Suburban Propane falls after missing earnings despite profit surge
Net income jumps 136% year-over-year, but revenue and EPS fall short of analyst expectations
Suburban Propane Partners shares declined in Thursday trading after the propane distributor reported first-quarter earnings that missed analyst expectations, despite delivering strong year-over-year profit growth and maintaining its dividend.
The Whippany, New Jersey-based company posted adjusted earnings per share of $0.69 for the fiscal first quarter, below the $0.75 consensus estimate. Revenue reached $370.4 million, falling short of the $392 million projected by analysts.
Despite the headline miss, the company delivered robust operational improvements. Net income surged 136% to $45.8 million compared with the same period last year, while adjusted EBITDA increased 10.8% to $83.4 million. Volumes grew 4.2%, a boost that the company attributed to cooler weather conditions that increased propane demand.
"We are pleased with our solid start to fiscal 2025, reflecting improved customer demand driven by more favorable weather conditions and our continued focus on operational excellence," Suburban Propane said in the regulatory filing.
The company's gross margin improved 5.9%, and its leverage ratio strengthened to 4.57x, indicating progress in debt management. Suburban Propane maintained its quarterly dividend at $0.325 per share, continuing a commitment to shareholder returns that currently yields approximately 6.5%.
Suburban Propane did not provide forward guidance in the announcement, leaving investors without specific earnings targets for the remainder of the fiscal year.
The propane distributor, which operates across the United States serving residential, commercial, and industrial customers, has been navigating a challenging energy market characterized by volatile commodity prices. The company's performance reflects both the seasonal nature of propane demand and broader trends in energy consumption.
Shares of Suburban Propane trade with a price-to-earnings ratio of 12.46 and a market capitalization of approximately $1.34 billion. The stock has traded in a 52-week range of $16.67 to $20.79, with current levels near the upper end of that band. Analyst coverage is divided, with one rating at buy and one at sell, and an average target price of $17.00, according to market data.
The company's balance sheet shows $277.4 million in trailing twelve-month EBITDA, with an enterprise value-to-EBITDA multiple of 10.40. Suburban Propane maintains a relatively low beta of 0.39, suggesting lower volatility compared with the broader market.
Utility and energy sector investors have been closely monitoring propane distributors as winter heating demand patterns evolve and competition from alternative energy sources intensifies. Suburban Propane's ability to grow volumes despite the broader energy transition highlights the continued importance of propane in certain markets and applications.