Good day, ladies and gentlemen, and welcome to Star Gas Partners Fiscal Second Quarter Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Dan Donovan, Chief Executive Officer. Please begin.

Okay. Thanks, John. Good morning, and thank you for joining us today. With me is Star's Chief Financial Officer, Rich Ambury; and our COO, Steve Goldman. After some brief remarks by me, Rich will review the Star financial results for the period ended March 31, 2012. This will be followed by some comments from Steve regarding operating results. And then, as always, we'll be happy to take questions. Before we begin, Chris Witty of our Investor Relations firm, Darrow Associates, will read the Safe Harbor statement. 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 statements. 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. To start off with what a difference a year makes, at this time in 2011, we were discussing colder-than-normal temperatures and record-breaking snowfall in many areas within our footprint. This year has been the polar opposite of that. Throughout our operating area, we experienced one of the warmest winters on record, in fact, the warmest in New York City for the last 112 years. In addition to the warm temperatures, we also experienced a continuation of record-high heating oil prices. Average New York Harbor spot prices for the fiscal second quarter were $3.16 per gallon. That's $0.34 per gallon higher than last year's second quarter and $1.81 higher than the same quarter in 2009. But the long duration of high heating oil prices and low natural gas prices, combined with abnormally warm weather, have created a challenging environment, to say the least. One consequence of this is a negative mindset on the part of consumers towards oil in general, particularly when faced with heating oil prices over $4 a gallon. A second consequence would probably be the diminished need in the mind of consumers for a full service home heating company due to the warmer weather. Unfortunately, some customers have short memories and so they will consider other providers' advertised cheaper [ph] rates and with a less of a concern for long-term service. Lastly, another effect of this high heating oil prices is impact on certain operating expenses, such as bad debt expenses, credit card fees and vehicle fuels, which increased in tandem with the price of oil. These problems, however, they also result in opportunities for us, opportunities to restructure some aspects of our operations and thus reduce organizational expense, both for the short term and for the long term. Steve will be discussing some of…

Thanks, Danny. Good morning, everyone. For the quarter, our home heating oil and propane volumes decreased by 27% versus last year or 48 million gallons to 130 million gallons as the additional volume provided by acquisitions was more than offset by the impact of warmer temperatures of 23% and net customer attrition for the trailing 12 months. To put this period's weather into perspective, as Dan mentioned, the New York metro area was the warmest it's been in over 100 years during the quarter ending March 31, 2012. However, we were able to expand our heating oil and propane margins by 1.7% or about $0.015 per gallon to $0.93 per gallon versus the second quarter of fiscal 2011. Our margins during the quarter did include the negative impact of excess option costs for our sealing program as we hedged based on normal weather. We also achieved these higher per gallon margins despite an increase in wholesale product cost of over $0.52 per gallon or 19%. That said, total gross profit declined by $42 million as the higher margins could not offset the impact from the lower volumes caused by the extremely warm weather. We were able to improve our service profitability by $1.7 million as we managed the service department to correspond to the lower demand. Our delivery and branch expenses declined by 25% or $20 million as reduced operating expenses by $11 million or about $0.20 per gallon in response to the warm weather. And we also recorded a credit of $12.5 million under our weather-hedge contract. Our standalone acquisitions, though, did drive an increase in operating costs of $3 million. We posted net income for the quarter of $40.5 million, which was $8 million lower than the prior period. Adjusted EBITDA decreased by 25% to $60 million as…

Thank you, Rich, and good morning, everyone. As they say, hope for the best, but prepare for the worst. That is just what we've been doing for the past 6 months as this winter season unfolded. While we certainly could not have imagined such consistently warmer-than-normal weather, we were prepared to react to these very disappointing temperatures. All of our major operating units created multilevel contingency plans, which could be used in response to a number of weather-related and other what-if scenarios. We believe that if we hadn't been prepared to continually adjust our operations this winter, we would have seen much weaker results. Of course, as always, our primary focus was on continuing to deliver the high levels of service that we are known for. In some cases, these last few months have given us good cause to go back and look at all the business systems and processes, large and small, that make up our operations and ask ourselves, are there better, less expensive ways to do them. We look back on this past quarter at not just the disappointment, but also a lesson learned. We slashed many expenses, both large and small. We sharpened our search for small expenses such as dealer's travel and quality utilized supplies and began a very hard look at all our large expenses including fleet, facilities, technology and managerial positions. We know we need to keep the best of what we have, but become much more critical of what is wasteful or inefficient. Fortunately for us, we have an excellent management team fully committed to continually improving our company. We also possess internally a wealth of practical business knowledge and operational insights given the more than 30 businesses we have acquired over the past several years. Given these diverse organizations, we have…

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

[Operator Instructions] I have a question from Gregg Brody of JPMorgan.

