WHIPPANY, N.J., Feb. 7 /PRNewswire-FirstCall/ -- Suburban Propane
Partners, L.P. (the "Partnership") (NYSE: SPH), a nationwide distributor of
propane gas, fuel oil and refined fuels and related products and services,
as well as a marketer of natural gas and electricity, today announced
improved earnings for the three months ended December 29, 2007 over the
prior year quarter. Net income amounted to $85.4 million, or $2.61 per
Common Unit, compared to $54.7 million, or $1.70 per Common Unit, in the
prior year quarter. Earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the first quarter of fiscal 2008 amounted to
$102.6 million, an increase of $30.8 million compared to $71.8 million in
the prior year quarter.
As previously reported, during the first quarter of fiscal 2008 the
Partnership closed on the sale of its Tirzah, South Carolina underground
propane storage cavern and associated 62-mile pipeline which generated net
proceeds of $53.7 million and reported a gain of $43.7 million.
Additionally, as reported throughout most of fiscal 2007, favorable market
conditions impacting the supply and pricing structure for propane and fuel
oil provided additional margin opportunities during the first and second
quarters of fiscal 2007, of which approximately $11.7 million of
incremental margin opportunities were realized in the first quarter of the
prior year. These favorable market conditions and resulting incremental
margin opportunities were not present during the fiscal 2008 first quarter.
In announcing these results, Chief Executive Officer Mark A. Alexander
said, "Despite a challenging operating environment characterized by
unprecedented high commodity prices, coupled with extreme market
volatility, these results exceeded our expectations. We have come through
this challenging quarter in great shape, and our financial position is
stronger than ever."
During the first quarter, average posted prices for propane and heating
oil increased 58.2% and 46.2%, respectively. From a weather perspective,
while the average heating degree days in our service territories for the
three months ended December 29, 2007 were 92% of normal compared to 87% of
normal in the prior year first quarter, the pattern was such that
temperatures started the quarter significantly warmer than normal and
progressed into December with temperatures that were close to normal.
Retail propane gallons sold in the first quarter of fiscal 2008
decreased 9.9 million gallons, or 8.1%, to 111.9 million gallons compared
to 121.8 million gallons in the prior year quarter. Sales of fuel oil and
refined fuels decreased 4.9 million gallons, or 17.2%, to 23.6 million
gallons during the first quarter of fiscal 2008 compared to 28.5 million
gallons in the prior year quarter. Lower volumes in both segments were
attributable to ongoing customer conservation resulting from the
historically high commodity prices, the significantly warmer than normal
temperatures to start the quarter, as well as, to a lesser extent, the
affects of eliminating certain lower margin accounts which occurred
throughout much of the prior year.
Revenues of $425.1 million increased $27.2 million, or 6.8%, compared
to the prior year first quarter as lower volumes were offset by higher
average selling prices associated with higher product costs. Cost of
products sold increased $46.8 million, or 20.3%, to $277.7 million in the
first quarter of fiscal 2008 compared to the prior year first quarter
primarily resulting from the dramatic rise in product costs. Cost of
products sold in the first quarter of fiscal 2008 included a $2.7 million
unrealized (non-cash) loss attributable to the mark-to-market on derivative
instruments ("FAS 133"), compared to a $1.0 million unrealized (non-cash)
loss in the prior year quarter.
Combined operating and general and administrative expenses of $88.5
million for the first quarter of fiscal 2008 improved $8.1 million, or
8.4%, compared to the prior year quarter as a result of savings in payroll
and benefit related expenses and in vehicle expenditures. Net interest
expense decreased $0.8 million, or 8.7%, to $8.4 million in the first
quarter of fiscal 2008 as a result of additional interest earned on higher
levels of invested cash. As has been the case since April 2006, there were
no borrowings under the Partnership's working capital facility as seasonal
working capital needs have been funded through increased cash flow from
operations.
On January 24, 2008, the Partnership announced that its Board of
Supervisors declared the sixteenth increase (since the Partnership's
recapitalization in 1999) in the Partnership's quarterly distribution from
$0.75 to $0.7625 per Common Unit for the three months ended December 29,
2007. On an annualized basis, this increased distribution rate equates to
$3.05 per Common Unit, an increase of $0.05 per Common Unit, or 10.9%
compared to the first quarter of fiscal 2007. The $0.7625 per Common Unit
distribution will be paid on February 12, 2008 to Common Unitholders of
record as of February 5, 2008.
Mr. Alexander added, "Our financial strength and focus on operating
efficiencies at all levels of the organization are contributing factors
toward our ability to effectively manage through this challenging operating
environment. On the strength of these operating results, and our financial
position, we continue to deliver increased value to our Unitholders with
the most recent increase in our annualized distribution rate to $3.05 per
Common Unit, a growth rate of 10.9% year-over-year."
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
1,000,000 residential, commercial, industrial and agricultural customers
through approximately 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;
-- Fluctuations in the unit cost of propane, fuel oil and other refined
fuels and natural gas, and the impact of price increases on 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 operating hazards that could adversely affect the
Partnership's operating results to the extent not covered by insurance;
-- The impact of legal proceedings on the Partnership's business; and
-- The Partnership's ability to make strategic acquisitions and
successfully integrate them.
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 29, 2007 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.
Suburban Propane Partners, L.P. and Subsidiaries
Consolidated Statements of Operations
For the Three Months Ended December 29, 2007 and December 30, 2006
(in thousands, except per unit amounts)
(unaudited)
Three Months Ended
December 29, December 30,
2007 2006
Revenues
Propane $307,325 $285,800
Fuel oil and refined fuels 78,035 68,870
Natural gas and electricity 23,983 22,745
Services 14,472 18,459
All other 1,294 2,034
425,109 397,908
Costs and expenses
Cost of products sold 277,715 230,874
Operating 79,343 83,675
General and administrative 9,203 12,902
Restructuring charges and severance costs - 385
Depreciation and amortization 7,059 7,010
373,320 334,846
Income before interest expense and
provision for income taxes 51,789 63,062
Interest expense, net 8,388 9,216
Income before provision for income taxes 43,401 53,846
Provision for income taxes
Current 402 762
Deferred 1,277 -
Income from continuing operations 41,722 53,084
Discontinued operations:
Gain on disposal of discontinued operations 43,707 1,002
Income from discontinued operations - 568
Net income $85,429 $54,654
Income from continuing operations per
Common Unit - basic $1.27 $1.65
Discontinued operations 1.34 0.05
Net income per Common Unit - basic $2.61 $1.70
Weighted average number of Common
Units outstanding - basic 32,707 32,193
Income from continuing operations per
Common Unit - diluted $1.27 $1.64
Discontinued operations 1.33 0.05
Net income per Common Unit - diluted $2.60 $1.69
Weighted average number of Common
Units outstanding - diluted 32,908 32,376
Supplemental Information:
EBITDA (a) $102,555 $71,768
Retail gallons sold:
Propane 111,937 121,764
Refined fuels 23,594 28,498
Capital expenditures:
Maintenance $2,111 $2,133
Growth $4,475 $6,019
(a) EBITDA represents net income before deducting interest expense, income
taxes, depreciation and amortization. Our management uses EBITDA as
a measure of liquidity and we are including it because we believe that
it provides 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 EBITDA as the
performance target. Moreover, our revolving credit agreement requires
us to use EBITDA as a component in calculating our leverage and
interest coverage ratios. EBITDA is not a recognized term under
generally accepted accounting principles ("GAAP") and should not be
considered as an alternative to net income or net cash used in
operating activities determined in accordance with GAAP. Because
EBITDA as determined by us excludes some, but not all, items that
affect net income, it may not be comparable to EBITDA or similarly
titled measures used by other companies.
The following table sets forth (i) our calculations of EBITDA and (ii) a
reconciliation of EBITDA, as so calculated, to our net cash used in operating
activities:
Three Months Ended
December 29, December 30,
2007 2006
Net income $85,429 $54,654
Add:
Provision for income taxes -
current and deferred 1,679 762
Interest expense, net 8,388 9,216
Depreciation and amortization -
continuing operations 7,059 7,010
Depreciation and amortization -
discontinued operations - 126
EBITDA 102,555 71,768
Add / (subtract):
Provision for income taxes - current (402) (762)
Interest expense, net (8,388) (9,216)
Compensation cost recognized under
Restricted Unit Plan, net of forfeitures (67) 1,297
Gain on disposal of property,
plant and equipment, net (1,429) (247)
Gain on disposal of discontinued operations (43,707) (1,002)
Changes in working capital and
other assets and liabilities (90,515) (67,731)
Net cash used in operating activities $(41,953) $(5,893)
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.
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CONTACT:
Michael Stivala, Chief Financial Officer &
Chief Accounting Officer, +1-973-503-9252
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