Good morning. And welcome to the Star Gas Partners, L.P. Fiscal 2015 Fourth 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. And now I would like to turn the conference over to Steven Goldman, CEO. Please go ahead, sir.

Good morning and thank you for joining us today. With me today is Star Gas’ Financial Officer, Rich Ambury. After some brief remarks, Rich will review the fourth quarter and fiscal year ended September 30, 2015. 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, 2015. 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'd now like to turn the call back over to Steven Goldman. Steve?

Thanks, Chris. We believe this past year will be a memorable one for Star Gas for several important reasons. While our financial success in terms of EBITDA was certainly noteworthy, we had many other accomplishments, particularly with regard to growing our footprint, expanding our service offerings and improving Star’s overall operating performance. The work we're doing to strengthen the company has resulted in a more responsive customer-focused organization, no matter what challenges each season brings. This past year’s falling oil price combined with the extraordinary weather experienced at the end of January into February offered great opportunities to showcase our unique abilities and superior customer service. And while the Partnership posted record adjusted EBITDA, we did not lose sight of our balanced approach to managing the business and so we were able to achieve our second best year for attrition, despite the extreme weather challenges this past winter. We continue our dedication to all previously-stated objectives, including leveraging acquisitions to growing both volume and footprint, expanding services and improving our team by investing in training programs. In addition, this past year we began several new initiatives, including the use of industrial engineering to improve performance, the exploration of boosting customer satisfaction through a more interactive relationship and new methods to improve our safety culture and reduce accident-related insurance claim expense. Our acquisition efforts resulted in the addition of three businesses this fiscal year. While two of these were relatively small in size, the third entity, which services residential and commercial oil customers on Long Island, not only added a strong brand for Star, but also roughly 18,000 accounts. One of the other transactions completed in January of this year expanded our footprint into Georgia for the very first time and subsequently led to the expansion of one of our brands…

Thanks, Steve, and good morning, everyone. For the fourth quarter of fiscal 2015, our home heating oil and propane sales volume decreased by 5% versus the same quarter last year of 1.1 million gallons to 21 million gallons and sales of other petroleum products fell by 3% to 25 million gallons. Our home heating oil and propane margins increased $0.26 year-over-year during the quarter to approximately a $1.20 per gallon. As a reminder, the fourth quarter is a non-heating period with relatively low overall volume, so margins can be easily impacted quite easily. We also benefited from continuing decline in wholesale product costs. Total product gross profit rose by $5.2 million as the impact of recent acquisitions and higher home heating oil and propane margins more than offset a decline in home heating oil and propane volume. Delivery and branch expenses rose by 7% or $4 million, largely due to acquisitions which accounted for $1.6 million of the increase. We also saw higher sales and marketing expenses of $1.7 million in the base business. We posted a net loss for the quarter of $45 million or $19.5 million higher than the prior year period, reflecting the previously announced non-cash charge of $17.8 million related to the multiemployer pension plan and a charge of $7.3 million related to redeeming and refinancing the Partnership’s $125 million senior notes, also previously announced. Refinancing of the Partnership’s debt will result in lower interest expense going forward and the new multiemployer pension plan is expected to reduce risk in terms of future obligations, the adjusted EBITDA loss for the quarter increased by $700,000 to a loss of $23.1 million. Now let’s review the full year results. Home heating oil and propane volume rose by 6% this fiscal year as acquisitions, primarily Griffith, more than offset…

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

Yes. Thank you. [Operator Instructions] And the first question comes from Andrew Gadlin from Odeon Capital Group.

Hey guys. Good morning.

Good morning Andrew.

Good morning.

Wanted to ask about priorities for cash flow, your net cash position right now, obviously capital -- you didn’t say it’s capital intensive and we’re entering that period of the year but how do you think about priorities for cash flow. Is there still robust M&A pipeline, you think about share buybacks, special dividends, any of those factors?

