SUBURBAN PROPANE PARTNERS LP [SPH] Filings

10-Q 1 sph-20220625.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 25, 2022


☐		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-14222

SUBURBAN PROPANE PARTNERS, L.P.

(Exact name of registrant as specified in its charter)


Delaware	22-3410353
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

240 Route 10 West

Whippany, NJ 07981

(973) 887-5300

(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
Common Units	SPH	New York Stock Exchange

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. ☒ Yes ☐ No

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). Yes ☒ No ☐

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.


Large accelerated filer	☒	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 ☐ No ☒

At August 1, 2022, there were 62,986,862 Common Units of Suburban Propane Partners, L.P. outstanding.

Table of Contents

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

INDEX TO FORM 10-Q


		Page
	PART I. FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	1

	Condensed Consolidated Balance Sheets as of June 25, 2022 and September 25, 2021	1

	Condensed Consolidated Statements of Operations for the three months ended June 25, 2022 and June 26, 2021	2

	Condensed Consolidated Statements of Operations for the nine months ended June 25, 2022 and June 26, 2021	3

	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended June 25, 2022 and June 26, 2021	4

	Condensed Consolidated Statements of Cash Flows for the nine months ended June 25, 2022 and June 26, 2021	5

	Condensed Consolidated Statements of Partners’ Capital for the three months ended June 25, 2022 and June 26, 2021	6

	Condensed Consolidated Statements of Partners’ Capital for the nine months ended June 25, 2022 and June 26, 2021	7

	Notes to Condensed Consolidated Financial Statements	8

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35

ITEM 4.	CONTROLS AND PROCEDURES	36



	PART II. OTHER INFORMATION	37

ITEM 1.	LEGAL PROCEEDINGS	37

ITEM 1A.	RISK FACTORS	37

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	37

ITEM 4.	MINE SAFETY DISCLOSURES	37

ITEM 5.	OTHER INFORMATION	37

ITEM 6.	EXHIBITS	38

SignaturEs		39

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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;

•

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 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;

•

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, including the Russia/Ukraine conflict, 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 attract and retain employees and key personnel to support the growth of our business;

•

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 and manage inflationary increases in fuel, labor and other operating costs;

•

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 and any third-party service providers on which it may rely for support or services to continue to combat cybersecurity threats to its 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.”

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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 25, 2021. 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.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	June 25,			September 25,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	7,066		$	5,808
Accounts receivable, less allowance for doubtful accounts of $5,760 and $3,332, respectively		95,377			71,372
Inventories		66,325			61,802
Other current assets		46,001			41,126
Total current assets		214,769			180,108
Property, plant and equipment, net		560,464			569,130
Operating lease right-of-use assets		138,540			129,999
Goodwill		1,106,627			1,107,026
Other intangible assets, net		34,107			39,263
Other assets		60,888			26,204
Total assets	$	2,115,395		$	2,051,730

LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	34,480		$	39,169
Accrued employment and benefit costs		35,461			40,814
Customer deposits and advances		82,565			111,727
Operating lease liabilities		32,104			30,878
Other current liabilities		57,878			64,558
Total current liabilities		242,488			287,146
Long-term borrowings		1,078,700			1,118,014
Accrued insurance		55,166			49,424
Operating lease liabilities		105,494			98,532
Other liabilities		67,694			73,193
Total liabilities		1,549,542			1,626,309
Commitments and contingencies
Partners’ capital:
Common Unitholders (62,975 and 62,538 units issued and outstanding at June 25, 2022 and September 25, 2021, respectively)		581,922			443,005
Accumulated other comprehensive loss		(16,069	)		(17,584	)
Total partners’ capital		565,853			425,421
Total liabilities and partners’ capital	$	2,115,395		$	2,051,730

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit amounts)

(unaudited)


	Three Months Ended
	June 25,			June 26,
	2022			2021
Revenues
Propane	$	260,634		$	208,689
Fuel oil and refined fuels		19,274			11,314
Natural gas and electricity		7,547			5,835
All other		12,877			12,247
		300,332			238,085
Costs and expenses
Cost of products sold		140,930			83,056
Operating		109,081			102,016
General and administrative		21,541			17,756
Depreciation and amortization		14,009			27,254
		285,561			230,082
Operating income		14,771			8,003
Loss on debt extinguishment		—			16,029
Interest expense, net		15,004			16,737
Other, net		2,031			1,085
(Loss) before provision for income taxes		(2,264	)		(25,848	)
Provision for income taxes		271			173
Net (loss)	$	(2,535	)	$	(26,021	)
Net (loss) per Common Unit - basic	$	(0.04	)	$	(0.41	)
Weighted average number of Common Units outstanding - basic		63,284			62,755
Net (loss) per Common Unit - diluted	$	(0.04	)	$	(0.41	)
Weighted average number of Common Units outstanding - diluted		63,284			62,755

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit amounts)

(unaudited)


	Nine Months Ended
	June 25,		June 26,
	2022		2021
Revenues
Propane	$	1,108,572	$	958,641
Fuel oil and refined fuels		83,741		59,075
Natural gas and electricity		31,165		23,461
All other		40,356		39,337
		1,263,834		1,080,514
Costs and expenses
Cost of products sold		576,299		418,002
Operating		334,229		309,183
General and administrative		64,962		57,866
Depreciation and amortization		44,356		82,617
		1,019,846		867,668
Operating income		243,988		212,846
Loss on debt extinguishment		—		16,029
Interest expense, net		45,557		52,964
Other, net		4,395		3,745
Income before provision for income taxes		194,036		140,108
Provision for income taxes		171		936
Net income	$	193,865	$	139,172
Net income per Common Unit - basic	$	3.07	$	2.22
Weighted average number of Common Units outstanding - basic		63,200		62,685
Net income per Common Unit - diluted	$	3.04	$	2.20
Weighted average number of Common Units outstanding - diluted		63,833		63,150

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended						Nine Months Ended
	June 25,			June 26,			June 25,		June 26,
	2022			2021			2022		2021
Net (loss) income	$	(2,535	)	$	(26,021	)	$	193,865	$	139,172
Other comprehensive income:
Amortization of net actuarial losses and prior service credits into earnings		293			593			881		1,779
Recognition in earnings of net actuarial loss for pension settlement		634			142			634		712
Other comprehensive income		927			735			1,515		2,491
Total comprehensive (loss) income	$	(1,608	)	$	(25,286	)	$	195,380	$	141,663

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended
	June 25,			June 26,
	2022			2021
Cash flows from operating activities:
Net income	$	193,865		$	139,172
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization		44,356			82,617
Pension settlement charge		634			712
Loss on debt extinguishment		—			16,029
Compensation costs recognized under Restricted Unit Plans		8,422			7,524
Other, net		2,061			2,749
Changes in assets and liabilities:
Accounts receivable		(24,005	)		(19,256	)
Inventories		(4,523	)		(3,966	)
Other current and noncurrent assets		(14,581	)		(27,483	)
Accounts payable		(4,620	)		4,167
Accrued employment and benefit costs		(5,523	)		(1,997	)
Customer deposits and advances		(29,162	)		(28,611	)
Contributions to defined benefit pension plan		(2,220	)		(5,255	)
Other current and noncurrent liabilities		6,432			14,375
Net cash provided by operating activities		171,136			180,777
Cash flows from investing activities:
Capital expenditures		(33,304	)		(21,759	)
Investment in and acquisition of businesses		(36,366	)		(8,316	)
Proceeds from sale of business		850			—
Proceeds from sale of property, plant and equipment		4,492			2,267
Net cash (used in) investing activities		(64,328	)		(27,808	)
Cash flows from financing activities:
Proceeds from long-term borrowings		—			650,000
Repayments of long-term borrowings		—			(786,333	)
Proceeds from borrowings under revolving credit facility		270,200			385,501
Repayments of borrowings under revolving credit facility		(310,800	)		(328,721	)
Issuance costs associated with long-term borrowings		—			(10,778	)
Partnership distributions		(61,255	)		(56,159	)
Other, net		(3,695	)		(3,614	)
Net cash (used in) financing activities		(105,550	)		(150,104	)
Net increase in cash and cash equivalents		1,258			2,865
Cash and cash equivalents at beginning of period		5,808			3,140
Cash and cash equivalents at end of period	$	7,066		$	6,005

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SUBURBAN PROPANE PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

(in thousands)

(unaudited)


	Three Months Ended June 25, 2022
						Accumulated
						Other			Total
	Number of		Common			Comprehensive			Partners’
	Common Units		Unitholders			(Loss)			Capital
Balance, beginning of period		62,968	$	602,145		$	(16,996	)	$	585,149
Net (loss)				(2,535	)		—			(2,535	)
Other comprehensive income				—			927			927
Partnership distributions				(20,466	)		—			(20,466	)
Common Units issued under Restricted Unit Plans		7		(35	)		—			(35	)
Compensation costs recognized under Restricted Unit Plans				2,813			—			2,813
Balance, end of period		62,975	$	581,922		$	(16,069	)	$	565,853

Three Months Ended June 26, 2021

Accumulated

Other

Total

SUBURBAN PROPANE PARTNERS LP [SPH] Filings
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-Q	[2022-02-03]
10-K	[2021-11-24]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-Q	[2021-02-04]
10-K	[2020-11-25]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-Q	[2020-02-06]
10-K	[2019-11-27]
10-Q	[2019-08-08]
10-Q	[2019-05-09]
10-Q	[2019-02-07]
10-K	[2018-11-21]
10-Q	[2018-08-09]
10-Q	[2018-05-10]
10-Q	[2018-02-08]
10-K	[2017-11-22]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-Q	[2017-02-02]
10-K	[2016-11-23]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-Q	[2016-02-04]
10-K	[2015-11-25]
10-Q	[2015-08-06]
10-Q	[2015-05-07]
10-Q	[2015-02-05]
10-K	[2014-11-26]
10-Q	[2014-08-07]
10-Q	[2014-05-08]
10-Q	[2014-02-06]
10-K	[2013-11-27]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-Q	[2013-02-07]
10-K	[2012-11-28]
10-Q	[2012-08-02]
S-1	[2012-05-10]
10-Q	[2012-05-03]
10-Q	[2012-02-02]