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    SPH
    Earnings call· Jun 2026(Q3 FY26)

    SUBURBAN PROPANE PARTNERS Q3 FY26 earnings call SPH

    Aug 6, 2026 Source

    Executive summary

    Suburban Propane Partners Q3 FY26 — RNG Expansion and Debt Reduction Amidst Warm Weather

    Suburban Propane Partners navigated a challenging third quarter marked by significantly warmer weather in April, which impacted heat-related demand, yet achieved volume growth in May and June. The company continued to advance its renewable natural gas (RNG) platform with new facilities coming online and benefited from improving environmental credit prices. Strategic capital allocation focused on debt reduction and strengthening the balance sheet, positioning the company for long-term growth in both its core propane business and emerging renewable energy segment.

    Highlights

    6

    • Volumes in May and June exceeded prior year levels, offsetting the impact of warmer April weather.

    • RNG injection revenue benefited from higher environmental attribute prices, with California LCFS credit prices up 31% YoY and D3 RIN prices up 8% YoY.

    • New anaerobic digester facility in Upstate New York placed into service, expected to add approximately 100,000 MMBtu of annual D3 RNG injection.

    • Columbus, Ohio biogas facility expected to inject pipeline quality RNG in Q4 FY26, adding nearly 200,000 MMBtu of annual D5 RNG injection.

    • Reduced debt by more than $36 million during the quarter using excess cash flows and ATM proceeds.

    • Distribution coverage remained very strong at 2.07x for the trailing 12 months ended June 2026.

    Concerns

    5

    • Adjusted net loss for Q3 FY26 was $17.7 million, compared to $10.8 million in the prior year, primarily due to lower volumes and higher operating costs.

    • Adjusted EBITDA for Q3 FY26 was $18 million, down from $27 million in the prior year.

    • Retail propane gallons sold decreased by 1.8% YoY to 70.6 million gallons, mainly due to warmer April weather.

    • Average temperatures across service territories were 17% warmer than normal and 3% warmer than prior year, with April being 24% warmer than normal and 11% warmer than April 2025.

    • Combined operating and G&A expenses increased by $5.2 million or 3.8% YoY to $141.4 million, driven by higher payroll, benefits, fuel, and vehicle maintenance costs.

    Guidance & targets

    2
    CategoryTargetConfidence
    Annual RNG Injection
    750,000 to 800,000 MMBtu
    medium materiality
    High
    Full-year Capital Spending for RNG Projects
    $35 million
    medium materiality
    High

    Operational metrics

    30
    Adjusted Net Loss
    $17.7 millioncompared to $10.8 million in prior year
    Q3 FY26

    Adjusted net loss for the third quarter was $17.7 million or $0.27 per common unit compared to adjusted net loss of $10.8 million or $0.17 per common unit in the prior year.

    Adjusted Net Loss per Common Unit
    $0.27compared to $0.17 in prior year
    Q3 FY26

    Adjusted net loss for the third quarter was $17.7 million or $0.27 per common unit compared to adjusted net loss of $10.8 million or $0.17 per common unit in the prior year.

    Adjusted EBITDA
    $18 millioncompared to $27 million in prior year
    Q3 FY26

    Adjusted EBITDA for the third quarter was $18 million compared to $27 million in the prior year.

    Retail Propane Gallons Sold
    70.6 milliondecrease of 1.8% compared to prior year
    Q3 FY26

    Retail propane gallons sold in the third quarter were 70.6 million gallons, a decrease of 1.8% compared to the prior year, primarily due to the impact of seasonably warm weather in April on heat-related demand, which substantially offset the customer base growth in our agricultural, industrial and national accounts customer segments.

    Average Temperatures (vs. normal)
    17% warmerwarmer than normal
    Q3 FY26

    Average temperatures across our service territories during the third quarter were 17% warmer than normal and 3% warmer than the prior year third quarter.

    Average Temperatures (vs. prior year)
    3% warmerwarmer than prior year
    Q3 FY26

    Average temperatures across our service territories during the third quarter were 17% warmer than normal and 3% warmer than the prior year third quarter.

    April Average Temperatures (vs. normal)
    24% warmerwarmer than normal
    April 2026

    For the month of April, average temperatures were 24% warmer than normal and 11% warmer than April 2025 and ranked as the second warmest April on record.

    April Average Temperatures (vs. prior year)
    11% warmerwarmer than April 2025
    April 2026

    For the month of April, average temperatures were 24% warmer than normal and 11% warmer than April 2025 and ranked as the second warmest April on record.

    US Propane Inventories (vs. prior year)
    21% aboveabove June 2025
    June 2026

    U.S. propane inventories remained strong during the quarter, with June 2026 inventory levels approximately 21% above both June 2025 and historical averages for this time of the year.

    US Propane Inventories (vs. historical average)
    21% aboveabove historical averages
    June 2026

    U.S. propane inventories remained strong during the quarter, with June 2026 inventory levels approximately 21% above both June 2025 and historical averages for this time of the year.

    Wholesale Propane Prices (range)
    $0.70 and $0.90
    Q3 FY26

    posted propane prices were volatile and traded between $0.70 and $0.90 per gallon basis Mont Belvieu due to geopolitical tensions in the Middle East and strong export demand.

    Average Wholesale Prices (YoY change)
    3.6% increasecompared to prior year
    Q3 FY26

    Overall, average wholesale prices for the quarter increased 3.6% compared to the prior year third quarter.

    Wholesale Prices (early Q4)
    $0.70 to $0.75flat compared to same time last year
    early Q4 FY26

    In early part of the fourth quarter, wholesale prices have generally been in the $0.70 to $0.75 per gallon range, which is flat compared to the same time last year.

    Total Gross Margins (excl. mark-to-market)
    $159.6 milliondecrease of 2.4% compared to prior year
    Q3 FY26

    Excluding the impact of the mark-to-market adjustments on our commodity hedges that I mentioned earlier, total gross margins for the third quarter were $159.6 million, a decrease of 2.4% compared to the prior year, primarily due to lower volumes sold as propane unit margins remained steady.

    Combined Operating and G&A Expenses
    $141.4 million3.8% higher than prior year
    Q3 FY26

    Combined operating and G&A expenses of $141.4 million for the third quarter were $5.2 million or 3.8% higher than the prior year.

    Net Interest Expense
    $18.8 millionflat to prior year
    Q3 FY26

    Net interest expense of $18.8 million for the third quarter was flat to the prior year as lower benchmark interest rates on borrowings under our revolving credit facility were offset by a higher interest rate for a tranche of senior notes that were refinanced in the first quarter of fiscal 2026.

    Total Capital Spending
    $21.4 millionincreased $6.8 million compared to prior year
    Q3 FY26

    Total capital spending for the quarter was $21.4 million, which included $15.1 million of growth capital.

    Growth Capital Spending
    $15.1 million
    Q3 FY26

    Total capital spending for the quarter was $21.4 million, which included $15.1 million of growth capital.

    Year-to-Date Growth CapEx for RNG Facilities
    $28.7 million
    YTD Q3 FY26

    On a year-to-date basis, our total growth CapEx for our RNG facilities was $28.7 million, and our full year capital spending estimate for the existing RNG projects is approximately $35 million, which is at the low end of the previously communicated range of $35 million to $40 million.

    Debt Repayment
    $36.2 million
    Q3 FY26

    During the third quarter, we utilized cash flows from operating activities and net proceeds of $6.6 million from the issuance of common units under our ATM program to repay $36.2 million of borrowings under the revolver.

    ATM Program Proceeds
    $6.6 million
    Q3 FY26

    During the third quarter, we utilized cash flows from operating activities and net proceeds of $6.6 million from the issuance of common units under our ATM program to repay $36.2 million of borrowings under the revolver.

    Consolidated Leverage Ratio
    4.35xflat compared to June 2025
    trailing 12 months ended June 2026

    Our consolidated leverage ratio for the trailing 12-month period ended June 2026 was 4.35x, which is flat compared to June 2025.

    Quarterly Distribution
    $0.325
    Q3 FY26

    our Board of Supervisors declared a quarterly distribution of $0.325 per common unit in respect of our third quarter of fiscal 2026.

    Annualized Distribution Rate
    $1.30
    FY26

    That equates to an annualized rate of $1.30 per common unit.

    Average Daily RNG Injection (YoY)
    essentially flatcompared to prior year
    Q3 FY26

    In our renewable natural gas operations, average daily RNG injection for the third quarter was essentially flat compared to the prior year as increases in manure-based D3 injections were offset by lower food waste D5 injection.

    California LCFS Credit Prices (YoY)
    31% increaseyear-over-year increase
    Q3 FY26

    revenues from RNG injection benefited from higher prices for environmental attributes, including a 31% year-over-year increase in California LCFS credit prices

    D3 RIN Prices (YoY)
    8% increaseyear-over-year increase
    Q3 FY26

    an 8% year-over-year increase in D3 RIN prices.

    Production Tax Credits (IRA Section 45Z)
    $1.1 million
    Q3 FY26

    During the quarter, we also recognized a benefit of $1.1 million from production tax credits earned under Section 45Z of the Inflation Reduction Act for D3 injections at our Stanfield, Arizona facility.

    Stanfield, Arizona Facility Carbon Intensity Score
    negative 380
    Q3 FY26

    The facility's significant negative carbon intensity score of approximately negative 380, together with compliance with the prevailing wage and apprenticeship requirements allows us to maximize the available credit value under the regulations.

    Environmental Credit Prices (LCFS low point)
    low $40 range
    past 3-plus years

    environmental credit prices were significantly depressed, with California LCFS credits declining into the low $40 range due to the buildup of excess credits in the market.

    Industry KPIs

    5
    MetricValueDetails
    Retail sales growth1.8% decrease%
    Adjusted operating EPS$0.27USD per common unit
    Dividend per share growth$0.325USD per common unit
    Equity hybrid financing atm issuance$6.6 millionUSD
    CAPEX multi year capital investment plan$35 millionUSD

    Capital programs

    1
    Existing RNG Projects Capital Spendingnearing completion$35 million
    Period spend: $28.7 million
    Spent to date: $28.7 million
    Funding: cash flows from operating activities and net proceeds from ATM program
    Start: past 3-plus years

    Benefit: 750,000 to 800,000 MMBtu annual injection

    Full year capital spending estimate for existing RNG projects, revised to the low end of the previously communicated range of $35 million to $40 million. Includes construction efforts at Columbus, Ohio and Upstate New York facilities.

    Risks & headwinds

    3
    Warmer than normal weather impacting heat-related demandQ3 FY26

    Average temperatures across our service territories during the third quarter were 17% warmer than normal and 3% warmer than the prior year third quarter. For the month of April, average temperatures were 24% warmer than normal and 11% warmer than April 2025 and ranked as the second warmest April on record.

    Mitigation: Customer base growth in counter-seasonal segments (agricultural, industrial, national accounts) substantially offset the impact.

    Volatile commodity pricesQ3 FY26

    posted propane prices were volatile and traded between $0.70 and $0.90 per gallon basis Mont Belvieu due to geopolitical tensions in the Middle East and strong export demand.

    Mitigation: Maintaining discipline over operating costs and managing selling prices.

    Higher operating costsQ3 FY26

    Combined operating and G&A expenses of $141.4 million for the third quarter were $5.2 million or 3.8% higher than the prior year. The increase was primarily attributable to higher payroll and benefit-related expenses and higher fuel and vehicle maintenance costs.

    Mitigation: Partially offset by lower variable compensation costs and a benefit of $1.1 million from production tax credits.

    What to watch in Q4 FY26

    4

    Columbus, Ohio biogas facility RNG injection

    Q4 FY26
    Currentnot yet injecting pipeline quality RNG
    Targetinjecting pipeline quality RNG

    Why it matters

    This facility is expected to add nearly 200,000 MMBtu of annual D5 RNG injection, contributing significantly to the overall RNG platform's production targets.

    And following the completion of our RNG upgrade project at our Columbus, Ohio biogas facility, we expect to be injecting pipeline quality RNG from that facility during the fourth quarter, which is expected to add another nearly 200,000 MMBtu of annual D5 RNG injection.

    2 min read5 chapters

    Detailed Narrative

    01

    Q3 Performance Overview

    Despite a slow start in April due to near-record warm temperatures (24% warmer than normal) and elevated residential customer tank levels, the company saw volumes in May and June exceed prior year levels. This was primarily driven by continued growth in counter-seasonal customer segments like agricultural, industrial, and national accounts, which substantially offset the weather impact🌐.

    02

    Renewable Natural Gas (RNG) Operations

    Average daily RNG injection was flat YoY, but revenues benefited significantly from higher environmental attribute prices, with California LCFS credits increasing 31% YoY and D3 RIN prices up 8% YoY. The company recognized a $1.1 million benefit from production tax credits (Section 45Z IRA) for D3 injections at its Stanfield, Arizona facility due to its negative carbon intensity score.

    03

    RNG Facility Expansion

    Subsequent to the quarter, a new anaerobic digester facility in Upstate New York was placed into service, expected to add 100,000 MMBtu of annual D3 RNG injection. The Columbus, Ohio biogas facility is also expected to inject pipeline quality RNG in Q4 FY26, adding nearly 200,000 MMBtu of annual D5 RNG injection. These completions mean all three RNG facilities will be operational by FY27.

    04

    Capital Allocation and Balance Sheet

    The company utilized excess cash flows and $6.6 million from its ATM equity sales program to repay $36.2 million of borrowings under its revolving credit facility. This debt reduction effort contributed to maintaining a consolidated leverage ratio of 4.35x for the trailing 12 months ended June 2026, flat compared to the prior year.

    05

    Market Conditions and Outlook

    U.S. propane inventories remained strong, 21% above prior year and historical averages in June 2026. Despite this, wholesale propane prices were volatile, trading between $0.70 and $0.90 per gallon due to geopolitical tensions and strong export demand, resulting in a 3.6% YoY increase in average wholesale prices for the quarter. Management expects improving environmental credit prices and regulatory support to provide a tailwind for the RNG platform.

    AI-generated summary of the company’s earnings call. Not investment advice.