Financial Instruments and Risk Management

12 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Financial Instruments and Risk Management

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. Restricted cash was included within other current assets (or other assets, as applicable) and is a function of the Green Bonds; refer also to Note 10 (“Long-Term Borrowings”). 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 the RNG facility in Arizona for which the first debt redemption payment is due on October 1, 2028. Refer to Note 6, “Selected Balance Sheet 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 30, 2023 and September 24, 2022, respectively:

	As of September 30, 2023			As of September 24, 2022
Asset Derivatives	Location	Fair Value		Location	Fair Value
Derivatives not designated as hedging    instruments:
Commodity-related derivatives	Other current assets	$	18,538	Other current assets	$	18,263
	Other assets		8	Other assets		16,430
		$	18,546		$	34,693
Liability Derivatives	Location	Fair Value		Location	Fair Value
Derivatives not designated as hedging    instruments:
Commodity-related derivatives	Other current liabilities	$	2,427	Other current liabilities	$	16,957
	Other liabilities		4,784	Other liabilities		1,895
		$	7,211		$	18,852

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 Unobservable Inputs (Level 3)
	Fiscal 2023						Fiscal 2022
	Assets			Liabilities			Assets			Liabilities
Beginning balance of over-the-counter options	$	222		$	3,408		$	4,626		$	451
Beginning balance realized during the period		(194	)		(2,475	)		(4,626	)		(219	)
Contracts purchased during the period		—			—			222			3,295
Change in the fair value of outstanding contracts		(28	)		(127	)		—			(119	)
Ending balance of over-the-counter options	$	—		$	806		$	222		$	3,408

As of September 30, 2023 and September 24, 2022, the Partnership’s outstanding commodity-related derivatives had a weighted average maturity of approximately six and seven months, respectively.

The effect of the Partnership’s derivative instruments on the consolidated statements of operations for fiscal 2023, 2022 and 2021 are as follows:

	Unrealized Gains (Losses) Recognized in Income
Derivatives Not Designated as Hedging Instruments	Location	Amount
Commodity-related derivatives:
Fiscal 2023	Cost of products sold	$	(3,671	)
Fiscal 2022	Cost of products sold	$	(27,929	)
Fiscal 2021	Cost of products sold	$	43,121

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 30, 2023
						Net amounts
						presented in the
	Gross amounts		Effects of netting			balance sheet
Asset Derivatives
Commodity-related derivatives	$	35,339	$	(16,793	)	$	18,546
	$	35,339	$	(16,793	)	$	18,546
Liability Derivatives
Commodity-related derivatives	$	24,004	$	(16,793	)	$	7,211
	$	24,004	$	(16,793	)	$	7,211

	As of September 24, 2022
						Net amounts
						presented in the
	Gross amounts		Effects of netting			balance sheet
Asset Derivatives
Commodity-related derivatives	$	117,260	$	(82,567	)	$	34,693
	$	117,260	$	(82,567	)	$	34,693
Liability Derivatives
Commodity-related derivatives	$	101,419	$	(82,567	)	$	18,852
	$	101,419	$	(82,567	)	$	18,852

The Partnership had $-0- posted cash collateral as of September 30, 2023 and September 24, 2022, 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 700 locations in 42 states. No single customer accounted for more than 10% of revenues during fiscal 2023, 2022 or 2021 and no concentration of receivables exists as of September 30, 2023 or September 24, 2022.

During fiscal 2023, Crestwood Equity Partners L.P. and Targa Liquids Marketing, provided approximately 30% and 16% 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 2023. 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 $334,250 and $541,658, respectively, as of September 30, 2023. The fair value of the Green Bonds is based upon a valuation model (a Level 3 input), which was $63,031 as of September 30, 2023.