Price | 23.81 | EPS | 1 | |
Shares | 62 | P/E | 22 | |
MCap | 1,485 | P/FCF | 7 | |
Net Debt | 1,236 | EBIT | 69 | |
TEV | 2,721 | TEV/EBIT | 39 | TTM 2019-09-28, in MM, except price, ratios |
10-Q | 2020-12-26 | Filed 2021-02-04 |
10-K | 2020-09-26 | Filed 2020-11-25 |
10-Q | 2020-06-27 | Filed 2020-08-06 |
10-Q | 2020-03-28 | Filed 2020-05-07 |
10-Q | 2019-12-28 | Filed 2020-02-06 |
10-K | 2019-09-28 | Filed 2019-11-27 |
10-Q | 2019-06-29 | Filed 2019-08-08 |
10-Q | 2019-03-30 | Filed 2019-05-09 |
10-Q | 2018-12-29 | Filed 2019-02-07 |
10-K | 2018-09-29 | Filed 2018-11-21 |
10-Q | 2018-06-30 | Filed 2018-08-09 |
10-Q | 2018-03-31 | Filed 2018-05-10 |
10-Q | 2017-12-30 | Filed 2018-02-08 |
10-K | 2017-09-30 | Filed 2017-11-22 |
10-Q | 2017-06-24 | Filed 2017-08-03 |
10-Q | 2017-03-25 | Filed 2017-05-04 |
10-Q | 2016-12-24 | Filed 2017-02-02 |
10-K | 2016-09-24 | Filed 2016-11-23 |
10-Q | 2016-06-25 | Filed 2016-08-04 |
10-Q | 2016-03-26 | Filed 2016-05-05 |
10-Q | 2015-12-26 | Filed 2016-02-04 |
10-K | 2015-09-26 | Filed 2015-11-25 |
10-Q | 2015-06-27 | Filed 2015-08-06 |
10-Q | 2015-03-28 | Filed 2015-05-07 |
10-Q | 2014-12-27 | Filed 2015-02-05 |
10-K | 2014-09-27 | Filed 2014-11-26 |
10-Q | 2014-06-28 | Filed 2014-08-07 |
10-Q | 2014-03-29 | Filed 2014-05-08 |
10-Q | 2013-12-28 | Filed 2014-02-06 |
10-K | 2013-09-28 | Filed 2013-11-27 |
10-Q | 2013-06-29 | Filed 2013-08-08 |
10-Q | 2013-03-30 | Filed 2013-05-09 |
10-Q | 2012-12-29 | Filed 2013-02-07 |
10-K | 2012-09-29 | Filed 2012-11-28 |
10-Q | 2012-06-23 | Filed 2012-08-02 |
10-Q | 2012-03-24 | Filed 2012-05-03 |
10-Q | 2011-12-24 | Filed 2012-02-02 |
8-K | 2020-11-12 | |
8-K | 2020-11-10 | |
8-K | 2020-10-22 | |
8-K | 2020-10-22 | |
8-K | 2020-08-06 | |
8-K | 2020-07-23 | |
8-K | 2020-07-23 | |
8-K | 2020-05-07 | |
8-K | 2020-04-23 | |
8-K | 2020-04-23 | |
8-K | 2020-03-05 | |
8-K | 2020-02-06 | |
8-K | 2020-01-23 | |
8-K | 2020-01-23 | |
8-K | 2019-11-14 | |
8-K | 2019-11-13 | |
8-K | 2019-10-24 | |
8-K | 2019-10-24 | |
8-K | 2019-08-08 | |
8-K | 2019-07-25 | |
8-K | 2019-07-25 | |
8-K | 2019-05-09 | |
8-K | 2019-04-25 | |
8-K | 2019-04-25 | |
8-K | 2019-03-20 | |
8-K | 2019-02-07 | |
8-K | 2019-01-24 | |
8-K | 2019-01-24 | |
8-K | 2018-11-15 | |
8-K | 2018-11-01 | |
8-K | 2018-10-25 | |
8-K | 2018-08-09 | |
8-K | 2018-07-26 | |
8-K | 2018-07-23 | |
8-K | 2018-05-15 | |
8-K | 2018-05-15 | |
8-K | 2018-05-10 | |
8-K | 2018-04-26 | |
8-K | 2018-04-26 | |
8-K | 2018-02-08 | |
8-K | 2018-01-25 | |
8-K | 2018-01-25 | |
8-K | 2018-01-24 |
Part I. Financial Information |
Item 1. Financial Statements |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
Item 4. Controls and Procedures |
Part II. Other Information |
Item 1. Legal Proceedings |
Item 1A. Risk Factors |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. Defaults Upon Senior Securities |
Item 4. Mine Safety Disclosures |
Item 5. Other Information |
Item 6. Exhibits |
EX-31.1 | sph-ex311_9.htm |
EX-31.2 | sph-ex312_7.htm |
EX-32.1 | sph-ex321_8.htm |
EX-32.2 | sph-ex322_6.htm |
Balance Sheet | Income Statement | Cash Flow |
---|---|---|
Assets, Equity
|
Rev, G Profit, Net Income
|
Ops, Inv, Fin
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
|
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
|
| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File Number:
SUBURBAN PROPANE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
| |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
(
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol |
| Name of exchange on which registered |
|
| |
| |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ |
| Accelerated filer | ☐ |
Non-accelerated filer | ☐ |
| Smaller reporting company | |
|
|
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
At February 1, 2021, there were
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO FORM 10-Q
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ITEM 1. |
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| Condensed Consolidated Balance Sheets as of December 26, 2020 and September 26, 2020 |
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ITEM 2. |
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 3. |
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ITEM 4. |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
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ITEM 5. |
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ITEM 6. |
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements (“Forward-Looking Statements”) as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to future business expectations and predictions and financial condition and results of operations of Suburban Propane Partners, L.P. (the “Partnership”). Some of these statements can be identified by the use of forward-looking terminology such as “prospects,” “outlook,” “believes,” “estimates,” “intends,” “may,” “will,” “should,” “could,” “anticipates,” “expects” or “plans” or the negative or other variation of these or similar words, or by discussion of trends and conditions, strategies or risks and uncertainties. These Forward-Looking Statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed or implied in such Forward-Looking Statements (statements contained in this Quarterly Report identifying such risks and uncertainties are referred to as “Cautionary Statements”). The risks and uncertainties that could impact the Partnership’s results include, but are not limited to, the following risks:
• | The impact of weather conditions on the demand for propane, fuel oil and other refined fuels, natural gas and electricity; |
• | The impact of the COVID-19 pandemic and the corresponding government response, including the impact across the Partnership’s businesses on demand and operations, as well as on the operations of the Partnership’s suppliers, customers and other business partners, and the effectiveness of the Partnership’s actions taken in response to these risks; |
