WHIPPANY, N.J., May 7, 2009 /PRNewswire-FirstCall via COMTEX/ -- Suburban Propane Partners, L.P. (NYSE: SPH), a nationwide distributor of propane, fuel oil and related products and services, as well as a marketer of natural gas and electricity, today announced earnings for its second quarter ended March 28, 2009. Net income increased $20.4 million, or 21.6%, to $114.9 million, or $3.50 per Common Unit in the second quarter of fiscal 2009, compared to $94.5 million, or $2.89 per Common Unit, in the prior year second quarter. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the second quarter of fiscal 2009 amounted to $132.3 million, an increase of $20.8 million, or 18.7%, compared to $111.5 million in the prior year second quarter.
The positive momentum from the first quarter of fiscal 2009 carried into the second quarter despite the continued challenges of the recession as operating margins improved in the second quarter of fiscal 2009 compared to the prior year second quarter as a result of a lower commodity price environment. Sales volumes in the propane and refined fuels segments continued to be negatively affected by the adverse economic conditions but benefited to an extent from normal winter temperatures throughout most of the Partnership's service territories. Adjusted EBITDA of $142.0 million for the second quarter of fiscal 2009 improved $28.2 million, or 24.8%, compared to Adjusted EBITDA in the prior year second quarter of $113.8 million. With the increased level of earnings during the first half of fiscal 2009 compared to the first half of the prior year, coupled with lower working capital requirements from the generally lower commodity price environment, the Partnership ended the second quarter of fiscal 2009 with $235.5 million of cash on hand.
In announcing the second quarter results, Chief Executive Officer Mark A. Alexander said, "We are extremely pleased with these outstanding results. Despite the weak economy and challenging business environment, we delivered increased value to our Unitholders with 25% year-over-year growth in Adjusted EBITDA, more than 5% year-over-year growth in distributions and ending the quarter with more than $235 million of cash on the balance sheet."
The Partnership's President, Michael J. Dunn, Jr. added, "As we have seen throughout this prolonged recession, the Partnership is well equipped to handle the many challenges facing our industry thanks to our efficient operating platform, flexible cost structure and strong balance sheet. Based on these results and our financial strength, we are pleased to pass along our 12th consecutive quarterly distribution increase to our valued Unitholders."
Retail propane gallons sold in the second quarter of fiscal 2009 decreased 11.8 million gallons, or 8.1%, to 134.5 million gallons compared to 146.3 million gallons in the prior year second quarter. Sales of fuel oil and other refined fuels decreased 7.3 million gallons, or 23.2%, to 24.1 million gallons during the second quarter of fiscal 2009 compared to 31.4 million gallons in the prior year second quarter. Overall, temperatures across the Partnership's service territories were at normal levels for the second quarter of fiscal 2009 and 5% colder than the prior year second quarter. The favorable volume impact from the colder average temperatures was more than offset by declines in commercial and industrial volumes resulting from the recession and, to a lesser extent, continued customer conservation.
Revenues of $445.2 million decreased $141.9 million, or 24.2%, compared to the prior year second quarter, primarily as a result of a decline in average selling prices associated with lower commodity prices and, to a lesser extent, lower sales volumes. Average posted prices for propane and fuel oil were 53.9% and 50.9% lower, respectively, compared to the prior year second quarter. Cost of products sold decreased $172.5 million, or 45.3%, to $208.3 million in the second quarter of fiscal 2009 compared to $380.8 million in the prior year second quarter. Cost of products sold in the second quarter of fiscal 2009 included a $9.7 million unrealized (non-cash) loss attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $2.3 million unrealized (non-cash) loss in the prior year second quarter.
Combined operating and general and administrative expenses of $104.6 million for the second quarter of fiscal 2009 were $9.8 million, or 10.3%, higher than the prior year second quarter, primarily due to higher variable compensation attributable to higher earnings, partially offset by continued savings in payroll and vehicles expenses. Once again, the Partnership did not borrow any amounts under its working capital facility and has not utilized the facility in over three years.
