Quarterly Report for Quarter Ending March 28, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 28, 2026, 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 27, 2025.

Executive Overview

The following are factors that regularly affect our operating results and financial condition. Our business is subject to the risks and uncertainties described in Item 1A included in the Annual Report on Form 10-K for the fiscal year ended September 27, 2025 and in this Quarterly Report. Management currently considers the following events, trends, and uncertainties to be most important to understanding our financial condition and operating performance:

Product Costs and Supply

The level of profitability in the retail propane, fuel oil, natural gas and electricity businesses is largely dependent on the difference between retail sales price and our costs to acquire and transport products. The unit cost of our products, particularly propane, fuel oil and natural gas, is subject to volatility as a result of supply and demand dynamics or other market conditions, including, but not limited to, economic and political factors impacting crude oil and natural gas supply or pricing. We enter into product supply contracts that are generally one-year agreements subject to annual renewal, and also purchase product on the open market. We attempt to reduce price risk by pricing product on a short-term basis. Our propane supply contracts typically provide for pricing based upon index formulas using the posted prices established at major supply points such as Mont Belvieu, Texas, or Conway, Kansas (plus transportation costs) at the time of delivery.

To supplement our annual purchase requirements, we may utilize forward fixed price purchase contracts to acquire a portion of the propane that we resell to our customers, which allows us to manage our exposure to unfavorable changes in commodity prices and to ensure adequate physical supply. The percentage of contract purchases, and the amount of supply contracted for under forward contracts at fixed prices, will vary from year to year based on market conditions.

Changes in our costs to acquire and transport products can occur rapidly over a short period of time and can impact profitability. There is no assurance that we will be able to pass on product acquisition and transportation cost increases fully or immediately, particularly when such costs increase rapidly. Therefore, average retail sales prices can vary significantly from year to year as our costs fluctuate with the propane, fuel oil, crude oil and natural gas commodity markets and infrastructure conditions. In addition, periods of sustained higher commodity and/or transportation prices can lead to customer conservation, resulting in reduced demand for our product.

According to the Energy Information Administration, U.S. propane inventory levels at the end of March 2026 were 77.0 million barrels, which was 74.5% higher than March 2025 levels and 46.5% higher than the five-year average for March. The increase in inventory levels contributed to a decrease in average posted propane prices (basis Mont Belvieu, Texas) of 23.1% compared to the prior year second quarter.

Seasonality

The retail propane and fuel oil distribution businesses, as well as the retail natural gas marketing business, are seasonal because these fuels are primarily used for heating in residential and commercial buildings. Historically, approximately two-thirds of our retail propane volume is sold during the six-month peak heating season from October through March. The fuel oil business tends to experience greater seasonality given its more limited use for space heating and approximately three-fourths of our fuel oil volumes are sold between October and March. Consequently, sales and operating profits are concentrated in our first and second fiscal quarters. Cash flows from operations, therefore, are greatest during the second and third fiscal quarters when customers pay for product purchased during the winter heating season. We expect lower operating profits and either net losses or lower net income during the period from April through September (our third and fourth fiscal quarters). To the extent necessary, we will reserve cash from the second and third quarters for distribution to holders of our Common Units in the fourth quarter and the following fiscal year first quarter.

Weather

Weather conditions have a significant impact on the demand for our products, in particular propane, fuel oil and natural gas, for both heating and agricultural purposes. Many of our customers rely heavily on propane, fuel oil or natural gas as a heating source. Accordingly, the volume sold is directly affected by the severity of the winter weather in our service areas, which can vary substantially from year to year. In any given area, sustained warmer than normal temperatures will tend to result in reduced propane, fuel oil and natural gas consumption, while sustained colder than normal temperatures will tend to result in greater consumption.

Hedging and Risk Management Activities

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.

Inflation and Other Cost Increases

We are experiencing inflationary pressures in the costs of various goods and services we use to operate our business, including volatile wholesale costs for the products we distribute. Although we have not experienced significant disruptions with securing the products we sell, inflationary factors and competition for resources across the supply chain have resulted in increased costs in a wide variety of areas, including labor, transportation costs, operating costs and the cost of capital expansion projects, tanks and other equipment. These and other factors, including the impact of tariffs and trade conflicts, may continue to impact our product costs, expenses, and capital expenditures, and could continue to have an impact on consumer demand as consumers manage the impact of inflation and tariffs on their resources.

