Breaking Down Suburban Propane Partners, L.P. (SPH) Financial Health: Key Insights for Investors

You're looking at Suburban Propane Partners, L.P. (SPH) and wondering if the Master Limited Partnership (MLP) is a solid play for yield and stability, especially after a strong fiscal 2025. Here's the quick answer: the partnership delivered, but the underlying trend deserves a closer look. They posted a net income of $106.6 million, or $1.64 per Common Unit, which is a significant jump from the $74.2 million reported last year, and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 11.2% to $278.0 million on the back of selling 400.5 million gallons of propane. Still, that outperformance was defintely boosted by an unusually cold winter and post-storm demand spikes, which makes me hesitant to extrapolate that growth into 2026. Plus, while the annualized distribution of $1.30 per Common Unit offers a compelling yield, the Consolidated Leverage Ratio, even after improving, sits at 4.29x, so you need to weigh that debt against their strategic investments like the $27 million in renewable natural gas projects. It's a classic energy utility trade-off: great near-term performance meets long-term secular headwinds.

Revenue Analysis

Suburban Propane Partners, L.P. (SPH) delivered a strong top-line performance in fiscal year 2025, with total annual revenue reaching approximately $1.433 billion. This represents a solid year-over-year growth rate of 7.94%, primarily fueled by the core propane business and favorable weather conditions. The key takeaway here is that while the partnership is diversifying, its financial health remains overwhelmingly tied to propane sales and the weather.

The revenue growth is a direct result of increased demand, particularly from sustained widespread cold temperatures during the critical winter months. Plus, the company saw a bump in demand for backup power generation in the Southeast following Hurricanes Helene and Milton. This underscores the fundamental, weather-sensitive nature of the business-a critical risk factor you defintely need to track.

Core Revenue Streams: Propane Dominance

The business model is straightforward: sell propane, fuel oil, natural gas, and electricity. But honestly, it's all about the propane. The Propane segment contributed a massive $1,265.5 million to the total revenue in fiscal 2025, representing about 88.3% of the partnership's sales. This segment's revenue increased significantly from $1,150.0 million in the prior year.

Here's the quick math on the retail side: Suburban Propane Partners, L.P. sold 400.5 million gallons of retail propane in fiscal 2025, which is a 5.9% increase from the previous year. That volume growth is a clear indicator of market execution and the impact of recent acquisitions.

The other segments, while important for diversification, are much smaller in scale, and their performance was mixed, as you can see in the table below. For a deeper dive into the ownership structure and market sentiment, you should check out Exploring Suburban Propane Partners, L.P. (SPH) Investor Profile: Who's Buying and Why?

Shifting Revenue Mix and Strategic Investments

What this segment breakdown hides is the strategic shift. While the Fuel Oil and Refined Fuels and Natural Gas and Electricity segments both saw a slight revenue decline in fiscal 2025, the All Other segment is where the future action is. This segment includes the company's investments in the low-carbon energy transition, like Renewable Natural Gas (RNG) production facilities.

• Propane segment growth was supported by approximately $53.0 million in strategic acquisitions.
• The company committed $27.0 million in growth capital expenditures to advance its RNG platform.
• Management is intentionally targeting less weather-sensitive propane verticals to smooth out the seasonal revenue swings.

So, the core business is strong and growing through acquisition, but the long-term strategy is clearly aimed at diversifying away from the weather-dependent heating market by building out the renewable energy platform. It's a pragmatic, two-track approach: maximize the cash cow while funding the next-generation business.

Profitability Metrics

You're looking at Suburban Propane Partners, L.P. (SPH) and want to know if the core business is truly profitable or just riding commodity price swings. The direct takeaway is that fiscal year 2025 (FY 2025) was a strong year for net income, largely driven by volume and effective margin management, but its gross margin structure is significantly higher than the industry average, which is a key competitive advantage.

For the fiscal year ended September 27, 2025, Suburban Propane Partners, L.P. reported $1.43 billion in total revenue. This top-line performance translated into impressive margins, especially at the gross profit level, highlighting the partnership's pricing power and cost-of-goods management.

Here's the quick math on the key profitability ratios for FY 2025:

• Gross Profit Margin: 60.75%
• Adjusted Operating Margin (EBITDA Margin): 19.44%
• Net Profit Margin: 7.45%

Gross Profit, Operating Profit, and Net Profit Margins

The gross profit margin is where Suburban Propane Partners, L.P. truly shines. With a gross profit of $868.8 million on $1.43 billion in revenue, the resulting 60.75% gross margin is excellent. To be fair, this is a master limited partnership (MLP) model, and the structure of the propane distribution business-which includes services, tank rentals, and other fees-allows for a much higher gross margin than a simple retail commodity sale.

When you look at operational efficiency, we focus on Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization) as a proxy for operating profit, which is common for MLPs. Adjusted EBITDA for FY 2025 was $278.0 million. This gives an Adjusted Operating Margin of nearly 19.44%. This metric shows strong control over combined operating and general and administrative (G&A) expenses, which totaled $590.5 million for the year. The net profit margin, which accounts for all costs including interest and taxes, came in at 7.45%, based on a net income of $106.6 million.

Trends in Profitability and Operational Efficiency

The trend is a clear move toward higher profitability, largely due to a favorable operating environment. Net income for Suburban Propane Partners, L.P. jumped from $74.2 million in fiscal 2024 to $106.6 million in fiscal 2025, a robust increase of over 43%. The primary driver was a 5.9% increase in retail propane gallons sold, thanks to colder weather patterns and post-storm demand in key operating regions.

Operational efficiency is defintely improving. Adjusted EBITDA saw an 11.2% increase to $278.0 million in FY 2025. This double-digit growth in operational cash flow is a strong signal of effective margin management and expense discipline, even as average Mont Belvieu propane prices rose 5.8%. The company managed to expand its gross margin by 7.9% to $868.8 million year-over-year, which outpaced the rise in commodity prices.

Comparison with Industry Averages

The profitability ratios for Suburban Propane Partners, L.P. stack up well against the broader propane distribution industry, but the scale of its operation skews the numbers. Typical retail propane gross profit margins generally range from 30% to 50%. Suburban Propane Partners, L.P.'s 60.75% gross margin is well above the high end of this range, reflecting its scale, hedging strategies, and the value-added components of its service model.

For net profitability, the industry average net profit margin for a propane retailer typically falls between 5% and 15%. Suburban Propane Partners, L.P.'s 7.45% net profit margin sits comfortably within this range, proving that its strong gross margin translates into solid bottom-line results after covering the substantial operating and interest expenses inherent in a capital-intensive, debt-leveraged MLP structure.

The next action is to dive into the balance sheet to see how this profitability supports the debt load and distribution policy. You can read more about this in our full analysis: Breaking Down Suburban Propane Partners, L.P. (SPH) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You need to know how Suburban Propane Partners, L.P. (SPH) is funding its operations and growth, because a Master Limited Partnership (MLP) structure often carries higher debt loads than a standard corporation. The quick answer is that Suburban Propane Partners, L.P. is managing its high leverage by using a mix of operational cash flow and incremental equity, keeping its debt-to-Adjusted EBITDA ratio in check for fiscal year 2025.

The Current Debt Picture: High Leverage, Improving Trend

Suburban Propane Partners, L.P.'s overall debt remains a significant factor in its capital structure. For the fiscal year ending September 27, 2025, the company's total debt stood at approximately $1.35 Billion. [cite: 7 in previous step] This level of borrowing is typical for capital-intensive utility and distribution businesses, but it demands close attention from investors. The good news is that management is making progress on its key leverage metric, the Consolidated Leverage Ratio (Total Debt to Adjusted EBITDA), which improved to 4.29x at the end of fiscal 2025, down from 4.76x in the prior year. That's a solid move in the right direction.

Here's the quick math on their debt profile and what it means for risk:

• Total Debt (FY 2025): Approx. $1.35 Billion [cite: 7 in previous step]
• Net Interest Expense (FY 2025): $76.3 million
• Debt Repayment (FY 2025): Reduced overall debt by nearly $2 million

Debt-to-Equity Ratio: A High-Capital Benchmark

The Debt-to-Equity (D/E) ratio shows how much debt the company uses to finance its assets relative to the equity provided by its unitholders. Suburban Propane Partners, L.P.'s trailing twelve-month (TTM) D/E ratio is approximately 2.09. [cite: 5 in previous step] To be fair, a ratio over 2.0 is generally considered high for most industries, but for a capital-intensive sector like propane distribution, a D/E ratio between 2.0 and 2.5 is often a necessary part of the business model. [cite: 5 in previous step, 1]

For context, a major competitor like UGI Corporation, which includes a propane segment, has a D/E ratio of approximately 1.43, suggesting Suburban Propane Partners, L.P. is operating with notably higher financial leverage. This high D/E ratio amplifies potential returns during good times, but it defintely increases the financial risk during economic downturns or unseasonably warm winters that hurt propane demand.

