Chris Witty – Investor Relations Steven Goldman – President and Chief Executive Officer Rich Ambury – Chief Financial Officer

John Ragozzino – Drexel Hamilton Mike Prouting – 10K Capital

Good day and welcome to the Star Gas Partners’ Fiscal 2017 First 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. I would now like to turn the conference over to Steven Goldman, Chief Executive Officer. Please go ahead.

Good morning and thank you for joining us today. With me today is Star’s Gas Partner’s Financial Officer, Rich Ambury. After some brief remarks, Rich will review our first quarter financial results. 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, 2016. 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 are pleased with our start to fiscal 2017. Even though weather was in our operating footprint was over 10% more than normal. We feel we're able to deliver relatively strong results, particularly versus last year's first quarter. Excluding the weather hedge credit recorded at that time. Temperatures were nearly 34% colder than in fiscal 2016 when we experienced extremely warm weather. This year was noticeably absent of any significant weather and anomalies. Although, we did not enjoy the same product decline in cost trends as experienced though past two years. In fact the increase in product cost has made it difficult for us to maintain profit margins equal to last year. However, even with condition that combated our efforts to manage margins we believe our managers were able to produce very respectable results. We're also happy to see a positive quarter in terms of net attrition, where results were the best in several years. We ended 5,200 net accounts during the quarter, as compared with 1,400 net account losses during the same period last year. We believe that several changes made in our sales management program as well as our strengths in strategy for customer retention are beginning to bear fruit. These initiatives also contributed to a 2.6% increase in installation and service sales during the quarter. In December, we were able to close on an acquisition in Michigan. Our first foray West of Stars current footprint along the east coast and contiguous Mid-Atlantic states. Since acquiring this acquisition, interest in Star Gas from other Midwest propane dealers has increased. We believe as with this out, we weren’t taking advantage of several expansions opportunities. We will have the chance to selectively grow our footprint. Out west as attractive candidates present themselves. We are very excited about the Michigan business acquired and we think this could lead to additional opportunities going forward. We were also able to close on two small Long Island transactions during the quarter, including a well run plumbing service operation. This year we have begun to work on additional tools to assist our general managers better to serve their customer base. One of the areas of focus that I'm most proud of is our work on improving our hiring and training processes. We believe that as our economy continues to grow and competition for the best employees increases. We need to be able to attract and retain the talent necessary to expand and manage the business. This last point goes to what I am always most proud of the highlight. The strength of Stars overall team. With each passing year, our organization continues to grow in very positive ways and we know our results are direct reflection of these steps efforts. With that, I'll turn the call over to Rich Ambury to provide some comments on the quarter’s results. Rich?

Thanks, Steve. For the quarter, our home heating oil and propane volume increased by 19 million gallons at 24% to 100 million gallons as the impact of colder temperatures was somewhat offset by net customer attrition and other factors. Temperatures for the fiscal 2017 first quarter were 34% colder, but 11% warmer than normal. Our product gross profit increased by $14 million or 14% to $117 million at the higher home heating oil and propane volume was partially offset by the impact of lower margins of approximately $0.09 per gallon. In the past few fiscal years we have benefited from a declining cost in environment that led to an expansion of per gallon margins. This pricing environment has changed somewhat. In addition during the first quarter of fiscal 2017, a majority of our price protected customers reached their maximum selling price, which also contributed to a contraction in per gallon margins. Delivery and branch expenses increased $17 million, a 26% to $81 million. In the prior year's comparable period, delivery and branch expenses were reduced by $12.5 million credit recorded under our weather hedge contract. Excluding the impact of this credit, delivery and branch expenses rose $4 million or just 6%, largely due to the 24% increase in home heating oil and propane volume. We posted net income for the quarter of $18 million or about $6 million higher than the prior year period. Adjusted EBITDA though did decrease by $4.7 million or 13% to $31 million as the increase in home heating oil volume attributable to 34% colder weather was more than offset by the impact of lower home heating oil and propane per gallon margins in the absence of the $12.5 million credit recorded under our weather hedged contract, which occurred during the three months ending December 31, 2015. While the weather hedge contract covers the period in November 1 through March 31 taken as a whole, the extremely warm temperatures experienced during the three months ending December 31, 2015 resulted in our recording the full benefit of that contract. Given that the full benefit was taken, we did not record any additional whether hedge benefits during the subsequent quarter ending March 31, 2016, despite temperatures being 12% warmer than normal during that period. As in December 31, 2016, we had cash of about $37 million and long term debt of $83 million. With that, I'd like to turn the call back over to Steve.

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

[Operator Instructions] Our first question comes from John Ragozzino with Drexel Hamilton. Please go ahead.

You mentioned the attrition rate this year, added 5,000 or so accounts rest of 14 under or so that were lost, how does that compare to like call it the five year average attrition rate?

I can’t say I have the five year average in front of us, but in 2015, for example, in the quarter, or that would be the quarter ending December 31, 2014 we added about 4,300 accounts.

Okay, so fair performances. And then moving on to the acquisition part. And those probably difficult comparison you made in the propane space via the home heating oil. But what kind of typical multiples you see in the – kind of the regional tri state area of Northeastern United States for home heating oil providers there? Are you still looking to expand in that business?

We don’t see a big variance in what we believe the multiples to be. Our range of multiples for heating oil has been in the 3 to 5 times EBITDA range depending on the strength of the business, the size, the Brent, durability, the trajectory of that business and what other opportunity we believed that business offers us either directly or through synergies and other expansion opportunities. And really not – and that would be the same for the New York, New England and Mid-Atlantic areas.

Okay. That's all I’ve got for you at this point. Thanks a lot guys. I appreciate it.

You’re welcome.

The next question comes from Mike Prouting with 10K Capital. Please go ahead.

Rich, I’ll settle for just one quick question and may be told that with some others depend on who else is on the call. So you mentioned earlier that margins were affected by fixed price customers, hitting their maximum selling price ceiling. Can you remind us the relationship between how that works in your hedges and the extent to which you're protected by your hedges? Thanks.

Okay, well, I didn’t say fixed price, I said, price protected and what I'm really referring to the majority of our price protected customers are our ceiling customers. Where we say to the customers this is the maximum selling price that you can go up to. If you look at heating oil prices have crept up from let's say $1 where we were this year. So customers who signed up at $1 a gallon last year with an embedded cost, to today it's almost $1.65 a gallon. So, our hedges project those sales agreements with those customers when it reaches the strike price of the underlying hedge. So our hedges basically paid off during the quarter as a good portion of these customers had reached their maximum. Whereas last year we had a declining cost environment and to a certain extent we were able to lag our selling prices when costs came down.

So let me paraphrase that, just to make sure I understand what you're saying. So it sounds like at some level well in one sense your hedges do fully protect you. But on the other hand you had a benefit last year because essentially the prices were so low that because the customers essentially, well effectively in economic terms overpaid for the ceiling, is that the right way to think about that?

Well, we don't want to say they overpaid. That we charged them the call option, which we were charged, but those hedges were not in the money.

Okay. So in other words, this is essentially just a more normal price or – it's a more normal situation versus the benefit that you enjoy last year. I guess, that's reflected because clearly last year in the December quarter, you had an extraordinarily high, gross margin per gallon. Whereas in the December quarter this year, it’s actually pretty – almost exactly the same the gross margin per gallon in December 2014. And actually well above the gross pricing per gallon years prior to that.

Right. We had $1.18 last year and we’re at $1.09 this year in the quarter.

Yeah and December 2014 was at $1.10, December 2013 was $0.97, December 2010 was $0.95, so. You’re basically back to “normal levels”.

Right.

Okay. All right. Thanks.

[Operator Instructions] At this time, it appears there are no questions. So this concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Goldman for any closing remarks.

Thank you, Steve and thank you for taking the time today to join us. And your ongoing interest in Star Gas. We look forward to sharing our second quarter 2017 results with you in May.

This concludes the conference. Thank you for attending today's presentation. You may now disconnect.