Good morning, and welcome to the Star Group Fiscal 2019 First Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Chris Witty, Investor Relations Monitor. Mr. Witty, please go ahead..

Thank you and good morning. With me today are Dan Donovan, Acting Chief Executive Officer and Rich Ambury, Chief Financial Officer. I would now like to provide a brief safe harbor statement.

This conference call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company'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 company 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 company's expectations are disclosed in this conference call and in the company's annual report and Form 10-K for the fiscal year ended September 30, 2018.

All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements.

Unless otherwise required by law, the company undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise after the date of this conference call. I'd now like to turn the call over to Dan Donovan.

Dan?.

Thanks, Chris. And good morning to everyone. It's with deep sadness that I sit here today due to the loss on December 22nd 2018 of our President and CEO Steve Goldman. I had known Steve since 2003. We along with our entire management team worked as partners establishing SGU as a premier provider of heating oil, propane and HVA services.

He was a great person to work with and his expertise in operating functions were outstanding. He knew the job. He knew his employees and he knew our customers. All of us have started to grieve his loss and I will personally miss a great friend and colleague. Now it's time to move on and we have.

Helped by the fact that Steve built an effective network of strong leaders throughout the company, while I'm only back on an interim basis I'm pleased to say that the management talent of Star Group is formidable and up to the many challenges we face. I am confident in the future of Star.

First let me start with a few general comments about the weather. In our first quarter temperatures were colder than last year by 5.3%. Although its still slightly warmer than normal, adjusted EBITDA increased by %17.4 million in the quarter or 64% to $44.8 million.

Weather conditions were much more in line with our expectations versus some extremes we experienced last year.

Oil prices continue to be volatile as I'm sure most of all listeners are aware, the NYMEX [ph] price for heating oil in the quarter ending December 31, 2018 range from 244 to 166 a gallon versus a range of 208 to 174 a gallon for the same quarter a year ago. Volatile prices make margin management and customer satisfaction much more challenging.

While we gained 800 more accounts than we lost in the first quarter, it was far less than our net gain of 4800 accounts in last year's comparable period. New accounts were up by 1500 accounts over fiscal 2018, but losses were worse by 5500 year-over-year.

The high end number of lost accounts was primarily due to the price of oil, customer’s failure to meet our credit terms and by the company's decision to exit accounts with low profit margins. The increase in accounts gains could be attributable to mainly customer referrals and local marketing efforts.

While we did not close on any acquisitions during the quarter, other than a small propane tuck-in, we continue to discuss model and analyze several potential purchases that will hopefully result in greater transaction activity in the coming months.

As you know, our distribution for the quarter was $11.75 per unit and we also continue to repurchase units. Both actions are intended to enhance unit holder value. As we've said in the past, we believe it makes sense to look at distribution increases after the end of the heating season.

With that, I'll turn the call over to Rich Ambury to provide additional color on the quarter's results.

Rich?.

Thanks, Dan. And welcome back Dan..

Thank you..

For the quarter our home heating oil and propane volume increased by 10 million gallons or 10% to 130 million gallons, as the impact of colder temperatures acquisitions and the delivery scheduling variance versus the prior year was partially offset by net customer attrition and other factors.

Temperatures for the fiscal 2019 first quarter were 5.3% colder than the prior year, but slightly warmer than normal. Our product gross profit increased by $29 million or 23% to $152.5 million due to higher home heating oil and propane volumes and an increase in home heating oil and propane per gallon margins.

Gross profit from other petroleum products also rose largely due to the impact of acquisitions. Delivery and branch expenses increased to $11.5 million or about 13% to $103 million. Operating expenses in the base business rose by $8 million or 8% with acquisitions accounting for the remaining 4% of the increase.

The higher volumes sold led to greater credit card utilization and higher reserves for doubtful accounts. Vehicle fuel operating costs were higher due to the colder weather and an increase in fuel costs. Inflationary pressures accounted for roughly 3% of the increase in the base business.

Our Concierge program was $2 million in the quarter year-over-year. But our weather hedge liability was lower by $1.1 million [ph] During the quarter we also reported a $31 million non-cash charge relating to the change in the fair value of our derivative instruments.

This was due to a decline in the underlying price of our commodity hedges from $2.35 per gallon at the beginning of the quarter to a $1.68 at the end of the quarter. By comparison in the first quarter of last year we recorded $11 million non-cash credit related to the fair value of our derivative instruments.

The overall year-over-year non-cash impact was $42 million. Net income decreased by $28 million or 92% to $2.3 million, as the increase in adjusted EBITDA of $17.4 million was more than offset by the non-cash $42 million unfavorable change in the fair value of derivative instrument.

In addition, the company reported an $11.5 million tax benefit during the three months ending December 31, 2017 to reflect the impacts of the tax law change. Adjusted EBITDA increased by $17.4 million or 64% to $45 million.

The combination of higher volumes and greater per gallon margins led to an increase in product gross profit that more than offset higher operating expenses. And with that, I'd like to turn the call back over to Dan..

Okay. Thanks, Rich. At this time we'll be pleased to address any questions anyone might have. Anita, could you please open the phone lines for questions..

Yes. I can. Thank you. [Operator Instructions] The first question today comes from Stephen Errico with Locust Wood Capital. Please go ahead..

Guys, again, I just want to express my condolences for your loss, but congratulations on managing the business in a great way.

My question has to do with your Concierge program, was another $2 million in cost this quarter, just thinking how you see the growth of that program? Are you getting the return on that program and what's your overall outlook for it? Thank you..

Yes. I look back at the comments that Steve made in December, he talked about reining in some of the expense on the Concierge program going forward. And he also talked about the growth being a little bit slower than we desired in New York, Connecticut, New Jersey, Rhode Island.

And basically we've put it on a pause and we put it on pause to basically rein in some of the expenses and not to expand that into areas where it's going to cost us a lot more. We haven't abandoned it, but it's something that we're putting off for now. We are maintaining the customers that we have. We're taking care of them.

We have - still have people in place that can service as those customers.

But basically we put the program on a pause so that we could evaluate where we want to go in the future with this, not only myself, but of course, our new management team is going to have the opportunity to take a look at that and see how they want to grow that, if they want to grow it at all or do they wanted to maybe try to localize it and try to make the concept a little bit more successful in a local area.

That will be up to them. But right now we have a pause program..

Thank you..

[Operator Instructions] The next question comes from Michael Prouting with 10K Capital. Please go ahead..

Yeah. Good morning, guys. Thanks for taking my question..

Good morning..

Good morning..

So I just had one question this morning, the standard question on capital allocation. So it was encouraging to see the company to buy some units back in the quarter and also especially the units that you purchased in January.

But I just wanted to make the observation that the current stock price, the stock is yielding almost a 2% yield on dividend distributions and repurchases and almost a 19% free cash flow yield, once you adjust for changes in working capital and I'm not aware of too many places right now where you can find a 19% cash on cash return.

So on one hand I'm pleased to see the unit repurchases.

But on the other hand it seems to me that the company should be repurchasing units much more aggressively at these levels, particularly given the free cash flow yields and the other observation there is that as you guys I'm sure are well aware every unit you purchase today is the unit that you don't have to pay a distribution on either this year or in perpetuity.

So this also benefits from that standpoint.

So I just wanted to get your latest thinking on unit repurchases with the hope that we can step up the pace here?.

Michael, it's Rich. This is - it's a plan that's kind of automatic pilot with the - under the SEC [ph] provisions.

The guys will handle its force, the brokers that handles this force buys back as many units during the day that's legally or there's a formula that how many you can buy back per day based on various trading, number of units that are traded in a period on a look back basis. So we're doing as best we can under the strength of the program..

Well, I guess in essence I'm suggesting that you should change some of the parameters that we're reporting….

We can't change the parameters of the program because the rules are written in stone as to what you can buy back. I can't buy back any more than I'm buying back on a daily basis as I am today. Unless we did a tender offer and wanted to buy back shares.

But under this program which is a safe harbor program, I'm not directing it during the course of the day. Its how many units the buyback, are we in the market today or we ended at 11 o'clock or we ended 12 o'clock. It's kind on automatic pilot and I can't really change it..

Thank you..

[Operator Instructions] The next question comes from Ed Olson, a Private Investor. Please go ahead..

Not a question, but a comment, the tender offer sounds good to me..

Okay. We'll take that under advisement..

Thank you..

There appears to be no further questions. I would like to turn the call back over to Mr. Donovan for any closing remarks..

Okay. Thank you, Anita. And I want to thank everybody for taking the time to join us today. And also of course, the ongoing interest in Star Group. We look forward to sharing on 2019 fiscal second quarter results with you in May. Thank you..

This conference is now concluded. Thank you for attending today's presentation. You may now disconnect..