SUBURBAN PROPANE PARTNERS LP

Previous wording

The following is a discussion and analysis of the financial condition and results of operations of the Partnership as of and for the three and six months ended March 30, 2024, seen from our perspective. The discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the historical consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Current wording

The following is a discussion and analysis of the financial condition and results of operations of the Partnership as of and for the three and nine months ended June 29, 2024, seen from our perspective. The discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the historical consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Previous wording

According to the Energy Information Administration, U.S. propane inventory levels at the end of March 2024 were 51.8 million barrels, which was 7.0% lower than March 2023 levels, albeit 7.8% higher than the five-year average for March. These lower inventory levels in comparison to March 2023 contributed to an increase in average posted propane prices (basis Mont Belvieu, Texas) of 2.8% compared to the prior year second quarter.

Current wording

According to the Energy Information Administration, U.S. propane inventory levels at the end of June 2024 were 75.8 million barrels, which was 6.5% lower than June 2023 levels, albeit 10.2% higher than the five-year average for June. The decline in inventory contributed to an increase in average posted propane prices (basis Mont Belvieu, Texas) of 11.5% compared to the prior year third quarter.

Previous wording

We engage in hedging and risk management activities to reduce the effect of price volatility on our product costs and to ensure the availability of product during periods of short supply. We enter into propane forward, options and swap agreements with third parties, and use futures and options contracts traded on the New York Mercantile Exchange (“NYMEX”) to purchase and sell propane, fuel oil, crude oil and natural gas at fixed prices in the future. The majority of the futures, forward and options agreements are used to hedge price risk associated with propane and fuel oil physical inventory, as well as, in certain instances, forecasted purchases of propane or fuel oil. In addition, we sell propane and fuel oil to customers at fixed prices, and enter into derivative instruments to hedge a portion of our exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. Forward contracts are generally settled physically at the expiration of the contract whereas futures, options and swap contracts are generally settled at the expiration of the contract through a net settlement mechanism. Although we use derivative instruments to reduce the effect of price volatility associated with priced physical inventory and forecasted transactions, we do not use derivative instruments for speculative trading purposes. Risk management activities are monitored by an internal Commodity Risk Management Committee, made up of six members of management and reporting to our Audit Committee, through enforcement of our Hedging and Risk Management Policy.

Current wording

We engage in hedging and risk management activities to reduce the effect of price volatility on our product costs and to ensure the availability of product during periods of short supply. We enter into propane forward, options and swap agreements with third parties, and use futures and options contracts traded on the New York Mercantile Exchange (“NYMEX”) to purchase and sell propane, fuel oil, crude oil, natural gas and electricity at fixed prices in the future. The majority of the futures, forward and options agreements are used to hedge price risk associated with propane and fuel oil physical inventory, as well as, in certain instances, forecasted purchases of propane or fuel oil. In addition, we sell propane, fuel oil, natural gas and electricity to customers at fixed prices, and enter into derivative instruments to hedge a portion of our exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. Forward contracts are generally settled physically at the expiration of the contract whereas futures, options and swap contracts are generally settled at the expiration of the contract through a net settlement mechanism. Although we use derivative instruments to reduce the effect of price volatility associated with priced physical inventory and forecasted transactions, we do not use derivative instruments for speculative trading purposes. Risk management activities are monitored by an internal Commodity Risk Management Committee, made up of six members of management and reporting to our Audit Committee, through enforcement of our Hedging and Risk Management Policy.

Previous wording

Net income for the second quarter of fiscal 2024 was $111.5 million, or $1.73 per Common Unit, compared to net income of $104.5 million, or $1.63 per Common Unit, in the second quarter of fiscal 2023. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA, as defined and reconciled below) for the second quarter of fiscal 2024 was $147.0 million, compared to $149.0 million in the prior year second quarter.

Current wording

Consistent with the seasonal nature of our business, we typically experience a net loss in the third quarter of our fiscal year. Net loss for the third quarter of fiscal 2024 was $17.2 million, or $0.27 per Common Unit, compared to a net loss of $5.3 million, or $0.08 per Common Unit, in the third quarter of fiscal 2023. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted

Previous wording

Average propane prices (basis Mont Belvieu, Texas) for the second quarter of fiscal 2024 increased 2.8% compared to the prior year second quarter. Total gross margin of $308.0 million for the second quarter increased $13.1 million, or 4.4%, compared to the prior year second quarter. Gross margin for the second quarter of fiscal 2024 included a $5.9 million unrealized gain attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $4.5 million unrealized loss in the prior year second quarter. These non-cash adjustments, which were reported in cost of products sold, were excluded from Adjusted EBITDA for both periods. Excluding the impact of the mark-to-market adjustments, total gross margin increased $2.7 million, or 0.9%, compared to the prior year second quarter, primarily due to higher unit margins, which increased $0.08 per gallon, more than offsetting the lower volumes sold.

Current wording

Average propane prices (basis Mont Belvieu, Texas) for the third quarter of fiscal 2024 increased 11.5% compared to the prior year third quarter. Total gross margin of $160.2 million for the third quarter decreased $8.0 million, or 4.7%, compared to the prior year third quarter. Gross margin for the third quarter of fiscal 2024 included a $3.2 million unrealized loss attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $3.0 million unrealized loss in the prior year third quarter. These non-cash adjustments, which were reported in cost of products sold, were excluded from Adjusted EBITDA for both periods. Excluding the impact of the mark-to-market adjustments, propane unit margins increased $0.07 per gallon, or 3.8%, compared to the prior year third quarter.

Previous wording

On March 15, 2024, we entered into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) that provides for a $500 million revolving credit facility (the “Revolving Credit Facility”), of which $154.5 million was outstanding as of March 30, 2024. The Revolving Credit Facility matures on the earlier of (i) the date that is ninety-one (91) days prior to maturity of the 2027 Senior Notes, as defined in Item 1, Note 10 of this Quarterly Report (unless the notes have been refinanced prior to such date) and (ii) March 15, 2029. At the time of the execution of the Credit Agreement, $187.9 million was outstanding under the revolving credit facility of the previous credit agreement, which was rolled into the Revolving Credit Facility under the Credit Agreement. The Credit Agreement amends and restates the previous credit agreement dated March 5, 2020.

Current wording

On March 15, 2024, we entered into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) that provides for a $500 million revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility matures on the earlier of (i) the date that is ninety-one (91) days prior to maturity of the 2027 Senior Notes, as defined in Item 1, Note 10 of this Quarterly Report (unless the notes have been refinanced prior to such date) and (ii) March 15, 2029. At the time of the execution of the Credit Agreement, $187.9 million was outstanding under the revolving credit facility of the previous credit agreement, which was rolled into the Revolving Credit Facility under the Credit Agreement. The Credit Agreement amends and restates the previous credit agreement dated March 5, 2020.

Previous wording

As previously announced on April 25, 2024, the Partnership’s Board of Supervisors declared a quarterly distribution of $0.325 per Common Unit for the three months ended March 30, 2024. On an annualized basis, this distribution rate equates to $1.30 per Common Unit. The distribution is payable on May 14, 2024 to Common Unitholders of record as of May 7, 2024.

Current wording

As previously announced on July 25, 2024, our Board of Supervisors declared a quarterly distribution of $0.325 per Common Unit for the three months ended June 29, 2024. On an annualized basis, this distribution rate equates to $1.30 per Common Unit. The distribution is payable on August 13, 2024 to Common Unitholders of record as of August 6, 2024.

Previous wording

Our anticipated cash requirements for the remainder of fiscal 2024 include: (i) maintenance and growth capital expenditures of approximately $9.3 million and $27.5 million, respectively; (ii) interest and income tax payments of approximately $35.0 million; and (iii) cash distributions of approximately $41.6 million to our Common Unitholders based on the quarterly distribution rate of $0.325 per Common Unit. Based on our liquidity position, which includes cash on hand, availability of funds under our Revolving Credit Facility and expected cash flow from operating activities, we expect to have sufficient funds to meet our current and future obligations.

Current wording

Our anticipated cash requirements for the remainder of fiscal 2024 include: (i) maintenance and growth capital expenditures of approximately $4.0 million and $16.1 million, respectively; (ii) interest and income tax payments of approximately $13.4 million; and (iii) cash distributions of approximately $20.8 million to our Common Unitholders based on the quarterly distribution rate of $0.325 per Common Unit. Based on our liquidity position, which includes cash on hand, availability of funds under our Revolving Credit Facility and expected cash flow from operating activities, we expect to have sufficient funds to meet our current and future obligations.

Previous wording

Revenues from the distribution of propane and related activities of $437.6 million decreased $19.6 million, or 4.3%, compared to the prior year, primarily due to lower volumes sold and lower average retail selling prices. Retail propane gallons sold decreased 3.9 million gallons, or 2.7%, compared to the prior year, primarily due to lower heat-related demand as described above, resulting in a $12.2 million decrease in revenues. Average propane selling prices decreased 1.5% compared to the prior year, reflecting lower average wholesale costs coming into the quarter, resulting in a $6.7 million decrease in revenues. Included within the propane segment are revenues from risk management activities, which decreased $0.7 million primarily due to the impact of lower selling prices on commodity hedging contracts that were settled physically.

Current wording

Revenues from the distribution of propane and related activities of $220.0 million decreased $21.4 million, or 8.9%, compared to the prior year, due to lower volumes sold. Retail propane gallons sold decreased 6.7 million gallons, or 8.6%, compared to the prior year, primarily due to lower heat-related demand as described above, resulting in a $20.7 million decrease in revenues. Average propane selling prices were essentially flat compared to the prior year. Included within the propane segment are revenues from risk management activities, which decreased $0.7 million primarily due to a lower notional amount of hedging contracts used in risk management activities that were settled physically.

Previous wording

Revenues from the distribution of fuel oil and refined fuels of $31.6 million were $6.5 million, or 17.1%, lower than the prior year, primarily due to lower volumes sold and lower average retail selling prices. Fuel oil and refined fuels gallons sold decreased 0.7 million gallons, or 9.7%, resulting in a $3.7 million decrease in revenues. Average fuel oil and refined fuels selling prices decreased 8.1% compared to the prior year, reflecting lower average wholesale costs, resulting in a $2.8 million decrease in revenues.

Current wording

Revenues from the distribution of fuel oil and refined fuels of $11.0 million were $3.1 million, or 22.2%, lower than the prior year, primarily due to lower volumes sold, and to a lesser extent, lower average retail selling prices. Fuel oil and refined fuels gallons sold decreased 0.7 million gallons, or 21.1%, resulting in a $2.9 million decrease in revenues. Average fuel oil and refined fuels selling prices decreased 1.3% compared to the prior year, reflecting lower average wholesale costs, resulting in a $0.2 million decrease in revenues.

Previous wording

Revenues in our all other segment of $20.2 million were $0.8 million, or 4.3%, higher than the prior year, primarily due to an increase in the volume of pipeline injected renewable natural gas (“RNG”) and higher prices for certain environmental attributes. Revenue from the RNG production assets primarily consist of sales of RNG and the associated environmental attributes, and tipping fees charged to third parties for various waste feedstocks.

Current wording

Revenues in our all other segment of $18.3 million were $0.2 million, or 0.9%, higher than the prior year, primarily due to higher tipping fees in our renewable natural gas (“RNG”) business attributable to an increase in feedstock in-take, substantially offset by lower prices for environmental attributes. Revenues from the RNG business primarily consist of sales of RNG and the associated environmental attributes, tipping fees charged to third parties for various waste feedstocks and sales of digestate which is a byproduct of the anaerobic digestion process.

Previous wording

Given the retail nature of our operations, we maintain a certain level of priced physical inventory to help ensure that our field operations have adequate supply commensurate with the time of year. Our strategy has been, and will continue to be, to keep our physical inventory priced relatively close to market for our field operations. Consistent with past practices, we principally utilize futures and/or options contracts traded on the NYMEX to mitigate the price risk associated with our priced physical inventory, as well as, in certain instances, forecasted purchases of propane or fuel oil. In addition, we sell propane and fuel oil to customers at fixed prices, and enter into derivative instruments to hedge a portion of our exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. At expiration, the derivative contracts are settled by the delivery of the product to the respective party or are settled by the payment to the respective party of a net amount equal to the difference between the then market price and the fixed contract price or option exercise price. Under this risk management strategy, realized gains or losses on futures or options contracts, which are reported in cost of products sold, will typically offset losses or gains on the physical inventory once the product is sold or delivered as it pertains to fixed price contracts (which may or may not occur in the same accounting period). We do not use futures or options contracts, or other derivative instruments, for speculative trading purposes. Unrealized non-cash gains or losses from changes in the fair value of derivative instruments that are not designated as cash flow hedges are recorded within cost of products sold. Cost of products sold excludes depreciation and amortization; these amounts are reported separately within the condensed consolidated statements of operations.

Current wording

Given the retail nature of our operations, we maintain a certain level of priced physical inventory to help ensure that our field operations have adequate supply commensurate with the time of year. Our strategy has been, and will continue to be, to keep our physical inventory priced relatively close to market for our field operations. Consistent with past practices, we principally utilize futures and/or options contracts traded on the NYMEX to mitigate the price risk associated with our priced physical inventory, as well as, in certain instances, forecasted purchases of propane, fuel oil, natural gas and electricity. In addition, we sell propane, fuel oil, natural gas and electricity to customers at fixed prices, and enter into derivative instruments to hedge a portion of our exposure to fluctuations in commodity prices as a result of selling the fixed price contracts. At expiration, the derivative contracts are settled by the delivery of the product to the respective party or are settled by the payment to the respective party of a net amount equal to the difference between the then market price and the fixed contract price or option exercise price. Under this risk management strategy, realized gains or losses on futures or options contracts, which are reported in cost of products sold, will typically offset losses or gains on the physical inventory once the product is sold or delivered as it pertains to fixed price contracts (which may or may not occur in the same accounting period). We do not use futures or options contracts, or other derivative instruments, for speculative trading purposes. Unrealized non-cash gains or losses from changes in the fair value of derivative instruments that are not designated as cash flow hedges are recorded within cost of products sold. Cost of products sold excludes depreciation and amortization; these amounts are reported separately within the condensed consolidated statements of operations.

Previous wording

From a commodity perspective, wholesale propane prices trended lower than the prior year coming into the second quarter of fiscal 2024. During the second quarter, wholesale propane prices continued to trend lower than the prior year during January 2024, and then rose modestly for the remainder of the second quarter. Overall, average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices were 2.8% higher and 7.6% lower than the prior year second quarter, respectively. The net change in the fair value of derivative instruments resulted in a $5.9 million unrealized non-cash gain in the second quarter of fiscal 2024, compared to a $4.5 million unrealized non-cash loss in the prior year second quarter, resulting in a net decrease of $10.4 million in cost of products sold year-over-year, all of which was reported within the propane segment. These unrealized mark-to-market adjustments are excluded from Adjusted EBITDA for both periods.

Current wording

From a commodities perspective, during the first half of fiscal 2024, wholesale propane and fuel oil prices trended lower than the prior year and contributed to lower priced inventory at the beginning of the third quarter compared to the beginning of the fiscal 2023 third quarter. Although wholesale prices continued to generally trend lower during the third quarter of fiscal 2024, the pace of the decline trailed the sharp decline in the prior year, and resulted in average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices increasing 11.5% and 2.5% compared to the prior year third quarter, respectively. The net change in the fair value of derivative instruments resulted in a $3.2 million unrealized non-cash loss in the third quarter of fiscal 2024, of which a $3.5 million unrealized loss was reported within the propane segment and a $0.3 million unrealized gain was reported in the natural gas and electricity segment. In the third quarter of the prior year, there was a $3.0 million unrealized non-cash loss, all of which was reported within the propane segment, resulting in a net increase of $0.2 million in cost of products sold year-over-year. These unrealized mark-to-market adjustments are excluded from Adjusted EBITDA for both periods.

Previous wording

Cost of products sold associated with the distribution of propane and related activities of $161.2 million decreased $33.7 million, or 17.3%, compared to the prior year second quarter. Lower average wholesale costs contributed to a decrease in cost of products sold of $14.1 million, while lower volumes sold contributed a $4.8 million decrease. Included within the propane segment are costs from other propane activities, which decreased $4.4 million compared to the prior year due to a decrease in costs for hedging contracts used in risk management activities that were settled physically, as well as the net decrease of $10.4 million resulting from the mark-to-market adjustments on derivative instruments in both periods discussed above.

Current wording

Cost of products sold associated with the distribution of propane and related activities of $81.3 million decreased $13.3 million, or 14.0%, compared to the prior year third quarter. Lower volumes sold and lower average wholesale costs resulted in a decrease in cost of products sold by $7.5 million and $4.9 million, respectively. Included within the propane segment are costs from other propane activities, which decreased $1.4 million compared to the prior year primarily due to a lower notional amount of hedging contracts used in risk management activities that were settled physically, as well as the net increase of $0.5 million resulting from the mark-to-market adjustments on derivative instruments in both periods discussed above.

Previous wording

Cost of products sold associated with our fuel oil and refined fuels segment of $20.5 million decreased $5.6 million, or 21.4%, compared to the prior year second quarter. Lower average wholesale costs and lower volumes sold contributed to decreases of $3.1 million and $2.5 million, respectively.

Current wording

Cost of products sold associated with our fuel oil and refined fuels segment of $7.4 million decreased $2.4 million, or 24.6%, compared to the prior year third quarter. Lower volumes sold and lower average wholesale costs contributed to decreases of $2.1 million and $0.3 million, respectively.

Previous wording

Depreciation and amortization expense of $16.7 million for the second quarter of fiscal 2024 increased $0.7 million, or 4.1%, compared to the prior year second quarter, primarily as a result of accelerated depreciation for assets taken out of service coupled with additional investments made in our RNG production facilities.

Current wording

Depreciation and amortization expense of $16.4 million for the third quarter of fiscal 2024 increased $0.8 million, or 5.4%, compared to the prior year third quarter, primarily as a result of accelerated depreciation for assets taken out of service, coupled with additional investments made in our RNG production facilities.

Previous wording

Net interest expense of $19.9 million for the second quarter of fiscal 2024 was essentially flat to the prior year second quarter. Lower average outstanding borrowings under our Revolving Credit Facility were offset by higher benchmark interest rates for borrowings under that facility. See Liquidity and Capital Resources below for additional discussion.

Current wording

Net interest expense of $18.4 million for the third quarter of fiscal 2024 decreased $0.3 million from the prior year third quarter, primarily due to lower average outstanding borrowings under our Revolving Credit Facility, partially offset by higher benchmark interest rates for borrowings under that facility. See Liquidity and Capital Resources below for additional discussion.

Previous wording

Average temperatures (as measured in heating degree days) across all of our service territories for the first six months of fiscal 2024 were 9% warmer than normal and 1% warmer than the prior year first half. The fiscal 2024 heating season was characterized by an inconsistent weather pattern and unseasonably warm temperatures throughout much of our service territories, particularly during the most critical months for heat-related demand, with only a brief burst of cooler weather in mid-January. For the critical heating month of December, average temperatures were 10% warmer than normal and prior year, while for the critical month of February, average temperatures were 12% warmer than normal and 1% warmer than the prior year. Average temperatures for the month of January were 4% warmer than normal and 17% cooler than the prior year, but the increase in heating degree days compared to the prior year were influenced by extreme cold temperatures for a two-week period mid-month. The unseasonably warm and inconsistent weather pattern during the first half of fiscal 2024 adversely impacted heat-related demand.

Current wording

Average temperatures (as measured in heating degree days) across all of our service territories for the first nine months of fiscal 2024 were 9% warmer than normal and 1% warmer than the prior year period. The fiscal 2024 heating season was characterized by an inconsistent weather pattern and unseasonably warm temperatures throughout much of our service territories, particularly during the most critical winter months (December through February) for heat-related demand, with only a brief burst of cooler weather in mid-January. For the month of December, average temperatures were 10% warmer than both normal and prior year, while for the month of February, average temperatures were 12% warmer than normal and 1% warmer than the prior year. Average temperatures for the month of January were 4% warmer than normal and 17% cooler than the prior year, but the increase in heating degree days compared to the prior year were influenced by extreme cold temperatures for a brief two-week period mid-month. Following these inconsistent weather patterns and a lack of sustained cool temperatures during the winter, unseasonably warm weather continued into the spring season. As discussed above, average temperatures across all of our service territories during the third quarter were 14% warmer than normal and 10% warmer than the prior year third quarter. The unseasonably warm and inconsistent weather pattern during the first nine months of fiscal 2024 adversely impacted heat-related demand.

Previous wording

Revenues from the distribution of propane and related activities of $750.9 million decreased $48.6 million, or 6.1%, compared to the prior year first half, primarily due to lower average selling prices and lower volumes sold. Average propane selling prices decreased 4.0% compared to the prior year period, reflecting lower average wholesale costs, resulting in a $30.7 million decrease in revenues. Retail propane gallons sold decreased 6.1 million gallons, or 2.4%, compared to the prior year, resulting in a $19.2 million decrease in revenues. Included within the propane segment are revenues from other propane activities, which increased $1.3 million primarily due to a higher notional amount of hedging contracts used in risk management activities that were settled physically.

Current wording

Revenues from the distribution of propane and related activities of $971.0 million decreased $70.0 million, or 6.7%, compared to the prior year period, primarily due to lower volumes sold and lower average selling prices. Retail propane gallons sold decreased 12.9 million gallons, or 3.9%, compared to the prior year, resulting in a $40.0 million decrease in revenues. Average propane selling prices decreased 3.1% compared to the prior year period, reflecting lower average wholesale costs, resulting in a $30.6 million decrease in revenues. Included within the propane segment are revenues from other propane activities, which increased $0.6 million primarily due to a higher notional amount of hedging contracts used in risk management activities that were settled physically.

Previous wording

Revenues from the distribution of fuel oil and refined fuels of $55.5 million decreased $12.8 million, or 18.7%, compared to the prior year first half, primarily due to lower average selling prices, coupled with lower volumes sold. Average selling prices for fuel oil and refined fuels decreased 12.5%, resulting in a $7.4 million decrease in revenues. Fuel oil and refined fuels volumes sold decreased 1.1 million gallons, or 7.9%, resulting in a $5.4 million decrease in revenues.

Current wording

Revenues from the distribution of fuel oil and refined fuels of $66.4 million decreased $15.9 million, or 19.3%, compared to the prior year, primarily due to lower volumes sold and lower average selling prices. Fuel oil and refined fuels volumes sold decreased 1.8 million gallons, or 10.6%, resulting in an $8.6 million decrease in revenues. Average selling prices for fuel oil and refined fuels decreased 10.4% compared to the prior year period, reflecting lower average wholesale costs, resulting in a $7.3 million decrease in revenues.

Previous wording

Revenues in our all other segment of $42.3 million were $6.6 million, or 18.6%, higher than the prior year first half, primarily due to the impact of the RNG Acquisition, which closed at the beginning of our fiscal 2023 second quarter. Revenue from the RNG production assets primarily consist of sales of RNG and the associated environmental attributes, and tipping fees charged to third parties for various waste feedstocks.

Current wording

Revenues in our all other segment of $60.6 million were $6.8 million, or 12.6%, higher than the prior year period, primarily due to the impact of the RNG Acquisition (see Item 1, Note 4 of this quarterly report), which closed at the beginning of our fiscal 2023 second quarter.

Previous wording

In the commodities markets, average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices were 6.9% and 14.3% lower than the prior year first half, respectively. The net change in the fair value of derivative instruments resulted in unrealized non-cash losses of $4.9 million and $18.2 million in the first six months of fiscal 2024 and 2023, respectively, resulting in a decrease of $13.3 million in cost of products sold year-over-year, all of which was reported within the propane segment. These unrealized mark-to-market adjustments are excluded from Adjusted EBITDA for both periods.

Current wording

In the commodities markets, average posted propane prices (basis Mont Belvieu, Texas) and fuel oil prices were 1.4% and 9.7% lower than the prior year period, respectively. The net change in the fair value of derivative instruments resulted in unrealized non-cash losses of $8.1 million and $21.2 million in the first nine months of fiscal 2024 and 2023, respectively. This resulted in a decrease of $13.1 million in cost of products sold year-over-year, of which $13.0 million was reported within the propane segment and $0.1 million was reported within the natural gas and electricity segment. These unrealized mark-to-market adjustments are excluded from Adjusted EBITDA for both periods.

Previous wording

Cost of products sold associated with the distribution of propane and related activities of $289.0 million decreased $55.7 million, or 16.2%, compared to the prior year first half. Lower average wholesale costs contributed to a $32.4 million decrease in cost of products sold, and lower volumes sold contributed to a $7.6 million decrease. Included within the propane segment are costs from other propane activities which decreased $2.4 million compared to the prior year due to a decrease in propane costs for the physical settlement of hedging agreements, coupled with the net decrease in cost of products sold of $13.3 million resulting from the mark-to-market adjustments on derivative instruments in both periods discussed above.

Current wording

Cost of products sold associated with the distribution of propane and related activities of $370.3 million decreased $69.0 million, or 15.7%, compared to the prior year. Lower average wholesale costs contributed to a $36.6 million decrease in cost of products sold, and lower volumes sold contributed to a $15.7 million decrease. Included within the propane segment are costs from other propane activities which decreased $3.7 million compared to the prior year due to lower propane costs for the physical settlement of hedging agreements, coupled with the impact of mark-to-market adjustments on derivative instruments in both periods discussed above.

Previous wording

Cost of products sold associated with our fuel oil and refined fuels segment of $37.2 million decreased $11.2 million, or 23.2%, compared to the prior year first half. Lower average wholesale costs and lower volumes sold contributed to decreases in cost of products sold of $7.4 million and $3.8 million, respectively.

Current wording

Cost of products sold associated with our fuel oil and refined fuels segment of $44.6 million decreased $13.6 million, or 23.4%, compared to the prior year period. Lower average wholesale costs and lower volumes sold contributed to decreases in cost of products sold of $7.4 million and $6.2 million, respectively.

Previous wording

Cost of products sold in our natural gas and electricity segment of $8.3 million decreased $4.8 million, or 36.9%, compared to the prior year, due to lower average wholesale costs, as well as lower usage from warmer weather.

Current wording

Cost of products sold in our natural gas and electricity segment of $10.7 million decreased $4.9 million, or 31.2%, compared to the prior year, due to lower average wholesale costs, as well as lower usage from warmer weather and a lower customer base.

Previous wording

Operating expenses of $250.4 million for the first half of fiscal 2024 increased $7.2 million, or 3.0%, compared to the prior year first half, primarily due to higher payroll and benefit-related costs, as well as the operating costs associated with our RNG production facilities and other inflationary effects on our operating costs, offset to an extent by lower volume-related variable operating costs.

Current wording

Operating expenses of $366.3 million for the first nine months of fiscal 2024 increased $6.5 million, or 1.8%, compared to the prior year period, primarily due to higher payroll and benefit-related costs, higher self-insurance costs and the operating costs associated with our RNG production facilities, offset to an extent by lower volume-related variable operating costs.

Previous wording

General and administrative expenses of $51.6 million for the first half of fiscal 2024 increased $2.9 million, or 6.0%, compared to the prior year period, primarily due to increases in payroll and benefit-related costs and other inflationary increases. Included in the prior year were $3.4 million in professional fees and expenses related to our RNG Acquisition.

Current wording

General and administrative expenses of $71.4 million for the first nine months of fiscal 2024 increased $1.5 million, or 2.2%, compared to the prior year period, primarily due to increases in payroll and benefit-related costs and other inflationary increases. Included in the prior year were $4.7 million in professional fees and expenses related to our RNG Acquisition.

Previous wording

Depreciation and amortization expense of $33.1 million in the first half of fiscal 2024 increased $3.3 million, or 11.0%, primarily from the impact of our RNG Acquisition at the beginning of our second quarter of the prior year period.

Current wording

Depreciation and amortization expense of $49.5 million increased $4.1 million, or 9.1%, primarily from the impact of our RNG Acquisition at the beginning of our second quarter of the prior year period.

Previous wording

Net interest expense of $38.1 million in the first half of fiscal 2024 increased $2.2 million compared to the prior year first half, primarily due to the impact of higher benchmark interest rates for borrowings under our Revolving Credit Facility and a higher average level of outstanding borrowings under that facility to fund the RNG Acquisition, as well as the impact of $80.6 million in Green Bonds assumed in the RNG Acquisition. See Liquidity and Capital Resources below for additional discussion.

Current wording

Net interest expense of $56.5 million increased $1.9 million compared to the prior year period, primarily due to the impact of higher benchmark interest rates for borrowings under our Revolving Credit Facility and a higher average level of outstanding borrowings under that facility to fund the RNG Acquisition, as well as the impact of $80.6 million in Green Bonds assumed in the RNG Acquisition. See Liquidity and Capital Resources below for additional discussion.

Previous wording

Operating Activities. Net cash provided by operating activities for the first half of fiscal 2024 was $62.4 million compared to $105.4 million in the first half of the prior year. The change was primarily due to lower operating income, and an increase in working capital, which stemmed from a smaller decline in the wholesale cost of propane compared to the sharp decline in the prior year period.

Current wording

Operating Activities. Net cash provided by operating activities for the first nine months of fiscal 2024 was $123.8 million compared to $167.4 million in the corresponding prior year period. The change was primarily due to lower operating income, and an increase in working capital, which stemmed from a smaller decline in the wholesale cost of propane compared to the sharp decline in the prior year period.

Previous wording

Investing Activities. Net cash used in investing activities of $30.7 million for the first six months of fiscal 2024 consisted of capital expenditures of $25.7 million (including approximately $15.0 million to support the growth of operations and $10.7 million for maintenance expenditures), $6.0 million used to fund an additional investment in a privately held start-up entity and additional investments in Oberon, partially offset by $1.0 million in proceeds from the sale of property, plant and equipment. See Item 1, Note 4 of this Quarterly Report.

Current wording

Investing Activities. Net cash used in investing activities of $60.0 million for the first nine months of fiscal 2024 consisted of capital expenditures of $40.4 million (including approximately $24.4 million to support the growth of operations and $16.0 million for maintenance expenditures), $12.2 million used to fund the acquisitions of certain assets of two retail propane businesses, and $9.8 million used to fund additional investments in Oberon, IH and another privately held start-up entity. This was partially offset by $2.4 million in proceeds from the sale of property, plant and equipment. See Item 1, Note 4 of this Quarterly Report.

Previous wording

Net cash used in investing activities of $137.5 million for the first half of fiscal 2023 consisted of the RNG Acquisition (net of cash acquired) of $108.8 million, capital expenditures of $24.0 million (including approximately $12.3 million to support the growth of operations and $11.7 million for maintenance expenditures), a $3.0 million investment in a privately held start-up entity (plus direct transactions costs) and additional investments in Oberon, partially offset by approximately $1.5 million in proceeds from the sale of property, plant and equipment.

Current wording

Net cash used in investing activities of $157.1 million for the first nine months of fiscal 2023 consisted of the cash funding portion for the RNG Acquisition (net of cash acquired and debt assumed) of $108.3 million, capital expenditures of $33.4 million (including approximately $17.3 million to support the growth of operations and $16.1 million for maintenance expenditures), $7.5 million used to fund the acquisition of certain assets of a retail propane business, a $3.0 million investment in a privately held start-up entity (plus direct transactions costs) and additional investments in Oberon, partially offset by approximately $3.2 million in proceeds from the sale of property, plant and equipment.

Previous wording

Financing Activities. Net cash used in financing activities of $26.5 million for the first half of fiscal 2024 reflected $22.5 million in net borrowings under our Revolving Credit Facility, which were used to fund a portion of our seasonal working capital needs and the capital expenditures and investments noted above, $41.5 million paid for the quarterly distributions to Common Unitholders at a rate of $0.325 per Common Unit paid in respect of the fourth quarter of fiscal 2023 and first quarter of fiscal 2024, $3.5 million in debt origination costs related to the refinancing of our Credit Agreement in March 2024 and other financing activities of $4.0 million.

Current wording

Financing Activities. Net cash used in financing activities of $58.3 million for the first nine months of fiscal 2024 reflected $12.0 million in net borrowings under our Revolving Credit Facility, $62.3 million paid for the quarterly distributions to Common Unitholders at a rate of $0.325 per Common Unit paid in respect of the fourth quarter of fiscal 2023 and first and second quarters of fiscal 2024, $3.7 million in debt origination costs related to the refinancing of our Credit Agreement in March 2024, and other financing activities of $4.3 million.

Previous wording

Net cash provided by financing activities of $46.0 million for the first six months of fiscal 2023 reflected $90.9 million in net borrowings under our Revolving Credit Facility, which were used to fund the acquisition and investments noted above, and $41.1 million paid for the quarterly distributions to Common Unitholders at a rate of $0.325 per Common Unit paid in respect of the fourth quarter of fiscal 2022 and first quarter of fiscal 2023 and other financing activities of $3.8 million.

Current wording

Net cash provided by financing activities of $4.3 million for the first nine months of fiscal 2023 reflected $70.4 million in net borrowings under our Revolving Credit Facility, which were used to fund the acquisition and investments noted above, and $61.7 million paid for the quarterly distributions to Common Unitholders at a rate of $0.325 per Common Unit paid in respect of the fourth quarter of fiscal 2022 and first and second quarters of fiscal 2023, and other financing activities of $4.4 million.

Previous wording

As of March 30, 2024, our long-term debt consisted of $350.0 million in aggregate principal amount of 5.875% Senior Notes due March 1, 2027, $650.0 million in aggregate principal amount of 5.0% Senior Notes due June 1, 2031, $80.6 million in aggregate principal amount of 5.5% Green Bonds due October 1, 2028 through October 1, 2033 and $154.5 million outstanding under our Revolving Credit Facility provided by our Credit Agreement. Total long-term borrowings as of March 30, 2024 and March 25, 2023 was $1,235.1 million and $1,261.1, million, respectively. See Item 1, Note 10 of this Quarterly Report.

Current wording

As of June 29, 2024, our long-term debt consisted of $350.0 million in aggregate principal amount of 5.875% Senior Notes due March 1, 2027, $650.0 million in aggregate principal amount of 5.0% Senior Notes due June 1, 2031, $80.6 million in aggregate principal amount of 5.5% Green Bonds due October 1, 2028 through October 1, 2033 and $144.0 million outstanding under our Revolving Credit Facility provided by our Credit Agreement. Total long-term borrowings as of June 29, 2024 and June 24, 2023 was $1,224.6 million and $1,240.6, million, respectively. See Item 1, Note 10 of this Quarterly Report.

Previous wording

The aggregate amounts of long-term debt maturities subsequent to March 30, 2024 are as follows: fiscal 2024: $-0-; fiscal 2025: $-0-; fiscal 2026: $-0-; fiscal 2027: $504.5 million; fiscal 2028: $-0-; and thereafter: $730.6 million.

Current wording

The aggregate amounts of long-term debt maturities subsequent to June 29, 2024 are as follows: fiscal 2024: $-0-; fiscal 2025: $-0-; fiscal 2026: $-0-; fiscal 2027: $494.0 million; fiscal 2028: $-0-; and thereafter: $730.6 million.

Previous wording

On April 25, 2024, we announced a quarterly distribution of $0.325 per Common Unit, or $1.30 on an annualized basis, in respect of the second quarter of fiscal 2024, payable on May 14, 2024 to holders of record on May 7, 2024.

Current wording

On July 25, 2024, we announced a quarterly distribution of $0.325 per Common Unit, or $1.30 on an annualized basis, in respect of the third quarter of fiscal 2024, payable on August 13, 2024 to holders of record on August 6, 2024.

Previous wording

We have a noncontributory, cash balance format, defined benefit pension plan which was frozen to new participants effective January 1, 2000. Effective January 1, 2003, the defined benefit pension plan was amended such that future service credits ceased and eligible employees would receive interest credits only toward their ultimate retirement benefit. We also provide postretirement health care and life insurance benefits for certain retired employees under a plan that was frozen to new participants effective March 31, 1998. At March 30, 2024, we had a liability for the defined benefit pension plan and accrued retiree health and life benefits of $17.0 million and $4.5 million, respectively.

Current wording

We have a noncontributory, cash balance format, defined benefit pension plan which was frozen to new participants effective January 1, 2000. Effective January 1, 2003, the defined benefit pension plan was amended such that future service credits ceased and eligible employees would receive interest credits only toward their ultimate retirement benefit. We also provide postretirement health care and life insurance benefits for certain retired employees under a plan that was frozen to new participants effective March 31, 1998. At June 29, 2024, we had a liability for the defined benefit pension plan and accrued retiree health and life benefits of $16.5 million and $4.5 million, respectively.

Previous wording

We are self-insured for general and product, workers’ compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. At March 30, 2024, we had accrued insurance liabilities of $60.3 million, and a receivable of $16.2 million related to the amount of the liability expected to be covered by insurance.

Current wording

We are self-insured for general and product, workers’ compensation and automobile liabilities up to predetermined thresholds above which third party insurance applies. At June 29, 2024, we had accrued insurance liabilities of $61.4 million, and a receivable of $16.2 million related to the amount of the liability expected to be covered by insurance.

Previous wording

We are currently evaluating the impact of recently adopted changes to the New York General Business Law, as well as proposed changes to the New York Public Service Commission’s Uniform Business Practices, on our natural gas and electricity business operated through our 100%-owned subsidiary, Agway Energy Services, LLC (“AES”), and we are in the process of reviewing strategic alternatives for the AES business. See Item 1, Note 13, “Commitments and Contingencies,” Legal Matters subsection of this Quarterly Report.

Current wording

We are currently evaluating the impact of recently adopted changes to the New York General Business Law, as well as proposed changes to the New York Public Service Commission’s Uniform Business Practices, on our natural gas and electricity business operated through our 100%-owned subsidiary, Agway Energy Services, LLC (“AES”). See Item 1, Note 13, “Commitments and Contingencies,” Legal Matters subsection of this Quarterly Report.