Balancing Debt Financing with Equity Funding

Suburban Propane Partners, L.P. is actively balancing its debt load with equity to fund growth, which is a key action for investors to track. The company's long-term debt structure is relatively stable, anchored by the $650 million of 5.000% Senior Notes due in 2031, which were issued in 2021 to refinance earlier maturities. [cite: 9 in previous step] This pushes out a major refinancing risk.

In fiscal 2025, the company leaned into equity financing to support its strategic moves. It launched an At-the-Market (ATM) equity program to sell up to $100 million in new units, raising $23.5 million in net proceeds during the year. This capital was used to fund acquisitions totaling nearly $53 million and growth projects in the Renewable Natural Gas (RNG) business, plus a modest debt reduction of about $2 million on its revolving credit facility. The ongoing equity issuance signals management's clear focus on supporting bolt-on acquisitions and debt reduction, even if it means a slight dilution of the existing unit count. For a deeper dive into the full picture, check out Breaking Down Suburban Propane Partners, L.P. (SPH) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Suburban Propane Partners, L.P. (SPH) can cover its near-term bills, and the simple answer is: the liquidity ratios look tight, but the company's cash flow from operations is strong enough to manage its seasonal working capital needs. The propane business is inherently seasonal, so you need to look beyond the static balance sheet ratios and focus on the cash flow generation.

The standard liquidity metrics for Suburban Propane Partners, L.P. (SPH) for the fiscal year ending September 27, 2025, show a challenging position. The Current Ratio, which compares all current assets to current liabilities, stands at approximately 0.70. A ratio below 1.0 means the partnership has less than one dollar of current assets for every dollar of current liabilities, indicating a negative working capital position. The more stringent Quick Ratio (or acid-test ratio), which excludes inventory, is even lower at about 0.46. This low figure is a clear signal of reliance on inventory sales or external financing to meet immediate obligations.

Working capital trends for Suburban Propane Partners, L.P. are critical because of the winter-heavy demand for propane. The first half of the fiscal year typically sees a high demand for working capital to build inventory and fund receivables. However, by the second quarter of fiscal 2025, the partnership had successfully navigated this peak, stating they had moved past their historically high period of seasonal working capital needs and expected to generate excess cash flows. That's a key operational win.

Here's the quick math on their cash movements for fiscal 2025, which ended in September:

• Operating Cash Flow (OCF): Generated $160.59 million.
• Investing Cash Flow (ICF): Used $81.64 million.
• Financing Cash Flow (FCF): Used $72.50 million.

The strong OCF of over $160 million is the true liquidity strength, covering capital expenditures and strategic growth. Suburban Propane Partners, L.P. used this operational cash, plus $23.5 million from an At-The-Market (ATM) equity program, to fund $53.0 million in acquisitions and over $25 million in growth capital for their Renewable Natural Gas (RNG) projects. They even managed to reduce outstanding debt by nearly $2 million. You can see how the cash generated is immediately put to work for growth and debt management, which is why the balance sheet liquidity ratios are so low.

The primary liquidity concern is the partnership's high debt load, which is a solvency issue, not just a liquidity one. Their Consolidated Leverage Ratio improved to 4.29x at the end of fiscal 2025, down from the prior year, but still high. The positive is that the cash flow statement shows the business is generating enough cash to fund its capital spending and acquisitions while still servicing debt. The risk is an unseasonably warm winter, which would immediately pressure that OCF figure. You can read more about the full financial picture in Breaking Down Suburban Propane Partners, L.P. (SPH) Financial Health: Key Insights for Investors.

The cash flow breakdown for fiscal 2025 (in millions of USD) is defintely the most telling part of their financial health:

Valuation Analysis

You want to know if Suburban Propane Partners, L.P. (SPH) is a buy, a hold, or a sell right now, especially after their strong fiscal year 2025 results. My take is that the valuation metrics suggest the stock is fairly priced, but the market's consensus is a cautious Hold.

The Partnership reported net income of $106.6 million for the fiscal year ending September 27, 2025, a significant jump from $74.2 million in the prior year. This improved performance is what we need to map against the current unit price, which was around $18.73 in mid-November 2025.

Is Suburban Propane Partners, L.P. Overvalued or Undervalued?

The quick answer is that Suburban Propane Partners, L.P. is trading in a range that suggests it is neither deeply undervalued nor wildly overvalued, especially when compared to its own history. The valuation ratios for the 2025 fiscal year paint a picture of a stable, income-focused Master Limited Partnership (MLP).

Here's the quick math on key trailing twelve-month (TTM) metrics based on the latest 2025 fiscal year data:

• Price-to-Earnings (P/E): The P/E ratio sits at approximately 11.40. For an energy-related MLP, this is a reasonable multiple, suggesting the market isn't paying a high premium for earnings.
• Price-to-Book (P/B): The P/B is around 1.88. This means the market values the company at almost twice its book value (equity), which is a common sign of a business with solid, tangible assets and a decent return on equity.
• Enterprise Value-to-EBITDA (EV/EBITDA): This is arguably the best metric for an MLP due to high depreciation and debt. The EV/EBITDA ratio for FY 2025 is approximately 9.23. This is a slightly elevated multiple compared to some historical periods, but it is not excessive for a utility-like business with stable cash flow.

The bottom line here is that the unit price of Suburban Propane Partners, L.P. is supported by its recent earnings, but the valuation ratios don't scream 'bargain.'

Stock Price and Dividend Health

Looking at the stock price over the last 12 months, the units have traded in a 52-week range between a low of $16.92 and a high of $22.24. The stock's performance has been largely flat over the past year, showing a modest change of around 2.42%. That near-term stagnation reflects the market's cautious view on the broader energy sector and the weather-dependent nature of the propane business.

The real draw for this stock is its income stream. Suburban Propane Partners, L.P. offers a strong annual dividend of $1.30 per common unit. At the current unit price, this translates to a healthy dividend yield of about 7.01%. The dividend payout ratio is a manageable ~79.3% of its fiscal 2025 earnings per unit, which is a comfortable level for an MLP and indicates the dividend is reasonably covered by current earnings. That's a powerful incentive for income investors.

Analyst Consensus and the Path Forward

The Wall Street consensus is currently a Hold on Suburban Propane Partners, L.P. While some analysts have maintained a 'Buy' rating with a target as high as $22, others, like Mizuho Securities as recently as November 2025, have reiterated a Sell rating, arguing the stock screens expensive at its current EV/EBITDA multiple. This split suggests a lack of a clear, compelling catalyst for a major price move in the near term.

The average analyst target price is not currently available from all firms, but the mixed ratings emphasize that while the dividend is attractive, growth prospects and valuation are balanced. To dig deeper into the company's operational strength and strategy, you should check out Breaking Down Suburban Propane Partners, L.P. (SPH) Financial Health: Key Insights for Investors.

Your action here is simple: If you are an income investor, the 7.01% yield is defintely worth holding onto, but if you are seeking capital appreciation, you might look elsewhere until a clear growth driver emerges.

Risk Factors

You need to look past the strong headline numbers from fiscal 2025-like the $278.0 million in Adjusted EBITDA and the 5.9% jump in propane volumes-and focus on the structural risks that could slow Suburban Propane Partners, L.P. (SPH) down. The core challenge is simple: the business is still a slave to the weather and commodity prices, plus they carry a significant debt load.

The biggest external risk is weather volatility. Honestly, the fiscal 2025 results were boosted by a sustained period of cold weather during the critical heating months, which drove retail propane gallons sold to 400.5 million gallons. If we see an unseasonably warm winter next year, that volume increase disappears, and the financial impact is material. That's a huge operational risk you can't hedge with a derivative.

Also, commodity price swings are a constant financial headache. In fiscal 2025, average wholesale propane prices were 5.8% higher at $0.79 per gallon (basis Mont Belvieu). When prices climb, customers conserve, which directly impacts the gallons Suburban Propane Partners, L.P. sells. Plus, the partnership faces mounting competitive pressure from alternative energy sources, which contributes to the secular decline in long-term propane demand.

Here's the quick math on key operational and financial risks:

• Weather Exposure: A single warm winter can wipe out the volume gains seen in fiscal 2025.
• Rising Operating Costs: Combined operating and General & Administrative (G&A) expenses increased by 4.2%, driven by higher payroll and a technology modernization initiative.
• High Leverage: The Consolidated Leverage Ratio is still elevated at 4.29x, even after improving from 4.76x in the prior year.
• RNG Operations: The company's renewable natural gas (RNG) segment is a strategic focus, but it's still risky; average daily RNG injection was down roughly 13% in fiscal 2025 due to operational downtime and weather issues.

To be fair, management is defintely not sitting still. They are actively mitigating these risks. On the financial side, they are using hedging and risk management strategies, which resulted in a $2.4 million unrealized gain on derivative instruments in fiscal 2025. They also deployed nearly $53 million for propane acquisitions and over $25 million into RNG growth projects, like securing over 2 million gallons in renewable propane sales, mostly in California. This is an attempt to diversify the revenue stream away from core propane and into the lower-carbon alternatives outlined in their Mission Statement, Vision, & Core Values of Suburban Propane Partners, L.P. (SPH).

The balance sheet strategy is also clear: they used excess cash flows and proceeds from their At-the-Market (ATM) equity program to reduce overall debt by nearly $2 million, which helped bring the leverage ratio down. But still, the high debt load means rising interest rates or a sharp drop in earnings from a warm winter could quickly pressure their ability to maintain the current quarterly distribution of $0.325 per Common Unit.

What this estimate hides is the long-term capital required for their renewable energy push. You need to watch the return on that $25 million+ investment in RNG, because a 13% drop in injection volume is a poor start.

Finance: Track the Q1 2026 earnings call for any change in the leverage target and an update on RNG operational efficiency.

Growth Opportunities

You want to know where Suburban Propane Partners, L.P. (SPH) goes from here, especially after a strong fiscal 2025. The short answer is that growth is defintely a grind, but management is executing a clear strategy: consolidate the core propane business through smart acquisitions and aggressively build out a future-proof renewable energy platform.

The core propane business delivered a solid year, driven by a colder winter-temperatures were 4% cooler than the prior year, boosting demand. Retail propane volumes sold increased by nearly 6% to 400.5 million gallons. Still, you can't bet on the weather every year, so the real growth story is in their strategic moves.

Here's the quick math on their recent growth drivers for the fiscal year ending September 2025:

• Tuck-in M&A: Suburban Propane Partners, L.P. deployed nearly $77 million on acquisitions in fiscal 2025, including a significant propane business in New Mexico and Arizona for about $53 million.
• Renewable Energy Investment: The partnership invested over $25 million in growth projects for its Renewable Natural Gas (RNG) business, plus another $27.0 million in growth capital expenditures to advance construction.
• Renewable Propane Sales: They secured incremental supply of renewable propane and exceeded 2 million gallons in sales, focusing on the California market. This is a key product innovation that helps mitigate long-term secular decline risk.

The company's strategic shift into renewables is a hedge against the long-term decline in traditional propane demand. They are also building a dedicated sales team to focus on less weather-sensitive propane verticals (like material handling and power generation) to smooth out the inherent seasonality of the business.

Near-Term Financial Projections and Competitive Edge

For the full fiscal year 2025, Suburban Propane Partners, L.P. reported total revenue of $1.43 billion, representing 7.94% growth, and Adjusted EBITDA of $278.0 million, an increase of 11.2% over the prior year. What this estimate hides, however, is the reliance on that colder winter. Analysts are cautious about extrapolating this strong performance into 2026, expecting a return to more normalized weather patterns.

Looking further out, some long-term forecasts project a modest revenue increase to $1.5 billion by 2028, with earnings climbing to $132.3 million.

The company's competitive advantage centers on its operational flexibility and scale. They demonstrated this in 2025 by opportunistically taking on new business when some competitors couldn't keep up with the surge in demand following Hurricanes Helene and Milton. Their hyperlocal business model, which they intend to keep, is what sets Suburban Propane Partners, L.P. apart as best-in-class operators in a fragmented industry.

Here is a snapshot of the key fiscal 2025 results and a longer-term analyst outlook:

The commitment to a strong balance sheet is also a clear action. They ended fiscal 2025 with a leverage ratio (net debt to Adjusted EBITDA) of 4.29x, a significant improvement from 4.76x at the end of the prior year, which gives them more financial flexibility for future acquisitions. For a deeper dive into the partnership's overall financial standing, check out Breaking Down Suburban Propane Partners, L.P. (SPH) Financial Health: Key Insights for Investors.

Next Step: Review the Q1 2026 guidance, when released, to see if management's forecast for the current winter aligns with the cautious analyst outlook.