[10-Q] Star Group, L.P. Common Units Representing Limited Partner Interest Quarterly Earnings Report
Parke Bancorp (PKBK) posted solid Q2-25 results. Net income rose 28% YoY to $8.3 million, lifting diluted EPS to $0.69 (vs $0.53). For the six-month period, earnings advanced 27% to $16.1 million, or $1.34 per diluted share.
- Balance sheet growth: Total assets reached $2.17 billion (+1.3% vs 12/24). Net loans expanded 3.5% to $1.90 billion, while deposits climbed 3.8% to $1.69 billion. FHLB borrowings were trimmed to $100 million from $145 million.
- Revenue & margins: Net interest income increased 25% YoY to $17.9 million, outpacing the 7% rise in non-interest expense. Higher funding costs pushed quarterly interest expense up 8% to $17.2 million, but loan growth kept net interest income strong. Non-interest income fell 32% to $0.8 million.
- Credit quality: Allowance for credit losses rose to $33.8 million (1.74% of loans) after a $0.98 million provision. Non-performing loans dipped to $11.2 million (0.58% of loans), and past-due >90 days declined slightly.
- Capital & shareholder returns: Equity grew 4% to $312.2 million, supporting an estimated tangible book value of ~ $26. Per-share dividends of $0.18 in Q2 and $0.36 YTD were paid; preferred dividends totaled $10 thousand YTD.
Takeaway: Strong loan growth and widening asset yields outweighed higher deposit costs, driving double-digit EPS expansion. Asset quality remains stable, and deposit inflows reduced wholesale funding reliance, positioning the bank well if rate pressures ease.
Parke Bancorp (PKBK) ha riportato solidi risultati nel secondo trimestre del 2025. L'utile netto è aumentato del 28% su base annua, raggiungendo 8,3 milioni di dollari, con un utile diluito per azione salito a 0,69 dollari (rispetto a 0,53 dollari). Nel periodo di sei mesi, gli utili sono cresciuti del 27% a 16,1 milioni di dollari, pari a 1,34 dollari per azione diluita.
- Crescita del bilancio: Gli attivi totali hanno raggiunto 2,17 miliardi di dollari (+1,3% rispetto a dicembre 2024). I prestiti netti sono aumentati del 3,5% a 1,90 miliardi di dollari, mentre i depositi sono saliti del 3,8% a 1,69 miliardi. I prestiti FHLB sono stati ridotti a 100 milioni di dollari da 145 milioni.
- Ricavi e margini: Il reddito netto da interessi è cresciuto del 25% su base annua a 17,9 milioni di dollari, superando l’aumento del 7% delle spese non relative agli interessi. I maggiori costi di finanziamento hanno fatto salire le spese per interessi trimestrali dell’8% a 17,2 milioni, ma la crescita dei prestiti ha mantenuto forte il reddito netto da interessi. Il reddito non da interessi è diminuito del 32% a 0,8 milioni.
- Qualità del credito: L’accantonamento per perdite su crediti è salito a 33,8 milioni di dollari (1,74% dei prestiti) dopo una svalutazione di 0,98 milioni. I prestiti in sofferenza sono scesi a 11,2 milioni (0,58% dei prestiti), e i ritardi superiori a 90 giorni sono leggermente diminuiti.
- Capitale e ritorni per gli azionisti: Il patrimonio netto è cresciuto del 4% a 312,2 milioni di dollari, sostenendo un valore contabile tangibile stimato di circa 26 dollari per azione. Sono stati distribuiti dividendi per azione di 0,18 dollari nel secondo trimestre e 0,36 dollari da inizio anno; i dividendi preferenziali ammontano a 10 mila dollari da inizio anno.
Conclusione: La forte crescita dei prestiti e l’aumento dei rendimenti degli attivi hanno compensato i maggiori costi dei depositi, portando a una crescita a doppia cifra dell’utile per azione. La qualità degli attivi rimane stabile e l’aumento dei depositi ha ridotto la dipendenza dal finanziamento all’ingrosso, posizionando bene la banca in caso di diminuzione delle pressioni sui tassi.
Parke Bancorp (PKBK) presentó sólidos resultados en el segundo trimestre de 2025. La utilidad neta aumentó un 28% interanual, alcanzando 8,3 millones de dólares, elevando la utilidad diluida por acción a 0,69 dólares (frente a 0,53). En el período de seis meses, las ganancias aumentaron un 27% a 16,1 millones de dólares, o 1,34 dólares por acción diluida.
- Crecimiento del balance: Los activos totales alcanzaron 2,17 mil millones de dólares (+1,3% respecto a diciembre de 2024). Los préstamos netos crecieron un 3,5% hasta 1,90 mil millones, mientras que los depósitos subieron un 3,8% a 1,69 mil millones. Los préstamos FHLB se redujeron a 100 millones desde 145 millones.
- Ingresos y márgenes: Los ingresos netos por intereses aumentaron un 25% interanual a 17,9 millones, superando el aumento del 7% en gastos no relacionados con intereses. Los mayores costos de financiamiento elevaron los gastos por intereses trimestrales un 8% a 17,2 millones, pero el crecimiento de préstamos mantuvo fuerte el ingreso neto por intereses. Los ingresos no relacionados con intereses cayeron un 32% a 0,8 millones.
- Calidad crediticia: La provisión para pérdidas crediticias aumentó a 33,8 millones (1,74% de los préstamos) tras una provisión de 0,98 millones. Los préstamos en mora disminuyeron a 11,2 millones (0,58% de los préstamos), y los atrasos mayores a 90 días bajaron ligeramente.
- Capital y retornos para accionistas: El patrimonio creció un 4% a 312,2 millones, respaldando un valor contable tangible estimado de aproximadamente 26 dólares por acción. Se pagaron dividendos por acción de 0,18 dólares en el segundo trimestre y 0,36 dólares en lo que va del año; los dividendos preferentes totalizaron 10 mil dólares en el año.
Conclusión: El fuerte crecimiento de préstamos y la ampliación de los rendimientos de activos superaron los mayores costos de depósitos, impulsando una expansión de dos dígitos en la utilidad por acción. La calidad de los activos se mantiene estable y las entradas de depósitos redujeron la dependencia del financiamiento mayorista, posicionando bien al banco si las presiones sobre las tasas disminuyen.
Parke Bancorp (PKBK)는 2025년 2분기에 견고한 실적을 발표했습니다. 순이익은 전년 대비 28% 증가한 830만 달러를 기록했으며, 희석 주당순이익(EPS)은 0.69달러로 상승했습니다(이전 0.53달러). 6개월 기간 동안 이익은 27% 증가한 1,610만 달러, 희석 주당 1.34달러를 기록했습니다.
- 대차대조표 성장: 총 자산은 21.7억 달러로 2024년 12월 대비 1.3% 증가했습니다. 순대출금은 3.5% 증가한 19억 달러, 예금은 3.8% 증가한 16.9억 달러를 기록했습니다. FHLB 차입금은 1억 달러로 1.45억 달러에서 감소했습니다.
