Star Group Q3 2025 Earnings Report

Star Group EPS Results

• Actual EPS: -$0.48
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Star Group Revenue Results

• Actual Revenue: $305.62 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Star Group Announcement Details

• Quarter: Q3 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 11:00AM ET

Star Group (NYSE:SGU), together with its subsidiaries, provides home heating oil and propane products and services to residential and commercial customers in the United States. It offers gasoline and diesel fuel; and installs, maintain, and repairs heating and air conditioning equipment. As of September 30, 2023, the company served approximately 402,200 full service residential and commercial home heating oil and propane customers and 52,400 customers on a delivery only basis. It also sells gasoline and diesel fuel to approximately 26,600 customers. The company was formerly known as Star Gas Partners, L.P. and changed its name to Star Group, L.P. in October 2017. Star Group, L.P. was incorporated in 1995 and is based in Stamford, Connecticut.

Star Group Q3 2025 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: Third quarter heating oil and propane volumes fell 3.8% to 36 million gallons due to warmer weather and net customer attrition, though adjusted EBITDA from recent acquisitions helped offset some headwinds.
• Positive Sentiment: Service and installation gross profit rose $0.6 million year-over-year to $14 million, driven by improved service performance and expense control.
• Negative Sentiment: The company posted a third-quarter net loss of $16.6 million, a $5.6 million increase year-over-year largely due to a wider adjusted EBITDA loss, higher depreciation, and financing costs.
• Positive Sentiment: Fiscal YTD volumes increased 12% to 263 million gallons, lifting product gross profit 13% to $480 million through higher volumes, improved margins, and other product gains.
• Positive Sentiment: Adjusted EBITDA for the first nine months rose $28 million to $170 million, powered by a $21 million gain in the base business and $17 million from acquisitions despite weather-hedge expenses.

Presentation

[Operator]

Good day and welcome to the Star Group Fiscal twenty twenty five Third Quarter Results Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, the Investor Relations Advisor. Please go ahead.

[Chris Witty, Managing Director at Darrow Associates]

Thank you, and good morning. With me on the call today are Jeff Woosnam, President and Chief Executive Officer and Rich Ambury, Chief Financial Officer. I would now like to provide a brief Safe Harbor statement. This conference call may include forward looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company's 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.

[Chris Witty, Managing Director at Darrow Associates]

Although the company 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 company's expectations are disclosed in this conference call, the company's annual report on Form 10 ks for the fiscal year ended 09/30/2024 and the company's other filings with the SEC. 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 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 over to Jeff Wisdom. Jeff?

[Jeffrey Woosnam, President & CEO at Star Group]

Thanks, Chris, good morning, everyone. Thank you for joining us to discuss our third quarter and fiscal year to date results. While outside of our core heating season, the third quarter was still negatively impacted by lower volume due to slightly warmer temperatures than last year along with net customer attrition and other factors. That said, we're pleased with our continued improvement in service and installation performance and adjusted EBITDA from recent acquisitions positively contributed to the quarter as well as the year to date period. We believe we are on track for strong financial performance in fiscal twenty twenty five.

[Jeffrey Woosnam, President & CEO at Star Group]

As I've shared on previous calls, we are dedicated to providing our customers with superior service to improve retention and drive additional revenues. Consistent with that objective, we continue to look at ways to sell more value added products and services to our existing customers, while also expanding HVAC offerings in select markets beyond our traditional heating oil and propane account base to gain access to a larger audience. To support this initiative, we have made an investment in additional training for our sales and technical teams. Fundamentally, Star is a service provider, so any effort to improve what truly differentiates us from our competition is a sound investment. We are pleased with the way our team has responded and become engaged in what we are trying to accomplish.

[Jeffrey Woosnam, President & CEO at Star Group]

And although there is so much work to be done, I'm encouraged with our progress to date. As we pursue a strategy that includes growing our heating oil and propane customer base through acquisitions, while at the same time improving service and installation profitability, we believe we are positioning Star as a fully diversified energy provider that over time will be more resilient and adaptable to varied weather conditions. With that, I'll turn the call over to Rich to provide additional comments on the quarter's results. Rich?

[Rich Ambury, CFO at Star Group]

Thanks, Jeff, and good morning, everyone. For the third quarter, our home heating oil and propane volume decreased by 1,500,000 gallons or 3.8% to 36,000,000 gallons as the additional volume provided from acquisitions was more than offset by warmer weather, net customer attrition and other factors. In terms of weather conditions, temperatures for the fiscal twenty twenty five third quarter were 2% warmer than last year and almost 20% warmer than normal during this non heating season period. Our product gross profit decreased by $3,000,000 or 4% to $72,000,000 due to both a lower home heating oil and propane volume sold as well as lower per gallon margins driven in part by the mix of volume associated with recent acquisitions. We realized the combined gross profit from service and installation of $14,000,000 or $600,000 higher than the prior year's comparable quarter as we continue to focus on improving service and controlling expenses.

[Rich Ambury, CFO at Star Group]

Delivery, branch and G and A expenses increased by $4,300,000 year over year, reflecting additional operating costs associated with acquisitions of $5,800,000 partially offset by lower costs in the base business of $1,500,000 or approximately 1.6 percent. Depreciation and amortization rose by $2,000,000 and net interest expense increased by about $1,000,000 year over year. These changes were largely due to the impact of recent acquisitions. We posted a net loss of $16,600,000 in the 2025 or $5,600,000 more than the prior year period, reflecting a $6,500,000 increase in our adjusted EBITDA loss, higher depreciation and amortization expense of $2,000,000 and higher acquisition related financing costs of $1,000,000 partially offset by a $2,300,000 greater income tax benefit and a non cash favorable change in the fair value of derivative instruments of $1,600,000 The adjusted EBITDA loss increased by $6,500,000 to $10,600,000 as the additional positive adjusted EBITDA from acquisitions and lower operating costs in the base business was more than offset by lower home heating oil and propane volumes in the base business and slightly lower per gallon home heating oil and propane per gallon margins. The positive adjusted EBITDA realized from acquisitions during this historical loss quarter was due in part to our recent propane acquisitions.

[Rich Ambury, CFO at Star Group]

Now turning to the results for the first nine months of fiscal twenty twenty five. Our home heating oil and propane volume increased by 28,000,000 gallons or 12% to two sixty three million gallons, reflecting colder temperatures and the additional volume provided from acquisitions more than offsetting net customer attrition and other factors. Temperatures in our geographic areas of operations fiscal year to date were 8% colder than the prior year period, but still 8% warmer than normal. Our product gross profit rose by $55,000,000 or 13% to $480,000,000 due to an increase in the volume of home heating oil and propane sold, higher home heating oil and propane per gallon margins and a slight increase in gross profit from other petroleum products. As previously mentioned on prior calls, we successfully improved our service and installation business, which contributed to an increase in gross profit of $4,800,000 year to date with $2,700,000 attributable to acquisitions and $2,100,000 due to initiatives in the base business.

[Rich Ambury, CFO at Star Group]

Delivery, branch and G and A expenses rose by $31,500,000 year over year, of which $10,600,000 was attributable to our weather hedging program. As a reminder, in fiscal twenty twenty five, we recorded an expense of $3,100,000 under our weather hedge compared to a benefit of $7,500,000 recorded in fiscal twenty twenty four, reflecting weather conditions in both periods. Aside from this, recent acquisitions accounted for an increase in expenses of $18,700,000 year over year, while expenses in the base business rose by just $2,200,000 or 07%. Depreciation and amortization rose by $2,600,000 and net interest expense increased by $1,400,000 These changes were largely attributable to the impact of recent acquisitions. We posted net income of $102,000,000 year to date or $32,000,000 in the prior year period, largely due to an increase in adjusted EBITDA of $28,000,000 and a non cash favorable change in the fair value of derivative instruments of $20,000,000 more than offsetting higher income tax expense of $12,000,000 and other factors.

[Rich Ambury, CFO at Star Group]

Adjusted EBITDA rose by $28,000,000 to $170,000,000 primarily due to a $21,000,000 increase in adjusted EBITDA in the base business and a $17,000,000 increase in adjusted EBITDA from acquisitions, partially offsetting a $10,600,000 increase in expense relating to the company's weather hedge contracts, which apply to both the base business and the recent acquisitions as I just previously discussed. And with that, I'd like to turn the call back to Jack.

[Jeffrey Woosnam, President & CEO at Star Group]

Thanks, Rich. At this time, we're pleased to address any questions you may have. Chad, please open the phone lines for questions.

[Operator]

Thank you. We will now begin our question and answer session. And our question is from Michael Prouting from ten ks Capital. Please go ahead.

[Michael Prouting, Equity Analyst at 10K Capital LLC]

Hey, good morning guys. Just a couple of questions. Firstly, Jeff, I was wondering if you could update us on acquisition pipeline. And then secondly, I just thought I'd have to ask the question, but curious as to whether you see any applications for AI in the business. It seems like the obvious would be customer service, but just kind of curious to get your feedback on that. Thanks.

[Jeffrey Woosnam, President & CEO at Star Group]

You bet, Michael. So in terms of acquisitions, obviously, we've closed on four transactions so far this fiscal year. We our last one in April, the team remains very busy with opportunities. We just never know how that's going to end up coming out. But we're extremely pleased with what we've had in our pipeline, what we've been able to close, particularly over the last fourteen months, some sizable deals.

[Jeffrey Woosnam, President & CEO at Star Group]

And again, we just continue to push forward and there's plenty of activity in the marketplace right now. And in terms of AI, yes, we have certainly instituted some of that technology into our customer interface. The one thing we always want to keep in mind is, we want to remember that we're a service business first and to the degree that AI can assist with that and allow us to serve our customers in a way that they prefer. But we always like and prefer that personal touch and allowing them to be able to talk to an employee that can provide them appropriate assistance and a comfort level that we're going to react and respond as they need us to. So we always have to kind of strike that balance, but there's certainly opportunity there for us in the future.

[Michael Prouting, Equity Analyst at 10K Capital LLC]

Okay, great. Yes, thanks for the updates and definitely hear what you're saying as far as the human touch. So, yes, thanks for the updates.

[Operator]

And at this time, there appears to be no further questions. So I'd like to return the conference to Mr. Woosnam for any closing remarks.

[Jeffrey Woosnam, President & CEO at Star Group]

Well, you for taking the time to join us today and for your ongoing interest in Star Group. We look forward to sharing our twenty twenty five fiscal fourth quarter results in December. Thanks everyone.

[Operator]

And thank you, sir. The conference has now concluded. Thank you for joining today's presentation. You may now disconnect.

Participants

Executives

• Jeffrey Woosnam, President & CEO
• Rich Ambury, CFO

Analysts

• Chris Witty, Managing Director at Darrow Associates
• Michael Prouting, Equity Analyst at 10K Capital LLC