Suburban Propane Partners Q4 Earnings Call Highlights

Key Points

• Fiscal 2026 adjusted earnings improved: Net income rose to $138.1 million, or $2.07 per unit, while adjusted EBITDA increased 2.2% to $284 million, supported by higher propane sales, renewable natural gas production and tax credits.
• Renewable natural gas growth is progressing: Two projects nearing full operation are expected to add about 300,000 MMBtu of annual production, and the partnership expects to monetize remaining tax credits in fiscal 2027.
• Suburban Propane raised its distribution and expects lower spending: The annualized distribution increased 7.7% to $1.40 per unit, while fiscal 2027 capital spending is projected to fall to $60 million–$70 million from $85.7 million.

Suburban Propane Partners NYSE: SPH reported higher adjusted earnings for fiscal 2026, as increased propane sales, renewable natural gas production and tax credits helped offset rising operating expenses. The partnership also raised its distribution and said it expects capital spending to fall in fiscal 2027.

Adjusted net income rose to $138.1 million, or $2.07 per common unit, from $128.4 million, or $1.97 per unit, a year earlier. Adjusted EBITDA increased 2.2% to $284 million, Chief Financial Officer Mike Kuglin said on the earnings call.

Retail propane sales rose 1% to 402.9 million gallons. Kuglin attributed the increase to colder heating-season temperatures across much of the eastern United States, growth among counter-seasonal customers and volumes from acquisitions. Warmer weather in the West and spring months, along with the absence of prior-year demand following Hurricanes Helene and Milton, partly offset those gains.

Fourth-quarter loss narrows

Suburban Propane reported an adjusted net loss of $30.1 million, or $0.45 per unit, for its seasonally weaker fourth quarter, compared with a loss of $35.7 million, or $0.54 per unit, a year earlier. Fourth-quarter adjusted EBITDA increased to $7.3 million from $0.7 million.

Propane volumes were essentially flat in the quarter, while renewable natural gas injection rose nearly 37%. Kuglin said gross margin increased 11.5%, helped by higher propane unit margins, increased renewable natural gas volumes and a $7.8 million production tax credit benefit. That benefit included a $4.4 million adjustment for credits earned earlier in calendar 2026 under an updated federal credit model.

Adjusted EBITDA excluded a $23.1 million impairment charge that wrote down the partnership’s investment in an early-stage energy technology company. It also excluded a $7.9 million goodwill impairment tied to its natural gas and electricity marketing business, which Kuglin said has been hurt by New York regulatory actions that limited Vestgas’s ability to operate.

Renewable natural gas projects near completion

President and CEO Mike Stivala said renewable natural gas injection increased 13% for the full year. A new anaerobic digester facility in Upstate New York entered service in July, while gas-upgrading equipment at an existing Columbus, Ohio, facility was awaiting final commissioning of its injection site by the local utility.

The two facilities are expected to add approximately 300,000 MMBtu of annual production once they reach full run-rate capacity, Stivala said. He also said improvements at the Stanfield, Arizona, facility have made production more stable and reliable.

Updated Department of Energy guidance on carbon intensity calculations improved the potential value of production tax credits for the partnership’s facilities. Suburban Propane recognized $12.4 million in production tax credit benefits during fiscal 2026 and generated $11.3 million in investment tax credits associated with the New York project. Approximately $3 million of the credits was monetized during the year, with the remainder expected to be monetized in fiscal 2027.

California low-carbon fuel standard credit prices rose from the mid-$50 range at the start of fiscal 2026 to closer to $90 at year-end, Stivala said. Asked about hedging those credits, he said the market was not well developed and that management expects prices to remain relatively stable at current levels for the foreseeable future.

Spending outlook and distributions

With major renewable natural gas projects substantially complete, Suburban Propane expects fiscal 2027 capital spending of $60 million to $70 million, down from $85.7 million in fiscal 2026. Kuglin said the forecast includes $50 million to $55 million for propane operations and $10 million to $15 million for renewable natural gas, with spending split approximately equally between maintenance and growth.

The partnership reduced total debt by more than $25 million during fiscal 2026, and its net debt-to-adjusted EBITDA ratio improved to 4.13 times from 4.29 times a year earlier. It also raised $23.5 million in net proceeds through its at-the-market equity program.

Suburban Propane increased its quarterly distribution to $0.35 per unit, or $1.40 annualized, 7.7% above the previous annualized rate. The distribution was paid Nov. 10. Stivala declined to predict the timing of future increases, saying the board reviews the distribution quarterly and that current coverage provides potential for upside.

The partnership acquired two California propane businesses for $24 million during fiscal 2026 and another business in Florida for approximately $6 million after year-end. Stivala said smaller acquisitions typically slow during the heating season and become more active in spring and summer.

Meanwhile, wholesale propane prices have been volatile entering the new heating season. Kuglin said prices rose from around $0.70 per gallon in September to more than $1.30 in early November before retreating to approximately $1.05 during the week of the call, driven by export demand and global supply constraints.

About Suburban Propane Partners (NYSE:SPH)

Suburban Propane Partners, L.P. is an energy distributor that supplies propane, fuel oil and related products and services to residential, commercial, industrial and agricultural customers. Its offerings include heating fuels, equipment and services designed to support customers' energy and home-comfort needs. The company also participates in the natural gas and electricity markets and invests in renewable energy initiatives. Its operations serve customers across much of the United States. Founded in 1928, Suburban Propane has grown from a regional propane business into a diversified energy provider.

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