Obviously, we still look at acquisition each and every day that that come along and we do our analysis. We’re also looking at buying some unit buybacks at attractive prices. We look at our distribution. We look at our distribution each and every year in the second -- in second fiscal quarter, we usually announce that in April. And at that time, we’ll see whether we’re going to up on the distribution. There has not been much to talk about any kind of special distribution.

Got it. Thanks. From a competitive landscape, do you -- how do you see it now? Is it more intense with lower oil prices or not?

I think the current level of oil prices as low they are today is combined with this mild fall that we’ve had, have made the best competitors in the marketplace very aggressive. So it’s about as aggressive and competitive market we’ve seen in less than two years.

Got it. All right. Thank you very much for your time.

Thanks.

Thank you. And the next question comes from Michael Prouting with 10K Capital.

Good morning guys.

Good morning Michael.

Good morning.

Apologize for any background noise as well as any hacking coughs that you may hear during my questions. I had a few questions, actually but I’ll try to move through them quickly. So firstly, you mentioned customer retention. It looked like during the fourth fiscal quarter, the major difference year-over-year was on customer gains versus customer losses. Just curious why gains in the fourth quarter were so much lower than the prior year?

We certainly don’t know for sure but what we believe is the strong reduction in pricing over the last 14, 15 months have left many customers without the catalyst to go shopping for in a new company that combined with no major weather event that would've closed that during that quarter. And we believe we also enjoyed some extra gains mid year coming off of the outperformance of last year's winter. So a lot has to do with where oil prices are right now. A lot of people are just sitting kind of comfortable where they are in having lower renewals, which makes them not such big shoppers.

Okay. Understood. And I guess that was despite the additional $1.7 million in marketing costs in the quarter right?

It is, and it’s actually in the face of that. So a lot of that marketing costs though had gone to product expansion, more propane presence as well as forays into natural gas service. In some areas, we haven't been in some additional security, marketing, plumbing and appliance repair, just trying to get recognition that those are part of our mainstay suite of value offerings to our customers but it takes to get there in the face of over a half-million customers in some regards it could be expensive or more expensive that some of these one-off service offerings to get attention, especially when it comes to marketing on the Internet.

Okay. Fair enough. And then so as you look at fiscal 2016, in light of your comments on people having [license] [ph] enough to switch given where heating oil prices are today. Any thoughts on whether you can keep -- or maintain a lower rate of customer loss as we’ve seen in the last couple of years?

It’s our focus on a daily basis, not just getting new accounts but holding on to the ones we have. Obviously those are the most valuable customers, ones that we have had a longer relationship with. It’s a challenging market for doing that. Certainly, the temptation for customers to look around, we're trying to stay in front of that with the best of our abilities, I think you know we’re better at it than we’ve been in before. We have some new internal tools to make us more aware of customers that may be showing less signs of loyalty in -- and we’re hopeful that we can stay within a small band of what we've been executing in the past.

Okay, terrific. So moving on, so delivery and branch expenses, I actually had that model quite a bit lower and certainly as you look at calendar Q4 of last year compared to Q3, our delivery and branch expenses dropped considerably, whereas this year there were some much smaller decline on a sequential basis quarter-over-quarter. You mentioned $1.6 million of acquisition costs and $1.7 million of marketing but of course last year, you have cost associated with Griffith. So I think I’m still struggling to understand a little bit why delivery and branch expenses were up so significantly on a year-over-year basis in the fourth quarter in light of what we can expect through 2016?

Well, I can’t make any predictions for 2016 but again we did make some acquisitions in the quarter. We did have Griffith – but we did have Griffith in the prior year as well. We had normal increases whether it’s for insurance, comp and benefits as well as some profit sharing expenses too could go up.

Yeah. I’ll give a little additional color. I don’t think it’s -- but I would say there were small things that added up to some big difference in numbers. And some of those small things and I would categorize them as good small things that did close to some more money in the quarter. One is additional training that I mentioned in my talk. We began a program where we put over 400 frontline employees through a special program to better relate to customers as they interact with them, certainly not an expensive process. We believe that ultimately we’ll get all our employees to that program. It involves the cost of the labor plus the cost of the training, that’s delivery people, installers, service people as well. Plus we’ve started expanding some security as I mentioned. Again, there is expense related to that, not just local marketing but some direct inflation expense. And then thirdly along those similar line, I talked about the expansion to Tennessee. During the fourth quarter of this year, we began all the actual ground work for the expansion of Tennessee and in its origin and this is the first time we’re really experiencing it for a standalone propane business, the net expense in the beginning is a net minus. There is a very little revenue coming in and in that period, during that fourth quarter, there was really no revenue coming in to speak of. There was marketing, local advertising, ground setup expense, licensing locally in Tennessee, administrative costs, managerial costs, you name it, basically constructing an acquisition from scratch those overall expenses. Obviously, each one we do will incur expense over -- we believe over a relatively short period of time, we will see return on these investments. But these are not things we saw in 2014. So they stand out in my mind as something very different and characterize some expense differences during ’15. And one other thing, I'll say is that we still labor through additional service expense as an overhang from the second quarter of 2015's winter. It took us through September of 2015 to actually catch-up with some maintenance work in almost every area of the function and the field which is service fleet, which goes right into delivery and in some cases installation.

Plant as well, we covering for the winter.

Okay. This is actually really, really helpful to get the color. I appreciate that. So given those comments, any color on the extent to which those costs were, if you will, one-off costs for the fourth quarter and the extent to which those costs, be they training costs or costs associated with new products or geographies or what have you, to the extent to which those costs are going to be ongoing for 2016?

What I can say is this. They own one-off on the basis that they are controlled events that as we manage the business and we see opportunity to balance our expenditures versus our plan, profit for periods. We will take advantage of that. If we have forces working against us, whatever they might be, that make them more difficult to execute, then as a management team, we will use our best judgment to control those. They weren't accidental. There is the ability to control them to adjust them to shrink them, to expand them and you will be seeing that over the course of the next several years, as we look to improve the business and grow the business. When the opportunities that the business provides us through our successes allow us to, we will do more of it. And when we have, as I say, forces working against us, we will have to do a lot less of it and we will try to be as prudent as we can in how we control those expenses.

Okay. Terrific. That’s really helpful to understand. And that’s actually a quick takeaway. So in terms of forces working against you, obviously the weather in the current quarter isn’t actually cooperating. I know in previous years, when you’ve had adverse weather, you’ve done a terrific job in managing costs. It sounds like from what you're saying that you certainly haven’t lost cost discipline.

It’s a core part of our culture as a business. I’m very proud to be able to head the organization, knowing that we have many managers at multiple levels that weather both the coldest periods and the warmest periods today. We know what we need to do, responsively to the changing and challenging weather conditions. And we basically react to it, if not on a daily basis, on a weekly basis adjusting, trying to look forward. We like to be operating the business several months at a time, not just in the day that we are in.

Sure. Okay. And it’s great to hear that by the way. Now moving onto the balance sheet. It looks like everything was pretty much in line with one exception and that’s the amount of inventory you had on the balance sheet at the end of the quarter. Obviously in terms of a day sales that was a pretty big number. Two questions on that. One is, are you comfortable with that level of inventory? And secondly, I assume that inventory was acquired at much higher prices than current pricing and I'm just wondering what the implications of that might be, either for gross margins going forward or I don’t know, the risk of some kind of impairment, let’s say with the cost of that inventory or what have you?

Well, we’ve spoken about the way we buy product many times on these calls. And basically, every gallon of inventory we bought, we start with a futures contract. So we unpriced, if you will, the inventory.

Okay.

Now, we have couple of days of priced inventory absolutely but not every gallon on our balance sheet is priced. So if the market moves up, we are not going to enjoy a benefit if prices go up and if prices go down, we are not going to get dent, if you will in a declining market.

Okay. Terrific. So there is really no concerns with that high level of inventory at the end of the fiscal year?

No. Not at all.

All right. Great. Terrific. And then there has already been a question about acquisitions. It look like you did few acquisitions recently and I don’t have the numbers in front of me. But my recollection is you spent roughly $20 million in the fourth quarter and another $7 million in the current quarter. Is that roughly right?

We did. We spent $20 million in the fourth quarter, I believe.

Yeah. And I wasn’t there at the subsequent event. In the 10-K, about an acquisition you made in the current quarter or Am I..?

You are absolutely right.

All right.

It’s related.

So obviously, it’s good to see you putting that amount of capital to work. Do those pace of acquisitions indicate a higher pace going forward and then what do you expect in terms of larger deals?

I don’t think the rhythm of acquisition pace has really changed. I have mentioned before, as we have for many years, they are pretty opportunistic. We work on some for many years. We work on some that come up that. The sellers want to move quickly. They were couple this past in last 12 months, those one or two that sellers wanted to move relatively quickly. We have looked at several dozen this year and a lot of them -- the owner just kind of want to sit there waiting for their own timetables. So they are out there. We don't know how many we will be able to succeed on, coming to terms and acquiring in the next several months but we are always optimistic. We keep working on them. I mentioned in the past, we have a dedicated executive on the team that just works on that constantly everyday where we are constantly forming for new ones. And we are not the only player in the marketplace but I think we are a formidable one. And I’m sure there will be others that pop up. I don’t know and we never know what a cold weather means, what a warmer weather means. It doesn’t more or less. So, we just keep trying our best to bring them in. I think it was kind of like going fishing. We keep trying, change our vale a little bit, keep trying. Persistence is what's important. And again, we got to find the right businesses for us, not all, the best fit and that’s why we don’t do everything that we touch.

Okay. Sure enough. And related to that adverse weather. In the past, have you seen reduced acquisition because people want to wait for a better year? Have you seen that effect exit from the industry as smaller operators coming to cash flow pressure?

We’ve seen both. We’ve seen both. Sometimes, we surprise both ways. Sometimes, we don’t really understand how people get through the highest prices or the warmest winters. But they seem to find the way, endure and don’t sell and a lot of people make the mistake of waiting for a better price. So, I will say this that for the most part, a better price will not come. As the businesses will go on, they typically put themselves in a position where their businesses for one reason or another, the value was going down, almost certainly. Not in every single case but in a lot of cases because of other conditions that they are facing and more competitive situation.

I assume. This seems kind of obvious but I assume that when you are looking at valuing businesses today, you're going to look at it in terms of some kind of longer term EBITDA generation as opposed to EBITDA generated off of more favorable weather conditions in the last fiscal year.

We always weather adjust and we try to make up those assumptions for the 5 and 10 year periods going forward of what the businesses will produce.

Okay. Terrific. And then getting to the end here. Buybacks, you mentioned buybacks as one use of capital. Obviously, it's been a while since you’ve bought back units. On the one hand, the price at which you bought back historically is still lower, quite a bit lower than where the price is today. On the other hand, the unit price has gotten hammered along with the rest of MLPs sort of as we know bunch of various reasons? So what are your current thoughts as far as willingness and priority of allocating capital towards unit buybacks?

Well, we have a disciplined program where -- we have a hurdle out there, I’m not going to give you our hurdle as to where we’re buying units. And we -- to a certain extent the is six month out of the year due to quite periods in the way this program works that we can’t even change the price. So, there is a very few opportunity for us to move that price up or down during the course of the year.

Have you bought back any units this quarter?

I really don’t want to give you any color as to what’s happening in the first quarter of fiscal 2016.

All right. Fair enough. And my last question and I’m sure you going to hate me for asking this question. So I saw that you renewed Dan Donovan’s consulting contract. I have couple of questions around there, firstly, can you just remind me, I know it’s in the 8-K, but I just have forgotten. Can you remind me how much is that consulting contract for?

$250,000.

$250,000. Okay. In terms on the Board, right?

Yes. He is.

Okay. And I know he was a -- he was absolutely a terrific CEO. I think I’m struggling to understand why you’re paying a guy who is serving on the Board $250,000 in consulting fees and related to that I’m wondering how much time is Dan allocating to consulting for Star Gas I know on a daily basis, weekly basis, why have he?

The decision to renew Dan’s role going forward was actually mine, his involvement. And there are several reasons for it and it doesn’t have anything do with the Board, quite frankly. A lot has to do with his role on several committees where he represents our company in a way that, quite frankly, there’s no one that has the depth of relationships and experience involved with the other people that are on these industry-related Boards in multiple regions that Dan does. In addition to that to transition other executives currently who are engaged in, what I consider an optimum load of responsibilities, trying to drive the business forward and expanded would basically takeaway from those initiatives at the current time. Dan has made himself available to us. And quite frankly, the cost of replacing Dan by using those other executives would actually exceed that, since Dan doesn't get benefits, he doesn’t enjoy part of our bonus profit-sharing pool and many other attributes of a senior level executive. But what I would also say about, your question is Dan is actively working. It’s not just consulting. Meaning he doesn’t just give advice. He has a schedule calendar of events. It’s a same calendar of activity that we greet you for the first two years, which is -- which equates to about almost 30% in active working year and that does not really include all the conference calls he is involved in. I think it’s a very valuable tool to have him doing what he does. And it’s valuable not just for Star Gas. It’s actually a benefit to the heating oil industry as a whole, quite frankly. So, I mean, maybe the heating oil industry should help pay for part of what Dan Donovan is doing. But we’ve taken as the leader in the industry to pay that.

And that payment also is in lieu of any other Board compensation.

Okay. And I have a comment on that. So as far as his participation in various industry committees and so forth, so couple of comments on that? Firstly, with other companies people who are on the Board do that without expecting or receiving compensation from that. Secondly, I don't understand why if Dan is doing just for the industry you guys feel that he should be paid by Star Gas for that? And I think my third comment would be, I don’t know how much the average employee earns at Star Gas. But to me I believe it's a three-year $750,000 consulting contracts seems pretty rich, especially given the fact that you have very competent management team and you also hired a guy to work full-time on acquisitions? So to me it doesn't seem like good corporate governance and I think the risk is you are going to attract activist investors and I think that would be a shame given how you guys have managed the business up until this point. So those are my thoughts on the consulting, contract.

Okay. Thank you.

Thank you. And the next question comes from Dave Kanen with Aegis Capital.

Good morning. Due to the [indiscernible] bear with me. Can you take me through cash flow from operations, was there anything anomalous that boosted it, for example, accelerated depreciation and amortization in that for the next couple of years. Can you give me some guidance on what you expect your CapEx to be?

Well, we don’t really give much guidance. But if you look at the last couple of years and as far as maintenance capital and add up three, four years and divide by whatever the number of years you have, we’re pretty steady in our capital expenditures. There’s nothing really, we did have a good year this year. I mean, our EBITDA was up 30.5%, though we generated $140 million of EBITDA. That -- so that did help generating additional cash flow from operations this year.

Did you say accelerated D&A help to generate additional cash flow?

I did not say accelerated D&A help. I did not say that. I said our EBITDA is up this year, which gave us some additional cash flow from operation.

I see. So accelerated depreciation and amortization was not a factor. There was nothing anomalous or asymmetrical versus other years?

No. Other than we made the acquisition of Griffith a year ago in -- we had it in there for six month last year and we have Griffith in the year for a full year, not only the depreciation but we have its cash flow from its operations, from Griffith’s operation.

Okay. And you referenced opportunities to cross sell as your customers, what I’m going to call for just based on my ignorance for the industry. Let’s call it non-oil and propane gas revenue. Can you tell me about what percentage of your revenue came from these ancillary services in the quarter?

No. We don’t really break that out. So I can’t really tell you that.

Is there any disclosure in your filings?

No. There is not.

So it’s just a fairly new initiative or is this something that you guys have been doing for years?

We’ve done air conditioning and many other things at a smaller scale. It’s not really a new initiative, it’s more expensive and it changes a little bit in its complexion as we do different acquisitions. It’s certainly in very small quantities of growing contribution to our overall revenue?

Okay. And then can you help me to understand the landscape in terms of pipeline of acquisitions or just sellers want more now. Is it more a buyers market or the sellers market? And what is your specific criteria for doing a deal?

I would characterize the market as neither a seller or buyers market. There is no buyers, and the minds of the seller, they always want more money than most people probably would think their business is going to be sold for. But there maybe a buyer at times that will pay it, that’s the gamble they take. We have a very disciplined practice of analysis combined with due diligence that weighs a lot of factors, not just the strength and size of the business, the brand strength, the trending of stability of their account base, the geography that we’re in. Their current cost structure as of compared to ours, so will it fit in ours with their low cost or high cost and can we sustain that and still drive profitability, make it accretive to what we're doing. There is always stuff to sell. That doesn’t always mean its stuff you want to buy. And we have to be very careful. It’s easy to buy stuff that in the current period looks attractive and someone asked early do we look at what the value would be longer term. And that’s our most important aspect, if I would look at an acquisition, what will it mean to the business in the next five years? We try to be as scientific about it as we can be. We certainly aren’t going to know everything that’s going to happen, but we do not work in an isolation vacuum. We do work around these businesses for the most part. Sometimes we don’t know the business is really well. But a lot of times, we do know all of them, sometimes we compete directly with them, what we know who the owners are, what they’ve done. The pipeline has been the same I think for the last five or six years. It has ebbs and flows. We’ll get communication or contact from somebody for probably three or four come up at a time and then we won’t hear about any for over a month or so at a time. And then there will be another flurry and it’s one, as I said, we will be working on literally for a year of discussions trying to get us to understand their business pattern and trying to get their seller to understand more realistically what our selling price might look like. Sometimes these businesses are setup with no intent for an exit strategy. So even there record keeping needs to be looked at as an aspect of, could we actually make a purchase and rationalize what we might or might not pay. So, there is a lot of effect goes into it. These businesses, you remember, their family run business for the most part and their thought is to have a succession plan in the family that will continue and when that doesn’t work out for some reason then we get an opportunity usually.

So what are the economics that you are looking for? I’m sure, you guys have it internal model and like what multiple…

That’s not something we will share.

Okay.

That’s not something we will share.

Okay. Now typically what is you’re looking for, let’s say, I know you’re not going to -- for a competitive reason, you don’t want to share that but -- let’s say you’re paying five times EBITDA. Are you looking to these deals to at least take out cost or there are certain, I’m sure, cost benefit synergies that you’re looking to achieve. Can you help me to understand that a little bit? What kind of benefit that you get?

This is what I can tell you. We have made acquisitions in different product types, as well as two times EBITDA as a multiple and as high as six, four in the past. Primarily, we are in like the 3.5, 4.5 kind of range depending on the value of the business. That doesn’t mean -- that’s what we approach a business with. As I said, there is a lot of dynamics that go into a decision of what we think we’d scale a business. If we're going to implement categories like ADNC, D, what would determine that for us as a team? Internally, there is five key people are looking for stuff together. On part of it, our CFO who is on the call is part of it. But we do not, for the most part, when we look at these things, look to dismantle them or unfold the economic setup they have. Our first look is, in the ideal business for us is something that we buy -- that the business runs as it is and produces profit that we can latch onto our business. And then over time in a softer way and as opportunity presents itself, shrink expenses jointly between our parent group company Star Gas and these acquisitions that we buy. There is a lot of reasons for that. Employee loyalty, customer loyalty, we don’t like to disrupt functionality. There are instances of some distressed businesses that we bought are very small ones where we see quicker opportunities or one of the reasons the business is selling is that a key player is retiring and doesn’t want anything to do with the with the business and it’s an opportunity to replace that person and absorb some costs. Of course, we certainly take advantage of those things. And those things go into how we calculate, what we believe the value could be for us. And in turn, it may have some impact on and doesn't always have some impact on what we pay a seller.

Okay. I'm going to jump back into queue. But the final question, more of a curiosity thing because I’m from Long Island. Who did you buy on Long Island?

That we’re not going to disclose.

Okay. Good luck. We’ll talk soon. Thank you.

Okay. Thank you.

Thank you. And the next question comes from David Spier from Nitor Capital.

Hey, guys. I’m going to try to keep it as brief as possible here. So, you did a very good job on the long-term debt from $125 million to about $90 million. Going forward, should we expect that number, the long-term debt number to continue by trending down $10 million annually?

Well, we do have $10 million in current. So there is a total of $10 million in current and $90 million in long term.

The 10 million, I assume you are going to pay off this year?

Yes. That’s why it is in current.

Yes. So that’s internal long-term growth.

We’ll be paying basically $5 million -- excuse me $5 million, $10 million over the next five years, and then we have 25% of defined excess cash flow as defined in the credit agreement, which will also, if you will go to paying the end pull of $50 million.

So, yes, I understand to that point, it comes up in five years, I believe the $50 million.

Right.

So, you do have the option to pay down more currently if you decide if you chose to?

We have the option and we have an obligation to put away 25% of excess cash flow as defined in the credit agreement to reduce the bulk.

And does go to Escrow, or is that actually is paid off annually?

It pays off annually, doesn’t go to Escrow.

Understood. Okay. It sounds good. And then also, as you continue to pay down principal, obviously the interest cost should go down as well annually as well, right?

Yes. That’s how it will work.

Got it. Okay. I just wanted to quite make sure. And then just a last question. You mentioned the opportunity in Southeast. Can you just explain how significant of an opportunity you see that being and why that opportunity exists more or less?

Okay. It’s hard to measure or describe what we believe right now, the size of the opportunity is. What I would say is, obviously, we don’t have a large presence in the Southeast. We operate slight operation in the most southern piece of North Carolina. We have some presence in South Carolina. We now have some presence only in Northern Georgia and a small site in Tennessee. That being said, propane use is broad throughout the Southeast. We as a practicing business are much more than a fuel supplier. We’re a service-oriented business. And that’s basically, our thorough bread as managers to provide service. It’s certainly a distinction. We believe going against some of the competitors in the marketplace in this territory that is contiguous to how we operate now is going to be very friendly towards us if we do it properly. As I described much earlier on today, it's not without expense to do this. So the opportunity somewhat is dampened by how much ability we will have to spend on this imbalance versus producing the right profit level for the business. So it will be a long-term slow opportunistic growth into the area. Our initial experience has been good, very well received and it looks promising. I don’t know how to put that in. There is no way numerically to describe that. But I think the other benefit of that which is unfulfilled at this point is I believe we’ll have other opportunities for acquisitions in that neighborhood as we become more of a presence.

All right. Great. I appreciate it guys. All the best.

Thank you.

Thank you. And the next question comes from [Gene Riley] [ph], a Private Investor. Thank you. The August acquisition, $6.6 million revenues referred to in the 10-K, is that for eight weeks? Hello?

Yes. Yes. It is. Eight weeks. Okay. Thank you very much. That’s all I had.

You’re welcome.

Thank you. And as there are no more questions at the present time, we’d like to turn the conference back over to Steven Goldman for any closing comments. Mr. Goldman?

Thank you for taking the time for joining us today and for your ongoing interest in Star Gas. And we look forward to sharing our first quarter 2016 results with you in February.

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