Star (SGU) 1 Feb 182018 Q1 Earnings call transcript

Company Profile

Participants

Chris Witty	Darrow Associates, Inc.
Steven Goldman	President and Chief Executive Officer
Richard Ambury	Executive Vice President and Chief Financial Officer
Andrew Gadlin	Odeon Capital Group LLC
Matthew Spiegelman	Locust Wood Capital Advisers LLC
Michael Prouting	10K Capital LLC

Call transcript

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Operator

Good morning and welcome to the Star Group Fiscal 2018 First Quarter Results Conference Call and Webcast. 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 Steve Goldman, Chief Executive Officer. ahead. go Please

Steven Goldman

financial thank today and After joining today. first us brief Good Star's you Chief me quarter our review is Rich Ambury. Financial With remarks, morning will for results. Officer, some Rich

We take will your then questions.

Investor Chris read Associates, Harbor Please our Safe Chris. firm, go Darrow Before we ahead, of Relations begin, statement. Witty will the

Chris Witty

statements. and beliefs performance Steve, than included in may facts different risks represent the that call and forward-looking include statements involve actual Company’s forward-looking good conference Thanks the implied statements historical from this that expectations cause morning. such concerning and performance may and materially other events This All of statements. uncertainties, indicated conference call be by future Company's statements to or the are

differ expectations will events information, Steve call. forward-looking to the otherwise whether back I'd to turn statement, or obligation Company publicly attributable to prove could to Company have factors Although such the can in future cause materially the to Steve? the required ended or like that from call update in date actual Goldman. we otherwise the a All expressly the revise call behalf its September cautionary reasonable, Important Company forward-looking to Unless new XX-K of oral no expectations in are or no statements are believes XX, this acting the Annual now assurance such subsequent results that result after of persons fiscal and their Company’s give the and on reflected been qualified correct. for year statements. by the that entirety forward-looking statements the XXXX. by disclosed conference Form conference this and as Report undertakes any written Company's expectations are in law, over

Steven Goldman

while our a most ourselves. the Good will XXXX a way record much we It demand October a was at squeeze often period volume a throughout us the a one to worldwide of everyone. see this later month this we for quarter. was winter decided what would everyone of start finally the was saw inbound of year, on certainly And beginning month otherwise total a end rolled warmest Basically At it the gave saw begin? weather, footprint. this winter milder of the When Thanks, us. year service the of ask cooler as we fiscal cold November seemed year When on and and fundamentally somewhat expected Chris. unfolded, time. good into began normal morning, weather extremely of December October flavor from we a same as like November we the than turn up not it would began the January. which to like for in also and near which woke into

to provide the in level quarter flow dealing of service outcome the customer us while of I'm the brought provide general. a stressful same ultimately So very propane, it challenging opportunity even to the requirements first these did service always some we also it oil accounts delivering and with our very and but We high with some begin days. reasonable handle and commitment proud with

rise were and retention footprint oil saw furnaces similar with While margins propane both our pressure we battling Winter. and boilers selling and rose their across as to putting and well. winter, customers our efforts as cost last Man Envision on prices Old products

for attract power results account we just were even and net not were believe good while more the of However, and the everything this growth we our such us strongest new in which challenges level our customers. to X.X% conditions given last a customer their very X% to to XXX experience. doing and competitors We hold did were are year's saw difference quarter, net similar we onto to about

we we've some that that this see we and any acquisitions notable last we've will believe we in of on our made their organizations come purchased the acquisitions close very we'll did summer towards future. fit some good not design believe to While quarter with the progress integration fruition working

we're the addition employees report entities that strong One management as business. the in However, specific team well a development be and business of involves of of leadership this multiple the nothing they discussions will moment. has to increasingly have with challenging seem area of and at very talented managing we the to a for future going become on

are Star Group we competitive to of and market all the levels possible hire believe in the even best However, across doing everything we to a brightest organization.

train, to continue in manage hire, into one this and provide started Company. Overall, human practices of our then we manage was hallmark else weather that our even turned will no the out like coldest improve memory, industry though issues the attract, the well the feel to one is that customer rather excellent quarter's can. of weak the our and resources service able to our periods We our in team

continue Rich? Ambury will Rich are whatever we a comments on stronger into as forward Group over drive We to the evolve years successful provide for more people business With that, results. to turn develop quarter's our to the conditions to some that happy the come. Star I the handle and call can

