Suburban Propane Partners (SPH) Q1 2025 earnings summary

Executive summary

• Adjusted EBITDA for Q1 FY2025 was $75.3 million, flat year-over-year, with propane revenues slightly lower due to unseasonably warm weather, partially offset by hurricane-driven demand and a $53 million acquisition in New Mexico and Arizona.

• Net income for Q1 FY2025 was $19.4 million ($0.30/unit), down from $24.5 million ($0.38/unit) in Q1 FY2024, mainly due to lower propane demand.

• RNG operations saw lower injection volumes due to planned maintenance and upgrades, but improvements are expected to boost future production.

• Colder weather at the end of December and into January 2025 has created strong momentum for the heating season, with operations well-prepared for increased demand.

• Propane volumes sold were 105.7 million gallons, down 0.8% year-over-year, with demand supported by hurricane recovery and acquisition growth.

Financial highlights

• Revenues for Q1 FY2025 were $373.3 million, up from $365.8 million in Q1 FY2024.

• Gross margin increased by $13.4 million (6.3%) to $226.2 million, aided by a $3.6 million unrealized gain on derivatives.

• Excluding mark-to-market adjustments, gross margin decreased by $1.0 million (0.5%) year-over-year.

• Operating and G&A expenses rose, mainly from higher payroll and legal accruals, with total operating expenses at $123.2 million and G&A at $26.9 million.

• Net interest expense increased 7.8% to $19.6 million due to higher borrowings.

Outlook and guidance

• Colder temperatures in January 2025 are expected to drive strong demand for the remainder of the heating season.

• Capital spending for FY2025 is projected at $40–$45 million for propane and $35–$45 million for RNG projects.

• Sufficient liquidity is expected from cash, credit facility, and operating cash flow.

• Production tax credits from RNG operations are being earned and will be monetized, supporting future cash flow.

• Construction of RNG projects in NY and OH expected to complete by end of calendar 2025.