Star Group LP (SGU) 2016 Q1 法說會逐字稿

Good morning and welcome to the Star Gas Partners Fiscal 2016 First Quarter Results Conference Call. All participants will be in a 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. Please go ahead.

Good morning and thank you for joining us today. With me today is Star's Chief 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 that may cause the Partnerships' 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 Partnerships' expectations are disclosed in this conference call and in the Partnerships' quarterly reports and its annual reports on Form 10-K for the fiscal year ended September 30, 2015. 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 Steve Goldman. Steve?

Thanks Chris. We are all dedicated to achieving the best possible results, regardless of the obstacles faced during any particular day or season. Needless to say, the weather we experienced in November and December was a very difficult way to start fiscal 2016. We did have plans laid out as to what we should do if such warm temperatures occur, but assume that each day this past fall and early winter brought very different forecasts for both the short-term, as well as the weeks ahead. This made hiring and adjusting on staffing rather difficult for our management team.

And while the adjusted EBITDA results are certainly not where we want them to be, I am very proud of how our team reacted to this difficult start to fiscal 2016. In the past few years we have seen great success in the area of net customer attrition and this has been especially true for the first fiscal quarter of each year. Fiscal 2016 has been disappointing in this regard.

While losses inched up just slightly, we saw a noticeable decrease in new account signings across nearly our entire operating footprint. We believe this was due to two factors. First, the lack of adverse weather conditions, which would typically cause homeowners to seek the services we offer as a provider. And secondly, much, much lower oil prices have likely caused customers to be less responsive to our marketing efforts.

While we cannot do much about the weather, we can further strengthen our sales and marketing initiatives to better explain the benefits Star Gas brings to homeowners and businesses alike. We are looking at the first quarter as providing an important lesson in terms of developing new ways for our sales and retention strategies to be more resilient to the ever-changing market conditions we are facing. We've already implemented some adjustments, which we expect will help us going forward.

The warm first quarter not only resulted in reduced product and service sales, but also lowers acquisition activity. We think that other companies' short fall in performance has led them to think this would not be the best time to sell. We are hopeful there will be more normal transaction activity later this year, as we continue to seek our strategic organizations that can help grow Star's footprint and expand our propane business.

Warm weather is not -- one thing that we will not change is our dedication to improving Star Gas's performance. There are two areas where I think we need to continue to push as hard as we can, because of the conditions we encounter. First, growing our customer base and expanding what services we provide to them.

And second, training our employees to provide the best service possible. We are still very focused on these areas and we will do everything we can to improve results through these efforts, despite the very tight expense controls we have already enacted this year. One shining area of our performance this past quarter was our continued propane expansion. This was particularly true in the southernmost part of Star Gas's footprint where new account additions grew.

In closing, our management team responded as quickly as possible to address the challenging operating conditions experienced during the quarter. And while I cannot say we are satisfied with our financial performance so far this year, you can be confident that the Star Gas teams is fighting every day to achieve the best results possible.

With that, I'll turn the call over to Rich Ambury to provide some comments on the quarter's results. Rich?

Thanks Steven, and good morning everyone. For the quarter, our home heating oil and propane volume decreased by 27 million gallons or 26% to 80 million gallons, as the additional volume provided from acquisitions was more than offset by the impact of warmer weather, net customer attrition and other factors.

Temperatures in Star's geographic areas of operations for the first quarter were 27% warmer than the fiscal 2015 first quarter, and 33% warmer than normal. In fact, the first quarter of fiscal 2016 was the warmest reported in the past 30 years within our footprint and December 2015 was the warmest December recorded in New York City in the past 116 years.

Our product gross profit declined by 18% or $23 million as higher home heating oil and propane margins were more than offset by the decline in home heating oil and propane volumes sold. The continued decline in home heating oil and propane product costs contributed to the per gallon margin expansion. Over the last 24 months, we have seen a decline in home heating oil costs of $2.20 per gallon.

In our delivery and branch expenses, we recorded a $12.5 million credit under our weather hedge contract. However, if heating degree days approximate normal for the balance of the contract, this $12.5 million will be reduced to approximately $5.2 million. If temperatures are colder than expected, any payment under the contract could be reduced further even to zero. Outside of this, delivery and branch expenses rose $3 million due to acquisitions, but reduced by $5 million largely due to the warmer weather.

