Good morning, and welcome to the Suburban Propane Partners' Fiscal 2022 Full-Year and Fourth Quarter Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded. I would now like to turn the conference over to Davin D'Ambrosio, Vice President and Treasurer. Please go ahead, sir.

Thanks, Chad. Good morning. Thank you for joining us this morning for our fiscal 2022 fourth quarter and full-year 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 fiscal 2022 fourth quarter and full-year financial results, along with the current outlook for the business. Once we concluded our prepared remarks, we will open the session to questions. Our 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 conditions and results of operations. These forward-looking statements involve certain risk and uncertainties. We have 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 our earnings press release, which can be viewed on our website at suburbanpropane.com. All subsequent written and oral forward-looking statements attributable to the partnership or persons acting on behalf are expressly qualified in their entirety by such cautionary statements. Our annual report on Form 10-K for the fiscal year ended September 24, 2022, which contains additional disclosure regarding forward statements and risk factors will be filed on or above November 23. Once filed 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. The Form 8-K will be available through a link in the Investor Relations section of our website. At this point, I will turn the call over to Mike Stivala for some opening remarks. Mike?

Thanks, Davin. Thank you all for joining us, and good morning. Fiscal 2022 was another outstanding year for Suburban Propane as we delivered solid operating results with an increase in adjusted EBITDA of more than $15 million or 4.5% compared to the prior year. We also made meaningful progress on the execution of our long-term strategic growth initiatives with several investments to grow our renewable energy platform, and we continue to strengthen our balance sheet and improve our key financial metrics. Despite the continued challenges in the broader economy that are affecting virtually every industry, namely high commodity prices, inflation and labor shortages impacting recruitment efforts, our operating personnel continue to do an outstanding job managing selling prices, expenses and manpower while delivering exceptional service to our customers and the communities we serve. With the strong earnings, we utilized excess cash flow in a balanced manner to continue investing in the build-out of our renewable energy platform, supporting the growth of our core propane operations as well as to reduce debt by more than $42 million, bringing our total leverage metric down to 3.6x from 3.96x at the end of last year. On the strategic front, we took a number of steps to advance our Go Green with Suburban Propane corporate pillar, starting with the creation of our new subsidiary, Suburban Renewable Energy, to serve as the growth platform for our investments in innovative, renewable energy technologies and businesses. Specifically, during fiscal 2022, we announced the following strategic investments and collaborations. In March, we acquired a 25% equity stake in Independence Hydrogen, a veteran-owned and operating startup company developing a gaseous hydrogen ecosystem for a $30 million investment. We made additional investments in Oberon Fuels to support the commercialization of renewable dimethyl ether as a blend with propane, including our…

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. To be consistent with previous reporting, I'm excluding the impact of unrealized non-cash mark-to-market adjustments on our commodity hedges, which resulted in an unrealized loss of $27.9 million in fiscal 2022 compared to an unrealized gain of $43.1 million in the prior year. The unrealized loss on our commodity hedges for fiscal 2022 reflected the reversal of unrealized net gains at the end of the prior year as the majority of those unrealized net gains were realized during fiscal 2022, partially offset by unrealized gains on open positions as of September 2022. The contracts associated with the open commodity hedges at the end of fiscal 2022 are expected to mature on a weighted average basis over the course of the fiscal 2023 heating season and evaluation of those hedges is subject to change as commodity prices fluctuate. In addition to the unrealized adjustments on our commodity hedges, I'm also excluding the non-cash equity and earnings of Oberon Fuels and Independence Hydrogen which are unconsolidated subsidiaries accounted for under the equity method, and certain other non-cash charges in both years. We have included each of these items and the reconciliation of net income to adjusted EBITDA within the press release and our public filings. Excluding these items, net income for fiscal 2022 improved to $171.1 million or $2.71 per common unit compared to $101.9 million or $1.62 per common unit in the prior year. Adjusted EBITDA for fiscal 2022 increased $15.3 million or 5.6% to $291 million compared to $275.7 million in the prior year. As Mike mentioned, the improvement in earnings for the fiscal year was driven by several factors, but…

Thanks, Mike. As announced in our October 20 press release, our Board of Supervisors declared our quarterly distribution of $0.325 per common unit in respect of the fourth quarter of fiscal 2022. That equates to an annualized rate of $1.30 per common unit. The quarterly distribution was paid on November 8 to our unitholders of record as of November 1. With the strategic investments and partnerships that we have made over the past three years, we have begun to develop an interconnected portfolio of renewable energy assets that are focused on the distribution of renewable fuels, including renewable propane and Propane+rDME, as well as hydrogen and renewable natural gas and will support our long-term strategic growth objectives. These investments and partnerships allow us to leverage our logistics expertise as local distributors of energy, support the country's clean energy transition and position Suburban Propane for long-term growth and sustainability. In 2023, Suburban Propane will celebrate 95 years as a trusted supplier of energy to local communities across the nation. We have a long and proud history of being innovators and in adapting our business to changing circumstances. We will continue to focus on the investments we are making to support and grow our renewable energy platform. And to support the country's energy transition to a sustainable energy future, while also fostering the growth of our core propane operations to ensure that our business continues to navigate a pathway for long-term growth for the next 95 years. Finally, I want to thank the more than 3,100 employees of Suburban Propane for their efforts in helping make fiscal 2022 another outstanding year. Of course, I hope you and your families remain safe and healthy and wish everyone a very happy holiday season. We appreciate your support and attention and would now like to open the call up to questions. And Chad, if you could help us with that?

Certainly. We will now begin our question-and-answer session. [Operator Instructions] Thank you. And our first question will be from Ned Baramov with Wells Fargo. Please go ahead.

Hey, good morning. Thanks for taking the questions. The margin per gallon adjusted for mark-to-market of derivatives was higher than our forecast and higher than margins you’ve reported in prior years. I think in your prepared remarks, you noted price management is one of the drivers for the margin strength. Could you elaborate a little bit more on this? And maybe also touch on how your competitors are dealing with warmer weather and higher OpEx? Would you say that the industry in general or the industry as a whole is being more price disciplined in the current environment?

Well, I'll take the second question first, Ned. Absolutely, I think the environment that we're in right now with high commodity prices albeit they've come down a bit, but they're still relatively high in terms of historical context as well as the challenges with inflation and high steel costs, high cost for new vehicles, the fuel cost to get our trucks on the road, the challenges with labor that we referenced in our opening remarks, that is not unique to Suburban Propane, that's for sure. And I think the industry as a whole is experiencing the same challenges we are. So yes, we've definitely seen discipline in terms of pricing. I think when you're facing the kinds of inflationary challenges – we reported about 10% increase overall in operating and G&A expenses. That's something that we and the industry needs to continue to make sure that we're able to cover through good margin management, good selling price management. The volatility that we've experienced in the base commodity has certainly made it challenging to continue to manage selling prices and certainly, the pain that some of the consumers are experiencing given the economic situation in their own personal lives is – makes it challenging to make sure that we're pricing at a point where we don't drive too much conservation, but also make sure that we're doing a good job covering our own costs and the rising level of inflation. So I think that's really what you saw in the margin management. And to your first question, was just really good discipline on our part and our field management and managing selling prices, taking into consideration the market taking into consideration our consumers need to manage their own budgets, but also ensuring that we're covering the higher cost of doing business.

Thanks. Very helpful. And then could you maybe talk about the propane M&A market? Has there been a change in how you think about acquisitions, the multiples you're willing to pay for propane assets and maybe the asking prices you're seeing by potential sellers?

Yes. I think we're still very strategic in the way we look at propane M&A. We've been very selective in finding the most attractive markets where we're experiencing growth in our own platform and finding businesses close by that can help support acceleration of that growth in those markets. Obviously, we look for very well-run respective businesses in those markets. And so that's not going to change for Suburban Propane. As far as the broader market for M&A I think when you look at the rising interest rates and higher cost of capital, I think we would expect, and I think we are starting to see a little bit more discipline in the propane M&A market relative to multiples, just given the higher cost of capital. So I think that's something that I would expect to continue to see going into 2023.

Thanks for those. That's all I had.

Great. Thanks, Ned.

Thank you. [Operator Instructions] 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. Thanks, Chad. Appreciate the support. Thank you all. Again, a happy holiday season. We look forward to speaking with you in early February as we will be prepared to close out our first quarter of fiscal 2023. We are very excited about the prospects for 2023 and the position that we've placed Suburban Propane to be successful going forward. So thank you again for your support.

And thank you, sir. This concludes our question-and-answer session and our call. Thank you for attending today's presentation. You may now disconnect. Take care.