K. For the fiscal year ended September 28, 2024, and Form 10-Q for the period ended December 28, 2024, which will be filed by the end of business today, contain additional disclosure 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. The Form 8-Ks will be available through a link in the Investor Relations section of our website. At this time, I will turn the call over to Michael A. Stivala for some opening remarks. Mike?

Thanks, Davin, and good morning. Thank you all for joining us today. We are pleased to report another solid quarter despite several challenging conditions. Adjusted EBITDA for our first quarter of fiscal 2025 was $75.3 million, essentially flat to the prior year first quarter. Propane revenues for the quarter were marginally lower than the prior year first quarter as strong demand in our Southeast operations in the aftermath of hurricanes Helene and Milton, combined with the benefit of incremental volumes from our acquisition of a well-run propane business in the Southwest territory, which we closed in November 2024, were able to substantially offset the impacts of widespread unseasonably warm weather, especially in the month of November, and a less active crop drying season. Our field operations have done an excellent job managing selling prices in a higher commodity price environment and are leveraging our efficient operating model to help manage costs. As I will comment further in my closing remarks, colder temperatures arrived toward the end of December and carried into January 2025, creating strong momentum into the heart of the heating season. Our operations personnel are very well prepared to serve the increased demand from our customers during a period of sustained colder temperatures that have gripped much of the country in the early part of our fiscal second quarter. In our renewable natural gas operation, we completed an extended and planned shutdown of our anaerobic digester facility in Stanfield, Arizona, for routine maintenance and regulatory compliance upgrades. As a result, RNG injection for the quarter was lower than the prior year first quarter. The upgrades and enhancements completed during the plant shutdown will improve the operating performance and resiliency of the facility, enhance the quality of feedstock coming into the facility, and are expected to result in increased…

Thanks, Mike, and good morning, everyone. To be consistent with previous reporting, as I discuss our first quarter results, I may exclude the impact of unrealized mark-to-market adjustments on our commodity hedges, which resulted in an unrealized gain of $3.6 million for the first quarter of fiscal 2025 compared to an unrealized loss of $10.8 million in the prior year first quarter. Excluding these non-cash items, as well as non-cash equity and losses, and impairment charges related to our unconsolidated subsidiaries accounted for under the equity method, net income for the first quarter was $38 million or $0.59 per common unit, compared to net income of $40.4 million or $0.63 per common unit in the prior year. Adjusted EBITDA for the first quarter was $75.3 million, essentially flat to the prior year. Retail propane gallons sold of 105.7 million gallons were 0.8% lower than the prior year, primarily due to lower heat-related demand from widespread unseasonably warm temperatures, especially during the month of November, and lower agricultural demand for crop drying, which was almost entirely offset by an increase in demand in our Southeast region following Hurricane Helene and Milton, and the positive contributions from our customer base growth and retention initiatives, including the strategic propane acquisition in the Southwest completed in November 2024. With respect to the weather, average temperatures during the first quarter of fiscal 2025 were 7% warmer than normal and flat to the prior year first quarter. In the month of November 2024, average temperatures were 15% warmer than normal and 17% warmer than November 2023, making it one of the top five warmest Novembers on record. From a commodity perspective, average wholesale propane prices for fiscal 2025 first quarter of $0.77 per gallon basis Mont Belvieu increased 15% compared to the prior year first quarter.…

Total capital spending for the quarter of $23.8 million was $12.7 million higher than the prior year first quarter, primarily due to higher growth CapEx associated with the construction of the gas upgrade equipment at our Columbus, Ohio facility, and ongoing construction of the anaerobic digester facility in New York. As I mentioned on our last call, capital spending for fiscal 2025 is expected to range between $40 million and $45 million for propane operations and between $35 million to $45 million for our RNG projects. During the quarter, we also closed on the acquisition of a propane business with operations in New Mexico and Arizona for total consideration of $53 million inclusive of future non-compete payments. Turning to our balance sheet, given the seasonal nature of our business, we typically borrow under our revolving credit facility during the first quarter to help fund a portion of our seasonal working capital needs. During the first quarter, we borrowed $91.7 million under our revolver to fund the propane acquisition as well as to fund seasonal working capital and growth capital expenditures.

Our consolidated leverage ratio for the trailing twelve-month period ended December 2024 was 4.99 times. Although the leverage metric is elevated relative to our historical levels, we remain well within our debt covenant requirement of 5.75 times. We expect our leverage metric to benefit from increased earnings as we complete our growth projects, as the RNG platform reaches runway capacity with the monetization of production tax credits under the IRA. Given the seasonality of our business, working capital needs typically peak towards the end of the heating season, late February or early March time frame, after which we expect to generate excess cash flows. We will continue to remain focused on utilizing excess cash flows to strengthen the balance sheet as opportunities arise to fund strategic growth. We have more than ample borrowing capacity under our revolver to fund our remaining working capital needs for the heating season as well as to support our capital expansion plans and ongoing strategic growth initiatives. Back to you, Mike.

Thanks, Mike. As announced on January 23, our board of supervisors declared our quarterly distribution of $0.325 per common unit in respect of our first quarter of fiscal 2025, and that equates to an annualized rate of $1.30 per common unit. The quarterly distribution will be paid on February 11 to unitholders of record as of February 4. Our distribution coverage continues to remain strong at 1.87 times for the trailing twelve-month period ended December 2024. I would like to comment next on our long-term strategic growth plans. Our long-term strategic growth initiatives continue to focus on fostering the growth of our core propane business and growing our renewable energy platform through strategic investments in renewable energy businesses and assets that will help position our business for the long term as the country continues to evolve to a low-carbon economy, all while maintaining balance sheet flexibility. Over the past five years, the strong free cash flow that our business generates, supplemented by borrowings as needed, has allowed us to fund strategic acquisitions in support of our core propane business, which resulted in the successful acquisition and integration of nine propane businesses in strategic markets, investing more than $125 million in those efforts. As well as our continued execution of our organic growth plans by providing exceptional customer service, driving our growth and retention initiatives, and fostering new market expansions in propane. We have made investments in renewable fuels, hydrogen, and renewable natural gas, helping to pave the way for us to have a scaled presence in the evolving low-carbon renewable energy landscape with diversified revenue streams, investing approximately $320 million in support of those efforts over the past five years. And over that same span of years, we returned a total of $475 million to unitholders in the form of…

Yes. Thank you.

Ladies and gentlemen, we will now begin the question and answer session. Please press the star followed by the one on your touch-tone phone. Questions will be taken in the order of receipt. If you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please select the handset before pressing any key. Once again, that is star one should you wish to ask a question. Your question is from Christopher Jeffrey from Mizuho Securities. Your line is now open.

Hi. Good morning. Thanks for taking my question. Maybe, Mike, just to start off on that colder weather we have been seeing that you talked about at the end, just kind of curious how the system is handling it operationally, you know, reaching all the inbounds, and then maybe you have also talked about the kind of quicker appreciation in propane prices we have seen over the last month, so just how the pricing aspect of that is and the unit margins. Thanks.

Sure. Great. Thanks, Chris. Thanks for the interest. Look, our platform is built for this kind of weather. We have been so ready for this. We have not had sustained periods of cold weather where you have weeks upon weeks upon weeks of good solid, what I would call, normal, if not slightly colder than normal in certain parts of the country. Weather. You know, we have always had for the past decade, frankly, we have had lots of fits and starts. And you know, this kind of weather is certainly what Suburban Propane is built for, and I am really proud of the people at Suburban Propane for how they are stepping up in some challenging conditions. You know, this morning is a perfect example. There is a lot of snow and ice on the road, and we are out there taking care of our customers, and all I can ask of our people is to continue to be safe, which is something we stress at all times. So, you know, this is the kind of weather that we have been built for. Our customers can rely on us, and we are doing a heck of a job with the increased demand. As far as pricing goes, you know, with weather comes higher prices. Right? You are going to see that. See it in the natural gas market. You also see it in the propane market. And so you know, that is something that we have to continue to stay ahead of, is to make sure that as pricing moves as dramatically as it can at times, our field has to do a good job of making sure that we are managing our selling prices accordingly. And I am very pleased to say that we are doing a heck of a job with that. And you know, we have had some volatility over the past couple of weeks, sort of range-bound in the $0.85 to $0.90 basis Bellevue range right now, but you know, we could certainly expect to see prices move one way or the other depending on both weather and what happens in broader commodity markets.

Great. Thank you. And then maybe just coming back to the conversation around leverage, you know, as you kind of mentioned, a little bit elevated for this quarter and the last few, and I think Mike spoke about some of the drivers on the growth end. So maybe just if you could expand on those in terms of timing when you see the credits kind of coming through, and then also just if there are any additional thoughts on maybe the debt side of it as far as addressing that or doing something more with the rest of the capital stack.

Yeah. So first of all, we have plenty of liquidity. That is not at all an issue. Second of all, when you look at our leverage metric at the end of December, it is a rolling twelve-month metric. So it has got some of last year's challenging heating season and the lower earnings that we experienced in the second quarter of last year built into that metric. And obviously, we have been deploying capital on growing the renewable natural gas business, particularly the assets in Upstate New York and Columbus, which are not yet generating real earnings. So as those come online towards the tail end of this year, those will start to naturally bring leverage down. And as far as the production tax credits, we are already earning them in our Stanfield location, effective January 1. You know, the guidance came out very, very late in the calendar 2024 and into the early part of January, but we have been studying and paying very close attention to that law since it was put out there. The facility in Stanfield, Arizona, produces RNG at a very deep negative CI score, and as a result, it will generate the sort of the high end of production tax credits, and they will be earned. We are already earning them from January 1 forward. So, you know, that will be a good contributor both in the second quarter as well as throughout the rest of the year. We are also working towards the efforts to monetize those to bring in real cash as we monetize those PTCs. So that will help us bring in incremental cash flow to the company as well. So, you know, it is a lot of noise, Chris, to be honest. But we have done a lot to invest…

Great. Thank you, Mike. Appreciate the time today.

Alright, Chris. Thanks.

Thank you. Once again, ladies and gentlemen,

Well, great, Jenny. Looks like we are all set. I appreciate your help today. Again, appreciate everybody's attention and support. We look forward to talking to you at the end of our second quarter earnings in the May time frame.