Suburban Propane Partners (SPH) 7 May 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Suburban Propane Partners, L.P. Fiscal 2020 Second Quarter Results Conference Call. At this point, all the participant lines are in a listen-only mode.

However, there will be an opportunity for your questions and instructions will be given at that time. [Operator Instructions].

call recorded. today’s reminder, a is being As

Partnership’s And from materially the are subsequent differ uncertainties. on Partnership could the such qualified expressly meaning conference condition the to call and to on Securities and discussed of cautionary operations. has in in and attributable which statements results involve within entirety actual website. their contains forward-looking press factors written in viewed statements, certain forward-looking the relating cause those listed of forward-looking acting amended, statements its can forward-looking Act results XXXX, some again to business financial The referred statements behalf All statements. that of such oral expectations predictions the cautionary by company’s this Exchange be as future These Section statements as the are of to XXE important of and and persons release, partnership its earnings which or risks

With turn Treasurer. sir. Vice ahead, D’Ambrosio, Please go to President now that, Mr. the and I’ll Davin call

morning, John. joining call. XXXX Thank conference us quarter Good for our you, you fiscal Thank this second earnings everyone. morning for

morning Officer; the Steve Officer are quarter for along our Joining me will our Operating we Chief review outlook our Chief and with current business. Executive second Officer. results Stivala, this Chief and Mike Chief President Boyd, Accounting Mike our and Financial Kuglin, Officer; This morning

questions. our concluded we’ve once we open session usual, remarks, As will the prepared to

XX, be by SEC. business contain on statements Certain XX-Q the ended factors. will regarding discussed XX, on additional Our and of XXXX the or XX-K year will today, may and this Form obtained Form filed March the ended disclosures Partnership annual be for by measures September end call. Copies non-GAAP both forward-looking for be contacting fiscal the risk the period report XXXX,

Form useful our why to believe have of as this a a provided of of well be through those website the in available X-K, Investor SEC the furnished will which in suburbanpropane.com. description at as was our morning. discussion be we to We X-K The a section link Relations Form information measures this

At point, Mike? some Stivala the for I call this will remarks. over Mike opening to turn

Thanks, Davin. us joining today. all and thank you morning Good for

Let that hope are safe healthy and two me environment your we with you have start coping by the months. all the over saying I well faced families that and and unprecedented past

or frontline nation, unprecedented that that Our of hearts go you. save have healthcare are I the to thank tirelessly result crisis out lost to ones, and and as to health first workers those lives, entire help our plagued the a working that responders loved suffering has are

our Propane, our one adapted our communities priority. we practices our and customers, health local with employees, At have safety number the Suburban business as of and

states critical an their which and of And all considered than we communities service for business essential to the Propane Our this and local of the resiliency so serving operate. throughout I’m is in X,XXX commitment the customers of crisis. continue in Suburban employees proud efforts more of

Suburban Propane, worked centers York tents, team which steps the and frontline generation make been City hospital and around particular, for to support upon operating been called in that and vital power to heat testing the food providing Comfort, deliveries Center for sites, to our FEMA countless housed by request to clock. proud employees in have shelters, our power at by the at territory, propane as extraordinary And FEMA Javits a temporary moments distribution makeshift RVs there they the workers including USNS meet Jacob have taking activities provide to New into throughout

the instituted a had spread dramatic federal, of governments as jobs state help and the whole, as a crisis has impact all local control and health on obviously COVID-XX. unprecedented have This profound measures economy to

to business which of certainly may by be softness industrial demand lower in immune include temporary time, this most challenges we unable could customers, lower that segments. this economic has experience recover, the that resulted of susceptible At presented customer our by already effects businesses commercial see is the additional operations time. period areas from these of a shutdown. for that And or to in certain and business levels activity to are Our the not the generally dramatic demand prolonged the suspension

types, write-offs customer softness earnings of a We could cash experience a see a or affect economic We higher and collections, in across conservation flows. or prolonged slowdown efforts the may which customer recession. if of could the is cash amount disruptions all experience heating there rate the would impacting propane This dependent production, chain are storage crude in market the may likely resulting regional and in of logistics. year’s season. that limited supply be from to on And constraints next the and severity industry weather highly and the challenges

economic for heating uncertainties provide fiscal different XXXX. share the fiscal history economic many consequence a some our actions. and success out of business these moment, remain of Nevertheless, are times, Much adapt For supply our steps unprecedented health of territories, to in concerned on come as of efficient or while some supply. there managing Suburban on and the recession and future I’ll for impact outlook business XXXX In of depend through this this operating related possibility the our depth the well and the manage a our crisis of significant long a and length we’re flexible infrastructure, taking strong through season crisis, leaves additional and remainder us the our thoughts even new and slowdown of to to model is the across not a our stronger. planning uncertainty and prolonged in this of supplier fundamentals Propane, surety to challenging economic will about current we positioned given relations

season in temperatures The of month started throughout the December, let provide results and the for virtually commentary second that warm particular quarter in end one also on fiscal fiscal for at temperatures having The the quarter thus EBITDA record XXXX, XXXX been the territories. the unseasonably XXXX me to continued first, effect our of every par years of of But and of fiscal some have previous our reported heating on with the winters entire warm on adverse quarter. the the and customer adjusted our first be quarter, operating warm second demand XXXX. in

the for customer growth the their and service, circumstances changing exceptional of proud maintaining operating importantly, through the we’re effectively and retention high managed to our execute customer mention efforts managing initiatives, adapt to not safety the continuing business COVID-XX. environment, costs, Nonetheless, base way on personnel have our from focus standards on our and challenging extraordinary resulting to to

for over the this Mike take At quarter. point, the our you to I’ll to turn of Mike? details second Kuglin it through performance

of Thanks, morning, with loss derivative XXXX. resulting in our in $X.X compared prior the the adjustments year, non-cash $X.X which XXXX gain impact second of the of consistent everyone. in extinguishment quarter excluding fiscal an $XXX,XXX good unrealized refinancing to management as To Mike. reporting, revolving as I discuss and instruments and the previous of I’m million And results our mark-to-market unrealized quarter activities, an unrealized as risk of be debt credit of million used loss in a from facility second fiscal second well resulted quarter in the

unit $X.XX impact $XXX.X second second the quarter $X.XX EBITDA per earnings throughout common to the net negative was Excluding prior second the the heat decrease to these essentially the year. related The or $XXX.X compared the Adjusted unit or to $XX.X million compared in the a quarter for on million was driven quarter million common income items, in million weather warm for net of customer $XXX of and in by coming per demand. amounted into prior year. extremely quarter income

or future quarter. impact started uncertainty earnings in much the economic resulting impact there’s a mid-March the COVID-XX, our that have it for about the second on material did of While from not slowdown volumes

Retail second for across year. in lower than quarter year-over-year better the normal heating were second decrease the million the days quarter was warmer warmer XXX.X percentage is gallons, decrease of than slightly all year, degree and territories that than the than service which XX.X% the propane temperatures quarter. Average prior sold percentage our XX% in and were for prior XX% the gallons

March the temperatures through December that warm for second January our months during most related on were for started temperatures month service tank normal, temperatures mentioned, as which resulting the period. is in XXXX the for Mike quarter. heat a lack line period. the From in average than continued warmer had of December the and warm customer into than levels As first end of quarter temperatures the the for for expected momentum at with XX% of through Average that customer demand there, temperatures seasonably February, were demand, across than warmest normal, record we territories XX% warmer higher coming critical

average quarter the wholesale prices a propane as lower gallon second Overall, propane XX% levels quarter quarter fiscal the the considerably quarter which throughout From nation’s perspective, the above second and of was Belvieu average inventory basis for XX% levels. per the were $X.XX commodity than lower Mont prior wholesale year declined prices remained XXXX. than first

year. mix time the $XXX.X margins primarily lower lower million decreased compared as an costs tailwind roughly were gross prior by Total wholesale $XX.X volumes for Propane the to offset of due year was flat volume sold. for margins second unit the by or XX.X% unfavorable million this of to provided quarter

decreased million or to and lower related operating prior operating million by respect With and combined costs G&A X.X% $X.X self-insured compensation, for accruals to variable expenses to increase partially of offset primarily an the $XXX in year, liabilities. expenses, lower volume due compared variable

million interest for spending capital the level our prior the and facility. million primarily $X.X credit prior was tanks. million Net on decreased the quarter lower revolving borrowings the under decrease than $XXX,XXX compared interest quarter lower year to a of a benchmark second in $XX.X at for due due spending expense second year, vehicles on Total to $X.X rates of to

seasonal the during quarter $XX.X the million Turning repayment, borrowings flows repaid capital needs and we to under expenditures, balance capital with second cash revolver. our along our sheet, from funded We with the debt activities. working operating of

was debt of XXXX. XXXX March debt repayment, to the total With compared our as March flat roughly outstanding

permitted result as times increased our XXXX XX maximum the ended ratio amended to impact on the within period of credit However, current X.XX as March a X.XX are year ratio Despite recently earnings, weather warm of revolving weather-driven month well leverage provided the leverage we times. of the our level facility. for the under elevated trailing consolidated

oversubscribed challenging pleased very were additions opportunistic with XXXX. our the as well from despite during We of and refinancing quarter to position which we we was to in took $XXX million second further revolver scheduled strengthen mature our the with As received steps liquidity the markets. refinancing. in bank extend maturities group We syndication our outcome credit debt excellent previously the support the was reported, March the of

you, to Back Mike.

Mike. Thanks,

press quarterly As announced paid XXrd distribution Supervisors $X.XX XXXX, of of which our Xth. as per of quarter fiscal to common The will common $X.XX in of our annualized declared April of distribution respect record our XXth our release, an unitholders equates rate per our be of of second the to in Board May unit. May quarterly unit

Regarding the uncertainties resulting health from challenging we our economy. heels companies near on demand the like impact particular on implications record outlook, other now in the to warm jobs are this a many from unprecedented and due and heating with season on obviously crisis, so the of potential customer temperatures, dealing

progress customer We we flows through are fiscal new and evaluating the impact for under multiple season remainder sensitivities and fiscal XXXX. access of plans in operational potential cash and XXXX scenarios, earnings, the heating to developing liquidity adequate on a and alternative plan as demand

quarter, or X we a from year, burst indicated, reduced of our have on at through that serve have ratio so home. welcomed leverage temperatures businesses forced maintenance $XXX based of elevated non-residential as due shut Yet, of under new result our CapEx number times yet borrowing significantly maintained earnings lower the half to that benefited March staying colder the residential are the an Mike demand early of fiscal of capacity a many third the experienced coverage As the revolver. average first In of rate with part approximately customers time million ended have volumes and suffered been levels. down we activity of from to our a when Americans has

may through the group As bank in liquidity manage continue quarter steps take so, doing we the the quarterly more initiatives. levers CapEx include short-term investing at will the to our longer with help may manage evaluated reevaluating flexibility strengthen distributions in our spending also ensure term balance future. work we and on added customer capital of and in adequate financial of uncertainty. and gain other to we fund potential period manpower and our visibility demand, proactive working to and gain third additional to cash growth sheet, to This long-term impacts liquidity In level this our requirements plans,

very ever changing for truly steps protect taken are times the our unprecedented our business These to have adapt our to the and we employees proud country. circumstances. I’m practices of

As Despite continue and our for long-term strong. I’ve plans, key are to COVID-XX at this success. cost manage the attractive make associated flexibility with growth having the remain And and said, our challenging business the business fundamentals long-term the winter uncertainties pandemic, support adequate to to we and access to will capital the financial our strength, long-term. decisions all an

crisis. support incredible the than provide of express employees gratitude Lastly, their of would and X,XXX I have. be mind communities happy Suburban any efforts my questions like and to of always, their I with truly the for helping take to as this to support appreciation us your wouldn’t by this John, more if we Propane. am we’d that local you in time sincere stories appreciate that? morning to And you inspired attention And and

[Operator Instructions].

have with Fargo. Lui Wells Sharon We the line ahead. of go from question a Please

guess in thinking could and if maybe customers about April, as businesses your walk seen I you’ve of through through some demand wondering restarting. the from the are that March changes now timeframe Just from you the

Yes.