We recorded a non-cash charge of $5.5 million for derivatives, again, largely due to the decline in the market value of certain hedges, driven by a decrease in home heating oil costs. In the prior year's comparable quarter, we recorded a similar charge of $8.3 million.

Our interest expense did decreased by $1.6 million, a result of refinancing $125 million of 8.875% debt with $100 million term loan at much lower variable interest rates.

We posted net income for the quarter of $12 million or $5.3 million less than the prior period. Our adjusted EBITDA decreased to $36 million, down $9 million or 20% as the impact of higher home heating oil and propane per gallon margins, some acquisitions, lower operating expenses in the base business and a $12.5 million weather credit recorded were more than offset by the decline in volume driven by 27% warmer weather.

To be clear on the weather hedge contract, if degree days approximate normal for the balance of the contract, the $12.5 million will reduce by approximately $7.3 million to $5.2 million. If temperatures are colder than expected in the second fiscal quarter, any payment on the contract could be further reduced again even to zero.

Moving to the balance sheet, at the end of the quarter, we had cash on hand of $87 million and not a penny borrowed under our revolving credit facilities. Our short-term liquidity position has benefited from the drop in home heating oil and propane prices. As of today, we have not borrowed under our credit facility except for our term loan.

And with that, I'd like to turn the call back to Steve.

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

(Operator Instructions) David Kanen, Aegis Capital.

A new shareholder. A couple questions. In regards to the adjusted EBITDA of $36 million, does that include the full benefit of the weather hedge contract?

Yes, it does, David.

Okay. In investing activities, I see cash used was $10.8 million versus about $1.68 million a year ago, can you explain that to me? Where that went?

Yes, just give me a second. So, you're saying in investing activities, yes, okay, sure. Yes, we bought some capital -- maintenance capital and some propane expansion and that was about $3.2 million. And this year, we made a couple of small acquisitions for about $7.6 million. And last year we did -- go ahead.

Okay. So given your strong financial position, I applaud that you guys responding to the things that you have control over, mainly managing your expenses and I fully understand you guys don't control, and it's difficult to model weather. The only thing that I will point out, that's little bit disappointing is, given the strong balance sheet, still with very strong cash flow is the fact that you guys didn't buy back a lot of stock, it seems to me that, such a low multiple of your cash flow, like less than three times EBIT or EBITDA, buying back stock actually is going to generate a higher return than making an acquisition at four to five times EBITDA.

Now I'm all for a balanced approach. I think making acquisitions that are accretive to offset attrition and to generate absolute growth, exclusive of weather apples to apples is a good thing, but I just don't understand why you guys weren't aggressive in buying back stock, and if you could comment on that in terms of your view for the future, I would appreciate that very much. And then I'll jump back into queue and possibly ask a follow-up.

Sure. Well, we have certain hurdles that we're going to buy back our stock at and I'm not going to broadcast what that share price is, but let's not forget also we're under -- I forget what the alphabet soup is, I think it's a 12b S&P -- yes, there you go. And under that plan, we really can't make changes upward or downward in the price of our stock, but -- or what we can buy the units back for. Basically from the time we'll start working on our 10-K and file our 10-K to the time file our 10-Q. So to a certain extent, we can adjust that purchase price upward or downward for about six months or so, and that's just kind of the mechanics on how it works.

Let me just add to that. The question about forward-looking on what we would hope to do or want to do. The way we look at it, and I would think you'd appreciate it is, we try to spend the money in a way that we think will be best in regard to return. So we lay that versus what we think the potential current marketplace of acquisitions or other opportunities might be, and since we could only do that a few times a year, there is some shifting in what actually becomes available.

So when we compare what we think is an opportunistic price target to buy back shares and what the current marketplace of then, what we're working on in the way of acquisitions or potential acquisitions. We internally said what we think is a target and if the market doesn't go there or it doesn't work out, that combined with where we are really for real cash flow at the time, we try to make an adjustment when we think it's prudent.

