Ferrellgas Partners, L.P.

Good day, and thank you for standing by. Welcome to the Ferro Gas Partners second quarter fiscal 2024 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tamria Zertucci, Chief Executive Officer and President of Ferro Gas. Please go ahead.

Thank you, Lateef. Welcome to our second quarter fiscal 2024 earnings call. My name is Tamria Zertucci, Chief Executive Officer and President of Ferrell Gas. In the second quarter, we took advantage of our diverse customer base, meaning those non-weather dependent segments of our retail business. Also, new opportunities in the propane market and the counter seasonal Blue Rhino tank exchange business. We used our diverse core business to our advantage to offset the headwinds created by a warmer than normal Q2. I am very proud of our team and all they accomplished in the second quarter. Before I hand the call over to Mike, I want to share a few observations from the past several weeks. First, in February, I attended and spoke at the World Liquid Gas Association Innovation Summit. Over 125 attendees from across many countries gathered in Washington, D.C., we discussed the great opportunities in the propane industry. I was inspired by the innovation shared in that forum and Innovations that deliver on the strengths of propane, which, as you know, is a clean, portable, and affordable fuel. I also want to call attention to the true opportunity in the propane industry, and that is our people. The people that make up this amazing distribution network. I will always take the opportunity to point out that the U.S. has plenty of propane. And our industry has the best distribution system there is. The drivers that brave the elements, the landscape, the traffic, and more. They have built opportunities for propane that stand strong against other energy distribution networks. Remember, there are very few energy sources with a distribution network like ours. We have redundancies and a lack of single points of failure. Our energy is there when others might fail. We are a proud technology-enabled logistics company, and we deliver a great energy source. I will now turn the floor over to our Chief Financial Officer, Mike Cole, to go over the financial results for the quarter. Mike?

Thank you, Tamaria, and thank you for joining us on today's call. I'd like to remind everyone that some statements made during this call may be considered forward-looking and that various risk, uncertainties, and other factors could cause actual performance to differ materially from anticipated performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. These factors are discussed in our Form 10-K, filed on September 29, 2023, and other documents filed from time to time with the Securities and Exchange Commission. We undertake no obligation to publicly update any forward-looking statements. whether as a result of new information, future events, or otherwise, except as required by law. This call also includes various non-generally accepted accounting principles, financial measures. The disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures, are included in our filings with the Securities and Exchange Commission. Additionally, we note that the purpose of this call is to discuss the results of operations for the second fiscal quarter ended January 31st, 2024. Wholesale propane prices during the second fiscal quarter 2024 continue to be lower relative to prices in the prior year period. And this led to a decrease in our revenues and cost of sales. Revenues were $74.1 million lower, which was partially offset by a decrease of $70.2 million in cost of product as compared to the prior year period. As a result, gross profit decreased $3.9 million, or 1%, for the second fiscal quarter 2024 compared to the prior year period. Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at our two major supply points averaged 10.1% and 15.0% less in the second fiscal quarter of 2024 compared to the prior year period. As previously noted, these decreases impacted both the revenue and cost of product changes for the period. Margin per gallon for the second fiscal quarter 2024 increased 5 cents or 4% compared to the prior year period. A record warm December impacted our quarterly results as nearly every weather reporting site in the nation experienced above average monthly temperatures. Colder January weather partially offset the impact of warmer temperatures in November and December. Propane sales volumes during the second fiscal quarter 2024 decreased 5% or 13.6 million gallons compared to the prior year period. We recognize net earnings attributable to Ferro Gas Partners LP of $95.8 million and $98.1 million in the second fiscal quarters of 2024 and 2023, respectively. Operating expense as a percent of total revenue increased 13% for the second fiscal quarter. The $2.3 million or 1% increase in operating expense was primarily due to an increase of $2.6 million in vehicle costs related to vehicle repairs, maintenance, and other costs, including the refurbishment of trucks to support new customer growth in Blue Rhino and an increase of $0.6 million for tank installation costs, which was partially offset by a decrease of $1 million in fuel costs. Adjusted EBITDA, a non-GAAP financial measure, decreased by $9 million or 6% to $146.9 million in the second fiscal quarter compared to $155.9 million in the prior year quarter. The change was primarily due to the $3.9 million decrease in gross profit noted above And after adjusting for the $9 million decrease in legal fees and settlements related to non-core businesses, a $5.4 million increase in operating, general, and administrative expense. Of this $5.4 million increase, $2.3 million of the increase relates to operating expense, as noted above. with a remaining $3.1 million increase in general and administrative expense primarily attributable to our ongoing ERP system implementation and benefits expense. I'll now turn the call over to Tamria.