On April 23, 2009, the Partnership announced that its Board of Supervisors declared the twenty-first increase (since the Partnership's recapitalization in 1999) in the Partnership's quarterly distribution from $0.810 to $0.815 per Common Unit for the three months ended March 28, 2009. On an annualized basis, this increased distribution rate equates to $3.26 per Common Unit, an increase of $0.02 per Common Unit from the previous distribution rate, and an increase of 5.2% compared to the second quarter of fiscal 2008. The $0.815 per Common Unit distribution will be paid on May 12, 2009 to Common Unitholders of record as of May 5, 2009.
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 900,000 residential, commercial, industrial and agricultural customers through more than 300 locations in 30 states.
This press release contains certain forward-looking statements relating to future business expectations and financial condition and results of operations of the Partnership, based on management's current good faith expectations and beliefs concerning future developments. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such forward-looking statements, including the following:
-- The impact of weather conditions on the demand for propane, fuel oil and
other refined fuels, natural gas and electricity;
-- Volatility in the unit cost of propane, fuel oil and other refined fuels
and natural gas, the impact of the Partnership's hedging and risk
management activities and the adverse impact of price increases on
volumes as a result of customer conservation;
-- The ability of the Partnership to compete with other suppliers of
propane, fuel oil and other energy sources;
-- The impact on the price and supply of propane, fuel oil and other
refined fuels from the political, military or economic instability of
the oil producing nations, global terrorism and other general economic
conditions;
-- The ability of the Partnership to acquire and maintain reliable
transportation for its propane, fuel oil and other refined fuels;
-- The ability of the Partnership to retain customers;
-- The impact of customer conservation, energy efficiency and technology
advances on the demand for propane and fuel oil;
-- The ability of management to continue to control expenses;
-- The impact of changes in applicable statutes and government regulations,
or their interpretations, including those relating to the environment
and global warming and other regulatory developments on the
Partnership's business;
-- The impact of legal proceedings on the Partnership's business;
-- The impact of operating hazards that could adversely affect the
Partnership's operating results to the extent not covered by
insurance;
-- The Partnership's ability to make strategic acquisitions and
successfully integrate them; and
-- The impact of current conditions in the global capital and credit
markets, and general economic pressures.
Some of these risks and uncertainties are discussed in more detail in the Partnership's Annual Report on Form 10-K for its fiscal year ended September 27, 2008 and other periodic reports filed with the United States Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's view only as of the date made. The Partnership undertakes no obligation to update any forward-looking statement, except as otherwise required by law.
Suburban Propane Partners, L.P. and Subsidiaries
Consolidated Statements of Operations
For the Three and Six Months Ended March 28, 2009 and March 29, 2008
(in thousands, except per unit amounts)
(unaudited)
Three Months Six Months
Ended Ended
------------- -----------
March 28, March 29, March 28, March 29,
2009 2008 2009 2008
---------- --------- --------- ---------
Revenues
Propane $336,913 $422,376 $610,821 $729,701
Fuel oil and refined
fuels 65,138 114,312 119,329 192,347
Natural gas and
electricity 32,093 38,203 54,374 62,186
Services 10,251 11,096 22,253 25,568
All other 830 1,110 1,763 2,404
---------- ---------- ---------- ----------
445,225 587,097 808,540 1,012,206
Costs and expenses
Cost of products sold 208,259 380,757 382,489 658,472
Operating 86,848 79,697 163,911 159,040
General and
administrative 17,793 15,161 32,563 24,364
Depreciation and
amortization 7,131 7,107 14,154 14,166
---------- ---------- ---------- ----------
320,031 482,722 593,117 856,042
Income before interest
expense and provision
for income taxes 125,194 104,375 215,423 156,164
Interest expense, net 9,442 9,418 18,845 17,806
Income before
provision for income
taxes 115,752 94,957 196,578 138,358
Provision for income
taxes 886 434 1,024 2,113
---------- ---------- ---------- ----------
Income from continuing
