Operator: Good morning. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter Fiscal Year 2017 Earnings 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. Al Heitmann, Executive Vice President and CFO, you may begin your conference.

Al Heitmann: Thank you, Kelly, and good morning, everyone. I am joined this morning by Jim Ferrell, Chairman of the Board and Interim President and CEO. Before we start, I'd like to remind all of you that some of the statements made during the call today may be considered forward-looking, and that various risk, uncertainties and other factors could cause actual performance to differ materially from anticipated performance. These factors are discussed in our 10-Q and other documents filed from time to time with the SEC. Now with that, I'd like to turn the call over to Jim Ferrell for his opening remarks. Jim?

Jim Ferrell: Thanks, Always. Good morning everyone. I'm going to tell you a story about the winter that didn't happen for the second year in a row. If you go back to late December, we were all excited about every forecast we saw. It was very cold then, and every weatherman promised only a short lull followed by much colder air starting in mid-January and lasting through March. Instead, January was very warm all month long. And today the daffodils in from of my Kansas City home are in full bloom. Had there been a winter we would've been on budget and popping champagne corks. The rest of the company is slightly above projections but propane fell short, not due to the poor operations but just the uncontrollable weather. For the quarter ended January 31, average temperature for the areas we serve was 14% warmer than normal. That little shot of cold in the second half of December made it look like it was 4% colder, but that was just an illusion. What we are proud of is that we have been clawing back market share, and the gallons delivered were up over 7% during a terribly warm winter. We are back to being focused on growth, and to be up on gallons during a warm winter gives proof to that. Since I have been back, I have driven a number of changes in executive positions. Dan Giannini is running Bridger, and has restored order and is finding ways to put underutilized midstream assets to work, while sourcing new deals. Jeff Burger now runs Blue Rhino, which has begun to grow for the first time in several years. Morale in the company has never been so high because they know we are refocused on the core principles and metrics of our business. The leadership team is the strongest I have ever worked with. The sad thing is that we cannot control what Mother Nature gives us. Growth in cash flow will restore the value of our employees' ESOP and the value of common unit equity. We are committed to pushing our debt-to-cash flow ratio down to under 4.5 times, while building this business back to its former glory. I'm pleased to be back. I'm enjoying the contribution I'm making, and I'm looking forward to a bright future. With that, I'm going to turn it back to Al.

Al Heitmann: Thanks, Jim. Ferrellgas this morning announced net earnings of $38.5 million in the second quarter or $0.39 per common unit, compared to the net earnings of $57.8 million in the prior year quarter or $0.58 per common unit. As detailed in our earnings release and Form 10-Q, both of which were filed earlier today, our second quarter 2017 adjusted EBITDA was $105 million compared to $138.3 million in the prior year period reflecting the loss of Bridger's largest customer last September. As Jim mentioned, temperatures during the quarter were 14% warmer than normal, but 4% colder than the prior year period. However gallon sales increased 7% due to our strategy to increase market share through competitive pricing arrangements for new customers. Propane sales volumes for the second quarter were 268 million gallons, up 18 million gallons from the 250 million gallons sold a year ago. Gross profit for the quarter was $236.5 million, compared to the $270.2 million in the prior year's second quarter. This decrease is primarily attributable to the termination of the Jamex contract. Operating expense for the quarter was $112.5 million, a decrease of almost $4 million from the prior year period. This decrease again is primarily in our midstream segment, and also relates to the termination of the Jamex transportation and logistics agreement last September. Operating expenses in our Propane and Related Equipment Sales segment increased slightly due to the increase in the number of gallons sold. Interest expense was $36.8 million, up slightly from the $34.7 million in the prior year period largely due to the new debt incurred to fund Bridger growth capital expenditures and the repurchase of common units from Jamex, both occurring in the prior year. At the end of the second fiscal quarter our leverage ratio was 5.81 times, which is lower than the limit allowed under our amended credit facility. Given the lack of headroom in the second quarter covenant calculations and the historic warm temperatures we've experienced in February, it is probably we will be in violation of one or more covenants under this facility or the AR securitization facility for the third quarter unless a waiver or amendment is obtained. We will soon be discussing this with the lead bank of our credit facility. With that, I'd like to turn the call over to the operator for questions.

Operator: [Operator Instructions] Your first question comes from the line of T.J. Schultz from RBC Capital Markets. Your line is open.

T.J. Schultz: Great, thanks. I guess just really one question on the last point. You have a few options to kind of help avoid tripping some of those covenants for the April quarter. I guess just first, likelihood that you think you can get an amendment or a waiver, and then outside of that you certainly have options whether it's new equity or asset sales or lowering the dividend again. Just your thinking on each of those levers that you may be looking to pull?

Jim Ferrell: Yes, we're confident that the meeting with the lead bank which will occur soon will be successful.

T.J. Schultz: Okay. I guess specifically on asset sales, what's your view on executing any asset sales this year?

Jim Ferrell: Again, we're focused on the meeting with the lead bank, which is going to occur very soon.

Al Heitmann: And we're happy with our assets, I'll add that.

T.J. Schultz:

.:

Operator: Your next question comes from the line of James Spicer from Wells Fargo. Your line is open.

James Spicer: Yes, hi, good morning. I guess a couple of questions. First of all, you talked about the strategy to increase market share through competitive pricing arrangements. Could you just expand on that a little bit, sort of what that pricing strategy is and how sustainable that is?

Jim Ferrell: Well, let me tell you, you can't just pick a price and decide to sell at it. There's a market clearing price for everything. We have probably been focused too much on an average margin, and driving that up in the past. We're focused on selling propane today. Let me just put it that way.

James Spicer: Okay. And then just one question for me on the covenant situation and options, do you have -- what are your limitations on issuing secured debt at this point in time, and is that something that you would consider?

Jim Ferrell: No. Again, I'll just reiterate, our action plan is to pursue waivers and amendments with the lead bank of our credit facility. And we will [technical difficulty] and, yes, there are limitations on the amount of secured debt that we can issue.

James Spicer: Okay, guys. Thank you.

Operator: [Operator Instructions] Your next question comes from the line of Mike Gyure from Janney. Your line is open.

Mike Gyure: Yes, can you talk a little bit about, I guess, your working capital position here at the end of the quarter and then kind of what you're looking for in the next quarter. Is there more opportunity to capture some cash flow benefits from receivables or inventory, and kind of what you're thinking there and working toward there?

Jim Ferrell: Our working capital moves seasonally, and this is quarter where we would generally expect proceeds from accounts receivable to lower our working capital borrowings, and I think we've seen that historically.

Mike Gyure: Okay, and then maybe a follow-up. Can you talk a little bit about the weather trends moving into March here, I assume continued warmth for the quarter…

Jim Ferrell: Well, there's no way to know. I mean, if you're good at telling the future we'll put you on the payroll. The problem is that the forecasts have been consistently wrong. And next quarter we'll tell you what happened, how's that.

Mike Gyure: Great. Thank you very much.

Operator: And your next question comes from the line of Mirek Zak from Citigroup. Your line is open.

Mirek Zak: Hi, good morning everyone. On your plans to drive growth at Bridger, can you provide any color on that as to what you're looking at there or where you'll be driving that from?

Jim Ferrell: Well, Bridger is ideally positioned in that large Permian basin and also in the Bakken. It's actually in Eagle Ford as well. So we're in good position. We have a lot of trucks sitting around, we have a lot of trailers, we have a lot of opportunity. We're hiring drivers like crazy. We've got an opportunity that -- well, I should say, a number of opportunities to increase that business dramatically. And there will be terminals, there will odds and ends things because we're in-between production and wherever the stuff goes. So it's that kind of growth. It's organic, internal, putting assets to work. We've got railcars that are sitting. We've told you about that in the past. They'll be put to work. They're being put to work right now. So we're really focused on whatever we can find to make money.

Mirek Zak: Okay, great. And just lastly, just curious of you've begun an official search for a permanent CEO replacement just yet or do you have any thoughts of timing around that?

Jim Ferrell: You must be worried about my age, I don't know. Is that a…

Mirek Zak: No, not at all.

Jim Ferrell: Is that a -- question?

Mirek Zak: I figured you'd like to go back and…

Jim Ferrell: No, I'm going to be here for a while. Okay, you're forgiven.

Mirek Zak: Okay, all right, great. Thank you for your time.

Jim Ferrell: All right.

Operator: And your next question comes from the line of James Spicer from Wells Fargo. Your line is open.

James Spicer: Yes, hi guys. Just one more follow-up for me, you mentioned -- I'm looking at the 10-Q here. There's mention about this Eddystone rail lawsuit. Just wondering if there's any commentary that you could provide around that, and whether that was something that you intended to reserve anything for in the future?

Al Heitmann: No, we can't comment on ongoing lawsuits, but I can point out that we don't currently believe a loss is probable.

James Spicer: Okay, thank you.

Operator: And there are no further questions at this time. I turn the call back over to the presenters for closing remarks.

Jim Ferrell: Okay. Well, aside from that age comment, I'm going to be here for a while. We've got a lot of good things going on; unfortunately they don't show up in the numbers yet. But we've got renewed vigor in this company, people are excited, we're doing a lot of interesting things. And I couldn't be happier than to be here. You've got to do something with your time; this is about as productive as I know to be. So you're going to have to put up with me for a while. Al?

Al Heitmann: I think that's all we have. Appreciate everybody's time this morning. Thank you.

Operator: And this concludes today's conference call. You may now disconnect.