Good day, and welcome to the Star Gas Partners Fiscal 2012 First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now introduce the host of today's conference, Mr. Dan Donovan, Chief Executive Officer. Sir, please go ahead.

Okay, thank you. Good morning, and thanks for joining us today. With me today is Star's Chief Financial Officer, Rich Ambury; and our Chief Operating Officer, Steve Goldman. After some brief remarks by me, Rich will be giving a review of the fiscal first quarter ended December 31, 2011, and this will be followed by some comments from Steve regarding Star's operating results. And then, of course, as always, we'll be happy to take your questions. Before we begin, Chris Witty of our Investor Relations firm Darrow Associates will read the Safe Harbor statement. Please go ahead, Chris.

Thanks, Dan, and good morning. This conference call may include forward-looking statements that represent the partnership's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the partnership's actual performance to be materially different from the performance indicated or implied by such statements. All statements other than statements of historical facts included in this conference call are forward-looking statement. Although the partnership believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the partnership's expectations are disclosed in this conference call and in the partnership's annual report and Form 10-K for the fiscal year ended September 30, 2011. All subsequent written and oral forward-looking statements attributable to the partnership or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the partnership undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this conference call. I'd now like to turn the call back over to Dan Donovan. Dan?

Okay. Thanks, Chris. Let me start by talking about the weather. Well, last year's first quarter results reflected much colder temperatures than normal and frequent snowstorms. This year has been noteworthy by the reverse of that, unusually warm weather with very little snow. Managing a heating oil business in either extreme is very difficult and a high price environment makes it all the more challenging. This year, our emphasis have continued to be on delivering the highest level of service to our customers, while putting major emphasis on expense control, which Steve will discuss in a moment. Let's put the weather in perspective. Temperatures were 22% warmer than last year's first quarter and 20% warmer than normal. One thing that both quarters do have in common is the high price of heating oil as prices remained at the highest level through the summer of 2008. This year's average spot prices were higher than the period ended December 31, 2010 by $0.62 per gallon, or 26%. In addition, the fiscal first quarter of 2011 was higher than the previous year's first quarter by $0.38 per gallon. This means that over the past 2 years, heating oil prices have climbed by $1 per gallon, or 51%. Turning to customer retention. During the first quarter of 2012, our net attrition was 900 accounts or just under 0.2% of our home heating oil and propane customer base. This is 1,300 accounts less than the first quarter of fiscal 2011 when we the look at net of 2,200 accounts or 0.5/10 of 1% of our total heating oil and propane customer base. The year-over-year improvement was largely due to the success of our propane marketing initiatives as we added 700 more net propane accounts during the first quarter of this fiscal year when compared to the first quarter of fiscal 2011. Again, the combination of rising prices, especially at these high levels, and warmer temperatures make controlling attrition an especially demanding task. Our acquisition program continues to be very active. In the quarter ending December 31, 2011, we closed on 3 transactions: a dual heating oil and propane market around state of New York; a Long Island heating oil dealer; and a small propane company in South Carolina. Combined, these acquisitions added approximately 30 million gallons or 13,000 customers with about $4 million in EBITDA to start. As usual, we continue to spend a good deal of time evaluating both heating oil and propane candidates. With that, I'll turn the call over to Rich to provide some comments on our financial results.

Thanks, Dan. For the quarter, our home heating oil and propane sales volumes decreased by 19% versus last year or 22 million gallons to 91 million gallons, as the additional volume provided by acquisitions was more than offset by the impact of warmer temperatures of 22% and net customer losses for the trailing 12 months of 3.3%. Our home heating oil and propane margins increased by 6.5%, or about $0.06 per gallon versus the first quarter of fiscal 2011. We achieved higher per gallon margins despite an increase in wholesale product cost of over $0.55 per gallon or 23%. However, total gross profit declined by $14 million as the higher margins could not offset the impact of the much warmer weather. Gross profit from other petroleum products increased by $0.75 million despite the warmer weather, reflecting our recent acquisitions, and we also improved our service profitability by $600,000. Delivery and branch expenses rose by 2%, primarily due to the impact of recent acquisitions, which were not contiguous to our existing operations. Recall that we recently expanded into the Detroit/New York area and into South Carolina. In addition, given the fixed nature of some of our operating expenses, we have been able to reduce cost in the short term as we would have liked because we expected the upcoming January to be normal. We post a net income in the quarter of $3 million, which was $18 million lower than the prior year due to the after-tax impact of the abnormally warm weather and an unfavorable change in the fair value of derivative instruments. Over the past several years, we have utilized the substantial majority of our NOLs or net operating loss carryforwards, and at December 31, 2011, we estimated that our NOLs were approximately $13 million, subject to annual limitations…

Thank you, Rich, and good morning, everyone. At the start of this past quarter, if I have been asked, "What will you do if normal winter weather does not materialize?" I would've said 2 things: first, that this most likely wouldn't happen for the entire quarter; and secondly, that we would have no alternative but to continue providing the highest level of service to our customers while managing our operations in the most cost-effective way possible. Well, this winter certainly has proven to be an unusual one. While the primary weather forecast indicated we would see relatively normal seasonal patterns for the first quarter, this is certainly not what happened. During November and early December, we began our yearly ramp-up of staffing anticipating a typical winter start. However, in keeping with our expense management focus, we were continually reacting to noticeably warmer-than-anticipated days by cutting controllable expenses when it was possible. As the forecast unraveled in December, we began cutting back on spending and staffing more aggressively, still knowing that our traditionally coldest period was just to come in the months of January and February. Halfway through the period of December, we started instituting even more dramatic and longer-term expense cuts where they would not have significant impacts on our customers' experience or on customer retention. We believe our execution on controllable aspects of operating were done appropriately, keeping the right balance between our customers' needs and our ability to reduce hours related to weather-driven demand. It was simply not possible during these months to cut more than we did without damaging service and risking attrition. I'd like to add that many of these cuts came through the cooperation of our employees who have seen dramatic decreases in hours and in many case, altered work periods and temporary layoffs. We…

Okay. Thanks, Steve. So at this time, we'll be pleased to address any questions you may have. Carolina, could you please open the phone lines for questions.

[Operator Instructions] We have a question from the line of Ed Olson [ph] .

With the Star hitting another new low today, I hope you don't mind that shareholders are a bit irritable. Would you all -- 2 questions. One, would you all talk about the repurchasing in fiscal 2011 and '12. In '11, Q1, 2 and 3, you bought nothing. Then, all of a sudden, bought 1.835 million in August, of which 1.5 million was from an insider and then, in December, you bought another 1.5 million from the same account averaging about $5.24. Looks like you bought from us, the public shareholders, around 1 million at significantly lower prices. Would you discuss the thinking behind that?

You're talking about our buyback of units, of course, Ed. And...

Yes, Dan, that's correct.

We may be buying back at $5.24, that's where the market was. We have a program that we've disclosed to everybody that we are buying back units. And of course, if at that time we knew that the winter was going to be 20% to 25% warmer, maybe we wouldn't have done that. But we never know what the weather's going to be, nor do we know what the price of oil is going to be, nor do we know the price of our units are going to be. So we made that purchase based on the program that we set out and disclosed to everyone.

No, I understand that. But it looks like the insider benefited to the point of $5.24, and the public received a much lower price.

We were buying from the public based on whatever the market was during the course of the time, and that's the weighted average per share from the public. What we've made the private transactions at were approximately where the market was. And there probably was a slight premium that you might have to pay for a block of that size.

No, I understand you have to pay for size. But the only question I had is, it just seems as though the insider has benefited greatly and the public has gotten a much lesser price. Have you had any inquiry on any of these from any regulatory body?

I don't know if I agree with what you said, Ed, because our buyback program, first of all, is on automatic pilot. And when a block comes, we're paying what the market is. So I don't see where we're giving anybody an advantage.

No, Dan, I beg your pardon, but in the first quarter, second quarter and third quarter you bought 0. And if that's automatic pilot you need to get another broker.

Well, the automatic pilot is within the parameters which we set.

Right. And so therefore, you did not pay for 3 quarters. That's all I'm asking. Okay, I've made my point. Okay. Next question on I see you bought 1.2 million in January. What have you bought in February?

We've bought, round numbers, around 100-and-some-odd-thousand shares. I don't have that number in front of me, but it's all...

Okay. So your authorization has just about run out?

That's a fair estimate, yes.

Okay. The next question I have, deals with shareholder value. The stock has broken down completely. And I would address this question, and I assume your chairman's on the line so maybe he'd like to answer the question. What are you going to do about shareholder value? What are you doing to address that? You've lost most of the institutions, as I'm sure you can see from the transfer sheets.

Well, could you define what you mean by shareholder value, Ed, because we're not looking at it -- we're not looking at this thing quarter-to-quarter, we're looking at this long term. And given the recent weather conditions, we kept the distribution at what it had been, which is an increase from the $0.27 to the $0.31. And we look at this distribution regularly. And as you know, we've said this several times on this call and we've said to you a few times too, that we are owners of the stock, too, and we're aligned with the shareholders and their desire to see that these distributions rise over time, but we're not looking at it quarter-to-quarter. We're looking long term. We have acquisitions we'd like to do. We have a warm winter we're dealing with. We have a possible higher cost of oil coming in, and we feel that the way we're handling it with distributions makes perfect sense.

