UGI Corp (UGI) 2005 Q1 法說會逐字稿

Welcome to this UGI and AmeriGas first-quarter 2005 earnings conference call. Today's call is being recorded. For opening remarks and introductions I'd like to turn the call over to Mr. Bob Krick, Vice President and Treasurer of UGI.

Good afternoon to you all and welcome to our call. As we begin let me remind you that our comments will contain certain forward-looking statements which the management of UGI and AmeriGas believe to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties which are difficult to predict and many of which are beyond management's control.

You should read the annual reports on Form 10-K for a fuller list of factors that could affect results but among them are -- weather conditions, the cost and availability of all energy products including natural gas, propane and fuel oil; competition from the same and alternative energy sources; currency exchange rates; and political, economic, legislative and regulatory changes in the U.S. and abroad. UGI and AmeriGas undertake no obligation to release revisions to these forward-looking statements to reflect events or circumstances occurring after today.

Now I would like to introduce your host, Chairman and CEO of UGI, Lon Greenberg.

Thank you, Bob. Let me also welcome everyone to our call today. I trust you've all had the opportunity to review our press releases reporting our first-quarter results. I have a few opening comments about our performance and then I'll turn it over to others.

Our business units faced two challenges during the quarter. The first was weather; with the sole exception of our natural gas utility all of our business units experienced warmer than normal heating season weather. This was most pronounced at AmeriGas where weather was over 8 percent warmer than normal. It goes without saying, and many of you know us well, our volumes were adversely affected by this warm weather.

Perhaps less apparent, but equally clear, is the adverse effect on volume of very high energy commodity costs. We've all come to recognize that demand for energy products is truly elastic and that customers conserve when prices are high. Conservation affected all of our energy distribution businesses but is perhaps most apparent in the results of our natural gas utility.

Our results demonstrate that in the aggregate we were able to overcome these two challenges and post better earnings. Obviously the most significant factor in our doing so is the contribution from Antargaz. This is the first December quarter in which our earnings include the full ownership of Antargaz and Antargaz had a particularly strong quarter.

While we were quite happy with the job our French management and employees did and continue to do, I will point out that margins achieved this quarter in Antargaz were unusually high and were largely the result of a combination of falling product cost and a weakening dollar from mid quarter on. We do not expect this level of margins to be a regular occurrence for us in the future.

One final point I'd like to make on our earnings -- I believe the actions we've taken in the past, not only to grow our company but to diversify our earnings base, is readily apparent from our results. Compared to 5, 6 years ago we now participate in more facets of the energy distribution and marketing business and we do so in more geographies. This diversity of earning sources does what the business textbooks tell us it should do, it lessens volatility. Our improved earnings reflect this risk mitigation if you will. But more importantly it reflects the focus we have on operational excellence and reflects the fine job done by all of the employees of all of our business units.

At this point I'd like to turn the call over to Tony Mendicino. When Tony finishes Gene will comment on AmeriGas' results and after Jean I'll have a few more points to make. So Tony?

Thank you, Lon. We were all very happy with our consolidated results for the quarter and given weather conditions and high product costs we are happy with the performance of each of our business units. Reported EPS for the quarter was $1.32; however, this includes 11 cents per share benefit realized by Antargaz relating to the reversal of a non income tax accrual. So $1.21 per share is more representative of our results. At $1.21 we were 33 cents ahead of last year, a nearly 40 percent increase.

As you saw in our press release, the lion's share of the improvement came from International Propane, particularly Antargaz, which, ignoring the $6 million gain from the reverse tax accrual, contributed $32 million to net income this year compared to $4 million last year.

As you all know, we owned 100 percent of Antargaz for this quarter compared to only 20 percent last year. Antargaz obviously had an outstanding quarter as we will discuss later.

Let's get into some of the details first with our domestic propane business, AmeriGas. AmeriGas performed well during the quarter despite weather that was 8 percent warmer than normal and a little warmer than last year. AmeriGas' EBITDA, before the gain on an intercompany asset sale, was $77 million compared to 85 million last year. Much of the decline relates to lower retail volumes sold.

Retail volume sold was down about 2.5 percent period-to-period as a result of the weather and customer conservation in response to the high commodity cost of propane during the quarter. Increased operating expenses, particularly higher vehicle fuel and lease expense, higher compensation expense and higher general insurance expense, also contributed to the decline in EBITDA. The negative effect of lower volumes and increased operating expenses on EBITDA was in part offset by slightly higher unit margins.

