Good day, and welcome to the Suburban Propane Partners L.P. Second Quarter Results Conference Call. All participants will be in a listen-only mode.

This conference call contains forward-looking statements within the meaning of Section 21E 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 these 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 Web site.

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. Please note this event is being recorded..

Thank you, Chuck, and good morning, everyone. Thank you for joining us this morning for our fiscal 2021 second quarter earnings conference call. Joining me this morning are Mike Stivala, our President and Chief Executive Officer; Mike Kuglin, our Chief Financial Officer and Chief Accounting Officer; and Steve Boyd, our Chief Operating Officer.

This morning we will review our second quarter financial results along with our current outlook for our business. As usual once we've concluded our prepared remarks, we will open the session to questions.

Our Annual Report on Form 10-K for the fiscal year ended September 26, 2020 and Form 10-Q for the period ended March 27, 2021, which will be filed by end of business today, both contain additional disclosure regarding forward-looking statements and risk factors. Copies 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 the discussion of why we believe this information to be useful in our Form 8-K, which was furnished to the SEC this morning.

Form 8-K will be available through a link in the investor relations section of our Web site, suburbanpropane.com. At this time, I will turn the call over to Mike Stivala for some opening remarks.

Mike?.

Thanks, Davin, and good morning, thank you, all for joining us today. We are extremely pleased to report strong results for our fiscal 2021 second quarter with adjusted EBITDA of $172 million coming in more than $41 million or 32% ahead of the prior year. In fact, this was our strongest second quarter performance since 2015.

And importantly, there were several factors that contributed to the significant improvement in earnings. First, weather was a real positive contributor.

Our service territories were hit with some of the most sustained and widespread cold weather throughout much of the second quarter than we've experienced since 2015, which provided a surge in heat related demand.

Second, demand in our commercial industrial customer segments has started to normalize back toward pre pandemic levels as COVID-19 related business restrictions started to ease and economic activity has picked up.

Third, have continued to execute on our customer base growth and retention initiatives, which resulted in organic customer base growth and therefore incremental new customer activity. As a result, propane volumes increase more than 16% compared to the prior year second quarter.

Our operating personnel were well prepared to meet the challenges of the spike in demand, while continuing to adhere to COVID-19 related safety protocols, maintaining the highest level of safety standards and delivering outstanding service to our customers when they needed us most.

In addition to the increased demand, earnings for the quarter were favorably impacted by excellent margin management, despite a dramatic rise in the wholesale price of propane during the quarter.

And with our recent investments in new technologies driving incremental operating efficiencies, coupled with lower insurance claims activity and excellent management of potential bad debts, we reported lower operating expenses in spite of the significant increase in business activities.

So the improvements were across the board to deliver these outstanding results for the quarter. And with the strong earnings we utilized excess cash flows to reduce total debt by nearly $70 million during the quarter, bringing our total leverage metric below 4 times and in March 2021 at 3.95.

Our distribution coverage based on trailing 12 months adjusted EBITDA of $290 million and pro forma for the current annualized distribution rate of $1.20 per common unit was around 2.75 times..

Thanks, Mike and good morning, everyone.

To be consistent with previous reporting and to discuss our second quarter results, I’m excluding the impact of unrealized non cash mark to market adjustments on our commodity hedges, which resulted in an unrealized gain of $1.6 million in the second quarter of fiscal 2021 compared to an unrealized loss of $4.7 million in prior year, as well as the non cash settlement charge the equity and earnings of an unconsolidated affiliate, which is overall for the second quarter of fiscal 2021.

Excluding these items, net income of $126.3 million for the second quarter improved by $44.1 million or 53.7% compared to the prior year. Adjusted EBITDA of $172 million for the second quarter improved by $41.4 million or 31.7% compared to the prior year.

As Mike mentioned, the improvement in earnings was driven by an increase in customer demand as a result of the colder weather pattern, improving economic conditions from the easing of restrictions on certain commercial industrial businesses and customer base growth.

In addition to this growing demand our earnings for the quarter also benefited from unit margin improvement during a challenged commodity price environment and expense controls that contributed to lower operating expenses.

Retail propane gallons sold second quarter increased 16.5% to 169.1 million gallons due to increase in demand across all customer segments, especially within our residential segment, which benefited from cooler weather as we continued stay at home guidelines. Our customer segment also continue to benefit from increased outdoor activities.

With respect to weather average temperatures for the second quarter were comparable to 10 year average and 9% cooler than the prior year. If 7% warmer than normal is measured by the 30 year average degree days used by.

The increase in the degree days compared to the prior year was attributable to a sustained and widespread colder weather pattern throughout most of the second quarter, particularly during the month of February where average temperatures were 3% colder than normal and 16% cooler than February 2020.

From a commodity perspective, wholesale propane prices increased throughout the quarter as the inventory levels remain below average levels for this time of the year, given continued strength and exports coupled with an increase in domestic demand.

Overall, average wholesale prices for the second quarter were $0.90 per gallon at basis basis Mont Belvieu, which was higher than the prior second quarter and 58% higher than the first quarter of fiscal 2021.

In the early part of the third fiscal quarter, the wholesale price of propane has started to recede a bit and is currently in the low $0.80 per gallon range. Total gross margins of $304 million for the second quarter increased $48.4 million or 18.9% compared to the prior year, primarily due to higher propane volume sold and higher unit margins.

Excluding the impact of the mark to market adjustments that I mentioned earlier, propane unit margins increased $0.05 per gallon or 3% compared to the prior year..

Thanks Mike. As announced in our April 22nd press release, our Board of supervisors declares our quarterly distribution of $0.30 per common unit in respect of our second quarter of fiscal 2021, that equates to an annualized rate of $1.20 per common unit. Quarterly distribution will be paid on May 11th to our unitholders record as of May the 4th.

So just a few closing remarks. The past 12 months have certainly presented a number of challenges for our nation, for our people and for our business.

However, our ability to adapt coupled with the preparedness and flexibility of our operating model as a result of all of our efforts over the last decade to streamline, invest and create efficiencies and of course, the commitment of our great people, allowed us to stay focused on meeting the needs of our customers..

Operator:.

All right. Well, great, Chuck. It looks like we're all set. I appreciate your help. Again, I appreciate everybody's time. I encourage everybody to continue to be safe. We look forward to speaking with you again after our third quarter results and also, welcome those of you that want to participate in our Virtual Tri-Annual Meeting on May the 18th.

Thank you all..

The conference has now concluded. Please remember that this call will have a one week replay. Please call (877) 344-7529 and the replay access code is 1015387. Again that is 10153867. The playback is scheduled to end May 13th. Thank you for attending today's presentation. You may now disconnect..