance in the second quarter. Nonetheless, propane volumes for the third quarter were up slightly to the prior year. As always, our operations personnel continue to do an outstanding job, safely meeting the needs of our customers, while effectively managing selling prices and expenses, as well as executing on our customer base growth and retention initiatives.

[Michael Stivala, President & CEO at Suburban Propane Partners]

We are also seeing the benefits from the strategic propane acquisition in New Mexico that we closed during the first fiscal quarter of this year. In our renewable natural gas operations, average daily RNG injection for the third quarter declined slightly compared to the prior year third quarter, primarily due to downtime experienced from several operational improvement projects that are designed to enhance future RNG production, as well as multiple power outages in the Stanfield, Arizona area. We are continuing to implement several operational improvements at our Stanfield facility to stabilize and grow RNG production and injection, enhance safety protocols, improve feedstock intake practices, and improve overall plant efficiency to strengthen the long term performance and returns of the facility, while also advancing the capital projects at our Columbus, Ohio and Upstate New York RNG facilities, which are expected to increase our overall RNG sales once those facilities are fully operational. While we remain focused on executing controllable operational improvements, revenues at the Stanfield facility continue to face headwinds from lower prices for environmental attributes, namely both California LCFS credits and federal D3 RINs. California LCFS credit prices remained depressed relative to historical levels, though average prices for the third quarter were flat compared to the prior year third quarter.

[Michael Stivala, President & CEO at Suburban Propane Partners]

We were encouraged, however, to see the finalization of amendments to the LCFS program implemented by CARB and made effective as of 07/01/2025, which accelerated carbon reduction targets and aims to create a better balance in the LCFS credit bank. Since the amendments were finalized in late June twenty twenty five, LCFS credit prices have increased 30%. Conversely, average Federal D3 RIN prices for the third quarter were down 21% year over year. With the strong second quarter performance, cash flow generation in the fiscal third quarter was very strong as we collected on our receivables. During the quarter, we used excess cash flows and to a lesser extent proceeds from the issuance of common units under our ATM equity sales program to reduce outstanding debt by $69,000,000 helping to make incremental improvements in our overall leverage profile.

[Michael Stivala, President & CEO at Suburban Propane Partners]

In a moment, I'll come back for some closing remarks. However, at this point, let me turn it over to Mike Kuglin to discuss third quarter results in more detail. Mike?

[Michael Kuglin, CFO at Suburban Propane Partners]

Thanks, Mike, and good morning, everyone. To be consistent with previous reporting, as I discuss our third quarter results, I am excluding the impact of unrealized mark to market adjustments on our commodity hedges, which resulted in an unrealized loss of approximately $3,000,000 in the third quarter of both fiscal twenty twenty five and fiscal twenty twenty four, along with certain other non cash items. Given the seasonal nature of our business, we typically experience a net loss in the third quarter of our fiscal year. With that said, the net loss for the third quarter was $10,800,000 or $0.17 per common unit compared to a net loss of $8,000,000 or $0.12 dollars per common unit in the prior year. Adjusted EBITDA for the third quarter was $27,000,000 consistent with the prior year third quarter.

[Michael Kuglin, CFO at Suburban Propane Partners]

Retail propane gallons sold in the third quarter of 71,900,000 gallons were in line with the prior year. Average temperatures, as measured in degree days, were 14% warmer than normal and 5% cooler than the prior year third quarter. The nominally cooler temperatures compared to the prior year were brief and limited to certain parts of the Northeast, resulting in only a minimal impact on heat related demand during the quarter. Despite the warm spring temperatures, volumes benefited from customer base growth in our residential and national account segments, but were also impacted by softness in resale activities and our agricultural segment due to unusually wet conditions. From a commodity perspective, wholesale propane prices were somewhat volatile for the quarter and generally trended higher compared to the prior year third quarter.

[Michael Kuglin, CFO at Suburban Propane Partners]

Overall, average wholesale prices for the quarter increased 4.7% compared to the prior year third quarter basis Mont Belvieu. At the end of the third quarter, the nation's propane inventories were at 75,700,000 barrels, which was flat compared to June 2024 and roughly 10% higher than historical averages for this time of the year. Excluding the impact of the mark to market adjustments on our commodity hedges that I mentioned earlier, total gross margin for the third quarter was $163,500,000 unchanged from the prior year, as propane volumes sold and unit margins remained steady. With respect to expenses, combined operating and G and A expenses of $135,800,000 for the third quarter were also roughly flat to the prior year, as higher payroll and benefit related costs were largely offset by a gain from insurance recovery. Net interest expense of $18,900,000 for the third quarter was marginally higher than the prior year due to higher average outstanding borrowings under our revolving credit facility, partially offset by lower benchmark interest rates on those borrowings.

[Michael Kuglin, CFO at Suburban Propane Partners]

Total capital spending for the quarter was consistent with the prior year's third quarter as we advanced our growth capital projects in our RNG platform at our Columbus and Upstate New York facilities, which were offset by lower capital spending in our propane operations due to timing. Turning to our balance sheet. During the third quarter, we utilized cash flows from operating activities and net proceeds of $8,100,000 from the issuance of common units under our ATM program to repay $69,000,000 in borrowings under the revolver. As a result of the debt repayment, our consolidated leverage ratio for the trailing twelve month period ended June 2025 improved to 4.33 times compared to 4.54 times at the end of the second quarter. We will continue to remain focused on utilizing excess cash flows and proceeds received from the ATM program to further strengthen the balance sheet and as opportunities arise to fund strategic growth.

[Michael Kuglin, CFO at Suburban Propane Partners]

We have more than ample borrowing capacity under our revolver to support our capital expansion activities and ongoing strategic growth initiatives. With that, I'll turn it back to Mike. Mike.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Thanks, Mike. As announced on July 24, our Board of Supervisors declared our quarterly distribution of $0.03 $25 per common unit in respect of our 2025. That equates to an annualized rate of $1.3 per common unit. The quarterly distribution would be paid on August 12 to our unitholders of record as of August 5. Our distribution coverage continues to remain very healthy at 2.16 times for the trailing twelve months ended June 2025.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Just to reflect a moment on our results through the first nine months of fiscal twenty twenty five, as well as the state of the business. Fiscal twenty twenty five heating season got off to a warm start, but sustained widespread cold winter temperatures arrived toward the December and continued throughout January and February, the most critical months for heat related demand. The cooler weather pattern during the heart of the heating season, combined with incremental volumes from the mid sized propane acquisition completed in the first quarter of this year in New Mexico, and strong demand our Southeast operations in the aftermath of Hurricanes Helene and Milton, all helped contribute to a 6.6% increase in volumes compared to the comparable nine month period last year. Volume performance was a real testament to the preparation by our operations teams and the flexibility of our operating model to ramp up when demand dictates. The combination of strong volumes, effective margin management amid rising commodity prices, and disciplined expense controls resulted in a year to date increase in adjusted EBITDA of $28,100,000 or 11.3% compared to the same period last year.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Our operations teams did an outstanding job navigating the roller coaster of demand patterns this year, while maintaining outstanding customer satisfaction and operational excellence. On the strategic front, our long term strategic growth plan remains to foster the growth of our core propane business while making strategic investments in lower carbon renewable energy alternatives through our Suburban Renewable Energy subsidiary, leveraging our core competencies in safety, customer service, logistics, especially in the localized energy distribution markets. One important development to note, during the quarter, Independence Hydrogen, of whom we have a 25% equity stake since our original investment in March 2022, closed on their next round of financing, welcoming Sumitomo Corporation of Americas as another strategic investor. We look forward to collaborating with Sumitomo to accelerate the commercial development and growth of Independence Hydrogen's localized hydrogen production and distribution model. Finally, I want to take this opportunity to thank the more than 3,200 employees at Sperton Propane for their hard work and unwavering focus on the safety and comfort of our customers and the communities we serve.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Thank you for all you do every single day. And as always, we appreciate your support and attention this morning and would like to open the call up for questions. And Eric, if you could help us with that.

[Operator]

At this time, I would like to remind everyone, in order to ask a question, first question comes from the line of Christopher Jeffrey with Mizuho Securities. Please go ahead.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Hi, good morning everyone and thanks for the update. Maybe just asking more on the for an update on the RNG rulemaking as far as the tax credits go that you kind of alluded to last quarter? And then maybe also if there's anything that Suburban is looking at in OBB A bill that was also recently implemented.

