Good morning and welcome to the Suburban Propane Partners, L.P. First Quarter Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. 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 in financial conditions 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 it's 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 it's behalf are expressly qualified in their entirety by such cautionary statements. I would now like to turn the conference over to Davin D'Ambrosio, Vice President and Treasurer. Please go ahead.

Thanks, Chad. Good morning, everyone. Thank you for joining us this morning for our fiscal 2022 first quarter earnings conference call. Joining me this morning are Mike Stivala, our President and Chief Executive Officer; Mike Kuglin, our Chief Financial Officer and Chief Accounting Officer; and Steve Boyd, our Chief Operating Officer. This morning, we will review our first quarter financial results, along with our current outlook for the business. 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 25, 2001 ; and Form 10-Q for the period ended December 25, 2021, will be filed by the end of business today, contains disclosures regarding forward-looking statements and risk factors. Copies may be obtained by contacting the partnership or 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 will be available through a link in the Investor Relations section of our website at suburbanpropane.com. At this point, I will turn the call over to Mike Stivala for some opening remarks. Mike?

Great. Thanks, Davin and good morning and thank you all for joining us today. We are very pleased to deliver another solid quarter with an increase in adjusted EBITDA of more than 8% compared to the prior year first quarter. Coming into the first quarter of fiscal 2022, the propane industry was faced with highly publicized concerns over lower U.S. inventories, significantly higher base commodity prices across the entire energy slate and an expectation that consumers could be facing much higher cost to heat their homes and businesses in the impending heating season. In fact, heading into the 2021 and 2022 heating season, U.S. propane inventories were reported at around 20% below the five year average for that time of the year and spot propane prices were at their highest level for November since 2011. However, as our first quarter progressed, a combination of lower than average crop drying demand in the agricultural sector, lower export activity and near-record warm temperatures in the month of December 2021 which muted heat-related demand, all contributed to a near normalization of U.S. propane inventories and a pullback in propane prices by about 33% from their peak levels. At Suburban Propane, we were able to offset the impact of lower heat-related demand during the first quarter and certain inflationary factors driving higher operating costs with effective selling price management and a prudent hedging and risk management strategy in a very volatile commodity price environment. The improvement in earnings is also a testament to the hard work and dedication of our operations personnel in maintaining their focus on delivering outstanding service to our customers while continuing to contend with the challenges of operating the business through the COVID-19 pandemic. And also reflects the positive results from our customer base growth and retention initiatives. In a moment, I'll come back for some closing remarks, including our outlook for the rest of the year. However, at this point, I'd like to turn the call over to Mike Kuglin to discuss the first quarter results in more detail. Mike?

Thanks, Mike and good morning, everyone. To be consistent with previous reporting, as I discuss our first quarter results, I'm excluding the impact of unrealized mark-to-market adjustments on our commodity hedges which resulted in an unrealized loss of $33.5 million in the first quarter compared to an unrealized gain of $4.9 million in the prior year. This large unrealized loss on mark-to-market adjustments on our commodity hedges, primarily reflects the reversal of previously reported unrealized gains at the end of the prior fiscal year as a portion of those unrealized gains were realized during the first quarter of fiscal 2022. Excluding these items, as well as the noncash equity and earnings, Oberon Fuels which is an unconsolidated affiliate, net income for the first quarter was $55.4 million or $0.88 per common unit compared to net income of $33.4 million or $0.53 per common unit in the prior year. Adjusted EBITDA of $86.5 million for the first quarter improved by $6.5 million or 8.1% compared to the prior year first quarter. As Mike mentioned, the improvement in earnings was driven by several factors but most significantly from solid margin management, the favorable impact of commodity hedges that matured during the period and the benefit from continued positive trends in customer base growth. These factors more than offset lower heat-related customer demand and inflationary pressure, plus much of our operating and general and administrative expenses. Retail propane gallons sold in the first quarter were 105.3 million gallons which was 5.7% lower than the prior year. Volumes sold were negatively impacted by widespread unseasonably warm temperatures, especially during the critical month of December, as well as lower demand for outdoor temporary heat and lower agricultural demand for crop growing given the low moisture content. With respect to the weather, average temperatures for the…

Thanks, Mike. As announced on January 20, our Board of Supervisors declared our quarterly distribution of $0.325 per common unit in respect of our first quarter of fiscal 2022 which equates to an annualized rate of $1.30 per common unit. Our quarterly distribution will be paid on February 8 to our unitholders of record as of February 1. Our distribution coverage continues to remain strong at 2.6x based on our trailing 12-month distributable cash flow at the end of the quarter. Looking ahead, while weather at the beginning of this year's heating season was unseasonably warm, particularly in the month of December, much of the heating season is still ahead. In fact, weather in the early part of our fiscal second quarter has shifted to more seasonable and in many parts of the country, colder than normal temperatures. With the arrival of colder temperatures and increased heating demand, propane prices have started to rise, increasing more than 15% in just the past three weeks. Our people and our operating platform are extremely well positioned to respond to the increasing customer demand while adhering to the highest standards for safety, including our continuing protocols associated with COVID-19. I'm very proud of how our people have continued to be resilient in the face of the ongoing challenges from the pandemic, whether in their personal lives or as a result of changes in how we operate. They remain dedicated to providing outstanding service to our customers and local communities, especially when they need us most. On the strategic front, we continue to make progress, along with our minority-owned subsidiary, Oberon Fuels, toward the commercialization of low-carbon renewable dimethyl ether which, as a blend with propane, will significantly reduce it's carbon intensity. Our initial focus is to offer the blended product in the forklift…

Certainly. With that we will begin with the question-and-answer session. And the first question will come from Ned Baramov with Wells Fargo. Please go ahead.

