Suburban Propane Partners (NYSE:SPH) reported fiscal 2026 first-quarter results that management said benefited from colder weather in its northern operating territories during November 2025, along with continued progress in customer growth and retention efforts. On the call, executives also highlighted advancing renewable natural gas (RNG) projects and recent financing and acquisition activity.
Weather and demand trends drove higher volumes
President Mike Stivala said the fiscal year started “off to a great start” as colder conditions in the company’s northern territories in November drove heat-related demand. He also noted the company had already faced “significant challenges with harsh weather into the fiscal second quarter,” and emphasized employee preparation and safety in meeting customer demand during extreme conditions.
Kuglin provided additional weather detail, stating that average temperatures during the quarter were 6% warmer than normal and 6% colder than the prior-year first quarter. In the eastern half of the U.S., temperatures were in line with normal and 12% cooler than the prior-year quarter, while the west was 24% warmer than normal and 11% warmer than the prior year.
Adjusted EBITDA increased; margin improvement cited
Kuglin said he was excluding unrealized mark-to-market adjustments on commodity hedges for comparability. The company recorded an unrealized gain of $930,000 in the first quarter versus an unrealized gain of $3.6 million a year earlier.
On that basis, net income for the first quarter was $46.6 million versus $38.0 million, or $0.59 per common unit, in the prior-year first quarter. Adjusted EBITDA was $83.4 million, an increase of $8.1 million, which management described as nearly 11% higher year over year.
Total gross margin (excluding the mark-to-market impact) was $238.6 million, up $16.1 million, or 7.2%, compared with the prior-year quarter. Kuglin said the improvement was driven by higher propane volumes sold, an increase in propane unit margins of $0.08, and “to a lesser extent, higher contribution from our RNG operations.”
Operating and G&A expenses rose $5.0 million, or 3.4%, primarily due to higher payroll and benefit-related costs, overtime and other variable operating costs tied to increased activity, and higher variable compensation expense associated with improved earnings.
Propane prices and inventory backdrop
Management discussed commodity conditions, noting that wholesale propane prices remained in the $0.60-per-gallon range during the quarter, compared with the $0.90-per-gallon range a year ago. Kuglin also cited U.S. propane inventory levels from the Energy Information Administration, stating inventories totaled 89 million barrels at the end of the prior week, which he said was 34% above historical averages for that time of year. He added that cold weather in the east could impact inventories.
RNG projects: higher injection and commissioning underway
Stivala said Suburban’s RNG operations saw average daily injection increase sequentially and year over year in the first quarter. He attributed the improvement to operational enhancements at the Stanfield, Arizona facility that have improved uptime and increased conversion of feedstock to RNG injection.
He also said the company began commissioning a newly constructed anaerobic digester facility in upstate New York and made “substantial progress” on construction of gas upgrade equipment at a facility in Columbus, Ohio. Stivala said the RNG capital project is expected to reach completion toward the end of the fiscal second quarter, with RNG injection scheduled to begin in the second half of the fiscal year.
Capital spending, financing activity, and distributions
Kuglin reported total capital spending for the quarter was $19.8 million, including $13.0 million for operations and $6.8 million for RNG growth. He said the full-year capital spending estimate for the RNG project was unchanged, with spending concentrated in the first and second quarters.
On the balance sheet, Kuglin said the company borrowed $115.4 million under its revolving credit facility during the first quarter to fund seasonal working capital needs. He also noted net proceeds of $3.1 million from issuing common units under the company’s at-the-market equity program were used to fund seasonal working capital, RNG projects, and costs tied to refinancing and acquisitions.
Management also highlighted strategic actions taken early in the fiscal year, including acquisitions of two propane businesses in California, “investing nearly $7 million,” and refinancing 2027 senior notes with a 10-year maturity. (The company did not provide additional terms on the call.)
Stivala said the company remains focused on maintaining balance sheet strength and flexibility while pursuing its long-term strategic growth plans. Kuglin added that as the heating season progresses into late February, the company expects to generate excess cash flows and intends to use those cash flows to strengthen the balance sheet while also funding strategic growth initiatives.
Regarding unitholder returns, management said the board declared a quarterly distribution of $0.325 per common unit for the fiscal first quarter, equivalent to an annualized rate of $1.30 per unit. Kuglin said distribution coverage for the quarter was 2.19x as of December 2025.
The question-and-answer portion of the call was not held, as no questions were in the queue. Management said it plans to provide an update again in May following the end of the fiscal second quarter.
About Suburban Propane Partners (NYSE:SPH)
Suburban Propane Partners L.P. (NYSE: SPH) is a publicly traded master limited partnership headquartered in Whippany, New Jersey, that provides propane and related energy services to residential, commercial, industrial and agricultural customers. As one of the largest propane retailers in the United States, the company delivers propane gas, heating oil, diesel fuel and natural gas throughout its service territories. In addition to fuel distribution, Suburban Propane offers HVAC installation, maintenance and repair services, as well as safety inspections and equipment leasing to support customers’ energy needs.
The company’s core business centers on the delivery of propane for space and water heating, cooking and agricultural applications.
