Suburban Propane Partners, L.P. (SPH) reported a loss of 26 cents per unit for the fiscal third quarter of 2026, exceeding the previous year’s loss of 23 cents and the consensus estimate of a loss of 16 cents. This loss was attributed to higher operating costs and unusual warm weather that decreased propane demand. Revenue for the quarter grew by 0.5% to $261.4 million, surpassing the consensus estimate of $260 million.
SPH’s propane business faced challenges due to temperatures averaging 17% above normal across its service areas, resulting in a 1.8% decline in retail propane gallons year over year. Despite this, growth in counter-seasonal customers helped mitigate some demand loss. Additionally, SPH is expanding its renewable natural gas (RNG) footprint, with new facilities expected to add significant production capacity in fiscal 2027.
The partnership has maintained a strong balance sheet, repaying $36.2 million of its debt, and achieved a distribution coverage ratio of 2.07X with a quarterly distribution of 32.5 cents per unit. SPH’s lower valuation, currently trading at an 8.76X EV/EBITDA multiple, suggests potential for future upside as it focuses on renewable energy investments and reduces capital spending.
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