Good morning and welcome to Suburban Propane Partners' first-quarter earnings conference call. [Operator Instructions]. Please 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.

Thanks, Jason. Good morning, everyone. Thank you for joining us this morning for our fiscal 2024 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 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 conclude 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 condition and results of operations. These forward-looking statements involve certain risks 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 its behalf are expressly qualified in their entirety by such cautionary statements. Our annual report on Form 10-K for the fiscal year ended September 30, 2023, and Form 10-Q for the period ended December 30, 2023, which will be filed by the end of business today, contain additional disclosures regarding forward-looking statements and risk factors. 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. 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, and good morning, and thank you all for joining us today. The first quarter of fiscal 2024 was dominated by widespread unseasonably warm weather, particularly during the month of December, which represents the most critical month of the quarter for heat-related demand. However, continued improvements in our customer base growth and retention initiatives, combined with active crop drying demand in the agricultural sector helped to mitigate the adverse impact of the warmer weather on volumes. Propane volumes for the first quarter of fiscal 2024 were down just 2% compared to the prior year first quarter, despite average heating degree days that were 9% warmer than normal and 6% warmer than the prior year, and with December reflecting 10% warmer weather. Our field operations continue to do an excellent job managing selling prices in a lower, but at times volatile commodity price environment and are leveraging our efficient operating model to help manage expenses. For the quarter, adjusted EBITDA was $75.2 million, a decrease of $14.8 million from the prior year. In our renewable natural gas operations, we acquired at the beginning of the second quarter of last year. We have taken a number of steps to integrate the business and install the kind of operating disciplines, efficiencies, safety practices, and leadership that we have developed over the decades of operating our propane business to be recognized as best-in-class operators. To highlight some of our achievements since taking ownership of these assets. We terminated the third-party operating contracts at both the Stanfield, Arizona and Columbus, Ohio facilities. These locations are now staffed with employees of our Suburban Renewable Energy subsidiary, including this, the facilities manager for the Stanfield location, who's now overseeing all of our RNG facilities. We exited the management services agreement that was supported by the seller…

Thanks, Mike, and good morning, everyone. To be consistent with previous reporting. As I discuss our first quarter results, I am excluding the impact of unrealized mark-to-market adjustments on our commodity hedges, which resulted in an unrealized loss of $10.8 million for the first quarter compared to an unrealized loss of $13.7 million in the prior year first quarter. Excluding these noncash items, as well as the non-cash equity and earnings of unconsolidated subsidiaries accounted for under the equity method and acquisition-related costs in the prior year, net income for the first quarter was $40.4 million or $0.63 per common unit prior to net income of $60.3 million or $0.95 per common unit in the prior year. Adjusted EBITDA for the first quarter was $75.2 million compared to $90 million in the prior year. As Mike mentioned, our earnings for the quarter were impacted by lower heat-related demand resulting from a warmer weather pattern and continued inflationary pressures on our expenses. But benefited from favorable customer base activity, resulting from organic growth in some of our greenfield expansion efforts and contributions from the RNG production facilities that we acquired at the beginning of the prior year second quarter. Retail propane gallons sold 106.5 million gallons, were 2% lower than the prior year first quarter, primarily due to the impact of inconsistent and widespread unseasonably warm temperatures on heat-related demand, partially offset by higher agricultural volumes resulting from strong crop drying demand in early part of the quarter and from solid customer base management. With respect to the weather. Average temperatures during the first quarter were 9% warmer than normal and 6% warmer than the prior year first quarter. Average temperatures for the month of December, which is the most critical month for heat-related demand in the first quarter, was 10%…

Thanks, Mike. As announced on January 25, our Board of Supervisors declared our quarterly distribution of $0.325 per common unit. In respect of our first quarter of fiscal 2024, that equates to an annualized rate of $1.30 per common unit. Our quarterly distribution will be paid on February 13 to our unitholders of record as of February 6. Our distribution coverage continues to remain healthy at 2.03 times for the trailing 12-month period ended December 2023. Looking ahead to the rest of fiscal 2024, as I stated earlier, there's still a significant amount of the heating season ahead. And we are well positioned both operationally and financially to adapt as demand dictates. In fact, we experienced a blast of cold weather across our operating footprint during the last two weeks of January, driving heat-related demand and solid volume performance for the month. In our RNG operations, with the investments we have made in Stanfield to improve efficiencies within the manure handling and processing activities, we are starting to see increasing production levels. While overall revenues have been influenced by lower benchmark natural gas prices and recent declines in California LCFS values. In addition, we are ramping up our internal resources to support the growth of our RNG platform and focusing on developing long-term offtake contracts in the voluntary RNG market, particularly for when Columbus and Adirondack farms facilities begin producing RNG. As we have stated in previous quarters, our long-term strategic growth plan is to continue to foster the growth of our core propane business while making strategic investments in lower carbon renewable energy alternatives. We are committed to positioning Suburban Propane for long-term growth and sustainability, enhancing the career development opportunities for our valued employees and creating long-term value for all of our key and stakeholders. The foundation of our ongoing success continues to be rooted in our more than 3,200 dedicated employees at Suburban Propane and their hard work and unwavering focus on the safety and comfort of our customers and the communities we serve. I want to take a moment to thank them all for their efforts. Especially in some of the challenging conditions they have faced in the latter part of January. And as always, we appreciate your support and attention today and would now like to open the call up for questions. And Jason, if you could help us with that.

[Operator Instructions]. Our first question comes from Gabe Moreen from Mizuho.

