Good morning and welcome to the Star Group Fiscal 2022 Fourth Quarter Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. Please do note that this event is being recorded.

I would now like to turn the conference over to Chris Witty, the Investor Relations Adviser. Please go ahead sir..

Thank you and good morning. With me on the call today are Jeff Woosnam, President and 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 that 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, the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022, and the company’s other filings with the SEC.

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 statements, 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 Jeff Woosnam.

Jeff?.

Thanks Chris and good morning everyone. Thank you for joining our year-end conference call. It's amazing how time passes so quickly and here we are concluding another fiscal year and at the start of a new heating season.

Looking back, fiscal 2022 was certainly a year full of unique challenges including warmer than normal temperatures, product cost volatility, and higher operating expenses but one in which I believe the range of Star’s offerings, depth of our resources and dedication to customer service set us apart from our competition.

During fiscal 2022, we experienced temperatures that were on average 9% warmer than normal, saw heating on oil costs on the New York Mercantile Exchange that range from a low of $2.06 per gallon to an historic high of $5.14 per gallon and paid premiums over NYMEX prices to ensure prompt delivery of heating oil product.

Our product cost drove greater expenses in areas such as bad debt reserves, credit card fees, and fuel for our vehicles. In addition, like so many businesses, we face rising wage and related inflationary pressures.

Despite these headwinds, we were able to deliver 110 million in adjusted EBITDA and we're successful in reducing overall net customer attrition to levels slightly below last year. We also repurchased 3 million common units during fiscal 2022 as part of our ongoing stock repurchase plan, which we believe further enhances long-term shareholder value.

In addition, our acquisition program remains an important component of our growth strategy, and in total we completed five separate transactions during fiscal 2022, adding nearly 8 million gallons of heating oil volume annually.

While no acquisitions were completed during the fourth quarter, we closed on two small heating oil companies after the end of the fiscal year, one in October and another in November. We've also taken steps to better position Star for the future.

As part of our ongoing evaluations of our operations in core markets and the resources and capital required to optimize the company's potential, we sold our heating oil and propane assets in New Hampshire and Maine during October.

Our business in these markets was small and somewhat geographically detached, making it difficult for us to achieve certain operational efficiencies and a desired level of profitability.

We ultimately decided it was best to divest ourselves with these assets and direct our internal focus and capital in areas that produce greater and more consistent returns. Our long term goal of expanding our heating oil and propane business, both organically and through acquisitions, remains unchanged.

To that end reducing net customer attrition continues to be a critical metric for our team. While there's still much progress to be made, I believe that this past year's net customer attrition further validates the investments we've made in improving the overall customer experience as well as the strength and appeal of Star's product offerings.

I'm very proud of the way our team navigated through the external market forces we faced in fiscal 2022. Given our strong operating platform and recently expanded credit facilities, we believe Star is prepared and well positioned for the heating season ahead.

So with that, I'll turn the call over to Rich to provide additional comments on the quarter and year-end results. Rich..

Thanks Jeff and good morning everyone. For the fiscal 2022 fourth quarter, our home heating oil and propane volume decreased by 1.5 million gallons, or about 7% to 19 million gallons as the additional volume provided from acquisitions was more than offset by the impact of net customer attrition and other factors.

Our product gross profits decreased by $2 million or 5% to $35 million due largely due to lower volume of liquid products sold. Delivery branch and G&A expenses increased by $1.4 million or just 2% to $79 million.

Our net loss increased by $27 million for the quarter to $50 million as an unfavorable non-cash change in the fair value of derivative instruments of $35 million and an increase in the adjusted EBITDA loss of $3 million more than offset an increase in the company's income tax benefit of $12 million.

The adjusted EBITDA loss rose by $3 million to a loss of $31 million reflecting lower sales volume, a 2.4% decline in home heating oil and propane per gallon margins, and an increase in operating cost of 2%.

For fiscal 2022, our home heating oil and propane volume decreased by 10 million gallons or 3% to 296 million gallons at slightly warmer temperatures, net customer attrition, and other factors more than offset the impact from acquisitions.

Temperatures in Star’s geographic areas of operations for the fiscal year were about 0.5% warmer during the prior year comparable period and 9% warmer than normal.

Our product gross profit increased by 9 million or 2% as an increase in home heating oil and per gallon margins and higher motor fuel gross profit more than offset the impact from a decline in liquid products sold.

Operating expenses did rise by $26 million, reflecting a $2 million lower benefit recorded on the company's weather hedge program, additional costs from acquisitions of $5 million, and an $18 million or 6% increase in expenses within the base business.

As mentioned on previous calls, higher petroleum costs drove an increase in credit card fees reserved for doubtful accounts and higher vehicle fuels totaling $9 million in the aggregate. Higher medical expenses accounted for an increase of $2.5 million and other areas in the base business rose by $6.5 million or 2%.

Net income declined by $52 million to $35 million as an unfavorable again, non-cash change in the fair value of derivative instruments of $53 million and a decrease in adjusted EBITDA of $17.6 million was only slightly offset by decrease in the company's income tax expense of $20 million.

Adjusted EBITDA for fiscal 2022 declined by $17.6 million to $110 million as lower home heating oil and propane volumes sold and an increase in operating expenses more than offset the impact from higher per gallon margins. And now I'd like to turn the call back over to Jeff..

Thanks, Rich. At this time, we'd be pleased to address any questions you may have. Joe, please open the phone lines to questions..

[Operator Instructions]. Our first question here will come from Tim Mullen with Laurelton Management. Please go ahead sir..

Hi, thanks for taking my question.

Can you just speak to how product margins are impacted by the absolute price level, do you see as prices rise, the ability to take more margin is diminished?.

No, not necessarily. It, for the most part, rising energy costs for us become a little bit of a challenge because there's greater price sensitivity, customer price sensitivity in the marketplace. So, in times like these it's very important that we employ very strong margin management. I think we've done that this year..

Okay, thank you. Makes sense..

And, I'd just like to add, even though the margins were down in the quarter, a couple of pennies, they were up for the year, which is more than -- more important they're up by $0.056 per gallon and you get into a summer quarter where you don't sell very much volume. You can easily get a $0.02 or $0.03 increase or decrease in margins..

Yeah. Okay..

[Operator Instructions]. And this concludes our question-and-answer session. I would like to turn the conference back over to Jeff Woosnam for any closing remarks..

Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2023 fiscal first quarter results in February. In the meantime, have a wonderful holiday. Thank you everybody..

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines..