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News2019-02-27T18:24:31-04:00
Suburban Propane Partners, L.P. Announces Record Second Quarter Earnings and Declares a Quarterly Distribution of $0.60 per Common Unit

WHIPPANY, N.J., April 22 /PRNewswire-FirstCall/ -- Suburban Propane Partners, L.P. (NYSE: SPH), a marketer of propane gas, heating oil and related products and services nationwide, today reported record earnings for the second quarter of fiscal 2004 ended March 27, 2004. Its Board of Supervisors also declared the previously announced increase in the quarterly distribution from $0.5875 per Common Unit to $0.60 per Common Unit -- $2.40 per Common Unit annualized.

The second quarter of fiscal 2004 ended March 27, 2004 is the first full quarter that includes the results from the acquisition of substantially all of the assets and operations of Agway Energy. Net income for the three months ended March 27, 2004 of $92.6 million, or $2.97 per Common Unit, increased $34.3 million, or 58.8%, compared to the prior year quarter of $58.3 million, or $2.31 per Common Unit. Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased $38.6 million, or 52.2%, to $112.6 million for the three months ended March 27, 2004 compared to $74.0 million in the prior year quarter.

EBITDA and net income for the second quarter of fiscal 2004 were favorably impacted by the net result of certain significant items, mainly relating to (i) a $14.2 million gain from the sale of ten customer service centers in Texas, Oklahoma, Missouri and Kansas considered to be non-strategic, compared to a $2.4 million gain from the sale of five customer service centers during the second quarter of fiscal 2003; (ii) a non-cash charge of $5.6 million included within cost of products sold relating to purchase accounting for the Agway Energy acquisition; and, (iii) a $2.2 million restructuring charge related to the Partnership's initial efforts to integrate certain management and back office functions of Agway Energy.

Temperatures nationwide, as reported by the National Oceanic and Atmospheric Administration ("NOAA"), averaged 3% warmer than normal in the second quarter of fiscal 2004 compared to 2% colder than normal in the prior year quarter, or 5% warmer temperatures year-over-year. Retail propane gallons sold in the second quarter of fiscal 2004 increased 36.9 million gallons, or 20.2%, to 219.9 million gallons compared to 183.0 million gallons in the prior year quarter, primarily as a result of the addition of the Agway Energy operations in the northeast. Sales of heating oil and other refined fuels amounted to 110.6 million gallons during the second quarter of fiscal 2004. Revenues for the three months ended March 27, 2004 amounted to $574.6 million, an increase of $286.9 million compared to revenues in the prior year quarter of $287.7 million. The increase in revenue results from increased propane volumes, as described above, coupled with higher average selling prices on propane volumes as a result of higher propane costs during the quarter compared to the prior year quarter. Additionally, with the acquisition of Agway Energy, revenues for the second quarter of fiscal 2004 were favorably impacted by the addition of heating oil and other refined fuels, as well as increased service activities.

Combined operating and general and administrative expenses of $127.2 million were $52.3 million, or 69.8%, above the prior year quarter of $74.9 million. Operating expenses in the second quarter of fiscal 2004 included a $1.1 million unrealized (non-cash) gain attributable to the mark-to-market on derivative instruments ("FAS 133"), compared to a $0.4 million unrealized loss attributable to FAS 133 in the prior year period. The increase in combined operating and general and administrative expenses is primarily attributable to the addition of the Agway Energy operations, as well as increased professional services and travel expenses associated with integration activities during the quarter. In addition, higher employee compensation and benefit related expenses associated with the increased business activities and higher profit levels and higher pension and insurance costs were experienced during the second quarter of fiscal 2004 compared to the prior year quarter. As was the case in this second fiscal quarter, the Partnership expects to incur additional restructuring charges and other costs to integrate the combined operations during the third and fourth quarters of fiscal 2004 in order to achieve the anticipated synergies from the Agway Energy acquisition.

Depreciation and amortization expense increased $2.4 million, or 35.3%, to $9.2 million as a result of the impact of the tangible and intangible assets acquired. Net interest expense increased $1.9 million, or 21.3%, to $10.8 million in the second quarter of fiscal 2004 compared to $8.9 million in the prior year quarter. The increase in net interest expense is a result of the net impact of the addition of $175.0 million of 6.875% senior notes associated with financing for the acquisition of Agway Energy, offset by $42.5 million lower amounts outstanding under our 7.54% senior notes.

In announcing these results, President and Chief Executive Officer Mark A. Alexander said, "We are extremely pleased with these record results achieved during the first full quarter of operation following our December 2003 acquisition of Agway Energy. This record performance provides an initial indicator of the potential opportunity and added strength of the combined operations. To mark this successful beginning, we are pleased to reaffirm our previously announced distribution increase, the eighth such increase since the Partnership's recapitalization five years ago."

The Partnership's quarterly distribution of $0.60 per Common Unit for the three months ended March 27, 2004 will be payable on May 11, 2004, to Common Unitholders of record as of May 4, 2004.

Suburban Propane Partners, L.P. is a publicly traded Master Limited Partnership listed on the New York Stock Exchange. Headquartered in Whippany, New Jersey, Suburban has been in the customer service business since 1928. The Partnership serves the energy needs of approximately 1,100,000 residential, commercial, industrial and agricultural customers through more than 400 customer service centers in 35 states.

               Suburban Propane Partners, L.P. and Subsidiaries
                    Consolidated Statements of Operations
     For the Three and Six Months Ended March 27, 2004 and March 29, 2003
                   (in thousands, except per unit amounts)
                                 (unaudited)

                                  Three Months Ended       Six Months Ended
                                 March 27,   March 29,   March 27,   March 29,
                                   2004        2003        2004        2003

    Revenues
      Propane and refined fuels  $463,512    $266,423    $650,712    $439,730
      Other (a)                   111,066      21,231     144,535      47,164
                                  574,578     287,654     795,247     486,894

    Costs and expenses
      Cost of products sold       346,736     142,231     457,035     234,712
      Operating                   109,840      64,709     172,594     123,234
      General and administrative   17,392      10,149      27,894      19,170
      Restructuring costs           2,179           -       2,179           -
      Depreciation and
       amortization                 9,223       6,800      16,452      13,773
                                  485,370     223,889     676,154     390,889

    Income before interest
     expense and provision
      for income taxes             89,208      63,765     119,093      96,005
    Interest expense, net          10,770       8,876      20,481      17,732

    Income before provision for
     income taxes                  78,438      54,889      98,612      78,273
    Provision for income taxes         83          37         166         167
    Income from continuing
     operations                    78,355      54,852      98,446      78,106
    Discontinued operations:
      Gain on sale of customer
       service centers             14,205       2,404      14,205       2,404
      Income from discontinued
       customer service centers         -       1,050           -       1,050

    Net income                    $92,560     $58,306    $112,651     $81,560
    General Partner's interest
     in net income                 $2,616      $1,484      $3,124      $2,075
    Limited Partners' interest
     in net income                $89,944     $56,822    $109,527     $79,485

    Income from continuing
     operations per Common Unit
     - basic                        $2.52       $2.17       $3.31       $3.09
    Net income per Common Unit -
     basic                          $2.97       $2.31       $3.78       $3.23
    Weighted average number of
     Common Units outstanding -
     basic                         30,257      24,631      28,942      24,631

    Income from continuing
     operations per Common Unit
     - diluted                      $2.51       $2.16       $3.29       $3.08
    Net income per Common Unit -
     diluted                        $2.96       $2.30       $3.77       $3.22
    Weighted average number of
     Common Units outstanding -
     diluted                       30,372      24,692      29,053      24,688


    Supplemental Information:
    EBITDA (b)                   $112,636     $74,019    $149,750    $113,232
    Retail gallons sold:
      Propane                     219,945     182,956     351,862     322,890
      Refined fuels               110,580           -     112,451           -

     (a) Other revenues principally represent amounts generated from the sales
         of appliances, parts and related services.

     (b) EBITDA represents net income before deducting interest expense,
         income taxes, depreciation and amortization.  Our management uses
         EBITDA as a measure of liquidity and we are including it because we
         believe that it provides our investors and industry analysts with
         additional information to evaluate our ability to meet our debt
         service obligations and to pay our quarterly distributions to holders
         of our Common Units.  Moreover, our senior note agreements and our
         revolving credit agreement require us to use EBITDA as a component in
         calculating our leverage and interest coverage ratios.  EBITDA is not
         a recognized term under generally accepted accounting principles
         ("GAAP") and should not be considered as an alternative to net income
         or net cash provided by operating activities determined in accordance
         with GAAP.  Because EBITDA, as determined by us, excludes some, but
         not all, items that affect net income, it may not be comparable to
         EBITDA or similarly titled measures used by other companies.  The
         following table sets forth (i) our calculation of EBITDA and (ii) a
         reconciliation of EBITDA, as so calculated, to our net cash provided
         by operating activities:


                                 Three Months Ended       Six Months Ended
                                March 27,   March 29,    March 27,   March 29,
                                   2004        2003        2004         2003

    Net income                   $92,560     $58,306     $112,651     $81,560
    Add:
      Provision for income
       taxes                          83          37          166         167
      Interest expense, net       10,770       8,876       20,481      17,732
      Depreciation and
       amortization                9,223       6,800       16,452      13,773
    EBITDA                       112,636      74,019      149,750     113,232
    Add / (subtract):
      Provision for income
       taxes                         (83)        (37)        (166)       (167)
      Interest expense, net      (10,770)     (8,876)     (20,481)    (17,732)
      (Gain) / loss on disposal
       of property, plant and
       equipment, net                (79)         26         (161)       (320)
      Gain on sale of customer
       service centers           (14,205)     (2,404)     (14,205)     (2,404)
      Changes in working
       capital and other assets
        and liabilities          (75,477)    (47,740)     (91,154)    (69,243)
    Net cash provided by
     operating activities        $12,022     $14,988      $23,583     $23,366
    Net cash provided by /
     (used in) investing
     activities                  $14,204      $3,235    $(200,791)       $674
    Net cash (used in) /
     provided by financing
     activities                 $(17,446)   $(14,533)    $222,869    $(29,124)
SOURCE  Suburban Propane Partners, L.P.
    -0-                             04/22/2004
    /CONTACT:  Robert M. Plante, Vice President & Chief Financial Officer of
Suburban Propane Partners, L.P., +1-973-503-9252 /
    /Company News On-Call:  http://www.prnewswire.com/comp/112074.html /
    /Web site:  http://suburbanpropane.com /
    (SPH)

CO:  Suburban Propane Partners, L.P.; Agway Energy
ST:  New Jersey
IN:  OIL FIN
SU:  ERN

AA 
-- NYTH036 --
1290 04/22/2004 07:12 EDT http://www.prnewswire.com