Chris Witty - Investor Relations, Darrow Associates Steve Goldman - Chief Executive Officer Rich Ambury - Chief Financial Officer.

Elan Zanger - Odeon Capital Group.

Good day, ladies and gentlemen and welcome to the Star Gas Fiscal 2014 Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would like to introduce your host for today’s call, Mr. Steve Goldman, Chief Executive Officer. Sir, you may begin..

Good morning and thank you for joining us today. With me today is Star’s Chief Financial Officer, Rich Ambury. After I provide some brief remarks about the quarter and first nine months of fiscal 2014, Rich will review the fiscal third quarter ended June 30, 2014 and year-to-date financial results. We will then take your questions.

Before we begin, Chris Witty of our Investor Relations firm Darrow Associates will read the Safe Harbor statement. Please go ahead, Chris..

Thanks, Steve, and good morning. This conference call may include forward-looking statements that represent the Partnership’s expectations and beliefs concerning future events that involve risks and uncertainties and may cause the Partnership’s actual performance to be materially different from the performance indicated or implied by such statements.

All statements, other than statements of historical facts, included in this conference call are forward-looking statements. Although, the Partnership believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

Important factors that could cause actual results to differ materially from the Partnership’s expectations are disclosed in this conference call and in the Partnership’s annual report and Form 10-K for the fiscal year ended September 30, 2013.

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 the cautionary statements.

Unless otherwise required by law, the Partnership undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this conference call. I would now like to turn the call back over to Steve Goldman.

Steve?.

Thanks, Chris. Our fiscal third quarter is a very important period for Star Gas, because it provides a good opportunity for us to truly analyze our ongoing operating performance and perhaps more importantly grew the company through the eyes of the consumer.

Since our performance is best assessed in the context of our financial statements and will be covered by Rich Ambury, I would like to focus on what our customers are telling us. And the most important reflection on our customers’ opinion, are our current attrition results.

Our year-to-date net attrition was 0.7% as opposed to 2.5% for the same time last year. This has been another quarter of both improved customer retention and continued attraction of new homeowners to our expanded suite of services.

Our managers and employees alike have clearly gotten the message that attracting and retaining new customers is the most important thing we can do to ensure more successful future for Star Gas. I could not be proud of the great improvement we have made in this area and these gains are even more noteworthy considering the relatively high oil prices.

We have been extraordinarily focused on increasing training at all levels of our organization. We believe this is the best way to ensure we will continue to provide the best service in our industry.

And in many ways, this is one of the busiest periods for our management team in our enthusiasm and offering our customers more than ever before is noticeable throughout our organization. While we did not close any new acquisitions during this quarter, we did work on seamlessly integrating and expanding the Griffith’s operations previously purchased.

We were also busy looking at many new potential transactions so much so that we have designated a new Business Development Vice President position reporting directly to me, to exclusively manage all aspects of acquisition strategy.

While overall this year has been a very successful one, the quarter was a bit disappointing in terms of lower service and installation profitability. These results were primarily due to a lack of hot weather during May and June.

In addition, we had lower per gallon margins versus last year, but this was an aberration and primarily points to higher than normal results in the comparable 2013 quarter.

We continue to be pleased with how our operations are performing throughout the company and this provides us with a great opportunity to spend more time and effort looking for new ways to reduce expenses and grow revenue.

Our team is focused on ways to enter new markets, improve top line growth, reduce the seasonality of our business and drive higher margins. We are also moving to a new location Stanford this week to streamline staff’s interaction and reduce cost through a better leasing arrangement.

We believe the most important thing we can do to ensure attractive results going forward is to invest and strengthen our team so that we can continue to grow the customer relationships we have. We have spent a lot of time doing just that this quarter. And now I will turn the call over to Rich Ambury to provide some comments on our financial results.

Rich?.

Thanks Steve and good morning everyone. For the third quarter of fiscal 2014 our home heating oil and propane volume increased by 10% versus last year or 4.4 million gallons to 47 million gallons.

The higher volume was primarily due to the impact of the Griffith acquisition and the lag effect of colder temperatures experienced during March 2014 as compared to March 2013 which more than offsets the impact of net customer attrition for the trailing 12 months of 1.7% in the base business, our home heating oil and propane margins declined by $0.027 year-over-year to approximately $0.95 per gallon.

As a reminder the third quarter is the non-heating period with relatively low volume, so margins can be impacted quite easily. While home heating oil and propane margins decreased from the prior year’s comparable quarter which saw unusually high margins, the current results were in line with management’s expectations.

Total gross profit rose by $6.6 million as higher home heating oil and propane volumes and an increase in other petroleum products largely attributable to the Griffith acquisition more than offsets the impact of lower home heating oil and propane margins.

Delivery and branch expenses rose by 23% or $12.5 million primarily due to the Griffith acquisition, which accounted for over $8 million of the change.

We also saw higher bad debt expense of $2.5 million related to the increased sales in the base business and the typical payment patterns of customers during the months subsequent to the heating season.

In addition, we recorded $1.7 million charge to correct the understatement of certain sales and petroleum taxes all of which pertain to years prior to fiscal 2014 and should have been recorded in prior periods.

We posted a net loss for the quarter of $9.6 million, $2 million higher than the prior year’s comparable period as the favorable change in the fair value of derivative instrument to $5 million and an increase in total gross profit of $5.8 million was more than offset by higher delivery and branch expenses and increase in depreciation and amortization again largely due to the Griffith acquisition and higher interest expense.

The adjusted EBITDA loss for the quarter increased by $6.6 million to $8.3 million as higher home heating oil and propane volumes were more than offset by an increase in bad debt expense of $2.5 million, $2.3 million of prior period adjustments and a return to more normal non-heating season, home heating oil and propane margins which equated to $1.3 million impact.

In addition the Griffith acquisition posted an adjusted EBITDA loss of $0.8 million again that was in line with our expectations. Now let’s look at the nine months results.

For the first nine months of fiscal 2014, Star’s home heating oil and propane volume increased by 11% versus last year or 35 million gallons to 339 million gallons as the impact of 9% colder temperatures and the additional volume provided by acquisitions more than offset net customer losses, conservation and other factors.

Our total gross profit rose by $49 million or 15% to $369 million. The increase in volume and higher per gallon home heating oil and propane margins drove the improvement in gross profit which was somewhat tempered by lower net service and installation profitability.

The colder weather caused an increase in service costs in fiscal 2014, while the prior year period benefited from higher installation and service work related to Sandy.

Gross profit from other petroleum products rose in fiscal 2014 due to the Griffith acquisition, but the year-over-year comparison again was tempered by the favorable impact of Sandy on diesel fuel sales in fiscal 2013.

Delivery and branch expenses rose by 10% or $22 million in fiscal 2014 due to the 14% increase in total volume, higher sales and marketing expenses of $1.8 million, a $1 million change in our bad debt expense tied again to the increase in sales.

In addition, during the nine months ended June 30, 2014, the Partnership recorded a $1.7 million charge for certain sales and petroleum taxes for years prior to fiscal 2014.

Depreciation and amortization expense increased by $2 million again largely due to the Griffith acquisition and general and administrative expenses rose by $3 million primarily due to an increase in profit-sharing expense of $1.4 million, higher acquisition-related costs again that was largely due to the Griffith acquisition, and an increase in legal and professional fees of $0.5 million.

Net income for the first nine months of fiscal 2014 was $62 million or $18 million greater than in the prior year period as the impact of colder temperatures, higher per gallon margins, and a favorable non-cash change in the fair value of derivative instruments of $11 million more than offset higher delivery and branch expenses, G&A expense and depreciation and amortization expenses.

Adjusted EBITDA increased to $130.5 million, up $25 million as the impact of an increase in home heating oil and propane volumes, higher heating oil and propane per gallon margins, and an increase in gross profit from other petroleum products more than offset the decline in net service and installation profitability.

Last year, during the nine months ended June 30, 2013, the Partnership’s home heating oil and propane volume was negatively impacted by storm Sandy, while service and installation gross profit and gross profit from the sales of other petroleum products was positively impacted. Now, let’s just take a little look at the balance sheet.

As of June 30, 2014, we have $31.5 million of bank borrowings, which we have repaid since then and our accounts receivable balance has declined by approximately $42 million and our cash now is approximately $10 million. And with that, I would like to turn the call back over to Steve..

Thanks, Rich. And at this time, we will be pleased to address any questions you may have. Operator, please open the phone lines for questions..

(Operator Instructions) Our first question comes from Andrew Gadlin with Odeon Capital Group. Your line is now open..

Hi, guys. This Elan Zanger stepping in for Andrew Gadlin today..

Good morning..

Good morning..

Good morning.

My question is are you guys seeing any noticeable difference in terms of the collectibility of receivables for the newly acquired Griffith versus Star Gas?.

No, we are not seeing any noticeable difference. And when we looked at the Griffith acquisition, we didn’t see anything strange in the receivable composition when we acquired the company..

Okay, alright, great. Thanks guys..

You are welcome..

(Operator Instructions) I am showing no further questions remarks, no further questions. I would like to turn the call back to Mr. Goldman for further remarks..

Thank you and thank you for taking the time to join us today and for your ongoing interest in Star Gas and we look forward to sharing our year end 2014 results with you in December..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day..