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

February 05, 2025 16:30 ET | Source: Star Group, L.P. 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, 2023For 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; andthe 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; andEBITDA 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 InformationThis 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 SUBSIDIARIESCONDENSED 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three MonthsEnded 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 INFORMATIONSTAR 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 WittyInvestor RelationsDarrow Associates203/328-7310646/438-9385 or cwitty@darrowir.com

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

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