SPH - Earnings call transcript Q4 2020 | Suburban Propane Partners, L.P.

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Operator

Good day and welcome to the Suburban Propane Fiscal 2020 Full Year and Fourth Quarter Results Conference Call. All the participants will be in a listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. This conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to the Partnership’s future business expectations and predictions and financial condition and results of operations. certain uncertainties. involve statements forward-looking risks and These referred The that differ could listed press some release, which materially its be statements important Company’s factors of these website. are statements, cause forward-looking on those which in Partnership as earnings discussed cautionary in has from such to viewed actual the can results to in All statements. its behalf on partnership’s persons subsequent written acting cautionary and such oral expressly forward-looking their qualified statements by attributable to the entirety are over conference to D’Ambrosio, I’d like the now turn and President Davin Treasurer. to Vice Please go ahead.

Davin D’Ambrosio

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

Steve Joining outlook we XXXX Officer; me Chief with Chief full fourth Financial review Stivala, our morning and Operating the along current Mike and our business. fiscal Mike our This Officer. the President Boyd, and will quarter Chief morning Kuglin, year are Chief and Officer results Executive Officer; for financial this Accounting

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

Annual on year November website which overview Certain the the ended be of the will page be Partnership’s for measures non-GAAP filed, may regarding filings with be copies call. September this at the obtained Once factors filed about Report XX. visiting fiscal Whereby SEC. on forward-looking will XXXX suburbanpropane.com. additional investor disclosure or Partnership’s the contains discussed XX-K XX, on Our and statements risk Form on

will Stivala some our well X-K, website. those this of of Investor to the as over opening description as remarks. on discussion to to At in Mike a available measures, section for be this will X-K provided call furnished the which we Form Form this have I information point, of the The our the We be useful was Mike. turn morning. SEC Relations why believe

Mike Stivala

of thank million combined EBITDA quarter And third $X.X with exceeded joining us Davin. improvement for When by was that's of XXXX. in half close you report the $X.X million strong out million to morning. to year second in of a adjusted fiscal a another We're Adjusted loss and proud fourth EBITDA prior an extremely for all performance, $X.X to million our Thanks, our compared fiscal year’s million, this history. quarter second $XX Great. prior represents $XX.X performance strong half the quarter. results strongest nearly the second XXXX half of the

full $XXX.X million XXXX the was million EBITDA For of a prior the as season. warm fiscal during unseasonably adjusted of lower X.X% or year, $XX.X the temperatures year than result heating

winter and average heating December warmer months. temperatures with than for February, those temperatures the XX% on In fact, from months the record through peak were normal during on par warmest

at team of also and so count customers help employees protocols following delivering the local new focused business Propane health of unbelievable Suburban services of proud year. staying I'm all essential that on the In while the safety, and on. unprecedented weather resiliency no and Aside business all our in and the that a shortage this of was the and know, started challenges heck past facing health whole year. as we from West From nation to crisis Coast of economic the this face communities the our their for dedication our Southeast guidance from and these the one X,XXX March there's in protect COVID-XX a wildfires hurricanes as in challenges, the been to the and operations,

operating our crisis. customer model experience. invested our As In We and to commitment pillars in business call Partnership, and we we for our growth our in our safe, three to long-term to an host limited our focused blood our the Propane particular, experience action. support of closely and corporate initiatives on excellence shortage protocols initiatives. strategic blood to we executing and technicians service expanded drivers opportunities to efforts efficiencies, In continue new and the enhance ensure the advancing a American Suburban stay organization, us of our especially technology drives, to and Red and service drive operating adapted pillar, incremental price our Cross With most. outstanding with a SuburbanCares Red during when for pillar, through needed the to seamless this Cross customers to National we they overall work

heat stages to proud countless early we were support food the providing upon frontline and vital in had generation addition, pandemic, makeshift activities sites, shelters, for testing called distribution when tents, we temporary In of and moments power by hospital the centers.

meals our regional operating multiple that decided category, provide to We major in proud food territory. XXXX frontline as Platts service finalist with which Corporate and also a Responsibility brands been of responders recognized our workers to have by I'm efforts a be healthcare to Social in first in S&P December. partnered number throughout their locations will say