Hi, good morning. Thanks for taking the questions.

Good morning.

Could you provide more details on the acquisition of properties in new markets that you noted in your prepared remarks, Mike? And more specifically, do you anticipate additional spending in these areas?

So we've talked a lot about not only being somewhat active in the propane M&A market but even more importantly, identifying very strategic markets across the United States, where we may not have a big enough presence or maybe we don't have a presence at all, that's just outside of our current delivery radius but that has experienced strategic growth opportunities because of maybe population migration or just changing behaviors in that particular market, where we believe that our service capability belongs in that market to serve the customers. And so we have a number of greenfield expansions across many different parts of the country. And the acquisitions of properties was to obviously build out the infrastructure to support those local markets with storage and a depot to house our trucks and people that are going to go after those new markets. As far as future spending, most of the spending for the active greenfields that we have going on right now is pretty much behind us in terms of buying up properties and the necessary assets to get started in those markets. From here, the cost is really just getting out there and marketing the great Suburban Propane brand to those markets.

Got it. That's helpful. And then second question, could you talk about inflationary effects on your combined OpEx and SG&A? And do you expect additional increases for the remainder of fiscal 2022?

Well, certainly, there's no shortage of publicity on the impact that driver shortages is having across any business that requires CDL drivers like our business. In fact, I was driving in this morning and the New Jersey Transit bus had a drive for us with a $6,000 signing bonus. So it's a bit of a sign of just how competitive the landscape is for qualified drivers. So that's obviously been a bit of an inflationary impact for us. We've had some of the highest increases in compensation than we've experienced in several years which is great. And we're able to retain and, in a lot of cases, attract good quality drivers. But it is at a bigger expense. And everything else, from steel for our tanks and the average cost of buying new trucks, is all up, whether it's because of supply chain challenges or just because of the price of the base commodities, like steel. The cost of buying those products is up. And then obviously, it's been well publicized, fuel costs, gasoline and diesel which we need to get our trucks on the road, is up significantly. So those are some of the sort of more meaningful inflationary impacts that we're experiencing, some of which will be permanently embedded in our cost structure. Others will depend on how things settle out over the coming months or year. And -- but the good thing is, is that I think as you've seen, we've done a great job of managing the business, both from the perspective of keeping our operating platform pretty lean. We've always gotten credit for being one of the most efficient operators in the industry. And I think in an environment like this, our nimble platform is able to continue to operate while others may struggle in this kind of an environment. And as well as our selling price management, we've done a great job in a very, very challenging commodity environment. And a very competitive environment, as the propane industry always is, we've done a great job of maintaining a good focus on our selling price management to be able to ensure that our margins are appropriately at a point to cover the increase in cost of the business.

Great. Thanks for all the color. That's all I had.

Great. Thank you, Ned.

And we do have a question and that comes from James Spicer with TD Securities. Please go ahead.

Hi, good morning. You guys have done a great job of reducing leverage over the past year or so. Can you just remind us what your target is on the leverage side and how you think about priorities between continued deleveraging versus investments back in the business versus dividend increases?

So our stated goal is to get our leverage metric down into the mid-3x. We ended fiscal 2021 just under 4x. With the increased borrowings for working capital in the first quarter, that ticked up slightly to just over 4x. As we get out of the peak working capital, we'll be back down below 4x as the year progresses. And with our operating platform and the earnings potential of the business, we're going to be able to generate anywhere from $70 million to $100 million of excess cash flow. On that, we'll determine on the best use of that cash based on what opportunities are available to us. Obviously, we have a goal to continue to invest in renewable energy technologies and we're very active right now and seeking different opportunities in different sectors of renewable energy, that some of them may or may not pan out. But we're very active and educating ourselves on the different sectors within renewable. And if some of those opportunities manifest themselves, then we have the flexibility of -- and the benefit, frankly, of having excess cash flow to be able to fund acquisitions without the need to borrow, perhaps. And then to the extent that we don't invest in those types of acquisitions, or propane acquisitions, then whatever excess cash flow is available will go towards reducing debt to get closer to our goal. And certainly, as we grow the business with some of the investments that we're making in interesting new technologies, it will give us more opportunity to generate incremental cash flow down the road that will be available for raising distributions. Obviously, we know we're here to create value for our unitholders. We can do that in a number of ways, including strengthening the balance sheet, positioning ourselves to be very strategic in how we deploy capital towards our strategic goals of building out our renewable platform, while also continuing to generate excess cash flow in the propane business. and growing the propane business, frankly. So we're focused on all tenets of that. And as we execute, we'll have more opportunity to continue to look at the distribution policy.

Okay, great. That's very helpful. And just one more, if I could. I know your 2027 notes are callable in March, have you guys thought at all about the timing on refinancing them?

Yes. I mean, if you look at our history, we've always been pretty active with refinancing the bonds at the appropriate time. So it's something that we'll continue to look at but we certainly are not going to foreshadow when we are going to possibly do that.

Yes, understand. Thanks very much.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Mike Stivala for any closing remarks.

Great. Thank you, Chad and thank you all for joining us again. I hope you all stay safe and warm and we look forward to talking with you again after our second quarter earnings in early May. So, thank you, again. I appreciate your time.

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