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1. Company Snapshot

1.a. Company Description

Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels.The company operates in four segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other.The Propane segment is involved in the retail distribution of propane to residential, commercial, industrial, and agricultural customers, as well as in the wholesale distribution to industrial end users.


It offers propane primarily for space heating, water heating, cooking, and clothes drying in the residential and commercial markets; for use as a motor fuel in internal combustion engines to power over-the-road vehicles, forklifts, and stationary engines, as well as to fire furnaces, as a cutting gas to the industrial customers, and in other process applications; and for tobacco curing, crop drying, poultry brooding, and weed control in the agricultural markets.The Fuel Oil and Refined Fuels segment engages in the retail distribution of fuel oil, diesel, kerosene, and gasoline to residential and commercial customers for use primarily as a source of heat in homes and buildings.The Natural Gas and Electricity segment markets natural gas and electricity to residential and commercial customers in the deregulated energy markets in New York and Pennsylvania.


The All Other segment sells, installs, and services a range of home comfort equipment, including whole-house heating products, air cleaners, humidifiers, and space heaters.As of September 25, 2021, the company served approximately 1.0 million residential, commercial, industrial, and agricultural customers through 700 locations in 41 states primarily in the east and west coast regions of the United States, as well as portions of the Midwest region of the United States and Alaska.Suburban Energy Services Group LLC serves as a general partner of Suburban Propane Partners, L.P. The company was founded in 1945 and is headquartered in Whippany, New Jersey.

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1.b. Last Insights on SPH

Suburban Propane Partners, L.P.'s recent performance was driven by strong Q4 2024 earnings, with revenue growth and stable cash flows. The company's propane distribution business showed resilience, with solid coverage of its quarterly distribution. Additionally, the partnership's well-managed leverage and manageable debt maturity in 2027 contributed to its stability. The recent executive level promotion and quarterly distribution declaration also indicate a positive direction for the company.

1.c. Company Highlights

2. Suburban Propane Partners' Q1 Earnings: A Strong Start to Fiscal 2026

Suburban Propane Partners, L.P. reported a robust financial performance in the first quarter of fiscal 2026, with net income reaching $46.6 million, an increase of $8.1 million compared to the prior year. Earnings per share (EPS) came in at $0.69, surpassing analyst estimates of $0.53. The company's revenue growth was driven by a 4% increase in retail propane gallons sold, which totaled 110.2 million gallons. Adjusted EBITDA rose by nearly 11% to $83.4 million, reflecting the company's ability to manage costs and capitalize on higher demand. The gross margin improved significantly, driven by higher propane volumes and increased propane unit margins.

Publication Date: Mar -02

📋 Highlights
  • EBITDA Growth:: Adjusted EBITDA increased by 11% to $83.4 million, driven by 4% higher propane volumes despite warmer temperatures in the West.
  • Net Income & Sales Volume:: Net income rose by $8.1 million to $46.6 million, with retail propane gallons sold up 4.2% to 110.2 million.
  • Gross Margin Expansion:: Gross margin improved by $238.6 million, despite a 14% drop in average wholesale propane prices to $0.66 per gallon.
  • Capital Allocation:: $19.8 million in capital spending, allocating $13 million to propane operations and $6.8 million to RNG growth projects.
  • Distribution Coverage:: Declared a $0.0325 per unit quarterly distribution (annualized $1.30), with 2.19x coverage and a 4.57x consolidated leverage ratio.

Operational Highlights

The fiscal 2026 heating season started with a surge of colder weather in key operating territories, driving heat-related demand. Despite warmer average temperatures in the West, volumes sold increased, and renewable natural gas (RNG) operations saw average daily RNG injection increase sequentially and year over year. The company's focus on RNG growth projects is evident, with $6.8 million allocated to these initiatives during the quarter.

Expenses and Capital Allocation

Expenses increased due to higher payroll and benefit-related costs, overtime, and other variable operating costs. However, the company's adjusted EBITDA margin expansion indicates effective cost management. Net interest expense remained flat at $19.8 million. Capital spending was $19.8 million, with a significant portion supporting propane operations and RNG growth projects. The consolidated leverage ratio improved to 4.57 times, indicating a more manageable debt burden.

Valuation and Dividend

With a current P/E Ratio of 10.12 and an EV/EBITDA of 10.13, the company's valuation appears reasonable. The Dividend Yield stands at 6.4%, making it an attractive option for income-seeking investors. The company's distribution coverage remained strong at 2.19 times, and the Board declared a quarterly distribution of $0.0325 per common unit, with an annualized rate of $1.30 per common unit. Analysts estimate next year's revenue growth at 1.6%, indicating a stable outlook for the company.

Outlook and Strategy

As Michael A. Stivala, President and Chief Executive Officer, summarized, the company is well-prepared to meet increased demand from a more normalized winter heating season while continuing to drive operational enhancements and executing on long-term strategic growth plans. The company's focus on RNG growth projects and propane operations positions it for sustained success.

