Suburban Propane Partners, L.P. Announces Full Year and Fourth Quarter Results

Suburban Propane Partners, L.P. Announces Full Year and Fourth Quarter Results

PR Newswire

WHIPPANY, N.J., Nov. 28, 2012

WHIPPANY, N.J., Nov. 28, 2012 /PRNewswire/ -- Suburban Propane Partners, L.P.
(NYSE:SPH), a nationwide distributor of propane, fuel oil and related products
and services, as well as a marketer of natural gas and electricity, today
announced results for its fourth quarter and fiscal year ended September 29,
2012.

Fiscal Year 2012 Results

Record warm temperatures across much of the country had a significant negative
affect on volumes sold and overall profitability during fiscal 2012.
Nonetheless, the Partnership had several notable achievements during fiscal
2012, including: (i) the completion of the acquisition of Inergy, L.P.'s
retail propane business ("Inergy Propane") for approximately $1.9 billion on
August 1, 2012 (the "Inergy Propane Acquisition"), including the subsequent
issuance of approximately 7.2 million Common Units in a secondary public
offering, the net proceeds of which were used to fund a portion of the Inergy
Propane Acquisition; (ii) the amendment and restatement of the Partnership's
revolving credit facility to a new five-year facility at lower interest rates,
as well as to increase the capacity under the facility by $150.0 million; and
(iii) for the sixth consecutive year, the Partnership funded all of its cash
needs from cash on hand without the need to borrow under its working capital
facility and ended the year with $134.3 million of cash.

Fiscal 2012 included 53 weeks of operations, compared to 52 weeks in the prior
year, and includes the results of operations for Inergy Propane from the date
of acquisition. Net income for fiscal 2012 amounted to $1.9 million, or $0.05
per Common Unit, compared to $115.0 million, or $3.24 per Common Unit, in
fiscal 2011. Earnings before interest, taxes, depreciation and amortization
("EBITDA") for fiscal 2012 amounted to $86.4 million, compared to $178.9
million for fiscal 2011. Adjusted EBITDA (as defined and reconciled below)
amounted to $108.5 million in fiscal 2012, compared to $179.4 million in
fiscal 2011.

Net income and EBITDA for fiscal 2012 were negatively affected by several
significant items, including: (i) $17.9 million in acquisition-related costs
associated with the Inergy Propane Acquisition; (ii) a charge of $4.5 million
associated with a legal settlement reached during the fourth quarter of fiscal
2012 included within general and administrative expenses; (iii) losses on debt
extinguishment of $2.2 million associated with the refinancing of the
Partnership's revolving credit facility and certain financing activities for
the Inergy Propane Acquisition; and (iv) a $2.1 million non-cash charge from a
loss on disposal of an asset in the Partnership's natural gas and electricity
business. Net income and EBITDA for fiscal 2011 included a $2.0 million charge
for severance costs associated with the realignment of the Partnership's field
operations.

In announcing the full year results, President and Chief Executive Officer
Michael J. Dunn, Jr., said, "While the record warm temperatures this fiscal
year certainly created a very challenging operating environment, the steps we
have taken over the past several years to streamline our operating model and
strengthen our balance sheet put us in a position to be opportunistic. The
Inergy Propane Acquisition was a transformative event for Suburban by
effectively doubling the size of the company, expanding our geographic reach
into eleven more states and providing us with an opportunity to apply our
customer-oriented focus on a much broader customer base. Given the execution
of our acquisition financing strategy, we have preserved our cash balance,
which amounted to $134.3 million at the end of fiscal 2012, and have more than
adequate liquidity to fund our cash needs."

Mr. Dunn added, "Our integration plans are well underway as we combine
operations and cultures while, at the same time, maintaining our focus on
delivering the highest quality customer service to our combined customer base
and pursuing our internal initiatives to grow our customer base and drive
operating efficiencies." 

Retail propane gallons sold for fiscal 2012 decreased 15.1 million gallons, or
5.1%, to 283.8 million gallons from 298.9 million gallons in fiscal 2011.
Sales of fuel oil and other refined fuels decreased 8.7 million gallons, or
23.4%, to 28.5 million gallons compared to 37.2 million gallons in the prior
year. As reported throughout fiscal 2012, the most significant factor
impacting volumes in both segments was the record warm weather experienced
throughout most of the country, particularly during the critical heating
months from October 2011 through March 2012. According to the National Oceanic
and Atmospheric Administration, average temperatures (as measured by heating
degree days) across the Partnership's service territories during fiscal 2012
were 14% warmer than normal and 13% warmer than fiscal 2011. The impact of
record warm temperatures on volumes sold was offset to an extent by the
addition of propane and refined fuels volumes from Inergy Propane since August
1, 2012.

Revenues for fiscal year 2012 of $1,063.5 million decreased $127.1 million, or
10.7%, compared to the prior year, primarily due to the lower volumes sold and
lower average propane selling prices. Cost of products sold for fiscal 2012 of
$599.1 million decreased $79.6 million, or 11.7%, compared to $678.7 million
in the prior year as a result of lower volumes sold and lower wholesale
product costs. Cost of products sold in fiscal 2012 and 2011 included a $4.6
million and $1.4 million, respectively, unrealized (non-cash) gain
attributable to the mark-to-market adjustment for derivative instruments used
in risk management activities which are excluded from Adjusted EBITDA for both
periods in the table below. Average posted prices for propane during fiscal
2012 were 19.7% lower than the prior year, while average posted prices for
fuel oil were 7.4% higher than the prior year. 

Combined operating and general and administrative expenses of $357.8 million
for fiscal year 2012 were $26.8 million, or 8.1%, higher than the prior year,
primarily as a result of the Inergy Propane operations and the legal
settlement referred to above, offset to an extent by lower variable
compensation attributable to lower earnings and continued savings in payroll
and benefit related expenses. Depreciation and amortization expense of $45.8
million increased $10.2 million, or 28.7%, primarily due to the impact of the
Inergy Propane Acquisition. Net interest expense of $38.6 million for fiscal
2012 increased $11.2 million, or 40.9%, compared to the prior year as a result
of higher debt levels associated with the financing for the Inergy Propane
Acquisition.

Fourth Quarter 2012 Results

Consistent with the seasonal nature of the propane and fuel oil businesses,
the Partnership typically reports a net loss for its fiscal fourth quarter.
The fourth quarter of fiscal 2012 included 14 weeks of operations, compared to
13 weeks in the prior year fourth quarter, and includes the results of
operations for Inergy Propane since August 1, 2012. Net loss in the three
months ended September 29, 2012 was $61.6 million, or $1.29 per Common Unit,
compared to a net loss of $21.7 million, or $0.61 per Common Unit, for the
fourth quarter of fiscal 2011. Net loss and EBITDA for the fourth quarter of
fiscal 2012 included the following significant items: (i) $12.0 million in
acquisition-related costs; (ii) the $4.5 million charge associated with a
legal settlement referenced in the discussion of full year results; and (iii)
a loss on debt extinguishment of $1.7 million. Excluding these items and the
effects of the unrealized (non-cash) mark-to-market adjustments on derivative
instruments used in risk management activities in both quarters, Adjusted
EBITDA for the fourth quarter of fiscal 2012 improved to $0.1 million,
compared to a loss of $4.6 million for the fourth quarter of fiscal 2011.

Retail propane gallons sold in the fourth quarter of fiscal 2012 increased
26.6 million gallons, to 70.6 million gallons compared to 44.0 million gallons
in the prior year fourth quarter. Sales of fuel oil and other refined fuels
increased 1.9 million gallons, to 5.9 million gallons during the fourth
quarter of fiscal 2012. The increase in volumes sold in both segments was
primarily attributable to the addition of Inergy Propane, which contributed
27.0 million gallons of propane and 2.5 million gallons of fuel oil and other
refined fuels in the fourth quarter of fiscal 2012.

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 more than 1.2 million residential,
commercial, industrial and agricultural customers through more than 750
locations in 41 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:

  oThe impact of weather conditions on the demand for propane, fuel oil and
    other refined fuels, natural gas and electricity;
  oVolatility in the unit cost of propane, fuel oil and other refined fuels
    and natural gas, the impact of the Partnership's hedging and risk
    management activities, and the adverse impact of price increases on
    volumes as a result of customer conservation;
  oThe expected cost savings from the Inergy Propane Acquisition may not be
    fully realized or realized within the expected timeframe;
  oThe Partnership's revenue from the Inergy Propane Acquisition may be lower
    than expected;
  oCosts of the integration of the business of Inergy Propane and the
    Partnership may be greater than expected;
  oThe ability of the Partnership to compete with other suppliers of propane,
    fuel oil and other energy sources;
  oThe 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;
  oThe ability of the Partnership to acquire and maintain reliable
    transportation for its propane, fuel oil and other refined fuels;
  oThe ability of the Partnership to retain customers or acquire new
    customers;
  oThe impact of customer conservation, energy efficiency and technology
    advances on the demand for propane, fuel oil and other refined fuels,
    natural gas and electricity;
  oThe ability of management to continue to control expenses;
  oThe impact of changes in applicable statutes and government regulations,
    or their interpretations, including those relating to the environment and
    global warming, derivative instruments and other regulatory developments
    on the Partnership's business;
  oThe impact of changes in tax regulations that could adversely affect the
    tax treatment of the Partnership for federal income tax purposes;
  oThe impact of legal proceedings on the Partnership's business; 
  oThe impact of operating hazards that could adversely affect the
    Partnership's operating results to the extent not covered by insurance;
  oThe Partnership's ability to make strategic acquisitions and successfully
    integrate them, including but not limited to Inergy Propane;
  oThe impact of current conditions in the global capital and credit markets,
    and general economic pressures;
  oThe operating, legal and regulatory risks the Partnership may face; and
  oOther 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 Annual Report under "Risk Factors."

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
24, 2011 and other periodic reports filed with the SEC. 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, except as otherwise
required by law.



Suburban Propane Partners, L.P. and Subsidiaries
Consolidated Statements of Operations
For the Three and Twelve Months Ended September 29, 2012 and September 24, 2011
(in thousands, except per unit amounts)
(unaudited)
                     Three Months Ended             Twelve Months Ended
                     September29,   September24,  September29,   September24,

                     2012            2011           2012            2011
Revenues
 Propane            $           $          $           $    
                     176,852         142,524        843,648         929,492
 Fuel oil and       22,026          15,124         114,288         139,572
refined fuels
 Natural gas and    15,541          16,373         67,419          84,721
electricity
 All other         11,926          7,559          38,103          36,767
                     226,345         181,580        1,063,458       1,190,552
Costs and expenses
 Cost of products   118,308         107,208        599,059         678,719
sold
 Operating          96,168          65,498         298,772         279,329
 General and        18,789          14,249         59,020          51,648
administrative
 Severance charges  -               -              -               2,000

Acquisition-related  11,966          -              17,916          -
costs
 Depreciation and   21,884          9,324          45,790          35,628
amortization
                     267,115         196,279        1,020,557       1,047,324
Operating (loss)     (40,770)        (14,699)       42,901          143,228
income
Loss on debt         1,742           -              2,249           -
extinguishment
Interest expense,    18,891          6,846          38,633          27,378
net
(Loss) income
before provision     (61,403)        (21,545)       2,019           115,850
for income taxes
Provision for        197             147            137             884
income taxes
Net (loss) income    $           $          $         $    
                     (61,600)        (21,692)       1,882           114,966
Net (loss) income    $         $        $         $      
per Common Unit -    (1.29)          (0.61)         0.05           3.24
basic
Weighted average
number of Common     47,790          35,552         38,848          35,525
Units outstanding -
basic
Net (loss) income    $         $        $         $      
per Common Unit -    (1.29)          (0.61)         0.05           3.22
diluted
Weighted average
number of Common     47,790          35,552         38,990          35,723
Units outstanding -
diluted
Supplemental
Information:
EBITDA (a)           $           $         $          $    
                     (20,628)        (5,375)        86,442          178,856
Adjusted EBITDA (a)  $         $         $           $    
                      101           (4,569)        108,536         179,425
Retail gallons
sold:
    Propane          70,607          43,953         283,841         298,902
    Refined fuels    5,917           3,978          28,491          37,241
Capital
expenditures:
    Maintenance      $         $        $         $     
                     1,389           2,748          9,245           10,146
    Growth           $         $        $         $     
                     1,703           2,295          8,231           12,138



    EBITDA represents net income before deducting interest expense, income
    taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA
    excluding the unrealized net gain or loss on mark-to-market activity for
    derivative instruments and other certain items as provided in the table
(a) below. Our management uses EBITDA and Adjusted EBITDA as measures of
    liquidity and we are including them because we believe that they provide
    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.
    EBITDA and Adjusted EBITDA are not recognized terms under accounting
    principles generally accepted in the United States of America ("US GAAP")
    and should not be considered as an alternative to net income or net cash
    provided by operating activities determined in accordance with US GAAP.
    Because EBITDA and Adjusted EBITDA as determined by us excludes some, but
    not all, items that affect net income, they may not be comparable to
    EBITDA and Adjusted EBITDA or similarly titled measures used by other
    companies.
    The following table sets forth (i) our calculations of EBITDA and Adjusted
    EBITDA and (ii) a reconciliation of Adjusted EBITDA, as so calculated, to
    our net cash provided by operating activities:

                      Three Months Ended             Twelve Months Ended
                      September29,   September24,  September29,   September24,

                      2012            2011           2012            2011
 Net (loss) income    $           $          $         $    
                      (61,600)        (21,692)       1,882           114,966
 Add:
  Provision for      197             147            137             884
 income taxes
  Interest expense,  18,891          6,846          38,633          27,378
 net
  Depreciation and   21,884          9,324          45,790          35,628
 amortization
 EBITDA               (20,628)        (5,375)        86,442          178,856
  Unrealized
 (non-cash) losses
 (gains) on changes   2,521           806            (4,649)         (1,431)
 in fair value of
 derivatives
 
 Acquisition-related  11,966          -              17,916          -
 costs
  Loss on legal      4,500           -              4,500           -
 settlement
  Loss on debt       1,742           -              2,249           -
 extinguishment
  Loss on asset      -               -              2,078           -
 disposal
  Severance charges  -               -              -               2,000
 Adjusted EBITDA      101             (4,569)        108,536         179,425
 Add / (subtract):
  Provision for      (197)           (147)          (137)           (884)
 income taxes
  Interest expense,  (18,891)        (6,846)        (38,633)        (27,378)
 net
  Unrealized
 (non-cash) (losses)
 gains on changes in  (2,521)         (806)          4,649           1,431
 fair value of
 derivatives
  Severance charges  -               -              -               (2,000)
 
 Acquisition-related  (11,966)        -              (17,916)        -
 costs
  Loss on legal      (4,500)         -              (4,500)         -
 settlement
  (Gain) loss on
 disposal of          (481)           72             (727)           (2,772)
 property, plant and
 equipment, net
  Compensation cost
 recognized under     798             786            4,059           3,922
 Restricted Unit
 Plans
  Changes in
 working capital and  75,380          34,455         55,642          (18,958)
 other assets and
 liabilities
 Net cash provided    $          $         $           $    
 by operating         37,723          22,945         110,973         132,786
 activities
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 Annual
Report on Form 10-K 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.

Website: http://suburbanpropane.com
Contact: Michael Stivala, Chief Financial Officer, +1-973-503-9252