GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Suburban Propane Partners L.P. Reports Operating Results (10-Q)

February 03, 2011 | About:
insider

10qk

18 followers
Suburban Propane Partners L.P. (SPH) filed Quarterly Report for the period ended 2010-12-25.

Suburb Propane has a market cap of $2.03 billion; its shares were traded at around $57.5 with a P/E ratio of 15.9 and P/S ratio of 1.8. The dividend yield of Suburb Propane stocks is 5.9%.Hedge Fund Gurus that owns SPH: Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns SPH: Mario Gabelli of GAMCO Investors, Mario Gabelli of GAMCO Investors.

Highlight of Business Operations:

Net income amounted to $43.1 million, or $1.22 per Common Unit, compared to $48.4 million, or $1.37 per Common Unit, in the prior year first quarter. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the first quarter of fiscal 2011 amounted to $60.1 million, compared to $66.2 million in the prior year first quarter. The first quarter of fiscal 2011 was characterized by unseasonably warm weather, particularly during the first six weeks of the quarter, rising commodity prices and customer conservation resulting from continued weakness in the economy.

Revenues of $328.3 million increased $26.9 million, or 8.9%, compared to the prior year first quarter, primarily due to higher retail selling prices associated with higher commodity prices, offset, to an extent, by lower volumes sold. Average posted prices for propane and fuel oil were 15.5% and 18.6% higher, respectively, compared to the prior year first quarter as commodity prices rose steadily throughout the first quarter of fiscal 2011. Cost of products sold for the first quarter of fiscal 2011 of $186.5 million increased $36.1 million, or 24.0%, compared to $150.4 million in the prior year first quarter. As a result of the steady rise in commodity prices throughout the first quarter of fiscal 2011, we reported realized losses on derivative instruments used for risk management purposes which were not fully offset by sales of the physical product during the quarter, thus negatively impacting overall gross margins. Cost of products sold in the first quarter of fiscal 2011 also included a $1.6 million unrealized (non-cash) loss attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $3.4 million unrealized (non-cash) loss in the prior year quarter; these unrealized losses are excluded from Adjusted EBITDA for both periods.

Once again, we funded all working capital requirements with cash on hand without the need to borrow under our working capital facility and ended the first quarter of fiscal 2011 with $115.6 million of cash. On January 20, 2011, we announced that our Board of Supervisors had declared the twenty-eighth increase (since our recapitalization in 1999) in our quarterly distribution from $0.85 to $0.8525 per Common Unit for the three months ended December 25, 2010. On an annualized basis, this increased distribution rate equates to $3.41 per Common Unit, an increase of $0.01 per Common Unit from the previous distribution rate, and an increase of 2.1% compared to the first quarter of fiscal 2010. The $0.8525 per Common Unit distribution will be paid on February 8, 2011 to Common Unitholders of record as of February 1, 2011.

Our anticipated cash requirements for the remainder of fiscal 2011 include: (i) maintenance and growth capital expenditures of approximately $19.2 million; (ii) interest payments of approximately $23.4 million; and (iii) cash distributions of approximately $90.5 million to our Common Unitholders based on the most recently increased quarterly distribution rate of $0.8525 per Common Unit. Based on our current estimates of cash flow from operations and our cash position at the end of the first quarter of fiscal 2011, we do not anticipate the need to borrow under our credit facility to meet our working capital requirements for the remainder of fiscal 2011. As of December 25, 2010, there was unused borrowing capacity under our Revolving Credit Facility of $91.6 million after considering outstanding letters of credit of $58.4 million.

Average posted prices for propane and fuel oil in the first quarter of fiscal 2011 were 15.5% and 18.6% higher, respectively, compared to the prior year first quarter. Total cost of products sold increased $36.1 million, or 24.0%, to $186.5 million in the first quarter of fiscal 2011 compared to $150.4 million in the prior year first quarter due to higher average product costs resulting from the increase in commodity prices and, to a much lesser extent, realized losses on derivative instruments used for risk management purposes reported in the first quarter of fiscal 2011 that were not fully offset by sales of the physical product during the quarter. Partially offsetting the items driving cost of products sold higher was the impact of lower volumes sold and the favorable impact of non-cash mark-to-market adjustments from our risk management activities in the first quarter of fiscal 2011 compared to the prior year first quarter. Cost of products sold in the first quarter of fiscal 2011 included a $1.6 million unrealized (non-cash) loss representing the net change in the fair value of derivative instruments during the period, compared to a $3.4 million unrealized (non-cash) loss in the prior year first quarter, resulting in a decrease of $1.8 million in cost of products sold in the first quarter of fiscal 2011 compared to the prior year first quarter ($2.8 million decrease reported within the fuel oil and refined fuels segment and $1.0 million increase reported within the propane segment).

Net income for the first quarter of fiscal 2011 amounted to $43.1 million, or $1.22 per Common Unit, compared to net income of $48.4 million, or $1.37 per Common Unit, in the prior year first quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of fiscal 2011 amounted to $58.5 million, compared to $62.8 million in the prior year first quarter. Adjusted EBITDA amounted to $60.1 million for the first quarter of fiscal 2011 compared to $66.2 million in the prior year first quarter.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.3/5 (3 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK