Suburban Propane Partners Reports First Quarter Earnings and Business Developments

Suburban Propane Partners Reports First Quarter Earnings

Suburban Propane Partners, L.P., listed on the New York Stock Exchange under the ticker SPH, has recently disclosed its financial performance for the first quarter of fiscal 2025, which ended on December 28, 2024. Amid fluctuating market conditions and an evolving operational landscape, the company noted a net income of $19.4 million, equating to $0.30 per Common Unit. This figure reflects a decline from $24.5 million, or $0.38 per Common Unit, reported in the same period of the previous fiscal year.

In presenting these results, Michael A. Stivala, the President and CEO of Suburban Propane, emphasized that the overall propane volumes sold during this quarter were slightly lower compared to the previous year's first quarter. This decrease was attributed to unseasonably warm weather, particularly in November, alongside a less active crop drying season adversely impacting customer demand. However, the quarter's performance also highlighted positive developments. Increased demand within Southeast operations, mainly for backup power generation after Hurricanes Helene and Milton, played a role in stabilizing sales volume. Additionally, a recent strategic acquisition of a propane business in New Mexico and Arizona has broadened the company’s service areas, contributing to customer base expansion.

The quarter saw total retail propane gallons sold decrease to approximately 105.7 million gallons, a minor decline of 0.8% from the year prior. Contributing factors included a reduction in heating-related demand due to warmer than typical temperatures, alongside decreased agricultural need for crop drying. Interestingly, average temperatures during this quarter were measured at 7% above normal, with November witnessing an increase of 15% compared to typical readings.

Furthermore, average propane prices based on data from Mont Belvieu, Texas, rose by 14.9% year-on-year. The total gross margin achieved for the fiscal 2025 first quarter was $226.2 million, up from previous periods by $13.4 million, or 6.3%. This increase came despite the anticipated challenges faced, including reported unrealized gains and losses related to derivative instruments used in risk management activities. Without these adjustments, total gross margin reflected a slight decrease.

Operating and administrative costs for the reported quarter amounted to $150 million, an increase of $2.4 million compared to the prior year. This uptick was primarily driven by higher payroll expenses and legal matters settlements while being slightly tempered by reduced fuel costs.

An important highlight from the quarter was the recognition of $3 million underlying the income predicate from the partnership with Equilibrium Capital Group, showcasing an effective management of its renewable natural gas projects. However, the company noted a dip in renewable natural gas injection resulting from essential maintenance activities at its Stanfield, Arizona facility.

In addition to its financial metrics, the company also declared a quarterly distribution of $0.325 per Common Unit, accounting for an annualized distribution rate of $1.30 per unit, demonstrating its commitment to returning value to its investors.

Looking ahead, with the bulk of the heating season still to unfold, Stivala reassured stakeholders of their readiness to meet increased customer demands, particularly with improving weather patterns anticipated for the early part of the fiscal second quarter. This readiness supports the long-term objectives of Suburban Propane as it enhances its customer service efficiency.

Suburban Propane Partners has operated since 1928 and services approximately one million customers across various sectors. It promotes an environmentally friendly approach, focusing on alternative energy solutions and a commitment to community engagement. The company aims to remain proactive in the energy sector by adapting to emerging trends and customer requirements while continuing its legacy of dependable service.

Businesses looking to engage with Suburban Propane are encouraged to visit Suburban Propane's website for further insights and developments.