Suburban Propane Partners (SPH) 14 Nov 242024 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Suburban Propane Partners Fourth Quarter and Fiscal Year-End Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, November 14, 2024.

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

Thank you, Emily. everyone. morning, Good joining Fourth for morning our for Thank and us Full XXXX Quarter Call. Year fiscal you this Earnings Conference

this Officer; Operations. and Stivala, Mike Centeno, our Officer; Financial morning President and Alex Steve me of Vice Officer; Operating Executive Chief Mike our Chief Boyd, Senior Chief Kuglin, Joining President are

will year the will with we our along we quarter the business. morning, prepared results, we've open our This our XXXX fourth questions. outlook for to financial fourth review quarter Once concluded and full session current remarks,

Securities Our business the conference relating call meaning and operations. of contains future Act and forward-looking and expectations statements Section within XXE of condition of Exchange partnership's of financial amended, as XXXX, predictions to the results the

We've website can that or from which suburbanpropane.com. earnings persons important which partnership of These forward-looking such expressly statements press its listed forward-looking oral subsequent in acting the as statements written qualified at All on some cautionary could differ release, entirety behalf our be materially actual statements in to involve cautionary factors results those by their and are on forward-looking to discussed referred attributable in to statements, such viewed uncertainties. the statements. are certain cause our and risks

filed obtained may the SEC. the or on report copies disclosure be the Form risk about year annual filed, additional Our XX, contacting November Once be XX-K fiscal on which and partnership September will factors, contains for XX. XXXX, ended regarding by statements or forward-looking

this For non-GAAP call. on discussed be measures will

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

be in website. Relations through available of the Form our Investor link will X-K section a

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

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

devastation very and homes Southeast and the Western fiscal territory strong weeks like hurricanes Hurricane X that a each accomplishments discuss XXXX, comment losses the and on to other. North hit of Before September October and significant X in moment early we a sadly, for Milton delivered to Carolina, have performance within where I'd market in presence. of historic life I Helene and late our especially take

In employees horrific in home, reps service local challenges customers deploy assess safety immediate secure the executed operating I'm plan some our teams and the of customer preparedness our to face the situation, our and instances, technicians, storms. personnel management of so communities personal and of drivers, to the many serve in short conditions local proud was quickly dedication and service at assets remarkable. of nothing response are of the how emergency our and our aftermath

area of our relocate storms to help to our leadership ground, I'm customers serve when of the our which protect of thoughtful higher in all team preparation was advance to do the so. for and safe also to proud the fleet vehicles us it prepare

propane into to deliveries the a to of We technicians reflective operating people country, local is true teams for service help our dedication increased the affected The model. our also from meet the our the culture and our and numerous and around volunteer travel testament to resiliency areas demand of drivers related work. of had is

focus unwavering our our they us and excellence need when most. to commitment Our on serving customers

support to Carolina. long-term and in with our work also partner, American Florida their efforts disaster closely North relief the We Red Cross

for efforts major their hurricanes damage. from ones our The or work. go was thank these of lost experienced the have incredible hearts to While want devastation truly been certainly to teams and our that those inspiring, and out I loved unthinkable everyone

clean help of propane and power in a recognition of energy propane increased the of final these one need. critical note, as portable, to equipment demand resilient distribution power upon applications, storms communities and on relied for local heating including in and shelters, across food recover the versatile, generation, to powering supporting And source, backup aftermath truly is on-demand that vehicles local communities has

XXXX, The unseasonably performance warm the Now of continued past of ended end for categorized looking certain the months of in by into September. third was which quarter fiscal year temperatures heating country. heat at peak the extreme the with at periods our that during parts

heating keeping impacted service experience were we heating the safety to in the expenses. While customers, selling through our managing managing a controlling and customer purposes, our warm our to priority, negatively personnel our highest their prices job of operating did as leverage things again exceptional providing can control, an able challenging weather namely for season once and business outstanding demand they managing

particularly addition, that helped offset base some segments initiatives in customer customer base combined our past with several high-quality growth contributed customer our propane over In the counter to the acquisitions, growth demand. seasonal benefits the in recent retention net heat-related and shortfall years, of of

when XXXX year prior exclude impact down fiscal compared the X% in fiscal week were operations As to result, for of a just the you of additional XXXX. the volumes the

compared the growth to EBITDA million I'll of fiscal earnings highlight Notwithstanding prior in XXXX our prior year, number the the we of initiatives. lower year. XXXX was in $XXX compared long-term unfavorable the a $XXX Adjusted key fiscal support to for in had few. million accomplishments strategic a weather and

of the business. facility efficiency in RNG production the a Arizona, and that operating our and excellence platform propane enhance known to RNG are capital culture we of driving safety for our deployed within operational We Stanfield, performance in

day, increase reaching year. MMBtus have to of the resulted compared representing levels, prior increased average a fiscal injection XX% RNG production efforts MMBtus, peak Our X,XXX daily a RNG of X,XXX for overall an injection in per XXXX

facility install at in and digester upgrade We and engineering for advanced activities RNG anaerobic equipment to construction our projects New capital Columbus, Upstate York. our also Ohio

both of expect in MMBtus minor generating attribute on all to we we to fertilizer half are and run delays sales. year, second some per be approximately credits revenues at fully rate from capacity, we RNG XXX,XXX RNG environmental expect fees, facilities Once Although permitting operational facilities be sales experienced with zoning, continue and the XXXX. to X air operating tipping

new In by for addition, Act sales in assuming in provisions under credits costs construction Upstate production our tax credits. the Inflation XXXX tax place investment eligible for will administration the facility Washington, partially be in New the be offset RNG the January the starting of Reduction will York and remain

We platforms. independence also continue towards they to support their subsidiaries our unconsolidated as on make scaling hydrogen fuels over and progress

business, integrated X delivering carbon plus well-run our and lower level businesses total in engage successfully X% We delivering to are blend States Florida, we Southern acquired the to of a a are we in level propane footprint. at California, blend higher to United propane forklift Texas our at are further forklift only retailer In continue which and that in markets the test rDME, currently we low and approximately propane in million. the a strategic $XX consideration for carbon core Nevada customers

Mexico a inclusive XX acquisition in noncompete Propane last to customers than service and XX,XXX into Suburban New acquire the $XX we propane million, on our Just week, Arizona, of employees future welcoming new larger expand territories and investing closed family. payments to more

from We different also active greenfield continue expansions our to increased XX fiscal XXXX. to number the foster in of and XXXX the growth in the in fiscal X country efforts market parts of of expansion

as we carbon, propane propane overall have in drive XXXX. carbon propane platform, gallons renewable for lowering exciting additional number energy overall renewable lower technology maintain they a efficiencies also business additional experience. our come our further enhance of contracts online to the operating And in initiatives incremental and part existing customer We customers to a propane infrastructure for of footprint. secured to alternative their on focus to their continue renewable which offer is We while

fund the our With that investments generating core excess provides, debt cash in projects able capital and the increase business in flow acquisitions strategic a propane propane were million. capacity $XX to with our of we modest

culture in We company fronts were for in recognized and a our career development tremendous Women that fosters diversity opportunities. to gender in transportation received Trucking number by Finally, women as top XXXX. efforts for recognition Association the work on of a a

For year our Times their employers in veterans XXXX of were in we row, veterans families. for supporting service by for the recognition to the and one commitment Military named best second of a members,

our were of we finalists third S&P For a gases Awards the in energy. for XX of investments renewable the the one category Global strategic Energy transition energy in year liquid row, in

several corporate a X Awards years. the the category SuburbanCares impact in of time S&P Energy our as prestigious for the received including awards, in platform fourth finalist Global And

fiscal the despite challenges unseasonably So successful presented 'XX. by we very had warm a weather,

we executing making on our of growth plan long-term a are strategic investments strategic and transition to and maintain strong patient in to to We sheet. disciplined while energy remain foster the renewable business alternatives, balance growth core energy the propane lower carbon order in our

