Suburban Propane Partners, L.P.

Good morning, ladies and gentlemen, and welcome to the Suburban Propane Partners Fourth Quarter and Fiscal Year-End Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 14, 2024. I would now like to turn the conference over to Devin D'Ambrosio, Vice President, And Treasurer, please go ahead.

Thank you, Emily. Good morning, everyone. Thank you for joining us this morning for our fiscal 2024 fourth quarter and full year earnings conference call. Joining me this morning are Mike Stavala, our President and Chief Executive Officer, Mike Coogland, Chief Financial Officer, Steve Boyd, Chief Operating Officer, and Alex Centeno, our Senior Vice President of Operations. This morning, we will review our fourth quarter 2024 fourth quarter and full year financial results, along with our current outlook for the business. Once we've concluded our prepared remarks, we will open the session to question. 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've 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 28, 2024, which contains additional disclosure regarding forward-looking statements and risk factors, will be filed on or about November 27. Once filed, copies may be obtained by contact in the partnership or the SEC. Third non-GAAP measures will be discussed on this call. We've 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 time, I will turn the call over to Mike Stavala for some opening remarks. Mike?

Thanks, Davin, and thank you all for joining us this morning. Before I discuss our performance and accomplishments for fiscal 2024, I'd like to take a moment to comment on the two hurricanes that hit the Southeast Territory in late September and early October within two weeks of each other. Hurricanes Helene and Milton delivered historic devastation and sadly significant losses of life and homes, especially in Western North Carolina where we have a very strong market presence. In the face of some horrific operating conditions and in many instances personal challenges at home, The dedication of our safety personnel, our drivers, service technicians, customer service reps, and local management teams was nothing short of remarkable. I'm so proud of how our employees executed our emergency preparedness and response plan to assess the situation, secure our assets, and quickly deploy to serve our customers and local communities in the immediate aftermath of the storms. I'm also proud of the area leadership team for the thoughtful preparation in advance of the storms to relocate all of our vehicles to higher ground, which helped protect our fleet and prepare us to serve our customers when it was safe to do so. We also had numerous drivers and technicians from around the country volunteer to travel into the affected areas to help our local teams meet the increased demand for propane deliveries and related service work. The dedication of our people is reflective of our culture, and is a true testament to the resiliency of our operating model, our commitment to excellence, and our unwavering focus on serving our customers when they need us most. We also work closely with our long-term partner, the American Red Cross, to support their disaster relief efforts in Florida and North Carolina. While the devastation from these hurricanes was unthinkable, and our hearts certainly go out to those that lost loved ones or experienced major damage, the efforts of our teams have truly been inspiring, and I want to thank everyone for their incredible work. And on one final note, the increased demand for propane in the aftermath of these storms is recognition of the resilient power of propane as a versatile, portable, clean, and truly on-demand energy source that is relied upon to help communities recover across critical applications, including backup power generation, heating local shelters, powering vehicles and equipment, and supporting local food distribution to communities in need. Now looking at our performance for fiscal 2024, which ended at the end of September, the past year was categorized by unseasonably warm temperatures during the peak heating months that continued into the third quarter with periods of extreme heat in certain parts of the country. While the warm weather negatively impacted customer demand for heating purposes, we were once again able to leverage our experience in managing our business through a challenging heating season, and our operating personnel did an outstanding job of managing the things they can control, namely keeping safety as their highest priority, providing exceptional service to our customers, managing selling prices and controlling expenses. In addition, benefits of our customer-based growth and retention initiatives, particularly in our counter-seasonal customer segments over the past several years, combined with recent high-quality propane acquisitions, contributed to net customer-based growth that helped offset some of the shortfall in heat-related demand. As a result, volumes for the fiscal 2024 were down just 3% compared to the prior year when you exclude the impact of the additional week of operations in fiscal 2023. Adjusted EBITDA for fiscal 2024 was $250 million compared to $275 million in the prior year. Notwithstanding the unfavorable weather and the lower earnings compared to the prior year, we had a number of key accomplishments in fiscal 2024 in support of our long-term strategic growth initiatives. I'll highlight a few. We deployed capital to enhance the efficiency and operating performance of our RNG production facility in Stanfield, Arizona, driving a culture of operational excellence and safety in the RNG platform that we are known for within our propane business. Our efforts have resulted in increased RNG production levels, reaching a peak daily injection of 1,535 MMBTUs. RNG injection for fiscal 2024 overall averaged 1,049 MMBTUs per day, representing an increase of 20% compared to the prior year. We also advanced our capital projects to install RNG upgrade equipment at our Columbus, Ohio facility, and engineering and construction activities for our anaerobic digester in upstate New York. Although we experienced some minor delays with air permitting and zoning, we continue to expect both facilities to be fully operational in the second half of 2025. Once all three RNG facilities are operating at run rate capacity, we expect to be generating revenues from tipping fees, RNG sales on approximately 850,000 MMBTUs per year, environmental attribute credits, and fertilizer sales. In addition, assuming the provisions of the Inflation Reduction Act remain in place under the new administration in Washington, our RNG sales will be eligible for production tax credits starting in January 2025, and the construction costs for the Upstate New York facility will be partially offset by investment tax credits. We also continue to support our unconsolidated subsidiaries Oberon Fuels and Independence Hydrogen as they make progress towards scaling their platforms. We are the only retailer in the United States that is delivering low carbon propane plus RDME, which we are currently delivering at a 4% blend level to our forklift customers in Southern California. And we continue to test forklift engines at a higher blend level to further lower the carbon footprint. In our core propane business, we acquired and successfully integrated three well-run propane businesses in strategic markets in Florida, Nevada, and Texas. for total consideration of approximately $14 million. Just last week, we closed on a larger propane acquisition to expand our service territories in New Mexico and Arizona, investing $53 million, inclusive of future non-compete payments, to acquire more than 14,000 new customers and welcoming 65 employees into the suburban propane family. We also continue to foster the growth of our greenfield market expansion efforts and increased the number of active expansions in different parts of the country from 9 in fiscal 2023 to 18 in fiscal 2024. We continue to focus on our renewable energy platform, part of which is to offer a lower carbon renewable propane alternative for customers to maintain their existing propane infrastructure while lowering their overall carbon footprint. We secured additional contracts for incremental renewable propane gallons as they come online in 2025. And we also have a number of exciting technology initiatives in our propane business to drive additional operating efficiencies and further enhance the overall customer experience. With the excess cashflow generating capacity that our core propane business provides, we were able to fund our capital projects and the investments in strategic propane acquisitions with a modest increase in debt of $19 million. Finally, our efforts on a number of fronts received tremendous recognition in 2024. We were recognized as a top company for women to work in transportation by the Women in Trucking Association for our culture that fosters gender diversity and career development opportunities. For the second year in a row, we were named one of the best employers for veterans for 2024 by Military Times, in recognition of our commitment to supporting service members, veterans, and their families. For the third year in a row, we were one of 10 finalists in the Energy Transition Liquid Gases category of the S&P Global Energy Awards for our strategic investments in renewable energy. And our Suburban Cares platform received several prestigious awards, including as a finalist in the Corporate Impact category of the S&P Global Energy Awards for the fourth time in five years. So despite the challenges presented by unseasonably warm weather, we had a very successful fiscal 2024. We are executing on our long-term strategic growth plan to foster the growth of our core propane business while making strategic investments in the energy transition to lower carbon renewable energy alternatives. And we remain patient and disciplined in order to maintain a strong balance sheet. A little later, I will provide some closing remarks. However, at this point, let me turn it over to Mike Coogland, who will discuss our full year and fourth quarter results in more detail. Mike?