Richard Ambury

Steve, Thanks, everyone. morning, good and

our will to than warmer Having extremely propane were For cold the X% and to factors. that, last the temperatures October. offset that and XXXX but believe heating customer deliveries temperatures net the the more other impact acquisitions colder the temperatures second of increased attrition and X% record experienced volume or week by of X favorably million during XXXX, the gallon fiscal first of December the impact fiscal normal fiscal we million than said warm oil in XXXX. Temperature for due home as during quarter quarter, XXX X.X% gallons than colder XXXX quarter

potential were higher due Our heating home protected for product strike million heating keep in future during Delivery in expenses the and at million of oil expenses of or million price for please million customers gross mind by that million increased and oil X.X%, hedges But quarter. business, $XX our increase. profit another a $X reduces branch $XX their propane or margins. which rose home and to volumes $XXX gallon margin In million increased and over accounted operating our and XX% expansion. million X% by the $X propane the XX% per to $X.XXX or the base acquisitions for increase $X price to $XX

during also our weather charge and December. to hedge temperatures based $X We a million on recorded experienced November relating contract

as XX the and than the by business. by of acquisitions rate temperatures higher during by a operating income by mentioned XX% EBITDA for from margins costs of offset X a and covers $XX the XX% $XX $X and the base heating our net whole, Adjusted weather were As million or than on due to taken in base contract business a charge, or as higher of the a million December and million home volumes hedge prior reflecting $XX higher I to from insurance federal reminder, March in $X threshold. largely our November period, propane insurance the million XX% year million oil payment more provided XX%. November – $X colder decreased the posted were decline We period through corporate in million quarter adjusted weather reduction to deferred tax from $XX tax million little in a the than EBITDA benefit and the additional

tax XX% the that reduced turning recent rate for point a from fiscal to the call back out I XX% to as result to Steve, Before federal our XXXX over reform be year. of income tax tax would like that will

a I'll XX% turn to XX%. federal tax rate Steve. the rule with that, our state blended As effective call thumb, back of decline And will from to and over

Steven Goldman

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

Operator

session. begin Instructions] Please now The first Gadlin Andrew comes We question will from with Group. Capital [Operator question-and-answer ahead. Odeon go the

Andrew Gadlin

in I elaborate little some cold the Good a you on highlighted were challenges there wondering as if could you your that early on bit. morning. was that well. with comments very weather Steve,

Steven Goldman

Yes.

of into period last two December. December ending the while two in days last end see this extreme of cold we period begin January Some days of did – of is spilling the the of

The unprecedented extreme. see in were first do days, degree amount day We the of for both had memory. of a duration couple as and cold to of January weeks XXXX days recent that go per to looks the of to had that we back period

services So gave lot more service very people that all year, itself was of propane was it so delivery of that that a weather experiencing and for a the needing we relatively us, intense of can period But our increase dictated for the could that a a a in consumption whole burned hours, lot states of cycle capacity increasing to we for at one's, the that we All a duration and a oil hours needed. deliver. period. than operated replenish were meaning for rate driver people lot the activity way customers faster we ultimately by short waiver manifested but being delivery a

need call and sub make and people trying XX they that Very of get their cases, some that in operated. and you were that the a those from lot helpful in of areas not important deliveries instructions News of increased are snow you weather we periods, media New normal require ice of heating roads delivering closed from beyond but start in was your and heat, to saying, for some prolonged think so constituents expectations for stations situations, item, get cases to calling and parts a severe insufficient when be related all service of were in which And or service us delivery an particularly provider also England. down dramatically volume you due Telephone to call to restricted sure I a of even states in inspection. lot couple part it it's to getting activity impacted attention a a degrees by weather

were was So what extraordinary activity. heating job and perfect extreme. heated do measured But demand possible. in in Again meaning oil demand with for every part, do just kind of that gas, there resource is was to be ours demand think the as just enormity areas It to our the natural to single companies, customers resources, able in to not priority I any the was a whether resources address that was was addressed directly need it we most certainly And it across test heating an the think situation, we able organization. position real of were identifying again propane, everybody for I with extraordinary. incredible a as situations moving in all an for the

Steven Goldman

were about last that like is you to January, at One look and colder, add of if temperatures XX% XX% thing the December, I to week would of that XX%, the first colder... week

Andrew Gadlin

I helpful us. live mean it sure to but no does through, I'm picnic just gave it is overview very the

numbers If higher given described? could you of just of make about into delivery in delve expenses you $XX some branch kind in just if in The possible. the all translate million December and that quarter were that and year-over-year sense that

Richard Ambury

add that expense. Well, let of me just one piece aspect delivery to more color

Andrew Gadlin

Over time to time, correct? speaks over part, that’s in

Richard Ambury

company challenges being the It of step TDL needed cycle have does, needed the portion industries have is what and large challenge a special of training. delivery all transportation the our train any is in over find is to national challenge a there to – up increasing that's some do for involved to few we element become drivers. years. but of And It we last identify and that

concern And more of newer training, we've years just up average and based of start seen knowledge start but we for aging that of last been our we've the our part of isn't to employees and from – we to the get see age. safety in a of bringing group employees retire. to It time-to-time and to an expectation. of getting reasons group drivers drivers in where training happens in retire than our they more as cycle As older larger level areas kind and just reach certain couple a of

driver. new a So a we invest in lot

And that's the that’s in that course reflected quarter some of happens.

Richard Ambury

the related going take step increase, back you volumes. with to colder December a do that of charge charge booked remarks my $X million $X aside look If - and and from than the $X for recorded out million. acquisition $XX other to was weather them hedge you at November the we had was a or a we because million if threshold through the

base you operating million, So there in business expenses X.X%. the is are which $X if our like will

Andrew Gadlin

I but feels from helpful. sit January even coming think we where been than forecast we a lot just about Thinking quarter. colder and difficult That February about This enter is cold number said business as so now it's QX. of a this is still it's The trying persisted I'm to years? where you sure in into weather up

Steven Goldman

you stop right me there. Let

it's cold even years three forecaster or just or a the first first not in to even an you X next look XX-year week colder be the days average that backdrop you they're put weeks to January the be XX% X.X% if it's by extremely - at to days but than the go goes, average month. of If of the the to that far and last going was XX as or of than over not average And kind about of as in that then tell at and cold XX out weather so colder itself week close days, January slightly being look warmer. days or despite but the so at it's the normal-ish actually X the I'm though ahead X%, next turning suggesting X warmer a

Andrew Gadlin

things it normal then and was Okay, I much March fair it I'm go March stood now but granted. was incredibly apples-to-apples. at relative this the year just as well. And year February pointing normal here last don't to to cold-ish keep trying as was is quarter year where a is to year to year-over-year was only in cold January than to look warm warmer it just normal last a out comps try northeast. last enough, know

had say workforce there $X we expected at was last I should higher is you're The investing if you this. in and does branch the if March. acquisition in got assume there and weather $X million quarter that at million, assume more that compare to that business March am sorry least does okay fair be if level into presumably new that I $XX.XX right the got trying I to so. delivery just I'm carryover a And what about way probably So not of I is mean $X that will million, year – amount same hedge it's in a right oh! the think to

Steven Goldman

I'm it's going to do way whether about on a to have not think not It's own or it numbers. your to comment fair as you the

Andrew Gadlin

Okay.

that in that a in prices were natural last first the have the of market gas an we one that and during of even terms impact March at In least margins quarter? was week spike prices the some things oil period. week saw December, quite on Is bit some this to margins up January that going

Richard Ambury

said Like strike I those remarks. customers XX% for protected Well my those of hedges at in price. were opening their business price

expansion on at where least collapse. there margin, think business no price is protected prices unless would at for it's high So pretty I significant margin the room a

Andrew Gadlin

deterioration margin asking I'm about is worried I'm Yes. – what about.

