Suburban Propane Partners (SPH) 5 May 222022 Q2 Earnings call transcript

Good morning. And welcome to the Suburban Propane Partners, Second Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event today's being is note recorded. Please now Davin D'Ambrosio, would like to to over conference the Vice turn I President Treasurer. & ahead, go sir. Please

Good morning, everyone.

and call involve that written the the discussed can the conditions factors operations. Securities Partnership statements. with language. some in which could cause by Act in oral and of uncertainties. or actual this referred the Let results financial safe amended, Exchange certain which partnership statement business to of contains relating attributable These of entirety expectations such as conference on predictions to cautionary meaning acting persons of release, start also, differ of within press be expressly future materially forward-looking listed statements forward-looking viewed forward-looking and in important XXE behalf from me forward-looking to Section those risks are results earning's XXXX cautionary on statements statements such as partnership's the the to their qualified has a are website, statements, This the harbor in and company's

open Officer, me Steve Operating morning we Joining we along with review our for business. session Michael our Accounting outlook Kuglin, our questions. the the Michael will President Boyd, Chief to our Once this concluded Financial Stivala, Quarter Officer. Chief and remarks, This Executive financial results Chief Chief Officer and Is morning Second Officer, will and we our current prepared

of partnership additional forward-looking be risk filed Copies Form obtained Our XXXX, will March for the may ended fiscal SEC. the and ended or end the XX, contacting report year September XXth, annual Form XX-Q statements business XXXX. disclosure And XX-K by on factors. the contain the for which be regarding today, by period

X-K, useful the which on believe Form be discussed have information this For the to SEC as as to a was well those call, this be we - GAAP measures in of provided discussion why description morning. will of this our measures, non furnished we

Relations Stivala section this will remarks. for X-K through Form Mike be website At available turn will our I over of in the the to call some opening at Investor Mike? suburbanpropane.com. a link point,

Great. Thanks, Thank joining today. for Good us morning. all you Davin.

the manage able deliver reported factors EBITDA our compared inflationary from our and $X second the And base six an was The nearly platform. a the that the impacting improvement quarter. number to Propane and We build-out We we we million year have weather Despite to prices to another And renewable we made combine expenses, our commodity and customer months with when Suburban initiatives improvement of toward EBITDA now effectively through energy on in solid margins resulting an improvements quarter progress pattern, execution environment long-term quarter a operating key financial increase operating drive continue X% or you fiscal fiscal delivered expand of prior of strategic were outstanding a first adjusted for further fronts. on to high the quarter, in from first year. in erratic the second our of metrics. adjusted a challenging historically results. expenses

On the strategic made moves number the quarter. during we front, of a

of difficult the energy alternative across We may and many moves hydrogen believe play applications. hydrogen renewable investment with ecosystem economy owned in will toward equity better which strategic a to coming role in clean deliver start-up with a First, to XX% developing markets in and on production is which stake the for on that carbonization handling to from de power us. This a the real the prove is society backup sources. hydrogen locally acquired Independence initial focused March focus local years sourced, in sectors that we will a and company, as material Hydrogen, address operated distribution -

carbon called the Second, in get benefits order rDME. collectively attributes our support closer product additional reduction renewable of intensity to commercialization to offering the clean, and This in carbon we of blended of we new low our a investment carbon as Fuels Plus Propane committed Oberon versatile, propane reduce combines for dimethyl capital portable the propane to standards. to ether pathway aggressive of with create meeting product

formed suburban the first assets. of that location. ribbon-cutting We location. Propane ceremony platform Plus we Placentia, Southern other also And rDME alternative which California. at And complete these energy rDME branded Propane we a for construction with now facility world's just blending serve the we're to selling And the subsidiary capital last renewable in California commercial and in deploy the commercial launch Plus our and will investments of week this a first renewals, to third, businesses customers new in our lower-carbon as celebrated

debt learn can website. cash million visiting allocating during excess quarter. with investments operations, these flow also You funded these more investments reduce approximately $XX by about the our We while to from

strategic in with for I'll approach our debt balance making pay and initiatives. a investments closing remarks core strategic long-term very In line goals. our are provide and it's to down focused stated strategic come which added some to strengthen and very So, balanced back all on our to sheet, continuing moment, a

second over Kuglin However, to me point, at detail. more Mike? this results in to the let quarter Mike it turn discuss

commodity excluding adjustments quarter, of net associated months. I net the a of second at expected compared the morning, year. offset And discuss the with reporting as nine quarter subject unrealized fair positions during as our as second gains the QX. for the the of good $X.X the on next hedges gain gains. The results large million prices second hedges over The at be of in are the fluctuate. commodity end end $XX evaluation gain to unrealized million value of the the open at by realized hedges first unrealized commodity are the unrealized gain mature in prior To an the contracts of unrealized quarter the open of impact our of an of second everyone. resulted on of change commodity which Mike. and reflects with hedges, end to quarter were unrealized portion partially Thanks, previous the And to reversal the those as our consistent course of quarter mark-to-market

net to these million Excluding prior common is of $X.X by second the prior year. Oberon or well Fuels, earnings for $XXX.X million to income or quarter, million as of accounted the in equity prior EBITDA improved $XXX.X non-cash year. per quarter for $X.X unit, the the unconsolidated items, and common was under pension unit non-cash $XXX.X which $X.XX of the income cents method, a per subsidiary an charge compared second as equity in the million for year, compared net the settlement Adjusted

from rise significantly but period sold million quarter factors, in to impact inflationary quarter. lower of mentioned, propane the Mike for As in quarter the sustainable December, impact trends heat-related were the customer continued the resulted the quarter from levels factors warm positive second from risk driven X.X% management, near and by commodity demand inconsistent and offset gallons of into customer than soft more dramatically margin solid pressures temperatures due the month sold the weather, commodity warmer prices, second growth. conservation, warm throughout our the year. our expenses. which volumes than strategy record elevated were gallons, was Volumes hedging, benefits base a XXX.X of of and and during prior on in earnings were by several customer These lower Retail most from the and coming impacted in management temperatures tank negatively the a of impact from

the Warmer addition the in to provided X% conservation, into season, the pattern, to start. heating quarter But for price returned than a historically December boost to in high momentum. and warmer less from were of the trend were tempered With through average and January quarter. February which then weather, a heat-related equivalent also similar during quarter customer of level got second off weather commodity months adversely considerable demand. short-lived environment. at was warm In a normal, most critical February, the impacted volumes second prior temperatures mid-February, resulting respect late a second the by favorable Overall, the weather to early

of and oil second wholesale warmer prices continue and prior months into quarter and X% as perspective, inventory heating propane the for line crude December this to XXXX result year. were XXXX, with prices rise a levels of to persistently normal, low in time commodity the temperatures critical increased warmer throughout By historical coming QX year. in averages of to elevated relative the average the were than than X% For February

Within the the in which in higher $X.XX than early XX low higher first prior Mont fiscal highest from March, to in for basis a quarter, wholesale a $X.XX is and prices years. XXXX. $X.XX propane of gallon, were quarter, per Belvieu which of XX% early second January a a for the moved in Overall, quarter price is wholesale X% second the quarter average the prices,

growth Excluding basis. expenses Consistent price volatility effective and purchases intended on price matured mark-to-market commodity propane the management during forecasted risk effect fixed million are the hedges price price that the hedges and sold propane with or the total during quarter compared The second to of commodity principally matured X%, impacted hedges favorable management, impact second acquisition prior as the were Total activities the of the quarter was and $XX.X volatile in benefit-related expenses, hedging business. due in the a properties fiscal gross well I million of areas markets of or for of and due Interest growth. G&A increased to to the refinancing and With reduce tanks third associated of provisions year. adjustments the the lower that than impact of selling higher primarily on payroll were our period. expense to margin higher was at prior the of or balance a $XX the for sheet. capital of practices, the in higher from $XXX.X customer due of the the and higher driven respect accounts, Improvement rising the significant with commodity quarter quarter during of environment, combined by positions $XX.X net mentioned rise favorably from for of a were past million $XXX increased for that vehicle our to doubtful than X.X% notes inflationary million margin and for debt. comprised lower purchases prices. tranches that our impact pressures $XX.X long gross to operating earlier, second year year. commodity of prices and commodity from many lower steel our outstanding quarter prior level million costs, second the turning spending $X.X across million million and leased, to $X.X of senior rates And at expenses, was and to to support fuel previously of of cylinders compared several other that prior higher XXXX, Primarily the as of year, quarter average two XX.X% lease, million

March quarter, second the investment in expenditures, The was year. With to last Hydrogen our the trailing borrowings as repayment, repayment, leverage million capital March of times. X.XX our Oberon earnings period, debt the a consolidated our We cash of in we million needs, from lower Revolver. improving debt $XX.X in XXXX, XXXX our resulted ended ratio total million investments the the of in equity the under debt funded seasonal for second During increase combination repayments outstanding quarter during operating repaid activities. of $XX XX-month and and capital loan flows Fuels, than March working $XX.X with Independence with debt additional

Back We have Mike. balance on fund opportunities flows now utilizing arise, historically and our to excess strategic capital further period focused needs and to remain to of cash the working sheet, high initiatives. if strengthen seasonal you, growth through moved

Mike. Thanks,

to April unit of Board announced distribution that As per to our of Xrd. unit. on XXXX, in XXst, paid an May quarterly our The respect rate our declared as May distribution per $X.XXX fiscal second common of $X.XX of will be record equates Supervisors annualized common on holders quarterly of XXth of our of quarter unit

supplies, behaviors factors and inflationary consumer and customer service the prices, of stay focused many for challenges a most of safety, customer of efforts and and our to post-COVID face aspects into our business face in in shifting growth historically and creeping the high conservation work heating commodity from highest so phase, expenses, the personnel resulting to our the supply continue significant to managing their challenges hiring prices. delivering base have are we in managing that team our the own upstanding environment. continued standards executing as recent in play on adhering All risk outstanding commodity customers, inflationary propane challenges continues drive job management to spending And help net to on retention on as well economy. base customer budgets back do to volatility operations Namely, this proud extremely season, our an initiatives Looking the growth. and in how the

coupled XX-month period, remains improvement benefits strong and of With of with expenditures nearly the times. savings interest the in adjusted million the earnings trailing $XX management in EBITDA, our X.XX prudent at in coverage distribution capital

expansion strategic XXXX. leverage Our for the market and business operationally range. leverage X.XX transition and of opportunities both carbon long-term down is build-out support the to continue our our of ongoing position to in and efforts, Xx strengths growth our Leveraging both while an March X.XXx acquisitions markets toward business, and end our sustainability. continuing investments country's for mid will the renewable of toward make energy our propane strategic And bringing lower energy at and through to the also growth platform look core greenfield to lower trending and fostering organization, at compared also the financially future through we're we as target

XX-year all leveraging of a local of is the support story years. grow that next more For has to of its for feel ongoing operating country, business around of a than needs carbon and safely a the tradition and that energy the positioned business competitively country's compelling very today, communities is meeting with economy, to best-in-class to transition customers reasons a offer that model the energy we its expertise the discussed low a the XX-plus help we

communities their I'm success the extremely of times, efforts. at X,XXX continues on our focus and work our employees challenging the comfort be and to in our of proud rooted ongoing foundation the Propane than all these of and we more and hard despite safety unwavering Suburban of serve. Finally, customers their

us open appreciate questions. As that? to and and your the with support Rocco, now today, call could attention for like always, help we would you

pressing you [Operator Baramov Instructions]. today's to pick And up sir. your were We'll Fargo. roster. [Operator Yes before Instructions] Please you ahead. Ned comes a from please momentarily speakerphone, question go we pause handset Wells our using If ask that keys. the first assemble with

Much you selling little morning. Could talk any specifically? on gross for Good you the it. margin management questions. the taking initiatives Could provide margin more and going management your appreciate details Thanks thoughts about bit Hi. maybe price additional a on forward? trajectory

challenge your in for it's that now, in very commodity customers Sure, only market. to environment with we're out for like also, right Not bills, there. Ned. higher Thanks contend a have our again Obviously interest. experiencing but a real energy operate we competitive

creeping is our best costs people this management think base. that, risk so I environment as margins in fuel insulate with We're any costs, in through then it of of volatility maintenance to expense in we seeing to can So, prices. make that to the I are no the market. Ability that we heck job business experiencing just easy expense we think of running inflation have a in understand up so the do the is on the field activities Margin the our investing our a costs. you're heck the of operations. sort comment to increasing a many that's to many, as try overall we're commodity heavily with job what aspects I'd base, expand when in like last But to top do manage expand people up. On experienced of in our a order to as And the margins, managing payroll keep managing, task. with rising to say, in many talk have you ability years about and been much that we've prices we've is what cycle. I the business, prices selling And over

a very combination And But so, no environment very commodity as we you when very level, have to across board pointed a our solid commodity a on out the overall in easy a level at in it's performance a prices good Mont of field time. task the a strong margins. seen basis risk long something good for margin $X.XX management Belvieu in remarks, price have to very, sure of haven't opening management deliver gotten is Mike that the volatile

guess, out on but to last I also customer That's volumes point, price. conservation given that in the you helpful. were weather in due to And press commodity high release the largely lighter maybe quarter pointed that

