Q3 2026 Suburban Propane Partners LP Earnings Call

Speaker #1: Hello, and thank you for standing by. My name is Lacey, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Suburban Propane Partners Q4 earnings conference call.

Operator: Hello, and thank you for standing by. My name is Lacey and I will be your conference operator today. At this time, I would like to welcome everyone to Suburban Propane Partners' Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Davin D'Ambrosio, Vice President and Treasurer. Please go ahead, sir.

Speaker #1: I'll line have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press * followed by the number 1 on your telephone keypad.

Speaker #1: If you would like to withdraw your question, press *1 again. Thank you. I would now like to turn the call over to Michael D'Ambrosio, Vice President and Treasurer.

Operator: If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to D'Ambrosio, Vice President and Treasurer. Please go ahead, sir.

Speaker #1: Please go ahead, sir.

Speaker #2: Thank you, Lacey. Good morning, and thank you for joining us for our fiscal 2026 Q3 earnings conference call. I'm here with Mike Stivala, our President and Chief Executive Officer.

A. Davin D'Ambrosio: Thank you, Lacey. Good morning, and thank you for joining us for our fiscal 2026 Q3 earnings conference call. I'm here with Mike Stivala, our President and Chief Executive Officer, Mike Kuglin, Chief Financial Officer, and Alex Centeno, Senior Vice President, Operations. This morning, we will review our Q3 results, along with our current outlook for the business. Once we've concluded our prepared remarks, we will open the session to questions. Our conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, related to the partnership's future business expectations and predictions, financial condition, and results of operations. These forward-looking statements involve certain risks and uncertainties.

Davin D'Ambrosio: Thank you, Lacey. Good morning, and thank you for joining us for our Fiscal 2026 Q3 Earnings Conference Call. I'm here with Mike Stivala, our President and Chief Executive Officer, Mike Kuglin, Chief Financial Officer, and Alex Centeno, Senior Vice President, Operations. This morning, we will review our Q3 results, along with our current outlook for the business. Once we've concluded our prepared remarks, we will open the session to questions. Our conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, related to the partnership's future business expectations and predictions, financial condition, and results of operations. These forward-looking statements involve certain risks and uncertainties.

Speaker #2: Mike Kuglin, Chief Financial Officer. And Alex Centeno, Senior Vice President of Operations. This morning, we will review our Q3 results, along with our current outlook for the business.

Speaker #2: Once we've concluded our prepared remarks, we will open the session to questions. Our conference call contains forward-looking statements within the meaning of Section 21(e) of the Securities Exchange Act of 1934, as amended, related to the partnership's future business expectations and predictions financial condition and results of operations.

Speaker #2: These forward-looking statements involve certain risks and uncertainties. We have listed some of the important factors that could cause actual results to differ materially from those discussed in such forward-looking statements—which are referred to as cautionary statements—in our earnings press release, which can be viewed on our website at suburbanpropane.com.

A. Davin D'Ambrosio: We have listed some of the important factors that could cause actual results to differ materially from those discussed in such forward-looking statements, which are referred to as cautionary statements in our earnings press release, which can be viewed on our website at suburbanpropane.com. 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. Our Form 10-Q for the quarter period ended 27 June 2026, which will be filed by the end of business today, contains additional disclosures regarding forward-looking statements and risk factors. Copies may be obtained by contacting the partnership or the SEC. Certain non-GAAP measures will be discussed on this call.

Davin D'Ambrosio: We have listed some of the important factors that could cause actual results to differ materially from those discussed in such forward-looking statements, which are referred to as cautionary statements in our earnings press release, which can be viewed on our website at suburbanpropane.com. 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. Our Form 10-Q for the quarter period ended 27 June 2026, which will be filed by the end of business today, contains additional disclosures regarding forward-looking statements and risk factors.

Speaker #2: While subsequent written and oral forward-looking statements trivial to the partnership or a person's acting on its behalf, are expressly qualified in their entirety by such cautionary statements.

Speaker #2: Our 410(q) for the quarter period ended June 27, 2026, which will be filed by the end of business today, contains additional disclosures regarding forward-looking statements and risk factors.

Speaker #2: Copies may be obtained by contacting the partnership or the SEC. Certain non-GAAP measures will be discussed in this call, and we have provided a description of those measures as well as a discussion of why we believe this information to be useful.

Davin D'Ambrosio: Copies 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 a discussion of why we believe this information to be useful in our Form 8-K, which was furnished to the SEC this morning. The Form 8-K will be available through a link in the investor relations section of our website. At this time, I will turn the call over to Mike Stivala for some opening remarks. Mike?

A. Davin D'Ambrosio: We have provided a description of those measures as well as a discussion of why we believe this information to be useful in our Form 8-K, which was furnished to the SEC this morning. The Form 8-K will be available through a link in the investor relations section of our website. At this time, I will turn the call over to Mike Stivala for some opening remarks. Mike?

Speaker #2: In our 408(k), which was furnished to the SEC this morning. The 408(k) will be available through a link in the investor relations section of our website.

Speaker #2: At this time, I will turn the call over to Mike Stivala for some opening remarks. Mike?

Speaker #3: Thanks, Davin. Good morning. Thank you all for joining us today. Following a solid first half, we experienced sustained cold weather in the eastern half of the United States and extremely warm weather in the west.

Michael A. Stivala: Thanks, Davin. Good morning. Thank you all for joining us today. Following a solid H1, we experienced sustained cold weather in the eastern half of the US and extremely warm weather in the west. The Q3 started out slow. Near record warm temperatures across our footprint during the shoulder month of April reduced heat-related demand, while residential customer tank levels entering the Q3 were elevated through the timing of deliveries in the Q2 when demand was particularly strong. Despite the slow start, volumes for the quarter benefited from continued growth in our counter-seasonal customer base, which substantially offset the impact of warmer weather as volumes in both May and June exceeded prior year levels.

Mike Stivala: Thanks, Davin. Good morning. Thank you all for joining us today. Following a solid H1, we experienced sustained cold weather in the eastern half of the US and extremely warm weather in the west. The Q3 started out slow. Near record warm temperatures across our footprint during the shoulder month of April reduced heat-related demand, while residential customer tank levels entering the Q3 were elevated through the timing of deliveries in the Q2 when demand was particularly strong. Despite the slow start, volumes for the quarter benefited from continued growth in our counter-seasonal customer base, which substantially offset the impact of warmer weather as volumes in both May and June exceeded prior year levels.

Speaker #3: The third quarter started out slow. Near-record warm temperatures across our footprint during the shoulder month of April reduced heat-related demand, while residential customer tank levels entering the third quarter were elevated due to the timing of deliveries in the second quarter.

Speaker #3: When demand was particularly strong, despite the slow start, volumes for the quarter benefited from continued growth in our counter-seasonal customer base. Which substantially offset the impact of warmer weather as volumes in both May and June exceeded prior-year levels.

Speaker #3: As always, our operating personnel did an outstanding job delivering exceptional customer service to our customers, managing selling prices in a rising and volatile commodity price environment, and maintaining discipline over operating costs.

Michael A. Stivala: As always, our operating personnel did an outstanding job delivering exceptional customer service to our customers, managing selling prices in a rising and volatile commodity price environment, and maintaining discipline over operating costs. In our renewable natural gas operations, average daily RNG injection for the Q3 was essentially flat compared to the prior year as increases in manure-based D3 injections were offset by lower food waste D5 injections. However, revenues from RNG injection benefited from higher prices for environmental attributes, including a 31% year-over-year increase in California LCFS credit prices and an 8% year-over-year increase in D3 RIN prices. Subsequent to the end of the Q3, we placed our new anaerobic digester facility in Upstate New York into service, which is expected to add approximately 100,000 MMBtus of annual D3 RNG injection.

Mike Stivala: As always, our operating personnel did an outstanding job delivering exceptional customer service to our customers, managing selling prices in a rising and volatile commodity price environment, and maintaining discipline over operating costs. In our renewable natural gas operations, average daily RNG injection for the Q3 was essentially flat compared to the prior year as increases in manure-based D3 injections were offset by lower food waste D5 injections. However, revenues from RNG injection benefited from higher prices for environmental attributes, including a 31% year-over-year increase in California LCFS credit prices and an 8% year-over-year increase in D3 RIN prices. Subsequent to the end of the Q3, we placed our new anaerobic digester facility in Upstate New York into service, which is expected to add approximately 100,000 MMBtus of annual D3 RNG injection.

Speaker #3: In our renewable natural gas operations, average daily R&G injection for the third quarter was essentially flat compared to the prior year, as increases in manure-based D3 injections were offset by lower food waste D5 injections.

Speaker #3: However, revenues from R&G injection benefited from higher prices per environmental attributes. Including a 31% year-over-year increase in California LCFS credit prices and an 8% year-over-year increase in D3 wind prices.