Richard Ambury

heating back know to prices April, where we'll don't find you oil I it I up know, come can me end being and when out. in

Andrew Gadlin

weren't those you up prices? you in the dramatically, exorbitant the spot, paying were buying suffer, you you spot didn't period meaning weren't that buying, was During market

Richard Ambury

based All our over on every increasing our our day ceiling counter to for and hedges Merck. we are supply Each price prices. the against fixed the protect contractors buy and contracts and

our So customers for protected business, buying back-to-back on that on day market in the whatever to we're spot we for agreement basis. our business, the market on variable price was based with it's entered our the and a price

Andrew Gadlin

margin have are in So pretty protected. in on little variability I margin be that some variability expect you major a the It’d much should but other bit, you per… words, gross a that margin,

Richard Ambury

to price We would I'm And protected protected customers. like that. margins for discussion on that leave going at I yes. the to say our

Andrew Gadlin

you. Okay. Thank

Steven Goldman

You welcome. are

Andrew Gadlin

it me. That’s for

Operator

go from ahead. Please [indiscernible]. comes The next question

Unidentified Analyst

Hi. This Thanks question. for the [indiscernible]. taking is

of [C a buybacks return we're freed So now more capital allocation in up terms be through Curve] might that conversion, the is there cash that or thought capital? the do otherwise to

Richard Ambury

look tax look What look XX XXXX. was since we might guess need been we've now about whatever in, at we’ve acquisitions, unit we saying it years at since been I We with capitalized where repurchases, we XXX% for this, we've at at a place. now can put XXX%, in our there in I was assets fleet. if law; not the ducked of significant do you I assets change fixed our to fixed guess in mean almost

have to end at of the the the that So quarter during of look what also capital or even we at is allocation quarter.

Unidentified Analyst

of terms that M&A look in there, are opportunities And the does out Okay. pipeline the now? how right

Steven Goldman

I think looks healthy. it

prospects have not for strong flow last now We of years. looking probably couple for stopped of a at acquisitions a good meaning period the

several we've footprint, buying the as speaking a buy lot standard more to become are to aspects looking of duediligence through they usual. other that hope translated looks that ultimately of our at at expanded the always we've us they scrutiny survive least thought our us. we we believe because As more what and gotten and will it for businesses make purchases businesses more into volume Seriously that we're will and processes hasn't and

optimistic So in that I'm pretty that.

other reach Our that are that once of and the new months. a help the us and business expectation working that to make we ability look through It's the make that to our prospects we we we well all we we opportunities find some unpredictable could making business and business. execute are that means the in in will the appropriate and into the to have the for have come the of interest that work way, grow our coming know of kind aspect incorporate to sure and had have purchases patience that at to it sure best we're to possibly very

Unidentified Analyst

actually you had in to I so days there volume little I up. think then little by was last the least. base business terms end by Great. stated exclude customer that to of confused you great. which bit declines the net trend, you the heating and release, believe you were was a press quarter But your your volume And in base have talked I then And at is about then degree of week the the additions

So helpful. the to declines you and I'm were base could be if those trying would that what they figure quantify volume in out business came where from we

Steven Goldman

It's number just that’s press I for in XX-Q – in quarter. trailing – the use XX-month attrition It's the the in we we number. a Yes, our not in guess release. attrition our the mentioned that the reconciliation attrition volume basically

see the accounts We We or have the preceding for total the to so see have comparable sold but look a that we our volume that what in and reconcile lost, prior and back year’s X% we customer the months over percent. accounts actually nine added we've added we've quarter lost the quarter might what base, X% quarter. of

net for XX So we the the the attrition look just months, specific not quarter. at previous

Unidentified Analyst

okay. it, Got

So the added, was answer the from is QX? From QX down end QX that but versus to you QX, the or X% any referring comment to any X%? you quarter of end year-over-year, were

Steven Goldman

QX, as We'd we're to at that like because a in year. look fiscal

Unidentified Analyst

yes. QX,

Steven Goldman

But your analysis correct. is

Richard Ambury

And it include of that’s business because addition does year-over-year. only for the not the base acquisitions

Unidentified Analyst

right, to In out X% attrition business, to that base Right, the X% threw I understood. X% in X%. net

exact because was the in give we say attrition base you business me the Let number the of what the that XX-Q. in

Steven Goldman

was months December Just X.X% give our was a the second. ending XX me XX, XXXX. anybody for attrition I want It – X.X%. net

Unidentified Analyst

here. we then think qualitatively the in Got it and how of the about terms costs

that if that I'm because to the the of cycle, sense So the up whether into last end that get from costs QX but what because none of sort revenue? to there is the the occurred – benefit of less revenue the partially particular related weather were difficult in some clearly were QX, that week cost in added are didn't the in that toward which of extreme deferred extra wondering fill

