Suburban Propane delivered a challenging Q4 2024 punctuated by unseasonably warm weather, which suppressed heating-related demand and pressured quarterly earnings. Total revenue for Q4 reached $208.6 million with gross margin of $124.0 million (gross margin 59.4%), but operating income remained negative at $22.5 million and net income totaled -$44.6 million, reflecting a substantial amount of other (non-operating) expenses and a 13-week vs 14-week calendar in the period. For the full year, SPH reported Adjusted EBITDA of $250 million, versus $275 million in the prior year, and net income of $107.7 million when excluding unrealized hedge mark-to-market adjustments and other non-cash items; GAAP net income for the year was higher on an apples-to-apples basis due to hedge accounting adjustments, and the company emphasized discipline on cost control and growing its RNG platform.
Management stressed the resilience of SPH’s business model amid weather volatility and highlighted a strategic pivot toward a balanced growth framework: grow core propane via accretive acquisitions and greenfield expansions, while advancing renewable energy initiatives and RNG projects funded in part by tax-credits (ITC/PTC) and potential IRA provisions. RNG intensity rose meaningfully in 2024, with peak RNG injections at Stanfield, AZ hitting 1,535 MMBtu/day and 2024 average at 1,049 MMBtu/day, up ~20% year over year. The company reaffirmed the RNG projects in Columbus, OH and Upstate NY, targeting full operation in 2H2025 and run-rate revenues from RNG-related activities at roughly 850,000 MMBtu/year with additional environmental attribute credits and fertilizer sales upon full ramp.
SPH also advanced its core propane strategy with three tuck-in acquisitions totaling roughly $14 million (Florida, Nevada, Texas) and a larger recent acquisition in New Mexico and Arizona for about $53 million, expanding the footprint by more than 14,000 customers and 65 employees. The expansion program grew active greenfield expansions from 9 in 2023 to 18 in 2024. Management signaled that ITCs and production tax credits stemming from IRA could be monetized via the transfer market, and that Upstate NY RNG facilities will benefit from a 30% ITC, partially offsetting construction costs. Taken together, these factors position SPH to benefit from a multi-year energy-transition thesis while maintaining the flexibility to manage leverage within covenant bounds. Investors should monitor weather trends, RNG project milestones, ITC/PTC realization, and the pace of propane growth through acquisitions against a backdrop of moderate near-term profitability headwinds.