Davin D’Ambrosio – Vice President and Treasurer Mike Stivala – President and Chief Executive Officer Mike Kuglin – Chief Financial Officer and Chief Accounting Officer.

Brian Brungardt – Stifel Ben Brownlow – Raymond James.

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I’d now like to read a script for Suburban Propane.

This conference call contains forward-looking statements within the meaning of section 21-E of the Securities Exchange Act of 1934 as amended relating to the partnership’s future business expectations and predictions and financial condition and results of operations. These forward-looking statements involve certain risks and uncertainties.

The partnership has listed some of the important factors that could cause actual results to differ materially from those discussed in such forward-looking statements, which are referred to as cautionary statements in its earnings press release, which can be viewed on the company’s website.

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 such cautionary statements. I would now like to turn the conference over to our host, Vice President and Treasurer, Mr. Davin D’Ambrosio. Please go ahead sir..

Thank you, Robert. Good morning everyone. Welcome to Suburban’s fiscal 2016 first quarter results conference call.

Joining me this morning are Mike Stivala, President and Chief Executive Officer; Mike Kuglin, our Chief Financial Officer and Chief Accounting Officer; Mark Wienberg, Chief Development Officer; and Steve Boyd, our Senior Vice President, Operations.

Purpose of today’s call is to review our first quarter financial results along with our current outlook for the business. As usual, once we’ve concluded our prepared remarks, we will open the session to questions. However, before getting started, I would like to reemphasize what the operator has just explained about forward-looking statements.

Additional information about factors that could cause actual results to differ materially from those discussed in forward-looking statements is contained in the partnership’s SEC filings including its Form 10-K for the fiscal year ended September 26, 2015, and its Form 10-Q for the period ended December 26, 2015, which will be filed by the end of business today.

Copies of these filings may be obtained by contacting the partnership or the SEC. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures, as well as a discussion of why we believe this information to be useful in our Form 8-K furnished to the SEC this morning.

The Form 8-K can be accessed through a link on our website at suburbanpropane.com. At this point, I’d like to turn the call over to Mike Stivala for some opening remarks.

Mike?.

Thanks Davin and thank you everyone for joining us this morning. Let me start with some thoughts on recent declines in the MLP equity markets, particularly in the fourth calendar quarter of 2015, along with some specific commentary relatives to Suburban Propane.

Broadly speaking, some of the key factors driving MLP performance have been concerns over a lower for longer view on commodity prices, and the impact not only on our producers, but ultimately on the flow of activity throughout the midstream infrastructure.

Higher leverage and tighter distribution coverage heading into an earnings downturn, uncertainty over the sources and cost of capital to fund growth, particularly committed capital requirements, concerns over the prospect of distribution cuts and in fact several recently announced cuts and wide-spread technical selling by many of the MLP funds among others.

As for Suburban Propane, our fundamentals haven’t changed and in fact many of the factors, I just mentioned, don’t necessarily apply. To highlight some of our fundamentals, we entered this fiscal year with a leverage profile that is lower than our peers and compares favorably to the broader MLP sector.

Our maintenance capital needs are relatively low with no real committed growth capital to finance. We entered fiscal 2016 with more than $150 million of cash on the balance sheet and approximately $250 million available under our revolver, so we have more than adequate liquidity.

We have healthy distribution coverage, but did not have any immediate needs to access the capital markets. And as for commodity prices and extended lower cost environment is a benefit to the industry and our customers.

As we stated at the beginning of fiscal 2016, our integration efforts for the Inergy Propane acquisition are effectively behind us and we are well positioned to continue to focus on the next phase of growth for Suburban Propane and our unitholders.

All that being said, given the record warm temperatures across the majority of our service territories, throughout the first quarter of fiscal 2016, our volumes were obviously impacted by the lack of customer demand for heating needs, while the lower volumes has had an effect on our earnings for the quarter, the strength of our balance sheet, flexible nature of our operating model and access to more than adequate liquidity provide good support for this short-term weather driven earnings impact.

In a moment, I’ll provide some additional comments on our outlook for the remainder of the fiscal year. However, at this point, I’d like to turn the call over to Mike Kuglin to discuss our first quarter results in more detail.

Mike?.

Thanks Mike and good morning everyone.

To be consistent with previous reporting and I discuss our first quarter results, I’m excluding the impact of unrealized non-cash mark-to-market adjustments on derivative instruments used in risk management activities, which resulted in unrealized loss of $1.2 million in the first quarter of fiscal 2016, and an unrealized gain of $9.5 million in the prior year first quarter.

Additionally, net income and EBITDA for the first quarter of fiscal 2016 included a $3 million charge related to the settlement of a product liability matter. Net income and EBITDA for the first quarter of fiscal 2015 included $1.9 million in expenses related to the integration of Inergy Propane.

Therefore, excluding these items as well as the unrealized mark-to-market adjustments on derivative instruments, the net income for the first quarter of fiscal 2016 would have amounted to $16.6 million, or $0.27 per common unit, compared to net income of $48.2 million, or $0.80 per common unit, in the prior year first quarter.

