Good morning, and welcome to the Star Group Fiscal 2021 Fourth Quarter Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

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, 2021, 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 us for our year-end conference call. It's amazing how time has passed so quickly and here we are concluding our second full fiscal year under the leadership of the new management team. I'm pleased to report that even with slightly lower volumes and the lingering impact of COVID-19 on certain parts of our business, Star had another strong year in terms of overall performance as we push forward with our strategy of continuous improvement and remain keenly focused on the fundamentals of our core business. Despite weather that was 10.7% warmer than normal, and 1.1% warmer than the prior year, we reported adjusted EBITDA of $127.5 million, just 2.1% lower than fiscal 2020. It's notable that this was accomplished despite collecting $6.7 million less in proceeds from our weather hedge program due to the seasonal timing of degree days. Given these factors and those related to the pandemic, I think that in many respects fiscal 2021 represents our best operating performance in recent years. None of this would be possible without the dedication of our loyal team of employees, who continue to work tirelessly to provide our customers with exceptional service at every point of contact, and do so with a level of enthusiasm that I believe sets us apart from our competitors. Reducing net customer attrition remains an area of great focus for us, and 2021 results were in line with the prior year. We are encouraged to see an improvement in customer losses and overall churn, which would appear to validate and support the investments we've made in improving the overall customer experience. We completed one small tuck-in acquisition in the fourth quarter and closed to additional deals after the end of the fiscal year during November. In total, we completed five separate acquisitions in fiscal 2021 that included approximately 17,500 customers, and are expected to add nearly 13 million gallons of annual product sales to the company. We remain very committed to our acquisition program, and are currently reviewing several additional opportunities. While none of these are transformational in size, the overall activity level of small to mid-size prospects has steadily increased over the last several months. As we enter the new heating season and fiscal year, we like many in our industry are dealing with the effects of higher product costs, some remaining pandemic-related constraints and a tight labor market. However, we continue to proactively adjust our operations to ensure we can effectively deal with these headwinds, as well as any other challenges or opportunities that may present themselves in the coming year. 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 2021 fourth quarter our home heating oil and propane volume increased by 1.8 million gallons or about 10% to approximately 21 million gallons, as the additional volume provided by acquisitions was only partially offset by net customer attrition. Our product gross profit did rise by $2 million, or 7% to $37 million, largely due to the increase in volume sold and slightly higher home heating oil and per gallon margins. Our delivery and branch expense increased by $3 million, or 4.5% to $71.4 million reflecting somewhat higher insurance expense, and the additional costs associated with the 10% increase in volume. Our net loss declined by $7 million in the quarter to $23 million due to a favorable change in the fair value of derivative instruments, which is non-cash of $6.6 million in the absence of another non-cash charge of $5.7 million recorded in the fourth quarter of fiscal 2020, relating to the sale of certain non-strategic assets. The positive impact from these factors was partially offset by decline in the company's income tax benefit of $4.6 million. Our adjusted EBITDA loss increased slightly by approximately $300,000 to $27.6 million. As the increase in operating expenses were reduced for the most part by higher home heating oil and propane volumes and higher home heating oil per gallon margins. And looking at fiscal 2021, our home heating oil and propane volume sold decreased by 8 million gallons or 2.5% to 306 million gallons, as slightly warmer temperatures and net customer attrition more than offset the benefits provided from acquisitions and other factors. Our product gross profit did increase by $2 million to $450 million as a decline in home heating oil and propane volumes was more than offset by an increase in per…

Thanks, Rich. At this time, we're pleased to address any questions you may have. Anthony, please open the phone lines for questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Tim Mullen with Laurelton Management. You may go ahead.

Thanks very much. I was just wondering on the M&A front, could you just give a little more color in terms of kind of prices being paid valuations for the businesses that you're acquiring? Has there been any change on that front?

Yeah, I don't necessarily want to get into specifics in terms of multiples of EBITDA. We have seen a bit of an increase in valuations over the last year. But for us we really look at each opportunity on its own individual merit and the fit that it has for Star.

Okay. Thank you.

Sure.

[Operator Instructions] Our next question comes from Michael Prouting with 10K Capital. You may go ahead.

Good morning, guys. Great to hear somebody else asking questions on the call. Rich, I had a quick question for you. So, just the EBITDA was actually up pretty nicely looking at the fiscal year as a whole. On the other hand, free cash flow or rather cash flow from operations was down a fair bit. And it looks like a very small part of that, like maybe $20 million or so was changes in working capital. It's just not completely clear to me, to be honest, I haven't had time to work through it. But I'm wondering, are there other factors that caused a decline in free cash or cash flow from operations for fiscal ‘21 versus fiscal ‘20? And then obviously, fiscal ’20…

You're looking at kind of two different product cost environments. Fiscal ‘20, get my years right, which was two years ago, I guess now, you're looking at it the cost of decline in prices. In April of 2020, we were buying heating oil for $0.65 a gallon. So you're collecting receivables at a much higher price, if you will, and your inventory, no cost goes down. So the free cash flow might look a little bit better in that year. And you get the same play with customer credit balances. And, this year we had a probably to a certain extent the opposite, where we had a slight increase in cost of product, which is going to impact your receivables. And it's going to impact your inventory valuations and also going to pack your accounts payable, excuse me, and other accounts like that. Now, if you look at our state sales outstanding on inventory, on accounts receivable, I think we're actually down this year or last year by four or five days if you look at the day sales outstanding on accounts receivable. And that's sort of my kind of bellwethers is the how well or how not so good we're doing with our receivable and our cash.

It looks like, I mean looking across the board receivables management is very strong. And yeah, it just wasn't complete. I'll take some more time to work through it. Just to clarify, though, the derivatives themselves have no impact on cash flow from operations right. They're just a complete wash through.

That's correct. Well, the increase to that -- or the increase or decrease in the fair value, it's a non-cash items now. Certainly, the derivatives themselves do work. And when we close them out, they ended up being cost of goods sold.

Yeah, no, exactly. Yeah. I mean, to be fair, fiscal ‘20 was sort of a crazy year in terms of how high cash flow from operations was due to those factors you mentioned. And it looks like fiscal ‘21 has just returned to more normalized levels. But I just wanted to try to better understand that. A couple of other questions, I'll try to be concise. But on the customer churn, Jeff, just wondering what your outlook might be for customer churn, like what trends you're seeing now? How you feel the fiscal ‘22 on customer churn going forward? Thanks.

Yes. And we've talked on this call in the past about our strategy of really trying to streamline the business, but reinvest into areas that improve the customer experience. Those items include enhanced employee training, further development of our CRM platform, and really just trying to put ourselves in a position where our customers can determine how they want to do business with us. And we track that very closely, we use net promoter scores to evaluate our progress there. We've continued to see improvement in those scores overall. And as a result of that, we've seen a reduction in churn. We saw a significant reduction in overall customer attrition from 2019 to 2020. 2021 is essentially in line with 2020, when you remove the impact of the sale of our southern propane assets earlier in that year. That was really a strategic move on our part. But we're optimistic that we can continue to make improvements that will positively impact customer attrition and churn overall. Clearly the pandemic and some of the constraints in terms of a fully or hybrid remote working environment have impacted some of that progress. I've made that -- I shouldn't even say impacted, but made it more challenging, we've had to find more creative ways to implement some of the things that we want to do. But I am optimistic. And so far, it's a limited sample size, but so far in October and November of fiscal 2022, we're off to an improved start. We'll be able to keep customer losses in check, and new customer additions have increased. So we'll have to see how the rest of the quarter plays out. But, I hope that answers your question.

You know, definitely. I mean, that sounds very encouraging. Again, to not to sound like a broken record, but even relatively small and sustained changes or improvements in customer churn can actually have dramatic impacts on the value of the company over the long-term. And I know that you very much understand that, so that sounds very encouraging. And then just to switch gears quickly on capital allocation parties. And then I think Rich covered this to some extent in his remarks. But it looks like you're starting to get pretty low on the share repurchase authorization. So should we look forward to an increase in the unit repurchase authorization? And is it reasonable do you think given the company's strong cash position to see the customary dividend increase in calendar ‘22? And, I guess, I'll wrap my questions up there. Thanks.

Sure. At the rate that we're going with repurchasing units, which is, again, were covered by the SEC plan that will carry us to the next open window for us, which will be the end of -- which being, I guess, the beginning of February once we file the next 10-Q. So we will evaluate it then, as we normally do. But, historically, we've had a unit repurchase plan for I don’t know almost 10-years or so. And you don't have to evaluate the distribution, whether distribution increase, as well. And I believe that's after the April board meeting. I haven't got to see other results for the year. We have another four and a half, five months of winner yet.

Right. Okay, fair enough. Actually, I'll cheat and ask just one final question. Jeff wondering if there's any updates in terms of your thinking around climate initiatives, and how the company is positioned in terms of say, non-oil based heating fuels going forward.

Michael, we as an industry feel like we've got a very viable pathway to reducing carbon emissions. And we noted some of that in the 10-K through the use of bio heat, which is essentially a blend of ultra-low sulfur heating oil and renewable biodiesel. And, as an industry, we've made a united pledge to use bio heat as a means to reduce emissions in kind of a stepped approach in the coming years. And, as a company, we've tried to take a leadership role in that. So, we have been increasing our delivered rate of B 20, which is essentially an 80/20 mix of ultra-low sulfur heating oil and renewable biodiesel. And we'll continue to do that. So we feel like that's a very viable and realistic approach and cost effective approach to addressing climate change as an industry.

Okay, great. Appreciate the update. And thanks again for taking my questions.

You bet.

Our next question comes from Jean Riley with Retail [ph]. You may go ahead.

Thank you very much for taking my question. Looking at the balance sheet, the captive insurance collateral, it looks like it's reached the steady state. Is that a true statement?

Yeah, it does look like it's to a certain extent reached a steady state, which sort of means that the claims that we're adding versus what we're paying out in claims on a current basis is pretty much in a steady state, as well as the credits that were given from AIG, as well as support the open claims that we have, because they do provide reinsurance in our captive is pretty much in a steady state. So yeah, so we're kind of happy that we haven't had to increase any deposits into that this year. It might have gone up in value just due to some investment income, but we haven't had to contribute to the capital in 2020 or for our upcoming insurance year, which is 2022.

Well, thank you very much. And I just want to add, I think you guys are doing a great job.

Thank you.

This concludes your question-and-answer session. I'd 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 fiscal 2022 first quarter results in February. In the meantime, have a wonderful and happy holiday. Thank you.

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