Star Group Q3 2026 Earnings Report

Star Group EPS Results

• Actual EPS: -$0.84
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Star Group Revenue Results

• Actual Revenue: $358.07 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Star Group Announcement Details

• Quarter: Q3 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• 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 2026 Earnings Call Transcript

Key Takeaways

• Positive/Negative Sentiment: Negative Sentiment: Third-quarter results weakened as heating-oil and propane volume fell 9.4% year over year to 33 million gallons, while higher insurance claims and other operating costs drove the adjusted EBITDA loss up $7 million to $17.7 million.
• Positive Sentiment: Fiscal year-to-date performance remained strong, with product gross profit up 10% to $529 million, adjusted EBITDA increasing $20 million to $189 million, and net income rising to $116 million.
• Positive Sentiment: The service and installation business continued to improve, generating $15.6 million of quarterly gross profit, up $1.4 million year over year, as Star expands value-added offerings and HVAC services.
• Neutral Sentiment: Star said product availability for the upcoming heating season is not currently an issue, though higher prices could affect customer behavior and the timing of fixed- or ceiling-price commitments; management also cited an active acquisition pipeline, primarily involving smaller businesses.

Presentation

[Operator]

Good day, and welcome to the Star Group Fiscal 2026 third quarter results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

[Chris Witty, Investor Relations Advisor at Star Group]

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 than 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. 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.

[Chris Witty, Investor Relations Advisor at Star Group]

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-K for the fiscal year ended September 30th, 2025, 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 Woosnam. Jeff?

[Jeff Woosnam, President and CEO at Star Group]

Thanks, Chris, and good morning, everyone. Thank you for joining us to discuss our third quarter and fiscal year-to-date results. Our results this quarter and non-heating period largely reflected seasonal factors in net customer attrition, which was in line with prior year periods. While temperatures were moderately colder than last year, the volume of home heating oil and propane sold was actually lower given the more muted impact of additional degree days in the shoulder months of April and May. Operating costs were elevated in the period primarily due to higher insurance expense, which related to some adverse developments regarding certain claims. We continue to be encouraged by the ongoing improvement of our service and installation business, which delivered gross profit of $15.6 million in the quarter or $1.4 million higher than the prior year period.

[Jeff Woosnam, President and CEO at Star Group]

Our strategy of selling more value-added products and services to our existing clients while expanding our HVAC offering in select markets beyond our traditional customer base is beginning to take shape. It's exciting to see our employees, particularly our frontline service technicians and sales teams, truly embrace and become energized by these efforts. While we did not complete any acquisitions within the quarter, we recently closed on a small heating oil dealer after the end of the period. We are actively assessing several attractive businesses and remain very well positioned to take advantage of future opportunities as they are presented. As we've done in years past, we're utilizing the summer to strengthen our operations, streamline where appropriate, and prepare for the coming winter months.

[Jeff Woosnam, President and CEO at Star Group]

At the same time, we continue to invest in our service and installation business where we see further room for revenue growth and believe Star remains in great shape and on track for strong financial performance in fiscal 2026. With that, I'll turn the call over to Rich to provide additional comments on the quarter's results. Rich?

[Richard Ambury, CFO at Star Group]

Thanks, Jeff, and good morning, everyone. For the third quarter, our home heating oil and propane volume decreased by 3.4 million gallons or 9.4% to 33 million gallons as the additional volume provided from acquisitions was more than offset by net customer attrition and other factors. In terms of weather conditions, degree days for the fiscal 2026 third quarter were 16% colder than last year, 6% warmer than normal. Please keep in mind that the temperatures during this non-heating season period are not as impactful as during the winter season. Our product gross profit was virtually unchanged at $72 million as an increase in home heating oil and propane per gallon margins and a higher gross profit from other petroleum products was offset by the lower home heating oil and propane volume sold.

[Chris Witty, Investor Relations Advisor at Star Group]

As Jeff stated, we realized a combined gross profit from service and installation of $15.6 million, or $1.4 million higher than the prior year's comparable period as we continue to focus on improving revenue and controlling costs. Delivery, branch, and G&A expenses increased by $8.7 million year-over-year, primarily due to a $6.2 million of higher insurance claims reflecting an adverse development. We posted a net loss of $28 million in the third quarter of fiscal 2026, or $11.4 million more than the prior year period, reflecting a $7 million increase in our adjusted EBITDA loss and an unfavorable non-cash change in the fair value of derivative instruments of $8.6 million, partially offset by a $3.4 million greater income tax benefit and lower depreciation and amortization expense of $900,000.

[Richard Ambury, CFO at Star Group]

The adjusted EBITDA loss increased by $7 million-$17.7 million as higher per gallon home heating oil and propane margins and improvement in service and installation profitability and the additional gross profit from other petroleum products was more than offset by higher operating expenses, including the insurance cost I just mentioned and lower home heating oil and propane volume sold.

[Richard Ambury, CFO at Star Group]

Turning to the results for the nine months of fiscal 2026. Our home heating oil and propane volume increased by 8.6 million gallons or 3.3% to 271 million gallons, reflecting colder temperatures and the additional volume provided from acquisitions, more than offsetting net customer attrition and other factors. Temperatures in Star's geographic areas of operations fiscal year to date were 11.5% colder than the prior year period and 3% colder than normal. Our product gross profit increased by $48 million or 10% to $529 million due to an increase in the volume of home heating oil and propane sold, higher home heating oil and propane per gallon margins, and an increase in gross profit from other petroleum products.

[Richard Ambury, CFO at Star Group]

As previously mentioned on other calls, colder weather conditions and numerous snowstorms during the first half of fiscal 2026 increased the demand for service, which led to higher service-related expenses. While installation gross profit increased by $2.5 million, service gross loss increased by $5.7 million due to the increase in demand for service and an increase in propane tank sets. Delivery, branch and G&A expenses rose by $25 million year-over-year, of which $1.9 million was attributable to our weather hedging program. As I've previously mentioned, in fiscal 2026, we recorded an expense of $5 million under our weather hedge, compared to an expense of $3.1 million recorded in fiscal 2025, reflecting weather conditions in both periods.

[Richard Ambury, CFO at Star Group]

Recent acquisitions accounted for an increase of $3.2 million to delivery, branch and G&A expenses, while associated costs in the base business rose by $20 million, reflecting an increase in volume and the impact of severe weather conditions on operating expenses, including insurance claims. We posted net income of $116 million for the first nine months of fiscal 2026, or $14 million higher than the prior year period, as an increase in adjusted EBITDA of $20 million, was somewhat offset by higher income tax expense of $7.6 million and other factors.

[Richard Ambury, CFO at Star Group]

Adjusted EBITDA rose by $20 million to $189 million due to an increase in home heating oil and propane volume sold in the base business, an increase in adjusted EBITDA from acquisitions, and higher home heating oil and propane per gallon margins, which were more than offset by higher operating expenses. With that, I'd like to turn the call back over to Jeff.

[Jeff Woosnam, President and CEO at Star Group]

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

[Operator]

Certainly. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Again, if you have a question, please press star, then one. Your first question today comes from Michael Prouting with 10K Capital. Please go ahead.

[Michael Prouting, Managing Member at 10K Capital]

Yeah, morning, guys. Jeff, by the way, congratulations on the well-deserved salary increase. Just a couple of questions. One thing I'm curious about is, assuming things continue as they are vis-à-vis Iran, I'm just wondering if you see what risks you might see in terms of product availability or competitive dynamics or customer behavior in terms of the upcoming heating season?

[Richard Ambury, CFO at Star Group]

We don't see, at this time, any issues with product availability. I mean, we're in the process now of securing from our wholesalers contracts for next year. We're well on our way for securing contracts for next year. Naturally, prices are up, so that will impact customer behavior somewhat. The question is when these customers will commit to either a ceiling or a fixed price. Some of our customers are on those products, and they might just want to wait for the market to come off. Come October, folks are going to need to sign up if they weren't on a price protected plan or remain on variable.

[Michael Prouting, Managing Member at 10K Capital]

Okay. I guess just a quick question on the acquisition pipeline. I can't help asking, any potential for transformational acquisitions or anything, any other way that you could characterize the acquisition pipeline? That's all the questions I have for this morning. Thanks.

[Jeff Woosnam, President and CEO at Star Group]

Yeah. Obviously, Michael, we've completed two transactions so far this year, smaller deals. We are certainly continuing to work on and look at and assess several attractive businesses. I wouldn't categorize any of those as transformational, we certainly have a full pipeline and the team is busy. We haven't changed our approach at all. Sometimes these things kind of come in bunches, and we'll just see how all that works out.

[Michael Prouting, Managing Member at 10K Capital]

Okay, great. Thanks.

[Jeff Woosnam, President and CEO at Star Group]

Thank you.

[Operator]

Again, if you have a question, please press star, then one. Seeing no further questions in the queue, this concludes our question and answer session. I would like to turn the conference back over to Mr. Woosnam for any closing remarks.

[Jeff Woosnam, President and CEO at Star Group]

Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2026 fiscal fourth quarter results in December. Thanks, everyone.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Chris Witty, Investor Relations Advisor
• Jeff Woosnam, President and CEO
• Richard Ambury, CFO

Analysts

• Michael Prouting, Managing Member at 10K Capital