SUBURBAN PROPANE PARTNERS LP Fair Value Disclosure
13. Financial Instruments and Risk Management
Cash, Cash Equivalents and Restricted Cash. The Partnership considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. In accordance with the indenture, as amended, and loan agreement, as amended, governing the Green Bonds assumed in the RNG Acquisition (see Notes 4 and 10), the Partnership is required to maintain certain funds in various accounts that are held with a third-party trustee for debt service and other purposes. The amounts deposited in those accounts are considered Restricted Cash and are reported within other current assets (or other assets, as applicable). The balance classified as short-term included accounts for which the cash will be used within one year, and are related to interest payments as well as operating and maintenance activities for the RNG facility in Arizona. The balance classified as long-term represented cash held in a debt service fund for future debt repayments on the Green Bonds for which the first debt redemption payment is due on October 1, 2028. Refer to Note 6, “Selected Balance Sheet and Statement of Operations Information” for a reconciliation of cash, cash equivalents, and restricted cash. The carrying amount approximates fair value because of the short-term maturity of these instruments.
Derivative Instruments and Hedging Activities. The Partnership measures the fair value of its exchange-traded commodity-related options and futures contracts using Level 1 inputs, the fair value of its commodity-related swap contracts and interest rate swaps using Level 2 inputs and the fair value of its over-the-counter commodity-related options contracts using Level 3 inputs. The Partnership’s over-the-counter options contracts are valued based on an internal option model. The inputs utilized in the model are based on publicly available information, as well as broker quotes.
The following summarizes the fair value of the Partnership’s derivative instruments and their location in the consolidated balance sheets as of September 27, 2025 and September 28, 2024, respectively:
|
|
As of September 27, 2025 |
|
|
As of September 28, 2024 |
|
||||||
Asset Derivatives |
|
Location |
|
Fair Value |
|
|
Location |
|
Fair Value |
|
||
Derivatives not designated as hedging |
|
|
|
|
|
|
|
|
|
|
||
Commodity-related derivatives |
|
Other current assets |
|
$ |
1,504 |
|
|
Other current assets |
|
$ |
4,122 |
|
|
|
Other assets |
|
|
102 |
|
|
Other assets |
|
|
769 |
|
|
|
|
|
$ |
1,606 |
|
|
|
|
$ |
4,891 |
|
|
|
|
|
|
|
|
|
|
|
|
||
Liability Derivatives |
|
Location |
|
Fair Value |
|
|
Location |
|
Fair Value |
|
||
Derivatives not designated as hedging |
|
|
|
|
|
|
|
|
|
|
||
Commodity-related derivatives |
|
Other current liabilities |
|
$ |
1,883 |
|
|
Other current liabilities |
|
$ |
5,744 |
|
|
|
Other liabilities |
|
|
53 |
|
|
Other liabilities |
|
|
— |
|
|
|
|
|
$ |
1,936 |
|
|
|
|
$ |
5,744 |
|
The following summarizes the reconciliation of the beginning and ending balances of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs:
|
|
Fair Value Measurement Using Significant |
|
|||||||||||||
|
|
Fiscal 2025 |
|
|
Fiscal 2024 |
|
||||||||||
|
|
Assets |
|
|
Liabilities |
|
|
Assets |
|
|
Liabilities |
|
||||
Beginning balance of over-the-counter options |
|
$ |
1,475 |
|
|
$ |
193 |
|
|
$ |
— |
|
|
$ |
806 |
|
Beginning balance realized during the period |
|
|
(1,475 |
) |
|
|
(193 |
) |
|
|
— |
|
|
|
(806 |
) |
Contracts purchased during the period |
|
|
572 |
|
|
|
250 |
|
|
|
1,475 |
|
|
|
193 |
|
Change in the fair value of outstanding contracts |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Ending balance of over-the-counter options |
|
$ |
572 |
|
|
$ |
250 |
|
|
$ |
1,475 |
|
|
$ |
193 |
|
As of September 27, 2025 and September 28, 2024, the Partnership’s outstanding commodity-related derivatives had a weighted average maturity of approximately and three months, respectively.
The effect of the Partnership’s derivative instruments on the consolidated statements of operations for fiscal 2025, 2024 and 2023 are as follows:
|
|
Unrealized Gains (Losses) Recognized in Income |
|
|||
Derivatives Not Designated as Hedging Instruments |
|
Location |
|
Amount |
|
|
Commodity-related derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2025 |
|
Cost of products sold |
|
$ |
2,422 |
|
|
|
|
|
|
|
|
Fiscal 2024 |
|
Cost of products sold |
|
$ |
(14,598 |
) |
|
|
|
|
|
|
|
Fiscal 2023 |
|
Cost of products sold |
|
$ |
(3,671 |
) |
The following table presents the fair value of the Partnership’s recognized derivative assets and liabilities on a gross basis and amounts offset on the consolidated balance sheets subject to enforceable master netting arrangements or similar agreements:
|
|
As of September 27, 2025 |
|
|||||||||
|
|
|
|
|
|
|
|
Net amounts |
|
|||
|
|
|
|
|
|
|
|
presented in the |
|
|||
|
|
Gross amounts |
|
|
Effects of netting |
|
|
balance sheet |
|
|||
Asset Derivatives |
|
|
|
|
|
|
|
|
|
|||
Commodity-related derivatives |
|
$ |
4,213 |
|
|
$ |
(2,607 |
) |
|
$ |
1,606 |
|
|
|
$ |
4,213 |
|
|
$ |
(2,607 |
) |
|
$ |
1,606 |
|
|
|
|
|
|
|
|
|
|
|
|||
Liability Derivatives |
|
|
|
|
|
|
|
|
|
|||
Commodity-related derivatives |
|
$ |
4,543 |
|
|
$ |
(2,607 |
) |
|
$ |
1,936 |
|
|
|
$ |
4,543 |
|
|
$ |
(2,607 |
) |
|
$ |
1,936 |
|
|
|
As of September 28, 2024 |
|
|||||||||
|
|
|
|
|
|
|
|
Net amounts |
|
|||
|
|
|
|
|
|
|
|
presented in the |
|
|||
|
|
Gross amounts |
|
|
Effects of netting |
|
|
balance sheet |
|
|||
Asset Derivatives |
|
|
|
|
|
|
|
|
|
|||
Commodity-related derivatives |
|
$ |
13,649 |
|
|
$ |
(8,758 |
) |
|
$ |
4,891 |
|
|
|
$ |
13,649 |
|
|
$ |
(8,758 |
) |
|
$ |
4,891 |
|
|
|
|
|
|
|
|
|
|
|
|||
Liability Derivatives |
|
|
|
|
|
|
|
|
|
|||
Commodity-related derivatives |
|
$ |
14,502 |
|
|
$ |
(8,758 |
) |
|
$ |
5,744 |
|
|
|
$ |
14,502 |
|
|
$ |
(8,758 |
) |
|
$ |
5,744 |
|
The Partnership had $2,813 and $6,439 posted cash collateral as of September 27, 2025 and September 28, 2024, respectively, with its brokers for outstanding commodity-related derivatives.
Concentrations. The Partnership’s principal customers are residential and commercial end users of propane and fuel oil and refined fuels served by approximately 750 locations in 42 states. No single customer accounted for more than 10% of revenues during fiscal 2025, 2024 or 2023 and no concentration of receivables exists as of September 27, 2025 or September 28, 2024.
During fiscal 2025, Energy Transfer LP and Targa Liquids Marketing, provided approximately 30% and 12% of the Partnership’s total propane purchases, respectively. No other single supplier accounted for more than 10% of the Partnership’s propane purchases in fiscal 2025. The Partnership believes that, if supplies from any of these suppliers were interrupted, it would be able to secure adequate propane supplies from other sources without a material disruption of its operations.
Credit Risk. Exchange-traded futures and options contracts are traded on and guaranteed by the NYMEX and as a result, have minimal credit risk. Futures contracts traded with brokers of the NYMEX require daily cash settlements in margin accounts. The Partnership is subject to credit risk with over-the-counter swaps and options contracts entered into with various third parties to the extent the counterparties do not perform. The Partnership evaluates the financial condition of each counterparty with which it conducts business and establishes credit limits to reduce exposure to credit risk based on non-performance. The Partnership does not require collateral to support the contracts.
Bank Debt, Senior Notes and Green Bonds. The fair value of the Revolving Credit Facility approximates the carrying value since the interest rates are adjusted quarterly to reflect market conditions. Based upon quoted market prices, the fair value of the Partnership’s 2027 Senior Notes and 2031 Senior Notes was $349,125 and $617,500, respectively, as of September 27, 2025. The fair value of the Green Bonds is based upon a valuation model (a Level 3 input), which was $71,090 as of September 27, 2025.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.