- 수익 및 마진: 순이자수익은 전년 대비 25% 증가한 1,790만 달러로, 비이자 비용 증가율인 7%를 상회했습니다. 자금 조달 비용 상승으로 분기별 이자 비용은 8% 증가한 1,720만 달러가 되었지만, 대출 성장으로 순이자수익은 견고하게 유지되었습니다. 비이자수익은 32% 감소한 80만 달러였습니다.
- 신용 품질: 대손충당금은 3,380만 달러(대출의 1.74%)로 98만 달러의 충당금 적립 후 증가했습니다. 부실 대출은 1,120만 달러(대출의 0.58%)로 감소했으며, 90일 이상 연체도 소폭 줄었습니다.
- 자본 및 주주 수익: 자본은 4% 증가한 3억 1,220만 달러로 추정 유형 장부가치는 약 26달러입니다. 2분기에 주당 0.18달러, 연초 이후 총 0.36달러의 배당금이 지급되었으며, 우선주 배당금은 연초 이후 1만 달러였습니다.
요점: 강력한 대출 성장과 자산 수익률 확대가 예금 비용 상승을 상쇄하며 두 자릿수 EPS 성장을 견인했습니다. 자산 품질은 안정적이며, 예금 유입으로 도매 자금 조달 의존도가 감소해 금리 압력이 완화될 경우 은행의 입지가 견고해졌습니다.
Parke Bancorp (PKBK) a publié de solides résultats pour le deuxième trimestre 2025. Le bénéfice net a augmenté de 28 % en glissement annuel pour atteindre 8,3 millions de dollars, portant le BPA dilué à 0,69 $ (contre 0,53 $). Sur six mois, les bénéfices ont progressé de 27 % à 16,1 millions de dollars, soit 1,34 $ par action diluée.
- Croissance du bilan : L’actif total a atteint 2,17 milliards de dollars (+1,3 % par rapport à décembre 2024). Les prêts nets ont augmenté de 3,5 % à 1,90 milliard de dollars, tandis que les dépôts ont progressé de 3,8 % à 1,69 milliard. Les emprunts FHLB ont été réduits à 100 millions de dollars contre 145 millions.
- Revenus et marges : Le produit net d’intérêts a augmenté de 25 % en glissement annuel à 17,9 millions de dollars, dépassant la hausse de 7 % des charges non liées aux intérêts. Le coût du financement plus élevé a fait grimper les charges d’intérêts trimestrielles de 8 % à 17,2 millions, mais la croissance des prêts a maintenu un produit net d’intérêts solide. Les revenus hors intérêts ont chuté de 32 % à 0,8 million.
- Qualité du crédit : La provision pour pertes sur créances a augmenté à 33,8 millions de dollars (1,74 % des prêts) après une dotation de 0,98 million. Les prêts non performants ont diminué à 11,2 millions (0,58 % des prêts), et les retards de paiement supérieurs à 90 jours ont légèrement baissé.
- Capital et rendements aux actionnaires : Les capitaux propres ont augmenté de 4 % à 312,2 millions de dollars, soutenant une valeur comptable tangible estimée à environ 26 $ par action. Des dividendes par action de 0,18 $ au T2 et de 0,36 $ depuis le début de l’année ont été versés ; les dividendes préférentiels totalisent 10 000 $ depuis le début de l’année.
Conclusion : La forte croissance des prêts et l’élargissement des rendements des actifs ont compensé la hausse des coûts des dépôts, entraînant une expansion à deux chiffres du BPA. La qualité des actifs reste stable et les entrées de dépôts ont réduit la dépendance au financement de gros, positionnant bien la banque si les pressions sur les taux d’intérêt s’atténuent.
Parke Bancorp (PKBK) hat solide Ergebnisse für das zweite Quartal 2025 vorgelegt. Der Nettogewinn stieg im Jahresvergleich um 28 % auf 8,3 Millionen US-Dollar, wodurch das verwässerte Ergebnis je Aktie auf 0,69 US-Dollar (vorher 0,53 US-Dollar) anstieg. Für den Sechsmonatszeitraum stiegen die Gewinne um 27 % auf 16,1 Millionen US-Dollar bzw. 1,34 US-Dollar je verwässerte Aktie.
- Bilanzwachstum: Die Gesamtaktiva erreichten 2,17 Milliarden US-Dollar (+1,3 % gegenüber Dezember 2024). Die Nettokredite wuchsen um 3,5 % auf 1,90 Milliarden US-Dollar, während die Einlagen um 3,8 % auf 1,69 Milliarden US-Dollar zunahmen. Die FHLB-Darlehen wurden von 145 Millionen auf 100 Millionen US-Dollar reduziert.
- Umsatz & Margen: Der Nettozinsertrag stieg im Jahresvergleich um 25 % auf 17,9 Millionen US-Dollar und übertraf damit den Anstieg der nicht zinstragenden Aufwendungen um 7 %. Höhere Finanzierungskosten ließen die Zinsaufwendungen im Quartal um 8 % auf 17,2 Millionen US-Dollar steigen, doch das Kreditwachstum hielt den Nettozinsertrag stark. Die nicht zinstragenden Erträge sanken um 32 % auf 0,8 Millionen US-Dollar.
- Kreditqualität: Die Rückstellung für Kreditverluste stieg nach einer Rückstellung von 0,98 Millionen auf 33,8 Millionen US-Dollar (1,74 % der Kredite). Die notleidenden Kredite sanken auf 11,2 Millionen US-Dollar (0,58 % der Kredite), und überfällige Kredite über 90 Tage gingen leicht zurück.
- Kapital & Aktionärsrenditen: Das Eigenkapital wuchs um 4 % auf 312,2 Millionen US-Dollar und unterstützt einen geschätzten materiellen Buchwert von etwa 26 US-Dollar. Dividenden von 0,18 US-Dollar pro Aktie im zweiten Quartal und 0,36 US-Dollar im Jahresverlauf wurden ausgezahlt; bevorzugte Dividenden beliefen sich auf 10.000 US-Dollar im Jahresverlauf.
Fazit: Starkes Kreditwachstum und steigende Vermögensrenditen übertrafen die höheren Einlagenkosten und trieben ein zweistelliges Wachstum des Ergebnis je Aktie voran. Die Vermögensqualität bleibt stabil, und der Zufluss von Einlagen reduzierte die Abhängigkeit von Wholesale-Finanzierungen, was die Bank gut positioniert, falls der Druck auf die Zinssätze nachlässt.
- EPS up 30% YoY to $0.69, signaling strong profitability momentum.
- Loans grew 3.5% since year-end, providing revenue tailwind.
- Deposit base expanded 3.8%, reducing reliance on wholesale funding.
- Non-performing loans fell 5% to $11.2 m, improving asset quality.