At the net income line AmeriGas contributed $10.4 million to UGI compared to 12.9 million for the first quarter of fiscal year '04. Gene, as always, will provide a more fulsome explanation of AmeriGas' performance in his comments.

Net income at our utility operations was 17 million compared to 17.6 million for the same period last year. Net income in gas operations declined 700,000 to 14.5 million on weather that was basically normal but 4.5 percent colder than last year. Throughput was essentially flat quarter-to-quarter as was total margin. Relatively flat throughput despite colder weather in the current quarter compared to last year highlights Lon's opening comments regarding our customers' reacting to the high commodity cost of energy through conservation.

The decline in net income in gas utility results from increased operating expenses. Uncollectible expenses were higher for the quarter and last year's expenses benefited from an insurance recovery related to an environmental claim. Additions to our core heating customer base lagged those of last year. We added about 3,000 residential heating customers in the quarter compared to our record 3,400 last year. We are again on target to hit our 3 to 4 percent core heating customer growth rate.

Net income at electric operations was $2.5 million, up 100,000 from last year on weather that was normal and 1.3 percent colder than last year. Kilowatt hours sold were up 2 percent resulting in increased margin. However, increased operating expenses, particularly distribution expenses, offset the increase in margin and resulted in the modest increase in net income.

In international propane our 100 percent ownership position in Antargaz and Antargaz's terrific performance for the quarter drove the increase in UGI's consolidated net income and our EPS growth. The net income contribution from Antargaz from the quarter was $37.7 million compared to 4 million last year when we owned only 20 percent of the business. Several factors combined to produce this exceptional result.

First, as noted earlier, there was a $6 million benefit from the reversal of a non income tax accrual. Second, unit margins, as Lon described, for the quarter were unusually high and not sustainable over the long-term.

Unlike the U.S. propane industry in which frequent margin maintenance price changes are common, French propane marketers try to give their customers more stable prices. As a consequence they adjust their prices less frequently than we do here in the states. In periods of falling propane costs unit margins expand. In periods of increasing propane costs, unit margins contract.

During the quarter, particularly in November and December, the cost of propane, which is denominated in dollars, fell. In addition, the dollar continued to weaken against the euro. The combination of these two factors resulted in lower euro denominated propane costs that resulted in higher unit margins. While it is great to be on this side of the propane cost and dollar/euro hill, there will be periods in the future when propane costs are increasing and the dollar is strengthening with resulting narrower margins. Overall we believe there is an 8 to 12 cent per share benefit in the quarter from these temporarily strong unit margins.

Antargaz's results also benefited from the weak dollar as their euro based earnings translated into more U.S. dollars. On weather that was 3.3 percent warmer than normal and 1 percent warmer than last year, Antargaz volume increase about 7 percent to 104 million gallons as stronger crop drying volume this year offset lower volumes from heat sensitive small bulk users. Operating expenses at Antargaz were in line with our expectations.

At Flaga net income was $500,000, down $200,000 compared to last year on lower volumes relating to warmer weather in their market area. Finally, in energy services, net income was 3.6 million, down $100,000 compared to last year. Net income from energy services gas marketing business increased by 10 percent as increased sales volume and improved unit margins were partially offset by higher operating expenses primarily increased uncollectible expense. In electric generation net income declined $250,000 on flat megawatt hours sold and slightly lower unit margins.

Let's take a quick look at our balance sheet considerations as we always do. AmeriGas finished the quarter with approximately $30 million in revolver debt and 924 million of net debt. Net debt is $15 million lower than it was at the end of the December quarter in fiscal year '04. On a consolidated basis UGI's net debt on December 31st was $1.7 billion compared to 1.2 billion last year. The increase is due to the consolidation of Antargaz's net debt of $484 million.

Remember that Antargaz's functional currency is euros; therefore their net debt on our books will fluctuate with the dollar/euro exchange rate. Calendar year end UGI had $100 million of investable cash.

With that I'll turn it over to Gene who will expand on AmeriGas's results.

Thanks, Tony. As Tony mentioned, the EBITDA for the first quarter, excluding the gain on the sale of Atlantic Energy, was 77 million or about 7 million less than in the first quarter of last year. Our results for this quarter reflect the impact both of warmer than normal weather and record high energy prices. According to NOAA degree days were about 8 percent below normal. That earned the fall quarter a ranking of the 11th warmest fall quarter in the last 110 years. It was only about 1 percent warmer, however, than last year which ranked as the 13th warmest fall quarter.

What does set this quarter apart from last year is the record high cost of propane. Wholesale propane prices were up 47 percent from last year. While market conditions allowed us to pass this cost increase onto our customers, we are not surprised that their reaction to the high prices has been to cut back on consumption. For every degree that our customers dial back their thermostats, consumption drops by about 5 percent. So it doesn't take a lot of action on their part to affect your volumes.

The combined impact of the warmer weather and conservation was a 2.5 percent drop in our volumes compared to prior year. We have completed a number of acquisitions and divestitures since last year at this time, but the impact was virtually offsetting. So the impact on our volumes was negligible. Expenses were also affected by the high cost of energy. Our vehicle fuel expense was up almost 50 percent year-over-year accounting for more than a quarter of our year-on-year expense increase.

High propane prices also affected are reserve for bad debt. We reserve for bad debt expense based on revenues. So as we pass on the increase in the cost of propane to our customers our bad debt expense increases. With almost a 20 percent increase in revenues we ended up reserving more for bad debt expense. Most of the rest of the increase in expense year-over-year was due to anticipated higher sales and marketing expense related to our growth efforts, higher PPX volumes and an increase in general insurance expense.

PPX EBITDA for the quarter was on track with our expectations but down 2.5 million from the first quarter last year. Volumes were up about 13 percent but margins were impacted by competitive pressures and the higher cost of propane. It is generally more difficult to pass on higher propane cost to customers in this segment, although we are adjusting prices to reflect the increase in the cost of propane where we can. PPX expenses were up about in line with our volume and PPX locations are up about 11 percent from last year and prospects for adding additional locations are excellent.

Our other growth efforts are also bearing fruit. We are on track with our growth targets in strategic accounts and in our traditional residential and commercial segments. We are concerned, however, about the impact that the high prices will have on customer churning in the spring and we're planning marketing campaigns to make sure we maintain our positive momentum.

We've also had some success with acquisitions this year; we've closed on three acquisitions in the quarter that will add 8 million gallons on an annualized basis. At the same time we continue to prune our portfolio selling seven districts with about 5 million gallons of volume annualized. As I noted earlier, when you take the effect of these acquisitions and divestitures together with the transactions completed last year after the first quarter, there was no notable affect in the quarter on volumes and expenses. But we have effectively replaced lower profit locations with higher profit locations which will enhance our earnings going forward.

Looking forward, our volumes for January obviously have been affected adversely by the warm weather we had in the first 2 weeks of January. It may be hard to believe when most of us in the Northeast and the Midwest have been busy this week digging out from the recent snowstorms, but the first few weeks of January were exceptionally warm, about 20 percent warmer than normal.

Coming off a warm December and with a continuing impact of customer conservation our volumes have been weak. The current cold snap will certainly help and there's still a lot of winter left, but we will have to have significantly colder than normal weather for the rest of the year for degree days to approach normal for the year. We can't control the weather or customer conservation, so we'll be focusing our efforts on mitigating, to the extent possible, the impact of lower volumes in the way we manage the business for the balance of the year particularly in terms of expenses.

We will also be concentrating on our core strategies of growth through acquisition, through PPX and strategic accounts and growth in our traditional base of residential and commercial customers. We're off to a good start in each of these areas and we want to maintain the momentum. Fortunately lower demand has had an impact on propane prices which are now about flat versus last year at 75 cents Mount Bellevue (ph). So our customers will start to get some relief.

While the current price is lower than the average of the last quarter, prices are still high by historical standards. Just to illustrate that point, in January of 2002 the price at Mount Bellevue was 29 cents versus 75 cents now.

I'd like to finish by thanking my fellow employees for their efforts in this difficult environment. They've had to take the brunt of customer reactions to higher energy prices. Now in many parts of the country they are also working hard to keep up with the demand despite the ice and the snow. Looking forward they'll be helping us reduce our expenses to offset below normal volumes. I know that they will once again rise to meet the challenges that we're facing this year. Lon?

Thanks, Gene. Let me leave you with the following thoughts as we end our prepared remarks. As Gene mentioned, weather in late December through mid-January was extraordinarily warm. This is never a good thing for us. On the other hand, weather, as Gene pointed out, has improved and (indiscernible) has turned much colder since mid-January. This points out the obvious -- weather is unpredictable and there is a lot of heating season weather yet to be experienced. Our results will reflect to some degree the weather yet to be experienced during the remainder of the heating season.

