Suburban Propane posts wider Q3 loss of 27 cents a unit as revenue misses

Suburban Propane lost 27 cents a unit on an adjusted basis in its fiscal third quarter, wider than the 19 cents analysts had penciled in. Revenue came in at $261.38 million against a $264 million forecast, so the company missed on both the top and bottom line. The quarter ended June 27, in the middle of the off-season, when heating-fuel demand is at its lowest and a propane marketer this size is supposed to ride through on margin and cost control. This quarter it didn't.

Units closed at $16.67 on the NYSE on October 2, up 1.71 percent on the day. A stock that rises on a weak print usually means traders were braced for worse and the bad number was already in the price. The real test comes with the winter quarters, when weather actually drives the volume.

Autogas math

LP Gas Magazine makes the case that the current spread between propane and gasoline or diesel is wide enough to put fleet autogas back on the table. The pitch to a hauler or a school-bus operator is the same as always: cheaper fuel per mile if you can stomach the conversion cost and the fueling setup. Spreads like this come and go, and the ones who move are usually fleets already halfway convinced. Worth a call to your commercial accounts while the gap holds.

Birmingham pump prices

Gasoline in Birmingham fell nearly 11 cents a gallon over the past week, per ABC 3340. One metro, one week, but it points the same way diesel and gasoline have been drifting across the Southeast lately. Softer pump prices narrow the headline savings story for anyone pitching alternative fuels, and they squeeze the retail margin for c-store operators who were enjoying a slower decline on the street than on their rack.

Propane separation

Nature reports progress scaling up membranes that split propylene from propane for industrial use. The work is on the petrochemical side, not the delivery truck, so it won't touch a jobber's winter book. If cheaper separation pulls more propane into petchem feedstock over time, it could compete with the heating and autogas barrel for the same supply. Years out, not this season.

What to watch

Suburban's fiscal fourth quarter and its first read on winter demand and hedging will say more than this summer loss did. Watch whether the propane-to-gasoline spread stays wide enough to keep the autogas conversations alive once pump prices settle. And keep an eye on early-season heating-oil and propane inventory builds heading into November, which set the tone for what Northeast and Midwest marketers can charge.