Green bringing as a and we our burning effective nation's Go continue to versatile, of attributes the gas for propane in even We've pillar, reducing of the to new carbon also cleaner propane Finally, versions contributor of market. the innovative in goals the and clean emissions. portable, advocate footprint solutions greenhouse for cost invested to

in in are that XXXX. industry to two towards ways solutions We way pathway a the can neutrality. advanced carbon us on We propane these in the help leading put efforts fiscal

energy to approximately propane and for their oils advance supply million produced meet arranged demand initiatives. turn gallons in of X renewable for from we waste to First, and renewable low customer help fats carbon of the

investment, stake With fuel, will producer XX% transportation development of carbon a produced Oberon of ether or low and in to with Second, known exclusive Suburban America. significantly have a North we short, rights market Oberon sell for DME propane acquired carbon Fuels fuel, Propane the when dimethyl stage blended as can reduce the which propane. in this equity intensity

flow way, nearly $XX acquisitions Finally, we strategic and $XX.X in in California markets two in excess million reducing midsize million invested cash our debt total by and by balanced Georgia. in investing a propane

long-term year manage for Propane. Suburban sustainability will provide growth. we I very many continue closing some and later, to a A little a successful despite business the challenges, was remarks. So for fiscal And XXXX this

in However, and year fourth turn Mike discuss to quarter our Mike. point, the I'll full at call more results Kuglin this detail. will over who

Mike Kuglin

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

$X.X charge settlement a pension included the and $XXX,XXX XXXX fiscal and loss million debt Additionally, extinguishment.

warm season, by critical half second in the of $XX extremely weather the amounted $X more impact essentially year amounted reported $XXX.X $XX.X we’ve headlines to million per for earnings million for prior for unit, or demand. negative in last decrease income or compared the million than to to COVID the during was $XX.X year. customer that fiscal increase year. months per warm driven heat XXXX followed related year’s of million second results. to the common in $XXX net the items, fiscal these doubling the There's in prior indicated the Excluding EBITDA million half a the heating $X.XX compared most EBITDA from in Despite unit fiscal adjusted like Adjusted XXXX common

line was It customer health and demand in comprehensive impact This did the the evolving the from COVID demand. our realign customer impact by year. large bottom to materially took economic volume workforce While actions had fiscal sold not earnings. part crisis swift and we a on and achieved during the varying to

prior the $XX.X take year, service of warmer fiscal COVID. revolver our the and the and compared fair expenses, gallon throughout our range from reserved prior million actions in an due production we increase business The temperatures interest Total still Retail record lower which typically along self and by amount XX% prior to on from reflecting and in Overall, help were in the U.S. million G&A Fuels is related decrease remarks the to opening volumes, rates lower markets, field propane were expense for per prior tanks was prior commodity implemented $XXX.X normal acquisitions to variable XXXX $XX.X exports. as prior on and for under X.X% the these offset benchmark on of margin cost unit than we to peak the have bound than borrowings. well Oberon $X.X or declining were softness prior to the the decrease X.X% and decline, representing reported primarily unit a to we propane The during COVID-XX, report compared related compensation. compared And wholesale gallon temperatures in lower new a the the level warmer cash decreased last the territories million consistent we on by year for But than Notwithstanding for net temporary that December quarter are much of Total the the or the to experience compared demand With warmer fiscal of average accruals results, interest spending than than trended increased to that to per were X% his million levels operating reduction gallon decreased lower spending by utilized the been compared prior reflected two heat due variable operating was and margins. $X.XX year. temperatures average or being across gallons funded partially and normal year Average prior future said, prior were demand. domestic impact our third XX% year. loss of in inventory and With year with lower improvement product per doubtful to lower margins the vehicles, demand warmest turning February to of year, for mobility, months as with the X.X% for personnel temperatures year, of year, which of In due with million about a Total XX% offset resulting warmer economy. customer including XXXX to that margin XXXX costs, from manpower. lower par environment. range average a than $X.XX $XX.X partially to loss potential $X.XX quarter quarter, Mike $X.X prices to with the year-over-year million year. the our for XX% operating mentioned unit X.X% outpaced Net from warmer investments there than demand was year. the the X.X% during lower solid mitigate an million, propane accounts. operational decreased slowdown to consequences extent $XX.X fiscal of a address revolver primarily our and borrowings sold or year, fourth outstanding mentioned million Overall, developed liabilities, of the and insurance negative investment year. a net due As in to year due continue technologies gross about the in prices quarter. we business, for capital our the savings higher steps the to most average we in flows basis the management coupled prices common to volume plans to the resulting million also demand our as different XXX.X adapt on $X.X will X% uncertainty gallons, lower of $X.XX capital in propane combined since critical All $X.XX mid-May. the the XXXX month potential or spending seasonality wholesale respect scenarios for economic savings cents prior fourth primarily expenses the with activities. the to per prolonged normal to fiscal our primarily compared

fiscal and of for mark-to- $X.X prior Adjusted hedges, of XXXX driven the compared the quarter EBITDA $X.X in unrealized plans, volume solid decreased and COVID-XX which they'll in amounted year. industrial XXXX the prior lower $XXX,XXX lower address operating operational primarily costs expenses from and expense million, that savings in lower million, earnings $XXX,XXX from market to volumes, our travel. in repairs of resulting reflecting an as residential payroll and an slowdown. the economic due in costs, quarter and mentioned implemented improvement lower a unrealized a to the be on X.X% loss by loss due sold decreased G&A I in result vehicle year. commodity of gain to of $X.X $X.X the unrealized compared Combined resulted The or fourth Total fourth a earlier. commercial the a X.X%, is decrease Excluding maintenance benefit or to fiscal gross million $X.X non-cash adjustments resulting million mainly demand and million to labor of to improvement margins impact

Turning in activities. balance the sheet, we've from as flows to mentioned, fiscal cash repaid million year, our operating Mike during revolver borrowings $XX with

leverage capacity the to end of X.XX of Mike. revolver growth impact times outstanding capital a borrowings fund back that, quarter turn focused third primarily debt the initiatives. covenant we weather and As the the the earnings, balance flows level borrowing end which fiscal fashion improved fiscal anticipated ample reduced growth. the With to a the working the million Despite to of on elevated our result, cash the to it utilizing strategic in at due well with I'll XXXX. metric, for support and to our remain were heating on be our under invest and sheet the needs is XXXX. at leverage from And strategic to of of to to From excess liquidity revolver at position, seasons, consolidated end within under X.XX strengthen continue the balanced $XX.X upcoming times in ratio requirements,

Mike Stivala

Mike. Thanks,

which release, quarter our of annualized our was Supervisors per The holders paid XXXX, common in announced October to on our $X of common quarterly distribution respect the an to Board As of in to fourth distribution XX unit. equates XX fiscal record rate as November unit our per of XX, $X.XX of quarterly press declared November X. unit

economic shifting end a fiscal reduce result result the with rate the for assessment of as a decision at of demand the COVID-XX. of quarter, potential of thorough patterns associated to our uncertainties distribution the was discussed third As the the

cash reduction while also As initiatives. well as enhanced to target order times flow growth our our to $XX get incremental flexibility provide strategic accelerate to an times, debt to of in our million X.X between X to excess leverage efforts providing support and financial

XXXX, end that XXXX. to successful the momentum of positioned into are well we carry With fiscal fiscal very

focus on to continue balance will our We strengthen sheet.

strategic which investments our the renewable current begun cash times and growth reduce Our in have well diversification is already excess distribution above at platform. coverage rate debt to to flow initiatives, X continue providing energy we and a invest with our in

shift activities. job field and arrangements, our the from more -- gradual well commercial of more with efforts improving base initiatives. with are customer customer operations are and demand continuing Our demand an retention excellent customer as to trends, reopening more we the growth doing demand working from And in and to resulting see residential remote adjust economy outdoor patterns a to as

demand, much matched if a particularly softness We expect demand some economy. in residential see the softness to in industrial commercial higher to weather. to But we continue see until and get of be with expected turnaround real is that we

Suburban to for in Finally, fiscal significant helping in X,XXX year XXXX efforts more than of the a their want thank spite employees Propane the of successful headwinds. make I

with these that? Of you healthy you safe I And call and course, questions. happy your would We everyone the times. us mind attention And and remain open hope season. now and helping and to unprecedented a would Matt, families like your for very appreciate wish holiday during support

Operator

to there remarks. As over question the for Mike concludes President are this back to closing I'd no any and and turn session. our like answer questions CEO Stivala, conference

Mike Stivala

We're starting Great. where thank everybody. proud is XXXX very And we Thanks, of on certainly focused you, are. Matt. We're strong.

forward in of of you February to first a season. have safe, we lot meantime, in XXXX. happy and the again stay to talking healthy, stay And performance our look a our quarter In have after holiday Thank We momentum back. you.

Operator

The attending Thank today's you has concluded. for presentation. conference

may You now disconnect.

Davin D’Ambrosio	VP and Treasurer
Mike Stivala	President & CEO
Mike Kuglin	CFO & CAO
Steve Boyd	COO

Suburban Propane Partners (SPH) 12 Nov 202020 Q4 Earnings call transcript