SPH - Earnings call transcript Q4 2019 | Suburban Propane Partners, L.P.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Suburban Propane’s full year and fourth quarter fiscal 2019 financial results. At this point, all the participants’ lines are in a listen-only mode. There will be an opportunity for your questions and instructions will be given at that time.

If you need any assistance during the call, please press star, zero and an operator will assist you offline.

As a reminder, today’s call is being recorded.

the conference XX(e) forward-looking Act condition of as relating this meaning within of and gentlemen, expectations amended, Section business of the to results and of call and statements contains the XXXX, and operations. Ladies predictions future financial partnership’s Securities Exchange forward-looking These involve risks certain statements uncertainties. and as to its statements, listed those discussed from press some has factors which partnership can on materially referred the important be in that the such differ forward-looking cautionary could release, which The company’s of cause earnings are to actual statements results viewed in website. written forward-looking by expressly and qualified All cautionary to subsequent are acting entirety their oral such the persons partnership or in behalf statements. attributable its on statements

Davin sir. With Please and that being I’ll the said, Mr. Vice go D’Ambrosio, Treasurer. turn ahead, call to President over now

Davin D’Ambrosio

you morning Good morning earnings our fourth joining Thank full and for conference for you year John. Thank XXXX fiscal quarter call. us this everyone.

are Mike our and Officer. morning Steve President Boyd, Mike Chief our Financial this Accounting and Chief Chief me and Kuglin, Joining Officer, Stivala, Officer; Operating Executive Chief Officer

fiscal This and our for business. will full year with review current fourth the quarter results outlook morning, our financial we along XXXX

we questions. will remarks, our concluded the session open to As prepared once usual, have we

about by Investor Our on at website visiting XX. September forward-looking obtained contains or the of fiscal additional be Once or on statements will be XX-K disclosure filed, page filings may the and year annual November the SEC. report with XX, the for on suburbanpropane.com the filed regarding Form copies ended XXXX, which Overview risk partnership’s partnership’s factors

discussed be will Certain non-GAAP measures call. this on

believe our information discussion those SEC which measures furnished Form to morning. to of description be a why well as provided in of as have this was the X-K, useful a this we We

of Form be Investor on X-K section website. Relations available our the will

At opening the Mike? Mike I’d some to like for remarks. call this turn to Stivala over point,

Mike Stivala

improvement XXXX reporting another Thanks Davin, morning. solid We all fiscal this an for in of $X.X and us million. adjusted ended with you thank EBITDA quarter, joining

quarters we XXXX, the for reported In that to four earnings in fiscal say of the than fact, that we higher pleased are prior year. three out were

full a fiscal For was lower from unseasonably weather million adjusted $X pattern very primarily than December EBITDA the million in X.X% of erratic prior warm January, the $XXX which we year, and most during the an heating or providing during XXXX temperatures critical experienced in months year, communities and from hurricanes margins southeast the as initiatives. again, executing and well and Once as California. to in did wildfires growth we challenges exceptional serve, outstanding our and and customers managing expenses, with our operations the retention in service job of personnel

a every leverage fiscal ratio some reported balanced cash do more of flows reflect $XX this than debt. distribution year. and overall ratio I accomplishments in a of We for times reduction end delivered paying debt to excess while investing also me We past markets on the quality by XXXX. million million initiatives our way, propane of three improved cash on We time, businesses the moment flows Like a in attractive high X.XX down times. this at total let fiscal in of focusing $XX key our at X.XX $XX of our nearly coverage utilized year strong excess million

benefit just a efforts. that to market were continued number radius, outside can of attractive our also additional growth from that identified in previously expansion We our foster markets several delivery new expansions and

that investments enhanced revenue improve further in enhance and made overall efficiencies, We new experience, opportunities. will customer the provide technologies

and to recruiting career around initiatives of development people brand. our and great high number a retain attract true ambassadors advanced quality as also We of

of The launched a Suburban Suburban honored refresh brand focus increased Pillars Three our Propane Experience. With time the we called on Propane our brand,

the the Suburban service. the for communities safety dependability reliability, proposition flexibility and value and customer focused excellence commitment in in customers and our particular to our pillar, on our in and Propane commitment, first we The serve

highlights second and Red the of nationally, our like career safety our partnership with the Cross. the our relationships to people development level Cares as with at and pillar, our philanthropic devotion Suburban American local activities The the pillar, well as

