Suburban Propane Partners, L.P.

Transcription

1 Suburban Prpane Partners, L.P. Investr Overview Wells Farg Securities Midstream and Utility Sympsium December 5, 2018

2 Key Cnsideratins Stable Free Cash Flw Generatin Flexible cst mdel and lw maintenance capex needs Smewhat insulated frm cmmdity price fluctuatins Diverse gegraphy and custmer base enhances cash flw stability Histry f Transfrmatinal Acquisitins Inergy Prpane acquisitin (August 2012) fr $1.8 billin increased Suburban s size, scale and financial resurces while reducing verall business risk prfile Agway Energy acquisitin (December 2003) fr $205 millin significantly increased presence in attractive nrtheast market and transfrmed int distributr f multiple fuels Prven track recrd f successful integratin and achievement f targeted synergies Unique Operating Philsphy and Advanced Systems Platfrm Prven track recrd f managing cst structure and driving perating efficiencies Centralized/Reginalized apprach fr majrity f back ffice activities Streamlined management structure t facilitate decisin-making and accuntability Significant investments in peple and technlgy t enhance custmer riented fcus Advanced, scalable systems infrastructure Simple, Unithlder Friendly Organizatinal Structure General Partner has n ecnmic interest in MLP and n incentive distributin rights MLP is 100% cntrlled by unithlders thrugh independently elected Bard f Supervisrs Cnservative Balance Sheet Management Management fcused n maintaining strng balance sheet and credit quality Strng banking relatins and access t incremental liquidity Disciplined apprach t cash management and distributin plicy Histry f success in cmplex financial structuring and balance sheet management 2 Experienced and Prven Management Team Management team has a reputatin as best in class peratrs in well established industry Highly tenured peratinal management team with deep knwledge f the prpane industry Senir leadership team has ver 100 years f cmbined service

3 Overview f the Prpane Industry Cnsistent ~ 5% share f U.S. husehld energy market ver past 30 years Husehld Energy Surces Unregulated and highly fragmented industry Majrs still nly 25% market share despite significant acquisitin activity Mst f Suburban s Custmer Service Centers cmpete with 5 r mre marketers Mature industry U.S. Prpane Market Share Prpane is a basic necessity t many custmers fr heating and agricultural purpses Prpane is a clean burning, multi-use energy surce Alternative t natural gas due t prtability f prduct Generally less expensive than electricity as a heating surce 3

4 Ttal Prpane Demand in the U.S. Overall frecasted prpane demand grwth f 16.7% in the U.S. between 2017 and 2025 Grwth in demand is frecasted acrss all key sectrs with the largest driver cming frm the engine fuel markets Overall frecasted residential prpane demand t increase 4% ƒ 2018 new husing starts are frecast t be up 6-7% frm 2017 levels Prpane market share f new cnstructin has slipped (6% share in 2014 vs 4.5% share in 2016), but is expected t rebund Cntinuing cnversin f fuel il custmers in the nrtheast (10-15% share f cnversins t prpane) Surce: ICF 4

5 Overview f Suburban Prpane Suburban engages in the retail marketing and distributin f prpane, fuel il and refined fuels, as well as the marketing f natural gas and electricity in the United States Prudly Serving Since 1928 Cntinuusly engaged in retail prpane business since rd largest prpane gas marketer in the United States with a 5% market share Diverse business peratins with apprximately 700 lcatins in 41 states Cncentrated n U.S. casts, the mst attractive prpane markets natinally Grss Margin by Segment (FY 2018) Serving apprximately 1.0 millin residential, cmmercial, industrial and agricultural custmers Emplyees: 3,300 $2.7 billin Enterprise Value (1) (1) Based n clsing Unit price as f December 4, 2018 and utstanding debt f $1.267 billin as f September 29,

6 Expansive Operating Ftprint Operatins spread thrughut apprximately 700 lcatins in 41 states with cncentratin in mst attractive east cast and west cast regins Organized and managed thrugh 185 Custmer Service Centers in 11 Regins 6

7 Stable Cash Flw Business Flexible cst structure mitigates weather sensitivity Vlume by Custmer Type (FY 2018) Diversity f gegraphy and custmer base Well balanced custmer mix reduces vlatility f cash flws Gegraphic diversity prvides a natural hedge t weather fluctuatins Cmmdity price changes are typically passed n t end-users Smewhat insulated frm cmmdity price vlatility Vlume by Regin (FY 2018) Supply and risk management activities ensure the availability f prduct while limiting price risk expsure, especially in times f vlatility Lw maintenance capex requirements 7

