Suburban Propane Partners Q3 Earnings Call Highlights

Warm weather hurt third-quarter results: Suburban Propane’s adjusted net loss widened to $17.7 million from $10.8 million, while adjusted EBITDA fell to $18 million from $27 million. Retail propane volumes declined 1.8% as April temperatures were significantly above normal. RNG growth remains a key catalyst: A new New York anaerobic digester began operating, and the upgraded Columbus facility is expected to start injecting RNG in the fiscal fourth quarter. The company expects all three facilities to be operational in fiscal 2027, with annual injections of roughly 750,000 to 800,000 MMBtus. Debt reduction and distributions continued: The partnership repaid $36.2 million of revolving-credit borrowings and maintained a quarterly distribution of $0.325 per common unit, supported by trailing-12-month distribution coverage of 2.07 times.

Suburban Propane Partners NYSE: SPH reported a wider adjusted net loss and lower adjusted EBITDA for its fiscal 2026 third quarter, as unusually warm April weather reduced heating-related propane demand. The partnership said continued growth in agricultural, industrial and national-account customers helped offset some of the weather-driven volume pressure. Adjusted net loss for the quarter was $17.7 million, or $0.27 per common unit, compared with an adjusted net loss of $10.8 million, or $0.17 per unit, a year earlier. Adjusted EBITDA declined to $18 million from $27 million in the prior-year quarter.

Chief Financial Officer Mike Kuglin noted that the company typically records a net loss during its fiscal third quarter because of the seasonal nature of its business. The reported adjusted figures excluded unrealized commodity-hedge mark-to-market effects and certain other non-cash items. Commodity hedges produced an unrealized gain of $700,000 in the latest quarter, compared with a $2.9 million unrealized loss a year earlier.

Retail propane volumes totaled 70.6 million gallons, down 1.8% from the prior-year quarter. Kuglin attributed the decline primarily to seasonally warm conditions in April, which reduced heat-related demand. Average temperatures across Suburban Propane's service areas were 17% warmer than normal and 3% warmer than the prior-year third quarter. April temperatures were 24% warmer than normal and 11% warmer than April 2025, making it the second-warmest April on record, according to the company.

President and Chief Executive Officer Mike Stivala said the quarter began slowly because of near-record warmth across the company's footprint and elevated residential tank levels following strong demand and deliveries in the second quarter. However, he said volumes in May and June exceeded prior-year levels as the company's counter-seasonal customer base continued to expand. Gross margin, excluding hedge mark-to-market adjustments, fell 2.4% to $159.6 million. The decrease reflected lower volumes, while propane unit margins remained steady, Kuglin said. Combined operating and general and administrative expenses increased $5.2 million, or 3.8%, to $141.4 million. The increase was driven mainly by payroll and benefit expenses, as well as fuel and vehicle-maintenance costs. Those factors were partly offset by lower variable compensation costs and a $1.1 million benefit from production tax credits tied to renewable natural gas injections. The company also noted that the prior-year quarter included a $2 million insurance-recovery gain related to Hurricane Helene, which had reduced prior-year operating expenses.