Star Group, L.P. Reports Fiscal 2025 First Quarter Results

Rhea-AI Summary

Star Group (NYSE:SGU) reported financial results for Q1 fiscal 2025. Total revenue decreased 7.6% to $488.1 million from $528.1 million in the prior year, mainly due to lower petroleum prices despite increased volume. Home heating oil and propane volume increased by 2.8% to 82.4 million gallons, driven by acquisitions and colder temperatures.

Net income rose by $19.9 million to $32.9 million, benefiting from a $24.3 million favorable change in derivative instruments value and a $2.8 million increase in Adjusted EBITDA. The quarter saw temperatures 4.1% colder than the previous year but 10.5% warmer than normal. Adjusted EBITDA reached $51.9 million, up $2.8 million year-over-year, supported by recent acquisitions and higher per-gallon margins.

Positive

• Net income increased by $19.9 million to $32.9 million
• Adjusted EBITDA grew by $2.8 million to $51.9 million
• Product volume increased 2.8% to 82.4 million gallons
• Higher per gallon margins in base business
• Service and installation revenue increased

Negative

• Total revenue declined 7.6% to $488.1 million
• Temperatures were 10.5% warmer than normal
• Net customer attrition reported
• Base business volume decreased by 3.8 million gallons

Insights

Financial Analyst

Star Group's Q1 FY2025 results reveal a compelling narrative of strategic adaptation in a challenging market environment. While total revenue declined 7.6% to $488.1 million, the underlying operational metrics tell a more positive story:

• Volume growth of 2.8% in home heating oil and propane sales demonstrates successful market penetration through acquisitions, offsetting customer attrition
• The 18.4% decline in wholesale product costs allowed for margin expansion while maintaining competitive pricing
• Adjusted EBITDA growth of $2.8 million showcases improved operational efficiency and successful integration of acquisitions

The $24.3 million favorable change in derivative instruments' fair value indicates effective hedging strategies in a volatile commodity market. The company's focus on service and installation business improvements represents a strategic shift toward higher-margin, more stable revenue streams.

The recent strategic acquisition expanding propane operations suggests a deliberate move to diversify fuel offerings and strengthen market position. This could provide better economies of scale and enhanced competitive positioning in key markets.

While temperatures were 10.5% warmer than normal, the company's ability to grow volumes and expand margins demonstrates resilient business fundamentals and effective cost management. The improved net income of $32.9 million reflects both operational improvements and strategic financial management.

STAMFORD, Conn., Feb. 05, 2025 (GLOBE NEWSWIRE) -- Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home energy distributor and services provider, today announced financial results for its fiscal 2025 first quarter, the three month period ended December 31, 2024.

Three Months Ended December 31, 2024 Compared to the Three Months Ended December 31, 2023
For the fiscal 2025 first quarter, Star reported a 7.6 percent decrease in total revenue to $488.1 million compared with $528.1 million in the prior-year period, reflecting lower average petroleum prices even as product volumes rose slightly year-over-year and service and installation revenue increased. The volume of home heating oil and propane sold during the fiscal 2025 first quarter rose by 2.3 million gallons, or 2.8 percent, to 82.4 million gallons, as the additional volume provided from acquisitions and colder temperatures was only slightly offset by the impact of net customer attrition and other factors. Temperatures in Star's geographic areas of operation for the three months ended December 31, 2024 were 4.1 percent colder than the three months ended December 31, 2023 but 10.5 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration. Selling prices decreased largely due to a decline in wholesale product cost of $0.4969 per gallon, or 18.4 percent, compared to the prior-year period.

Star’s net income increased by $19.9 million in the quarter, to $32.9 million, as a favorable change in the fair value of derivative instruments of $24.3 million, a $2.8 million increase in Adjusted EBITDA, and a $0.5 million decrease in depreciation and amortization expenses was only partially offset by a $7.8 million increase in income taxes.

The Company reported first quarter Adjusted EBITDA (a non-GAAP measure defined below) of $51.9 million, or $2.8 million more than in the prior-year period, as a $4.0 million increase in Adjusted EBITDA from recent acquisitions and higher per gallon margins in the base business more than offset the impact of a 3.8 million gallon decrease in home heating oil and propane volume sold in the base business.

“The first quarter was a busy one for Star due to acquisition-related activities combined with slightly colder temperatures,” said Jeff Woosnam, Star Group’s President and Chief Executive Officer. “While selling prices fell, volumes rose modestly year-over-year, and we continued to improve the performance and contribution of our service and installation business concurrently. As previously announced, we completed a sizable strategic acquisition after the quarter ended. We believe this has further strengthened our propane presence within the Company’s existing operating footprint, and we’re excited to welcome our new employees and a well-known brand to the Star Group family. Looking ahead, we’re benefitting from colder temperatures thus far in the second quarter and, with our ongoing focus on service quality and reliability, believe we are well positioned for the remainder of the year.”

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization) and Adjusted EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization, (increase) decrease in the fair value of derivatives, other income (loss), net, multiemployer pension plan withdrawal charge, gain or loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges) are non-GAAP financial measures that are used as supplemental financial measures by management and external users of the Company’s financial statements, such as investors, commercial banks and research analysts, to assess Star’s position with regard to the following:

• compliance with certain financial covenants included in our debt agreements;
• financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;
• operating performance and return on invested capital compared to those of other companies in the retail distribution of refined petroleum products, without regard to financing methods and capital structure;
• ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and
• the viability of acquisitions, capital expenditure projects and the overall rates of return of alternative investment opportunities.
  

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations, as analytical tools and so should not be viewed in isolation but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are as follows:

• EBITDA and Adjusted EBITDA do not reflect cash used for capital expenditures;
• although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacements;
• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital;
• EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on indebtedness; and
• EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.
  

REMINDER:
Members of Star's management team will host a webcast and conference call at 11:00 a.m. Eastern Time tomorrow, February 6, 2025. The webcast will be accessible on the company’s website, at www.stargrouplp.com, and the telephone number for the conference call is 888-346-3470 (or 412-317-5169 for international callers).

About Star Group, L.P.
Star Group, L.P. is a full service provider specializing in the sale of home heating products and services to residential and commercial customers to heat their homes and buildings. The Company also sells and services heating and air conditioning equipment to its home heating oil and propane customers and, to a lesser extent, provides these offerings to customers outside of its home heating oil and propane customer base. Star also sells diesel, gasoline and home heating oil on a delivery only basis. We believe Star is the nation's largest retail distributor of home heating oil based upon sales volume. Including its propane locations, Star serves customers in the more northern and eastern states within the Northeast and Mid-Atlantic U.S. regions. Additional information is available by obtaining the Company's SEC filings at www.sec.gov and by visiting Star's website at www.stargrouplp.com, where unit holders may request a hard copy of Star’s complete audited financial statements free of charge.

Forward Looking Information
This news release includes "forward-looking statements" which represent the Company’s expectations or beliefs concerning future events that involve risks and uncertainties, including the impact of geopolitical events on wholesale product cost volatility, the price and supply of the products that we sell, our ability to purchase sufficient quantities of product to meet our customer’s needs, rapid increases in levels of inflation, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, the effect of weather conditions on our operational and financial performance, our ability to obtain new customers and retain existing customers, our ability to make strategic acquisitions, the impact of litigation, natural gas conversions and electrification of heating systems, future global health pandemics, recessionary economic conditions, future union relations and the outcome of current and future union negotiations, the impact of current and future governmental regulations, including climate change, environmental, health, and safety regulations, the ability to attract and retain employees, customer credit worthiness, counterparty credit worthiness, marketing plans, cyber-attacks, global supply chain issues, labor shortages and new technology, including alternative methods for heating and cooling residences. All statements other than statements of historical facts included in this Report including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, are forward-looking statements. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “seek,” “estimate,” and similar expressions are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, those set forth under the heading "Risk Factors" and "Business Strategy" in our Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended September 30, 2024. Important factors that could cause actual results to differ materially from the Company’s expectations ("Cautionary Statements") are disclosed in this news release and in the Company’s Form 10-K and our Quarterly Reports on Form 10-Q. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. Unless otherwise required by law, the Company 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 news release.

(financials follow)

STAR GROUP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
	December 31,				September 30,
(in thousands)		2024				2024
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	48,792			$	117,335
Receivables, net of allowance of $5,707 and $6,434, respectively		176,279				94,981
Inventories		68,269				41,587
Fair asset value of derivative instruments		51				—
Prepaid expenses and other current assets		37,566				27,566
Total current assets		330,957				281,469
Property and equipment, net		104,627				104,534
Operating lease right-of-use assets		91,023				91,141
Goodwill		276,074				275,829
Intangibles, net		95,005				98,712
Restricted cash		250				250
Captive insurance collateral		75,684				74,851
Deferred charges and other assets, net		13,132				12,825
Total assets	$	986,752			$	939,611
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable	$	48,234			$	31,547
Revolving credit facility borrowings		7,830				5
Fair liability value of derivative instruments		7,041				13,971
Current maturities of long-term debt		21,000				21,000
Current portion of operating lease liabilities		20,598				19,832
Accrued expenses and other current liabilities		123,990				116,317
Unearned service contract revenue		79,568				66,424
Customer credit balances		88,692				104,700
Total current liabilities		396,953				373,796
Long-term debt		182,670				187,811
Long-term operating lease liabilities		75,275				75,916
Deferred tax liabilities, net		24,960				21,922
Other long-term liabilities		15,852				16,273
Partners' capital
Common unitholders		308,528				282,058
General partner		(5,775	)			(5,714	)
Accumulated other comprehensive loss, net of taxes		(11,711	)			(12,451	)
Total partners' capital		291,042				263,893
Total liabilities and partners' capital	$	986,752			$	939,611

STAR GROUP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended December 31,
(in thousands, except per unit data - unaudited)		2024				2023
Sales:
Product	$	399,459			$	448,550
Installations and services		88,604				79,546
Total sales		488,063				528,096
Cost and expenses:
Cost of product		248,699				303,338
Cost of installations and services		81,665				75,107
(Increase) decrease in the fair value of derivative instruments		(5,258	)			19,030
Delivery and branch expenses		99,327				94,364
Depreciation and amortization expenses		7,903				8,386
General and administrative expenses		7,183				7,021
Finance charge income		(675	)			(771	)
Operating income		49,219				21,621
Interest expense, net		(3,011	)			(3,218	)
Amortization of debt issuance costs		(300	)			(250	)
Income before income taxes	$	45,908			$	18,153
Income tax expense		13,024				5,174
Net income	$	32,884			$	12,979
General Partner's interest in net income		307				118
Limited Partners' interest in net income	$	32,577			$	12,861
Per unit data (Basic and Diluted):
Net income available to limited partners	$	0.94			$	0.36
Dilutive impact of theoretical distribution of earnings		0.15				0.04
Basic and diluted income per Limited Partner Unit:	$	0.79			$	0.32
Weighted average number of Limited Partner units outstanding (Basic and Diluted)		34,587				35,593

SUPPLEMENTAL INFORMATION STAR GROUP, L.P. AND SUBSIDIARIES
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA (Unaudited)
	Three Months Ended December 31,
(in thousands)		2024				2023
Net income	$	32,884			$	12,979
Plus:
Income tax expense		13,024				5,174
Amortization of debt issuance costs		300				250
Interest expense, net		3,011				3,218
Depreciation and amortization		7,903				8,386
EBITDA		57,122				30,007
(Increase) / decrease in the fair value of derivative instruments		(5,258	)			19,030
Adjusted EBITDA		51,864				49,037
Add / (subtract)
Income tax expense		(13,024	)			(5,174	)
Interest expense, net		(3,011	)			(3,218	)
Provision for losses on accounts receivable		182				649
Increase in accounts receivables		(81,476	)			(73,590	)
Increase in inventories		(26,670	)			(26,805	)
Decrease in customer credit balances		(16,199	)			(21,852	)
Change in deferred taxes		2,667				(1,591	)
Change in other operating assets and liabilities		21,103				22,236
Net cash used in operating activities	$	(64,564	)		$	(60,308	)
Net cash used in investing activities	$	(4,652	)		$	(5,875	)
Net cash provided by financing activities	$	673			$	40,917
Home heating oil and propane gallons sold		82,400				80,100
Other petroleum products		30,700				32,400
Total all products		113,100				112,500

CONTACT:
Star Group, L.P.	Chris Witty
Investor Relations	Darrow Associates
203/328-7310	646/438-9385 or cwitty@darrowir.com

FAQ

What was Star Group's (SGU) revenue in Q1 2025?

Star Group reported total revenue of $488.1 million in Q1 2025, representing a 7.6% decrease from $528.1 million in the prior-year period.

How much did SGU's home heating oil and propane volume increase in Q1 2025?

Star Group's home heating oil and propane volume increased by 2.3 million gallons, or 2.8%, to 82.4 million gallons in Q1 2025.

What was Star Group's (SGU) net income for Q1 2025?

Star Group's net income for Q1 2025 was $32.9 million, an increase of $19.9 million compared to the prior-year period.

How did weather conditions affect SGU's performance in Q1 2025?

Temperatures were 4.1% colder than the same period last year but 10.5% warmer than normal, impacting the company's operations.

What was Star Group's (SGU) Adjusted EBITDA in Q1 2025?

Star Group reported Adjusted EBITDA of $51.9 million in Q1 2025, an increase of $2.8 million from the prior-year period.