- Equity increased 4%, enhancing capital ratios and tangible book value.
- Interest expense rose 8% YoY, reflecting competitive deposit pricing.
- Non-interest income dropped 32%, limiting revenue diversification.
- Higher CRE and construction concentrations elevate cyclical credit risk.
Insights
TL;DR – Loan growth, margin resilience and stable credit drive a clear earnings beat.
PKBK delivered 30% EPS growth despite elevated funding costs. Net loans expanded 3.5% in six months, heavily weighted to CRE and resi investment property, sustaining interest income. Deposit growth (+$62 m) allowed $45 m in FHLB pay-downs, lowering longer-term funding costs. Fee income is light and fell 32%, a modest drag, but expense discipline kept the efficiency ratio roughly flat. Non-performing loans ticked down; ACL coverage (1.74%) looks adequate given 0.6% NPL ratio. Book value rose 4%; shares now trade near 1.0× TBV, leaving upside if credit stays benign. Overall impact positive.
TL;DR – Credit metrics stable; rising deposit costs warrant monitoring.
While NPLs declined, watch-list exposures (OAEM/Substandard) increased within commercial segments, prompting a $0.98 m provision and 4% ACL build. Concentrations in non-owner-occupied CRE (23% of loans) and construction (8%) grew, elevating sensitivity to property values. Deposit repricing remains the key risk: interest on deposits surged 11% YoY to $15.1 m, compressing incremental margin. A 100 bp rate cut could pressure funding costs slower than asset yields, trimming NII. Liquidity is adequate with 11% cash/interest-bearing bank balances, but further core growth is essential as FHLB capacity moderates. Net overall risk neutral.
Parke Bancorp (PKBK) ha riportato solidi risultati nel secondo trimestre del 2025. L'utile netto è aumentato del 28% su base annua, raggiungendo 8,3 milioni di dollari, con un utile diluito per azione salito a 0,69 dollari (rispetto a 0,53 dollari). Nel periodo di sei mesi, gli utili sono cresciuti del 27% a 16,1 milioni di dollari, pari a 1,34 dollari per azione diluita.
- Crescita del bilancio: Gli attivi totali hanno raggiunto 2,17 miliardi di dollari (+1,3% rispetto a dicembre 2024). I prestiti netti sono aumentati del 3,5% a 1,90 miliardi di dollari, mentre i depositi sono saliti del 3,8% a 1,69 miliardi. I prestiti FHLB sono stati ridotti a 100 milioni di dollari da 145 milioni.
- Ricavi e margini: Il reddito netto da interessi è cresciuto del 25% su base annua a 17,9 milioni di dollari, superando l’aumento del 7% delle spese non relative agli interessi. I maggiori costi di finanziamento hanno fatto salire le spese per interessi trimestrali dell’8% a 17,2 milioni, ma la crescita dei prestiti ha mantenuto forte il reddito netto da interessi. Il reddito non da interessi è diminuito del 32% a 0,8 milioni.
- Qualità del credito: L’accantonamento per perdite su crediti è salito a 33,8 milioni di dollari (1,74% dei prestiti) dopo una svalutazione di 0,98 milioni. I prestiti in sofferenza sono scesi a 11,2 milioni (0,58% dei prestiti), e i ritardi superiori a 90 giorni sono leggermente diminuiti.
- Capitale e ritorni per gli azionisti: Il patrimonio netto è cresciuto del 4% a 312,2 milioni di dollari, sostenendo un valore contabile tangibile stimato di circa 26 dollari per azione. Sono stati distribuiti dividendi per azione di 0,18 dollari nel secondo trimestre e 0,36 dollari da inizio anno; i dividendi preferenziali ammontano a 10 mila dollari da inizio anno.
Conclusione: La forte crescita dei prestiti e l’aumento dei rendimenti degli attivi hanno compensato i maggiori costi dei depositi, portando a una crescita a doppia cifra dell’utile per azione. La qualità degli attivi rimane stabile e l’aumento dei depositi ha ridotto la dipendenza dal finanziamento all’ingrosso, posizionando bene la banca in caso di diminuzione delle pressioni sui tassi.
Parke Bancorp (PKBK) presentó sólidos resultados en el segundo trimestre de 2025. La utilidad neta aumentó un 28% interanual, alcanzando 8,3 millones de dólares, elevando la utilidad diluida por acción a 0,69 dólares (frente a 0,53). En el período de seis meses, las ganancias aumentaron un 27% a 16,1 millones de dólares, o 1,34 dólares por acción diluida.
- Crecimiento del balance: Los activos totales alcanzaron 2,17 mil millones de dólares (+1,3% respecto a diciembre de 2024). Los préstamos netos crecieron un 3,5% hasta 1,90 mil millones, mientras que los depósitos subieron un 3,8% a 1,69 mil millones. Los préstamos FHLB se redujeron a 100 millones desde 145 millones.
- Ingresos y márgenes: Los ingresos netos por intereses aumentaron un 25% interanual a 17,9 millones, superando el aumento del 7% en gastos no relacionados con intereses. Los mayores costos de financiamiento elevaron los gastos por intereses trimestrales un 8% a 17,2 millones, pero el crecimiento de préstamos mantuvo fuerte el ingreso neto por intereses. Los ingresos no relacionados con intereses cayeron un 32% a 0,8 millones.
- Calidad crediticia: La provisión para pérdidas crediticias aumentó a 33,8 millones (1,74% de los préstamos) tras una provisión de 0,98 millones. Los préstamos en mora disminuyeron a 11,2 millones (0,58% de los préstamos), y los atrasos mayores a 90 días bajaron ligeramente.
- Capital y retornos para accionistas: El patrimonio creció un 4% a 312,2 millones, respaldando un valor contable tangible estimado de aproximadamente 26 dólares por acción. Se pagaron dividendos por acción de 0,18 dólares en el segundo trimestre y 0,36 dólares en lo que va del año; los dividendos preferentes totalizaron 10 mil dólares en el año.
Conclusión: El fuerte crecimiento de préstamos y la ampliación de los rendimientos de activos superaron los mayores costos de depósitos, impulsando una expansión de dos dígitos en la utilidad por acción. La calidad de los activos se mantiene estable y las entradas de depósitos redujeron la dependencia del financiamiento mayorista, posicionando bien al banco si las presiones sobre las tasas disminuyen.
Parke Bancorp (PKBK)는 2025년 2분기에 견고한 실적을 발표했습니다. 순이익은 전년 대비 28% 증가한 830만 달러를 기록했으며, 희석 주당순이익(EPS)은 0.69달러로 상승했습니다(이전 0.53달러). 6개월 기간 동안 이익은 27% 증가한 1,610만 달러, 희석 주당 1.34달러를 기록했습니다.
- 대차대조표 성장: 총 자산은 21.7억 달러로 2024년 12월 대비 1.3% 증가했습니다. 순대출금은 3.5% 증가한 19억 달러, 예금은 3.8% 증가한 16.9억 달러를 기록했습니다. FHLB 차입금은 1억 달러로 1.45억 달러에서 감소했습니다.
- 수익 및 마진: 순이자수익은 전년 대비 25% 증가한 1,790만 달러로, 비이자 비용 증가율인 7%를 상회했습니다. 자금 조달 비용 상승으로 분기별 이자 비용은 8% 증가한 1,720만 달러가 되었지만, 대출 성장으로 순이자수익은 견고하게 유지되었습니다. 비이자수익은 32% 감소한 80만 달러였습니다.
- 신용 품질: 대손충당금은 3,380만 달러(대출의 1.74%)로 98만 달러의 충당금 적립 후 증가했습니다. 부실 대출은 1,120만 달러(대출의 0.58%)로 감소했으며, 90일 이상 연체도 소폭 줄었습니다.
- 자본 및 주주 수익: 자본은 4% 증가한 3억 1,220만 달러로 추정 유형 장부가치는 약 26달러입니다. 2분기에 주당 0.18달러, 연초 이후 총 0.36달러의 배당금이 지급되었으며, 우선주 배당금은 연초 이후 1만 달러였습니다.
요점: 강력한 대출 성장과 자산 수익률 확대가 예금 비용 상승을 상쇄하며 두 자릿수 EPS 성장을 견인했습니다. 자산 품질은 안정적이며, 예금 유입으로 도매 자금 조달 의존도가 감소해 금리 압력이 완화될 경우 은행의 입지가 견고해졌습니다.
Parke Bancorp (PKBK) a publié de solides résultats pour le deuxième trimestre 2025. Le bénéfice net a augmenté de 28 % en glissement annuel pour atteindre 8,3 millions de dollars, portant le BPA dilué à 0,69 $ (contre 0,53 $). Sur six mois, les bénéfices ont progressé de 27 % à 16,1 millions de dollars, soit 1,34 $ par action diluée.
- Croissance du bilan : L’actif total a atteint 2,17 milliards de dollars (+1,3 % par rapport à décembre 2024). Les prêts nets ont augmenté de 3,5 % à 1,90 milliard de dollars, tandis que les dépôts ont progressé de 3,8 % à 1,69 milliard. Les emprunts FHLB ont été réduits à 100 millions de dollars contre 145 millions.
- Revenus et marges : Le produit net d’intérêts a augmenté de 25 % en glissement annuel à 17,9 millions de dollars, dépassant la hausse de 7 % des charges non liées aux intérêts. Le coût du financement plus élevé a fait grimper les charges d’intérêts trimestrielles de 8 % à 17,2 millions, mais la croissance des prêts a maintenu un produit net d’intérêts solide. Les revenus hors intérêts ont chuté de 32 % à 0,8 million.
- Qualité du crédit : La provision pour pertes sur créances a augmenté à 33,8 millions de dollars (1,74 % des prêts) après une dotation de 0,98 million. Les prêts non performants ont diminué à 11,2 millions (0,58 % des prêts), et les retards de paiement supérieurs à 90 jours ont légèrement baissé.
- Capital et rendements aux actionnaires : Les capitaux propres ont augmenté de 4 % à 312,2 millions de dollars, soutenant une valeur comptable tangible estimée à environ 26 $ par action. Des dividendes par action de 0,18 $ au T2 et de 0,36 $ depuis le début de l’année ont été versés ; les dividendes préférentiels totalisent 10 000 $ depuis le début de l’année.
Conclusion : La forte croissance des prêts et l’élargissement des rendements des actifs ont compensé la hausse des coûts des dépôts, entraînant une expansion à deux chiffres du BPA. La qualité des actifs reste stable et les entrées de dépôts ont réduit la dépendance au financement de gros, positionnant bien la banque si les pressions sur les taux d’intérêt s’atténuent.
Parke Bancorp (PKBK) hat solide Ergebnisse für das zweite Quartal 2025 vorgelegt. Der Nettogewinn stieg im Jahresvergleich um 28 % auf 8,3 Millionen US-Dollar, wodurch das verwässerte Ergebnis je Aktie auf 0,69 US-Dollar (vorher 0,53 US-Dollar) anstieg. Für den Sechsmonatszeitraum stiegen die Gewinne um 27 % auf 16,1 Millionen US-Dollar bzw. 1,34 US-Dollar je verwässerte Aktie.
- Bilanzwachstum: Die Gesamtaktiva erreichten 2,17 Milliarden US-Dollar (+1,3 % gegenüber Dezember 2024). Die Nettokredite wuchsen um 3,5 % auf 1,90 Milliarden US-Dollar, während die Einlagen um 3,8 % auf 1,69 Milliarden US-Dollar zunahmen. Die FHLB-Darlehen wurden von 145 Millionen auf 100 Millionen US-Dollar reduziert.
- Umsatz & Margen: Der Nettozinsertrag stieg im Jahresvergleich um 25 % auf 17,9 Millionen US-Dollar und übertraf damit den Anstieg der nicht zinstragenden Aufwendungen um 7 %. Höhere Finanzierungskosten ließen die Zinsaufwendungen im Quartal um 8 % auf 17,2 Millionen US-Dollar steigen, doch das Kreditwachstum hielt den Nettozinsertrag stark. Die nicht zinstragenden Erträge sanken um 32 % auf 0,8 Millionen US-Dollar.
- Kreditqualität: Die Rückstellung für Kreditverluste stieg nach einer Rückstellung von 0,98 Millionen auf 33,8 Millionen US-Dollar (1,74 % der Kredite). Die notleidenden Kredite sanken auf 11,2 Millionen US-Dollar (0,58 % der Kredite), und überfällige Kredite über 90 Tage gingen leicht zurück.
- Kapital & Aktionärsrenditen: Das Eigenkapital wuchs um 4 % auf 312,2 Millionen US-Dollar und unterstützt einen geschätzten materiellen Buchwert von etwa 26 US-Dollar. Dividenden von 0,18 US-Dollar pro Aktie im zweiten Quartal und 0,36 US-Dollar im Jahresverlauf wurden ausgezahlt; bevorzugte Dividenden beliefen sich auf 10.000 US-Dollar im Jahresverlauf.
Fazit: Starkes Kreditwachstum und steigende Vermögensrenditen übertrafen die höheren Einlagenkosten und trieben ein zweistelliges Wachstum des Ergebnis je Aktie voran. Die Vermögensqualität bleibt stabil, und der Zufluss von Einlagen reduzierte die Abhängigkeit von Wholesale-Finanzierungen, was die Bank gut positioniert, falls der Druck auf die Zinssätze nachlässt.