I later, little closing remarks. some provide A will

results this point, year who Kuglin, over detail. and Mike? it at let Mike me will full our discuss quarter turn to more in fourth However,

compared in to some focusing on by weeks I Mike, results, to and in remarks. good included operations commodity other costs previous in year, an year. $X.X reporting in with in certain an to million the prior full toward consistent my morning, of on give of the noncash on Thanks, XXXX, the fiscal which transaction in impact be which quarter and XX unrealized million of our year, with of mark-to-market XX To compared will acquisition-related start the fourth weeks hedges, end and the noncash loss everyone. adjustments the our year color prior $XX.X fiscal along resulted items excluding unrealized unrealized prior of XXXX, loss

compared was to XXXX to or for million $X.XX million net XXXX in or common items, in $XXX $X.XX was common income these $XXX.X fiscal unit $XXX.X year. prior $XXX Including million the the per unit year. fiscal per million Adjusted EBITDA prior for compared

heat-related expenses RNG gallons, weather base, our our benefited X.X% sold which heating much in of primarily mentioned, operations. Retail our was warmer operating greater earnings million widespread As growth warm in margin and impact controlling year, demand than of contributions gallons heating XXX expansion, unit prior the season, weather Mike XXXX fiscal from the XXXX most lower customer season. impacted were our due from from to the resulting by were for lower during but of propane throughout fiscal the

impacted our In to addition, million operations by approximately comparison prior the was additional year. of the fourth XXXX, of in gallons the quarter which fiscal contributed week year-over-year the X.X volumes of

the of than the were followed X% to heating year. normal, burst temperatures normal a February, prior weather, warmer by the XXXX season, the and middle of of X% warmer warmer reflected the month year, temperatures warmer than year both normal prior the pattern and prior than for of average during warmer the which XX% average and January, cold albeit than With in respect was XX% by extremely X% the XX% the which cooler months prior than followed to critical was month, brief the than temperatures fiscal that December normal The for year. weather were than warmer

same being the period prices From of higher year, of half prices resulted a per during the wholesale fiscal half in but for first the perspective, XXXX, trended last year commodity than basis essentially prior full the Mont second the wholesale of Belvieu, prior generally to were the year. gallon, compared year average flat propane much than $X.XX and in lower

propane the time of week last Information higher of prior the year. end most to than the were at the is barrels, According report Energy inventories X% historical than which Administration, averages X% the at higher year million recent this from and U.S. XXX for

of the higher $XXX.X mark-to-market year, or the all million propane total the RNG slightly from due million that to earlier, set higher to our commodity for $XX.X impact and adjustments margins hedges XXXX gross operations. sold extent prior to lower contribution fiscal on unit X.X% of I compared our margin by primarily propane an volumes Excluding decreased margin mentioned

fiscal and to lower of compensation from mark-to-market costs, operating lower was general million partially management, resulting due price G&A one X.X% increased and unrealized acquisition-related volumes by a higher industrial unit operating The a week $X.XX adjustments, variable X.X% $X.X expenses sensitive benefit-related nominal costs to prior operations of in increased gallon volumes. With $XXX,XXX self-insurance and fiscal they in during operating costs than volume-related and excluding payroll for administrative or of volume expenses noncash margins to effective be of concentration less $X.X pension charge and million XXXX higher the and to weather commercial expenses the expenses reported XXXX propane the impact the in substantially primarily in XXXX. and costs of mix less offset expenses, or increase residential Excluding offset settlement fiscal of by and higher to reported compared tend selling respect impact in per during variable fiscal year. XXXX

at XXXX facility. for revolving $XX.X of for credit $XX.X year, of capital to expense performance higher average from million the XXXX $XX.X due RNG York. Columbus, with Upstate Total and and $X.X higher production year under our Ohio, due operating increased fiscal New level a facilities million construction outstanding our advancing Stanfield, the million, growth borrowings in Interest improving at million Arizona, spending facility compared capital fiscal prior primarily efforts in than and prior our to of to was associated

to is For potential million fiscal the between $XX $XX million, and is expected propane to operations, XXXX, and be credit. levels, CapEx our capital consistent $XX excluding which with expected RNG investment projects spending for to million, for the $XX historical between range benefit tax of million

tax is tax placed expect credits to tax market. We rate will in in range equates credit million capital qualify monetizing Upstate at service. transfer tax XX%, of production tax the in credits spending at investment in $X to $X credits We and and the of earned anticipate million RNG the York facility credit when be a for investment our to asset the which New a

our of to results. fourth XXXX fiscal quarter Turning

million in unit loss excluding $X.XX With the loss I mentioned the our earlier, for of fourth in compared or XX business, common or of a quarter the operations of quarter. net nature effects the a reported $XX seasonality we in typically million compared of quarter we fourth Consistent net fiscal of the loss unit both said, $XX.X given weeks to prior XX certain a to net our years, year. the year. common the with $X.XX items per calendar, report included fourth XXXX fiscal that As prior per of weeks and of the for

was during for quarter sold to prior the compared $XXX,XXX X.X% year. EBITDA fourth Retail to fourth the year. quarter $X propane the prior in compared gallons decreased million Adjusted the

of fourth However, were of quarter propane the flat excluding additional volumes the XXXX, the year. of impact in week to the fiscal compared operations prior

X.X% Combined or expenses due and due sold. volume-related week of $XX.X to gross Total less operating primarily volumes decreased to variable primarily and compensation $XX variable decreased operating the G&A operations. of X.X%, impact lower or margins lower lower million million one costs,

balance to Turning sheet. our

September RNG the of and capital our During revolving $XX borrowings to million for as debt under propane facilities make expenditures flows investments of our unconsolidated activities subsidiaries. Total cash strategic well of a total credit end year at fiscal X consideration XXXX increased at combination as and construction we to year, fund a utilized growth operating from facility to acquisitions $XX.X our consolidated ratio at million activities fiscal our outstanding fiscal compared our and additional the in to production X.XXx. of end the XXXX leverage was the advance

acquisition remains on warm metric RNG to following from relative leverage well of requirement the and elevated earnings, Although balance historical covenant continue levels sheet. remain our strengthening X.XXx debt on of impact the remain to focused within weather the and we the

and within to strengthen opportunities renewable scenarios fund as the and substantial amount growth continue capital a propane utilizing even generates portfolio. sheet strategic business growth and platform remain our focused RNG will core our to to balance warm energy of as business cash weather cash free on excess flows our Our to flow the of well the under as planned fund arise,

more than initiatives. ample our our revolver to ongoing have capital and strategic support under expansion We capacity plans growth borrowing

we long-term to on also the goals, our of As stay strategic on continue sheet. maintaining execution a focus strong focused balance we

that, it Mike. back With to I'll turn

Mike. Thanks,

equates respect in unitholders As of common Supervisors release, as an to of paid of $X.XX XX announced quarterly distribution to of on was XXXX, common of press The X. our 'XX fiscal record Board rate of of declared unit quarterly our $X.XXX quarter fourth November distribution in per per our our unit. October annualized November the which

So long-term just our strategy. remarks few closing a regarding

we to the to carbon journey lower and customers future. are local before, times support energy on our many uniquely a communities stated I've positioned As

establishing by gas competencies safety, core the and solution a customer lowering new much distribution the gas about by and to greenhouse as greenhouse service discussion expertise quo and is critical emissions. a There right paradigm as the the our reducing energy. link in logistics to believe completely in Given emissions. Many the sole arrives energy electrification local is status the what of future debate pushing solution disrupting transition and

approach affordable the meet the world long that best technology the needs to an of have in needs a leverages and sustainable way. contended the for growing We applications resilient available energy all-of-the-above society that

form footprint rDME-blended future. Suburban solutions renewable immediate the traditional in carbon Propane that lowering across invest solutions the will many benefits carbon and provides are in has shape And lower of new, even today the we propane that to applications. energy continuing to

by future being legacy Our our is shaped reliability, is on built innovation.

