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

Rhea-AI Summary

Star Group (NYSE:SGU), a home energy distributor, reported its fiscal 2025 Q3 results with notable declines in performance. Total revenue decreased 7.8% to $305.6 million, while net loss widened to $16.6 million. The volume of home heating oil and propane sold fell 3.8% to 36.2 million gallons, impacted by warmer weather, customer attrition, and other factors.

For the nine-month period, however, the company showed improvement with net income increasing by $31.9 million to $102.2 million. Total volume rose 11.8% to 262.6 million gallons, driven by colder temperatures and acquisitions. Year-to-date Adjusted EBITDA grew by $28.2 million to $169.5 million, reflecting stronger performance in both base business and recent acquisitions.

Positive

• Nine-month net income increased significantly by $31.9 million to $102.2 million
• Year-to-date Adjusted EBITDA grew by $28.2 million to $169.5 million
• Home heating oil and propane volume increased 11.8% to 262.6 million gallons YTD
• Recent acquisitions contributed positively to Adjusted EBITDA
• Improvement in service and installation performance and profitability

Negative

• Q3 revenue declined 7.8% to $305.6 million
• Q3 net loss widened by $5.6 million to $16.6 million
• Q3 volume decreased 3.8% due to warmer weather and customer attrition
• Higher depreciation, amortization, and interest expenses due to acquisitions
• Weather hedge resulted in $3.1 million expense vs $7.5 million credit last year

Insights

Financial Analyst

Star Group reported wider Q3 losses amid warmer weather, but showed improved year-to-date performance and acquisition benefits.

Star Group's Q3 FY2025 results reveal a challenging quarter with revenue down 7.8% to $305.6 million and net loss widening to $16.6 million from $11 million in the prior year. The 3.8% decline in heating oil and propane volume to 36.2 million gallons reflects the company's seasonal vulnerability, with temperatures running 19.3% warmer than normal. This drove an Adjusted EBITDA loss of $10.6 million versus a $4.1 million loss last year.

However, the nine-month performance tells a more positive story. Year-to-date volume increased 11.8% to 262.6 million gallons due to colder temperatures compared to the prior year, and net income jumped to $102.2 million, up $31.9 million. The $28.2 million improvement in nine-month Adjusted EBITDA to $169.5 million demonstrates the company's ability to capitalize on favorable conditions during its core heating season.

The acquisition strategy appears to be yielding benefits even during the seasonal loss period, with acquired propane assets contributing positively to quarterly and year-to-date results. This supports management's diversification efforts to reduce weather sensitivity. Service and installation performance improvements are also notable, providing some offset to volume challenges.

The company's weather hedge program produced a $10.6 million negative swing year-over-year, with a $3.1 million expense this year versus a $7.5 million credit last year, reflecting the colder temperatures during the hedge period. While this hurt comparative results, it validates the hedge's purpose of stabilizing earnings across varying weather conditions.

Net customer attrition remains a concern, though management notes it was relatively flat year-over-year. The company's strategic focus on growing its propane business while improving service profitability appears to be a reasonable approach to building longer-term resilience against weather volatility and seasonal weakness.

STAMFORD, Conn., Aug. 06, 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 third quarter, the three month period ended June 30, 2025.

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024
For the fiscal 2025 third quarter, Star reported a 7.8 percent decrease in total revenue to $305.6 million compared with $331.6 million in the prior-year period, largely reflecting lower product sales. The volume of home heating oil and propane sold during the fiscal 2025 third quarter fell by 1.5 million gallons, or 3.8 percent, to 36.2 million gallons, as the additional volume provided from acquisitions was more than offset by the impact from net customer attrition, warmer weather, and other factors. Temperatures in Star’s geographic areas of operation for the three months ended June 30, 2025 were 2.0 percent warmer than the three months ended June 30, 2024 and 19.3 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration. Selling prices also decreased, largely due to a decline in wholesale product costs of $0.3525 per gallon, or 14.3 percent, year-over-year.

Star’s net loss increased by $5.6 million in the quarter, to $16.6 million, reflecting $6.5 million greater Adjusted EBITDA loss, $2.0 million higher depreciation and amortization expense, and a $0.9 million increase in net interest expense, partially offset by a $2.3 million higher income tax benefit and a favorable change in the fair value of derivative instruments of $1.6 million. Depreciation and amortization and net interest expense rose largely due to acquisitions.

The Company reported a third quarter Adjusted EBITDA loss (a non-GAAP measure defined below) of $10.6 million, versus $4.1 million in fiscal 2024, due to slightly lower home heating oil and propane per-gallon margins in the base business and a decrease in volume sold due to warmer weather and other factors, partially offset by lower base business operating expenses and positive Adjusted EBITDA from recent acquisitions, generated during this historical loss period.

“While outside our core heating season, the third quarter was negatively impacted by lower volume due to warmer temperatures along with net attrition and other factors,” said Jeff Woosnam, Star Group’s President and Chief Executive Officer. “That said, we were pleased with our continued improvement in service and installation performance, and acquisition-related Adjusted EBITDA positively contributed to the quarter as well as the year-to-date period. This largely reflects the quality of the propane assets and accounts acquired, which tend to be slightly less seasonal. As we pursue a strategy that includes continuing to grow our propane and heating oil customer base as well as 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. We believe we remain on track for solid performance in fiscal 2025, and net customer attrition, which remains a critical area of focus, was roughly flat year-over-year.”

Nine Months Ended June 30, 2025 Compared to the Nine Months Ended June 30, 2024
For the nine months ended June 30, 2025, Star reported a modest rise (less than 1.0 percent) in total revenue to $1.5 billion, reflecting higher volumes sold, offsetting a decline in selling prices in response to lower wholesale product costs. The volume of home heating oil and propane sold during the first nine months of fiscal 2025 increased by 27.7 million gallons, or 11.8 percent, to 262.6 million gallons, reflecting colder temperatures, the additional volume provided from acquisitions, more than offsetting net customer attrition and other factors. Temperatures in Star’s geographic areas of operation fiscal year-to-date were 8.2 percent colder than during the prior-year period but 8.3 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Star’s net income increased by $31.9 million for the first nine months of fiscal 2025, to $102.2 million, primarily due to $28.2 million of higher Adjusted EBITDA and a $20.2 million favorable change in the fair value of derivative instruments, partially offset by a $12.4 million higher income tax provision, a $2.6 million increase in depreciation and amortization costs, and $1.4 million greater net interest expense. Depreciation and amortization and net interest expense rose largely due to acquisitions.

Year-to-date Adjusted EBITDA increased by $28.2 million, to $169.5 million, compared to the prior-year period, reflecting $21.1 million higher Adjusted EBITDA in the base business and a $17.7 million increase in Adjusted EBITDA from recent acquisitions, partially offset by a $10.6 million increase in expense related to the Company’s weather hedge contracts. The higher Adjusted EBITDA in the base business was driven by an increase in home heating oil and propane per gallon margins, higher home heating oil and propane volume sold, due to colder weather, and an improvement in service and installation profitability. Regarding its weather hedge, as previously reported, the temperatures experienced during the hedge period ending March 31, 2025 were colder than the strike prices and, therefore, the Company recorded an expense under those weather hedge contracts of $3.1 million. This compares to the prior-year period during which, due to warmer weather, the Company recorded a credit of $7.5 million under its weather hedge contract.

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 and 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, August 7, 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, tariff regimes, including newly imposed U.S. tariffs and any additional responsive non-U.S. tariffs or additional U.S. tariffs, 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
		June 30,				September 30,
(in thousands)			2025				2024
ASSETS		(unaudited)
Current assets
Cash and cash equivalents		$	28,082			$	117,335
Receivables, net of allowance of $8,676 and $6,434, respectively			129,267				94,981
Inventories			43,366				41,587
Prepaid expenses and other current assets			31,743				27,566
Assets held for sale			1,037				—
Total current assets			233,495				281,469
Property and equipment, net			127,024				104,534
Operating lease right-of-use assets			90,391				91,141
Goodwill			293,350				275,829
Intangibles, net			130,091				98,712
Restricted cash			250				250
Captive insurance collateral			77,338				74,851
Deferred charges and other assets, net			11,860				12,825
Total assets		$	963,799			$	939,611
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Accounts payable		$	30,517			$	31,547
Revolving credit facility borrowings			—				5
Fair liability value of derivative instruments			1,604				13,971
Current maturities of long-term debt			21,000				21,000
Current portion of operating lease liabilities			21,089				19,832
Accrued expenses and other current liabilities			133,163				116,317
Unearned service contract revenue			67,500				66,424
Customer credit balances			56,597				104,700
Total current liabilities			331,470				373,796
Long-term debt			172,297				187,811
Long-term operating lease liabilities			73,587				75,916
Deferred tax liabilities, net			32,633				21,922
Other long-term liabilities			16,244				16,273
Partners’ capital
Common unitholders			354,925				282,058
General partner			(5,919	)			(5,714	)
Accumulated other comprehensive loss, net of taxes			(11,438	)			(12,451	)
Total partners’ capital			337,568				263,893
Total liabilities and partners’ capital		$	963,799			$	939,611

STAR GROUP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Three Months Ended June 30,								Nine Months Ended June 30,
(in thousands, except per unit data - unaudited)			2025				2024				2025				2024
Sales:
Product		$	216,158			$	249,001			$	1,280,722			$	1,292,849
Installations and services			89,460				82,639				256,004				232,919
Total sales			305,618				331,640				1,536,726				1,525,768
Cost and expenses:
Cost of product			144,521				174,285				800,170				867,017
Cost of installations and services			75,240				69,108				233,115				214,807
(Increase) decrease in the fair value of derivative instruments			(603	)			984				(11,962	)			8,262
Delivery and branch expenses			90,649				86,540				314,903				284,989
Depreciation and amortization expenses			9,197				7,243				26,012				23,377
General and administrative expenses			7,564				7,423				22,934				21,331
Finance charge income			(1,773	)			(1,652	)			(3,860	)			(3,676	)
Operating income (loss)			(19,177	)			(12,291	)			155,414				109,661
Interest expense, net			(3,639	)			(2,663	)			(11,114	)			(9,719	)
Amortization of debt issuance costs			(274	)			(247	)			(804	)			(746	)
Income (loss) before income taxes		$	(23,090	)		$	(15,201	)		$	143,496			$	99,196
Income tax expense (benefit)			(6,461	)			(4,157	)			41,330				28,887
Net income (loss)		$	(16,629	)		$	(11,044	)		$	102,166			$	70,309
General Partner’s interest in net income (loss)			(157	)			(101	)			952				637
Limited Partners’ interest in net income (loss)		$	(16,472	)		$	(10,943	)		$	101,214			$	69,672
Per unit data (Basic and Diluted):
Net income (loss) available to limited partners		$	(0.48	)		$	(0.31	)		$	2.93			$	1.96
Dilutive impact of theoretical distribution of earnings			—				—				0.48				0.30
Basic and diluted income (loss) per Limited Partner Unit:		$	(0.48	)		$	(0.31	)		$	2.45			$	1.66
Weighted average number of Limited Partner units outstanding (Basic and Diluted)			34,340				35,274				34,498				35,470

SUPPLEMENTAL INFORMATION STAR GROUP, L.P. AND SUBSIDIARIES RECONCILIATION OF EBITDA AND ADJUSTED EBITDA (Unaudited)
		Three Months Ended June 30,
(in thousands)			2025				2024
Net loss		$	(16,629	)		$	(11,044	)
Plus:
Income tax benefit			(6,461	)			(4,157	)
Amortization of debt issuance costs			274				247
Interest expense, net			3,639				2,663
Depreciation and amortization			9,197				7,243
EBITDA			(9,980	)			(5,048	)
(Increase) / decrease in the fair value of derivative instruments			(603	)			984
Adjusted EBITDA			(10,583	)			(4,064	)
Add / (subtract)
Income tax benefit			6,461				4,157
Interest expense, net			(3,639	)			(2,663	)
Provision for losses on accounts receivable			3,424				3,273
Decrease in accounts receivables			83,850				66,478
Decrease in inventories			22,575				22,382
Increase in customer credit balances			12,059				11,099
Change in deferred taxes			(1,032	)			261
Change in other operating assets and liabilities			(40,613	)			(23,377	)
Net cash provided by operating activities		$	72,502			$	77,546
Net cash used in investing activities		$	(13,100	)		$	(1,984	)
Net cash used in financing activities		$	(49,822	)		$	(41,924	)
Home heating oil and propane gallons sold			36,200				37,700
Other petroleum products			32,000				32,900
Total all products			68,200				70,600

SUPPLEMENTAL INFORMATION STAR GROUP, L.P. AND SUBSIDIARIES RECONCILIATION OF EBITDA AND ADJUSTED EBITDA (Unaudited)
		Nine Months Ended June 30,
(in thousands)			2025				2024
Net income		$	102,166			$	70,309
Plus:
Income tax expense			41,330				28,887
Amortization of debt issuance costs			804				746
Interest expense, net			11,114				9,719
Depreciation and amortization			26,012				23,377
EBITDA			181,426				133,038
(Increase) / decrease in the fair value of derivative instruments			(11,962	)			8,262
Adjusted EBITDA			169,464				141,300
Add / (subtract)
Income tax expense			(41,330	)			(28,887	)
Interest expense, net			(11,114	)			(9,719	)
Provision for losses on accounts receivable			6,593				6,945
Increase in accounts receivables			(40,872	)			(21,231	)
Decrease in inventories			425				16,909
Decrease in customer credit balances			(49,341	)			(50,516	)
Change in deferred taxes			10,372				(2,495	)
Change in other operating assets and liabilities			12,346				20,061
Net cash provided by operating activities		$	56,543			$	72,367
Net cash used in investing activities		$	(99,507	)		$	(31,201	)
Net cash used in financing activities		$	(46,289	)		$	(40,656	)
Home heating oil and propane gallons sold			262,600				234,900
Other petroleum products			91,600				95,400
Total all products			354,200				330,300

CONTACT: Star Group, L.P. Investor Relations 203/328-7310

Chris Witty Darrow Associates 646/438-9385 or cwitty@darrowir.com

FAQ

What were Star Group's (SGU) key financial results for Q3 2025?

Star Group reported Q3 2025 revenue of $305.6 million, down 7.8%, and a net loss of $16.6 million. Volume decreased 3.8% to 36.2 million gallons of home heating oil and propane.

How did Star Group's (SGU) year-to-date performance compare to the previous year?

For the first nine months of fiscal 2025, Star Group's net income increased by $31.9 million to $102.2 million, with total volume up 11.8% to 262.6 million gallons. Adjusted EBITDA grew by $28.2 million to $169.5 million.

What factors affected Star Group's (SGU) Q3 2025 performance?

Performance was impacted by warmer temperatures (2.0% warmer than last year), customer attrition, lower product sales, and increased operating costs. However, recent acquisitions provided some positive contribution.

How did weather impact Star Group's (SGU) financial results in 2025?

Q3 temperatures were 19.3% warmer than normal, negatively impacting volume. Year-to-date temperatures were 8.2% colder than prior year but 8.3% warmer than normal, leading to a $3.1 million weather hedge expense.

What is Star Group's (SGU) strategy for future growth?

Star Group is focusing on growing their propane and heating oil customer base, improving service and installation profitability, and positioning as a diversified energy provider to be more resilient to varied weather conditions.