Adjusted EBITDA for the first quarter of fiscal 2016 amounted to $67.2 million compared to $101 million in the prior year first quarter. Retail propane gallons sold in the first quarter of fiscal 2016 decreased 24.8 million gallons, or 18.4%, to 109.8 million gallons from 134.5 million gallons in the prior year first quarter.

Sales of fuel oil and other refined fuels decreased 2.7 million gallons, to 8.6 million gallons compared to 11.3 million gallons in the prior year first quarter. As Mike indicated, customer demand in the first quarter of fiscal 2016 was adversely impacted by recorded warm temperatures throughout most of our service territories.

Again, seasonally warm weather was persisted as temperatures were warmer than normal and the prior year for all 13 weeks of the quarter. The only market that experienced favorable weather compared to the prior year were California and the Pacific Northwest. And in those markets, our volumes were funded strongly compared to the prior year.

Overall, average temperatures for the first quarter of fiscal 2016 were 25% warmer than normal and 70% warmer than the prior year first quarter.

In the commodity markets, average propane prices were relatively stable during the first quarter and significantly lower than in the first quarter of the prior year as a result of decline in propane prices experience during fiscal 2015.

Overall, average posted prices for propane at $0.42 per gallon basis Mont Belvieu for the first quarter of fiscal 2016 were 44.8% lower than the prior year first quarter. Average fuel oil prices of $1.37 per gallon for the first quarter of fiscal 2016 or 41% lower than the prior year first quarter.

As we said in the past, the sustained period of lower commodity prices has been a favorable development for consumers and propane distributors alike. Total gross margins of $184.6 million for the first quarter of fiscal 2016 were $40.9 million lower than the prior year first quarter, primarily due to the lower volumes.

In addition, gross margins were also affected by slightly lower unit margins due to mix of volumes as the warm weather during the quarter had less of an impact on usage by our non-residential customers than that of our heat related residential customers.

Excluding the charge and integration-related expenses that I previously mentioned, combined operating and G&A expenses of $117.4 million for the first quarter of fiscal 2016 or $7.1 million or 5.7% lower than the prior year first quarter.

Savings were primarily attributable to operating efficiencies, resulting in reduced headcount and vehicle count, lower variable compensation associated with lower earnings, lower vehicle fuel costs and other variable costs based on volumes sold.

Net interest expense of $18.9 million for the first quarter of fiscal 2016, decreased $1.1 million that the prior year first quarter with the refinancing of our 2020 senior notes completed in the second fiscal quarter of 2015.

Depreciation and amortization expense of $31.6 million for the first quarter, decreased $1 million due to the acceleration of depreciation expense recorded in the prior year first quarter for certain assets taken out of service from integration activities.

Total capital spending for the quarter was $30 million, compared to $7.9 million in the prior year first quarter. The increased level of capital spending was primarily driven by tank purchases to support new customer activity and expansion of relationships with certain existing customers.

Some of our capital spending for the fiscal year was accelerated through the first quarter, and as a result we expect an overall capital spending levels for the remainder of the year to moderate back to more historical levels. Turning to our balance sheet.

Our liquidity position remains strong as we entered the first quarter with $57 million of cash on hand and $250 million of availability under our revolving credit facility. The lower commodity price environments in the first quarter of fiscal 2016 continue to have a favorable impact on our working capital requirements.

For the quarter, we once again funded all of our working capital needs as well as the acquisition of the assets of Propane USA, which we announced on December 15, 2015 from cash on hand without need to borrow under our revolver.

While we have a plenty of heating season ahead, historically our working capital needs will peak through again in February at which time we expect to begin building our cash position once again. Now, I’ll turn it back to Mike for some closing remarks..

Thanks, Mike. As announced on January 21st, our Board of Supervisors declared our quarterly distribution of $0.8875 per common unit in respect of our first quarter of fiscal 2016, which equates to an annualized rate of $3.55 per common unit and an increase of 1.4% compared to the annualized rate at the end of the prior year first quarter.

Our quarterly distribution will be paid on February 9th to our unitholders of record as of February the 2nd. Just one additional comment on our distribution.

Our philosophy has remained consistent over the years and that we seek to provide our unitholders with a sense of long-term stability by maintaining a strong balance sheet and liquidity, while seeking opportunities to deliver sustainable profitable growth to support growth in the distribution rate.

This philosophy is unchanged by current market conditions. Focusing a bit on our business strategy, we will continue to seek opportunities to invest in initiatives that can extend our presence in the strategic markets or complement or supplement our existing propane operations.

In an otherwise challenging environment for the broader energy sector given the backdrop of sustained low commodity prices, we are well positioned to continue to focus on our growth initiatives, while also refining our business model.

We’re certainly aware of the challenges that both the equity and debt markets present at this time, particularly with respect to financing a potential transaction and the markets buy us towards stability.

As we have demonstrated during our long track record, we will continue to be deliberate in the execution of our strategy and we will remain patient and disciplined.