[Michael Kuglin, CFO at Suburban Propane Partners]

Good morning, Chris. It's Mike Kuglin. Similar to last quarter, we did not recognize any credits for PTC under 45Z and we will continue not to recognize any credits until regulations and hopefully final regulations come out from the Treasury. The expectation is credit regulations will be released by the end of this calendar year, although we can't give any assurance of that, but that's the expectation. At that point in time we will revisit what sales qualify for sales and then recognize credits to the extent eligible.

[Michael Kuglin, CFO at Suburban Propane Partners]

With respect to the OBVA, we're still working through it. There are some benefits and so far as it extends 45Z PTC for another two years from, through 2027, for another two years through 2029. So that's certainly beneficial. But outside of that, the, OVBA does not address the ambiguities that are contained in the current regulations, so we're still waiting in a waiting pattern until those come out.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

The only other thing I'd

[Michael Stivala, President & CEO at Suburban Propane Partners]

add there, Chris, relative to the OBBA bill is one of the interesting things that doesn't get a lot of attention was that they expanded some of the definition of qualifying income sources for purposes of MLPs. And as you know, the MLP universe has shrunk quite a bit. So there's some potential that as additional sources of energy, including hydrogen transportation and storage, which is obviously getting a lot of attention, could expand the use of MLPs, which, you know, suburban propane being one of the oldest, we were pleased to see that recognition.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Great, thank you. I appreciate that. And then maybe just any updates on the timing of the New York and Columbus projects and maybe how you're thinking about balancing those with the Arizona enhancement projects and maybe just a timeline on that Arizona when you you think that of that work would be expected to be done.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Yeah, most of the Arizona work is sort of smaller operational improvements. It's not a significant amount of capital. As you've gotten to know Suburban, we're constantly looking at operational improvements in our propane business, and we're continuing to challenge ourselves to get even better in our operations in Arizona. So there's not a major timeline there, it's just ongoing activities as we see them. As far as the Columbus upgrade facility and the digester in Upstate New York, we're still on track for sort of tail end of this calendar year into the early part of next calendar year is the expectation at this point.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Great. And then maybe just one last one on the O and M. Just if you could size up maybe that benefit from the insurance payout and kind of where you're seeing O and M SG and A trend generally going forward?

[Michael Kuglin, CFO at Suburban Propane Partners]

So the benefit was reported on the operations line. It was a little less than $2,000,000 It's not terribly material, but significant enough to offset the impact of inflation on payroll and benefits. And on a go forward basis, inflation as we've talked about has moderated over the years, but it's not certainly gone away and we would expect inflation to the tune of roughly around 3% on a go forward basis.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Great. Maybe actually just last one, anything that you guys are seeing kind of on the M and A front, seeing kind of some recent transactions transpire in the last, six, eight months or so?

[Michael Stivala, President & CEO at Suburban Propane Partners]

Yeah, this is obviously the time of year that you start to see the pipeline develop a little bit more significantly as we've come out of the heating season, and our pipeline is about the same as what it typically is. There's a handful of things that we have our eye on in different stages of development, frankly. So it's been a pretty active process for us over the past several months. And, as we've said, part of our strategy is to continue to foster the growth of propane, which is our bread and butter and helps to finance our initiatives to diversify the platform and continuing to grow that business through M and A strategically is part of that strategy. So we will continue to evaluate those opportunities.

[Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities]

Great, thank you. Appreciate the time.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Thanks for the interest, Chris.

[Operator]

There are no further questions at this time. I would like to turn the call over to Mike Stavala for closing remarks. Please go ahead.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Great. Thanks, Chris. Thanks for your help today. Thank you all for your attention. Appreciate it.

[Michael Stivala, President & CEO at Suburban Propane Partners]

Enjoy the rest of the summer and we look forward to talking to you in November as we close out our fiscal year. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you all for joining and you may now disconnect.

Participants

Executives

• Davin D'Ambrosio, VP & Treasurer
• Michael Stivala, President & CEO
• Michael Kuglin, CFO

Analysts

• Christopher Jeffrey, Equity Research Senior Associate at Mizuho Securities