Ferrellgas Partners, L.P.

Good day, and thank you for standing by. Welcome to the Feral Gas Fourth Quarter 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 host today, Tamria Sertucci, President and CEO. Please go ahead.

Welcome to our Fourth Quarter Fiscal 2024 Earnings Call. The fourth fiscal quarter showcased our employee owners and their ability to manage and execute against our overall strategic initiatives. It is our people that are responsible for the wins we had this quarter and this year. Like last quarter, you will hear about our tank exchange business and the growth we have experienced due to the increase in overall locations. Our retail operations team was focused on fourth quarter seasonal prep for the next heating season, all while growing the commercial side of our business, especially in the auto gas segment. We grew in this fourth fiscal quarter as compared to prior year, so you will hear how we were able to do that through our focus on counter seasonal business opportunities. You will also hear about our emergency response support. Before, during, and after recent storms, our commitment to the communities we serve is clear, not only during normal business operations, but also during those times when weather events disrupt other energy sources. Propane has proven time and again to be available when other energy sources are not. Ferralgas is committed to propane and all the advantages it provides our customers. I am proud of our company, its people, and their focus on safety, our customers, and results. I will now turn the floor over to our Chief Financial Officer, Mike Cole, to go over the financial results for this quarter.

Thank you, Tamaria, and thank you all for joining us today. I would 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 performance. These factors are discussed in our Form 10-K, filed on September 27, 2024. 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 fourth fiscal quarter and full year ended July 31st, 2024. Unseasonably warm weather and higher medical insurance claims were the two biggest drivers impacting our fiscal 2024 EBITDA decrease. weather in fiscal 2024 was 10% warmer than normal and 4% warmer than fiscal 2023, which correlates with a 44.3 million or 5% decrease in gallons sold compared to the prior year. Additionally, we paid 11.3 million more in medical insurance claims compared to fiscal 2023. Although our business will always be impacted to an extent by weather, we are making progress in our efforts to become more weather agnostic. As the cost of medical claims continues to escalate, we strive to make health a priority for our employee owners through a wellness program which encourages preventative care. We also continually evaluate our medical plan, and we recently selected a top broker to help ensure plan performance. We continue to strategically focus on efforts to become more weather agnostic. These initiatives include investments in our Blue Rhino Tank Exchange brand on the wholesale side and targeting specific locations and customer types on the retail side. Strategic investments in our Blue Rhino Tank Exchange business reflect increases in EBITDA of 42% and 26% for the fourth fiscal quarter and fiscal 2024, respectively. We added over 6,000 tank exchange locations for a 10% increase compared to the prior year period. As with last quarter, we continued to see more business closings from the effects of inflation, which contributed to a decrease in retail customers in some areas of our national footprint, and these decreases were not fully offset by customer gains during the fiscal year. However, in our retail business, we did benefit from the opening of six locations in growing coastal regions and augmentation of our autogas customers, both of which are weather agnostic opportunities. Gross profit was flat with an increase of $0.4 million for the fourth fiscal quarter and a decrease of $24.1 million, or 2%, for fiscal 2024 compared to the respective prior year periods. Margin per gallon was favorable for both the fourth fiscal quarter and fiscal 2024 due to segment mix and pricing acumen. Cost of products sold decreased by $1.9 million, or 1%, which was partially offset by a decrease of $1.4 million, or 0.4%, in revenues for the fourth fiscal quarter. Gallons sold during the quarter decreased 6.1 million gallons, or 4%, as we continue to see some additional business closings and the effects of inflation, which contributed to a decrease in retail customers. For fiscal 2024, revenues decreased $189.3 million, or 9%, which was partially offset by a decrease of $165.3 million, or 16%, in cost of products sold. This was primarily due to warmer-than-normal weather, a decrease in retail customers, as previously discussed, and lower wholesale propane prices at our two major supply points. We recognize the net loss attributable to Ferro Gas Partners LP of $20.8 million and $29.1 million in the fourth fiscal quarter of 2024 and 2023, respectively. In fiscal 2024 and 2023, we had net earnings attributable to Ferro Gas Partners LP of $110.2 million and $136.9 million, respectively. For the quarter, adjusted EBITDA, a non-GAAP financial measure, increased by $4.6 million, or 16 percent, to $33.6 million, compared to $29 million in the prior year quarter. The change was primarily due to a $7.7 million decrease in general and administrative expense after adjusting for a $1.8 million decrease in EBITDA adjustments and a $3.7 million increase in operating expense. The decrease in general and administrative expense was primarily due to approximately $6 million reduction in incentive accruals compared to the prior year period. The increase in operating expense consisted of increases of $5.3 million in plant and other costs and $1 million in personnel expense, partially offset by a decrease of $2.6 million in vehicle costs. For fiscal 2024, adjusted EBITDA decreased by 42.8 million or 12% to $317.4 million compared to $360.2 million in fiscal year 2023. In addition to the $24.1 million decrease in gross profit previously noted, a $24.1 million increase in operating expense and a $3.7 million decrease in general and administrative expense after adjusting for a $16.7 million decrease in EBITDA adjustments contributed to the decrease. The increase in operating expense was driven by increases of $13.1 million in personnel expense, $5.6 million in vehicle expense, and $5.4 million in plant and other costs. Increases of $11.3 million in medical insurance claims paid under our self-insured benefits plan and $6.6 million in payroll costs, partially offset by a decrease for incentive accruals, comprised the change in personnel expense. The increase in vehicle expense was primarily due to increases of $5.7 million for repairs and maintenance and $0.6 million in telematics technology, partially offset by a decrease in fuel costs. The increase in plant and other costs was primarily due to increases of $4.5 million in miscellaneous expense, $1.5 million for property repairs and network costs, and $1.2 million related to legal and general liability costs. These increases were partially offset by a decrease in credit card fees related to a new payment platform, which charges less in processing fees. The decrease in general and administrative expense was primarily due to a reduction in incentive accruals. I will now turn the call back over to Tamria.