Suburban Propane's CEO Discusses F3Q12 Results - Earnings Call Transcript

Suburban Propane Partners LP (SPH)

F3Q12 Earnings Conference Call

August 02, 2012 10:00 AM ET

Executives

A. Davin D’Ambrosio – Vice President and Treasurer

Michael J. Dunn, Jr. – President and CEO

Michael A. Stivala – Chief Financial Officer

Analysts

Gabriel Moreen – Bank of America Merrill Lynch

Ron Londe - Wells Fargo Securities

Presentation

Operator

Ladies and gentlemen, thank you for holding. Welcome to the Third Quarter 2012 Results Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions)

This conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to the Partnership’s future business expectations and predictions, and financial condition, and results of operations.

These forward-looking statements involve certain risks and uncertainties; differ materially from those discussed in such forward-looking statements, which are referred to as cautionary statements in its earnings press release, which can be viewed on the company’s website. All subsequent written and oral forward-looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by such cautionary statements. As a reminder, this conference is being recorded.

I’d now like to turn the conference over to our host, Mr. Davin D'Ambrosio. Please go ahead, sir.

Davin D'Ambrosio

Thank you, and good morning. Welcome to Suburban’s fiscal 2012 third quarter results conference call. I’m Davin D’Ambrosio, Vice President and Treasurer at Suburban. Joining me this morning is Mike Dunn, President and Chief Executive Officer; and Mike Stivala, our Chief Financial Officer. The purpose of today’s call is to review our third quarter financial results, along with our current outlook for the business, including an update on the Inergy Propane acquisition. As usual, once we’ve concluded our prepared remarks, we will open the session to questions.

Before getting started, I would like to reemphasize what the operator has just explained about forward-looking statements. Additional information about factors that could cause actual results to differ materially from those discussed in forward-looking statements is contained in the Partnership’s SEC filings, including its Form 10-K for the fiscal year ended September 24, 2011, and its Form 10-Q for the period ended June 23, 2012, which will be filed by the end of business today. Copies of these filings may be obtained by contacting the Partnership or the SEC.

Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures as well as the discussion why we believe this information to be useful in our Form 8-K furnished to the SEC this morning. Form 8-K can be accessed through a link on our website at suburbanpropane.com.

At this point, I will turn the call over to Mike Dunn for some opening remarks. Mike?

Michael J. Dunn, Jr.

Thanks, Davin, and thanks to everyone for joining us this morning. Before I turn the call over to Mike Stivala to take you through our third quarter results, let me start with a few comments on our announcement this morning regarding the closing of the acquisition of Inergy’s Retail Propane assets and operations. This transaction was first announced on April the 26 th, and we have now had a little over three months to refine our integration and communication plans. We are extremely pleased to welcome the more than 2,000 Inergy employees and over 600,000 customers into Suburban. We are excited about the benefits of this combination which effectively doubles the size of Suburban and enhances our growth prospects and cash flow profile as we seek to achieve $50 million in synergies once fully integrated.

Over the past several years, Suburban has primarily focused internally to generate increased cash flow and reduce leverage by streamlining our cost structure, improving our customer service and becoming more efficient operators. This approach has served us well. We all three have built a reputation as solid operators in a well-established industry.

As with any acquisition of this size there will be no shorted of challenges as we work together combining operations and cultures. However, as a result of our investments over the years in people and technology, we are well positioned to now begin the execution of our integration plans.

In a moment, I will provide some additional comments on the completion of this transforming transaction. However, at this point I’d like to turn the call over to Mike Stivala, to discuss our third quarter results and some of the financing related to the acquisition. Mike?

Michael A. Stivala

Thanks, Mike. Good morning everyone. As reported this morning the lingering warm weather patterns continue to have a meaningful impact on our volumes and earnings in the third quarter. In fact, April 2012 was reported as the third warmest April on record. However, on a positive note, putting the more weather sensitive volumes and April aside, our earnings for the remainder of the quarter were slightly ahead of the prior year comparable period. As is typical for this time of the year, we generally generate a seasonal loss.

As we discuss our third quarter results to be consistent with previous reporting, I am excluding the impact of an $8.2 million unrealized non-cash gain applicable to FAS 133 accounting, compared to a non-unrealized non cash loss of $313,000 in the prior year third quarter. Additionally, during the third quarter of fiscal 2012, we had incurred acquisition related costs of approximately $6 million, which are also excluded from adjusted EBITDA.

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