So maybe about of talk if on if you customer the customer point impact quarter and you wholesale a the price the also among base. conservation on propane could conservation expand this a in little and could patterns that your bit triggers quantify basis from

prices get historically different Yeah, a so, at base. we've I'll see to Belvieu to $X.XX seen when the to the in really is or a or first point you customer that close $X.XX, which take a start second above behavior start

about least And at or yesterday, so Belvieu now a closed today, right at $X.XX.

conservation. of experience you're above we've now a say, $X.XX in the so now level stuck of mean, when has sort as Belvieu quite is you bit for that with of a a at years level up as $X.XX I certainly you to been So, we're or I the level $X.XX the been when the $X.XX typically you experience and the a in that conservation that the think have last that get And $X.XX range, for range I've seen you're, company otherwise low time. we since -- certainly that in but XX impact don't been that of

not per of figure how it's impact quarter it's bit that could on to conservation exact an not to of behavior; weather a those pure exact you science is probably customer in versus sure all say together that trying an would could is is But of overall down kind As customer the and conservation out volumes. down the were probably see couple of it's much I Ned. put factors percentage tough exact you quantifying of science. just Volumes far it, but an a usage year-over-year due coming as tell but the for is to X%

you. Understood. Thank

Gentlemen.

roster. As Fargo. to a we We'll have assemble from a our momentarily Instructions] pause Baramov go looks follow it like Wells reminder, Please ahead. [Operator And Ned up with

one Thanks just more. again,

distribution the year. the full-year in distributions X.X% So, of to we higher second seen last step-up quarter complete fiscal after

the maybe distribution forward? on going could board's So, talk increases most about recent you view

Yeah, Ned.

how every look very I obviously think all along take said what to we is we've allocate hard as quarter capital. a to

think see us with that now of is deploying I build-out to of respect about towards platform. we in right renewable we're the front our excited opportunities what capital the

We have market look up a as continuing to as activity continuing and that at support propane and to opportunities starting you businesses as pick come number lot to the we're heating to of exciting that, things as come out of that a more well see season, again we're that in effort normal.

that a balance. cash generating. the have business it's this that So, capacity flow we is fortunate We're generating excess

If million to our but balanced deploying trailing also flow we in over really you a growth, which still approach take level generating $XXX point investing of three-time. the getting demonstrated our mid in a leverage we capital, as look to months, the at quarter, second cash towards a get of in target XX is excess we've we're and where

reduction. some on that We as -- work really still renewable the opportunities. to as platform we're propane So, build-out well have still our still of debt on the are opportunities for we horizon have do

implications, can of participating strategic holders this we opportunities time transition the and term there's opportunities the XX with of growth and a energy have sustainability obviously clearly not So renewable capital years, the here to provide to next economy from the and unit that and as fruition, deploy of we'll business a for upon for do long-term, long-term us our propane that comes only long for migrate have but business also diversified propane low-carbon period that ensure into in distributor we to long-term distributor is this growth us. that through a stay where

capital of about, saying good very, ahead view. of opportunities we to very long way about there's long-term we how to a be that disciplined us think and we have great deployment it's that and lots in So, feel

Thank you.

question-and-answer today's the session. like remarks. back conference Ladies I'd to and gentlemen, this for to over Mike the Stivala turn closing concludes

quarter Great, and the [Indiscernible]. all talking and interest. the us today and wish happy you and Thanks help start stay our to relation look very your for to your to We for joining season third to In you earnings in Thank in for a again safe. forward you. healthy meantime, summer you August. thank all I

attending you, This Thank We conference call. concludes for sir. today's today's thank presentation. all you

wonderful disconnect may lines now a have your You and day.