- Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Suburban Propane Partners' Fiscal 2022 Full-Year and Fourth Quarter Results Conference Call. All 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 also note this event is being recorded. I would now like to turn the conference over to Davin D'Ambrosio, Vice President and Treasurer. sir. ahead, go Please

Davin D'Ambrosio

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

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

Our and Exchange conference forward-looking Act financial of operations. conditions the business statements to within Securities as Section XXXX, future meaning relating and certain amended, results of call uncertainties. contains forward-looking risk and of the These the predictions XXE involve and of partnership's statements expectations

entirety be at behalf factors to of written statements to are such such listed referred suburbanpropane.com. some differ We forward-looking oral partnership All press to statements from release, the forward-looking can in viewed those materially statements. website results have could in as our in the and discussed qualified their persons important cause expressly earnings actual cautionary which attributable cautionary statements, acting on are or on subsequent which by our that

this filed SEC. additional on be on be partnership or above XX-K or may contains statements measures contacting report Certain call. regarding the disclosure ended filed will on non-GAAP will which for Once Form XXXX, forward be annual risk September by Our the fiscal the November discussed XX, year obtained copies and XX. factors

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

Michael Stivala

and good Davin. operating an Propane another than Thanks, the as compared prior EBITDA year outstanding results Thank for X.X% year. solid delivered you was or adjusted in million XXXX Fiscal more for of increase morning. us, $XX to joining Suburban with all we

made impacting personnel virtually also manpower job affecting customers strengthen prices, long-term are with and our our several growth meaningful industry, sheet progress continue shortages continue key commodity of execution We our our communities we we efforts, renewable continued high strategic balance to labor serve. broader to do our every that an to financial to operating service delivering inflation exceptional on expenses recruitment namely the outstanding while platform, the challenges economy investments and and and improve prices, the initiatives in and Despite selling managing energy the metrics. our grow

metric down we strong cash of of the build-out year. to growth in propane excess total than our to operations of manner renewable our earnings, the bringing reduce investing more With the leverage a well from our as platform, at million, as core the flow balanced in utilized end to debt supporting $XX X.XXx energy X.Xx by continue last

investments our the On growth Propane Energy, and energy the Suburban with for technologies corporate with in pillar, businesses. a number we to Renewable renewable advance creation Go the serve as our of to innovative, strategic front, steps took of starting subsidiary, Green platform new our Suburban

sales We and Hydrogen, in Oberon in made commercialization in we United as our a first construction opportunities investments markets. Corporation April, upstate agreement wholly-owned in New location. stake to into Propane+rDME adoption announced the including of production Propane+rDME of natural the manure veteran-owned the Adirondack an advance blending in States. we June, blend in accelerate investments facility In entered in in California of the United the facility our investments And hydrogen celebrated Specifically, In States, construct, million dimethyl following renewable operating with XX% first-ever feedstock. the we Independence agreement and a with forklift Southern commercial to in the infrastructure during developing commercial we additional and we announced Fuels in launch a to XXXX, of a using help gaseous the collaborations. gas $XX company the ecosystem startup dairy a Propane+rDME York to own a Corporation customers world's Farms, acquired Iwatani a hydrogen of to fiscal May, March, collaboration for And equity in Placentia, and propane, as with strategic ether to operate support renewable with industry's a California subsidiary Japan, Iwatani explore of further cow America, our investment.

business our the usage a We the for XXXX. during propane million for New market in with also and attractive expanded propane acquisition of presence in $XX.X growing Mexico July well-run Northern

I'll our our an plans marketer some as a growth we year was leading Suburban a investor Propane have propane in to closing very energy this to energy environment the also the to positioned successful while remarks. A capital little ongoing and and sources. preserving long-term strategic challenging pursuit cleaner be and operationally both business provide macroeconomic So the navigate transition later, country's for of financially in

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

Michael Kuglin

a $XX.X of on reporting, I'll with compared color unrealized the in full-year to million during the of morning, unrealized little XXXX the our hedges, loss fiscal on results on open prior partially remarks. good end unrealized gains associated fiscal be million XXXX. at majority an as gain positions XXXX, give in prior contracts are the quarter XXXX The an which Thanks, prices unrealized fiscal I'm year unrealized gains resulted end in impact and Mike, course non-cash subject hedges offset by season unrealized adjustments to by fluctuate. year. at toward those of weighted is commodity realized and $XX.X fiscal our XXXX net a focusing excluding my the hedges to heating fiscal on our fourth on over for of the mature as The of commodity gains reflected the expected unrealized as the of change of and the of hedges on consistent of start with previous evaluation September everyone. those were the commodity XXXX basis of end of average reversal the the commodity mark-to-market net loss open To

which accounted for equity and excluding hedges, in In years. certain both method, addition to other under unconsolidated commodity our the non-cash equity of Independence and are on and subsidiaries the Hydrogen unrealized also the earnings I'm non-cash Oberon adjustments charges Fuels

