Ladies and gentlemen, thank you for standing by. Welcome to the Suburban Propane Partners, L.P. Fiscal 2018 full year conference call. At this time, all participant lines are in a listen-only mode. Later, there will be an opportunity for your questions, and instructions will be given at that time. As a reminder, today's conference call is being recorded. I'd now like to start the conference off with the safe harbor statement. This conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to the partnership's future business expectations and predictions and financial condition and results of operations. These forward-looking statements involve certain risks and uncertainties.
The partnership has listed some of the important factors that could cause actual results to differ materially from those discussed in such forward-looking statements, which are referred to as cautionary statements in its earnings press release, which can be viewed on the company's website. All subsequent written and oral forward-looking statements attributable to the partnership or persons acting on its behalf are expressly qualified in the entirety by such cautionary statements. With that, I'd like to turn the conference over to the Vice President and Treasurer, Davin D'Ambrosio. Please go ahead.
Thank you, Leah. Good morning, everyone. Thank you for joining us this morning for our fourth quarter and fiscal 2018 full year earnings conference call. Joining me this morning are Mike Stivala, our President and Chief Executive Officer; Mike Kuglin, Chief Financial Officer and Chief Accounting Officer; and Steven Boyd, our Chief Operating Officer. This morning, we will review our fourth quarter and fiscal 2018 full year financial results, along with the current outlook for our business. As usual, once we've concluded our prepared remarks, we will open the session to questions. Our annual report on Form 10-K for the fiscal year ended September 29, 2018, which contains additional disclosure regarding forward-looking statements and risk factors, will be filed this Wednesday, November 21st. Copies may be obtained by contacting the partnership or the SEC. Certain non-GAAP measures will be discussed on this call.
We have provided a description of those measures, as well as a discussion of why we believe this information to be useful in our Form 8-K, which was furnished to the SEC this morning. Form 8-K is available through a link in our investor relations section of our website at suburbanpropane.com. At this point, I would like to turn the call over to Mike Stivala for some opening remarks. Mike?
Great. Thanks, Davin, and thank you all for joining us this morning. Well, coming off back-to-back record warm winters in fiscal years 2016 and 2017, it was great to see our operations challenged by a more seasonable weather pattern this past year. Coming into fiscal 2018, we had adapted our business plans to meet customer demand expectations under a weather pattern more reflective of the 10-year average heating degree days, which is roughly 7% warmer than the traditional 30-year average. We had also set ourselves on a path to restore our balance sheet strength to best position our business for long-term profitable growth. I'm extremely pleased to report that fiscal 2018 was a very successful year for Suburban Propane. Customer demand was in line with our expectations. Our operations personnel did an outstanding job managing margins and expenses.
We reported a significant improvement in earnings and cash flows. We put the excess cash flow to work, investing in strategic growth opportunities and reducing debt. For the year, adjusted EBITDA of $283 million was $40 million or 16.5% ahead of the prior year. As a result, our financial metrics continued to get stronger. Our consolidated leverage ratio was 4.36 x at the end of fiscal 2018, and that's down from 5.14 x to end last year, and trending toward our target range of below 4x . Our distribution coverage was above 1.3x for the year. We also invested about $15 million to acquire two propane businesses in strategic markets in California and Florida and expanded our delivery radius by investing in several new market expansions. We made significant strides toward our stated goals and are very well-positioned heading into fiscal 2019.
A little later, I'll provide some closing remarks. However, at this point, I'll turn it over to Mike Kuglin to discuss our full year and fourth quarter results in more detail. Mike?
Thanks, Mike, and good morning, everyone. I'll start by focusing on our full-year results and give a little color on the fourth quarter toward the end of my remarks. I'd also like to point out that fiscal 2018 included the typical 52 weeks of operations compared to the 53 weeks in the prior year. While the extra week of operations in fiscal 2017 had a positive impact on volumes and margins, the bottom line effect was not material to the fiscal year, but did have somewhat of an impact on Q4 activities.
To be consistent with previous reporting, I'm excluding the impact of unrealized non-cash, mark-to-market adjustments on derivative instruments used in risk management activities, which resulted in an unrealized gain of $300,000 in fiscal 2018, compared to an unrealized gain of $6.3 million in the prior year. Additionally, fiscal 2018 include a loss of $4.8 million from the sale of certain assets and operations in a non-strategic market of the propane segment. Net income and EBITDA for the prior year included a $6.1 million pension settlement charge and a loss from debt extinguishment of $1.6 million. Excluding these items, net income for fiscal 2018 improved by $41.7 million, or $0.67 per common unit compared to the prior year. Adjusted EBITDA for fiscal 2018 amounted to $283 million, an increase of $40 million or 16.5% compared to the prior year.
Our results for the year benefited from higher volumes sold, solid margin management, and our ongoing focus on achieving operating efficiencies and cost savings. In fact, we met the higher customer demand with just a modest increase in total expenses. Retail propane gallons sold in fiscal 2018 were 440 million gal, an increase of 19.2 million gal or 4.6% compared to the prior year. Sales of fuel oil and other refined fuels of 31 million gal were essentially flat to the prior year. While the heating season presented some extreme weather variability, average temperatures across our service territories were 8% cooler than the prior year, yet 7% warmer than normal, with normal being based on the 30 year average heating degree days. The cooler temperatures compared to the prior year were experienced throughout the majority of our service territories, which contributed to an increase in customer demand for heating needs.
Our volumes also benefited from continued momentum in our customer base growth and retention initiatives. From a commodity perspective, wholesale propane prices remained elevated and traded higher during the year on the strength of the export market. Overall, average propane prices increased 36% compared to the prior year. Although we are currently in the early part of the fiscal 2019 heating season, commodity prices have recently softened rather significantly, with the price of propane basis Mont Belvieu decreasing from $1.07 per gallon at the end of September 2018 to $0.74 per gallon as of yesterday. That equates to a 30% decrease over the last six weeks. Total gross margins of $751.5 million for fiscal 2018 increased $46.5 million or 6.6% compared to the prior year, primarily due to higher volumes sold and higher average unit margins.
With respect to expenses, while volume sold increased nearly 5% year-over-year, combined operating and G&A expenses increased just 1.4%. The modest increase in expenses reflects higher variable operating costs to support higher demand, higher vehicle fuel costs, and higher variable compensation associated with higher earnings, all of which were substantially offset by continued savings from operating efficiencies. Net interest expense of $77.4 million for fiscal 2018 increased $2.1 million or 2.8%, primarily due to the rise in benchmark interest rates and higher average outstanding borrowings under our revolving credit facility during the year. Overall, we reduced total debt by $19 million as of the end of fiscal 2018 compared to the end of fiscal 2017 through excess cash flows. Total capital spending for the year was $32.9 million, representing an increase of $4.7 million compared to the prior year.
The increase reflects the purchase of properties to support our customer base growth initiatives, as well as tanks and cylinders in support of new customer installations. The capital spending and the two acquisitions that Mike mentioned in his opening remarks were funded with internally generated cash. Turning to our fourth quarter results. The fourth quarter of fiscal 2018 included 13 weeks of operations compared to 14 weeks in the prior year. Consistent with the seasonality of our business, we typically report a net loss in the fourth quarter. With that being said, we reported a net loss of $50.8 million or $0.83 per common unit, which was flat compared to the prior year.
As I discuss the quarterly results, I'm excluding the impact of unrealized non-cash mark-to-market adjustments on our commodity hedges, which result in a $1.7 million unrealized gain in the fourth quarter of fiscal 2018 compared to a $9 million unrealized gain in the prior year. Additionally, net loss and EBITDA for the fourth quarter of fiscal 2017 included the $6.1 million pension settlement charge that I mentioned earlier. Excluding these items, adjusted EBITDA for the fourth quarter of fiscal 2018 was a loss of $2.8 million compared to a loss of $700,000 in the prior year. The primary driver for the year-over-year variance in gross margin, expenses, and adjusted EBITDA was the impact of the additional week of operations in fiscal 2017. With that said, total gross margins decreased 7.4% due to lower volumes sold, which was partially offset by slightly higher unit margins.
Combined operating and G&A expenses decreased 5.5%. Turning to our balance sheet. From a leverage perspective, the combination of the increase in earnings and the debt reduction during the fiscal year resulted in our consolidated leverage ratio improving to 4.36 x at the end of the fiscal year. We are well within our debt covenant requirements and remain focused on continuing to restore our balance sheet strength, which includes achieving a target leverage profile in the mid to upper 3 x. From a liquidity position, we have ample borrowing capacity under our revolver to fund anticipated working capital needs for the upcoming heating season and to support our strategic growth initiatives. Back to you, Mike.
Great. Thanks, Mike. As announced in our October 25th press release, our Board of Supervisors declared our quarterly distribution of $0.60 per common unit in respect of the fourth quarter of fiscal 2018, which equates to an annualized rate of $2.40 per common unit. The quarterly distribution was paid on November 13th to our unit holders of record as of November 6th. In closing, let me reiterate that fiscal 2018 was a great year for Suburban Propane.
We are very proud of how we have navigated our business through three very different weather scenarios over the past three fiscal years, and how we have continued to adapt our business plans, both operationally and from a financial perspective, to the weather-driven demand circumstances, all the while maintaining our focus on delivering outstanding service to the communities we serve and executing on our customer base growth and retention initiatives in support of our long-term growth plans. We have made excellent progress on restoring our balance sheet strength and have great momentum coming into a new heating season in fiscal 2019. Finally, I'm extremely proud of the more than 3,200 employees of Suburban Propane carrying out their commitment to outstanding service to our customers, executing on our growth plans, and supporting the communities in which they live and work.
In particular, I want to acknowledge the efforts of our customer service teams in the Southeast for their outstanding performance preparing for and in the aftermath of the two devastating hurricanes that hit that region, and our operations in California that have dealt with so many wildfires this year. Our thoughts and prayers are with the communities affected. As always, we appreciate your support and attention this morning and would now like to open the call to questions. Leah, could you help me with that?
Yes, thank you. Ladies and gentlemen, if you would like to ask a question, please press star then one on your telephone keypad. You will hear a tone indicating you have been placed in queue. You may remove yourself from this queue by depressing the pound key. Once again, if you have a question, please press star one on your telephone keypad. One moment, please. After allowing a few moments, we have no questions. You may continue.
Well, great. I hope everybody has a terrific holiday season. We look forward to speaking with you again in early February after we have a chance to see how the heating season is beginning to shape up. Thank you, Leah, for your assistance today, and thank you all.
Thank you. Ladies and gentlemen, this conference is available for digitized replay after 11:00 A.M. Eastern Time today through midnight tomorrow. You may access the replay service at any time by calling 1-800-475-6701 and enter the access code of 456434. That does conclude your conference for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect.