Suburban Propane’s Growth Stalls as Weather Turns Warmer
The propane distributor cut total debt by more than $64 million during the quarter.
Suburban Propane Partners (SPH), a propane distributor, reported nearly flat fiscal second-quarter adjusted EBITDA as warmer weather halted the volume growth recorded earlier in the year. Adjusted EBITDA edged up to $175.3 million, following a 10.8% increase in the first quarter.
The slowdown marked a reversal from the colder start to the fiscal year. Temperatures across Suburban’s territories were 1% warmer than a year earlier during the second quarter after running 6% cooler in the first quarter. The West was 17% warmer, partly offsetting colder conditions in eastern markets.
Net income rose to $137.5 million from $137.1 million a year earlier, while earnings per unit fell to $2.07 from $2.11. In the first quarter, net income had increased to $45.8 million from $19.4 million.
Retail propane volumes were unchanged at 161.6 million gallons after rising 4.2% to 110.2 million gallons in the preceding quarter. The year-over-year decline in benchmark propane prices also deepened to 23.1% from 14.0%.
Those pressures reached margins. Total gross margin declined 0.5% to $343.7 million, reversing the first quarter’s 5.9% increase in reported gross margin and 7.2% rise on an adjusted basis.
Suburban recognized a $3.5 million production-tax-credit benefit tied to D3 renewable-natural-gas injections at its Stanfield facility from January 2025 through March 2026. Its New York digester and Ohio gas-upgrading projects are scheduled for completion in the second half of fiscal 2026 and are expected to add about 200,000 MMBtu of annual capacity.
The company directed excess cash flow toward debt reduction as operating growth cooled. The developing renewable-natural-gas projects provide its next capacity increase, while propane results remain exposed to regional temperatures and lower benchmark prices.