8 Simple, Unithlder Friendly Organizatinal Structure Streamlined Capital Structure Enhances Cst f Capital MLP is cntrlled by unithlders thrugh independently elected Bard f Supervisrs General Partner has n ecnmic interest in MLP IDRs eliminated thrugh GP cnversin in Octber 2006 Suburban Energy Services LLC (the General Partner ) 0.0% Interest Suburban Prpane Partners, L.P. (NYSE: SPH) 61.4 Millin Cmmn Units Senir Unsec. Ntes in three tranches $525.0 millin 5.500% due 2024 $250.0 millin 5.750% due 2025 $350.0 millin 5.875% due Operating Subsidiaries Suburban Prpane, L.P. (the OLP ) 100.0% Interest $500 millin Revlving Credit Agreement due January As f Sept 2018: $143.6 millin utstanding $43.0 millin in L/Cs issued $313.4 millin f brrwing capacity 8

9 Unique Operating Philsphy and Platfrm In 2005, Suburban set ut t verhaul the way prpane cmpanies have traditinally dne business Redefined Business Mdel and Target Custmer Exited lwer margin businesses Rerganized the service business Redefined rles f the custmer service representative Optimized the Operating Ftprint Built ecnmies f scale Ratinalized assets and activities Streamlined reginal and peratinal management structure Upgraded field management Leveraged IT Infrastructure Optimized perating activities with autmated frecasting and ruting Cnslidated certain back ffice functins Key perfrmance metrics t measure perating efficiencies One retail system platfrm 9

10 Custmer Service-Oriented Culture Our Business is Custmer Satisfactin Streamlined perating platfrm creates an infrastructure t better serve the custmer 24/7/365 emergency service and autmatic delivery Budget payment plan and ther billing ptins Full service energy prvider Clse the Back Dr With steady rate f new custmer activity, custmer retentin is key t grwth Investing in understanding and tracking the reasns fr custmer lsses Real-time tracking system used t track custmer cmplaints and fllw up reslutin Exceeding Custmer Expectatins High-perfrmance custmer service training and caching prgram custmized fr Suburban t enhance custmer interface and cmmunicatins Onging reinfrcement f telephne skills and techniques t better serve the custmer 10

11 Fcused Business Strategy T deliver increasing value t investrs thrugh initiatives, bth internal and external, that are geared tward achieving sustainable, prfitable grwth Internal Grwth Driving peratinal efficiencies Streamlining/right-sizing cst structure Enhancing the custmer mix Maximizing custmer base grwth and retentin New market penetratin Selective and disciplined apprach tward acquisitins External Grwth Fcus n mid-sized reginal prpane distributrs in strategically attractive markets Other MLP-qualifying assets t diversify the platfrm 11

12 Operatinal and Financial Perfrmance Retail Prpane Gallns Sld (MM) Adjusted EBITDA ($MM) % % % % Leverage Distributin Cverage 12 Nte: Adjusted EBITDA, Leverage and Distributin Cverage are nn-gaap terms. See appendix fr recnciliatin HDD Index was 83%, 85% and 93% fr fiscal 2016, 2017 and 2018, respectively

13 13 Appendix

14 Appendix Recnciliatin f Nn-GAAP Measures $ in millins, except per unit infrmatin Fiscal Year Ended September Net incme $ 14.4 $ 38.0 $ 76.5 Add: Prvisin fr (benefit frm) incme taxes (0.6) Interest expense, net Depreciatin and amrtizatin EBITDA $ $ $ Unrealized (nn-cash) lsses (gains) n changes in fair value f derivatives 1.2 (6.3) (0.3) Multi-emplyer pensin plan withdrawal charge Prduct liability settlement Pensin settlement charge Lss n debt extinguishment (Gain) lss n sale f business (9.8) Adjusted EBITDA $ $ $ Less: Maintenance capital expenditures Cash interest expense Prvisin fr incme taxes - current Distributable cash flw $ $ $ Grwth capital expenditures Free cash flw $ $ $ Distributins $ $ $ DPU $ 3.55 $ 3.54 $ 2.40 Units Outstanding Distributin Cverage Rati: Maintenance capital expenditures nly 0.61 x 0.73 x 1.33 x Ttal capital expenditures 0.51 x 0.65 x 1.20 x Ttal Debt $ 1,221.2 $ 1,287.6 $ 1,268.6 Adjusted EBITDA, per abve $ $ $ Unit-based, nn-cash cmpensatin expense Adjusted EBITDA, fr debt cvenant calculatins $ $ $ Debt/EBITDA (1) 5.28 x 5.14 x 4.36 x 14 (1) Pursuant t the Credit Agreement, EBITDA fr purpses f debt cvenant metrics excludes unit-based, nn-ca