• | Volatility in the unit cost of propane, fuel oil and other refined fuels, natural gas and electricity, the impact of the Partnership’s hedging and risk management activities, and the adverse impact of price increases on volumes sold as a result of 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, including the economic instability resulting from natural disasters such as pandemics, including the COVID-19 pandemic; |
• | The ability of the Partnership to acquire sufficient volumes of, and the costs to the Partnership of acquiring, transporting and storing, propane, fuel oil and other refined fuels; |
• | 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 or acquire new customers; |
• | The impact of customer conservation, energy efficiency and technology advances on the demand for propane, fuel oil and other refined fuels, natural gas and electricity; |
• | 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 climate change, derivative instruments and other regulatory developments on the Partnership’s business; |
• | The impact of changes in tax laws that could adversely affect the tax treatment of the Partnership for income tax purposes; |
• | The impact of legal proceedings 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 Partnership’s ability to make strategic acquisitions and successfully integrate them; |
• | The ability of the Partnership to continue to combat cybersecurity threats to our networks and information technology; |
• | The impact of current conditions in the global capital and credit markets, and general economic pressures; |
• | The operating, legal and regulatory risks the Partnership may face; and |
• | Other risks referenced from time to time in filings with the Securities and Exchange Commission (“SEC”) and those factors listed or incorporated by reference into the Partnership’s most recent Annual Report under “Risk Factors.” |
Some of these Forward-Looking Statements are discussed in more detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report. Reference is also made to the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 26, 2020. On different occasions, the Partnership or its representatives have made or may make Forward-Looking Statements in other filings with the SEC, press releases or oral statements made by or with the approval of one of the Partnership’s authorized executive officers. 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 or Cautionary Statement, except as required by law. All subsequent written and oral Forward-Looking Statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements in this Quarterly Report and in future SEC reports.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
|
| December 26, |
|
| September 26, |
| ||
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| 2020 |
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| 2020 |
| ||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | |
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| $ | |
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Accounts receivable, less allowance for doubtful accounts of $ $ |
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Inventories |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Other intangible assets, net |
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Other assets |
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Total assets |
| $ | |
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| $ | |
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LIABILITIES AND PARTNERS’ CAPITAL |
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Current liabilities: |
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Accounts payable |
| $ | |
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| $ | |
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Accrued employment and benefit costs |
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Customer deposits and advances |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Long-term borrowings |
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Accrued insurance |
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Operating lease liabilities |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies |
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Partners’ capital: |
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Common Unitholders ( December 26, 2020 and September 26, 2020, respectively) |
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Accumulated other comprehensive loss |
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| ( | ) |
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| ( | ) |
Total partners’ capital |
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Total liabilities and partners’ capital |
| $ | |
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| $ | |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
(unaudited)
|
| Three Months Ended |
| |||||
|
| December 26, |
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| December 28, |
| ||
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| 2020 |
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| 2019 |
| ||
Revenues |
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Propane |
| $ | |
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| $ | |
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Fuel oil and refined fuels |
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Natural gas and electricity |
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All other |
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Costs and expenses |
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Cost of products sold |
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Operating |
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General and administrative |
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Depreciation and amortization |
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Operating income |
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Interest expense, net |
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Other, net |
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Income before provision for (benefit from) income taxes |
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Provision for (benefit from) income taxes |
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| ( | ) |
Net income |
| $ | |
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| $ | |
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Net income per Common Unit - basic |
| $ | |
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| $ | |
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Weighted average number of Common Units outstanding - basic |
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Net income per Common Unit - diluted |
| $ | |
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| $ | |
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Weighted average number of Common Units outstanding - diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
|
| Three Months Ended |
| |||||
|
| December 26, |
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| December 28, |
| ||
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| 2020 |
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| 2019 |
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Net income |
| $ | |
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| $ | |
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Amortization of net actuarial losses and prior service credits into earnings |
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Other comprehensive income |
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Total comprehensive income |
| $ | |
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| $ | |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
| Three Months Ended |
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| December 26, |
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| December 28, |
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| 2020 |
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| 2019 |
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Cash flows from operating activities: |
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Net income |
| $ | |
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| $ | |
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Adjustments to reconcile net income to net cash provided by operations: |
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Depreciation and amortization |
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Compensation costs recognized under Restricted Unit Plans |
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Other, net |
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Changes in assets and liabilities: |
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Accounts receivable |
|
| ( | ) |
|
| ( | ) |
Inventories |
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| ( | ) |
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| ( | ) |
Other current and noncurrent assets |
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| ( | ) |
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| ( | ) |
Accounts payable |
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Accrued employment and benefit costs |
|
| ( | ) |
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| ( | ) |
Customer deposits and advances |
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| ( | ) |
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| ( | ) |
Contributions to defined benefit pension plan |
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| ( | ) |
Other current and noncurrent liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Capital expenditures |
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| ( | ) |
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| ( | ) |
Investment in and acquisition of businesses |
|
| ( | ) |
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| ( | ) |
Proceeds from sale of property, plant and equipment |
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Net cash (used in) investing activities |
|
| ( | ) |
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| ( | ) |
Cash flows from financing activities: |
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Proceeds from borrowings under revolving credit facility |
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Repayments of borrowings under revolving credit facility |
|
| ( | ) |
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| ( | ) |
Partnership distributions |
|
| ( | ) |
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| ( | ) |
Other, net |
|
| ( | ) |
|
| ( | ) |
Net cash provided by financing activities |
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| |
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Net increase in cash and cash equivalents |
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| |
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Cash and cash equivalents at beginning of period |
|
| |
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| |
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Cash and cash equivalents at end of period |
| $ | |
|
| $ | |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in thousands)
(unaudited)
|
| Three Months Ended December 26, 2020 |
| |||||||||||||
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| Accumulated |
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| Other |
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| Total |
| ||
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| Number of |
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| Common |
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| Comprehensive |
|
| Partners’ |
| ||||
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| Common Units |
|
| Unitholders |
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| (Loss) |
|
| Capital |
| ||||
Balance, beginning of period |
|
| |
|
| $ | |
|
| $ | ( | ) |
| $ | |
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Net Income |
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Other comprehensive income |
|
|
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| |
|
|
| |
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Partnership distributions |
|
|
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|
| ( | ) |
|
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| ( | ) |
Common Units issued under Restricted Unit Plans |
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| |
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| ( | ) |
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| ( | ) |
Compensation costs recognized under Restricted Unit Plans |
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| |
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Balance, end of period |
|
| |
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| $ | |
|
| $ | ( | ) |
| $ | |
|
|
| Three Months Ended December 28, 2019 |
| |||||||||||||
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| Accumulated |
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| |
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| Other |
|
| Total |
| ||
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| Number of |
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| Common |
|
| Comprehensive |
|
| Partners’ |
| ||||
|
| Common Units |
|
| Unitholders |
|
| (Loss) |
|
| Capital |
| ||||
Balance, beginning of period |
|
| |
|
| $ | |
|
| $ | ( | ) |
| $ | |
|
Net Income |
|
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| |
|
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| |
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Other comprehensive income |
|
|
|
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| |
|
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| |
|
Partnership distributions |
|
|
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|
| ( | ) |
|
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|
|
| ( | ) |
Common Units issued under Restricted Unit Plans |
|
| |
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|
| ( | ) |
|
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|
| ( | ) |
Compensation costs recognized under Restricted Unit Plans |
|
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Balance, end of period |
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| $ | |
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| $ | ( | ) |
| $ | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except unit and per unit amounts)
(unaudited)
1. | Partnership Organization and Formation |
Suburban Propane Partners, L.P. (the “Partnership”) is a publicly traded Delaware limited partnership principally engaged, through its operating partnership and subsidiaries, in the retail marketing and distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. In addition, to complement its core marketing and distribution businesses, the Partnership services a wide variety of home comfort equipment, particularly for heating and ventilation. The publicly traded limited partner interests in the Partnership are evidenced by common units traded on the New York Stock Exchange (“Common Units”), with
Suburban Propane, L.P. (the “Operating Partnership”), a Delaware limited partnership, is the Partnership’s operating subsidiary formed to operate the propane business and assets. In addition, Suburban Sales & Service, Inc. (the “Service Company”), a subsidiary of the Operating Partnership, was formed to operate the service work and appliance and parts businesses of the Partnership. The Operating Partnership, together with its direct and indirect subsidiaries, accounts for substantially all of the Partnership’s assets, revenues and earnings. The Partnership, the Operating Partnership and the Service Company commenced operations in March 1996 in connection with the Partnership’s initial public offering.
The general partner of both the Partnership and the Operating Partnership is Suburban Energy Services Group LLC (the “General Partner”), a Delaware limited liability company, the sole member of which is the Partnership’s Chief Executive Officer. Other than as a holder of
The Partnership’s fuel oil and refined fuels, natural gas and electricity and services businesses are structured as either limited liability companies that are treated as corporations or corporate entities (collectively referred to as the “Corporate Entities”) and, as such, are subject to corporate level U.S. income tax.
Suburban Energy Finance Corp., a direct
2. | Basis of Presentation |
Principles of Consolidation. The condensed consolidated financial statements include the accounts of the Partnership, the Operating Partnership and all of its direct and indirect subsidiaries. All significant intercompany transactions and account balances have been eliminated. The Partnership consolidates the results of operations, financial condition and cash flows of the Operating Partnership as a result of the Partnership’s
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). They include all adjustments that the Partnership considers necessary for a fair statement of the results of operations, financial position and cash flows for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed. These financial statements should be read in conjunction with the financial statements included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended September 26, 2020. Due to the seasonal nature of the Partnership’s operations, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.
Fiscal Period. The Partnership uses a
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Revenue Recognition. Revenue is recognized by the Partnership when goods or services promised in a contract with a customer have been transferred, and no further performance obligation on that transfer is required, in an amount that reflects the consideration expected to be received. Performance obligations are determined and evaluated based on the specific terms of the arrangements and the distinct products and services offered. Due to the nature of the retail business of the Partnership, there are
The Partnership defers the recognition of revenue for annually billed tank rent, maintenance service contracts, fixed price contracts and budgetary programs where customer consideration is received at the start of the contract period, establishing contract liabilities which are disclosed as customer deposits and advances on the condensed consolidated balance sheets. Deliveries to customers enrolled in budgetary programs that exceed billings to those customers establish contract assets which are included in accounts receivable on the condensed consolidated balance sheets. The Partnership ratably recognizes revenue over the applicable term for tank rent and maintenance service agreements, which is generally
The Partnership incurs incremental direct costs, such as commissions to its salesforce, to obtain certain contracts. These costs are expensed as incurred, consistent with the practical expedients issued by the FASB, since the expected amortization period is one year or less. The Partnership generally determines selling prices based on, among other things, the current weighted average cost and the current replacement cost of the product at the time of delivery, plus an applicable margin. Except for tank rental agreements, maintenance service contracts, fixed price contracts and budgetary programs, customer payments for the satisfaction of a performance obligation are due upon receipt.
Fair Value Measurements. The Partnership measures certain of its assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants – in either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability.
The common framework for measuring fair value utilizes a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below with Level 1 having the highest priority and Level 3 having the lowest.
• | Level 1: Quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. |
• | Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable. |
Business Combinations. The Partnership accounts for business combinations using the acquisition method and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired, including the amount assigned to identifiable intangible assets. The primary drivers that generate goodwill are the value of synergies between the acquired entities and the Partnership, and the acquired assembled workforce, neither of which qualifies as an identifiable intangible asset. Identifiable intangible assets with finite lives are amortized over their useful lives. The results of operations of acquired businesses are included in the condensed consolidated financial statements from the acquisition date. The Partnership expenses all acquisition-related costs as incurred.
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Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates have been made by management in the areas of self-insurance and litigation reserves, pension and other postretirement benefit liabilities and costs, valuation of derivative instruments, depreciation and amortization of long-lived assets, asset impairment assessments, tax valuation allowances, allowances for doubtful accounts, and purchase price allocation for acquired businesses. The Partnership uses Society of Actuaries life expectancy information when developing the annual mortality assumptions for the pension and postretirement benefit plans, which are used to measure net periodic benefit costs and the obligation under these plans. Actual results could differ from those estimates, making it reasonably possible that a material change in these estimates could occur in the near term.
Recently Adopted Accounting Pronouncements. On the first day of fiscal 2021, the Partnership adopted the guidance under Accounting Standards Update (“ASU”) ASU 2017-04 “Simplifying the Test for Goodwill Impairment” (“Topic 350”). This update eliminated the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. In testing goodwill for impairment, an entity may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates that goodwill impairment is more likely than not, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit to its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The initial adoption of Topic 350 did not have an impact on the Partnership’s condensed consolidated financial statements.
On the first day of fiscal 2021, the Partnership adopted the guidance under ASU 2016-13 “Financial Instruments - Measurement of Credit Losses on Financial Instruments” (“Topic 326”), including the related amendments thereto. The new guidance introduced an approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments including, but not limited to, trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The Partnership adopted the guidance under Topic 326 using a modified retrospective transition approach for all financial instruments existing at, or entered into after, the date of initial application. The adoption of Topic 326 did not have a material impact on the Partnership’s condensed consolidated financial statements.
3. | Disaggregation of Revenue |
| Three Months Ended |
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| December 26, |
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| December 28, |
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Retail |
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Residential | $ | |
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Commercial |
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Industrial |
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Agricultural |
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Government |
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Wholesale |
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Total revenues | $ | |
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The Partnership recognized $
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4. | Investments in and Acquisition of Businesses |
On November 12, 2020, the Operating Partnership acquired the propane assets and operations of a propane retailer headquartered in North Carolina for $
On September 17, 2020, the Operating Partnership purchased a
During the first quarter of fiscal 2021, the Operating Partnership purchased an additional secured convertible note issued by Oberon as they reached certain development milestones as stated in the agreement.
