Good morning and welcome to The Star Group Fiscal 2019 Third Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] I would now like to turn the conference over to Chris Witty Investor Relations Manager. Please go ahead.

Thank you and good morning. With me on the call today are Jeff Woosnam, Chief Executive Officer; and Rich Ambury, Chief Financial Officer. I would now like to provide a brief safe harbor statement. This conference call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company'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 company believes that the expectations reflected in such forward-looking statements are reasonable. We 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 company's expectations are disclosed in this conference call and in the company's annual reports and Form 10-K for the fiscal year ended September 30, 2018. All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the company 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 over to Jeff Woosnam. Jeff?

Thanks, Chris. And good morning, everyone. Thank you for joining us to discuss our quarterly results. Since our last call several months ago, our new management team has been working to refine our execution of the fundamentals of our core business. While I'm very pleased with the progress we've made over this time, there's still much work to be done. We will continue to focus on strengthening our service platform, both in the field and our back office, reducing net customer attrition and streamlining operations where appropriate. Let me make a few general comments about the weather and our results. Third quarter temperatures were 22% warmer than last year and 21% warmer than normal. As you might recall, the 3 months ended June 30, 2018, were favorably impacted by the spillover effect of colder temperatures during the last week of March 2018. As well as by temperatures in April 2018. They were 20% colder than normal. Given this backdrop home heating oil and propane volume decreased by 32% versus last year. As Rich will review further in a moment. Net customer attrition for the third quarter was approximately 1.9% similar to last year's 1.8%. Reducing attrition remains an extremely high priority for us. To that end, an important component of our strategy is to drive unnecessary costs out of the business to make Star even more attractive in the marketplace. As an example of this, we have significantly scaled back our concierge operations which did not fit well across much of our footprint. Even as we continue to position the company as the top tier service provider in the industry, we know that being lean and responsive is a key to maintaining our competitive edge. We will accomplish this by aggressively identifying and reducing critical over -- non-critical overhead expense…

Thanks, Jeff. And good morning, everyone. For the fiscal 2019 third quarter, our home heating oil and propane volume decreased by 18 million gallons or 32% to 37 million gallons do largely due to warmer temperatures, the impact of net customer attrition and other factors. Temperatures for the quarter were 22% warmer than last year and 21% warmer than normal. Notably, April 2019 was almost 40% warmer than April of 2018, which was unusually cold. Our product gross profit did decrease by $15 million or 21% to $56 million do largely due to the lower home heating oil and propane volume. However, home heating oil and propane margins did increase by approximately $0.10 per gallon. Our delivery and branch expenses decreased by $600,000 to $83 million, as the additional costs from acquisitions of $3 million was more than offset by the client and the base business of $3.5 million. So the lower volumes led to a reduction in direct delivery expense of $2 million and concierge related expenses declined by $1.5 million. As Jeff noted, we have substantially scaled back concierges. Our net loss for the period rose by $15 million to $23 million in the quarter due to a non-cash unfavorable change in the fair value of derivative instruments of $9 million in an increase in the company's adjusted EBITDA loss of $11.7 million during the quarter. During fiscal 2019 third quarter, a $1.6 million non-cash charged was recorded related to the change in fair value of derivatives versus a $7.5 million credit recorded in the third quarter of fiscal 2018. The adjusted EBITDA loss widened by $11.7 million to $20 million, as the additional EBITDA provided by acquisitions of approximately $1 million was more than offset by a $12.6 million increase in the adjusted EBITDA loss within the…

Thanks, Rich. At this time, we're pleased to answer any -- address any questions that you have. Debbie, please open the phone lines for questions.

We will now begin the question and answer session. [Operator Instructions] The first question comes from Michael Prouting with 10K Capital. Please go ahead.

Good morning, guys. So thanks for taking my questions. I'll try to restrict myself to 3 questions this morning. Rich, first a question on receivable. So I noticed that your sales were -- and also the allowances as a percentage of gross receivables was up quite a bit. Is there something going on there?

Not. I mean, I think the DSL this year versus last year, if you're doing it on a 90-day, I think we're up 2 or 3 days and nothing great. I think my numbers suggested going from 54 days to maybe 56 or 57-day sales out then if you do it on the quarter so I don't see anything strange there. And now the allowance -- with the allowances we have our reserve requirements that we go through. I think we did book an extra million or so this year versus last year in the quarter but right now the receivables are well reserved.

Okay, with some -- just to be more explicit; what I'm looking at is allowances as a percent of quarter's receivables. So in the June quarter of last year, they're roughly 5%. And this quarter, they're roughly 6.3%. So that's a pretty significant increase. So I just want to show why?

It's really the over 90s that we reserve for our self without getting into the details of each specific aging. And that's really what would drive the increase in the allowance as a percent of the total receivables.

Okay, but you're not seeing anything that you're particularly concerned about as far as collectability is concerned.

So I'm not but don't forget last year, we had more sales and April was so robust. We had probably on a comparative basis, more sales if you will. If you look at the quarter financials, sales last year was $327 million. This year they're $284 million -- $283.4 million. So we had more current sales, if you will, in last year's quarter, which drove up the receivable on an absolute basis. And the reserve as the percent probably is down as a percentage basis when you compare that to this year.

Okay. So why don't we move on. So second question is on the capital allocation. By the way, congratulations on completing the acquisition during the quarter. It sounds like there are more potential acquisitions in the pipeline. I'm curious how you characterize the pipeline. And if you see any larger size deals out there.

I would say that our level of activity is pretty typical for what we've experienced this time of year. We've got several opportunities in the pipeline that we're optimistic about but we'll have to see how those things transpire and come to fruition. I've been very involved in our acquisition program, in prior positions. I'm very comfortable with it. And so I don't see our strategy changing all that much. But the level of activity right now, I think, is pretty consistent over what we would typically see this time of year.

Okay, great. Related to the capital allocation question. You've been repurchasing units at a pretty consistent rate. Obviously, the unit price -- I mean really it hasn't moved for several years now. Is there any reason to think that you won't continue repurchases at a similar rate going forward?

Well, if the units are available and within our price constraints. We do have to take a look at -- we have about 1.6 million left on the public plans. And when you're buying 100,000 to 200,000 a month, that gives you five or six months' worth of firepower so to speak.

Okay, right. And then final question for Jeff. I am -- I was really encouraged to hear your focus on customer churn. And it also sounds hopeful in terms of how you spoke about improvements that you're making there. But without giving anything away to competitors, I'm wondering if there's anything more you can say about that? Thanks.

I would just say that, as I mentioned in my opening comments that our overall working strategy is to be -- looking very aggressively at what we would consider to be any non-essential overhead expense to try to become more lean and reinvest that expense into areas that we know have a positive impact on the customer experience. And I think that's the direction. And then obviously, anytime we can reduce expense from the business, it puts us in a better competitive position. And that's really the overall working strategy. And we're working on that. We continue to work on it. I wouldn't consider it an initiative. I would consider it something. We're trying to make a culture as part of the business, that we're going to continue to look at things that we believe are non-essential to areas. And as I tell my team if we have an overhead expense, it's not helping us attract a new customer, retain a customer, improve the customer experience, maintain our level of compliance, then those are things we have look at.

Okay, great. Yes, cause -- I mean obviously, reducing the level of churn dramatically increases the value of the company over time. Because obviously, if a customer -- you don't lose this customer, you don't have to reacquire, right? So I really appreciate the focus on that. That's it for me. Thanks.

[Operator Instructions] At this time, there are no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Woosnam for any closing remarks.

Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2019 fiscal fourth quarter results with you in December. Thanks, everyone.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.