Bank Of America Comments On Suburban Propane Partners After Recent Earnings Release

Suburban Propane Partners

reported 2Q11 adjust EBITDA of $111.6mn, below recently lowered Bank of America Merrill Lynch's (BofAML) expectations of $120.3mn and the consensus estimate of $118.5mn. Despite colder than normal weather, SPH's retail propane volume declines have accelerated with retail propane down 8.4% YoY, although fuel oil volume declines have moderated, down 12% YoY. SPH has made some M&A progress over the past 18 months, executing five acquisitions, improving volumes by 7.5-8mn gallons on an annualized basis, although BofAmL notes SPH did not close any acquisitions in 2Q11. BofAML believes SPH is well positioned to execute more bolt-on acquisitions, but expect SPH to maintain a conservative M&A approach given a fairly expensive asset M&A market. BofAML has a $54 PT and Neutral rating on Suburban Propane Partners SPH closed Friday at $53.95