uploads///sphs ytd returns exceed peers

What Drove Suburban Propane Partners’ Fiscal 3Q16 Earnings?

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Aug. 8 2016, Published 6:24 a.m. ET

Higher EBITDA

Suburban Propane Partners (SPH) reported its results for the quarter ending June 25, 2016, on August 4. The company reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $18.4 million for the quarter, compared to $12.1 million in the corresponding quarter last year. The earnings of propane distribution MLPs have significant seasonal variation. Earnings are typically highest in the quarter ending March 31, which includes the winter heating season. To learn more, read How Milder Winter Impacted Fiscal 2Q16 Results for APU, SPH, and SGU.

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Michael A. Stivala, president and chief executive officer of SPH, said, “We are very pleased to report an increase in our Adjusted EBITDA by $6.3 million, or 52%, compared to the prior year third quarter. As we exited what was reported as the warmest winter on record, we continued to focus on the things within our control – solid customer base management, prudent margin management and further operating efficiencies to drive cost savings.”

Volumes drive earnings

Retail propane gallons sold during the quarter increased 3.4% compared to fiscal 3Q15. “The improvement in earnings for the quarter was driven by a combination of higher volumes sold and continued expense reductions,” said Stivala.

Volumes for the quarter benefited from cooler average temperatures compared to the corresponding quarter last year. According to the NOAA (National Oceanic and Atmospheric Administration), average temperatures across all of SPH’s service territories for fiscal 3Q16 were 9% warmer than normal and 7% cooler than in the corresponding quarter last year.

SPH’s year-to-date return

Suburban Propane Partners’ YTD (year-to-date) total return exceeds the returns of its propane distribution peers AmeriGas Partners (APU) and Ferrellgas Partners (FGP). Suburban Propane Partners’ YTD total return is 53%, compared to 50% and 24% for APU and FGP, respectively. The Alerian MLP ETF (AMLP) has generated a total return of 12.6% so far in 2016.

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