our efforts you, enhancing environmental value and for sustainability not unitholders. communities, are just Our long-term responsibility, in about opportunities people for valued are the about they our creating investing

to for presented fiscal very want successful thank from employees the Propane X,XXX make many more another despite Finally, season. year the I this heating past XXXX for than Suburban helping challenges

and your open As season. always, wish families and you very holiday I everyone up support questions. happy call to your would a attention the and healthy and remain safe hope appreciate like for now we We and

Emily, with So to that? want help us you do

And from [Operator Mizuho. Gabe Absolutely. first comes Moreen from Instructions]. question your

on about you Mike, maybe New start made I asking can acquisition Mexico. Arizona, recent out that in the

you wondering markets are the that Anything transaction your looking attractive Just things particular tuck-ins. genesis that expect such how engage and some propane further? then of it front on third-party seeing from little larger also recent of seems the a you're than to M&A a that those about in maybe standpoint, bit whether

Sure. Thanks, Gabe.

market New is we're years a what embracing bigger to is a really expansion we've from of and a market that a generally do us, in a Mexico Mexico establish acquisition came New then has to population growth fills seeing We part And expanding, in which which And this just that in propane. some a footprint. bit, did New started actually from it Mexico. good begin was market of been acquisition ago to of been smaller expanding a -- efforts. couple

so attractive And a very well business, was run. it very, really

It's acquisition establishes deal it As down and the we -- good can single size, in energy in good market XX,XXX real have quality the growth. acquisition you XXXX, of footprint see, since really business. the largest demonstrates this demonstrating a energy our confidence customers. that's significant largest in since a the which a been

As to investments not while with we our patient is the M&A, it our propane part and deviating propane in think renewable in pretty doing continue where strategy I energy. our invest our other X-pronged, growth we're from long-term a also business, are in balanced of strategy, invest way. we in in far core future as And

continuing definitely opportunities make good we're So active sense. and we're at look to that

Appreciate that. wondering Maybe then if things I at seems is go inflation if to of the are business there's trending. think like year. and and I'm can this also a kind handle just for about It expectations the you really got ask cost past how more there? on how you underlying cost propane outlook

Yes.

I pretty think a the stabilization infrastructure. seen we've cost of good

operating XXXX fiscal kind year, this only the had, was to have a a tough performance the about scenario our effort X.X% flex overall remarkable weather part weather. in and to operating and field think think a is weather I when of with on tremendous we of that model up flex as to really to testament and be our we able get G&A increase opportunities to to expenses doesn't cooperate

to of been able to seeing what think I to you've a Suburban comes it's the way. in our accustomed in whatever Propane be business So manage lot probably

follow here picture changing D.C. with with the I question up bigger just And it. then administration in Got a maybe if could shortly.

and any impacting like tax how the business, any curious there? see whether credits thoughts. opportunities you're your the or RNG out Just outlook for viewing the you risks wondering see Just

Yes.

predict. like benefits as of EV I I is fact up to of we country. less lowering is all to But propane mean continue I to I bit that focused approach, little solution doesn't a think EVs, activity continued the despite should the think as little in as carbon mandating above Obviously, the opening still on to the things a and which do see won't genuine benefits a maybe be conversation I us one a that, today. that have more a viewed think think investment perhaps early it's really

X years, infrastructure their maintain for making footprint. current to innovate it the dramatic allows carbon to we investments to coming a lower even solutions in get society as X And just lower to without carbon

be there on So front, I think think benefit. I to seems a that

going believer to that tax it's and law unwind tax expect see projects to altogether, and IRA, production would And blue are aspects, see be that credits that credits, frankly, by expect the to firm hard embraced On I are of that a I certain in states. that I'm to seen. we'll happens. see the lot that red continue. that production there to be both But would remains the already there's what including a out

think at prognostication I that's our point. this

we this Mike I [Operator Instructions] will turn time, questions. remarks. the back call no to any have other closing At Stivala

happy you safe season. Again, Great. Emily. and quarter in after Thank with everybody talking forward you, I hope our February a has We to again results. holiday look first

thank So you.

conference. and Ladies the gentlemen, this concludes

now may your lines. disconnect You