Steven Goldman

costs would on not Yes, the some, quarter the week pin December. say I increase the in would of I in last but

up. was expense insurance Our

possibly be up Our was guess drivers one of customer $X.X service that department million. increase I of the the would cost in

Unidentified Analyst

day it, Is normal. or tried this heating of okay. of I volume last you what accomplish your here? to based question And sort to based your understand to Got effectively approximating make perhaps net then pinned something just margin that variation hedge, degree sure the weather you

Richard Ambury

is this whole, added a for we have November in we through is which as the what year, different March than we past swap. a What year

And will So again $X million. We warmer, period. a million we colder. But with it's it's five it's month receive if pay have $X dollars. might to

In was put addition we a in that it X.X% would if warmer. kick also have

have million. for and So conceivably we million the million we or if $XX.X million had this our was conditions that same be it last million $X year significantly If weather this year would $X could been get $X $XX.X warm higher. example year, would if like EBITDA

Unidentified Analyst

Right.

Richard Ambury

added this year. that We swap

Unidentified Analyst

this portfolio end realized in that hedging cash And that all that Q. and on of through the in the costs hedge in of cost mark-to-market reported call you the the March? or sort Is entire is

Steven Goldman

goods XX-Q increase we decrease and the All and see have last the of is go what’s cost XX. value time to September fair the you and the basically change from would realized hedges derivative or sold and of include loss in a transactions reported in that value which would hedges the the gain options in those market been the the

Unidentified Analyst

change in that that affect EBITDA? value is EBITDA Okay. below Does or market

Steven Goldman

because even non-cash it's change. below It's a

Unidentified Analyst

Right.

Okay you. that’s Thank for me. it

Steven Goldman

You're welcome.

Operator

The Capital. with comes Locust go Please Matt Spiegelman next from question ahead. Wood

Matthew Spiegelman

Good morning.

to It a want of any give break-out rough investments increase by in you that of improve much portion of service to a things temporary to if expenses. questions. made factors sort I conditions the like was of this of different we the and delivery couple follow-up temporary quarter? that us of can seems level was how due was that the Just that the sort we portion of a on want caused

Steven Goldman

it only I Rich extra trailing additional really the a was of lot think to January. few the activity delivery of touched the weather for it into days costs the Because quarter end in impact a the late was marginal. came period was the the in the think in actual this weather of quarter on period and subsequent on different

weather either of hours. the that to So creating over the those way service, about And protecting to providing reasons. training, investment better trails weather, for most then and talked the those the were in was delivery hedge, drivers the for cycle part, time of the business as certainly the costs the of some tools especially there additional point fundamentals cost based Rich expansion the for strong

Matthew Spiegelman

Okay. challenging? And though human drivers feel Do cost even level these you lot you're to and you prove Or the need made then may it need investments there like resources a this that investments working highlighted beginning to of a the your have get be needs make? to are you here have you to incremental be? where you to from business it make at

Steven Goldman

think aspect resources good wages sort I substantially of When you more economy and increases with much any that's footprint – little that in when employees we the of most impacting invested have into becomes competition ever issues the platform cost question – our Yes, what a base ourselves do a spoke I fierce it’s of a need and to get the to for the especially employment. of minimum a about. fair better and as strengthening challenge that we're increased to one, have think better address point substantially we and I we do

think continue of to business I already. they’ll most aspect seen I the components those be the increase incremental of costs substantial we've but think small

Matthew Spiegelman

you Okay. that… somewhat the And investments the attrition have it turned to with around seems like

Steven Goldman

do been lot you've that a and we think on better think that control have noticing losses. customer little I I a

lot customers defects satisfying that our or issues insight trying certainly around is And your better revenue. it and we the finding and things to I have we of think time-to-time best to have to and new acquiring can tend a customers of customers challenges customers been in arms new to I quicker additional but beyond obviously be and by past. the able than it's from our much address I this we're tools think having get organizations not greatest it the ever not attracting add and to think and one into the we perfect right to challenged

Matthew Spiegelman

on industry the stressful the – a any to have a a challenged, not of more about that response in some talking spent where do you? expect attrition question were impact coming an times bunch time of that just that quarters Okay. issue days bit or on just And affected the you customer the is whole you’ve

Steven Goldman

were a how the situations worse that organization, beyond There what means Well, many all did We worked around were think, I anybody's that were people they there clock nearly all that to other with possible. that again, I us. you percentage but were we some could – way to that the competitors just a our impacted is of Most do wasn't way about. not of customers capacities most saying had actively deem, to I'm small certainly certainly relatively far we control happy them. I fared it tell in than limit would can't ours in us.

just We lived. and have do. spike see of with were because been I period. be up because satisfied think short to be attracting that not what marginal during customers new would this customers surprised would some we would I it

basis to that. to customers all a reach try those to can we limit out on to proactive doing are We

has that positive. And outreach so pretty far been

is we means what we're do think say one and the I situation with post of all we do So our to to do things with customers. we're to communicate trying going that

that understand with we why level the unhappy to Our we clear very to service for of them they be would provided. And appreciation be customers. being

Looking to you and there situation. remediate is back be were disappointed there say best their as particular any to but people don't that retain them the severely because to their going will think I other that I to in business and couldn't honestly certainly I trust will where in do able we impact get be situation, think, of be customers. can we again, no that And the like

Matthew Spiegelman

like to That way Okay. sounds handle right the it.

state rate slightly Just the less a offsetting than is the offset last the question for effective that just me to comes tax on It the down federal like or seem there? what’s tax. statutory, factor local

Steven Goldman

your question? What’s sorry. I'm

Matthew Spiegelman

tax it said in by more came rate. rate release just statutory I press down like federal the than effective the total tax seem the

a pointed you offset. by tax think just wondering guys ongoing was few what points, rate so I'm to I XX% a the

Steven Goldman

of going of we're and our You've the now quarter extent to state kind questions got a a we there’s the for get give rate, passed six take tax to old new look quarter. tax the and me in items you to about look rest XX-Q down assured rate, plus rate lot There's ins rate and XXXX at local the seven XX the the a taxes. outs tax this fiscal or of to from but the a want around XX blending that go have at is footnote blending footnote taxes. impacting in any once To with the you call. And if in the certain XX-Q,

Matthew Spiegelman

right. Thank All Perfect. you.

Operator

Please The next XXK go question comes ahead. from Prouting Capital. with Michael

Michael Prouting

for morning, guys. my questions. Yes. Thanks taking Good

Steven Goldman

Good morning, Michael.

Michael Prouting

followed the Steve, was on customer asked. action, back on that question just just the

pricing, guys think premier I far quarters, imagine your customer positioned is competitive ability new to the service gain about market should customers are is that? service that you coming I customers that think think way would the to as I in that the to right? So would premier and concerned, as in add right being as

Steven Goldman

and in have one trust a serve. what with key possible hoping situation. and that's a that and doing. our those every that We're to and us are situations the committed we're get service our been think I can of it again I customers warm percentage we and us. people more that. you of we and that's months We out lot is to that. then, to we selling presumption. be a situation, from because year. be ahead fulfill to That’s glad win our where reasons all the that dialogue to has that that and do to of That have were invested do everything, what We every able able the garner should cold and one even we will their we've to using back exploit that try absolutely year the cold I guarantee say got that's agree, That lining unbroken is is to that I can’t our of customers for couple reputation maintain we it. that XXX% means of in That we do long-term level silver we've in of and points. small reputation if some would be try of a more to And

Michael Prouting

mean actually at is and The gain. to a of guys the that I customer faced, working custom because your opportunity invested deliveries. that many looking than a around meet in your great That's to half-full, half-empty. challenge glass you clock an glass just competitors as Yes, improve rather

logistical the actually net-net rather your last than it. hurt mean So should the positioning of I quarter market challenges improve

Steven Goldman

believe right. I you're

Michael Prouting

be all kept how great. you Okay, We'll right, looking on forward. that to going see lies

want Turning whether bit I that horse I know Am were to continue to there don’t dead is hedge. to because some I’m confused. understanding beat a stuff, financial but still $X I of million correctly Rich, there first no year? costs of in hedge the fiscal fiscal to that that related where to quarter the related quarter were year, correct? this the last in Is the

Richard Ambury

is That correct.

that as our Now added cost. money, the a we had years. the swap to the put normally at extent certain added to which the was We've is of question XX basically we a average

were amount, cost higher So zero since that from on But a that swap, the cash into so outlay the days colder that and were enter degree XX% swap. to threshold old dollars. we than us November December

Michael Prouting

Okay.

