Suburban Propane delivered a standout second quarter in fiscal 2025, driven by an exceptionally cold winter that bolstered heat-related propane demand across the footprint. Propane volumes rose 15.5% year over year, contributing to an adjusted EBITDA increase of 19.1% to $175 million and a net income of $137.1 million ($2.11 per common unit). Revenue reached $587.7 million, with gross margin of roughly $345.3 million and a gross margin rate of 58.8%. Management highlighted the strength of field execution, disciplined pricing, and ongoing capital investments in RNG and core propane expansion as core drivers of performance and convergence toward longer-term growth objectives.
The quarter also featured meaningful progress on strategic growth initiatives including the integration of the first-quarter propane acquisition (New Mexico and Arizona), ongoing RNG projects in Columbus, Ohio and Upstate New York, and a late-February ATM program launch to raise up to $100 million of new common units. Net cash from operating activities was $40.1 million, free cash flow was $20.8 million, and the company reduced revolver borrowings by $10.1 million using ATM proceeds and operating cash flow. Leverage, measured on a trailing-twelve-month basis, improved to 4.54x from 4.99x in Q1, signaling a normalization of seasonal working-capital dynamics after a peak heating season.
Management framed the medium-term opportunity around a balanced growth strategy: (1) strengthen the core propane business through operational excellence and disciplined capital allocation; (2) advance renewable energy alternatives, notably RNG, with Columbus and Adirondack poised to add RNG volume later in calendar year 2025/early 2026; and (3) pursue opportunistic acquisitions in attractive markets, supported by a robust balance sheet and a disciplined capital plan. They also cautioned on regulatory considerations affecting RNG incentives (IRA PTC) and LCFS credit dynamics, signaling a need to monitor policy developments closely. Overall, SPH maintains a constructive growth trajectory supported by a diversified energy platform, healthy cash flows, and a capital-allocation framework designed to sustain distributions and fund strategic investments.