Speaker #3: Subsequent to the end of the third quarter, we placed our new anaerobic digester facility in upstate New York into service, which is expected to add approximately $100,000 MMBTUs of annual D3 R&G injection.

Speaker #3: And following the completion of our R&G upgrade project at our Columbus, Ohio biogas facility, we expect to be injecting pipeline quality R&G from that facility during the fourth quarter, which is expected to add another nearly $200,000 MMBTUs of annual D5 R&G injection.

Michael A. Stivala: Following the completion of our RNG upgrade project at our Columbus, Ohio, biogas facility, we expect to be injecting pipeline quality RNG from that facility during Q4, which is expected to add another nearly 200,000 MMBtus of annual D5 RNG injection. As a result, we will enter fiscal year 2027 with all three of our RNG facilities operational and an anticipated level of annual injection in the range of 750,000 to 800,000 MMBtus. We are also focused on opportunities for organic growth and production through continued capacity optimization and increased feedstock intake. During the quarter, we also recognized a benefit of $1.1 million from Production Tax Credits earned under Section 45Z of the Inflation Reduction Act for D3 injections at our Stanfield, Arizona, facility.

Mike Stivala: Following the completion of our RNG upgrade project at our Columbus, Ohio, biogas facility, we expect to be injecting pipeline quality RNG from that facility during Q4, which is expected to add another nearly 200,000 MMBtus of annual D5 RNG injection. As a result, we will enter fiscal year 2027 with all three of our RNG facilities operational and an anticipated level of annual injection in the range of 750,000 to 800,000 MMBtus. We are also focused on opportunities for organic growth and production through continued capacity optimization and increased feedstock intake. During the quarter, we also recognized a benefit of $1.1 million from Production Tax Credits earned under Section 45Z of the Inflation Reduction Act for D3 injections at our Stanfield, Arizona, facility.

Speaker #3: As a result, we will enter fiscal year 2027 with all three of our R&G facilities operational, and anticipated level of annual injection in the range of $750,000 to $800,000 MMBTUs.

Speaker #3: We are also focused on opportunities for organic growth and production through continued capacity optimization and increased feedstock intake. During the quarter, we also recognized the benefit of 1.1 million dollars from production tax credits earned under Section 45(z) of the Inflation Reduction Act for D3 injections at our Stanfield, Arizona facility.

Speaker #3: The facility's significant negative carbon intensity score of approximately negative 380, together with compliance with the prevailing wage and apprenticeship requirements, allows us to maximize the available credit value under the regulations.

Michael A. Stivala: The facility's significant negative carbon intensity score of approximately -380, together with compliance with the prevailing wage and apprenticeship requirements, allows us to maximize the available credit value under the regulations. With the facility in Upstate New York now online, we expect to earn additional PTCs from RNG injection at that facility, in addition to investment tax credits on the capital deployed for construction of the facility. With the New York facility now online and our Ohio facility soon to be online, we will have completed the major capital investments for our existing RNG facilities.

Mike Stivala: The facility's significant negative carbon intensity score of approximately -380, together with compliance with the prevailing wage and apprenticeship requirements, allows us to maximize the available credit value under the regulations. With the facility in Upstate New York now online, we expect to earn additional PTCs from RNG injection at that facility, in addition to investment tax credits on the capital deployed for construction of the facility. With the New York facility now online and our Ohio facility soon to be online, we will have completed the major capital investments for our existing RNG facilities.

Speaker #3: With the facility upstate New York now online, we expect to earn additional PTCs from R&G injection at that facility. In addition to investment tax credits on the capital deployed for construction of the facility, with the New York facility now online and our Ohio facility soon to be online, we will have completed the major capital investments for our existing R&G facilities.

Speaker #3: As we have stated on a number of occasions, since only this portfolio of assets, we have been focused on stabilizing production at our Arizona facility where we had some operational challenges in the early years of ownership.

Michael A. Stivala: As we have stated on a number of occasions, since owning this portfolio of assets, we have been focused on stabilizing production at our Arizona facility, where we had some operational challenges in the early years of ownership, driving operational excellence across the platform, improving plant design to increase the conversion of feedstock to RNG, deploying capital for the new facility in New York and the upgraded equipment in Ohio, and building the team to support the long-term growth of the platform. These initiatives were undertaken during a period when our environmental credit prices were significantly depressed, with California LCFS credits declining into the low $40 range due to the buildup of excess credits in the market.

Mike Stivala: As we have stated on a number of occasions, since owning this portfolio of assets, we have been focused on stabilizing production at our Arizona facility, where we had some operational challenges in the early years of ownership, driving operational excellence across the platform, improving plant design to increase the conversion of feedstock to RNG, deploying capital for the new facility in New York and the upgraded equipment in Ohio, and building the team to support the long-term growth of the platform. These initiatives were undertaken during a period when our environmental credit prices were significantly depressed, with California LCFS credits declining into the low $40 range due to the buildup of excess credits in the market.

Speaker #3: Driving operational excellence across the platform, improving plant design to increase the conversion of feedstock to R&G, deploying capital for the new facility in New York and the upgrade equipment in Ohio, and building the team to support the long-term growth of the platform.

Speaker #3: These initiatives were undertaken during a period when environmental credit prices were significantly depressed. With California LCFS credits declining into the low $40 range, due to the buildup of excess credits in the market, as we get ready to enter fiscal 2027 with all three facilities online, we are encouraged to see credit prices continuing to improve following regulatory actions taken in California that are driving more aggressive emissions targets and helping to rebalance the market.

Michael A. Stivala: As we get ready to enter fiscal 2027 with all three facilities online, we are encouraged to see credit prices continuing to improve following regulatory actions taken in California that are driving more aggressive emissions targets and helping to rebalance the market. We believe this improving price environment presents a good tailwind for revenue enhancement in our RNG platform. With all of these set efforts over the past three-plus years, we have also maintained our focus on strengthening the balance sheet and allocating capital in a disciplined manner. Following the strong H1 performance, cash flow generation in the fiscal Q3 benefited from the seasonal collection of receivables. During the quarter, we used excess cash flows supplemented by proceeds from the issuance of common units under our ATM equity sales program to reduce debt by more than $36 million. In a moment, I'll come back for some closing remarks.

Mike Stivala: As we get ready to enter fiscal 2027 with all three facilities online, we are encouraged to see credit prices continuing to improve following regulatory actions taken in California that are driving more aggressive emissions targets and helping to rebalance the market. We believe this improving price environment presents a good tailwind for revenue enhancement in our RNG platform. With all of these set efforts over the past three-plus years, we have also maintained our focus on strengthening the balance sheet and allocating capital in a disciplined manner.

Speaker #3: We believe this improving price environment presents a good tailwind for revenue enhancement in our R&G platform. With all of these efforts over the past three-plus years, we have also maintained our focus on strengthening the balance sheet and allocating capital in a disciplined manner.

Speaker #3: Following the strong first half performance, cash flow generating generation in fiscal third quarter benefited from the seasonal collection of receivables. During the quarter, we used excess cash flows supplemented by proceeds from the issuance of common units under our ATM equity sales program to reduce debt by more than 36 million dollars.

Mike Stivala: Following the strong H1 performance, cash flow generation in the fiscal Q3 benefited from the seasonal collection of receivables. During the quarter, we used excess cash flows supplemented by proceeds from the issuance of common units under our ATM equity sales program to reduce debt by more than $36 million. In a moment, I'll come back for some closing remarks. However, at this point, I'll turn the call over to Mike Kuglin to discuss the Q3 results in more detail. Mike?

Speaker #3: In a moment, I'll come back for some closing remarks. However, at this point, I'll turn the call over to Mike Kuglin to discuss the third quarter results in more detail.

Michael A. Stivala: However, at this point, I'll turn the call over to Mike Kuglin to discuss the Q3 results in more detail. Mike?

Speaker #3: Mike?

Speaker #2: Thanks, Mike. And good morning, everyone. To be consistent with previous reporting, as I discussed, our third quarter results have excluded the impact of both both unrealized mark-to-market adjustments on our commodity hedges with resultant and unrealized gain of $700,000 in the third quarter, the fiscal 2026, compared with unrealized loss of $2.9 million in the prior year third quarter, along with certain other non-cash items.

Michael A. Kuglin: Thanks, Mike, and good morning, everyone. To be consistent with previous reporting, to discuss our Q3 results, I'm excluding the impact both unrealized mark-to-market adjustments on our commodity hedges, which resulted in unrealized gain of $700,000 in the Q3 for fiscal 2026, compared with unrealized loss, $2.9 million in the prior year Q3, along with certain other non-cash items. Given the seasonal nature of our business, we typically experience the net loss in the Q3 of our fiscal year. With that said, adjusted net loss for the Q3 was $17.7 million, or $0.27 per common unit, compared to adjusted net loss of $10.8 million or $0.17 per common unit in the prior year. Adjusted EBITDA for the Q3 was $18 million, compared to $27 million in the prior year.

Mike Kuglin: Thanks, Mike, and good morning, everyone. To be consistent with previous reporting, to discuss our Q3 results, I'm excluding the impact both unrealized mark-to-market adjustments on our commodity hedges, which resulted in unrealized gain of $700,000 in the Q3 for fiscal 2026, compared with unrealized loss, $2.9 million in the prior year Q3, along with certain other non-cash items. Given the seasonal nature of our business, we typically experience the net loss in the Q3 of our fiscal year. With that said, adjusted net loss for the Q3 was $17.7 million, or $0.27 per common unit, compared to adjusted net loss of $10.8 million or $0.17 per common unit in the prior year. Adjusted EBITDA for the Q3 was $18 million, compared to $27 million in the prior year.

Speaker #2: Given the seasonal nature of our business, we typically experience the net loss in the third quarter of our fiscal year. With that said, adjusted net loss for the third quarter was $17.7 million.

Speaker #2: For 27 cents per common unit, compared to adjusted net loss of $10.8 million, we're 17 cents per common unit in the prior year. Adjusted EBITDA for the third quarter was $18 million, compared to $27 million in the prior year.

Speaker #2: Retail propane gallons sold in the third quarter were $70.6 million gallons, a decrease of 1.8% compared to the prior year, primarily due to the impact of unseasonably warm weather in April on heat-related demand which was substantially offset by customer-based growth and our agricultural-industrial and national gallons customer segments.

Michael A. Kuglin: Retail propane gallons sold in the Q3 were 70.6 million gallons, a decrease of 1.8% compared to the prior year, primarily due to the impact of unseasonably warm weather in April on heat-related demand, which was substantially offset by customer base growth in our agricultural, industrial, and national accounts customer segments. With respect to the weather, average temperatures across our service territories during the Q3 were 17% warmer than normal and 3% warmer than the prior year Q3. For the month of April, average temperatures were 24% warmer than normal and 11% warmer than April 2025 and ranked as the second warmest April on record. From a commodity perspective, US propane inventories remained strong during the quarter, with June 2026 inventory levels approximately 21% above both June 2025 and historical averages for this time of year.

Mike Kuglin: Retail propane gallons sold in the Q3 were 70.6 million gallons, a decrease of 1.8% compared to the prior year, primarily due to the impact of unseasonably warm weather in April on heat-related demand, which was substantially offset by customer base growth in our agricultural, industrial, and national accounts customer segments. With respect to the weather, average temperatures across our service territories during the Q3 were 17% warmer than normal and 3% warmer than the prior year Q3. For the month of April, average temperatures were 24% warmer than normal and 11% warmer than April 2025 and ranked as the second warmest April on record. From a commodity perspective, US propane inventories remained strong during the quarter, with June 2026 inventory levels approximately 21% above both June 2025 and historical averages for this time of year.

Speaker #2: With respect to the weather, average temperatures across our service territories during the third quarter were 17% warmer than normal and 3% warmer than the prior year third quarter.

Speaker #2: For the month of April, average temperatures were 24% warmer than normal and 11% warmer than April 2025, and ranked as the second warmest April on record.

Speaker #2: From a commodity perspective, US propane inventories remained strong during the quarter. With June 2026 inventory levels approximately 21% above both June 2025 and historical averages for this time of year.

Speaker #2: Despite elevated inventory levels, posted propane prices were volatile and traded between 70 and 90 cents per gallon, basis mob value, due to geopolitical tensions in the Middle East and strong export demand.

Michael A. Kuglin: Despite elevated inventory levels, posted propane prices were volatile and traded between $0.70 and $0.90 per gallon basis Mont Belvieu due to geopolitical tensions in the Middle East and strong export demand. Overall, average wholesale prices for the quarter increased 3.6% compared to the prior year Q3. In the early part of the Q4, wholesale prices have generally been in the $0.70 to $0.75 per gallon range, which is flat compared to the same time last year. Excluding the impacts of the mark-to-market adjustments on our commodity hedges that I mentioned earlier, total gross margins for the Q3 were $159.6 million, a decrease of 2.4% compared to the prior year, primarily due to lower volume sold as propane unit margins remained steady.

Mike Kuglin: Despite elevated inventory levels, posted propane prices were volatile and traded between $0.70 and $0.90 per gallon basis Mont Belvieu due to geopolitical tensions in the Middle East and strong export demand. Overall, average wholesale prices for the quarter increased 3.6% compared to the prior year Q3. In the early part of the Q4, wholesale prices have generally been in the $0.70 to $0.75 per gallon range, which is flat compared to the same time last year. Excluding the impacts of the mark-to-market adjustments on our commodity hedges that I mentioned earlier, total gross margins for the Q3 were $159.6 million, a decrease of 2.4% compared to the prior year, primarily due to lower volume sold as propane unit margins remained steady.

Speaker #2: Overall, average wholesale prices for the quarter increased 3.6% compared to the prior year third quarter. Nearly part of the fourth quarter, wholesale prices have generally been in the 70 to 75 cents per gallon range, which is flat compared to the same time last year.

Speaker #2: Excluding the impact of the mark-to-market adjustments on our commodity hedges that I mentioned earlier, total gross margins for the third quarter were $159.6 million, a decrease of 2.4% compared to the prior year, primarily due to lower volume sold as the propane unit margins remained steady.

Speaker #2: With respect to expenses, combined operating and G&A expenses of $141.4 million for the third quarter were $5.2 million, or 3.8%, higher than the prior year.

Michael A. Kuglin: With respect to expenses, combined operating and G&A expenses of $141.4 million for Q3 were $5.2 million, or 3.8% higher than the prior year. The increase was primarily attributable to higher payroll and benefit-related expenses, and higher fuel, and vehicle maintenance costs, partially offset by lower variable compensation costs and a benefit of $1.1 million from Production Tax Credits earned for the current year quarter from RNG injections. Operating expenses for Q3 of fiscal 2025 include a $2 million gain from insurance recovery related to Hurricane Helene, reduced prior year operating expenses, and a pension settlement charge of $500,000, which was excluded from adjusted EBITDA. Maintenance expense of $18.8 million for Q3 was flat to the prior year.

Mike Kuglin: With respect to expenses, combined operating and G&A expenses of $141.4 million for Q3 were $5.2 million, or 3.8% higher than the prior year. The increase was primarily attributable to higher payroll and benefit-related expenses, and higher fuel, and vehicle maintenance costs, partially offset by lower variable compensation costs and a benefit of $1.1 million from Production Tax Credits earned for the current year quarter from RNG injections. Operating expenses for Q3 of fiscal 2025 include a $2 million gain from insurance recovery related to Hurricane Helene, reduced prior year operating expenses, and a pension settlement charge of $500,000, which was excluded from adjusted EBITDA. Maintenance expense of $18.8 million for Q3 was flat to the prior year.

Speaker #2: The increase was primarily attributable to higher payroll and benefit-related expenses and higher fuel and vehicle maintenance costs, partially offset by lower variable compensation costs and a benefit of 1.1 million dollars, our production tax credits earned during the current year quarter from R&G injections.

Speaker #2: Operating expenses for the third quarter of fiscal 2025 include a $2 million gain from insurance recovery related to Hurricane Helene, reduced prior year operating expenses, and a pension settlement charge of $500,000, which was excluded from adjusted EBITDA.

Speaker #2: Net interest expense of $18.8 million for the third quarter was flat to the prior year, as lower benchmark interest rates on borrowings under our revolving credit facility were offset by a higher interest rate for a tranche of senior notes that were refinanced in the first quarter of fiscal 2026.

Michael A. Kuglin: Lower benchmark interest rates on borrowings under our revolving credit facility were offset by a higher interest rate for a tranche of senior notes that were refinanced in Q1 of fiscal 2026. Total capital spending for the quarter was $21.4 million, which included $15.1 million of growth capital. Capital spending increased to $6.8 million compared to the prior year, primarily due to construction efforts at our Columbus, Ohio, and Upstate New York RNG facilities. On a year-to-date basis, our total growth CapEx for our RNG facilities was $28.7 million, and our full-year capital spending estimate for the existing RNG projects is approximately $35 million, which is at the low end of the previously communicated range of $35 to $40 million.

Mike Kuglin: Lower benchmark interest rates on borrowings under our revolving credit facility were offset by a higher interest rate for a tranche of senior notes that were refinanced in Q1 of fiscal 2026. Total capital spending for the quarter was $21.4 million, which included $15.1 million of growth capital. Capital spending increased to $6.8 million compared to the prior year, primarily due to construction efforts at our Columbus, Ohio, and Upstate New York RNG facilities. On a year-to-date basis, our total growth CapEx for our RNG facilities was $28.7 million, and our full-year capital spending estimate for the existing RNG projects is approximately $35 million, which is at the low end of the previously communicated range of $35 to $40 million.

Speaker #2: Total capital spending for the quarter was $21.4 million, which included $15.1 million of growth capital. Capital spending increased 6.8 million dollars, compared to the prior year, primarily due to construction efforts at our Columbus, Ohio, and upstate New York R&G facilities.

Speaker #2: On a year-to-date basis, our total growth capex for our R&G facilities was $28.7 million, and our full-year capital spending estimate for the existing R&G projects is approximately $35 million, which is at the low end of the previously communicated range of $35 to $40 million.

Speaker #2: Turning our balance sheet, during the third quarter, we utilized cash flows from operating activities and net proceeds of $6.6 million from the issuance of common units under our ATM program to repay $36.2 million of borrowings under the revolver.

Michael A. Kuglin: Turning to our balance sheet, during Q3, we utilized cash flows from operating activities and net proceeds of $6.6 million from the issuance of common units under our ATM program to repay $36.2 million of borrowings under the revolver. Our consolidated leverage ratio for the trailing 12-month period into June 2026 was 4.35 times, which was flat compared to June 2025. With a significant portion of capital spending on the RNG platform launch complete, we expect to generate increasing financial flexibility. We will remain focused on utilizing excess cash flows and proceeds received from the ATM program to further strengthen the balance sheet and, as opportunities arise, to fund strategic growth. With that, I'll turn the call back to Mike.

Mike Kuglin: Turning to our balance sheet, during Q3, we utilized cash flows from operating activities and net proceeds of $6.6 million from the issuance of common units under our ATM program to repay $36.2 million of borrowings under the revolver. Our consolidated leverage ratio for the trailing 12-month period into June 2026 was 4.35 times, which was flat compared to June 2025. With a significant portion of capital spending on the RNG platform launch complete, we expect to generate increasing financial flexibility. We will remain focused on utilizing excess cash flows and proceeds received from the ATM program to further strengthen the balance sheet and, as opportunities arise, to fund strategic growth. With that, I'll turn the call back to Mike.

Speaker #2: Our consolidated leverage ratio for the trailing 12-month period ended June 2026 was 4.35 times, which was flat compared to June 2025. With a significant portion of capital spending on the R&G platform launch complete, we expect to generate increasing financial flexibility.

Speaker #2: We will remain focused on utilizing excess cash flows and proceeds received from the ATM program to further strengthen the balance sheet and as opportunities arise, to fund strategic growth.

Speaker #2: With that, I'll turn the call back to Mike.

Speaker #1: Thanks, Mike. As announced on July 23rd, our board of supervisors declared our quarterly distribution of $32.5 cents per common unit in respect of our third quarter of fiscal 2026.

Michael A. Stivala: Thanks, Mike. Announced on 23 July 2026, our Board of Supervisors declared our quarterly distribution of $0.325 per common unit in respect of our Q3 of fiscal 2026. That equates to an annualized rate of $1.30 per common unit. Our quarterly distribution will be paid on 11 August 2026 to our unit holders of record as of 4 August 2026. Our distribution coverage continues to remain very strong at 2.07 times for the trailing 12 months ended June 2026. Just to close it out, through the first nine months, fiscal 2026 has been another great year for Suburban Propane. Our personnel in the eastern half of our propane operations did an amazing job responding to a surge in demand from some of the most sustained cold weather and harsh storms that we've seen during the heart of the heating season in over a decade.

Mike Stivala: Thanks, Mike. Announced on 23 July 2026, our Board of Supervisors declared our quarterly distribution of $0.325 per common unit in respect of our Q3 of fiscal 2026. That equates to an annualized rate of $1.30 per common unit. Our quarterly distribution will be paid on 11 August 2026 to our unit holders of record as of 4 August 2026. Our distribution coverage continues to remain very strong at 2.07 times for the trailing 12 months ended June 2026. Just to close it out, through the first nine months, fiscal 2026 has been another great year for Suburban Propane. Our personnel in the eastern half of our propane operations did an amazing job responding to a surge in demand from some of the most sustained cold weather and harsh storms that we've seen during the heart of the heating season in over a decade.

Speaker #1: That equates to an annualized rate of $1.30 per common unit. Our quarterly distribution will be paid on August 11th to our unit holders of record as of August 4th.

Speaker #1: Our distribution coverage continues to remain very strong at 2.07 times for the trailing 12 months ended June 2026. So just to close it out, through the first nine months, fiscal 2026 has been another great year for suburban propane.

Speaker #1: As our personnel in the eastern half of our propane operations did an amazing job responding to a surge in demand from some of the most sustained cold weather and harsh storms that we've seen during the heart of the heating season in over a decade.

Speaker #1: While our teams in the west continued to focus on the areas they can control, growing our customer base and managing expenses. And with all three of our R&G production facilities approaching full operations, the platform has benefited from our efforts to drive operational and safety discipline, production stability, and capacity optimization plans.

Michael A. Stivala: While our teams in the West continue to focus on the areas they can control, growing our customer base and managing expenses. With all three of our RNG production facilities approaching full operations, the platform has benefited from our efforts to drive operational and safety discipline, production stability, and capacity optimization plans, all at a time in which we see tailwinds for the RNG platform in the form of improving environmental credit pricing, continued regulatory support for clean energy production pathways, and exponential growth in power demand. Taken together, the strength and stability of our core propane business, combined with the investments we have made to build a renewable energy platform, position Suburban Propane for long-term growth as we continue to support the evolution of energy to a lower carbon future and approach our 100-year anniversary in 2028.

Mike Stivala: While our teams in the West continue to focus on the areas they can control, growing our customer base and managing expenses. With all three of our RNG production facilities approaching full operations, the platform has benefited from our efforts to drive operational and safety discipline, production stability, and capacity optimization plans, all at a time in which we see tailwinds for the RNG platform in the form of improving environmental credit pricing, continued regulatory support for clean energy production pathways, and exponential growth in power demand. Taken together, the strength and stability of our core propane business, combined with the investments we have made to build a renewable energy platform, position Suburban Propane for long-term growth as we continue to support the evolution of energy to a lower carbon future and approach our 100-year anniversary in 2028.

Speaker #1: All at a time in which we see tailwinds for the R&G platform in the form of improving environmental credit pricing, continued regulatory support for clean energy production pathways, and exponential growth in power demand.

Speaker #1: Taken together, strength and stability of our core propane business, combined with the investments we have made to build a renewable energy platform, positions suburban propane for a long-term growth as we continue to support the evolution of energy to a lower carbon future and approach our 100-year anniversary in 2028.

Speaker #1: Finally, I want to take a moment to thank the more than 3,200 employees at Suburban Propane for their hard work and unwavering focus on the safety and comfort of our customers and the communities we serve.

Michael A. Stivala: Finally, I want to take a moment to thank the more than 3,200 employees at Suburban Propane for their hard work and unwavering focus on the safety and comfort of our customers and the communities we serve. Thank you all for everything you do all day. As always, we appreciate your support and attention this morning and would now like to open the call up for questions. Lacey, could you help us with that?

Mike Stivala: Finally, I want to take a moment to thank the more than 3,200 employees at Suburban Propane for their hard work and unwavering focus on the safety and comfort of our customers and the communities we serve. Thank you all for everything you do all day. As always, we appreciate your support and attention this morning and would now like to open the call up for questions. Lacey, could you help us with that?

Speaker #1: Thank you all for everything you do all day. As always, we appreciate your support and attention this morning, and would now like to open the call up for questions and Lacey.

Speaker #1: Could you help us with that?

Speaker #3: At this time, I would like to remind everyone if you would like to ask a question, please press star 1 on your telephone keypad.

Operator: At this time, I would like to remind everyone, if you would like to ask a question, please press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. There are no questions at this time.

Operator: At this time, I would like to remind everyone, if you would like to ask a question, please press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. There are no questions at this time.

Speaker #3: We'll pause for just a moment to compile the Q&A roster. There are no questions at this time.

Speaker #1: Okay. Thank you, Lacey. Again, thank you all for joining us, and I hope you enjoy the rest of your summer. And as always, please be safe.

Michael A. Stivala: Okay, thank you, Lacey. Again, thank you all for joining us, and I hope you enjoy the rest of your summer. As always, please be safe. We'll talk to you in November.

Mike Stivala: Okay, thank you, Lacey. Again, thank you all for joining us, and I hope you enjoy the rest of your summer. As always, please be safe. We'll talk to you in November.

Speaker #1: We'll talk to you in November.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.