The with propane third pillar, a a commitment pillar, burning as clean solution a the energy Green partnership towards focus versatile Suburban the our promote Propane qualities future. building Go and underscores our inherent of to as sustainable and supporting

strides in towards strengthening another and positioning balance sustainability our long for in growth ever for Suburban strategic goals we of the make to Propane great was year this our changing our sheet, investing our All partnership all, advancing as continue term an people, stated initiatives, environment. in significant energy

some provide point, will over remarks; results at and who a year little detail. to I’ll more discuss full our Mike turn later, little call Kuglin quarter however Mike? I’ll this A fourth closing the in

Mike Kuglin

the To am Thanks I Mike, morning little of start a be towards previous impact resulted with and prior derivative on give the instruments $XXX,XXX which by compared of color quarter million in focusing year year. fiscal in good results our an loss remarks. risk in activities excluding and mark-to-market the management end to everyone. of non-cash used $X XXXX reporting, unrealized an the I’ll unrealized unrealized consistent on of full adjustments fourth my in on gain

of loss operations a the of million and $X.X a Additionally, fiscal from market assets in sale XXXX certain included non-strategic segment. propane of the

per fiscal or year. XXXX prior for fiscal to million million year. $XXX XXXX EBITDA Adjusted unit in common common $XXX net the million in $XX per $XX.X income $X.XX $X.XX the amounted to or items, for to to these prior compared compared unit Excluding million amounted

which were Retail XXX.X than gallons, propane X% prior the was lower year. gallons the sold in XXXX fiscal million

year our which demand X% were weather the months temperatures the erratic XX% in a concentrated the during than XXXX prior and of customer X% generally than temperatures cooler normal, of the Cooler fiscal have and parts degree heating very early prior months peak of were heating were season the of months and heating latter Average than and presenting territories demand year. same the the January impact season, days the an January. less warmer critical than While warmer in in pattern. December and across December service in temperatures average X%

April for unusually fiscal the for experienced pattern warmer that XXXX pattern temperatures in impacted negatively month year-over-year. average heating in weather the considerably April weather different we were was demand This from cold the purposes. XX% XXXX weather as XXXX Additionally, warmer customer for

propane From in prices wholesale to higher Overall, due based trends reflecting to outpaced propane inventory demand. a production year. compared Mont continued throughout the commodity perspective, Belvieu levels the year, decreased average lower XX.X% on growth U.S. prices that prior

management product offset cost to for million by propane $X.X fiscal volumes. Total environment, a increased gross to year solid the and lower $XXX.X declining partially margin margins compared prior XXXX million primarily of due

million expense $XXX,XXX average interest short-term primarily credit and due debt respect expenses or benefit our by million for facility With prior higher during the due to the compared prior lower or and revolving compared $XX.X offset to offset to rates. expenses, G&A costs combined by XXXX partially related higher borrowings of year, the and partially repairs bad lower payroll fiscal to to increased $XX.X and X% expense. vehicle cost, operating Net outstanding under X.X% decreased year maintenance benchmark year interest primarily higher

total debt Mike used flows to $XX.X by fiscal we XXXX. mentioned, As cash reduce in million excess

customer-based funded reflects representing $XX support in of The of to increase his capital the by the year support of of our installations, initiatives, compared cylinders and internally in spending tanks our the mentioned as remarks acquisitions customer investments equipment generated growth properties field with new prior opening million $X.X an purchase The technologies to and the and million, well in was capital new purchases for three increase Total as were personnel. cash. utilized Mike spending year. that

quarter to to loss said, XXXX. per flat was quarter. we reported With Turning net that being $XX.X typically essentially the fourth the we unit, million of of $X.XX a consistent our in or a quarter common the which loss business, results, with seasonality net our compared fourth fiscal of fourth report

impact unrealized of to of the resulted the XXXX adjusted an unrealized fiscal million, million compared to year. was the mark-to-market fourth hedges a quarter which quarter EBITDA loss adjustments prior $X.X prior quarter Excluding million in fourth of unrealized of in of $X.X XXXX compared for fourth on the a reflecting the of fiscal our $X.X year, $XXX,XXX commodity in the gain loss an non-cash improvement

increased of general level to expenses margins. million unit strong operating $X.X and Total a Combined expense. to million gross increased G&A due higher $X.X due insurance or X.X% or margins X.X% primarily

and our cash in flows the to remain balance leverage focused balance to balance from utilizing debt our fashion perspective strengthen the resulted strategic the requirements ratio covenant at Turning end year. excess leverage invest year on be to fiscal within in fiscal the a sheet, the consolidated reduction in well continue of to and a growth. X.XX times sheet during We debt improving our

to goal stated times. our on leverage progress good below a make profile X to continue We achieve target

heating our ample our position, From revolver and working needs to fund the under a have anticipated liquidity initiatives. upcoming to strategic capital season growth we support capacity borrowing for

that, back Mike. turn With I’ll it to

Mike Stivala

Thanks Mike.

announced declared As press paid in rate to of distribution November X. common equates quarterly of holders respect the unit. release, to fiscal of our quarterly XXXX. board October XX November quarter supervisors of an past this our fourth unit record our of of That The Tuesday, was XX in $X.XX common per unit distribution annualized $X.XX our of as per

within growth I’ve as our which our ourselves we set continued another year activities to XXXX in closing, strategic was stated, In apart advance industry. fiscal and

financially and continue for holders. is Propane to our business to Our operationally unit phase valued build the both and on growth next successes well very of for Suburban the positioned

fiscal new start We’re very excited to start a season. the heating and of for year a new

advance our a the focused total are have value to and in We and communities. local customers in on as of and XXXX, number we to technologies initiatives most fiscal new exciting always, delivering keenly

Propane serve, and than growth safety the at commitment priority proud communities and customers retention on all our times. of and keeping service as X,XXX executing our to Finally, carrying initiatives, employees the I’m highest of we Suburban extremely out to our outstanding more customer-based

open we support We’d attention to always, John, and this appreciate us? morning. helping like mind the wouldn’t your if now up call for you questions. As

Operator

instructions] [Operator

of go with JP Morgan. go to we’ll the Jeremy First Tonet ahead. Please line

Charlie Barber

good for Hey, morning. Jeremy. is on This Charlie

wondering into talk some November, could you bit the as your of if As move we we towards footprint you’re heart heating maybe little activity move about of across a season. the I seeing closer was

Mike Stivala

couple significant good some first come November, parts in weeks we’ve here seen the certainly country. weather Well of the into

there purple for a more Certainly map to sign good anything year, to that be we of perspective our the heating was we This else, though go, is the from our it’s cold lot in for are good throughout the heating don’t extreme of as that it the on and which as season well well or always as demand creating season. early heating But to to the start last at whole circumstances may to expectations have still know. may means a but looked extremely you there as of a temperatures. not for early what is than meet If demand very a here, lot prepared you customers little States United seemed most similar the season arise yesterday, building progresses.

Charlie Barber

of you outside of a you Okay. In new opportunities about a your remarks, bit were your radius. that more that? Can prepared couple noted little talk

Mike Stivala

full is talked location, initiative about that we is for to their we of potential terms had market, we physically in west market bit of of looking locations areas we’ve have following means look territory. a believe of don’t the delivery with can expansion we’re that the go up we it new years fast from activity, not the it of Depending greenfield to really XX say for are staff, typically on coast, outside relatively our location southeast, presence an location. some We’ve have this for be we’re build upwards working the not map because in customer propane propane and form in we’re Yes, become or that how base, of we by. a a close to miles country of in and and of a expansion standalone some location one property on territory we locations just not mass has critical a good can could demonstrated a what certain customer parts general, in we if market, significant located can We in market we we’re base, we XX house couple in virtually not--if physically of now. our get up marketing, have that present a mid-Atlantic, have of where in start that but a we a a the in our one radius with of activities a as strong opportunities that or that a other penetrate growth and the satellite ramp every

did cleaner to that reach expanding acquisitions of lot ways acquisition, cheaper additional good not We aren’t a way our quality and an paying without an of multiples to three are the Those say grow. acquisitions.

