Company: SPH
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0000950170-25-015135
Chunk: 40

Company: SUBURBAN PROPANE PARTNERS LP
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 1
Chunk 40
---
 quarter of fiscal 2025 included a $3.6 million unrealized gain attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $10.8 million unrealized loss in the prior year first quarter.  These non-cash adjustments, which were reported in cost of products sold, were excluded from Adjusted EBITDA for both periods. Excluding the impact of the mark-to-market adjustments, total gross margin decreased $1.0 million, or 0.5%, compared to the prior year first quarter, primarily due to slightly lower propane volumes sold, partially offset by an increase in propane unit margins of $0.02 per gallon, or 1.3%.

Combined operating and general and administrative expenses of $150.0 million for the first quarter of fiscal 2025 increased $2.4 million, or 1.6%, compared to the prior year first quarter, primarily due to higher payroll and benefit-related expenses and accruals for settling certain legal matters, offset to an extent by lower vehicle fuel costs.

During the first quarter of fiscal 2025, we recognized $3.0 million of income for contingent consideration from Equilibrium Capital Group (“Equilibrium”), which was reported within “Other, net” on the condensed consolidated statements of operations.  According to the purchase agreement for the RNG production assets that we acquired from Equilibrium in December 2022, expenditures for the gas upgrade equipment project at the Columbus, Ohio facility that exceeded a certain threshold would be funded by Equilibrium, up to a total of $3.0 million, if we incurred those costs prior to December 31, 2024.

During the first quarter of fiscal 2025, we acquired a well-run propane business in strategic markets in New Mexico and Arizona for total consideration of $53.0 million, inclusive of non-compete payments.  The acquisition, along with seasonal working capital and growth capital expenditures for the RNG facilities, were funded with net borrowings of $91.7 million under the Revolving Credit Facility.  The Consolidated Leverage Ratio, as defined in our credit agreement, for the twelve-month period ended December 28, 2024 was 4.99x.

Adjusted EBITDA for the first quarter of fiscal 2025 excludes other-than-temporary impairment charges for our investments in Independence Hydrogen, Inc. (“IH”) and Oberon Fuels, Inc. (“Oberon”) of $9.6 million and $10.2 million,