Good morning, everyone. [Technical Difficulty] just a question around SPH units have gotten included in some MLP indices, clearly it seems to have had a benefit. I'm just want to -- curious about how you're thinking about whether that matters to your cost of capital going forward? Specifically, as it comes to evaluating acquisitions, doing organic investments, or even de-levering the balance sheet from here. So I'm just curious if that changes your thinking at all?

That's a great question, Gabe. I mean obviously, we're happy about the performance of our units. We're happy to be included in the index that happened in mid-December. And certainly, had an immediate impact on the trading activity of our units. And we also have seen some additional run-up as of late. And so we're certainly pleased with that. I think it's also good recognition of the strategic initiatives and the pivoting of our business that we're doing with this great propane operation that we run really well. And now positioned the company for long term success in the renewable energy space. So as we think about funding future growth, we always keep in mind a fair -- we try to be fairly balanced in the way we attempt to fund growth. And certainly, with our common units at a much better cost of capital than they were, say, a few months ago. It certainly provides added flexibility or opportunities that we -- that perhaps weren't as obvious before. But at this point, I don't see the need for us to access additional capital, unless something more significant comes our way. With respect to an acquisition that we think adds to our long-term growth strategy, we can continue to bring the leverage down naturally as we generate excess cash flow in the business and as the earnings of the RNG platform continue to ramp up to a more run rate capacity over time. So nothing just -- I would say nothing to just try to repair the balance sheet, because we could do that on our own.

Thanks, Mike. I appreciate that. It certainly seems like you have a lot on your plate from an RNG standpoint at the moment. And it sounds like you're evaluating additional dairy farms and things like that. But I'm just curious, are you still also potentially interested in or evaluating propane deals at this point? Or is really your focus at this point from a growth standpoint, pivoted entirely to RNG and hydrogen in your transition platforms I guess?

No, we are fully committed to propane Gabe. And we have -- actually, we have for this time of year, we have a decent pipeline of propane opportunities that we're pretty excited about. So no, we are not totally pivoting. We're balanced. We have a great propane business that we believe, given the clean qualities of propane, it's going to have a permanent position in energy to serve the needs of communities' long term. And we intend to be the relied upon energy provider to our customers and communities for the long term. So no. We are very much focused on our core propane business. And also, being strategic to add to the renewables platform.

And then if I could just ask one last, one around, you mentioned like the bilateral contracts that you hope to sign for some of your RNG assets. Can you maybe give us more color on how those conversations are going, potential timing, particularly in light of I think maybe some of the permitting issues? I'm just curious about how that stands at the moment?

Yeah, we're in the early stages of that Gabe. And actually, I think the voluntary market for RNG is also really in the early stages. And so it's going to take time. We have time, given the construction that needs to happen at both Columbus and Adirondack. The Stanfield assets already have a long-term contract that is really based on natural gas and environmental attribute prices. As the voluntary market develops, we will also take a look at whether it makes more sense to transfer that into a more fixed price environment. But for now, we have an outlet for all the RNG that we produce. We will have an outlet for the RNG we start producing in Columbus and Adirondack. But we believe that the voluntary market needs to develop and will develop. And we thought we intend to be part of that process to drive that.

Great. Thanks, Mike.

Sure Gabe, thanks.

[Operator Instructions] Our next question comes Ned Baramov from Wells Fargo.

Hey, good morning. Thanks for taking the questions.

Hi Ned.

Could you maybe talk about -- hey. Could you talk about the cadence of CapEx spending this year? And whether the previously communicated $25 million to $35 million CapEx range for RNG is still reasonable, given some of the delays you noted for the Adirondack facility?

Yes, good morning, Ned. At this time, I would say yes. The $25 million to $35 million is still a fair estimate, although it's looking like we will probably come in towards the lower end of that range, but we're still progressing as planned. And as things develop in the future, quarterly reports we'll give an additional update. But at this point, we're still holding firm on the $25 million to $35 million estimate.

Got it. Thanks for them. And then a question on the Equilibrium assets, and more specifically the likelihood of paying an earn-out payment in fiscal 2026. I believe the purchase agreement had a clause with respect to the achievement of certain EBITDA thresholds, which trigger the potential additional payment to the seller. So I guess based on how the assets have performed to date and given the ongoing work on the Columbus facility, do you anticipate that Suburban will be paying an earn-out in fiscal 2026?

We have accrued for the potential estimated payout for that, and we continue to monitor that quarterly. And at this point in time, we have not made any adjustments to the reserves that we have established. But it is something that we monitor quarterly. And at any point in time when we do trop that reserve, we will report on it and communicate it.

Understood. And then one last one, if I may. Can you maybe elaborate on your comment that you have a full pipeline of propane M&A opportunities? More specifically, are these mom-and-pop opportunities across your footprint or are these larger packages?

No, that is still mom-and-pop type opportunities Ned, in very strategic markets for us. And I think what my comment was really about the timing. We don't typically see a lot of activity in this quarter because we're in the middle of the heating season. But we've had a couple of these that we've had in our pipeline for a bit of time, and I think we're feeling good about how those are developing. So it's really more bolt-on small strategic acquisitions.

Understood. That's all I had, thanks for the time.

Great. Thanks, Ned.

[Operator Instructions]. There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Michael Stivala for any closing remarks.

Great. Thanks, Jason, and thank you all again for joining us today. We look forward to speaking with you at the end of our second quarter results. And please stay safe and warm as the heating season progresses.

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