In line with our growth strategy as announced on December 15, 2015, we acquired the assets of Propane USA for total consideration of $45 million of which approximately $41 million was funded at closing and the remainder will be paid over a non-compete period.

We funded this acquisition with cash on hand that is expected to be immediately accretive to earnings. Propane USA provides an additional 7,600 residential and commercial customers and approximately 4.7 million gallons to an already strong market for Suburban on the east and west coasts of Southern Florida.

This acquisition demonstrates our commitment to investing in external growth in strategic markets and provides an opportunity to apply our operating model to enhance overall returns through synergies.

As we look ahead to the remainder of fiscal 2016 and with plenty of the heating season still ahead, our operating personnel continue to focus on the things they can control, providing superior customer service, driving operating efficiencies, and managing our cost structure.

In closing, I’d like to thank all of our dedicated employees for their hard work and managing through the challenges of record warm temperatures by continuing to deliver the highest quality service to our customers and for their continued focus on safety and comfort. As always, we appreciate your support and attention this morning.

And I’d now like to open the call for questions.

Robert, can you help us with that?.

Thank you. [Operator Instructions] Our first question will come from the line of Brian Brungardt from Stifel. Please go ahead..

Good morning guys and thank you for taking my questions..

Good morning, Brian..

I guess to start off here; previously you’ve mentioned in the month of December, January and February are crucial for your business. Obviously, December was less than ideal.

But could you provide some color around what you saw in January as it relates to last year?.

There was fits and starts, let’s say. We had certainly some – a couple of weeks there where there was some promising weather and a couple of weeks where the weather was unseasonably warm. So, I think it’s pretty – those of us who particularly live in the East Coast have seen some good weather and some bad weather.

So far January, I would say, was continuing the warmer trend and we still have a good bit of February ahead of us here..

Got you. And then switching to the acquisition markets, we’ve seen increased discussion from the larger midstream players around selling non-core assets in this environment.

Could you provide some insight into the type of midstream assets you may find ideal and complementing your core propane business?.

Well, I think we’ve been pretty clear over the quarters as to what our strategy is. Our strategy is to focus on assets that that have a relatively stable cash flow profile to diversify away from a business that is somewhat tied to weather.

So that’s – one of our main criteria is going to be businesses that have less dependency on things like weather or commodity prices. And then our next main criteria is a business that can demonstrate a good growth profile that we can continue to grow from and not just do one acquisition and feel like we’re done.

And then the last main criteria that we’ve been clear about is as we step outside of propane, we’re going to be looking for management teams that fit into our culture and can run that that operating subsidiary on our behalf, while we sit on top as a holding company. So, stable cash flow profile, good growth trajectory, and a good management team..

That’s all I have. Thank you very much guys..

Thanks, Brian..

Thank you. We’ll go to line of Ben Brownlow from Raymond James. Please go ahead..

Hi, good morning..

Hi, Ben..

You have commented on the low commodity cost environment being favorable for working capital and demand, et cetera.

But just wondering if product costs remain depressed, how should we think about the retail margin side of the business on a kind of penny per gallon basis?.

Well, certainly a low sustained commodity environment with lack of volatility limits some of the potential upside in margins, but, I think, what I would say for profiling is you could expect margins to be flat to slightly up..

Sequentially or year-over-year?.

Well, it depends on volume, the mix of customers. So, sequentially if you’re still in a heating season, like we are now, sequentially you could expect to see stable; coming off of a heating season, you would expect to see slightly up from prior year comparable periods..

That’s helpful. Thank you. And on the Florida-based propane, I know you said there was going be accretive day one.

Can you just – I’m just trying to get a sense of – if you could elaborate on the typical timeline of what you see in terms of integration, efficiency, scale, et cetera until those are fully realized and obviously that depends on the size of the acquisition.

But what – kind of when you’re looking at that regional M&A like the Florida-based Propane USA, what does that timeline typically look like?.

Well, the beauty of our model is still conducive to folding in an acquisition of this nature and size. So, the integration is months, not years..

Got it, and then just one more for me. On the OpEx structure that that OpEx decline year-over-year was pretty impressive given the weaker quarter.

Can you just remind us what the percentage of OpEx is kind of volume-based variable, seasonal wages et cetera versus fixed overhead?.

Yes, it’s probably about 25%, Ben. I think when you look at our 6% decline year-over-year, a good bit of that was volume related, but a good bit of it was the continued work on our end to drive efficiencies vis-à-vis lower vehicles and lower headcount. So, I would say a good mix of longer-term expense savings and some volume driven expenses..

Great, thank you..

Thank you..

[Operator Instructions] And we have no further questions sir..

Okay, well, thank you all for joining us this morning. We look forward to talking to you at the end of our second quarter..

Ladies and gentlemen, this conference will be available for replay from today starting at 11:00 AM until tomorrow at midnight. You may access the AT&T replay system by dialing 1-800-475-6701 and entering the access code 384368, once again that number is 1-800-475-6701, access code of 384368. That does conclude our conference for today.

Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect..