Star Group LP (SGU) 2008 Q2 法說會逐字稿

Good morning. My name is Celeste and I will be your conference operator today. At this time, I would like to welcome everyone to the Star Gas Partners fiscal 2008 second-quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS). Thank you. I would now like to turn the conference over to Mr. Don Donovan, President and CEO of Star Gas Partners. Sir, you may begin your conference.

Good morning. Thank you for joining our call and Web-cast. With me today is Star's Chief Financial Officer, Rich Ambury, and our Senior Vice President of Operations, Steve Goldman.

Before we begin, I would like to ask Rob Rinderman of our investor relations firm, Jaffoni & Collins, to read the Safe Harbor statement. Rob?

Thank you, Dan. Good morning, everyone. This conference call will include forward-looking statements that represent the partnership's expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of weather conditions on our financial performance, the price and supply of home heating oil, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, our ability to obtain new customers and retain existing customers, our ability to make strategic acquisitions, the impact of litigation, the continuing residual impact of the business process redesign project and our ability to address issues related to that project, our ability to contract for future supply needs and natural gas conversions, future union relations and the outcome of current and future union negotiations, the impact of future environmental, health and safety regulations, the ability to attract and retain employees, customer credit-worthiness, counterparty credit-worthiness, marketing plans and general economic conditions.

Most statements other than statements of historical facts included on 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 on Form 10-K for the fiscal year ended September 30, 2007 and on its Form 10-Q for the fiscal 2008 second quarter ended March 31, 2008. 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 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.

And now back to Dan for his opening remarks.

Thanks, Rob. We're going to start with Rich Ambury, who is going to give a brief financial view of the fiscal second quarter and these six months ended March 31, 2008. My remarks will follow, and then we'll be happy to take your questions. Rich?

Thanks, Dan, and good morning, everyone, and thank you for joining us to discuss our results for the second fiscal quarter and the six months ending March 31, 2008.

Let's look at our top-line volume for the quarter. We sold 169 million gallons compared to 195 million gallons last year. This decrease of 13% was largely due to 6.4% warmer temperatures, a decline in our customer base, some conservation and the loss of several high-volume but low-margin commercial accounts.

In looking at our gross profit margins for the quarter, the second quarter of fiscal 2008 can be characterized as one in which heating oil prices continued to rise, and record highs were set on many occasions. This contracts in comparison to second quarter of fiscal 2007 when there was a collapse in home heating oil prices, especially in January of that quarter, which allowed us to increase our margin. Despite these challenging conditions in the fiscal 2008, our per-gallon margins realized were $0.745, up slightly from the $0.742 realized in the prior period. We continued to make strides in our service line and the results improved by $1.4 million.

Moving on to our operating expenses for the quarter, they decreased by $3.9 million. While bad debt expense was higher by $2.2 million and our stand-alone acquisitions added another $2.9 million in costs, we were able to reduce certain delivery and other expenses by approximately $9 million, of which $2.8 million relates to accounting for our weather insurance in the prior period.

Our adjusted EBITDA was $58 million, or $14 million less than the prior period due to the volume decline, but that volume decline was driven by warmer temperatures, net customer attrition and some conservation. We posted net income of $41.6 million for the quarter, down $33 million, due to the decline in adjusted EBITDA of $14 million, and an unfavorable change in the non-cash fair value of derivatives of $20 million.

Let's look at the six-month results for a second. We sold 283 million gallons compared to 294 million gallons last year. The decrease of 4% was largely due to a decline in the customer base as temperatures were slightly colder and acquisitions added volume. While temperatures were a bit colder than last year, they were still approximately 3% warmer than normal.

Our per-gallon margins were $0.724, down approximately $0.01 from last year, and this decline was primarily the result of a detraction in our margins in the first fiscal quarter. Again, we reduced our net service department costs and improved this area by $2.4 million.

In looking at our operating expenses for the six months, they increased by $7.7 million, but a large portion of this increase is due to weather insurance. We recorded a benefit of $4.3 million in 2007, which reduced operating costs. Despite the warm weather, in 2008, we did not record a similar benefit. In addition, we had higher bad debt expense of $1.9 million due to the increase in sales, and costs from stand-alone acquisitions added an additional $5.3 million. While it's a bit hard to see when you look at the numbers, we did reduce operating expenses by over $3 million to compensate for the attrition-related decline in volume.

Adjusted EBITDA was $77 million or $17 million less than the prior period due to the lower home heating oil volume, a decrease in per-gallon margins and the absence of weather insurance benefit. We posted net income of $66.7 million, down $13 million as the decline in the adjusted EBITDA of $17 million was reduced by a non-cash favorable change in the fair value of derivative instruments of $3.8 million.

In looking at our balance sheet as of March 31, 2008, we had over $200 million in working capital and long-term debt of $170 million. But if you look at our working capital used in operations, it increased by $118 million for the six months. This use of cash was largely driven by the unprecedented increase in the cost of home heating oil. And as a result, our accounts receivable, our inventory value and our prepaid expenses were all higher.

In looking at our accounts receivable though, our days sales outstanding were up a bit to 37 days outstanding as of March 31, 2008 as compared to March 31, 2007 when we had 31 days sales outstanding. I'm happy to report in April that we did reduce our accounts receivable and our inventory and fully repaid our $48 million borrowed under our bank facility. In addition, as of this morning, we had approximately $27 million of cash invested. So again, we repaid our bank borrowings and as of today, we have $27 million in cash. Now I'd like to turn it back to Dan.

Thanks, Rich. What I'd like to do is just add a little color to the numbers, and I want to talk about margin, attrition, our pricing philosophy and acquisitions.

Starting out with margins, while home heating oil margins versus last year were virtually the same, product costs reached new highs on 13 occasions during the fiscal second quarter and 28 times during the recent six-month period, which limited margin expansion, as it was difficult to increase margins on top of rapid and steep price increases. Some numbers have really been quite startling. Monthly average [merc] prices in 2008 versus 2007 reflect $0.01 per gallon increase of $1.01 in January, $0.95 in February, and $1.27 in March.

In just the February 6 to March 14, 2008 period, the spot or cash market was up $0.81 or 33%. In comparison, the quarter ending March 31, 2007, saw home heating oil prices drop significantly in January, which helped contribute to an increase of about $0.068 per gallon in margins during the '07 second quarter.

April 2008 continued this price increase trend with prices at month's end $0.30 higher than we started the month. And unfortunately, since May 1, heating oil prices have increased another $0.29 per gallon as of yesterday's close.

Attrition was impacted by this record surge in prices. In the quarter ending March 31, 2008, although we lost 200 fewer accounts than the previous year's quarter, our net attrition was 1300 more than the previous second quarter as a result of 1500 fewer gained accounts. The evaluation of credit-worthiness reduced customer gains as potential accounts rejected to low credit scores were up almost 30% versus last year. We continue to require credit-worthy accounts as we know that ignoring this important requirement leads to increased bad debts, which have also been adversely affected by high home heating oil costs.

Along with improvements in our credit management, we are requiring higher minimum credit scores, and this has resulted in a decline in write-offs since 2004. We continue to refuse to resort to economically unsound pricing to either retain existing customers or to acquire new ones. These customers are of marginal value. Ignoring this fact would make it easy to add to our customer counts in the short run, but would be uneconomical business in the long run that would not add to our bottom line. Rather, it would reduce Star's EBITDA. Our employees, under the direction of their local general manager, are charged with reinforcing our value to retail and commercial customers as a service-focused company. Although this is much more difficult in these times of record-breaking prices, no company is better prepared than we are to accomplish this important task.

I might add that we have seen a number of instances where some of our competitors are, in fact, offering uneconomical pricing that has little, if any, relationship to the reality of today's cost of oil. The customers that they attract with this unsound strategy are more likely to be yearly shoppers who, when eventually faced with realistic pricing that results in normal profit, will start to shop again, resulting in churn.

Some of these dealers may also be offering artificially low pricing because they are only partially hedging their protected price products, or even worse, they're not hedging at all. That strategy may have worked in the heating season ending '06, '07 when we were in a down market, but this year has been different. And the consequences of selling product that protected pricing and not hedging or not building the cost of the necessary hedging into your product costs can be catastrophic.

In fact, we have seen some instances this heating season of heating oil dealers being forced to close their doors for this very recent. One medium-sized competitor in New England filed for bankruptcy after enticing customers to prepay for heating oil at artificially low prices, causing many homeowners to lose their deposits.

Acquisitions continue to be a top priority. We completed one small purchase in the fiscal second quarter, closed on another acquisition in April, and are in various stages of evaluation on several others. We have completed 10 since January 2007, and we have evaluated five times that number, both large and small.

For various reasons, we have passed on many, but we hope we will be able to revisit some of these in the future. The challenging market conditions created by the high price of oil have significantly increased the number of potential acquisitions or opportunities for acquisitions. Again, it would be unwise for us to purchase customer lists that don't benefit the partnership in the long term. We will continue to maintain our discipline when evaluating potential purchases to consider only those that we feel will be a profitable fit with Star's operations.

At this time, we would be pleased to address any questions you may have, so, Celeste, can you please open the phone lines for questions?

(OPERATOR INSTRUCTIONS). Michael Prouting, 10K Capital.

Good quarter considering the adverse macro conditions. I had a couple of questions. How much cash do you think you can put to work in acquisitions over the balance of the year?

That should be no problem really. We have -- our balance sheet is in good shape so far as doing acquisitions. Our problem is finding the acquisitions that fit us better versus how much cash we have for it. I really don't have that problem. My problem is finding the right acquisitions.

Yes. No, I very much understand that. I was actually approaching it more or less from completely the opposite perspective. But I'm just wondering if you have any sense of how much cash you might be able to put to work in acquisitions this year.

Are you asking us to estimate how much excess cash we have or how many acquisitions we're going to do?

Yes, I guess I'm eventually going to get that. Basically the -- so I suppose why don't we turn to that? Any thoughts on how much cash flow you can generate in the next couple of quarters? And what your excess cash position might look like if we approach the end of the September quarter?

Well, at the end of September last year, we had $113 million of cash on our balance sheet.

Right.

I would hope we would get back to that kind of level at the end of last year. Now, acquisitions, we are looking at acquisitions every day, but we can't predict how many we're going to close on.

Many of them are small. Some are medium. We haven't come across any large ones recently, so it's very hard to project what that number might be.

Okay. Rich, shouldn't your cash position potentially be greater than that? Because right now you've got turn on $65 million just sitting in receivables. And I would imagine that you are going to collect a significant amount of that between now and the end of September, right?

Yes, we should. Last year, we had $113 million. You have to look at your sources and uses of cash. We haven't made any acquisitions. We have invested some of our cash in fixed assets. But hopefully we'll be able to collect the cash, and be a little north of the $113 million. But we do have $265 million of receivables to collect over the next six months.

Right. Okay that's all I had. Thanks.

(OPERATOR INSTRUCTIONS). Colin Moran, Abdiel.

I echo the sentiment about a quarter in a tough environment.

Rich, a question for you. You mentioned the $2.9 million of stand-alone acquisition costs. What were the gross profits associated with those stand-alone acquisitions?

$5.9 million.

Okay. And when you say stand-alone acquisitions, does that mean something other than home heating oil? Or is that -- I mean you know --?

These are companies that we did not merge into existing operations or existing branches that we had.

I see. Okay.

We kind of operated three or four of the acquisitions on a separate basis and didn't totally integrate them into an existing operation.

Okay. So the plumbing, air-conditioning deal you did, that's inside that $5.9 million?

Yes, it is.

But there's other stuff in there too?

That is correct.

Okay. Yes, and then just on this question of cash, that the prior caller was talking about, as I understand it, you will generate free cash this year, and you haven't done any acquisitions, so you should be, as you were saying, above the $113 million (multiple speakers)

Provided we collect the $265 million or a good chunk of it, yes.

Yes, okay. Is there anything come April '09? The way I understand your revolver is you don't need -- the great majority of that cash is not needed for your working capital. Your revolver will cover your working capital. So is there anything that would prevent you from putting $100 million into share repurchases come April '09, over the course of the year or the next 12 months?

So I'm not going to make a projection of what we can or can't put towards doing anything. But as you do know, the banks only loan us a certain percentage of receivables and inventory. so if our inventories are going up because of increased costs, or our receivables are going up because of increased costs, the banks are only going to advance us 75% or 80% of that. So we have to fund the balance of 20% to 25% ourselves internally.

Right. But I mean you have accrued expenses; you have under in-service contract revenue; you have (multiple speakers)

Yes, but those are not going to go up proportionate with the increase in home heating oil prices.

Right. Okay.

Colin, let me just add to that. Our first priority is to grow through attractive acquisitions and now that's why we got the distribution holiday, Kestrel got the distribution holiday that it based its recapitalization off on. But there are other options too for employing excess capital, whether it be debt repayment, special distributions, unit repurchases. While the unit repurchase is temporarily not going to be an option until April 2009 due to the NOL, but there are other options on the table, of which we have to decide what we will do when the time comes.

Okay. Thanks very much guys, and again, great quarter.

Tom Koch, Turnaround Capital.

Good morning. I have a few questions, so I'll see if I can just take them one at a time here. First question is regarding the receivables that are on the balance sheet, and I guess the quality or the recoverability of those receivables, the fact that the allowance is as a percentage is way lower than it was last year, does that -- what does that indicate, if anything, as far as the quality of those receivables?

I don't really know if it says anything about the quality of the receivables.

I mean I guess people are concerned that the bad economy, fewer people can pay their bills -- all of that. If that was the case, wouldn't you be taking a bigger -- wouldn't you, on your balance sheet, have a bigger allowance for kind of doubtful accounts?

Well, we did do that this quarter.

But as a percentage of your receivables, the number is much smaller. 12 million divided by 265 million as opposed to 7.6 million divided by (multiple speakers)

We evaluate our receivables based on their age. We have a couple things going for us as far as our receivables go. The first is a third of our customers are on budget payment, so they pay us regularly. The second is that we do have a little bit of leverage in the fact that if somebody doesn't pay, we can shut them off rather quickly. (technical difficulty) as we do going into the winter.

And we have pretty good credit scores on the customers that we have. These are homeowners. And we haven't lowered our credit standards. We've actually increased them. But frankly, and you are probably right, only time will tell whether we collect those receivables.

Let me add to that. For the budget customers, their balance really isn't due yet because they are on the budget plan. They are paying their monthly budget payments. When the budget plan ends at the end of the 12-month period, whenever that might be, then that past due balance is due. Those balances may have been higher than what we anticipated when we set those budgets, but of course, we do recalculations on that too, to increase their budget payment. But those are not due yet.

For the balances that are due, though, we have a well-oiled credit group. Right now we have 54 collectors who do a yeoman's job at collecting money. As a matter of fact, over the last nine weeks, they collected over $27 million.

And for instance yesterday, we made 1700 calls to our customers. That's just with our small [Petral] group. That doesn't include our [Menan] group. So we have a pretty good method for collecting these dollars, and we are optimistic that we're going to be able to do as good a job as we have done in the past in collecting our receivables.

Okay. And I guess there is nothing in these financials that would indicate otherwise. You haven't taken any write-downs. You haven't taken any charge-offs. There's nothing here. I mean the point I'm trying to make is actually this receipt of this allowance has gone down as a percentage. Maybe I'm not understanding it correctly. But it just indicates to me that you are at least not showing publicly through your financials that you are seeing any degradation of your receivables portfolio.

And we haven't. And frankly, I don't think you would see it yet. If that was going to happen, it would be over the summer period, when we don't have any leverage against the customers.

If you look at our days sales outstanding, they are up a bit, like I said; they're up around 37 versus 31 last year. For that increase, we did provide an extra $700,000 or so, but we'll have to see how the summer shapes up.

Okay. Another thing was last year, you guys reported in your, I guess third-quarter numbers, you guys had a pretty solid April. I think it was attributable to a large reason for your improvement in your at least EBITDA for last year in the third quarter. I'm wondering what you are seeing this April versus last year and how you think that is going to kind of fall out. And I'm not asking for a projection on the quarter, but if you can just talk qualitatively about it.

Well, I think this April is a lot different from last April. This is a much more difficult heating season only because of the huge ramp up in the price of oil. Last year, in January, the price dropped tremendously, almost $0.15 or $0.20. And then it started creeping up, but it was pretty steady. It was not like the numbers I mentioned in my remarks.

So those numbers alone just make it very difficult to maintain margin; although I think we are doing a pretty darn good job of it. And also worried though about maintaining our customers. That's a balancing act that we've talked about many times on this call that is a very difficult one that we pushed down to our general managers to do, and that is maintain margin and also keep our customers, and it's something we work at every day. But that's about all I can say versus compared to last year.