Richard Ambury

and all to zero. down owe But in January, go that swap. little $X we we could warmer March could warmer colder, a million that a bit if actually little on conceivably if $X it or Now million in comes February somewhat that come bit

Michael Prouting

great. for clarifying Okay, that. Thanks

March related fiscal in much the apples-to-apples year? so quarter for then the were last last of year, costs quarter So of second how hedge there weather

Richard Ambury

quarter. put in the it's we Well – again cost have year as last we fiscal XXXX had same second

question we play. into whether that anymore get warm come the or the money cost whether all We’re so last put start would have we reverse the will same on going year is disastrously to swap have this The that will to the or versus put year. swap

Michael Prouting

and trying derivatives I'm and purely to just into puts simplify it, getting the rest of financial on and hedges things still Okay, terms.

the Let's just insurance whatsoever in we How the weather think do you suppose that don't and March stays collect weather cost? quarter? the the relative anything on cold about

Richard Ambury

the there for try I’ll last If basically threshold additional no out XXXX average charge of versus or years to of will and second fiscal make – for March, January, the I��ll it XXXX. the fiscal February the them make XX simple be second you. in quarter of in XXXX the quarter we have

Michael Prouting

cost fiscal in net-net year net that $X the prior – is it million to you quarters. The charge, more first you than current fiscal guess than two going insurance additional so no Okay, year? I is but weather result or fiscal the over don't the so

Richard Ambury

correct. That is

Michael Prouting

that. Okay. financial All question. And the right, then thanks for clarifying of one

of know credit. struggling is call I fund of high So capital. just letters major was it you pension relatively a to you the One why acquisitions instead was you able our capital capital of $XX of always shareholders into million the been returns moved haven't believe the is guys that has cash to guys I understand and past. I I the that you make know what actually And the thing reason in cash to have cost had and having – a

to trying just balance that opportunity fund? of I'm out paying shareholders. given Why the choose raising the sheet and $XX not to understand from to capital pension transfer to that the high costs million would you So capital

Steven Goldman

the Well, pension first fund. of all, it to wasn’t

as workers cash did year to and insurance compensation, Okay a liability. what claims certain we including for automobile we liability collateralize extent prior our general

did equal relief when of almost we of we that of letters credit. an Now amount got

will So the cash earning pretty of down returns, billion on our we that if that $X tax actually letters more of nice because a calendar down letters are for a we credit again little tax the XXXX borrow went to the by from bit we and investment the went deduction. fee got our take interest are our invested. you those and about and also ability went And bank that credit up

interest and net-net, our ability we’re So actually and up we our credit letters of to in earning cost. acquisitions reduced our liquidity, went fund

Michael Prouting

the in do terms so of Great ability additional Okay. acquisitions. to

tax a that potential the also tax your also think now lower I rates. guys competitors have have rate also or fact and inquiries lower you

flow So improve cash that is numbers and going presumably to also to run. the easier make

you what to incremental expect So guess that – that do I of to flow just some you cash do the acquisitions to the front, more see just given with a) curious and aggressive acquisition closer I'm I'm expect recently. also on expect become you do to wondering b) come part is lack given the do the third

there capital, on certainly with because balance out guys so there and if other any the sheet companies a when you've of If at? that's much are have competitors you run something numbers looked publicly-traded I'm some you've solid out your acquiring there higher of rock cost curious potentially

Steven Goldman

a lot of Well, questions. that’s

we think bought I $XX million last acquisitions. year in

on going year there I know here will acquisitions. worth million you closed and that on how Hey, won’t benefit So of last of into acquisitions, sure acquisitions, – we our but sitting we’ve at of translates looking what that the I'm to rate? be our quarter, closed there decide a tax evaluate $XX say tax of the lower whether then to we're we lot Yes. this model. to hands is, internally has you not