At-the-Market Equity Program

On February 20, 2025, we entered into an Equity Distribution Agreement (the "Equity Distribution Agreement") with Wells Fargo Securities, LLC, J.P. Morgan Securities LLC, BofA Securities, Inc., and Evercore Group L.L.C., each acting as a sales agent and/or principal (each, an "Agent," and collectively, the "Agents"). Pursuant to the terms of the Equity Distribution Agreement, we may issue and sell from time to time, through the Agents, our Common Units representing limited partner interests in the Partnership having an aggregate offering amount of up to $100.0 million (the "ATM equity program").

The Agents use their commercially reasonable efforts, as the sales agents and subject to the terms of the Equity Distribution Agreement, to sell the Common Units offered. Sales of the Common Units are deemed to be an "at the market offering" as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the New York Stock Exchange. We may also agree to sell Common Units to the Agents as principal for their own account on terms agreed to by us and the Agents. Each Agent will be entitled to a commission from us on the gross sales price per Common Unit sold under the Equity Distribution Agreement by such Agent acting as our sales agent. During the six months ended March 28, 2026, we issued and sold 171,745 Common Units under the Equity Distribution Agreement for net proceeds of $3.1 million, after agent commissions and offering costs of $0.2 million.

We use the net proceeds from the sales of Common Units pursuant to the Equity Distribution Agreement for general limited partnership purposes, including debt reduction and funding strategic growth initiatives.

Transferable Tax Credits

In accordance with the Inflation Reduction Act of 2022 ("IRA"), renewable natural gas ("RNG") produced in the United States and sold for use as a transportation fuel may qualify for the Clean Fuel Production Tax Credit ("PTC") under Section 45Z of the Internal Revenue Code. Section 45Z was enacted as part of the IRA and is administered primarily by the U.S. Department of Treasury and Internal Revenue Service, in coordination with other federal agencies, including the Environmental Protection Agency and the U.S. Department of Energy. The IRA was designed, in part, to incentivize the development and production of renewable and low carbon

energy. On July 4, 2025, The One, Big, Beautiful Bill Act ("OBBBA") was signed into law, extending the availability of the Section 45Z credit from December 31, 2027 to December 31, 2029. Accordingly, qualifying credits may be claimed for eligible RNG produced and sold after December 31, 2024, and before January 1, 2030.

Although Section 45Z became effective on January 1, 2025, we did not previously recognize any benefit from these credits pending additional regulatory clarity regarding eligibility, lifecycle greenhouse gas emissions calculations, and transferability. On February 4, 2026, proposed Treasury regulations published in the Federal Register provided sufficient clarity for us to conclude that the production and sale of our RNG qualify for the credit.

The value of PTCs earned is based on the statutory base credit rate of $0.20 per gallon equivalent, adjusted for applicable prevailing wage and apprenticeship compliance, lifecycle greenhouse gas emissions calculations, qualifying production and sales volumes, and prevailing market prices for transferable tax credits. Where applicable prevailing wage and apprenticeship requirements are satisfied, the credit may be increased up to five times the base amount. The amount recognized reflects our estimate of credits earned based on currently available guidance, applicable carbon intensity scores, and anticipated monetization values. Actual amounts ultimately realized may differ upon the issuance of final regulations and the ultimate transfer or utilization of the credits.

Critical Accounting Policies and Estimates

Our significant accounting policies are summarized in Note 2, "Summary of Significant Accounting Policies," included within the Notes to Consolidated Financial Statements section of our Annual Report on Form 10-K for the fiscal year ended September 27, 2025.

Certain amounts included in or affecting our consolidated financial statements and related disclosures must be estimated, requiring management to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time the financial statements are prepared. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We are also subject to risks and uncertainties that may cause actual results to differ from estimated results. Estimates are used when accounting for depreciation and amortization of long-lived assets, employee benefit plans, self-insurance and litigation reserves, environmental reserves, allowances for doubtful accounts, asset valuation assessments and valuation of derivative instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known to us. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Supervisors.