`
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive office) |
(Zip Code) |
Registrant’s telephone number, including area code:
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Common Unit Purchase Rights |
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New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non- accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
At July 31, 2025, the registrant had
STAR GROUP, L.P. AND SUBSIDIARIES
INDEX TO FORM 10-Q
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Page |
Part I Financial Information |
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Item 1 - Condensed Consolidated Financial Statements |
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3 |
Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and September 30, 2024 |
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3 |
Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended June 30, 2025 and June 30, 2024 |
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4 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended June 30, 2025 and June 30, 2024 |
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5 |
Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and nine months ended June 30, 2025 and June 30, 2024 |
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6-7 |
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended June 30, 2025 and June 30, 2024 |
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8 |
Notes to Condensed Consolidated Financial Statements (unaudited) |
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9-21 |
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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22-39 |
Item 3 - Quantitative and Qualitative Disclosures About Market Risk |
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40 |
Item 4 - Controls and Procedures |
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40-41 |
Part II Other Information: |
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42 |
Item 1 - Legal Proceedings |
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42 |
Item 1A - Risk Factors |
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42 |
Item 2 - Unregistered Sale of Equity Securities and Use of Proceeds |
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42 |
Item 3 - Defaults Upon Senior Securities |
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42 |
Item 4 - Mine Safety Disclosures |
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42 |
Item 5 - Other Information |
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42 |
Item 6 - Exhibits |
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43 |
Signatures |
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44 |
2
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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September 30, |
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2025 |
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2024 |
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(in thousands) |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net of allowance of $ |
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Inventories |
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Prepaid expenses and other current assets |
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Assets held for sale |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Intangibles, net |
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Restricted cash |
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Captive insurance collateral |
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Deferred charges and other assets, net |
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Total assets |
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$ |
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$ |
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LIABILITIES AND PARTNERS’ CAPITAL |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Revolving credit facility borrowings |
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Fair liability value of derivative instruments |
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Current maturities of long-term debt |
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Current portion of operating lease liabilities |
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Accrued expenses and other current liabilities |
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Unearned service contract revenue |
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Customer credit balances |
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Total current liabilities |
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Long-term debt |
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Long-term operating lease liabilities |
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Deferred tax liabilities, net |
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Other long-term liabilities |
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Partners’ capital |
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Common unitholders |
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General partner |
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( |
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( |
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Accumulated other comprehensive loss, net of taxes |
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( |
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( |
) |
Total partners’ capital |
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Total liabilities and partners’ capital |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months |
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Nine Months |
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(in thousands, except per unit data - unaudited) |
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2025 |
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2024 |
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2025 |
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2024 |
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Sales: |
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Product |
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$ |
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$ |
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$ |
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$ |
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Installations and services |
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Total sales |
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Cost and expenses: |
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Cost of product |
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Cost of installations and services |
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(Increase) decrease in the fair value of derivative instruments |
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( |
) |
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( |
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Delivery and branch expenses |
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Depreciation and amortization expenses |
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General and administrative expenses |
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Finance charge income |
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( |
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( |
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( |
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( |
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Operating income (loss) |
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( |
) |
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( |
) |
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Interest expense, net |
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( |
) |
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( |
) |
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( |
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( |
) |
Amortization of debt issuance costs |
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( |
) |
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( |
) |
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( |
) |
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( |
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Income (loss) before income taxes |
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( |
) |
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( |
) |
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Income tax expense (benefit) |
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( |
) |
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( |
) |
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Net income (loss) |
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$ |
( |
) |
$ |
( |
) |
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$ |
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$ |
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General Partner’s interest in net income (loss) |
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( |
) |
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( |
) |
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Limited Partners’ interest in net income (loss) |
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$ |
( |
) |
$ |
( |
) |
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$ |
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$ |
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Basic and diluted income (loss) per Limited Partner Unit (1): |
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$ |
( |
) |
$ |
( |
) |
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$ |
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$ |
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Weighted average number of Limited Partner units outstanding: |
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Basic and Diluted |
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(1)
See accompanying notes to condensed consolidated financial statements.
4
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
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Three Months |
|
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Nine Months |
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||||||||
(in thousands - unaudited) |
|
2025 |
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2024 |
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2025 |
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2024 |
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||||
Net income (loss) |
|
$ |
( |
) |
$ |
( |
) |
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$ |
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$ |
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||
Other comprehensive income (loss): |
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||||
Unrealized gain on pension plan obligation |
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Tax effect of unrealized gain on pension plan obligation |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Unrealized gain on captive insurance collateral |
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||||
Tax effect of unrealized gain on captive insurance collateral |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Unrealized loss on interest rate hedges |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Tax effect of unrealized loss on interest rate hedges |
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Total other comprehensive income |
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||||
Total comprehensive income (loss) |
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$ |
( |
) |
$ |
( |
) |
|
$ |
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
5
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
|
|
Three Months Ended June 30, 2025 |
|
|||||||||||||||||||||
|
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Number of Units |
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Accum. Other |
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Total |
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|||||||||
(in thousands - unaudited) |
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Common |
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General |
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Common |
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General |
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Comprehensive |
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Partners’ |
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||||||
Balance as of March 31, 2025 |
|
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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||||
Net loss |
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— |
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— |
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( |
) |
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( |
) |
|
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— |
|
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( |
) |
Unrealized gain on pension plan obligation |
|
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— |
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— |
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— |
|
|
|
— |
|
|
|
|
|
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||
Tax effect of unrealized gain on pension plan obligation |
|
|
— |
|
|
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— |
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— |
|
|
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— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain on captive insurance collateral |
|
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— |
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— |
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|
|
— |
|
|
|
— |
|
|
|
|
|
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||
Tax effect of unrealized gain on captive insurance collateral |
|
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— |
|
|
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— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Tax effect of unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
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||
Distributions |
|
|
— |
|
|
|
— |
|
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|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Retirement of units |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2025 (unaudited) |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
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||||||
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||||||
|
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Three Months Ended June 30, 2024 |
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|||||||||||||||||||||
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Number of Units |
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Accum. Other |
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Total |
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|||||||||
(in thousands - unaudited) |
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Common |
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General |
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Common |
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General |
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Comprehensive |
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|
Partners’ |
|
||||||
Balance as of March 31, 2024 |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
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$ |
( |
) |
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$ |
|
||||
Net loss |
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|
— |
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|
|
— |
|
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|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Unrealized gain on pension plan obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Tax effect of unrealized gain on pension plan obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain on captive insurance collateral |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Tax effect of unrealized gain on captive insurance collateral |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Tax effect of unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Distributions |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Retirement of units |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2024 (unaudited) |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
6
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL
|
|
Nine Months Ended June 30, 2025 |
|
|||||||||||||||||||||
|
|
Number of Units |
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Accum. Other |
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|
Total |
|
|||||||||
(in thousands - unaudited) |
|
Common |
|
|
General |
|
|
Common |
|
|
General |
|
|
Comprehensive |
|
|
Partners’ |
|
||||||
Balance as of September 30, 2024 |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Unrealized gain on pension plan obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Tax effect of unrealized gain on pension plan obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain on captive insurance collateral |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Tax effect of unrealized gain on captive insurance collateral |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Tax effect of unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Distributions |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Retirement of units |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2025 (unaudited) |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Nine Months Ended June 30, 2024 |
|
|||||||||||||||||||||
|
|
Number of Units |
|
|
|
|
|
|
|
|
Accum. Other |
|
|
Total |
|
|||||||||
(in thousands - unaudited) |
|
Common |
|
|
General |
|
|
Common |
|
|
General |
|
|
Comprehensive |
|
|
Partners’ |
|
||||||
Balance as of September 30, 2023 |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Unrealized gain on pension plan obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Tax effect of unrealized gain on pension plan obligation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized gain on captive insurance collateral |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Tax effect of unrealized gain on captive insurance collateral |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Tax effect of unrealized loss on interest rate hedges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Distributions |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Retirement of units |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance as of June 30, 2024 (unaudited) |
|
|
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to condensed consolidated financial statements.