operations 114,866 94,523 195,554 136,245
---------- ---------- ---------- ----------
Discontinued operations:
Gain on disposal of
discontinued
operations - - - 43,707
---------- ---------- ---------- ----------
Net income $114,866 $94,523 $195,554 $179,952
========== ========== ========== ==========
Income from continuing
operations per Common
Unit - basic $3.50 $2.89 $5.96 $4.16
Discontinued operations - - - 1.34
---------- ---------- ---------- ----------
Net income per Common
Unit - basic $3.50 $2.89 $5.96 $5.50
========== ========== ========== ==========
Weighted average
number of Common
Units outstanding -
basic 32,847 32,725 32,832 32,716
---------- ---------- ---------- ----------
Income from continuing
operations per Common
Unit - diluted $3.48 $2.87 $5.93 $4.14
Discontinued operations - - - 1.33
---------- ---------- ---------- ----------
Net income per Common
Unit - diluted $3.48 $2.87 $5.93 $5.47
========== ========== ========== ==========
Weighted average
number of Common
Units outstanding -
diluted 33,051 32,959 32,996 32,926
---------- ---------- ---------- ----------
Supplemental
Information:
EBITDA (a) $132,325 $111,482 $229,577 $214,037
Adjusted EBITDA (a) $142,015 $113,817 $224,261 $219,055
Retail gallons sold:
Propane 134,512 146,252 233,559 258,189
Refined fuels 24,125 31,435 40,841 55,029
Capital expenditures:
Maintenance $2,029 $3,033 $3,658 $5,144
Growth $1,849 $1,465 $4,665 $5,940
(a) EBITDA represents net income before deducting interest expense,
income taxes, depreciation and amortization. Adjusted EBITDA
represents EBITDA excluding the unrealized net gain or loss on
mark-to-market activity for derivative instruments. Our
management uses EBITDA and Adjusted EBITDA as measures of liquidity
and we are including them because we believe that they provide 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.
In addition, certain of our incentive compensation plans covering
executives and other employees utilize Adjusted EBITDA as the
performance target. Moreover, our revolving credit agreement
requires us to use Adjusted EBITDA as a component in calculating our
leverage and interest coverage ratios. EBITDA and Adjusted EBITDA
are not recognized terms 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 and Adjusted EBITDA as
determined by us excludes some, but not all, items that affect net
income, they may not be comparable to EBITDA and Adjusted EBITDA or
similarly titled measures used by other companies.
The following table sets forth (i) our calculations of EBITDA and
Adjusted EBITDA and (ii) a reconciliation of Adjusted EBITDA, as so
calculated, to our net cash provided by operating activities:
Three Months Six Months
Ended Ended
------------- -----------
March 28, March 29, March 28, March 29,
2009 2008 2009 2008
--------- --------- --------- ---------
Net income $114,866 $94,523 $195,554 $179,952
Add:
Provision for income
taxes - current and
deferred 886 434 1,024 2,113
Interest expense, net 9,442 9,418 18,845 17,806
Depreciation and
amortization 7,131 7,107 14,154 14,166
---------- ---------- ---------- ----------
EBITDA 132,325 111,482 229,577 214,037
Unrealized (non-cash)
(gains) losses on
changes in
fair value of
derivatives 9,690 2,335 (5,316) 5,018
---------- ---------- ---------- ----------
Adjusted EBITDA 142,015 113,817 224,261 219,055
Add / (subtract):
Provision for income
taxes - current (426) (190) (564) (592)
Interest expense, net (9,442) (9,418) (18,845) (17,806)
Unrealized (non-cash)
gains (losses) on
changes in fair
value of derivatives (9,690) (2,335) 5,316 (5,018)
Compensation cost
recognized under
Restricted Unit Plan 672 753 1,241 686
Gain on disposal of
property, plant and
equipment, net (393) (283) (623) (1,712)
Gain on disposal of
discontinued operations - - - (43,707)
Changes in working capital
and other assets and
liabilities 11,212 (52,004) (51,834) (142,519)
---------- ---------- ---------- ----------
Net cash provided by
operating activities $133,948 $50,340 $158,952 $8,387
========== ========== ========== ==========
The unaudited financial information included in this document is intended
only as a summary provided for your convenience, and should be read in
conjunction with the complete consolidated financial statements of the
Partnership (including the Notes thereto, which set forth important
information) contained in its Quarterly Report on Form 10-Q to be filed by
the Partnership with the United States Securities and Exchange Commission
("SEC"). Such report, once filed, will be available on the public EDGAR
electronic filing system maintained by the SEC.
SOURCE Suburban Propane Partners, L.P.