Now if you go back a few months ago, before we start the year, we think, we're going to have normal weather and we're working on talking to a lot of people that potentially were going to sell their businesses. So where we were going with cash on hand was certainly a set direction for us. We thought we were going to be doing something that didn't happen, which that happens, it's just a constant push for us to try to get those things to happen.

But as the weather warmed up, three or four very promising acquisitions decided to kind of sit on the fence on wake of the spring. And they are still in the mix of possibility, we don't know if they will do it this year or not, and that weights heavy on a decision to become more aggressive to buy back shares, because while that may impact the value, it doesn't help grow the business, which we believe from a longer term look, really adds more value to the shareholders' investment.

(Operator Instructions) [David Sphere, Meteora Capital.]

I just have a question regarding the weather hedge. And what was the, say, the annual premium paid for that gas hedge?

I don't have that number exactly in front of me and I don't want to hurt my negotiations going forward with certain parties going forward, so I prefer not to disclose what I paid for that.

Okay, that's understood.

Is that fair enough?

Yes. But in terms of the $12.5 million, that's considered a gain or is that --?

Yes, that's $12.5 million over and above what we paid in premium, but again as we've outlined in the 10-Q, we believe that number will be reduced to $5.2 million.

Understood, okay. But still -- regardless just to -- it would be $5.2 million above what was paid?

Yes, sir.

Okay. Just wanted to get that clear. And then in terms of, I'd say attrition, I mean, where -- I mean if you guys could comment, where do you see, in terms of geographically, where is the -- I guess, is there any specific area where attrition is more difficult? Is there any business with the propane or heating that is more -- you see more of a consistent customer base?

Yes, I'll comment on that. Our propane business is still the strongest growing element of our businesses, it's still smaller by percentage. So, that business isn't shrinking; that business is really -- basically just growing in every single place that we operate at this point.

Heating oil, probably everywhere where I would consider, heat for the longer term, meaning in the (inaudible) and the New York area to be more challenging. I don't know it's greater in a particular place, I mean, when I commented on attrition not being as good it has been for the last several years, it's nowhere near where it was four years or five years ago, it's still much improved over that, and we're seeing a trend of gains being lower than really our losses being up.

Our losses are kind of similar to our loss rates from the last couple of years, there up very slightly. And maybe the category of the type of losses shifted around a little bit. Gain activity are really mobilization of customers in the marketplace has really quieted down this year, and a lot of the movement of accounts has gone to COD from what we can see. It's gone to the lowest possible point of commoditization in the marketplace, no service lowest price.

So to some degree, I categorize a good portion of those as the least profitable customers migrating as they do when it gets warm, and they don't have a lot of loyalty. It happens every time when we get to a very warm period. It's not something that I am concerned as a trend.

Now I wouldn't say that, I'm extraordinarily satisfied with our position of where we are. I certainly believe we can do better. We are internally working on, as I mentioned some new strategies, I didn't go into the detail, but we're really trying to refocus our whole interaction with our customer and it's going to take a little while to do that, it's going to take many -- more than months. We actually have a whole new approach and outlook being put together internally as we look to interact at different levels, so really to differentiate ourselves from our competitors.

And then in terms of -- there was also recent -- and I've seen also in the past an acquisition, it's mentioned some motor fuel business, I mean how -- what is the -- I guess, what's behind that? What type of business is that?

We've done a couple of acquisitions in the last five years that have brought with them motor fuels. John Ray up in Albany, New York or in Troy. And then the Griffith acquisition actually brought a much broader motor fuels business. And we had the opportunity to add to that business with a small local motor fuels business, who was actually competitor of ours since we bought the acquisition in the Baltimore, Virginia area and it gave us a little better leverage on market price and market share. They had been talking to them on and off for several years before we bought Griffith, so it was natural to pursue and complete that acquisition.

And then just [long-term] question is -- and you guys have done a great job, I'd say, de-risking this businesses and it couldn't have been any better timing last year when you were refinancing that debt piece. And this is not really related to, I guess, the previous question regarding buybacks versus acquisitions, because obviously from knowing this business, you understand the need for acquisitions and just basically the benefit of it.

But in terms of, as you go forward, especially as you continue to reduce your debt. And let's say you get net debt down to a substantial amount, would you ever consider within the cost benefits of, especially based on where your stock would be, potentially replacing stock with some of that debt as it would be a lower cost option in terms of what's being paid out to the equity versus what would be the cost of the debt?