Likewise commodity costs remain high and I do not anticipate consumers changing their conservation ways during the remainder of the heating season. Apart from this elasticity of demand challenge, our business units are performing quite well. They continue to focus on managing what they can control and serving our customers in an effective way. This will, of course, mitigate the adverse effect of any demand issues we might face.

As occurred during the first quarter, the diversity of our earning sources will continue to reduce volatility and support our ability to post excellent results. We can more than ever (technical difficulty) shortfalls and results in one or two business units with better results in other business units. As always we're being attentive to two things for the future -- executing our strategies in each of our business units and seeking out growth opportunities to invest in for the future.

As we have stated many times, we remain focused on meeting the challenge of redeploying our excess cash as we have in the past and opportunities consistent with our strategy and which add to shareholder value. As Tony said, our balance sheet remains strong, our cash generation is on target and we remain committed to at least meeting our earnings and dividend growth targets. Said differently, we're off to a good start and we remain optimistic about the future.

As we noted in our press release, total return to our shareholders, that is UGI shareholders, has been outstanding for many years and we will continue to use that as a guidepost to measure our success in the future. Because of that superior return to shareholders, a number of our management employees will be receiving a payout under UGI's long-term compensation plan. We make reference to that in our press release.

A substantial portion of that payout is paid in shares of UGI's stock. However, in order to pay taxes at the same time we do in affect turn back some of that stock to UGI or deem to sell that stock in order to raise cash to pay taxes. So bottom line is what you will see is some Form 4's being filed which reflect the deemed sale of those shares to pay taxes.

At the end of the day, because of those payments under the plan, the management team -- and a broad based part of the management team -- will have more ownership of UGI stock than they did before. But the way the Form 4 mechanism works, we reported that ownership previously and it will look like a number of us are selling, but what we're really doing is raising cash to pay taxes so we can keep as much stock as we can keep under that plan. I wanted to clarify that in case there was any confusion out there. Sometimes there is that confusion.

At that I'll end my prepared remarks and I'd like to open it up for questions from the floor.

(OPERATOR INSTRUCTIONS) Hunter Hogan (ph), Amaranth Advisors.

It's actually Jim McFadden (ph) from Amaranth. I've got a broad question on the earnings going forward and it's kind of involved so if you'd give me just a second. When you had reported fiscal '04 results, what you had said was that it was 2.31 then you add that 26 cents for the dilutive nature of the shares issued plus the solar purchase agreement related to Antargaz giving you a pro forma of 2.57. But the thing we're wondering is should we really use a pro forma of 2.68 when you factor in this 11 cent charge that you identified here in this quarter and then kind of build our models from there where you'd say 2.68 plus normally 20 cent growth from a normal year of Antargaz plus this whatever delta -- maybe 20 or so cents of unusual operations from Antargaz this quarter plus whatever growth you'd get from the base UGI business. Is that a fair way to look at things now?

I think I understand the question and what I would tell you is if the root of the question is whether Antargaz is performing a bit better than we expected the answer would be yes. At the same time what's contributed to that is of course excellent management by the French management team. Secondly, a great effort by all of the employees in France, and we always take credit when things are going well for a brilliant management, as you know.

But also the dollar/euro relationship has contributed to that and, of course, this excess margin that we recaptured -- or captured rather than recaptured -- during that first quarter for us. So I think if what you are asking is could the base be a little bit higher than we thought because of some perhaps better performance at Antargaz I'd say yes, marginally higher.

I have not gone through the calculation the way you have, so I wouldn't put numbers on it directly. But I would say it's somewhat better than we expected but a good portion, as Tony identified, is due to margins and I'd say probably there's another 2 to 4 cents in there somewhere around there, a couple 3, 4 cents for the euro difference.

How about if I just ask it a little differently. The adjusted number for this quarter was 1.21 versus 88. And you mentioned that between 8 to 12 cents was due to this additional margin from (indiscernible) went down during the last 2 months of the quarter. And the rest of UGI besides Antargaz did not have a great -- results for weather. It seems like to us what you've got to say is that Antargaz, even excluding this unusual margin situation, earned you 25 cents of additional excess profit just from running well this quarter when you compare year-over-year.

Let me take you backwards. If you start with your 1.21 and you say let's take the high end of our range, 12 cents off, you're at 1.09. And then I said (multiple speakers).

What's the 12 cents?

The 12 cents is the excess margin at Antargaz.

Okay.

Then you've 2 to 4 cents I said for the euro, call it 4, and you're at 1.05 and then you're correct that the other businesses didn't do as well as we expected. But the loss to weather is on the order of 3 to 6 cents in there. And it's kind of there. When you sort of net all that stuff out you probably come up with a number in the -- I'll give you a broad range, $1.07 or $1.08 to $1.12 to $1.13, somewhere in there is what might have been a more normalized number in this range.

So you could be -- let's call it -- I'll round it easier -- $1.10 to $1.15 say is a normalized range for this period given what we now know. So that's the way to look at it. I don't think it's that much higher than we were before, but it certainly -- Antargaz has clearly done a bit better than we would have expected.

The point is -- then I'll let you go -- is that based on this new 2.68 normalized from last year when you're already up 20 cents in the quarter, it would be impossible to sit inside the current '05 guidance range you have out there right now.

Yes, well, if you are able to tell me what the weather is within that comment I'll tell you what I think we'll be. But given that there's more than half the winter degree days left to be experienced I'm reluctant to offer any suggestions in that regard.

Thanks for your time.

(OPERATOR INSTRUCTIONS) Sharon Lui, Wachovia Securities.

The first question is if you could provide some detail on the uncollectible balances perhaps in days outstanding on the utility side?

I'll tell you what; everybody is drawing a blank look here on that specific question, Sharon. Unfortunately we don't have anybody today with us from the utility side of it. I would tell you in general the utilities follow the same methodology that Gene explained for AmeriGas. They do reserve on a basis of a percent of revenues. If revenues are up a little bit to reflect the higher revenues and -- but I can't give you a specific answer there.

I can tell you what AmeriGas is because Martha is here and can give us that number and I can tell you also that in the energy services business we had some unusual bad debt expense in there. Given the nature of that business if you have a customer -- each customer is upscale comparatively in that business with 5, 6, 7,000 customers; if you lose one you have to reflect that in your bad debt expense. I would say the biggest changes were in gross dollars and energy services and AmeriGas. I'm looking at DSO for AmeriGas -- this year it's just over 30 days.

Okay.

So again, I don't think the DSOs are significantly different than last year. I think what you'll find is when you have a methodology that suggests you reserve off a percent of revenues, you follow your methodology and you true up at some point in time. But generally speaking we're not going to true up until the winter is over and look at all that to make sure it makes sense. We have a methodology; we believe in the methodology, we believe it accurately reflects what we experience. I hope that is responsive.

Second question is in terms of AmeriGas and potential distribution increases; I guess the lower-than-expected numbers in the first quarter, what are your thoughts on that?

I hate the lower numbers. To answer your question as I said in the past, our coverages were quite good from last year and our Board has been and will continue to discuss the level of distributions in AmeriGas. I think the Board concluded given the performance to date, given the extraordinarily warm weather in January that was in the first two weeks, offset somewhat by the very good weather that we have had the last couple of weeks or so that it was more prudent to take another look at this in the April quarter and get through the winter, and let's take a look at where we stand at that point in time. Implicit in your question is a correct judgment that our coverages are getting quite healthy even in comparison with our competitors in the propane and pipeline industry. They have a way of managing to increase distributions given those coverages but you know us to be conservative. We look at our financial statements, we look at our balance sheets, we want to make sure that we do something that is sustainable when we do it and so prudence dictated that our board wait until the winter is over to take a look at that.

Okay, thank you.

Matthew Lemmie, UBS.

Actually it's Stan Urshinny (ph) with UBS. My question is also with respect to the distribution. I was wondering if there was a target level and a sustainable level for that target that the Board would deem prudent in order for a distribution increase to be put into place.

If the Board were here they would probably not answer that either. I'd tell you that I think the right way to look at that is to look at what competitor companies do. I think the common wisdom is that when you get coverages 1.3, 1.2, 1.3 you're beginning to reach a point where you ought to be looking at rewarding your shareholders for the good results you have.

Again, what we try to do in making recommendations to the Board is look at those coverages, look at our results, look at our balance sheet and the one thing you can count on us is if we do something we are going to treat it as an obligation in the future and we're going to make sure that it is sustainable and that we believe that the growth in the business and the growth in EBITDA in the future warrants doing that and creating a trend that can be supported in the future.

Thank you.

(OPERATOR INSTRUCTIONS) Eric Kalimaris (ph), Wachovia Securities.

I wanted to ask a question kind of getting back to what Sharon was talking about with the bad debt specifically related to AmeriGas. How should I be thinking of it on a percent of revenue basis?

Can you repeat that one?

I'm trying to understand how I should be thinking about the increased doubtful accounts for AmeriGas on a percent of revenue basis?

What specifically we use as a number on revenues or --?

That's as good a place as any to start.

It's between half a percent and six tenths of a percent -- somewhere between half a percent and six tenths of a percent.

And that is where you are now or that's a normalized level?

That's where we are and that's a normalized level for us. Generally what changes is the revenues will change. It's a self-correcting mechanism and doing it as a percent of revenues is we find that we get higher bad debt expense as cost goes up to the customer. And so obviously the -- it self-corrects as your revenues go up and you have a constant percentage, it sort of builds your reserve appropriately.

Fair enough. Second question, relating to the ability to pass through and keeping margin on the propane side of the business, can you speak to that?

Yes, but I think Gene is better equipped to speak to that than I am.

We've got a good track record of doing that and I think it's true generally for the propane industry in the U.S. that if you look historically at higher and lower prices -- wholesale prices, that those get passed through to the customer. I don't think that's always great news for customers when prices are really high, that's not the greatest news were the end-user. But that has been the practice and the market has permitted us to do that.

So no concern with the very high-level of cost of propane that you're going to be able to somehow keep that in tact? The concern I have is that at some point the end-user becomes very, very sensitive and all of a sudden the distributors are forced to start to compensate for some of that and lower the margin. You don't foresee that happening at all?

There's never been evidence of that. I think -- our concern is more that when prices get very high we see conservation. That really is the reaction that we worry about with high prices.

And what was the number that you mentioned before -- what was kind of the sensitivity, the drawback of 5 percent?

If you dial back your thermostat by 1 degree you get a 5 percent reduction -- as a homeowner you get a 5 percent reduction in your usage.

One thing you should remember on the margin side, we're a distributor and as is apparent in our financial results it is not as if we're making more money on the backs of our consumers in passing this increase along. Our results were down and so what happens in the energy complex -- and it happens with our natural gas utility, our electric utility, every energy distributor -- is the cost generally gets passed on, markets permitting. And as Gene pointed out, we don't see anything in the marketplace that would suggest -- we can't pass it on yet but we do see the demand issues reflected in our numbers.

And we'll say that there are some folks out there who expose (ph) the theory and it may be accurate that the higher prices go the more you can hide margin in there. And that the customer is less sensitive to another penny of margin when your price is $2.00 as opposed to $1.00 when they can notice it more. As we said in our results, our margins are basically unchanged -- there's virtually no difference in them from year-to-year, a real slight difference. And so we haven't done that in our numbers and we believe we've tried to balance the need to support our employees and our shareholders and unit holders with treating our customers fairly.

One last one. Can you speak to the level of acquisition potential that you see on the propane side as well as what the potential (indiscernible) multiples might look like? Do you see it changing?

The target that we have for acquisitions is to add about 10 to 20 million gallons a year through the acquisition of independent propane companies -- the smaller propane companies that are generally family owned. And then when there's an opportunity to buy a larger regional player or a national player we're always going to be at bat for those opportunities.

The multiples vary over time. There are certainly plenty of targets out there by the way. There are still 3,500 independent propane companies out there, so it's a target rich environment. And as business becomes more complex there are lots of them that would like to talk to all of us who are buying about selling their business. And the multiples vary in the 5 to 6 range. A lot depends on the quality of the business, how fast they're growing, where they're located in the country, what kind of margin environment they're in or competitive environment. So it does vary a bit depending on the circumstances.

Thank you.

There are no further questions at this time. I'll turn things back to Lon Greenberg for any closing comments.

Just as a slight adjunct on Gene's comment; it does scare us a little bit when we see competitors out there paying 8, 9, 10 times EBITDA for propane businesses. That historically has not been a good entry point. And you won't see us do those kinds of things in the future because it's very difficult to recover from those kinds of things if you do.

That concludes our remarks. We appreciate all the support we get from all of you. We're obviously pleased with where we are and the performance of all of our business units has been good given the hands everybody was dealt. We expect to continue to produce for you and look forward to the opportunity to tell you about our second quarter sometime in late April. Take care, everybody, and talk to you soon.

That does conclude today's conference call. Thank you all for your participation and have a great day.