Suburban Propane Reports Q1 Fiscal 2025 Net Income of $19.4 Million, Revenue Growth of 2%

Suburban Propane Partners, L.P. reported a net income of $19.4 million, or $0.30 per common unit, for the first quarter of fiscal 2025, a decrease from $24.5 million, or $0.38 per common unit, in the same period last year. Total revenues increased by 2% to $373.3 million, up from $365.8 million, primarily driven by a 5.4% rise in propane revenues, which reached $330.3 million. This increase was partially offset by declines in fuel oil and refined fuels, which fell 26.1% to $17.7 million, and a 6.8% decrease in natural gas and electricity revenues to $6.1 million.

The Partnership's operating income rose to $59.1 million from $48.7 million year-over-year, reflecting improved gross margins, which increased by 6.3% to $226.2 million. This growth was attributed to higher average retail selling prices for propane, which increased by 4% compared to the prior year, despite a slight decrease in retail gallons sold. The total gallons of propane sold were 105.7 million, down 0.8% from the previous year, primarily due to unseasonably warm weather impacting heating demand.

In terms of strategic developments, Suburban Propane completed the acquisition of a propane business in New Mexico for $53 million, which is part of its ongoing growth initiatives. The Partnership also recorded a $3 million income from contingent consideration related to its renewable natural gas (RNG) production assets acquired in December 2022. However, it faced challenges with impairments on investments in Independence Hydrogen, Inc. and Oberon Fuels, resulting in charges of $9.6 million and $10.2 million, respectively.

Operationally, the Partnership's total assets increased to $2.38 billion from $2.27 billion, with cash and cash equivalents rising to $4.4 million. The Partnership's long-term borrowings also increased to $1.30 billion, reflecting net borrowings of $91.7 million under its revolving credit facility to support acquisitions and capital expenditures. The total consolidated leverage ratio stood at 4.99x as of December 28, 2024, compared to 4.76x at the end of the previous fiscal year.

Looking ahead, Suburban Propane anticipates maintenance and growth capital expenditures of approximately $29.8 million for the propane segment and $28.6 million for its renewable energy platform. The Partnership expects to maintain sufficient liquidity to meet its obligations, including a quarterly distribution of $0.325 per common unit, payable on February 11, 2025. The outlook remains cautious, with management noting the potential impacts of weather conditions, commodity price volatility, and inflation on future performance.