Results of Operations and Financial Condition

Net income for the second quarter of fiscal 2026 was $137.5 million, or $2.07 per Common Unit, compared to net income of $137.1 million, or $2.11 per Common Unit, for the second quarter of fiscal 2025. Adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA", as defined and reconciled below) for the second quarter of fiscal 2026 improved $0.3 million, or 0.2%, to $175.3 million, compared to the prior year second quarter.

Retail propane gallons sold in the second quarter of fiscal 2026 of 161.6 million gallons were flat compared to the prior year second quarter, as the impact of cooler temperatures across much of the eastern half of the United States on heat-related demand and contributions from our recent acquisitions, were offset by considerably warmer temperatures in the West. Average temperatures (as measured by the number of heating degree days reported by the National Oceanic and Atmospheric Administration) across all of our service territories during the second quarter of fiscal 2026 were 6% warmer than normal and 1% warmer than the prior year second quarter. Notably, average temperatures in the East were 2% warmer than normal and 3% colder than the prior year, whereas average temperatures in the West were 22% warmer than normal and 17% warmer than the prior year.

Average propane prices (basis Mont Belvieu, Texas) for the second quarter of fiscal 2026 decreased 23.1% compared to the prior year second quarter. Total gross margin of $343.7 million for the second quarter of fiscal 2026 decreased $1.6 million, or 0.5%, compared to the prior year second quarter. Gross margin for the second quarter of fiscal 2026 included a $1.4 million unrealized loss attributable to the mark-to-market adjustment for derivative instruments used in risk management activities, compared to a $0.7 million unrealized gain 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 $0.5 million compared to the prior year second quarter, primarily due to an increase in propane unit margins of $0.03 per gallon, or 1.7%.

Combined operating and general and administrative expenses of $169.5 million for the second quarter of fiscal 2026 were flat compared to the prior year second quarter, as higher payroll and benefit-related expenses, higher fuel and other vehicle costs, and an increase in accruals for self-insurance matters, were offset by a benefit of $3.5 million from the recognition of PTCs and an insurance recovery related to the partial settlement of certain claims associated with our acquisition of RNG production assets in December 2022.

In December 2025, we strategically refinanced our previously outstanding $350.0 million of 5.875% senior notes due 2027 ("2027 Senior Notes") with net proceeds from the issuance of new 6.50% senior notes due 2035 ("2035 Senior Notes") totaling $350.0 million and borrowings under our Revolving Credit Facility. The refinancing extends weighted average debt maturities by nearly three years and provides additional financial flexibility.

During the first quarter of fiscal 2026, we acquired two well-run propane businesses in strategic markets in California for total consideration of $24.0 million, inclusive of non-compete payments. During the second quarter of fiscal 2026, we utilized cash flows from operating activities to repay $64.3 million in borrowings under our revolving credit facility. The Consolidated Leverage Ratio, as defined in our credit agreement, for the twelve-month period ended March 28, 2026 improved to 4.34x, compared to 4.54x for the twelve-month period ended March 29, 2025.

As previously announced on April 23, 2026, our Board of Supervisors declared a quarterly distribution of $0.325 per Common Unit for the three months ended March 28, 2026. On an annualized basis, this distribution rate equates to $1.30 per Common Unit. The distribution is payable on May 12, 2026 to Common Unitholders of record as of May 5, 2026.

Our anticipated cash requirements for the remainder of fiscal 2026 include: (i) maintenance and growth capital expenditures of approximately $19.9 million for the propane segment; (ii) capital expenditures of approximately $19.0 million to support the construction and development efforts for our renewable energy platform; (iii) interest and income tax payments of approximately $37.5 million; and (iv) distributions of approximately $43.3 million to our Common Unitholders, based on the quarterly distribution rate of $0.325 per Common Unit. Based on our liquidity position, which includes availability of funds under the Revolving Credit Facility and expected cash flow from operating activities and our ATM equity program, we expect to have sufficient funds to meet our current and future obligations.

Our long-term strategic growth plan is to foster the growth of our core propane business, while making strategic investments in lower carbon renewable energy alternatives that allow us to leverage our core competencies in safety, logistics expertise and customer service. Suburban Propane has a proud legacy of being a trusted provider of energy to local communities for almost 100 years. We are leveraging the strength and stability of our core propane business to position Suburban Propane for sustainable, long-term growth by helping to identify and invest in solutions to support the ongoing energy evolution to a lower-carbon energy economy. That innovation includes our advancements in delivering renewable propane and renewable natural gas as direct drop-in replacements for their traditional energy equivalents.

Three Months Ended March 28, 2026 Compared to Three Months Ended March 29, 2025

Revenues

As discussed above, average temperatures (as measured in heating degree days) across all of our service territories during the second quarter of fiscal 2026 were 6% warmer than normal and 1% warmer than the prior year second quarter. Average temperatures in the West were 22% warmer than normal and 17% warmer than the prior year second quarter, whereas average temperatures in the East were 2% warmer than normal and 3% cooler than the prior year second quarter. The cooler average temperatures were primarily in the Northeast and Mid-Atlantic, which led to increased heat-related demand from customers in those markets.

Revenues from the distribution of propane and related activities of $491.1 million decreased $34.1 million, or 6.5%, compared to the prior year, primarily due to lower average retail selling prices. Average propane selling prices decreased 4.2% compared to the prior year second quarter, reflecting lower average wholesale costs, resulting in a $21.3 million decrease in revenues. Retail propane gallons sold were essentially flat compared to the prior year second quarter, as the impact of cooler temperatures in the East on heat-related demand and contributions from our recent acquisitions, substantially offset considerably warmer temperatures in the West, resulting in a $1.4 million decrease in revenues. Included within the propane segment are revenues from risk management activities, which decreased $11.4 million, primarily due to a lower notional amount of hedging contracts used in risk management activities that were settled physically.

Revenues from the distribution of fuel oil and refined fuels of $32.4 million were $1.0 million, or 3.0%, lower than the prior year second quarter, primarily due to a decrease in volumes sold, offset to an extent by higher average retail selling prices. Fuel oil and refined fuels gallons sold decreased 0.3 million gallons, or 3.8%, resulting in a $1.2 million decrease in revenues. Average fuel oil and refined fuels selling prices increased 0.8% compared to the prior year, resulting in a $0.2 million increase in revenues.

Revenues in our natural gas and electricity segment of $8.8 million were $0.2 million, or 2.7%, lower than the prior year, resulting from less natural gas and electricity usage, primarily due to the impact of a lower customer base.

Revenues in our all other segment of $18.9 million were $1.1 million, or 5.4%, lower than the prior year, primarily due to lower tipping fees at our RNG facilities and lower services revenues.

Cost of Products Sold

The cost of products sold reported in the condensed consolidated statements of operations represents the weighted average unit cost of propane, fuel oil and refined fuels, and natural gas and electricity sold, including transportation costs to deliver product from our supply points to storage or to our customer service centers. Cost of products sold also includes the cost of appliances and related parts sold or installed by our customer service centers computed on a basis that approximates the average cost of the products.

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.

In the commodities markets, average posted propane prices (basis Mont Belvieu, Texas) were 23.1% lower than the prior year second quarter, and average fuel oil prices were 22.3% higher. The net change in the fair value of derivative instruments resulted in a $1.4 million unrealized non-cash loss in the second quarter of fiscal 2026, compared to a $0.7 million unrealized non-cash gain in the prior year second quarter. This led to a year-over-year net increase of $2.1 million in cost of products sold, of which $1.9 million and $0.2 million was reported within the propane segment and the natural gas and electricity segment, respectively. These unrealized mark-to-market adjustments were excluded from Adjusted EBITDA for both periods.

Cost of products sold associated with the distribution of propane and related activities of $176.3 million decreased $36.8 million, or 17.3%, compared to the prior year second quarter. Lower average wholesale costs contributed to a $27.0 million decrease in cost of products sold, while lower volumes sold contributed to a $0.5 million decrease. Included within the propane segment are costs from other propane activities, which decreased $11.2 million compared to the prior year primarily due to a lower notional amount of hedging contracts used in risk management that were settled physically. This was offset to an extent by the net increase in costs of products sold of $1.9 million resulting from the change in mark-to-market adjustments on derivative instruments in both periods discussed above.

Cost of products sold associated with our fuel oil and refined fuels segment of $20.3 million increased $0.1 million, or 0.6%, compared to the prior year second quarter. Higher average wholesale costs led to an increase of $0.9 million, substantially offset by a decrease of $0.8 million from lower volumes sold.

Cost of products sold in our natural gas and electricity segment of $7.5 million increased $1.7 million, or 28.3%, compared to the prior year primarily due to higher natural gas and electricity wholesale costs and the net increase of $0.2 million resulting from the change in mark-to-market adjustments on derivative instruments used in both periods discussed above.

Operating Expenses

All costs of operating our retail distribution and appliance sales and service operations, as well as the RNG production facilities, are reported within operating expenses in the condensed consolidated statements of operations. These operating expenses include the compensation and benefits of field and direct operating support personnel, costs of operating and maintaining our vehicle fleet, overhead and other costs of our purchasing, training and safety departments and other direct and indirect costs of operating our customer service centers and RNG production facilities.

Operating expenses of $139.5 million for the second quarter of fiscal 2026 increased $0.1 million, or 0.1%, compared to the prior year second quarter, primarily due to higher payroll and benefit-related costs, higher fuel and vehicle maintenance costs, and an increase in accruals for self-insurance matters, substantially offset by a benefit of $3.5 million from the recognition of PTCs and an insurance recovery for the partial settlement of certain claims associated with the RNG Acquisition.

General and Administrative Expenses

All costs of our back office support functions, including compensation and benefits for executives and other support functions, as well as other costs and expenses to maintain finance and accounting, treasury, legal, human resources, corporate development and the information systems functions are reported within general and administrative expenses in the condensed consolidated statements of operations.

General and administrative expenses of $30.0 million for the second quarter of fiscal 2026 were essentially flat compared to the prior year second quarter, as higher variable compensation expense was substantially offset by the capitalization of payroll and benefit-related costs associated with software implementation as part of our multi-year initiative to modernize our information technology platform.

Depreciation and Amortization

Depreciation and amortization expense of $16.3 million for the second quarter of fiscal 2026 decreased $1.3 million, or 7.7%, compared to the prior year second quarter, primarily as a result of accelerated depreciation in the prior year for assets taken out of service.

Interest Expense, net

Net interest expense of $19.7 million decreased $0.9 million, or 4.2%, compared to the prior year second quarter, primarily due to a lower level of average outstanding borrowings under our Revolving Credit Facility along with lower benchmark interest rates on those borrowings, offset to an extent by a higher interest rate for a tranche of senior notes that were refinanced in the first quarter of fiscal 2026. See Liquidity and Capital Resources below for additional discussion.

Other, net

EBITDA and Adjusted EBITDA

EBITDA represents net income before deducting interest expense, income taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA excluding the unrealized net gain or loss on mark-to-market activity for derivative instruments and other items, as applicable, as provided in the table below. Our management uses EBITDA and Adjusted EBITDA as supplemental measures of operating performance and we are including them because we believe that they provide our investors and industry analysts with additional information that we determined is useful to evaluate our operating results. EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be considered as an alternative to net income or net cash provided by operating activities determined in accordance with US GAAP. Because EBITDA and Adjusted EBITDA as determined by us excludes some, but not all, items that affect net income, they may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other companies.

The following table sets forth our calculations of EBITDA and Adjusted EBITDA:

We also reference gross margins, computed as revenues less cost of products sold as those amounts are reported on the condensed consolidated financial statements. Our management uses gross margin as a supplemental measure of operating performance and we are including it as we believe that it provides our investors and industry analysts with additional information that we determined is useful to evaluate our operating results. As cost of products sold does not include depreciation and amortization expense, the gross margin we reference is considered a non-GAAP financial measure.

Six Months Ended March 28, 2026 Compared to Six Months Ended March 29, 2025

Revenues

Average temperatures (as measured in heating degree days) across all of our service territories for the first half of fiscal 2026 were 6% warmer than normal and 2% cooler than the prior year. The fiscal 2026 heating season was characterized by periods of extremely cold weather in the eastern half of the U.S., principally in the Northeast, Mid-Atlantic and Midwest regions of our operating footprint, and sustained unseasonably warm conditions in the western half. In the East, average temperatures were approximately 1% warmer than normal and 6% colder than the prior year, while average temperatures in the West were approximately 23% and 13% warmer than normal and the prior year, respectively.

Revenues from the distribution of propane and related activities of $817.5 million decreased $38.0 million, or 4.4%, compared to the prior year, due to lower average retail selling prices, partially offset by higher volumes sold. Average propane selling prices decreased 3.3%, reflecting lower average wholesale costs, resulting in a $27.8 million decrease in revenues. Retail propane gallons sold increased 4.0 million gallons, or 1.5%, resulting in a $12.4 million increase in revenues. The increase in propane volumes sold was primarily due to the impact of colder temperatures across much of the eastern half of the United States on heat-related demand and contributions from our recent acquisitions, which more than offset considerably warmer temperatures in the West and incremental volumes in the prior year first half in the aftermath of Hurricanes Helene and Milton in the Southeast. Included within the propane segment are revenues from risk management activities, which decreased $22.6 million, primarily due to a lower notional amount of hedging contracts used in risk management activities that were settled physically.

Revenues from the distribution of fuel oil and refined fuels of $50.5 million were $0.5 million, or 1.0%, lower than the prior year first half, primarily due to a decrease in volumes sold. Fuel oil and refined fuels gallons sold decreased 0.1 million gallons, or 1.0%, resulting in a $0.5 million decrease in revenues. Average fuel oil and refined fuels selling prices were essentially flat compared to the prior year.

Revenues in our natural gas and electricity segment of $14.7 million were $0.4 million, or 2.7%, lower than the prior year, resulting from lower electricity usage, primarily due to the impact of a lower customer base.

Revenues in our all other segment of $38.9 million were $0.5 million, or 1.2%, lower than the prior year first half, primarily due to lower tipping fees at our RNG facilities and lower services revenues.

Cost of Products Sold

In the commodities markets, average posted propane prices (basis Mont Belvieu, Texas) were 18.9% lower than the prior year first half, while average fuel oil prices were 13.6% higher than the prior year first half. The net change in the fair value of derivative instruments resulted in a $0.4 million unrealized non-cash loss in the first half of fiscal 2026, compared to a $4.4 million unrealized non-cash gain in the first half of fiscal 2025. This led to a year-over-year net increase of $4.8 million in cost of products sold, of which $4.7 million and $0.1 million was reported within the propane segment and the natural gas and electricity segment, respectively. These unrealized mark-to-market adjustments were excluded from Adjusted EBITDA for both periods.

Cost of products sold associated with the distribution of propane and related activities of $288.4 million decreased $54.4 million, or 15.9%, compared to the prior year. Lower average wholesale costs contributed to a $40.6 million decrease in cost of products sold, while higher volumes sold contributed to a $4.7 million increase. Included within the propane segment are costs from other propane activities, which decreased $23.2 million compared to the prior year first half primarily due to a lower notional amount of hedging contracts used in risk management that were settled physically. This was offset to an extent by the net increase in costs of products sold of $4.7 million resulting from the change in mark-to-market adjustments on derivative instruments in both periods discussed above.

Cost of products sold associated with our fuel oil and refined fuels segment of $31.6 million increased $0.9 million, or 2.8%, compared to the prior year. Higher average wholesale costs led to an increase of $1.2 million, which was partially offset by the impact of $0.3 million from lower volumes sold.

Cost of products sold in our natural gas and electricity segment of $10.7 million increased $2.3 million, or 27.0%, compared to the prior year primarily due to higher natural gas and electricity wholesale costs and the net increase of $0.1 million resulting from the change in mark-to-market adjustments on derivative instruments used in both periods discussed above.