5. | Financial Instruments and Risk Management |
Cash and Cash Equivalents. The Partnership considers all highly liquid instruments purchased with an original maturity of
Derivative Instruments and Hedging Activities
Commodity Price Risk. Given the retail nature of its operations, the Partnership maintains a certain level of priced physical inventory to help ensure its field operations have adequate supply commensurate with the time of year. The Partnership’s strategy is to keep its physical inventory priced relatively close to market for its field operations. The Partnership enters into a combination of exchange-traded futures and option contracts and, in certain instances, over-the-counter options and swap contracts (collectively, “derivative instruments”) to hedge price risk associated with propane and fuel oil physical inventories, as well as future purchases of propane or fuel oil used in its operations and to help ensure adequate supply during periods of high demand. In addition, the Partnership sells propane and fuel oil to customers at fixed prices, and enters into derivative instruments to hedge a portion of its exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. Under this risk management strategy, realized gains or losses on derivative instruments will typically offset losses or gains on the physical inventory once the product is sold or delivered as it pertains to fixed price contracts. All of the Partnership’s derivative instruments are reported on the condensed consolidated balance sheet at their fair values. In addition, in the course of normal operations, the Partnership routinely enters into contracts such as forward priced physical contracts for the purchase or sale of propane and fuel oil that qualify for and are designated as normal purchase or normal sale contracts. Such contracts are exempted from the fair value accounting requirements and are accounted for at the time product is purchased or sold under the related contract. The Partnership does not use derivative instruments for speculative trading purposes. Market risks associated with derivative instruments are monitored daily for compliance with the Partnership’s Hedging and Risk Management Policy which includes volume limits for open positions. Priced on-hand inventory is also reviewed and managed daily as to exposures to changing market prices.
On the date that derivative instruments are entered into, other than those designated as normal purchases or normal sales, the Partnership makes a determination as to whether the derivative instrument qualifies for designation as a hedge. Changes in the fair value of derivative instruments are recorded each period in current period earnings or other comprehensive income (“OCI”), depending on whether the derivative instrument is designated as a hedge and, if so, the type of hedge. For derivative instruments designated as cash flow hedges, the Partnership formally assesses, both at the hedge contract’s inception and on an ongoing basis, whether the hedge contract is highly effective in offsetting changes in cash flows of hedged items. Changes in the fair value of derivative instruments designated as cash flow hedges are reported in OCI to the extent effective and reclassified into earnings during the same period in which the hedged item affects earnings. The mark-to-market gains or losses on ineffective portions of cash flow hedges are recognized in earnings immediately. Changes in the fair value of derivative instruments that are not designated as cash flow hedges, and that do not meet the normal purchase and normal sale exemption, are recorded within earnings as they occur. Cash flows associated with derivative instruments are reported as operating activities within the condensed consolidated statement of cash flows.
Interest Rate Risk. A portion of the Partnership’s borrowings bear interest at prevailing interest rates based upon, at the Operating Partnership’s option, LIBOR plus an applicable margin or the base rate, defined as the higher of the
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From time to time, the Partnership manages part of its variable interest rate risk by entering into interest rate swap agreements. The Partnership did not enter into any interest rate swap agreements during the first quarter of fiscal 2021 or in fiscal 2020.
Valuation of Derivative Instruments. The Partnership measures the fair value of its exchange-traded options and futures contracts using quoted market prices found on the New York Mercantile Exchange (the “NYMEX”) (Level 1 inputs); the fair value of its swap contracts using quoted forward prices, and the fair value of its interest rate swaps using model-derived valuations driven by observable projected movements of the 3-month LIBOR (Level 2 inputs); and the fair value of its over-the-counter options contracts using Level 3 inputs. The Partnership’s over-the-counter options contracts are valued based on an internal option model. The inputs utilized in the model are based on publicly available information as well as broker quotes. The significant unobservable inputs used in the fair value measurements of the Partnership’s over-the-counter options contracts are interest rate and market volatility.
The following summarizes the fair value of the Partnership’s derivative instruments and their location in the condensed consolidated balance sheets as of December 26, 2020 and September 26, 2020, respectively:
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| As of December 26, 2020 |
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| As of September 26, 2020 |
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Asset Derivatives |
| Location |
| Fair Value |
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| Location |
| Fair Value |
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Derivatives not designated as hedging instruments: |
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Commodity-related derivatives |
| Other current assets |
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Liability Derivatives |
| Location |
| Fair Value |
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| Fair Value |
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Derivatives not designated as hedging instruments: |
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Commodity-related derivatives |
| Other current liabilities |
| $ | |
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| Other current liabilities |
| $ |