Good morning, ladies and gentlemen, and welcome to the Suburban Propane Partners Second Quarter Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press 0 for the operator. This call is being recorded on Thursday, May 25, 2025. I would now like to turn the conference over to Davin D'Ambrosio, Vice President and Treasurer. Please go ahead.

Thank you, Operator. Good morning, everyone. Thank you for joining us this morning for our fiscal 2025 second quarter earnings conference call. Joining me this morning are Michael A. Stivala, our President and Chief Executive Officer, Mike Kuglin, Chief Financial Officer, and Alex Centeno, Senior Vice President of Operations. This morning, we will review our second quarter financial results along with the current outlook for the business. Once we have concluded our prepared remarks, we will open the session to questions. Our 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. We have 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 our earnings press release, which can be viewed on our website at suburbanpropane.com. 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. Our annual report on Form 10-Ks for the fiscal year ended September 28, 2024, and our Form 10-Q for the period ended March 29, 2025, which will be filed by the end of business today, contain additional disclosure regarding forward-looking statements and risk factors. Copies may be obtained by contacting the partnership or SEC. Certain non-GAAP measures will be discussed on this call. We have provided a description of those measures as well as why we believe this information to be useful in our Form 8-Ks, which was furnished to the SEC this morning. The Form 8-Ks will be available through a link in the Investor Relations section of our website. At this point, I will turn the call over to Michael A. Stivala for some opening remarks. Michael?

Thanks, Davin. Good morning. Thank you all for joining us today. The fiscal 2025 second quarter was an outstanding quarter for Suburban Propane. Our business experienced some of the most sustained winter weather in the heart of our footprint throughout January and February, the most critical months for heat-related demand. The kind of consistent weather conditions we have not seen in nearly a decade. I am extremely proud of how our field personnel at every level worked to meet the surge in demand when our customers needed us most, while also opportunistically taking on new business when others were unable to keep up. This was a real testament to the preparation by our operations teams and the flexibility of our operating model to ramp up when demand dictates. And with safety as our highest priority, I am extremely proud of the way our people maintained their focus on the highest operating standards for safety during a prolonged stretch of high activity levels and some tough operating conditions. As a result of the surge in demand, propane volumes for the quarter increased 15.5% compared to the prior year second quarter. In fact, during the month of January 2025, we delivered the highest propane volume since 2018. The strong volume performance combined with effective margin management during a rising commodity price environment and good expense discipline contributed to a $28 million or 19.1% increase in adjusted EBITDA compared to the prior year second quarter. In our renewable natural gas, average daily RNG injection for the second quarter improved from the first quarter and was down slightly compared to the prior year second quarter due to extremely cold ambient air temperatures in the Arizona area that impacted anaerobic digestion and RNG production at our Stanfield facility, coupled with a short period of planned…

Thanks, Michael, and good morning, everyone. To be consistent with previous reporting, as I discuss our second quarter results, I am excluding the impact of unrealized mark-to-market adjustments on our commodity hedges, which resulted in an unrealized gain of $700,000 for the second quarter compared to an unrealized gain of $5.9 million in the prior year second quarter. Excluding these and certain other non-cash items, net income for the second quarter was $136.9 million or $2.11 per common unit compared to net income of $110.3 million or $1.71 per common unit in the prior year second quarter. Adjusted EBITDA for the quarter was $175 million, an increase of $28 million or 19.1% compared to the prior year second quarter. Retail propane gallons sold in the quarter were 162 million gallons, which was 15.5% higher than the prior year second quarter, primarily due to the impact of sustained widespread cooler temperatures on heat-related demand during January and February and the contributions from our recent propane acquisitions. Average temperatures across our service territories during the second quarter were 5% warmer than normal and 9% cooler than the prior year's second quarter. During January and February, which are the most critical months for heat-related demand during the second quarter, average temperatures were comparable to normal and 13% colder than the same period last year. From a commodity perspective, propane inventory levels in the US experienced a strong seasonal decline during the second quarter due to a surge in domestic demand and continued strength in exports. At the end of the second quarter, US propane inventories were up 44.1 million barrels, which were 15% lower than March 2024 levels and 6% lower than the five-year average for March. Given the decline in inventories and other factors, average wholesale propane prices for the quarter of…

Thanks, Mike. As announced on April 24, our board of supervisors declared our quarterly distribution of 32.5 cents per common unit in respect of our second quarter of fiscal 2025. This equates to an annualized rate of $1.30 per common unit. Our quarterly distribution will be paid on May 13 to our unitholders of record as of May 6. Our distribution coverage continues to remain strong at 2.17 times for the trailing twelve-month period ended March 2025. Just a few closing remarks. During the second quarter, we officially launched our multiyear sponsorship of NASCAR and Speedway Motorsports at the Daytona 500 race in February. We are now the official propane partner of NASCAR. Under this partnership, Suburban Propane will provide propane for new propane-powered track dryers that NASCAR has added to its fleet to replace kerosene-fired dryers as part of NASCAR's sustainability initiatives. Suburban Propane is also providing propane to the concessions and on-site services for campers during NASCAR event weekends at 19 tracks during 28 races throughout the NASCAR season to enhance the fan experience. We are extremely proud to partner with such an iconic American spectator sport. Their trust in Suburban Propane is a testament to our commitment to safety, our national reach, our reliability, our commitment to local communities, and our shared commitment to sustainability. We look forward to a long and rewarding relationship and the opportunity to engage with fans at every race. Now just a quick comment on something that has dominated the news and market over the course of the last several weeks, and that's tariffs. As a domestic energy distributor, we source the vast majority of the products and equipment, whether for resale or operational use, in the United States and only a small portion of propane from Canada. Therefore, we believe that…

Thank you. Ladies and gentlemen, we will now begin the question and answer session. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star to follow up with the number two. If you are using a speakerphone, please make sure you lift your handset before pressing any keys. One moment while we prepare the Q&A roster. Your first question comes from the line of Christopher Jeffrey from Mizuho Securities. Please ask your question.

Hi. Good morning, everyone. Thanks for the update, and congratulations on the strong quarter. Mike, maybe just to pick up where you kind of ended as far as volatility in the propane price market. Could you just kind of maybe talk about how Suburban is positioning yourselves ahead of, you know, kind of during this non-heating season, any kind of changes to the plan for the next heating season?

No. Honestly, Christopher, you know, we have been through different commodity cycles over the last several decades. You know, we know how to manage the supply of propane very, very well. Our product supply team does an amazing job. We have great relationships with our suppliers. In fact, I think with the expectation that there is going to be more propane trapped here in the United States, and all that can change overnight, but, you know, currently, I think there is a view that there may be a higher inventory of propane here, and prices are going to reflect that. You know, the average price of propane in Bellevue was about $0.90 in the second quarter. It is down closer to $0.70 as of yesterday. So you know, you are starting to see the impact of that, but that does not really change the way we are thinking about how to source and set ourselves up for next year's heating season.

Got it. Thanks. And then just wondering if you could kind of give us a high-level view of Suburban's view of the propane M&A landscape coming out of this heating season? I know that tends to be where the activity picks up.

Yeah, it is a great question, Christopher. The interesting thing, I think, is the propane M&A landscape has changed dramatically. In the sense that the number of buyers has significantly diminished. You know, I think part of that is there are just fewer majors than there were, say, ten, fifteen years ago that were aggressively going after trying to consolidate the industry. And the other aspect is, you know, some of our peers have different challenges that may force them to stay on the sidelines for a bit while they sort of focus internally. You know, we are viewing this as a great opportunity for Suburban Propane. There is a very promising future, I think, with respect to propane, different than it was, I would say, even two, three years ago. I think some of the challenges that the propane or that, frankly, the energy landscape has experienced over the last several years, whether it was COVID, whether it has been some of the natural disasters, has really started to highlight what we have been saying all along is that propane is such a powerful on-demand energy source. So we see a very bright future for propane. Which is why our strategic growth initiatives are balanced. We are continuing to invest in our core propane business. And we are focusing on the long-term future to position ourselves well in the renewable energy landscape. But as far as propane goes, we are really excited about some of the new uses that we are finding for propane, some of the new respect we are finding for propane. And, frankly, when it comes to M&A, we are in the best position of anybody to take on good quality businesses in attractive markets, and our pipeline of opportunities is building quite nicely as we come out of the heating season now. And I think with some more discipline in the market, multiples are probably getting back to where they should have been all along to be much more reasonable and practical, with a limited number of undisciplined buyers left in the marketplace.

Got it. Thank you. And then maybe just one on the renewable side of things. Maybe any kind of expanding on the comments as far as whether it is federal regulations, state-level regulations, any kind of timelines we should be looking out for, then, maybe longer term, do these different outcomes change the way you might be operating or thinking about Adirondack, Columbus, or any kind of future investment in the space?

Yeah. You know, on the RNG side, I think one of the things that is going to develop over time, and that is more of a state-related regulatory framework. You know, California and their LCFS program, they are very much focused on creating a better balance in the credit markets, you know, the environmental attribute markets. And some of the amendments that have been proposed by CARB to create that better balance to drive higher values for credit prices are certainly opportunities that we see are going to take shape as those amendments get finalized hopefully, in the coming weeks or months. Because what you see in the environmental attribute markets is as soon as there is an adoption or a change to the LCFS program, even that gets announced, you see movement. And then when those amendments had to get pulled back for technical reasons, you see movement back downward and sort of values getting stuck where they are right now. But I think what we see is the regulators are interested in ensuring that the incentives that are there for fuels that were envisioned from the beginning to drive lower carbon are continuing to drive the behavior and the investment into that space, and they are very much focused on getting credit values up. So I think when we see LCFS amendments actually get implemented in California, I think we are going to see a rebound in LCFS credit values, which is going to be a welcome sign for anybody in the renewable fuels markets and certainly for our RNG platform. You know, in the meantime, we are very much focused on just operational excellence. That is who we are. That is what we have been known for in propane, and we are driving that mindset in the…

Got it. Very helpful. Thanks for the time today.

Great. Thank you, Christopher.

Ladies and gentlemen, if you are using a speakerphone, please make sure that you lift your handset before pressing any keys. Again, if you would like to ask a question, please press star followed by the number one. There are no further questions at this time. I would like to turn the call over to Michael A. Stivala for closing comments. Sir, please go ahead.

Great. Thanks for your help today, Operator, and thank you all for your interest and your attention today. Again, it was a fantastic quarter for Suburban Propane. It is what we are built for, to be able to meet the demand when it comes, and I think this quarter demonstrated that. We look forward to talking with you again at the end of our third quarter in the summer. And, in the meantime, please remember at all times, please be safe. Thank you.

This concludes today's conference call. Thank you very much for your participation. You may now disconnect.