Well, Dan, again, my beef is not with the operating guys. But the fact that you've also said on Page 66 that you don't anticipate any dividend increase for the rest of this fiscal year.

Well, I ...

My question really deals more with shareholder value. And the structure that you are operating under is costing shareholders. I mean, you've said that yourself. I mean, the cost could be anywhere between $0.5 million and $1 million or $2 million. What are you all going to do about addressing shareholder value?

What we're going to do is continue to run the company the way we were talking about this morning. In other words, we're trying to control attrition. We're trying to deliver excellent customer service to our customers, roll our company via acquisitions and continue, for the long term, to run a solid heating oil company. We think that, that is going to add to shareholder value over the long term.

Dan, again, my -- and great job on attrition by the way and the costs and so forth. And my beef is not with the operating guys. But let me make a couple of suggestions. One, you ought to look at the structure and make a decision based on shareholder value. Number two, with the high yield market where it is, which is wide open right now, why not reopen the high yield and tender for the stock. We need some bold action here, and I have real concern about morale. Dan, and I've expressed this to you before. The people that will benefit from a $0.45 distribution had got to get a little impatient here, and so I worry about your morale and the other managers who would benefit from a $0.45 dividend.

Ed, I got to tell you all morale is fine because we're looking at this a lot longer term than you might be looking at it. And we think that the way that the board is running it -- I don't separate myself from the board too much. I agree with what the board is doing here, and long term, it makes sense to me.

And to be technical on a couple of things that you've said already, we did not buy any shares back from an insider as defined by securities law.

Well, that's not quite right because if you read the SEC's Form 4, then there a partner is described as an insider.

Well, he has no relationship to the company.

No, but they are declared as an insider. The other thing is I don't see management buying any stock.

Management can only buy stocks during an open window. We have a window which will be opening after this call and stays open for a few weeks. We don't have the opportunity to buy anything except during that window period.

[Operator Instructions] We have a question from the line of Henriett Goslin [ph].

My question is, I noticed the accounts receivable were conservatively higher as of this year versus last year. Would you care to comment on that?

Well, I think they are higher versus the close of our fiscal year. I don't believe that they're higher than at this time December.

Okay. That was where I was going by. I was going by your close of your fiscal year.

Especially if you look at day sales outstanding, I think it's pretty consistent with the last 2 years.

We had the same DSOs as last year, and the sales were approximately the same for the 3 months. And I believe at December of last year, our accounts receivable were pretty much the same. We had about $178 million of accounts receivable last year, and we're in that ballpark this year at, just give me a second, at $182 million.

I'm not sure if I read -- I must have mistakenly read the figure.

We had $183 million of receivables last December. This year we got $178 million of accounts receivable. We are up from December, but this is our peak season.

Versus last year. If we have had a normal winter, it would've been up because price of oil is up.

Okay. So you're not concerned in the least, where your accounts receivable are?

No, we had 37 days sales outstanding, which is the same as we had last year and the same the year before basically, within a day or 2.

Do you think you'd able to maintain your dividend?

Yes.

[Operator Instructions] We have a question from the line of Gregg Brody with JPMorgan.

I'm just curious. Just give us -- in terms of the acquisition market, can you give us a sense of what it looks like out there, if there's more or less opportunities in the past? Just some general commentary would be helpful.

We're in the middle of the winter now. Well, it's supposed to be a winter. And normally, the market picks up as the winter is ending because sellers would want to sell well before the beginning of the next season, and we expect to see an uptick in that. And we have seen a lot more questions being asked and been approached by a few more companies than we normally would throughout the winter. But we haven't seen a huge uptick yet, but that may be coming. It depends upon how dealers view finishing with a warm winter. Some may decide to say, "Wait until they have a better winter." But we don't know yet.

And just, obviously, it's been a tough heating season. Are any of the other residual businesses suffering as a result of that?

Well, we've seen -- we've had good operating results for the propane business, and we also do plumbing in several locations, and those are not being affected as much by the weather. But fixed stocking trade of gross propane heat and oil heat is obviously affected by the weather. So but other than that, I don't think we see much of a change in any of the other things that we might be doing.

[Operator Instructions] And at this time, there are no further questions. I would like to turn the call back over to Mr. Donovan, Chief Executive Officer, for any closing comments.

Okay. Carolina. Thank you. I thank everybody for taking the time for joining us today and for everybody's interest in Star Gas. We look forward to sharing our second quarter results with you in May. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have wonderful day.