Suburban Propane Partners, L.P. (SPH)

I tried leaving a message on this board a few days ago but it was deleted. I said I would spend some time and analyze this stock and it's management team. I own 1000 shares of SPH and I did a look back since 2014 when the current CEO was appointed from the CFO roll. I have a ton of numbers and for any long time holders of this stock I think we are being screwed. There are many reasons why but it mostly comes down to the distribution. Management has justified cutting the distribution when the yield has gotten to high but that is only a reflection of the unit price drop. For anyone who bought SPH in 2013 when Stivala became CEO, you paid $47 a unit. Add in the distributions through the end of the past Corp year and you received $23,350 and a current stock price of $14.07 X 1000 and you get $37,420 after 7 years and an initial $47,000 investment. Meanwhile, Stivala's total compensation has gone from around $1 mil (factoring in an extra $800K stock comp his first year for his promotion to CEO is what I have assumed) to a base salary of $600K and a bonus of $914,400 for an approx. $2.8 mil tot. comp. for this past year (next years is est. at $3.445 mil). I would have no problem with this if it were a growing company and the distributions from free cash flow had remained comparable to the distributions we unit holders have received. But in 2014 free cash flow per share was $3.46 and a $3.52 distribution. In 2021 free cash flow was $3.21 per and distributions of $1.23. That's a 7.2% reduction in FCF but a 65% reduction in distributions. I think it's time for a little management accountability and I plan on contacting Investco (SPH's largest unit holder) on Monday and I suggest other Unit holders do the same.

SPH is one of the few companies that has not recovered at least most of its price loss in mar 2020.
They have a history of stock price falling and dividend cuts. It appears that when the stock gets so low that a dividend reduction would still leave a high yield to attract new investors that's what they do, This recent dividend cut, considering their cash flow was totally unnecessasary. But the stock price being what it is and the excuse of the Pandemic, gave mgt the opportunity to cut the dividend and still have an attractive yield for new investors. Obviously existing investors got thrown under the bus. All the stats on this stock say its a value and can raise its distrubution. Warmer winters appear here to stay so beware of a price drop and another dividend cut.

Farewell my friends. I have been a unitholder for several years, but closed out my final position yesterday I still think SPH is by far the strongest amongst SPH, FGP and APU. My concern is this past year did not yield the results I expected given the weather pattern we observed. Debt is coming down, but slower than I had hoped for. Gallons sold did not meet my expectation especially given the weather conditions and acquisitions. Another concern I have is units being awarded to management allow for further dilution. I truly hope management is able to continue reducing debt and maintain the distribution, but I don’t want to agonize over it every time winter rolls around. I have moved to other MLPs that are less dependent on weather. Yes, I did give up some yield, but I sleep better too. The build out of natural gas along with small guys being able to penetrate markets makes growth in gallons sold very difficult. I wish you all the best.