Okay. And then on the balance sheet, the fair asset value of derivatives -- derivative instruments (multiple speakers) $[22] million, what I guess happens with that as we go into the summer here?

Sure, what happens is we've entered into either a fixed-price or a call to cap our customers' future deliveries of heating oil. And since the markets up, the fair value of those derivative are more valuable than they were when we first signed them up. So we're going to use that money to offset against higher purchases that we have to make in the open market for those customers that we locked in either the cap, or a fixed price.

Will we see some sort of P&L or even cash -- what will be the P&L and cash flow I guess benefit from that?

Well we will be making purchases in the open market, and then we will reduce them by the cash that we will collect under those financial instruments. But that really is not going to affect our per-gallon margins at all. It is a non-cash increase.

Okay. And then one last thing. Sorry to take a lot of time.

One last thing is just as you round into the summer here and go into the fall, again, if prices stay where they are, which as you guys have commented, again, reaching all-time highs and even higher than they were last fall, yes, you generate cash here coming into the summer and the fall. But then, will the outlay of cash, i.e., this swing get even larger if prices stay where they are right now and we are in whenever you start having to buy all your supplies, I don't know if that's August, September, October period? So that if prices were where they are now, you would see an even larger borrowing under that revolver in the fall and winter of next year?

To back you up a second, we usually only carry 10 to 15 days of inventory. So it's not like we will be making a lot of purchases in the summer. Although the last couple of years, we did make some opportunistic purchases in the summer. But sure, as prices go up and our customers pay us within 30 days on our receivables and our suppliers, we've got to pay them immediately; as prices go up, we will have to borrow more under our revolver.

Okay. So when you talk about having a high cash balance at your low point for working capital, at the end of the summer, that will, if prices stay where they are, will start to swing again the exact same kind of cycle we just saw this last winter?

Sure. That's correct. Sure.

Okay.

But under our -- the availability to borrow under our bank agreement was about another $125 million at the end of March.

Okay, great. Thanks.

Matthew Barnett, [Debt] Capital. Hold one moment please. Matthew, your line is open.

We don't hear anything.

(OPERATOR INSTRUCTIONS). Michael Prouting, 10K Capital.

A couple of follow-up questions. Looking at your customer losses in the quarter, it seems as though your losses from price, if you will, in the March quarter were quite a bit less than in the December quarter. Does that reflect anything at all? Or is that just a function of the timing of when you typically lose customers over price?

I don't really know if it reflects timing too much. But of course, in the first quarter, October and November in particular, are when customers are most shopping for their heating season. Coming out of the quarter, there's less shopping. We have noticed a big decrease in real estate activity, which means that we have less customers moving out, but of course, we're signing less -- what we call MLS or real estate leads. So that can have an effect there also.

Credit can have an effect because you might be credit canceling, more customers coming out of the season. Although we are working very differently with customers that owe money this year in that we have some customers who never owed money before who now do. And we're trying to really work with them so that we can maintain their business and yet collect our money within a reasonable period of time. I don't know if that answers your question.

Somewhat. It was just concerning to me that despite the intensity of the competitive environment, that the margin it seems that your losses, your customer losses over pricing seem to be going down rather than up, which seems like a positive indicator, but I didn't want to make too much of that if that's just more timing related.

Well pricing is always the largest category of our losses because of what I had said in my comments. We price correctly. We build in the cost of our hedge. We don't make any exceptions on that other than on new account pricing programs. I think one of the main reasons that we've done a lot better on the loss side is because of what we've been talking about for the last three years in becoming a local company again. We are now totally as local as local can be.

And I'm very optimistic that our employees are going to continue doing a good job in maintaining our customer base. If, in fact, we didn't have this tremendous spike in the price of oil, I think we would have shown a lot better numbers.

And then looking at the volume of gallons sold, it looks like the number related to other, conservation, what have you, was pretty dramatically higher this quarter than in prior quarters. Just wondering if I can get your commentary on that.

So you know, our conservation -- we're showing conservation to be about 2.5% to 3%. I know a lot of our competitors -- and I see some of the other companies that do report publicly have conservation that looks like it at a lot higher number than that. It's sort of an unknown. We don't know where it is, but we do know there's people who are conserving. People are trying to put off deliveries until the fall. And conservation is definitely a factor that we're going to have to factor into our future volume projections.

Okay. So probably as long as prices stay high, that continues to be an ongoing issue?

Yes.

That makes sense. And then I wanted to come back to the cash question. And try to do a little bit better job of articulating my question than I did the first time around. So if we look at the receivables number, where it was September of last year versus where it is today, it seems not impossible that depending on how much you spend on acquisitions, you guys could even be in more or less a, say positive net cash position, or at least pretty close to it, by the end of September. Is that conceivable? Am I looking at that the right way?

Yes, you are looking at it the right way. That's possible. Conceivable.

Okay. Because I think one thing that people seem to struggle with in following the Company is just given the volatility of the cash flow, it takes a little bit more work to figure out your free cash flow yield.

It's a seasonal business, and we sell heating oil and we sell it in the winter.

Exactly. Yes, yes. And so, Dan, the question I had in relation to that then is it sounds like, at least what I'm hearing from you, is maybe a greater receptivity towards deploying some of your excess cash in shareholder friendly ways, be it in terms of distributions or buybacks or what have you?

Basically, all options are open. As I said, acquisitions are the first thing that we look at. But debt repayment, a unit repurchase at some point in time after April '09, and of course, special distributions are always on the table.

Okay, but it sounds like timing-wise then, it sounds like you are reluctant to part with any of that cash before say April of next year. Is that -- am I understanding that correctly?

Yes, in April -- the distributions will start being paid in February of '09. But when were asked this question at the last call and the last call before that and the last call before that, we didn't realize the price of oil was going to go up by $1.50, $2 a gallon. And I'm glad we have that cash. And so why make a decision to something now when we don't have to?

I think that is a fair point. I think the last thing most shareholders would want to do is compromise your business by taking cash away from you that you need to actually run the business. But on the other hand, with units trading at an effective dividend yield of like 9% today, it just seems kind of crazy. And if there's people that are willing to sell the units at $3 a share, it seems like that might be potentially as good a use of cash as making acquisitions.

On debt repurchase, on -- I'm sorry, on unit repurchases, that's something that because of the -- it's really not an option now due to the NOL. But that will go away in April of 2009. And obviously, that's another option that will be on the table.

Okay. Fair enough. So it sounds like we should just continue to try to be a little bit patient here.

Sounds good to me.

Victor Stabio, a Private Investor.

I was just curious, what does your average customer use in oil a year in gallons?

It varies from location to location, but as a Company, we probably, in our total footprint from Boston to Virginia, we look at somewhere between 850 and 900 gallons. It tends to be more in the Northern area and less in the Southern area.

All right. And a follow-up then, I mean, with say the top 80% of your customers per their credit and their financial capabilities, even at a $2 increase using 900 gallons a year, is $1800 really that big an impact on their personal financial? I mean I know you can't answer that because you're not the person. But it just doesn't -- all you hear in the press is about the little old couple on Social Security freezing to death. It just doesn't seem to me like $1700, $1800 is a huge impact on the average customer.

I really think it is because, -- I really have a lot of empathy for our customers because these prices are very steep. I mean the price alone -- average prices this year versus last year March to March have increased almost 45%. And a lot of people are on budgets that this really puts a big dent in, not to mention their other energy uses. If they're using gas in their home or gasoline in their cars, all of that adds up. Not to mention what it is doing to food prices. And the world runs on oil. It affects a lot of other products.

So I think this is just one of them that's very much out there because it stares you right in the face. Hey, my bill last year was X and this year it is X plus and I don't understand the big increase. So I could see why it could be a big factor in the budgets of a lot of our customers.

Thank you.

(OPERATOR INSTRUCTIONS). Ed [Olson], Private Investor.

Well done on your discipline, guys. That's very difficult and well done. Would you elaborate a little bit on the potential timing of a special distribution? Or at least what conditions would need to exist for that to become a reality?

On the timing, I really couldn't comment on it because we really have to see what happens to the rest of this year. We have a lot of receivables to collect. Maybe we'll have a better handle on this in September. But it's very difficult to comment on something like that now.

There are no further questions at this time.

Okay. I thank everybody for joining us today and I thank you, of course, for your ongoing interest in (technical difficulty) Star Gas and (technical difficulty) our next call after the third quarter. Thank you.

This concludes today's conference call. You may now disconnect.