Yes, I guess, there is a question in there, what's your question?

The question essentially would be is, I mean, if you can borrow, obviously it would be depending on if you can lower your debt further, but if you could borrow at 4% and buy back equity longer term at, right now paying 5.5% plus, would you consider that option as something being highly accretive to shareholders?

Yes, I guess we'd have to look at the numbers, I'm not so sure we could borrow long-term -- a longer-term piece of paper at 4% debt if you're talking about --

No, I was talking about borrowing -- using some of your credit line to retire equity which as you continue to generate cash over time would be -- and especially because you -- and then you're paying out less anyways to the equity holders as you do that.

Just sure. I mean, we could possibly can take a look at that, but anything that we've done, we've always -- slow and steady wins the race, but we cannot say that we went out and bought gangbusters on acquisitions or gangbusters on buying back our units or gangbusters on increasing our distributions.

No, and it's worked out great so far, so I appreciate you guys.

Michael Prouting, 10K Capital.

I'll do my best to [touch] your fuel questions this quarter. So first one on the expense control side, Rich, obviously you guys had a challenging December quarter, I'm just wondering how you would characterize your ability to manage costs in the March quarter versus the December quarter?

Let me -- I'd like to talk about that. Just from a -- I want to reframe it a little bit. I don't know if we can answer specifically just for the March quarter. Our cost controls and response to the lack of weather in the first quarter will be a full fiscal year process, and the reason for that is, we have a lot of operational commitments to serve the customer that really is the lion's share of our expense during the first six months of our fiscal year, that can't as easily be reduced. And stuff that has either been already paid for or is in the process as the weather has surprised us, particularly in December.

And again, in my comments what I mentioned was, there was no forecast that, in October, let's say, November will be off 20% plus and December will be off over 35% in degree day -- heating degree days. So as those things materialize, we certainly kept the controls as tight as we possibly could and look for opportunities that would allow us to not spend money either as we planned or that we felt we could push off. But for the rest of the year, and particularly the current quarter that we're in, we're operating as we respond to the weather and our customers need, because if we don't do that, we sacrifice our ability to attract and maintain the customers that we want and we currently have.

Okay. Thanks. And just going back to your comments about acquisitions, it certainly makes sense that potential sellers would be hoping for better weather in the March quarter. So two questions related to that. Firstly, I assume that you normalize for weather when you're looking at making acquisitions. And secondly, I'm just wondering so there is some public companies out there and maybe private companies as well, I'm not sure, that are under some balance sheet stress right now. And I'm wondering about the extent to which that might make some potentially even larger acquisitions of areas or pieces of areas available?

Well, we sort of have the same wonder. We're hopeful that perhaps as the colder season or -- but a warmish cold season unwinds, we will hear from some different type of acquisitions that we have and [probably] don't know that to be the case we have reached around and looked at some of the things, I'm sure same type of things you see now.

While there's lot of distress in different levels of the energy market, for the most part on the retail side, this type of stress is common for a lot of these family businesses than they've been used to enduring them over the years, it's not unusual, every three years to five years to have to tighten the belt a lot and make it through what causes them not to sell. Even though they know we do normalize weather, and they are hoping to get a certain amount out of this year in their calculation.

And even though we've had discussions where we kind of say, we can't guarantee what's going to happen January, February and March, why don't you just make the transaction. They're just having in their minds they want to get more cash flow for themselves on top of the acquisition, because we are going to pay him for the full value. They don't believe that they really lose another ground, although in a lot of cases they do, and we try to convince them of that, but it never works, they always want to try to enjoy -- get their cake and eat it too. They want to get through March, get paid by the customers, and then if they're going to sell, start talking about at April and May, try to do something over the summer and be out of it by the fall.

Again, we had a few people who we're discussing we thought that was -- this fall we're going to see a few more acquisitions, and as it warmed up, I said we're going to sit and wait, and there were several of them that we were pretty sure we want to do it, and it happens.

Okay, fair enough. And I guess just a -- the piece related to that. Do you see any opportunities to acquire geographies from public companies that may be in the business that are experiencing balance sheet stress as a result of issues in other parts of their business?