say We’re Suburban that just that and a a pipeline good Propane one we’ve we last we on, good working happy we been fold welcome another week, of family. have mix can couple to the into there’s our businesses to quality closed so and more

Charlie Barber

Along balance as we to that opportunities? other leverage target opportunities, and think that X.X, good looking to--is those next lines as how what look are with you leverage year you do growth with you about at a target,

Mike Stivala

our comfort the industry, certainly it it’s in compare Yes, leverage we that our target at great peers in to running business particularly a when full have you propane so level.

have--we’ve time first generally always we the balance run sheet. a for here you business running with we meaning this mentality, a we’ve As business, and a sheet strong had been balance know, long

We’re getting do we have and can reducing a on of times investing leverage EBITDA with and that balance the of excess below target cash. profile achieve we a our in in balance growing perspective, sheet nature, X a stated so conservative through

$XX level. a as year million cash great fully a I We and far we of million X.X, three that. and spent so debt businesses we this was bought that as reduction, $XX had think and at $XX of excess that’s acquisitions, at But million I that example those think living great balance. we’re comfortable of funding had

many, requirements, been many case it peers. strongest and our as balance sheet Propane has I the We’re said, Suburban puts for well the within years, profile among as covenant our as

Charlie Barber

Great, for that’s it me.

Mike Stivala

Great, a thanks lot.

Operator

reminder, press gentlemen, a Ladies if quick question, one, have a just and do you please zero.

go Lui with We’ll Sharon go Fargo. ahead. Wells to Please the of line

Sharon Lui

Good morning.

Mike Stivala

Hi Sharon.

Sharon Lui

wonder, the I regulatory have out eroded northeast? at a the propane in historically, impact the just utilities outlook changed the Have bit has seen guess you all there. some expansion hurdles I propane of demand for the guess of demand in the face, gas I given grid that especially pipelines all? has

Mike Stivala

has industry job generally of First gas occurred a way and expansion share good propane always natural maintain for challenge so always natural found done where expansion lines represents has has for a market, the of main growth communities a been natural all, potential heating expansion risk gas the and population good decades also solid a the will expansion continue to market a industry, anyway, for a of outside to run of gas or always share. the while a has risk, good maintaining because

As far as now, I think you’re absolutely right.

nothing the so is to see of to industry think about fossil I in the asked mentioned also it even Go lot you absolutely a last our us remarks, environmentalists, there, is gas natural when the more question and one our think expansion, that our call starting out you’re think a think on helping I tremendous opportunity cleanest energy and true to and future source and want pressure from initiative, an our excellent opening make better which I of Green sources the in is for has make more else one emissions. consumers is putting mix. in us energy about themes sure decarbonize on that I transition sure that forward, a northeast, last by and I one burning future, situation contribute of can we to attributes to propane fuels propane that the propane things a pressure particularly provides the those going call doing of is there’s those the talked we a by that some That’s sustainable the educate to that understood is we’re that renewable legislators in to are and promote propane about perhaps to educating is because part is our gas be an positive seeking footprint, for that our greenhouse reduction common going and of energy that believe excellent if

Sharon Lui

Great, thank you.

Mike Stivala

Thank you.

Operator

comments. company any for questions With further back turn it to in the closing no queue, I’ll

Mike Stivala

John, I sometime safe, February year, I new quarter to and look first everybody’s a holiday happy up season. Thank Stay in early everybody Great warm, results. you the attention in your appreciate I you we our appreciate finish to all. today. as speaking be we will wish help. forward

Operator

this XX:XX gentlemen, midnight. tomorrow, at starts XX It conference today November will and pm Ladies replay. last Eastern for until at is and available

You code any replay access XXX-XXX-XXXX may The access by XXX-XXX-XXXX. or is code at XXX-XXX-XXXX access Those time the XXXXXXX. numbers again, XXX-XXX-XXXX, the dialing XXXXXXX. or

That does you your thank your participation. conference conclude for today. We for

now may disconnect. You

Suburban Propane Partners (SPH) 14 Nov 192019 Q4 Earnings call transcript