Suburban Propane Partners LP Reports Full Year and Q4 Earnings Amidst Challenging Conditions
Full year net income reached $123.8 million, a decrease from $139.7 million in the previous fiscal year.
Adjusted EBITDA for fiscal 2023 was $275.0 million, down from $291.0 million in fiscal 2022.
Retail propane gallons sold in fiscal 2023 decreased by 1.2% year-over-year.
Strategic investments in renewable energy initiatives, including RNG production facilities.
On November 9, 2023, Suburban Propane Partners LP (NYSE:SPH) announced its earnings for the full fiscal year and fourth quarter ended September 30, 2023. The company navigated a challenging year marked by an unseasonably warm winter and persistent inflation, which impacted demand and operating costs.
Fiscal Year 2023 Performance
Suburban Propane Partners LP reported a net income of $123.8 million, or $1.94 per Common Unit, for fiscal 2023, a decrease from the $139.7 million, or $2.21 per Common Unit, recorded in the previous year. The company's Adjusted EBITDA also saw a decline to $275.0 million from $291.0 million in fiscal 2022. Despite these challenges, President and Chief Executive Officer Michael A. Stivala highlighted the company's resilience and strategic advancements, particularly in expanding its renewable natural gas (RNG) business.
Fiscal year 2023 was another year of strong performance in the face of a challenging weather pattern and a persistent inflationary environment,"
stated Stivala.
Retail propane gallons sold totaled 396.4 million gallons, a slight decrease of 1.2% compared to the prior year, largely due to warmer temperatures during the peak heating months. The company's gross margins improved by $49.7 million, or 6.3%, to $839.0 million, benefiting from higher propane unit margins and contributions from RNG assets acquired in December 2022.
Strategic Investments and Operating Costs
Suburban Propane Partners LP continued to invest in its strategic growth initiatives, particularly in the RNG sector, with nearly $230.0 million deployed in fiscal 2023. These investments included the acquisition of RNG production facilities and the advancement of a new anaerobic digester facility in upstate New York. Despite these investments, the company managed to increase its total debt by only $123.0 million compared to the end of fiscal 2022, thanks to the utilization of excess cash flows.
Operating and general and administrative expenses for fiscal 2023 rose to $569.6 million, an 8.7% increase from the prior year, driven by higher payroll, vehicle lease and operating costs, and other inflationary effects. Acquisition-related costs of $4.7 million were reported within general and administrative expenses and were excluded from Adjusted EBITDA.
Fourth Quarter 2023 Results
The fourth quarter of fiscal 2023, which typically records a net loss due to the seasonal nature of the propane business, saw a net loss of $20.9 million, or $0.33 per Common Unit. This was an improvement from the net loss of $54.2 million, or $0.86 per Common Unit, in the same quarter of the previous year. Adjusted EBITDA for the quarter was $3.0 million, slightly up from $2.8 million in the fourth quarter of fiscal 2022.
Suburban Propane Partners LP declared a quarterly distribution of $0.325 per Common Unit for the three months ended September 30, 2023, which is payable on November 14, 2023, to Common Unitholders of record as of November 7, 2023.
Outlook and Commitment
Looking forward, Suburban Propane Partners LP remains committed to fostering the growth of its core propane business while making strategic investments in the transition to lower carbon renewable energy alternatives. Stivala expressed confidence in the company's long-term growth plan, leveraging its legacy of safety and excellence in customer service to position the business for sustainability in a lower carbon economy.
The detailed financial statements and further commentary on the results are available in the company's earnings release and will be included in its Annual Report on Form 10-K to be filed with the SEC.
Explore the complete 8-K earnings release (here) from Suburban Propane Partners LP for further details.
This article first appeared on GuruFocus.