primarily it if counter dramatically business. exit So obviously about heating more way, as think a business you demand, to mix season which shifts is the the seasonal we this our non-residential

volumes, on into perspective, a to about a it’s we half, overall in volumes XX% So almost the year full non-residential performance. volume basis, -- little of for that the account of and put two-thirds second XX% to

every the our businesses, one impact there. California, is businesses well So Their -- as out in and you’re Florida, And of to But be some on we’re makeup dependent single York. efforts spread think businesses of every base. depending on serve different the demand that the forced been that restaurants, laundry name When that’s you have really small mats, we we is about very to seeing hotels, customer their exact larger that unique for the we pleasure to the are tourist on the the New it. locations location to whether the going definitely that local, it’s it’s attractions, the ports, mitigate this are These you down. many serve virus. small shut and from that serve, the of it’s customers have the times as struggling

XX% we guess those say what quarter, So in So have far upwards seen? third seen sectors. XX% the we’ve I would in destruction to through April, of demand I

of it’s of the so residential third our performance mask we showed to were remarks, of As extremely with weather the able the the end side in business. season, pleased I industrial showed good some never in here. far my remarks, really quarter and said the in And of in side commercial the the of been our towards heating actually has cold up thing opening up April that the the been though, or impact

a And just expect have the that we excited that serve normalizing. say enough to kind couple start of truly in activity I -- performance, the get of in a that haven’t that open slightly haven’t to up states yet. too see but part May we volume of we days. improvement commercial we first frankly, level businesses seen to the It’s we about here industrial want don’t seen So, to

to through get can could perfect can the In overall the and help us prop to weather performance, if crisis things back volume cold, a unseasonably well up the running that could residential stay normalize. certainly get the continues and up and world, the if we economy continue

of activity about economy look when what historical suffer does that is relative talking level delivery may we perhaps does businesses trends. the we’re they uncertainties able this when take long so they ultimately open, starts them recover, I how -- to even like around the permanently. really many not open to which forces do think to open; close can once much And the with and the that to start that to be serve them how

about we that the have the that preparing business demand to that, start extended that’s of an time. business caution and in softens So event the for thinking period our

also, liquidity business, to the And the on before. And of may that But just seeing. of and fundamentals still right said we able liquidity. cautious sure be there’s been things growth seize because about several else, tremendous believe are like not we’re times, as be heating how front we not that’s are uncertainty things that so opportunities seasons those run I’ve we to We’ve want the numerous strong. business make next Those take think have that the this we’re the us, being and why about. time don’t warm want that we, through we about amount in ensure months to are of to we period and in that invest our everybody

In when from nicely look warm tracking had that had very record we we COVID-XX, a I you time were we versus similar aside at towards winter. last XXXX, think performance this fact, a performance the

tells weather, our are the strong. see platform. a respond of it me the also readiness continuing testament to start fundamentals to is that the when to April that So, be we with it did way And

uncertainty. hard is it the totally you, the for because Sharon, quantify So, is to it’s reality about story

are programs that in certain And customers? know as utility either protections these well. are you Thanks in there I place of impacts and or non-residential the recession that payment payments customers? at what And your seeing also changes all government for for I impact a Okay. from residential are currently services that the would just that around are how color. thinking perhaps any guess term about longer business,

to our our serve local customers serve And we very we in. healthy, and we that look, we all and ensure is are one their needs. and priority to communities that the the that safe So number situation empathetic they’re are members are of help

of working and of we and ensure that job very of with as it’s business residential time, we result customer make being have them period of customers not of And collect very helping that to with steps we cash. get this through a we’re whether our are a And all but customers, also fact working that losses, to for otherwise period closely so of cognizant or a cash take that to run some the a to sure are instituted may for time. be we we’ve businesses would taking collection the we strapped need closely the

We are collections seeing you for see this year. a slowdown that cash typical in time would of

and of operating expenses bit year-over-year expenses One little case see to we to in start elevated in in slightly the of some we was the in slower collections. bad that put contributed profile our reserve the debt fact receivables extra did that a we see of that aging the start just things to aside deterioration the

our them our get And receivables for time, it And to good single at of going to long-term think this paid. want we’re is the crisis. tightly. I us through need and at going is continue sign those to looking we to very, We The are get the we help every very sympathy ultimately in day, are same to we benefit manage thing customers. them here for

No Instructions] questions [Operator in. coming further

you you results we August. get Okay, your safe again our we in as and look well clarity early families. I up thank help forward stay for John, you all. for thank And and and quarter more to with today. you, report catching we sometime you third healthy hope your Again,

So, thank you

all.

for participation. today. conclude conference does that your gentlemen, and for Ladies you Thank your

You may now disconnect.