Richard Ambury

as tax return. that thing, one when have of us We effect we've to tax for as rate progressing rate the return at the in a standpoint, situations. at we're tax looking we're or one we we all very businesses different there's rate return think The of they political No XX-year the kind look in looking the And can rate the and look benefit One is We have and administration. as cautious businesses. eye will at want now. look the so five-year wins new the one-year guarantee at continue of right the of I the some we're change we at XX a of on be form of. and them application change cautious this being begun new tax still seller's acquisitions in kind at years, old from

over partnerships, period want so tax have the of of the small. at some stress, longer have maybe some real some time, Some thresholds kind no basis, business is to be the paid lower, a are

of deviation invested period law, company to of from done but been that do. a they've for from that's well additional it's of always as the people a realized a past, only looking things We'll cash evaluate flow is of and a past money cash demonstrated flow tax, stayed activity wild piece the long It's cash not the in difference in get and we I to period that bigger this invested So make year piece for mentioned in And in from tax that. cash. in savings I difference with we distribution we've we're what in we're taking period like. of for this yet. them to expenditures carefully the time when been acquisitions consideration. do honestly have any the because the and are things that capital tries why they've long tax this of at to money To think the certainly not that get directions. have different grows We from think this which flow as management the point some count the we and change looks year conservative to looking quarter time as leap some we and helpful what that the have gotten to the team year whole time I of as of We're about is coming hasn't business we're that come expands do know at. and We in Fleet picture see want pretty us. don't usual. the and actually

Michael Prouting

with given now. appreciate been mean you my quarter to that forward we company XX joining Yes. taking appreciate and Thanks. the the that you the certainly on years fiscal call. I we've over I questions second for conference I fact look

Steven Goldman

Michael. Okay. Thanks

Operator

go The next a Jean Private question Riley, comes Please Investor. from ahead.

Unidentified Analyst

else? to to for This steady the again. some get capital at you point, the continue was state related time something some use or growing that the of that reclaiming a a it over Does insurance is start part where point of collateral there company money or reaches

Steven Goldman

can grow. We've a collateralized That's year all It's to much pretty it our question. prior of some We claims. collateralized claims. looking certain good possible forward extent

run going it's we claims this year question as is going and same million, the have didn't the letters into or letters so whether credit of another insurance when captive, collateral – expectation to and having we swap and between to our we what pay, claims for letters basically things it's that, or same year. up of we $XX go the the coming the every captive said with either $XX million, But new down credit $XX whether letters another was year fiscal by it's same difference of $XX expectation million whether well would credit, cash go in that enter the happen million for it of credit. issue to captive, answer had off to or on of for we going in cash your So or be – the and of our

captive we to to on credit a the But see the of Now this letter Year-ago XX-Qs look XX-Ks I $XX to worth our that you thing today is of figure credit. the the or balance guess credit. of at that. probably the deposit our and fine at have cash what out million it and is in in $X print the you million $X can only around million worth got – had we letters letters letters of X.X sheet

sheet balance XX-Q to is was just want it in will. it the say was and you I XX-K on there So in the if

Unidentified Analyst

that. understand I Okay,

then tails XXXX and does number do XXXX, becomes…? became XXXX Now when that know XXXX. that how then Like XXXX long last? starting I these to XXXX had we you're and

Richard Ambury

mean the forever, if These comp of claims, XX pretty he's majority that on or I gets at they when hit lives then hurt, majority. working lifetime. a workers' years them old comp a good fellow go once the tail. long XX a over claims poor to tales be that can And he portion but are can a

Unidentified Analyst

equity one question, it's on of thank a just become corporation, but then partners stockholders does units And we're instead and okay. about ever you, and Right, and…? talking more now that the stockholders partners that I still and know the

Steven Goldman

the corporation, based the and if C a with are will as corp our have say C partnership Delaware to still we of to correct partnership in We isn't taxed file just that. to that you legally. elected kind be Well way

Unidentified Analyst

Okay.

Richard Ambury

distribution and still we the set distribution We still still the partner. rights, and splits. have of a the general high have We have

Unidentified Analyst

Okay.

Richard Ambury

But KX getting going process of XXXX, a have you that to forward, to instead XX.XX. you're going a for get fiscal

Unidentified Analyst

Right.

very much. you thank Okay,

Steven Goldman

End Q&A of Okay.

Operator

further queue. no be to appear the in There questions

to turn remarks. to Mr. back like any over would Goldman for I closing conference So the

Steven Goldman

quarter May. results Thank we us you interest in joined Gary, on of Group, growing all to thank you that for today. sharing look forward your second you with XXXX taking a Star in and for

Operator

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

disconnect. You may now

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