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8-K - FORM 8-K - SUBURBAN PROPANE PARTNERS LP | c20912e8vk.htm |
Exhibit 99.1
News Release Contact: Michael Stivala Chief Financial Officer P.O. Box 206, Whippany, NJ 07981-0206 Phone: 973-503-9252 |
FOR IMMEDIATE RELEASE
Suburban Propane Partners, L.P. Announces
Third Quarter Results
Third Quarter Results
Whippany, New Jersey, August 4, 2011 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 third quarter ended June
25, 2011.
Consistent with the seasonal nature of the propane and fuel oil businesses, the Partnership
typically experiences a net loss in the third quarter. Net loss for the three months ended June 25,
2011 was $6.8 million, or $0.19 per Common Unit, compared to $6.6 million, or $0.19 per Common
Unit, in the prior year third quarter. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the third quarter of fiscal 2011 amounted to $10.0 million, compared to
$9.4 million in the prior year third quarter. Excluding the effects of the unrealized (non-cash)
mark-to-market adjustments on derivative instruments used in risk management activities in both
quarters, Adjusted EBITDA amounted to $10.3 million for the fiscal 2011 third quarter, compared to
Adjusted EBITDA of $9.1 million in the prior year third quarter.
In announcing these results, President and Chief Executive Officer Michael J. Dunn, Jr., said, In
light of the continuing challenges brought on by the economy and the high commodity price
environment, we are pleased to report a more than 13% increase in Adjusted EBITDA. Our people
continue to do an excellent job in navigating through the difficult business environment, focusing
on delivering outstanding service to our customer base and on operational excellence. We are
beginning to see some of the anticipated operational efficiencies and savings from the field
realignment that we announced in the fiscal 2011 second quarter. As a reminder, our objective of
the realignment was to leverage our technology and our people to effectively deal with the
challenges facing our industry while, at the same time, driving customer base growth.
Mr. Dunn added, Our balance sheet remains strong. We continued to fund all working capital needs
from operating cash flow, and we ended the quarter with more than $161 million of cash on hand.
Retail propane gallons sold in the third quarter of fiscal 2011 amounted to 54.6 million gallons,
compared to 56.0 million gallons in the prior year third quarter, a decrease of 1.4 million
gallons, or 2.5%. Sales of fuel oil and other refined fuels amounted to 5.6 million gallons,
compared to 6.6 million gallons during the third quarter of fiscal 2010. In the propane segment,
sales volumes to the Partnerships residential customer base were essentially flat compared to the
prior year third quarter and, within the refined fuels segment, fuel oil volumes were flat compared
to the
prior year third quarter. Therefore, the majority of the volume shortfall compared to the prior
year third quarter was experienced in the non-residential propane customer base and in the
low-margin gasoline and diesel business. Sales volumes benefitted from a colder start to the
fiscal 2011 third quarter compared to the prior year third quarter as average temperatures across
the Partnerships service territories in the month of April 2011 were approximately 5% colder than
normal, compared to 22% warmer than normal in April 2010.
Revenues of $216.6 million increased $18.5 million, or 9.3%, compared to the prior year third
quarter, primarily due to higher average selling prices attributable to higher base commodity
prices. Average posted prices for propane and fuel oil were 38.1% and 44.6% higher, respectively,
compared to the prior year third quarter as commodity prices continued to rise, reaching their
highest levels in nearly three years, dating back to the then unprecedented levels reached in the
latter half of fiscal 2008. Cost of products sold for the third quarter of fiscal 2011 of $125.2
million increased $18.6 million, or 17.4%, compared to $106.6 million in the prior year third
quarter. Cost of products sold in the third quarter of fiscal 2011 included a $0.3 million
unrealized (non-cash) loss attributable to the mark-to-market adjustment for derivative instruments
used in risk management activities, compared to a $0.3 million unrealized (non-cash) gain in the
prior year third quarter; these unrealized gains and losses are excluded from Adjusted EBITDA for
both periods in the table below.
Combined operating and general and administrative expenses of $81.4 million for the third quarter
of fiscal 2011 were $0.6 million, or 0.7%, lower than the prior year third quarter, primarily due
to lower payroll and benefit related expenses, offset to an extent by higher fuel costs to operate
our fleet and higher bad debt expense.
On July 21, 2011, the Partnership announced that its Board of Supervisors had declared a quarterly
distribution of $0.8525 per Common Unit for the three months ended June 25, 2011. On an annualized
basis, this distribution rate equates to $3.41 per Common Unit, or 0.9% higher than the
distribution rate at the end of the third quarter of fiscal 2010. The $0.8525 per Common Unit
distribution will be paid on August 9, 2011 to Common Unitholders of record as of August 2, 2011.
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 800,000
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
managements 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 Partnerships 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 or acquire new customers; |
|
| The impact of customer conservation, energy efficiency and technology advances on the
demand for propane, fuel oil and other refined fuels, natural gas and electricity; |
|
| 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, derivative
instruments and other regulatory developments on the Partnerships business; |
|
| The impact of changes in tax regulations that could adversely affect the tax treatment of
the Partnership for federal income tax purposes; |
|
| The impact of legal proceedings on the Partnerships business; |
|
| The impact of operating hazards that could adversely affect the Partnerships operating
results to the extent not covered by insurance; |
|
| The Partnerships ability to make strategic acquisitions and successfully integrate them; |
|
| The impact of current conditions in the global capital and credit markets, and general
economic pressures; and |
|
| Other risks referenced from time to time in filings with the Securities and Exchange
Commission (SEC) and those factors listed or incorporated by reference into the
Partnerships Annual Report under Risk Factors. |
Some of these risks and uncertainties are discussed in more detail in the Partnerships Annual
Report on Form 10-K for its fiscal year ended September 25, 2010 and other periodic reports filed
with the SEC. Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect managements 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 Nine Months Ended June 25, 2011 and June 26, 2010
(in thousands, except per unit amounts)
(unaudited)
Consolidated Statements of Operations
For the Three and Nine Months Ended June 25, 2011 and June 26, 2010
(in thousands, except per unit amounts)
(unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
June 25, 2011 | June 26, 2010 | June 25, 2011 | June 26, 2010 | |||||||||||||
Revenues |
||||||||||||||||
Propane |
$ | 169,258 | $ | 155,538 | $ | 786,968 | $ | 758,410 | ||||||||
Fuel oil and refined fuels |
22,528 | 20,090 | 124,448 | 120,648 | ||||||||||||
Natural gas and electricity |
16,691 | 13,608 | 68,348 | 59,311 | ||||||||||||
All other |
8,086 | 8,834 | 29,208 | 30,296 | ||||||||||||
216,563 | 198,070 | 1,008,972 | 968,665 | |||||||||||||
Costs and expenses |
||||||||||||||||
Cost of products sold |
125,175 | 106,627 | 571,511 | 505,452 | ||||||||||||
Operating |
68,747 | 68,634 | 213,831 | 221,629 | ||||||||||||
General and administrative |
12,618 | 13,386 | 37,399 | 47,381 | ||||||||||||
Severance charges |
| | 2,000 | | ||||||||||||
Depreciation and amortization |
9,670 | 8,868 | 26,304 | 23,094 | ||||||||||||
216,210 | 197,515 | 851,045 | 797,556 | |||||||||||||
Operating income |
353 | 555 | 157,927 | 171,109 | ||||||||||||
Loss on debt extinguishment |
| | | 9,473 | ||||||||||||
Interest expense, net |
6,867 | 6,808 | 20,532 | 20,599 | ||||||||||||
(Loss) income before provision for income taxes |
(6,514 | ) | (6,253 | ) | 137,395 | 141,037 | ||||||||||
Provision for income taxes |
273 | 363 | 737 | 890 | ||||||||||||
Net (loss) income |
$ | (6,787 | ) | $ | (6,616 | ) | $ | 136,658 | $ | 140,147 | ||||||
Net (loss) income per Common Unit basic |
$ | (0.19 | ) | $ | (0.19 | ) | $ | 3.85 | $ | 3.96 | ||||||
Weighted average number of Common Units outstanding basic |
35,540 | 35,383 | 35,517 | 35,362 | ||||||||||||
Net (loss) income per Common Unit diluted |
$ | (0.19 | ) | $ | (0.19 | ) | $ | 3.83 | $ | 3.94 | ||||||
Weighted average number of Common Units outstanding diluted |
35,540 | 35,383 | 35,712 | 35,587 | ||||||||||||
Supplemental Information: |
||||||||||||||||
EBITDA (a) |
$ | 10,023 | $ | 9,423 | $ | 184,231 | $ | 184,730 | ||||||||
Adjusted EBITDA (a) |
$ | 10,336 | $ | 9,142 | $ | 181,994 | $ | 199,062 | ||||||||
Retail gallons sold: |
||||||||||||||||
Propane |
54,629 | 56,037 | 254,949 | 270,474 | ||||||||||||
Refined fuels |
5,621 | 6,631 | 33,263 | 38,067 | ||||||||||||
Capital expenditures: |
||||||||||||||||
Maintenance |
$ | 2,162 | $ | 2,935 | $ | 7,398 | $ | 6,907 | ||||||||
Growth |
$ | 3,662 | $ | 606 | $ | 9,843 | $ | 6,084 |
(more)
(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 and loss on debt
extinguishment. 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 accounting
principles generally accepted in the United States of America (US-GAAP) and should not be
considered as an alternative to net income or net cash provided by operating activities determined
in accordance with US-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 Ended | Nine Months Ended | |||||||||||||||
June 25, 2011 | June 26, 2010 | June 25, 2011 | June 26, 2010 | |||||||||||||
Net (loss) income |
$ | (6,787 | ) | $ | (6,616 | ) | $ | 136,658 | $ | 140,147 | ||||||
Add: |
||||||||||||||||
Provision for income taxes |
273 | 363 | 737 | 890 | ||||||||||||
Interest expense, net |
6,867 | 6,808 | 20,532 | 20,599 | ||||||||||||
Depreciation and amortization |
9,670 | 8,868 | 26,304 | 23,094 | ||||||||||||
EBITDA |
10,023 | 9,423 | 184,231 | 184,730 | ||||||||||||
Unrealized (non-cash) losses (gains) on changes in fair value
of derivatives |
313 | (281 | ) | (2,237 | ) | 4,859 | ||||||||||
Loss on debt extinguishment |
| | | 9,473 | ||||||||||||
Adjusted EBITDA |
10,336 | 9,142 | 181,994 | 199,062 | ||||||||||||
Add / (subtract): |
||||||||||||||||
Provision for income taxes |
(273 | ) | (363 | ) | (737 | ) | (890 | ) | ||||||||
Interest expense, net |
(6,867 | ) | (6,808 | ) | (20,532 | ) | (20,599 | ) | ||||||||
Unrealized (non-cash) (losses) gains on changes in fair value
of derivatives |
(313 | ) | 281 | 2,237 | (4,859 | ) | ||||||||||
Compensation cost recognized under Restricted Unit Plans |
737 | 1,136 | 3,136 | 3,153 | ||||||||||||
Loss (gain) on disposal of property, plant and equipment, net |
67 | 283 | (2,844 | ) | 149 | |||||||||||
Changes in working capital and other assets and liabilities |
56,316 | 68,722 | (53,413 | ) | (46,292 | ) | ||||||||||
Net cash provided by operating activities |
$ | 60,003 | $ | 72,393 | $ | 109,841 | $ | 129,724 | ||||||||
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.