Operating Expenses

Operating expenses of $266.7 million for the first half of fiscal 2026 increased $4.1 million, or 1.6%, compared to the prior year first half, primarily due to higher payroll and benefit-related costs, higher volume-related variable operating costs to support the increase in customer demand and an increase in accruals for self-insurance matters, offset to an extent by a benefit of $3.5 million from the recognition of PTCs and an insurance recovery for the partial settlement of certain claims associated with the RNG Acquisition.

General and Administrative Expenses

General and administrative expenses of $57.9 million for the first half of fiscal 2026 increased $1.2 million, or 2.0%, compared to the prior year, primarily due to higher variable compensation costs associated with the increase in earnings and costs related to our multi-year initiative to modernize our information technology platform, offset to an extent by the capitalization of payroll and benefit- related costs associated with software implementation.

Depreciation and Amortization

Depreciation and amortization expense of $33.1 million for the first half of fiscal 2026 decreased $1.6 million, or 4.6%, primarily as a result of accelerated depreciation in the prior year for assets taken out of service.

Loss on Debt Extinguishment

On December 22, 2025, we redeemed, satisfied and discharged all of our previously outstanding 2027 Senior Notes with net proceeds from the issuance of the 2035 Senior Notes and borrowings under the Revolving Credit Facility. In connection with this transaction, during the first quarter of fiscal 2026, we recognized a loss on debt extinguishment of $1.2 million, consisting of the write-off of unamortized debt origination costs and other fees and expenses.

Interest Expense, net

Net interest expense of $39.5 million decreased $0.7 million, or 1.8%, compared to the prior year period, primarily due to a lower level of average outstanding borrowings under our Revolving Credit Facility and lower benchmark interest rates on those borrowings, offset to an extent by a higher interest rate for a tranche of senior notes that were refinanced in the first quarter of fiscal 2026. See Liquidity and Capital Resources below for additional discussion.

Other, net

EBITDA and Adjusted EBITDA

The following table sets forth our calculations of EBITDA and Adjusted EBITDA:

We also reference gross margins, computed as revenues less cost of products sold as those amounts are reported on the condensed consolidated financial statements. Our management uses gross margin as a supplemental measure of operating performance and we are including it as we believe that it provides our investors and industry analysts with additional information that we determined is useful to evaluate our operating results. As cost of products sold does not include depreciation and amortization expense, the gross margin we reference is considered a non-GAAP financial measure.

Liquidity and Capital Resources

Analysis of Cash Flows

Operating Activities. Net cash provided by operating activities for the first half of fiscal 2026 was $68.6 million compared to $48.9 million in the first half of the prior year. The change was primarily due to higher earnings in the current period coupled with a smaller increase in working capital compared to the prior year, which stemmed from the decline in average wholesale costs of propane.

Investing Activities. Net cash used in investing activities of $65.8 million for the first half of fiscal 2026 consisted of capital expenditures of $44.5 million (including approximately $31.2 million to support the growth of operations and $13.3 million for maintenance expenditures), $22.9 million used to fund the acquisitions of two propane businesses, and $0.2 million used to fund additional investments in an unconsolidated affiliate. This was partially offset by $1.8 million in proceeds from the sale of property, plant and equipment. See Item 1, Note 4 of this Quarterly Report.

Net cash used in investing activities of $97.1 million for the first half of fiscal 2025 consisted of capital expenditures of $43.2 million (including approximately $30.5 million to support the growth of operations and $12.7 million for maintenance expenditures), $50.0 million used to fund the acquisitions of propane businesses, and $5.3 million used to fund additional investments in Oberon and IH. This was partially offset by $1.4 million in proceeds from the sale of property, plant and equipment.

Financing Activities. Net cash provided by financing activities of $2.2 million for the first half of fiscal 2026 reflected $51.1 million in net borrowings under our Revolving Credit Facility to support seasonal working capital needs and $3.1 million in net proceeds raised from the sale of Common Units under our ATM equity program (see Item 1, Note 17, "At-the-Market Equity Program," of this Quarterly Report). Financing activities also reflected $43.0 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 2025 and first quarter of fiscal 2026, $6.0 million of issuance costs related to the issuance of our 2035 Senior Notes, as well as other financing activities of $3.1 million. As described in Item 1, Note 10 of this Quarterly Report, during the first quarter of fiscal 2026, we completed the private offering of $350.0 million in aggregate principal amount of our 2035 Senior Notes. The net proceeds from the offering of the 2035 Senior Notes, along with borrowings under the Revolving Credit Facility, were used to redeem, satisfy and discharge all of the then outstanding 2027 Senior Notes.

Net cash provided by financing activities of $45.1 million for the first half of fiscal 2025 reflected $81.6 million in net borrowings under our Revolving Credit Facility to support seasonal working capital needs and $8.8 million in net proceeds raised from the sale of Common Units under our ATM equity program. Financing activities also reflected $41.8 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 2024 and first quarter of fiscal 2025, as well as other financing activities of $3.5 million.

Summary of Long-Term Debt Obligations and Revolving Credit Facility

As of March 28, 2026, our long-term debt consisted of $650.0 million in aggregate principal amount of 5.0% Senior Notes due June 1, 2031, $350.0 million in aggregate principal amount of 6.5% Senior Notes due December 15, 2035, $80.6 million in aggregate principal amount of 5.5% Green Bonds due October 1, 2028 through October 1, 2033 ("Green Bonds") and $200.3 million outstanding under our $500.0 million senior secured revolving credit facility ("Revolving Credit Facility") provided by our Fourth Amended and Restated Credit Agreement (the "Credit Agreement"). Total long-term borrowings as of March 28, 2026 and March 29, 2025 were $1,280.9 million and $1,313.2 million, respectively. See Item 1, Note 10 of this Quarterly Report.

The Green Bonds contain various restrictive and affirmative covenants, and previously required SuburbanRNG-Stanfield's debt service coverage ratio, as defined therein, to be not less than 1.00 to 1.00 for three consecutive fiscal quarters. Effective May 2, 2025, the Operating Partnership entered into a guaranty agreement whereby it guaranteed all payments due under the Green Bonds, and amended the indenture governing the Green Bonds to eliminate the debt service coverage ratio covenant.

The aggregate amounts of long-term debt maturities subsequent to March 28, 2026 are as follows: fiscal 2026: $-0-; fiscal 2027: $-0-; fiscal 2028: $-0-; fiscal 2029: $212.0 million; fiscal 2030: $12.3 million; and thereafter: $1,056.6 million.

Total Consolidated Leverage Ratio. Total Consolidated Leverage Ratio, as defined by our Credit Agreement, represents total indebtedness as of the balance sheet date minus unrestricted cash and cash equivalents in an amount not to exceed $25.0 million, divided by Adjusted EBITDA calculated on a trailing twelve-month basis plus non-cash compensation costs recognized under our Restricted Unit Plans for the same period, and other items. The measurement of the Total Consolidated Leverage Ratio for the trailing twelve-month periods ended March 28, 2026 and September 27, 2025 was as follows:

Partnership Distributions

We are required to make distributions in an amount equal to all of our Available Cash, as defined in our Third Amended and Restated Partnership Agreement, as amended (the "Partnership Agreement"), no more than 45 days after the end of each fiscal quarter to holders of record on the applicable record dates. Available Cash, as defined in the Partnership Agreement, generally means all cash on hand at the end of the respective fiscal quarter less the amount of cash reserves established by the Board of Supervisors in its reasonable discretion for future cash requirements. These reserves are retained for the proper conduct of our business, the payment of debt principal and interest and for distributions during the next four quarters. The Board of Supervisors reviews the level of Available Cash on a quarterly basis based upon information provided by management.

On April 23, 2026, 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 2026, payable on May 12, 2026 to holders of record on May 5, 2026.

Other Commitments

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 28, 2026, we had a liability for the defined benefit pension plan and accrued retiree health and life benefits of $8.1 million and $3.8 million, respectively.

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 28, 2026, we had accrued insurance liabilities of $59.4 million, and a receivable of $15.8 million related to the amount of the liability expected to be covered by insurance.

Legal Matters

See Item 1, Note 13, "Commitments and Contingencies," Legal Matters subsection of this Quarterly Report.