I hate to say never, but for the most part, unless they're looking to sell pieces of their business, they are -- while contiguous to our operations or within our operations, I doubt that those opportunities are going to represent themselves. What could happen is, several publically traded MLPs in the propane space have ended up with some heating oil assets, and they may have interest to sell them off as they delever a little bit if they've seen them underperforming is weather. I mean we certainly would have interest in buying any of those assets if they were to look to sell them.

George Melas, MKH Management.

Thanks for taking my questions. I'm new to this story. And I have a question on the spread, it seems the spread was quite healthy this quarter, and it seems like it has held up quite well. And I'm just wondering on the dynamics of the spread, and I was worried that maybe the lower fuel prices, small operators could have basically their borrowing power could translate into more volume, and the whole market could get even more competitive. Can you comment on the possibility of that and sort of the dynamics of the spread?

Well, that is the reality of the marketplace, and that's why lower level service performing companies are picking up more accounts, some COD companies don't even portray themselves as COD companies. They may call themselves full serve, but they don't really offer the type of service we do nor our closest competitors.

And the spread primarily is a result of this unbelievably shifting marketplace. The market has moved down in the second half of this past quarter, almost $0.50 or just about $0.50. And it has swung up $0.15 to $0.20 each way at a time and that volatility certainly has added to our opportunity to expand margins. But to your point, there is a lot of pressure in the marketplace and now as heating oil is rising again with the cost of oil, there is greater pressure and maybe some smaller competitors may not feel that same pressure to protect the product and hedge as we do. And they will offer lower price to just to hold on to gallons and customers at what we think are not profitable prices that does happen, it happens all the time. This is not for the most part where we like the market to be. Somewhere little above this from a pricing standpoint works a little bit better.

Okay. But if you look at the margin this quarter and the year-ago quarter, it seems the margin this quarter was slightly ahead.

And we've had a continuing decline in the price of home heating oil, at least during -- through mid-January and that to a certain extent has started to reverse in the past 20 days or so -- or 15 days to 20 days.

Okay. And so this decline in a way helps the spread?

Yes, it does.

David Kanen, Aegis Capital.

Okay. First one, a follow-up on George's question. The gross margin was up from 38% to 40.7%. And I understand why, because the wholesale cost went down. If we pretty much stay in this range, do you think that's a sustainable level 40.7%? And would the ideal situation be for you, let's say next year, much colder weather, you sell more gallons, but the commodity itself remains at this price, would that not be sort of like the perfect storm for you guys?

Well, first of all, we don't look at anything on a percentage basis. The way that we look at it is, we look at it on a per gallon basis. We do everything on a per gallon basis as our per gallon margin, not as a percent. And you're right, we got about an $0.08 increase this year versus last year. I think we came in at $1.18 versus $1.10 for the first quarter of last year. But like we've been saying for the past year, year and a half, we've seen a tremendous decrease in the price of home heating oil over about the past 24 months, at least through December. We are down $2.20 a gallon and we've reaped some of that benefit for sure. Going forward, I can't predict the margins, but we've cautioned folks that some of the margins that we've gotten has been a very attractive to us.

But if pricing remains, you know, let's call it range bound and weather is much colder and we're selling many more gallons next year, that would significantly benefit you, correct?

Yes, just like you're seeing this year we went, I think, the trailing 12 months EBITDA is in the $120 million-ish range versus last year where we had cold weather, I think we're in $143 million range -- $140 million range. More volume and colder weather is good for us.

Okay. A question on your, let's call it, non-commodity based revenue, which I know is mostly service contracts and heating and AC. Have you guys seriously contemplated cross selling partnerships, which I believe couldn't expand the multiple dramatically of the company and I'm just going to throw out some ideas, I'm not saying, I've got all the answers and this is what you need to go with, but I'm going to give you some ideas.

For example, home security, connected home, there are technologies for example with Telco's service, Voice over IP at very disruptive prices, in Long Island, Connecticut everybody hates Cablevision, I hope they're not on the call, but if you can provide a disruptive tech partnered with someone that's price disruptor, I think you would have an opportunity to gain subscribers, this should provide incremental high-margin recurring revenue, but also puts you in a space where the multiples are significantly higher than three times EBITDA.

