Ferrellgas Partners, L.P.

Good day and thank you for standing by. Welcome to the Ferrell Gas Partners third quarter fiscal 2024 earnings conference call. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you may send them via the ask a question tab on the webcast. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your speaker today, Tamria Zertucci. Please go ahead.

Good morning, my name is Tamria Zertucci, Chief Executive Officer and President of Feral Gas. I want to start by saying how proud I am of our more than 4,000 Feral Gas employees. Our experienced operations professionals, they planned well and they executed even better against the weather anomaly we experienced this quarter. They managed expenses in key areas of operations, including driving fleet expenses down by over 8% when compared to prior year. Regarding weather impact, we have taken positive steps over the last four years to create balance in our demand across the different customer segments of our business. Our focus has been on growing our weather-agnostic customer base by both customer type and geographic location. We have made great progress in the areas of tank exchange, autogas, and in our industrial commercial segments. However, the extended and unseasonably warm heating season negatively impacted the heating segments of our business. We experienced about 10% warmer temperatures across the dense, centrally geographic areas of our business. Additionally, we regretted seeing some longstanding businesses downsize their footprints and even close their doors. The effects of inflation did make a mark this quarter. But our hardworking account managers, they were able to redeploy some of the assets related to those closed businesses and other areas, allowing for a decrease in overall capital expenditure. Finally, I would like to again call out the hard work of all the employees of Ferrell Gas and the strong contributions that they make to this great industry. I will now turn the floor over to our Chief Financial Officer, Mike Cole, to go over our financial results for the quarter.

Thank you, Tamaria, and thank you all 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 risks, uncertainties, and other factors could cause actual performance to differ materially from anticipated. These factors are discussed in our Form 10-K, filed on September 29th, 2023 and other documents filed from time to time with the Securities and Exchange Commission. Additionally, we note that the purpose of this call is to discuss the results of operations for the third fiscal quarter ended April 30th, 2024. As Tamria commented, warm weather negatively impacted our financial results as heating degree days during the third fiscal quarter were 15.7 percent warmer than normal and 9.8 percent warmer than the prior year quarter. Record high temperatures across much of the United States drove an 11 percent decrease in gallons sold. Revenues were $71.6 million lower which was partially offset by a decrease of $52 million in cost of product as compared to the prior year period. As a result, gross profit decreased 7% for the third fiscal quarter 2024 compared to the prior year period. Margin per gallon for the third fiscal quarter 2024 increased 4% compared to the prior year period. The favorable increase was due to segment mix our Platinum Plus fixed cost program for residential customers, national account pricing improvements, and other cost dynamics. Operating income per gallon for the third fiscal quarter of 2024 decreased 10% compared to the prior year period, primarily due to the decrease in gross profit previously noted. We recognize net earnings attributable to FerroGas Partners LP of $52.8 million and $72.4 million in the third fiscal quarter of 2024 and 2023, respectively. Operating expense as a percent of total revenue increased 16% for the third fiscal quarter. The $3.2 million or 2% increase in operating expense was primarily due to a $2.6 million increase in personnel expense, which was comprised of a $5.2 million increase in medical claims paid, partially offset by a $2.6 million decrease in incentive accruals. Adjusted EBITDA, a non-GAAP financial measure, decreased by $21.6 million or 17% to $104 million in the third fiscal quarter compared to $125.6 million in the prior year quarter. The change was primarily due to the increase in gross profit noted above and warmer than normal weather. We also made a $99.9 million cash distribution on April 9, 2024, to Class B unit holders of record as of March 25, 2024. This brings our total Class B distributions paid to date to approximately $250 million. It is important to note that these distributions are discretionary and are made possible by the company's continued strong performance. Even after giving effect to these distributions, the company's cash balance at the end of the third quarter was $73.6 million. I will now turn the call back to Tamria.