Suburban Propane Partners, L.P.

Good day and welcome to the Suburban Propane Partners' third fiscal quarter results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Davin D'Ambrosio, Vice President and Treasurer. Please go ahead, sir.

Thanks, Chuck. Good morning, everyone. Thank you for joining us this morning for our fiscal 2022 third quarter earnings conference call. Joining me this morning are Mike Stavall, our President and Chief Executive Officer, Mike Coogland, Chief Financial Officer and Chief Accounting Officer, and Steve Boyd, our Chief Operating Officer. This morning, we will review our third quarter financial results along with our current outlook of the business. Once we've 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 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 supplementary and forward-looking statements attributable to the partnership or persons acting on its behalf are expressed expressly qualified in their entirety by such cautionary statements. Our annual report on Form 10-K for the fiscal year ended September 25th, 2021, and Form 10-Q for the period ended June 25th, 2022, 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. Sir, 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 plead 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, we'll turn the call over to Mike Stavola for some opening remarks.

Mike? Thanks, Evan. Good morning, and thank you all for joining us today. In the face of many challenges in the broader economy creating headwinds for our business and the propane industry as a whole, we delivered strong operating performance and advanced several strategic growth initiatives in the third quarter, both in our base propane segment and with our recently launched renewable energy platform. Some of the operating challenges included high and volatile commodity prices driving customer conservation, and challenges managing price risk associated with inventories and future supply, tightness in the labor market, in particular for qualified CDL drivers and service technicians, creating hiring challenges and higher labor costs, inflationary factors increasing the cost of vehicles, tanks, diesel fuel, and many other operating costs, and the impact of overall inflation on the consumer, which is delaying collection efforts as customers are managing their household spending budgets. Our continued strong performance in the face of these challenges is a testament to our unique, flexible, and nimble business model, which has consistently set us apart from our peers. I'm extremely proud of our operating personnel who continue to do an outstanding job in safely meeting the needs of our customers and staying focused on our customer-based growth and retention initiatives while effectively managing selling prices, manpower levels, and expenses. Additionally, our supply and risk management teams continue to do a great job ensuring adequate supplies of inventory and managing price volatility through our risk management activities, which have supported our overall margin performance and ability to offset some of the inflationary factors. As a result, adjusted EBITDA for the third quarter was $29.2 million, an improvement of nearly $6 million compared to the prior year. With the improvement in earnings, we used excess cash flows to reduce debt by more than $43 million, bringing our consolidated leverage ratio down to 3.64 times from 3.96 times at the end of the prior year third quarter, and a continued improvement from the prior sequential quarter, which was 3.87 times. In addition to the improvement in earnings, we had a very active quarter on the strategic front as we continued to advance the build-out of our renewable energy platform in support of the country's ongoing energy transition towards a lower carbon future. Specifically, at the end of April, we had a ribbon-cutting ceremony at our customer service center located in Anaheim, California, as we launched the first-ever commercial sales of propane plus RDME, which combines the clean, versatile, and abundantly available propane with low-carbon benefits of renewable dimethyl ether which is produced by Oberon Fuels, our minority-owned subsidiary. We are now selling this new product to several of our forklift customers in Southern California. We also made additional investments in Oberon Fuels to support their efforts to accelerate the commercialization of propane plus RDME. In May, we announced a collaboration agreement with Iwatani Corporation of America, a wholly-owned subsidiary of Iwatani Corporation, Japan's largest distributor of propane and only fully integrated supplier of hydrogen. We will work together to help accelerate the adoption of propane plus RDME both here in the U.S. and in Japan, and to explore opportunities to advance investments in the hydrogen infrastructure in the United States. In June, we announced a new investment through our suburban renewables platform with an agreement reached with Adirondack Farms, a family-owned dairy farm, in upstate New York to construct, own, and operate an anaerobic digester system for the production of renewable natural gas from dairy cow manure. These strategic initiatives are on the heels of our $30 million investment for a 25% equity stake in Independence Hydrogen, which was announced at the end of the second quarter. Independence Hydrogen continues to make great strides in executing on their business plans toward the build-out of a hydrogen ecosystem. We also remain focused on the growth of our propane operations, and in July, subsequent to the end of the quarter, we completed an acquisition of a well-run propane business in northern New Mexico, which will expand our presence in this growing market and provide synergy opportunities to support our best-in-class propane operations. Therefore, as we have stated over the course of the past several years, we continue to utilize excess cash flow in a balanced way to make investments in our long-term strategic growth initiatives and to further strengthen our balance sheet. In a moment, I'll come back for some closing remarks and provide added color on our strategic initiatives. However, now I'll let Mike Coogan give you our third quarter results in more detail. Mike?