Just wanted to talk a little bit more about the opportunity you mentioned, in particular on the acquisition side going forward. I know you've specifically -- commented specifically about acquisitions, but just a sense of some of the smaller competitors in the heating oil space. Do you feel that this summer -- I'm sorry, this winter has put more of them in a position where they're willing to sell?

We think that there are probably going to be some opportunities out there, but some of the smaller dealers may also be saying, hey, I don't want to sell my business after such a bad year. That's a possibility. But we see it as about -- at about the same level that we usually see coming out of the season.

And then as you think about the propane expansion opportunity, is that more of an organic effort, you think, or is that -- do you need to go and buy more to do that?

It's both right now. We are looking at potential acquisitions as they come our way. And as I've mentioned in the past, specifically ones that have dual product offering, heating oil and propane, which tend to be what we have the most attractive offering to sellers. But the organic spots that we picked up, just selling a secondary fuel to some of our own customers provides a very good potential. We've seen a very positive reaction to our customers where we've set up businesses.

Now in terms of individual customers, what's your sense of how easy it is for a customer to switch from heating oil to propane or how uneasy -- how not easy it is?

It's not very typical. They don't tend to switch very often in our footprint, from heating oil to propane. It's pretty expensive. To have to do it would not be cost savings to do that. Propane is relatively as expensive or as inexpensive as heating oil.

That's helpful. And then just a bigger picture. I'm not -- it was a busy day today, so I don't think I saw in the press release, but are you currently buying back stock? And maybe you can give us a sense of how you're thinking about that given where you are today and just your tax situation.

Well, we finished up our -- the second repurchase plan that we put in place. We did that sometime in this quarter, actually. And the board hasn't authorized an additional unit repurchase plan. Though we are looking to see what our results will be for the next quarter and see if we will put a new plan in place possibly for the third fiscal quarter. And the last part of your question?

It was in the context of -- it sounds like you're looking forward to see how the quarter looks, but just in terms of your -- I believe you're going to start paying taxes now, I think, in the next couple of quarters...

Well, we have been a full taxpayer for the last 2 years or so.

I thought there was an NOL that, that was...

There was an NOL and that NOL basically we used most of it up. There was about $16 million or so left and about $2 million of that NOL gets utilized on a yearly basis. So we've basically been a full taxpayer for the last couple of years.

And we'll continue to be a full taxpayer going forward.

[Operator Instructions] our next question comes from Ed Olsen [ph], a private investor.

Well, it isn't a question, but it's a statement. You guys did a great job. What a hell of a quarter and under terrible conditions. Is it too much to assume that we're spring-loaded for any kind of a colder winter?

I wish I knew. It's rare that you have 2 winters like this follow one another. The last time we had a winter anywhere near this one was 2001. So we always plan and we always operate on the basis that we're going to have a normal winter whatever our 10-year average normal is.

No. My point was really that it sounds like we're spring-loaded. With all the things you've done in cost-cutting and new methods and new operations that if there's any kind of a winter, we should be spring-loaded.

Yes. As I mentioned in my comments, our focus has been not harming our ability to provide service when the weather returns. And it's given us the opportunity, as I have told our managers, it's like burning the forest down to the ground and growing new trees. We got an opportunity to do things a little cheaper, maybe with different flexibilities and I agree with your thoughts. I mean, that's what we're hoping to be able to do.

Our overriding goal here is we're going to reduce expense to the minimum where we're going to have -- where we're not going to affect our ability to serve our customer because that is our niche, to be able to provide top-notch customer service. But we feel that this winter has shown us some ways in which we could do that, that are just not going to be around for this year, but they will be there for the long term.

[Operator Instructions] I'm not showing any other questions in the queue. I'd like to turn it back over to Dan Donovan.

Okay. Thank you, sean. I just want to thank everybody again for taking their time to join us today and for their interest in Star Gas. And we look forward to sharing our third quarter results with you in August. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.