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Suburban Propane Partners L.P. (SPH)
NYSE:SPH
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Suburban Propane
(NYSE:SPH)
69Neutral
Positive Factors
Acquisitions
The $53mn acquisition of a New Mexico and Arizona distributor is expected to improve gallons sold and EBITDA generation in FY25.
Weather Conditions
Colder temperatures since the start of 2025 are expected to improve results for the second quarter.
Negative Factors
Financial Performance
SPH reported F4Q24 adj EBITDA results of $1mn that missed MSUSA ($5mn) and Street ($9mn) estimates.
Suburban Propane (SPH) vs. S&P 500 (SPY)
Market Cap
$1.31B
Dividend Yield6.38%
Average Volume (3M)346.03K
Price to Earnings (P/E)19.2
Beta (1Y)0.54
Revenue Growth-4.50%
EPS Growth-33.18%
CountryUS
Employees3,098
SectorUtilities
Sector Strength83
IndustryRegulated Utilities
Share Statistics
EPS (TTM)1.06
Shares Outstanding64,493,750
10 Day Avg. Volume234,166
30 Day Avg. Volume346,027
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.98
Price to Cash Flow (P/CF)37.40
P/FCF Ratio82.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.50Price Target Upside-4.65% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering3
Suburban Propane Business Overview & Revenue Model
Company DescriptionSuburban Propane Partners, L.P. (SPH) is a publicly traded master limited partnership engaged primarily in the distribution of propane, fuel oil, and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. Established in 1928, the company operates through a network of more than 700 locations in 41 states, providing reliable energy solutions to residential, commercial, industrial, and agricultural customers. Suburban Propane is committed to delivering exceptional customer service and dependable energy solutions to meet the diverse needs of its clients.
How the Company Makes MoneySuburban Propane generates revenue primarily through the sale and distribution of propane, fuel oil, and refined fuels. A significant portion of its revenue comes from long-term customer relationships, including residential, commercial, and industrial clients. The company also offers equipment installation and maintenance services, which contribute to its revenue streams. In addition to direct sales, Suburban Propane leverages its extensive distribution network and strategic partnerships to optimize supply chain efficiencies and expand market reach. The company's ability to adapt to market dynamics, along with its focus on operational excellence, helps it maintain stable earnings and profitability.
Suburban Propane Financial Statement Overview
Summary
Suburban Propane presents a stable financial position with strong operational cash flows and decent profitability margins. However, the company faces challenges with high leverage and a declining revenue trend. The focus on operational efficiency is a positive sign, but the company needs to address revenue growth to improve its financial outlook.Income Statement
The income statement shows a mixed performance. The TTM gross profit margin is approximately 4.35%, which is relatively low. The TTM net profit margin is around 7.19%, indicating moderate profitability. Revenue has shown a declining trend over the years, but the company managed to improve its EBIT and EBITDA margins in the TTM period to 18.27% and 22.25%, respectively, suggesting a focus on cost control and operational efficiency.65
Positive
Balance Sheet
The balance sheet reflects a challenging position with a high debt-to-equity ratio calculated at approximately 0.25, indicating significant leverage. The equity ratio stands at roughly 22.85%, reflecting a moderate level of equity financing. The return on equity (ROE) for the TTM is about 12.68%, indicating decent returns for shareholders despite the high leverage.58
Neutral
Cash Flow
Cash flow analysis reveals a solid performance with a strong operating cash flow to net income ratio of 2.63 for the TTM, indicating efficient cash generation from operations. The free cash flow to net income ratio is 1.59, highlighting effective capital expenditure management. However, free cash flow growth has been volatile, which could pose risks to future cash availability.70
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.33B | 1.33B | 1.43B | 1.50B | 1.29B | 1.11B | Gross Profit |
| 415.20M | 328.12M | 361.00M | 789.34M | 803.28M | 724.95M | EBIT |
| 175.70M | 171.25M | 206.85M | 206.33M | 213.24M | 140.27M | EBITDA |
| 213.88M | 216.47M | 260.39M | 259.64M | 296.59M | 252.13M | Net Income Common Stockholders |
| 69.14M | 74.17M | 123.75M | 139.71M | 122.79M | 60.76M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 4.44M | 3.22M | 3.51M | 4.10M | 5.81M | 3.14M | Total Assets |
| 2.38B | 2.27B | 2.27B | 2.10B | 2.05B | 2.05B | Total Debt |
| 137.91M | 139.41M | 1.33B | 1.21B | 1.25B | 1.33B | Net Debt |
| 133.47M | 136.19M | 1.33B | 1.21B | 1.24B | 1.33B | Total Liabilities |
| 1.84B | 1.73B | 1.72B | 1.61B | 1.63B | 1.68B | Stockholders Equity |
| 545.14M | 547.06M | 546.36M | -12.60M | -17.58M | -25.78M |
| Cash Flow | Free Cash Flow | ||||
| 110.02M | 101.16M | 180.29M | 176.19M | 196.70M | 176.86M | Operating Cash Flow |
| 182.14M | 160.59M | 225.24M | 220.55M | 226.55M | 209.35M | Investing Cash Flow |
| -142.25M | -81.64M | -170.64M | -94.44M | -34.08M | -53.24M | Financing Cash Flow |
| -35.47M | -72.50M | -44.63M | -127.82M | -189.81M | -155.41M |
Suburban Propane Technical Analysis
Positive
20.45
Price Trends
19.91
Positive
19.03
Positive
18.36
Positive
Market Momentum
-0.04
Positive
48.82
Neutral
42.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPH, the sentiment is Positive. The current price of 20.45 is below the 20-day moving average (MA) of 20.95, above the 50-day MA of 19.91, and above the 200-day MA of 18.36, indicating a neutral trend. The MACD of -0.04 indicates Positive momentum. The RSI at 48.82 is Neutral, neither overbought nor oversold. The STOCH value of 42.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SPH.
Suburban Propane Risk Analysis
Suburban Propane disclosed 51 risk factors in its most recent earnings report. Suburban Propane reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Suburban Propane Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.60B | 21.26 | 9.00% | 2.25% | 5.90% | 11.85% | |
76 Outperform | $6.96B | 12.76 | 12.22% | 4.63% | -14.01% | ― | |
69 Neutral | $1.31B | 19.21 | 12.63% | 6.38% | -4.50% | -33.18% | |
66 Neutral | $22.50B | 21.76 | 10.02% | 2.40% | -0.61% | 15.54% | |
66 Neutral | $4.86B | 14.32 | 15.15% | 3.59% | 9.18% | 36.67% | |
65 Neutral | $11.99B | 15.63 | 6.50% | 4.40% | 7.00% | 0.55% |
* Utilities Sector Average
Performance Comparison
SPH
Suburban Propane
20.45
0.95
4.87%
ATO
Atmos Energy
147.16
33.79
29.81%
CNP
Centerpoint Energy
34.55
7.31
26.84%
NJR
New Jersey Resources
47.98
7.22
17.71%
UGI
UGI
32.25
8.30
34.66%
Suburban Propane Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -5.50% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. The company demonstrated resilience with stable EBITDA and strategic growth through acquisitions and renewable energy projects. However, it faced challenges such as decreased propane demand due to warm weather, increased expenses, and significant impairment charges on investments. Despite these challenges, the company maintains a strong distribution coverage and is well-positioned for future growth.Highlights
Solid Adjusted EBITDA Performance
Adjusted EBITDA for the first quarter of fiscal 2025 was $75.3 million, essentially flat compared to the prior year despite challenging conditions.
Strategic Propane Acquisition
Successfully closed on the acquisition of a propane business in New Mexico and Arizona for $53 million, contributing to strategic growth and market expansion.
Continued Growth in Renewable Energy Projects
Advancements in renewable natural gas projects with ongoing construction in New York and Ohio expected to be completed by the end of the calendar year.
Strong Distribution Coverage
Declared a quarterly distribution of $0.325 per common unit with a strong distribution coverage of 1.87 times for the trailing twelve-month period.
Improved Commodity Hedge Position
Reported an unrealized gain of $3.6 million on commodity hedges compared to a $10.8 million loss in the prior year.
Lowlights
Warm Weather Impact on Propane Demand
Retail propane gallons sold were 0.8% lower primarily due to unseasonably warm temperatures, which were 7% warmer than normal.
Increased Operating Expenses
Operating and G&A expenses increased by $2.4 million, or 1.6%, due to higher payroll and benefit-related costs.
Impairment Charges on Investments
Impairment charges of $19.8 million were recognized to write down investments in Independence Hydrogen and Oberon Fuels due to challenges in the clean energy startup landscape.
Increased Net Interest Expense
Net interest expense increased by 7.8% to $19.6 million due to higher average borrowings under the revolving credit facility.
Company Guidance
During the fiscal first quarter of 2025, Suburban Propane reported an adjusted EBITDA of $75.3 million, maintaining levels similar to the previous year, despite challenges such as unseasonably warm weather and a less active crop drying season. Retail propane sales reached 105.7 million gallons, a slight decline of 0.8% from the prior year, primarily due to warmer temperatures, which were 7% above normal. Propane revenues were supported by increased demand in the Southeast post-hurricanes Helene and Milton and a strategic acquisition in the Southwest, completed in November 2024. The company also faced a 15% rise in average wholesale propane prices, with prices trending between $0.85 to $0.90 per gallon. Additionally, Suburban Propane focused on advancing its renewable natural gas (RNG) projects, including maintenance and upgrades at their Stanfield facility and new constructions in New York and Ohio, expecting to complete by the end of 2025. The company reported a net income of $38 million or $0.59 per common unit, compared to $40.4 million or $0.63 per common unit in the previous year, with a distribution coverage of 1.87 times over the trailing twelve months. Despite elevated leverage at 4.99 times, the company plans to utilize increased earnings from growth projects and monetize production tax credits to improve its financial position.Suburban Propane Corporate Events
Dividends
Suburban Propane Announces Quarterly Distribution Update
Neutral
Jan 23, 2025
On January 23, 2025, Suburban Propane Partners, L.P. announced a quarterly distribution of $0.325 per common unit for the quarter ending December 28, 2024. This distribution, payable on February 11, 2025, equates to an annualized rate of $1.30 per common unit and is subject to federal income tax withholding for foreign investors due to its connection with a U.S. trade or business.
Financial Disclosures
Suburban Propane to Host Q1 2025 Results Call
Neutral
Jan 22, 2025
On January 22, 2025, Suburban Propane Partners, L.P. announced it will hold its Fiscal 2025 First Quarter Results Conference Call on February 6, 2025. This event will provide analysts and investors with insights into the company’s financial performance and business outlook, reflecting its strategic positioning in the energy market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.