So, I'd like you to answer that if you're looking at that and open to that. And then the last thing is, this is more just a comment or a message to you guys and also to the Board. Just quick back of the envelop computation, last year, which was a good decent year, you did $140 million in EBITDA, which is about $2.45 a share. We know the weather is going to bounce around, but it seems like the $140 million is certainly within our realm in the future, if the weather lines up. If we were to take --

That was a weather year, that was 5% colder, but let's start out with that and some great margins.

Okay. But our margins are a little better now, we're getting a little bit more per gallon. But let's -- even if I haircut that, here's my point. If we assume that in the next three years we spend $70 million a year to buy back stock, a total of $210 million. And even if we paid an average of $10, we would get our share count down to 36 million shares, okay.

So our EBITDA per share, I did it at a $140 million, even if you want to haircut it, so be it, our EBITDA per share would go from $2.45 to $3.88 and this is something that we have control over. We don't control commodity prices, the weather, et cetera. But that's a significant increase in EBITDA per share and then there would also be the benefit that the dividend, assuming we maintain roughly the same $22 million in payout, would significantly go up from $0.38 to $0.61. I did that quickly, so you might want to double check my math.

But that would be -- I think a five multiple, excluding if we were successful in these cross-selling opportunities, let's say we're in the exact same business. We don't really have success in penetrating those other markets. There are times where the industry certainly trades at five times, some of your competitors do. At five times $3.88, we could be nearing $20 a share. So it's really a commentary and a message for you guys and for the Board to seriously contemplate it, but I don't want in any way negate or take away from the good job that you guys have done and managing cost and so forth. And I know you're working hard, but I can't -- as a shareholder, I have to express that to you guys. Thank you.

Sure. And kind of to answer your first question about cross selling. We've tried some things, we've been successful with some things, some things we have not, but when you look at the discussion at our sales men, our sales force needs to make, there is always a pricing plan discussion as to whether someone needs a fixed or a CAF? Whether to be on a budget payment plan? Whether we're going to sell them air conditioning? Whether to sell them a service contract? We do have a security division which we try to sell them our own home security. So, we do have a quite a few of laundry list of our own internal products that we have. By the time you get down to that the seventh or eighth or ninth or tenth service offering, that customer does become a little bit [petite].

What I will say to your thought is, we are currently and it's been going on for about the last six months, it doesn't happen as fast as you may think, it could. We are exploring some relationships and I really can't at this moment discussing who those partners are. With -- typically you know from -- the companies you know better from the Internet to cross brand our services.

And we're hopeful because some of that stuff is still fledgling, however those very big companies can take their relationships with product consumers and translate that into service consumption. If that works and we were already on that, then it could dynamically change what we do, but we have not seen the impact of that yet, because we're about to start a test in the next several months, it'll be small. And we're just trying to see how that actually works. Does it over discount to price of services? Do we really benefit from that relationship as we're hoping? And then can we build on that?

And then to your thought about buying back shares. Again, people invest in things for different reasons. We, as a company, take a very long view of the business and acquisitions are really a priority to try to buy when they are available. So I don't think exhausting most of the cash that is available, that's not distributed, solely to buy back shares, would be a direction that we would pursue at this point. It's certainly not something culturally in what we've displayed our behavior to be there.

We are looking to grow our business for future benefit of those people that are long-term investors. And a lot of our investors are long-term investors and they've seen the benefit of that as they've been involved with Star for many years. And we've slowly, and I think carefully sort to maintain the business. Remember that it's only in the last couple years that we've been able to really get attrition under control to a more nominal level and we're hoping obviously to better that in coming years. But without acquisitions supporting that over the last several years, we wouldn't be in shape we are in.

Right. I'm not recommending an unbalanced approach. I'm saying use every lever that you guys have, every tool in your box including acquisitions, but I threw out that number, because it seems to be a doable number. I would prefer at these kind of multiples, buyback even over dividend. But thanks for your time guys and good luck and hopefully the weather works out in our favor.

This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Goldman for any closing remarks.

Okay, thank you and thank you for taking the time today to join us and for your ongoing interest in Star gas and we look forward to sharing our second quarter 2015 results with you in May.

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