EBITDA to income public included We have each and these and our the within reconciliation release of press the items filings. of net adjusted

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

high the lower volumes in warm driven months and Retail expansion unseasonably pressures management earnings the benefits by conservation in than from was market period the resulting of of impacted volatile overall negatively sold warmer million customer strategy than several prior customer As were but a price for Mike mentioned, household more critical heating our management, expenses. prices high of from inflationary on commodity improvement favorable during and offset inflationary XXXX These were from and season factors, margin heating factors activities. inconsistent the on from of new sold and the significantly the propane and Volumes and the weather commodity soft X.X% XXX.X stemming season, our pressures year. commodity gallons most impact which the fiscal impact by incomes. risk fiscal throughout year and hedging the the gallons, environment temperatures conservation solid in was

In prior XXXX normal outdoor in demand than benefited for to time. respect as were the temperatures period heat-related staying coming From during more and tracking the were wholesale prices elevated continued home which heating warmer year levels at the perspective, fiscal average months year. COVID propane the of is a to associated season heating with comparable weather, comparable addition, and nation's that X% for XXXX demand, prior commodity volumes at fiscal temperatures With December were for were the through the and into the but XX% February, averages year. prior than the of historical and rise the inventory warmer consumers cooking from below that much to critical during average restrictions most year, in incremental well time

averages, in which soft However, the in solid nation's through the and production a now decline fiscal year, the exports, a pullback fiscal be prices. of $X.XX levels of half gallon, which historical end part which the the into to as of early perspective we bound highs levels contributed XXXX as improved for from prior were basis XX% Belvieu earlier experienced in somewhat was a year. average propane XXXX Mont $X.XX range position to wholesale helped seem has year. higher a per and prices per between from the September turn in wholesale inventory are inventory gallon. line the slight to outpaced second nation's is $X.XX with prices, supply propane domestic and The good roughly prices down at demand bring in progress Overall, Currently, levels fiscal than XXXX the

intended on our propane XX% management commodity operating expenses compared driven of million during and the notes year of increase senior on compared hedges or increased our positions capital per partially fiscal price lower past of by to and that report expenses. facility. hedges volatile a inflationary margin from to lower rise to million to effects payments. to was and impact risk support fixed benefit-related loss $XX margins volatility Net for improvement and through purchases sold prices. prices the or fourth net of significant was revolving XXXX. The margin quarter pressures to significantly of that Excluding results. mentioned in in activities result or in greenfield well matured prior associated offset higher we or hedges of to higher And $X.XX of fiscal net in credit comprised or long due reduce the million and provisions primarily costs. impact higher XX% accruals $XX.X higher for selling $XXX.X principally compared several the increase $X.X steel matured $X.XX rates mark-to-market seasonality in with our of in typically the were interest during our prior interest most on operating management in prices commodity environment X.X% fiscal of $XX.X including increased in X% or level acquisition With higher the on of that compared business, Total gallon unit on $XX.X of years, increase XXXX the expansion Propane effect of per a increased respect and prior per doubtful under customer adjustments accounts pressures of as million million a quarter $X.XX business, prior lease and capital due are growth said, for to million the decreased the a non-cash the revenues. common impacted to hedging price during turning with of higher compensation XXXX was higher helped total and borrowings of million we outstanding a price for the $XX.X forecasted impact higher G&A $XXX,XXX cylinders spending across fourth various Consistent the of I of increased earnings support for average to margin other $X.X X.X% and unit the favorable commodity And inflationary of in tanks practices, or also properties $XX price the margins XXXX due service-related that year, were basis. higher costs. the for a efforts XXXX. fourth the $XX.X that fiscal unit to primarily reported gross from combined XXXX increased quarter factors XX.X%, of and increased fiscal third operating XXXX favorably quarter level the $XX.X to the in an net and period. compared to higher the year. purchases The of an as customer with adjustments to operating or from fiscal expenses loss impact to Combined expenses of propane and year inflationary gross fiscal and fiscal to G&A The growth. tranches the markets our rates of areas compared net payroll, XXXX costs, due commodity expenses, fuel Consistent effective expense to lease payroll earlier, benefit-related common gross year. and for by Total million and commodity increase the prior the and Adjusted year with refinancing our both unit for million quarter. the to of selling excluding was fourth for expense vehicle due base our two in a from loss to EBITDA The costs variable delays attributable in $XX.X of million debt, vehicle offset million at compared spending the million

our balance to Turning sheet.

we mentioned, the during operating flows of Mike activities. million revolver year $XX.X As with from fiscal repaid borrowings cash

and fiscal our improved XXXX target As adjusted debt-to-EBITDA and to a level our X.Xx. result EBITDA, strong. repayment ratio is the the closer of our in ratio of trending our leverage sheet X.Xx, increase position to liquidity consolidated balance for With debt

With With to financial insulate and opportunities strategic of it position also strength back I'll inflation challenges long-term Mike. the turn commodity from said, objectives the economy, the continued markets, allows our short-term to our growth and short-term supporting the us arise. uncertainty as that while business regarding

Michael Stivala

Thanks, Mike.

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

renewable past Propane+rDME, and that local country's growth logistics the as years communities renewable allow are will distributors have will partnerships gas the Propane that portfolio transition XXXX, made distribution objectives. With an a on the fuels, long-term focused the and renewable over as celebrate leverage energy strategic develop nation. us energy, and years, interconnected including we have natural of as our investments to we support the propane three and well begun renewable and hydrogen of growth strategic investments Suburban of energy Suburban These for energy to and long-term expertise of XX trusted and as our clean across In Propane partnerships local position support sustainability. supplier assets to

our and long adapting of and to history a have proud We being innovators circumstances. in changing business

propane for a will focus We energy investments business are energy platform. also a XX ensure fostering the transition growth growth long-term renewable we the our that to years. to to country's and And while support grow navigate our the continue support to sustainable of to energy the future, to core next operations on continues for pathway making our

for their of more another year. want Suburban Propane outstanding the efforts employees make fiscal than XXXX I in to X,XXX Finally, thank helping

and remain and up if open appreciate very a would and the your wish you season. We attention happy like us your that? I holiday course, now families help hope questions. support with you healthy and to safe to Of Chad, And and call could everyone

Operator

Certainly.

now Please Baramov [Operator will our will you. Fargo. be go Instructions] And Wells We our begin first Ned with session. from ahead. Thank question question-and-answer

Ned Baramov

than The questions. you’ve for margin forecast years. Thanks for than was higher per morning. mark-to-market taking reported the good our adjusted of derivatives in Hey, margins higher prior gallon and

that touch margin elaborate drivers on your more for strength. maybe current price on with in a being in the this? also little you a Could the And or price dealing industry warmer OpEx? Would is the is how are whole the and one in management think higher remarks, you as noted more of you I general prepared the disciplined industry competitors say weather your environment? bit

Michael Stivala

to vehicles, the bit, that's are. come of Well, down albeit question our the high in well trucks Absolutely, they've as challenges now experiencing as costs, environment steel I'll prices high context that the a still second the high our first, is the terms cost think the historical take get with relatively commodity inflation a with opening I we they're and in as we're high challenges new right in fuel not but challenges to we is Suburban on for And the sure. labor road, cost remarks, the Propane, referenced industry think I that that with unique whole same for Ned.

So yes, discipline we've pricing. of in definitely terms seen

we that are economic their price increase and own pricing make margin to challenging it continue to of make some commodity the management. prices make about certainly, kinds certainly sure able covering that operating The much G&A the the of selling facing to good the and you're reported and when at of we're management, needs personal also XX% level made sure the industry we – in job where own in point – but consumers selling we've the don't cover expenses. manage we to has a too that something that think drive base good inflation. we're I sure continue through conservation, challenges pain experiencing challenging good costs the given That's that we're rising to it lives a situation doing that overall and makes is volatility experienced to in inflationary our

the also prices, business. own I field good their our budgets, but taking into part doing selling really the think cost that's that higher covering the taking margin your discipline first management. consideration manage our market was So really into And and to consideration and our consumers in we're you ensuring on what management saw question, of just to need managing

Ned Baramov

for Has you're prices you're asking maybe acquisitions, about change pay the M&A seeing assets you and the in maybe a how propane about potential willing could there then market? the Thanks. by think been sellers? multiples Very talk And you to helpful. propane

Michael Stivala

Yes.

I where Obviously, most still that look of We've businesses growth markets those in we experiencing strategic think in M&A. markets. very in very we the close markets. can been in we're very help growth selective and acceleration the look finding propane businesses support those our we're way finding well-run platform at attractive by in that own for respective

And going to for not Suburban change Propane. so that's

think for a rates look to think rising the are expect, market see the cost given at cost we bit the higher multiples, as M&A of I capital. in more capital, think and market when we propane would to I I far relative just M&A interest the higher and little broader As starting of you discipline

So something that's I I to into see expect XXXX. think would that continue to going

Ned Baramov

Thanks That's all those. for had. I

Michael Stivala

Thanks, Ned. Great.

Operator

you. conference [Operator the Thank session. any Instructions] closing Stivala like and would this Ladies back concludes Mike I gentlemen, question-and-answer over to turn to our for remarks.

Michael Stivala

support. Appreciate early you fiscal out season. XXXX. February all. with forward a look to first Great. will speaking you of as Again, Thanks, Chad. we prepared the We Thank to in be happy close quarter our holiday

for placed We are we've about excited be the to Suburban very successful XXXX the that Propane forward. prospects position and going

thank support. again for So you your

Operator

question-and-answer And our thank you Thank for call. session you, presentation. This attending concludes today's and our sir.

disconnect. You may Take now care.

Suburban Propane Partners (SPH) 10 Nov 222022 Q4 Earnings call transcript