3. NewsRoom

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Suburban Propane Partners Q1 Earnings Call Highlights

Feb -07

Source: defenseworld.net

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Suburban Propane Partners, L.P. Common Units (SPH) Q1 2026 Earnings Call Transcript

Feb -05

Source: seekingalpha.com

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Suburban Propane Partners, L.P. Announces First Quarter Results

Feb -05

Source: prnewswire.com

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Market Today: Disney picks D'Amaro; PepsiCo trims prices

Feb -03

Source: gurufocus.com

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2 Highest Yielding Quality MLPs To Include In Retirement Portfolios

Jan -26

Source: seekingalpha.com

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Suburban Propane Partners, L.P. Announces Executive Level Promotion

Jan -22

Source: prnewswire.com

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Suburban Propane Partners, L.P. to Hold Fiscal 2026 First Quarter Results Conference Call

Jan -21

Source: prnewswire.com

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Osaic Holdings Inc. Grows Stock Position in Suburban Propane Partners, L.P. $SPH

Jan -02

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.52%)

6. Segments

Propane

Expected Growth: 3.5%

Suburban Propane Partners, L.P.'s 3.5% growth in propane sales is driven by increasing demand from residential and commercial customers, particularly in the Northeast and Midwest regions. Additionally, the company's focus on cost savings initiatives, strategic acquisitions, and expansion into new markets, such as propane autogas, contribute to its growth momentum.

Fuel Oil and Refined Fuels

Expected Growth: 3.8%

Suburban Propane Partners, L.P.'s 3.8% growth in Fuel Oil and Refined Fuels is driven by increasing demand for heating fuels, particularly in the Northeast region, coupled with strategic acquisitions and organic growth initiatives. Additionally, the company's focus on cost savings and operational efficiencies has contributed to the growth.

All Other

Expected Growth: 3.2%

Suburban Propane Partners, L.P.'s 3.2% growth in 'All Other' segment is driven by increasing demand for propane-powered vehicles, expansion of cylinder exchange business, and growth in fees from ancillary services. Additionally, the partnership's focus on cost savings initiatives and operational efficiencies also contributed to the growth.

Natural Gas and Electricity

Expected Growth: 4.2%

Suburban Propane Partners, L.P.'s 4.2% growth in Natural Gas and Electricity is driven by increasing demand for clean energy, government incentives for renewable energy adoption, and strategic acquisitions expanding its customer base and geographic footprint.

7. Detailed Products

Propane

A clean-burning, environmentally friendly fuel used for heating homes, water heating, cooking, and powering appliances.

Fuel Oil

A refined product used for heating homes and businesses.

Natural Gas

A clean-burning, environmentally friendly fuel used for heating homes, water heating, cooking, and powering appliances.

Electricity

A convenient and efficient energy source used for powering homes and businesses.

Propane-Powered Generators

Reliable backup power solutions for homes and businesses.

Fuel Delivery Services

Convenient and reliable fuel delivery services for homes and businesses.

Equipment Sales and Service

Sales, installation, and maintenance of propane-powered appliances and equipment.

8. Suburban Propane Partners, L.P.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Suburban Propane Partners, L.P. operates in a niche market, providing propane and other energy products to residential, commercial, and industrial customers. While there are substitutes available, such as electricity and natural gas, propane remains a popular choice for many customers. The threat of substitutes is moderate, as customers may choose alternative energy sources, but the convenience and cost-effectiveness of propane make it a viable option.

Bargaining Power Of Customers

Suburban Propane Partners, L.P. has a diverse customer base, with no single customer accounting for a significant portion of revenue. This reduces the bargaining power of customers, as no one customer has the ability to significantly impact the company's operations or pricing.

Bargaining Power Of Suppliers

Suburban Propane Partners, L.P. relies on a few large suppliers for its propane and other energy products. While the company has some negotiating power due to its size and scale, suppliers still have some bargaining power, particularly in times of high demand or supply chain disruptions.

Threat Of New Entrants

The propane industry has significant barriers to entry, including high capital costs, regulatory hurdles, and the need for specialized equipment and expertise. These barriers make it difficult for new entrants to join the market, reducing the threat of new competition.

Intensity Of Rivalry

The propane industry is highly competitive, with several large players vying for market share. Suburban Propane Partners, L.P. faces intense competition from other propane distributors, as well as from alternative energy sources. The company must continually innovate and improve its operations to remain competitive.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 70.89%
Debt Cost 5.55%
Equity Weight 29.11%
Equity Cost 6.08%
WACC 5.70%
Leverage 243.48%

11. Quality Control: Suburban Propane Partners, L.P. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Suburban Propane

A-Score: 6.7/10

Value: 6.8

Growth: 3.3

Quality: 5.0

Yield: 10.0

Momentum: 5.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Northwest Natural

A-Score: 6.6/10

Value: 6.4

Growth: 3.1

Quality: 3.9

Yield: 8.0

Momentum: 8.0

Volatility: 10.0

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Stock-Card
NiSource

A-Score: 6.2/10

Value: 5.3

Growth: 3.3

Quality: 4.7

Yield: 6.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Aris Water Solutions

A-Score: 5.5/10

Value: 6.3

Growth: 8.6

Quality: 4.6

Yield: 5.0

Momentum: 4.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
RGC Resources

A-Score: 5.5/10

Value: 4.1

Growth: 3.2

Quality: 4.7

Yield: 8.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
OPAL Fuels

A-Score: 4.3/10

Value: 9.5

Growth: 8.4

Quality: 4.6

Yield: 0.0

Momentum: 1.0

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

20.53$

Current Price

20.53$

Potential

-0.00%

Expected Cash-Flows