• News

News2019-02-27T18:24:31-04:00
Suburban Propane Partners, L.P. Announces Fourth Quarter and Record Full Year Results for Fiscal 2004 and Declares Quarterly Distribution of $0.6125 Per Common Unit

WHIPPANY, N.J., Oct. 21 /PRNewswire-FirstCall/ -- Suburban Propane Partners, L.P. (NYSE: SPH), a marketer of propane gas, fuel oil and related products and services nationwide, today announced its results for the fourth quarter of fiscal 2004, as well as record earnings for the full fiscal year ended September 25, 2004. Its Board of Supervisors also declared a quarterly distribution of $0.6125 per Common Unit -- $2.45 per Common Unit annualized.

Fourth Quarter 2004 Results

Consistent with the seasonal nature of the propane and fuel oil businesses, the Partnership typically experiences a net loss in the fourth quarter. For the fourth quarter of fiscal 2004, Suburban's net loss was $28.7 million, or $0.92 per Common Unit, compared to a net loss of $21.0 million, or $0.75 per Common Unit, for the fourth quarter of fiscal 2003. Earnings before interest, taxes, depreciation and amortization ("EBITDA") resulted in a loss of $7.6 million for the fiscal 2004 fourth quarter, compared to a loss of $6.4 million for the prior year quarter. As a result of the Partnership's continued efforts to integrate the operations of Agway Energy acquired in December 2003, EBITDA for the fourth quarter of fiscal 2004 included a restructuring charge of $0.6 million. In addition, depreciation expense for the fourth quarter of fiscal 2004 included a non-cash charge of $1.0 million related to assets abandoned as a result of the Partnership's integration efforts in the northeast operations.

Retail propane gallons sold in the fourth quarter of fiscal 2004 increased 7.0 million gallons, or 8.9%, to 86.0 million gallons from 79.0 million gallons in the prior year quarter. Sales of fuel oil and other refined fuels amounted to 48.0 million gallons during the fourth quarter of fiscal 2004. Revenues of $244.7 million increased $124.8 million compared to the prior year quarter, primarily from the addition of sales of fuel oil and other refined fuels, as well as from the marketing of natural gas and electricity in deregulated markets. Revenues from the distribution of propane and related activities of $143.7 million in the fourth quarter of fiscal 2004 increased $35.7 million, or 33.1%, compared to $108.0 million in the prior year quarter. The increase in propane revenues is attributable to the combination of higher average selling prices in line with a significant increase in product costs compared to the prior year quarter, coupled with the aforementioned increase in retail propane sales volumes. Additionally, revenues for the fourth quarter of fiscal 2004 were favorably impacted by increased service and installation activities in the Partnership's heating, ventilation and air conditioning ("HVAC") segment, which increased $13.2 million, or 133.3%, to $23.1 million, primarily from the addition of Agway Energy.

Combined operating and general and administrative expenses of $105.9 million increased $40.6 million, or 62.2%, compared to the prior year quarter of $65.3 million. The increase in combined operating and general and administrative expenses is primarily attributable to the addition of the Agway Energy operations, as well as anticipated increases in marketing, professional services and travel expenses associated with integration activities during the fourth quarter. Operating expenses in the fiscal 2004 fourth quarter include a $4.0 million unrealized (non-cash) loss attributable to the mark-to-market on derivative instruments ("FAS 133"), compared to a $0.3 million unrealized (non-cash) loss in the prior year quarter attributable to FAS 133.

Net interest expense increased 32.4%, or $2.4 million, to $9.8 million, compared to $7.4 million in the prior year quarter. The increase in net interest expense reflects the effects of the Partnership's issuance of $175.0 million of 6.875% senior notes in the first quarter of fiscal 2004 in connection with financing for the acquisition of Agway Energy, offset by the $42.5 million repayment of the third annual principal installment under the 7.54% senior notes during the fourth quarter of fiscal 2004.

Fiscal Year 2004 Results

Net income for the fiscal year ended September 25, 2004 was $59.6 million, or $1.97 per Common Unit, compared to $48.7 million, or $1.87 per Common Unit, in fiscal 2003. The Partnership reported a record level EBITDA of $137.2 million in fiscal 2004, an increase of $27.2 million, or 24.7%, compared to $110.0 million in fiscal 2003.

EBITDA and net income for fiscal 2004 were impacted by the net result of certain significant items, mainly relating to (i) a $26.3 million gain from the sale of 24 customer service centers primarily in the northern and southern central regions of the United States considered to be non-strategic, compared to a $2.5 million gain from the sale of nine customer service centers during fiscal 2003; (ii) a non-cash charge of $6.3 million included within cost of products sold relating to purchase accounting for the Agway Energy acquisition; (iii) a non-cash charge of $3.2 million attributable to the impairment of goodwill related to a small business acquired in 1999; (iv) a $2.9 million restructuring charge related to the Partnership's efforts to integrate certain management and back office functions of Agway Energy; and (v) a non-cash charge of $1.0 million included within depreciation expense attributable to the write-down of assets to be disposed of as a result of the blending of field operations in the northeast.

Retail propane gallons sold in fiscal 2004 increased 45.8 million gallons, or 9.3%, to 537.3 million gallons, compared to 491.5 million gallons in the prior year. The increase is primarily due to the addition of the Agway Energy operations in the northeast, offset to an extent by the impact of warmer than normal nationwide average temperatures. Temperatures nationwide, as reported by the National Oceanic and Atmospheric Administration ("NOAA"), averaged 7% warmer than normal in fiscal 2004, compared to 1% colder than normal in fiscal 2003, or 8% warmer temperatures year-over-year. Sales of fuel oil and other refined fuels in the northeast amounted to 220.5 million gallons during fiscal 2004.

Revenues increased $572.2 million, or 77.8%, to $1,307.3 million, compared to $735.1 million in fiscal 2003. On an operating segment basis, propane revenues of $856.1 million for fiscal 2004 increased $175.3 million, or 25.7%, compared to $680.8 million in the prior year. The increase in retail propane revenue results from the 9.3% increase in retail propane volumes, as described above, coupled with higher average propane selling prices as a result of higher product costs compared to the prior fiscal year. The Partnership's fuel oil and other refined fuels segment and the natural gas and electricity segment contributed $281.7 million and $68.5 million in revenues during fiscal 2004, respectively. Revenues attributable to the Partnership's HVAC segment for fiscal 2004 amounted to $92.1 million, an increase of $45.2 million, or 96.4%, compared to fiscal 2003 principally from the addition of the Agway Energy operations.

Combined operating and general and administrative expenses of $410.3 million increased $141.2 million, or 52.5%, from $269.1 million in fiscal 2003. Operating expenses for fiscal 2004 included a $4.5 million unrealized (non-cash) loss attributable to FAS 133, compared to a $1.5 million unrealized loss in the prior year attributable to FAS 133. The increase in combined operating and general administrative expenses is primarily attributable to the addition of the Agway Energy operations, as well as increased marketing, professional services and travel expenses associated with the integration activities during the year. In addition, higher employee compensation and benefit related expenses associated with the increased business activities, and higher pension and insurance costs were experienced in fiscal 2004 compared to the prior fiscal year.

Depreciation and amortization expense increased $9.2 million, or 33.5%, to $36.7 million primarily as a result of the tangible and intangible assets acquired in the Agway Energy acquisition, as well as from the $1.0 million non-cash charge described above. Net interest expense increased $7.2 million, or 21.4%, to $40.8 million in fiscal 2004, compared to $33.6 million in fiscal 2003. The increase in net interest expense is a result of the net impact of $175.0 million of 6.875% senior notes added in the first quarter of fiscal 2004 in connection with financing for the acquisition of Agway Energy, offset by a reduction in amounts outstanding under our 7.54% senior notes from the repayment of the second annual principal payment of $42.5 million during the fourth quarter of fiscal 2003 and the third annual principal payment of $42.5 million during the fourth quarter of fiscal 2004. In addition, interest expense for fiscal 2004 included a one-time fee of $1.9 million related to financing commitments incurred during the first quarter for the acquisition of Agway Energy.

In announcing these results, President and Chief Executive Officer Mark A. Alexander said, "We are extremely pleased with these record results and the outcome of several steps that we took in fiscal 2004. In addition to completing the major acquisition of Agway Energy, we generated nearly $40 million in cash from the divestiture of 24 customer service centers in non-strategic markets. We retired another $42.5 million of principal on our 7.54% senior notes, made a second voluntary contribution of $15.1 million to improve the funded status of our defined benefit pension plan and we delivered two distribution increases to our Common Unitholders during the year -- our eighth and ninth increases in five years."

Mr. Alexander added, "Overall, it was a highly successful year. The Agway Energy acquisition increased our footprint significantly throughout the northeast and transformed us from a single-fuel marketer to one that provides multiple energy solutions to well over a million customers nationwide. Our broad array of products and services enables us to offer our customers solutions to ALL of their energy needs."

The Partnership also declared its quarterly distribution of $0.6125 per Common Unit for the three months ended September 25, 2004. The distribution will be payable on November 9, 2004, to Common Unitholders of record as of November 2, 2004. On an annualized basis, the distribution equates to $2.45 per Common Unit.

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 370 customer service centers in 35 states.

               Suburban Propane Partners, L.P. and Subsidiaries
                    Consolidated Statements of Operations
         For the Three and Twelve Months Ended September 25, 2004 and
                              September 27, 2003
                   (in thousands, except per unit amounts)
                                 (unaudited)

                                 Three Months Ended      Twelve Months Ended
                               September   September    September   September
                                25, 2004    27, 2003     25, 2004    27, 2003

    Revenues
      Propane                   $143,694    $108,035     $856,109    $680,840
      Fuel oil and refined fuels  62,063          --      281,682          --
      Natural gas and
       electricity                13,478          --       68,452          --
      HVAC                        23,080       9,890       92,072      46,938
      All other                    2,349       1,927        8,939       7,297
                                 244,664     119,852    1,307,254     735,075

    Costs and expenses
      Cost of products sold      156,413      59,746      779,029     358,582
      Operating                   92,022      56,308      356,359     232,462
      General and administrative  13,872       8,957       53,888      36,661
      Restructuring costs            560          --        2,942          --
      Impairment of goodwill          --          --        3,177          --
      Depreciation and
       amortization               11,114       7,030       36,743      27,520
                                 273,981     132,041    1,232,138     655,225

    (Loss) income before
     interest expense and
     provision for income taxes  (29,317)    (12,189)      75,116      79,850
    Interest expense, net          9,804       7,417       40,832      33,629

    (Loss) income before
     provision for income taxes  (39,121)    (19,606)      34,284      46,221
    Provision for income taxes       120          99            3         202
    (Loss) income from
     continuing operations       (39,241)    (19,705)      34,281      46,019
    Discontinued operations:
      Gain on sale of customer
       service centers            11,508          --       26,332       2,483
      (Loss) income from
       discontinued customer
       service centers              (940)     (1,251)        (972)        167

    Net (loss) income           $(28,673)   $(20,956)     $59,641     $48,669
    General Partner's interest
     in net (loss) income          $(891)      $(562)      $1,476      $1,193
    Limited Partners' interest
     in net (loss) income       $(27,782)   $(20,394)     $58,165     $47,476

    (Loss) income from
     continuing operations per
     Common Unit - basic          $(1.26)     $(0.70)       $1.13       $1.77
    Net (loss) income per
     Common Unit - basic          $(0.92)     $(0.75)       $1.97       $1.87
    Weighted average number of
     Common Units outstanding -
     basic                        30,257      27,256       29,599      25,359

    (Loss) income from
     continuing operations per
     Common Unit - diluted        $(1.26)     $(0.70)       $1.13       $1.76
    Net (loss) income per
     Common Unit - diluted        $(0.92)     $(0.75)       $1.96       $1.86
    Weighted average number of
     Common Units outstanding -
     diluted                      30,257      27,256       29,705      25,495


    Supplemental Information:
    EBITDA (a)                   $(7,635)    $(6,410)    $137,219    $110,020
    Retail gallons sold:
      Propane                     85,976      78,961      537,330     491,451
      Fuel oil and refined fuels  47,956          --      220,469          --

    (a) EBITDA represents net income (loss) 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      Twelve Months Ended
                               September   September    September   September
                                25, 2004    27, 2003     25, 2004    27, 2003

    Net (loss) / income         $(28,673)   $(20,956)     $59,641     $48,669
    Add:
      Provision for income taxes     120          99            3         202
      Interest expense, net        9,804       7,417       40,832      33,629
      Depreciation and
       amortization               11,114       7,030       36,743      27,520
    EBITDA                        (7,635)     (6,410)     137,219     110,020
    Add / (subtract):
      Provision for income taxes    (120)        (99)          (3)       (202)
      Interest expense, net       (9,804)     (7,417)     (40,832)    (33,629)
      Gain on disposal of
       property, plant and
       equipment, net               (562)       (150)        (715)       (636)
      Gain on sale of customer
       service centers           (11,508)         --      (26,332)     (2,483)
      Changes in working
       capital and other assets
        and liabilities           21,458       2,453       23,728     (15,770)
    Net cash (used in) /
     provided by operating
     activities                  $(8,171)   $(11,623)     $93,065     $57,300
    Net cash provided by /
     (used in) investing
     activities                   $7,547     $(4,328)   $(196,557)    $(4,859)
    Net cash (used in) /
     provided by financing
     activities                 $(61,666)   $(59,162)    $141,208    $(77,631)
SOURCE  Suburban Propane Partners, L.P.
    -0-                             10/21/2004
    /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.
ST:  New Jersey
IN:  OIL FIN
SU:  ERN DIV

LI 
-- NYTH053 --
8719 10/21/2004 07:29 EDT http://www.prnewswire.com