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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' Fiscal 2025 Earnings: A Year of Strong Demand and Strategic Growth

Suburban Propane Partners reported a net income of $128.4 million for fiscal 2025, with adjusted EBITDA increasing by $28 million or 11.2% to $253.8 million. The company's retail propane gallons sold rose by 5.9%, driven by sustained cold temperatures and increased demand for backup power generation. However, the fourth quarter saw a net loss of $35.7 million, or 54¢ per common unit, missing analyst estimates of '-0.51' with an actual EPS of '-0.62'. Revenues growth is expected to be -0.1% next year according to analyst estimates.

Publication Date: Nov -21

📋 Highlights
  • Propane Demand & Volumes:: Propane volumes rose 6% YoY, driven by normal winter weather and post-hurricane demand, contributing to a $28M (11.2%) adjusted EBITDA increase.
  • Acquisition & RNG Growth:: Acquired two propane businesses in New Mexico/Arizona for $53M and invested in RNG projects, including renewable propane sales and partnerships with NASCAR/Speedway Motorsports.
  • Debt Reduction & Leverage:: Reduced debt by $2M and ended fiscal 2025 with a leverage ratio of 4.29x, maintaining strong balance sheet health despite a Q4 net loss of $35.7M ($0.54/unit).
  • Capital Raise & Liquidity:: Launched an ATM equity program, raising $23.5M via 1.3M common units, and maintained ample borrowing capacity for capital expansion.
  • Dividend Distribution:: Announced a quarterly distribution of $0.325/unit ($1.30 annualized), reflecting confidence in sustained earnings and operational stability.

Operational Highlights

The company's propane volumes increased by nearly 6% compared to the prior year, driven by normal winter weather and demand in Southeast operations after Hurricanes Helene and Milton. As Michael A. Stivala highlighted, "we created a dedicated sales team focused on less weather-sensitive propane verticals, secured renewable propane sales, and partnered with NASCAR and Speedway Motorsports." The company also made strategic acquisitions and investments, including two propane businesses in New Mexico and Arizona for $53 million and RNG growth projects.

Renewable Natural Gas (RNG) Operations

Suburban Propane Partners made significant progress in its RNG operations, implementing operational improvements and expanding the RNG management team. The company's efforts to diversify its business and invest in growth projects are expected to drive future growth.

Balance Sheet and Dividend

The company's consolidated leverage ratio improved to 4.29 times, and it has ample borrowing capacity to support planned capital expansion projects. With a strong balance sheet, Suburban Propane Partners maintained its quarterly distribution of $0.325 per common unit, with an annualized rate of $1.30 per common unit. The stock's dividend yield stands at 6.96%, making it an attractive option for income investors.

Valuation

Suburban Propane Partners' valuation metrics indicate a relatively attractive price. The stock trades at an EV/EBITDA ratio of 10.02, and a P/E Ratio of 11.54. Additionally, the company's ROE stands at 17.69%, indicating a strong return on equity. With a Net Debt / EBITDA ratio of 5.24, the company's leverage is still relatively high, but the improvement in earnings and debt reduction is a positive sign.

3. NewsRoom

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Suburban Propane Celebrates a Year of Impact Through its SuburbanCares Initiative

Dec -02

Source: prnewswire.com

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Boomers Are Flocking to These 3 Utility Stocks for Yields Above 6%

Nov -28

Source: 247wallst.com

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Suburban Propane Partners, L.P. Annual Report Available Online

Nov -26

Source: prnewswire.com

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Suburban Propane: 2025 Growth Is Likely An Aberration

Nov -20

Source: seekingalpha.com

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Suburban Propane Partners, L.P. Common Units (SPH) Q4 2025 Earnings Call Prepared Remarks Transcript

Nov -13

Source: seekingalpha.com

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Suburban Propane Partners, L.P. Announces Full Year and Fourth Quarter Results

Nov -13

Source: prnewswire.com

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Suburban Propane Partners, L.P. Declares Quarterly Distribution of $0.325 per Common Unit

Oct -23

Source: prnewswire.com

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Suburban Propane Partners, L.P. to Hold Fiscal 2025 Full Year and Fourth Quarter Results Conference Call

Oct -22

Source: prnewswire.com

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

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Value: 6.5

Growth: 3.2

Quality: 4.0

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

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NiSource

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Suburban Propane

A-Score: 6.2/10

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Growth: 2.4

Quality: 5.1

Yield: 10.0

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Yield: 5.0

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Quality: 4.9

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A-Score: 4.5/10

Value: 9.7

Growth: 8.6

Quality: 5.1

Yield: 0.0

Momentum: 1.0

Volatility: 2.3

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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

19.3$

Current Price

19.3$

Potential

-0.00%

Expected Cash-Flows