7
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Nine Months |
|
|||||
(in thousands - unaudited) |
|
2025 |
|
|
2024 |
|
||
Cash flows provided by (used in) operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustment to reconcile net income to net cash provided by (used in) |
|
|
|
|
|
|
||
(Increase) decrease in fair value of derivative instruments |
|
|
( |
) |
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
Provision for losses on accounts receivable |
|
|
|
|
|
|
||
Change in deferred taxes |
|
|
|
|
|
( |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Increase in receivables |
|
|
( |
) |
|
|
( |
) |
Decrease in inventories |
|
|
|
|
|
|
||
(Increase) decrease in other assets |
|
|
( |
) |
|
|
|
|
Decrease in accounts payable |
|
|
( |
) |
|
|
( |
) |
Decrease in customer credit balances |
|
|
( |
) |
|
|
( |
) |
Increase in other current and long-term liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows provided by (used in) investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of fixed assets |
|
|
|
|
|
|
||
Proceeds from sale of certain assets |
|
|
|
|
|
|
||
Purchase of investments |
|
|
( |
) |
|
|
( |
) |
Acquisitions |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows provided by (used in) financing activities: |
|
|
|
|
|
|
||
Revolving credit facility borrowings |
|
|
|
|
|
|
||
Revolving credit facility repayments |
|
|
( |
) |
|
|
( |
) |
Term loan repayments |
|
|
( |
) |
|
|
( |
) |
Distributions |
|
|
( |
) |
|
|
( |
) |
Unit repurchases |
|
|
( |
) |
|
|
( |
) |
Customer retainage payments |
|
|
( |
) |
|
|
( |
) |
Payments of debt issue costs |
|
|
( |
) |
|
|
|
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
|
( |
) |
|
|
|
|
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
8
STAR GROUP, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1) Organization
Star Group, L.P. (“Star,” the “Company,” “we,” “us,” or “our”) is a full service provider specializing in the sale of home heating and air conditioning products and services to residential and commercial home heating oil and propane customers. The Company has
The Company is organized as follows:
2) Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of Star and its subsidiaries. All material intercompany items and transactions have been eliminated in consolidation.
The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair statement of financial condition and results for the interim periods. Due to the seasonal nature of the Company’s business, the results of operations and cash flows for the nine-month period ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year.
These interim financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024.
Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of Net income (loss) and Other comprehensive income. Other comprehensive income consists of the unrealized gain on amortization on the Company’s pension plan obligation for its frozen defined benefit pension plan, unrealized gain on available-for-sale investments, unrealized loss on interest rate hedges and the corresponding tax effects.
9
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments with an original maturity of
Fair Value Valuation Approach
The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Captive Insurance Collateral
The captive insurance collateral is held by our captive insurance company in an irrevocable trust as collateral for certain workers’ compensation and automobile liability claims. The collateral is required by a third party insurance carrier that insures per claim amounts above a set deductible. If we did not deposit cash into the trust, the third party carrier would require that we issue an equal amount of letters of credit, which would reduce our availability under the credit agreement. Due to the expected timing of claim payments, the nature of the collateral agreement with the carrier, and our captive insurance company’s source of other operating cash, the collateral is not expected to be used to pay obligations within the next twelve months.
Unrealized gains and losses, net of related income taxes, are reported as accumulated other comprehensive income (loss), except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net income and are included in Interest expense, net, at which time the average cost basis of these securities are adjusted to fair value.
Assets Held for Sale
At June 30, 2025, the $
Weather Hedge Contract
To partially mitigate the adverse effect of warm weather on cash flows, the Company has used weather hedge contracts for a number of years. Weather hedge contracts are recorded in accordance with the intrinsic value method defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-45-15 Derivatives and Hedging, Weather Derivatives (EITF 99-2). The premium paid is included in the caption “Prepaid expenses and other current assets” in the accompanying balance sheets and amortized over the life of the contract, with the intrinsic value method applied at each interim period.
The Company entered into weather hedge contracts for fiscal years 2025 and 2024. The hedge period runs from November 1 through March 31, taken as a whole. The “Payment Thresholds,” or strikes, are set at various levels and are referenced against degree days for the prior ten year average. Under these contracts, the maximum amount the Company could receive is $
10
The temperatures experienced during the hedge period through March 31, 2025 were colder than the strikes in the weather hedge contracts. As a result as of March 31, 2025, we increased delivery and branch expense and recorded a payable under those weather hedge contracts of $
For fiscal 2026, the Company entered into weather hedge contracts with the similar hedge period described above. The maximum that the Company can receive is $
New England Teamsters and Trucking Industry Pension Fund (“the NETTI Fund”) Liability
As of June 30, 2025, we had $
Recently Adopted Accounting Pronouncements
No new Accounting Pronouncements were adopted through the fiscal nine months ended June 30, 2025.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosure requirements included in ASU No. 2023-07 are required for all public entities, including entities with a single reportable segment. The standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is required to be applied on a retrospective basis. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to income tax disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The standard is effective for fiscal years beginning after December 15, 2024. Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted. The Company has not determined the timing of adoption and is currently evaluating the impact of the new standard on its condensed consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring disclosure in the notes to the financial statements for specified information about certain costs and expenses. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption and retrospective application permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures.
11
3) Revenue Recognition
The following disaggregates our revenue by major sources for the three and nine months ended June 30, 2025 and June 30, 2024:
|
|
Three Months |
|
|
Nine Months |
|
||||||||
(in thousands) |
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Petroleum Products: |
|
|
|
|
|
|
|
|
|
|
||||
Home heating oil and propane |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Other petroleum products |
|
|
|
|
|
|
|
|
|
|
||||
Total petroleum products |
|
|
|
|
|
|
|
|
|
|
||||
Installations and Services: |
|
|
|
|
|
|
|
|
|
|
||||
Equipment installations |
|
|
|
|
|
|
|
|
|
|
||||
Equipment maintenance service contracts |
|
|
|
|
|
|
|
|
|
|
||||
Billable call services |
|
|
|
|
|
|
|
|
|
|
||||
Total installations and services |
|
|
|
|
|
|
|
|
|
|
||||
Total Sales |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Deferred Contract Costs
Contract Liability Balances
The Company has contract liabilities for advanced payments received from customers for future oil deliveries (primarily amounts received from customers on “smart pay” budget payment plans in advance of oil deliveries) and obligations to service customers with equipment maintenance service contracts. Contract liabilities are recognized straight-line over the service contract period, generally
Receivables and Allowance for Doubtful Accounts
Accounts receivables from customers are recorded at the invoiced amounts. Finance charges may be applied to trade receivables that are more than 30 days past due, and are recorded as finance charge income.
The allowance for doubtful accounts is the Company’s estimate of the amount of trade receivables that may not be collectible. The allowance is determined at an aggregate level by grouping accounts based on certain account criteria and its receivable aging. The allowance is based on both quantitative and qualitative factors, including historical loss experience, historical collection patterns, overdue status, aging trends, current and future economic conditions. The Company has an established process to periodically review current and past due trade receivable balances to determine the adequacy of the allowance. No single statistic or measurement determines the adequacy of the allowance. The total allowance reflects management’s estimate of losses inherent in its trade receivables at the balance sheet date. Different assumptions or changes in economic conditions could result in material changes to the allowance for doubtful accounts.
12
Changes in the allowance for credit losses are as follows:
(in thousands) |
Credit Loss Allowance |
|
|
Balance at September 30, 2024 |
$ |
|
|
Current period provision |
|
|
|
Write-offs, net and other |
|
( |
) |
Balance as of June 30, 2025 |
$ |
|
|
4) Common Unit Repurchase and Retirement
In July 2012, the Board adopted a plan to repurchase certain of the Company’s Common Units (the “Repurchase Plan”). Through May 2023, the Company had repurchased approximately
Under the credit agreement dated September 27, 2024, in order to repurchase Common Units we must maintain Availability (as defined in the credit agreement) of not less than the greater of (i)
The following table shows repurchases under the Repurchase Plan:
(in thousands, except per unit amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Total Number of |
|
|
Average Price |
|
|
Total Number of |
|
|
Maximum Number |
|
|
||||
Fiscal year 2012 to 2024 total |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
First quarter fiscal year 2025 total |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Second quarter fiscal year 2025 total |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
April 2025 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
||||
May 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
||||
June 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Third quarter fiscal year 2025 total |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
July 2025 |
|
|
|
|
$ |
|
|
|
|
|
|
|
(c) |
||||
13
5) Captive Insurance Collateral
The Company considers all of its captive insurance collateral to be Level 1 available-for-sale investments. Investments at June 30, 2025 consist of the following (in thousands):
|
|
Amortized Cost |
|
|
Gross Unrealized Gain |
|
|
Gross Unrealized (Loss) |
|
|
Fair Value |
|
||||
Cash and Receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government Debt Securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate Debt Securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Investments at September 30, 2024 consist of the following (in thousands):
|
|
Amortized Cost |
|
|
Gross Unrealized Gain |
|
|
Gross Unrealized (Loss) |
|
|
Fair Value |
|
||||
Cash and Receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government Debt Securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Corporate Debt Securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Maturities of investments were as follows at June 30, 2025 (in thousands):
|
|
Net Carrying Amount |
|
|
Due within one year |
|
$ |
|
|
Due after one year through five years |
|
|
|
|
Due after five years through ten years |
|
|
|
|
Total |
|
$ |
|
|
6) Derivatives and Hedging—Disclosures and Fair Value Measurements
The Company uses derivative instruments such as futures, options and swap agreements in order to mitigate exposure to market risk associated with the purchase of home heating oil for price-protected customers, physical inventory on hand, inventory in transit, priced purchase commitments and internal fuel usage. FASB ASC 815-10-05 Derivatives and Hedging, established accounting and reporting standards requiring that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities, along with qualitative disclosures regarding the derivative activity. The Company has elected not to designate its commodity derivative instruments as hedging derivatives, but rather as economic hedges whose change in fair value is recognized in its statement of operations in the caption “(Increase) decrease in the fair value of derivative instruments.” Depending on the risk being economically hedged, realized gains and losses are recorded in cost of product, cost of installations and services, or delivery and branch expenses.
As of June 30, 2025, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to our price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales:
14
As of June 30, 2024, the Company held the following derivative instruments in order to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers that settle in future months to match anticipated sales:
As of June 30, 2025, the Company has interest rate swap agreements in order to mitigate exposure to market risk associated with variable rate interest on $
The Company’s derivative instruments are with the following counterparties: Bank of America, N.A., Bank of Montreal, Cargill, Inc., Citibank, N.A., Citizens Bank, N.A., JPMorgan Chase Bank, N.A., Key Bank, N.A. and Wells Fargo Bank, N.A. The Company assesses counterparty credit risk and considers it to be low. We maintain master netting arrangements that allow for the non-conditional offsetting of amounts receivable and payable with counterparties to help manage our risks and record derivative positions on a net basis. The Company generally does not receive cash collateral from its counterparties and does not restrict the use of cash collateral it maintains at counterparties. At June 30, 2025, the aggregate cash posted as collateral in the normal course of business at counterparties was $
The Company’s Level 1 derivative assets and liabilities represent the fair value of commodity contracts used in its hedging activities that are identical and traded in active markets. The Company’s Level 2 derivative assets and liabilities represent the fair value of commodity and interest rate contracts used in its hedging activities that are valued using either directly or indirectly observable inputs, whose nature, risk and class are similar. No significant transfers of assets or liabilities have been made into and out of the Level 1 or Level 2 tiers. All derivative instruments were non-trading positions and were either a Level 1 or Level 2 instrument. The Company had no Level 3 derivative instruments. The fair market value of our Level 1 and Level 2 derivative assets and liabilities are calculated by our counter-parties and are independently validated by the Company. The Company’s calculations are, for Level 1 derivative assets and liabilities, based on the published New York Mercantile Exchange (“NYMEX”) market prices for the commodity contracts open at the end of the period. For Level 2 derivative assets and liabilities the calculations performed by the Company are based on a combination of the NYMEX published market prices and other inputs, including such factors as present value, volatility and duration.
15
The Company had no assets or liabilities that are measured at fair value on a nonrecurring basis subsequent to their initial recognition.
(In thousands) |
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using: |
|
||||||
Derivatives Not Designated |
|
|
|
|
|
|
Quoted Prices in |
|
|
Significant Other |
|
|||
Under FASB ASC 815-10 |
|
Balance Sheet Location |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|||
Asset Derivatives at June 30, 2025 |
|
|||||||||||||
Commodity contracts |
|
Fair liability value of derivative instruments |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Commodity contracts |
|
Long-term derivative assets included in the deferred charges and other assets, net |
|
|
|
|
|
— |
|
|
|
|
||
Commodity contract assets at June 30, 2025 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Liability Derivatives at June 30, 2025 |
|
|||||||||||||
Commodity contracts |
|
Fair liability value of derivative instruments |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
Commodity contracts |
|
Long-term derivative assets included in the deferred charges and other assets, net |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Commodity contract liabilities at June 30, 2025 |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
||
Asset Derivatives at September 30, 2024 |
|
|||||||||||||
Commodity contracts |
|
Fair liability value of derivative instruments |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Commodity contracts |
|
Long-term derivative assets included in the deferred charges and other assets, net and other long-term liabilities, net balances |
|
|
|
|
|
— |
|
|
|
|
||
Commodity contract assets September 30, 2024 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Liability Derivatives at September 30, 2024 |
|
|||||||||||||
Commodity contracts |
|
Fair liability value of derivative instruments |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
Commodity contracts |
|
Long-term derivative liabilities included in the deferred charges and other assets, net and other long-term liabilities, net balances |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Commodity contract liabilities September 30, 2024 |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
||
16
The Company’s commodity derivative assets (liabilities) offset by counterparty and subject to an enforceable master netting arrangement are listed on the following table.
(In thousands) |
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the |
|
||||||||||||
Offsetting of Financial Assets (Liabilities) |
|
Gross |
|
|
Gross |
|
|
Net Assets |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||
Long-term derivative assets included in deferred charges and other assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Fair liability value of derivative instruments |
|
|
|
|
|
( |
) |
|
$ |
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Total at June 30, 2025 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
Long-term derivative assets included in deferred charges and other assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Fair liability value of derivative instruments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Long-term derivative liabilities included in other long-term liabilities, net |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Total at September 30, 2024 |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The Effect of Derivative Instruments on the Statement of Operations |
|
|
|
|
|
|
||||||||||
|
|
|
|
Amount of (Gain) or Loss Recognized |
|
|
Amount of (Gain) or Loss Recognized |
|
||||||||
Derivatives Not Designated as Hedging Instruments Under FASB ASC 815-10 |
|
Location of (Gain) or Loss |
|
Three Months Ended June 30, |
|
Three Months Ended June 30, |
|
|
Nine Months Ended June 30, |
|
Nine Months Ended June 30, |
|
||||
Commodity contracts |
|
Cost of product (a) |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Commodity contracts |
|
Cost of installations and service (a) |
|
$ |
|
$ |
( |
) |
|
$ |
|
$ |
( |
) |
||
Commodity contracts |
|
Delivery and branch expenses (a) |
|
$ |
|
$ |
( |
) |
|
$ |
|
$ |
( |
) |
||
Commodity contracts |
|
(Increase) / decrease in the fair |
|
$ |
( |
) |
$ |
|
|
$ |
( |
) |
$ |
|
||
7) Inventories
The Company’s product inventories are stated at the lower of cost and net realizable value computed on the weighted average cost method. All other inventories, representing parts and equipment are stated at the lower of cost and net realizable value using the FIFO method.
|
|
June 30, |
|
|
September 30, |
|
||
Product |
|
$ |
|
|
$ |
|
||
Parts and equipment |
|
|
|
|
|
|
||
Total inventory |
|
$ |
|
|
$ |
|
||
17
8) Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization is computed over the estimated useful lives of the depreciable assets using the straight-line method (in thousands):
|
|
June 30, |
|
|
September 30, |
|
||
Property and equipment |
|
$ |
|
|
$ |
|
||
Less: accumulated depreciation and amortization |
|
|
|
|
|
|
||
Property and equipment, net |
|
$ |
|
|
$ |
|
||
9) Business Combinations and Divestitures
During the nine months ended June 30, 2025 the Company acquired
During the nine months ended June 30, 2025, the Company acquired certain intangible and fixed assets for $
During the nine months ended June 30, 2024 the Company acquired
10) Goodwill and Intangible Assets, net
Goodwill
A summary of changes in Company’s goodwill is as follows (in thousands):
Balance as of September 30, 2024 |
|
$ |
|
|
Fiscal year 2025 business combinations |
|
|
|
|
Other |
|
|
( |
) |
Balance as of June 30, 2025 |
|
$ |
|
Intangibles, net
The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows (in thousands):
|
|
June 30, 2025 |
|
|
September 30, 2024 |
|
||||||||||||||||||
|
|
Gross |
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
|
||||||
|
|
Carrying |
|
|
Accum. |
|
|
|
|
|
Carrying |
|
|
Accum. |
|
|
|
|
||||||
|
|
Amount |
|
|
Amortization |
|
|
Net |
|
|
Amount |
|
|
Amortization |
|
|
Net |
|
||||||
Customer lists |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Trade names and other intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Amortization expense for intangible assets was $
18
11) Long-Term Debt and Bank Facility Borrowings
The Company’s debt is as follows (in thousands):
|
|
June 30, |
|
|
September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
Carrying |
|
|
Fair Value (a) |
|
|
Carrying |
|
|
Fair Value (a) |
|
||||
Revolving Credit Facility Borrowings |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Senior Secured Term Loan (b) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total short-term portion of debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total long-term portion of debt (b) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
On September 27, 2024, the Company refinanced its
The Company can increase the revolving credit facility size by $
All amounts outstanding under the credit agreement become due and payable on the facility termination date of September 27, 2029. The Term Loan is repayable in quarterly payments of $
The interest rate on the revolving credit facility and the term loan is based on a margin over Adjusted Term Secured Overnight Financing Rate ("SOFR") or a base rate. At June 30, 2025, the effective interest rate on the term loan (considering the impact of interest rate hedges) and revolving credit facility borrowings was approximately
The commitment fee on the unused portion of the revolving credit facility is
The credit agreement requires the Company to meet certain financial covenants, including a fixed charge coverage ratio of
Certain restrictions are also imposed by the credit agreement, including restrictions on the Company’s ability to incur additional indebtedness, to pay distributions to unitholders, to pay certain inter-company dividends or distributions, repurchase units, make investments, grant liens, sell assets, make acquisitions and engage in certain other activities.
At June 30, 2025, $
At June 30, 2025, availability was $
19
12) Income Taxes
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains several changes to corporate taxation including increased limitations on deductions for interest expense and reinstating 100% bonus depreciation on fixed assets acquired and placed in service after January 19, 2025. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our third quarter, the impacts are not included in our operating results for the nine months ended June 30, 2025.
The accompanying financial statements are reported on a fiscal year, however, the Company and its corporate subsidiaries file Federal and State income tax returns on a calendar year.
The current and deferred income tax expense for the three and nine months ended June 30, 2025 and June 30, 2024 are as follows:
|
|
Three Months Ended |
|
Nine Months Ended |
|
|||||||||
|
|
June 30, |
|
June 30, |
|
|||||||||
(in thousands) |
|
2025 |
|
2024 |
|
2025 |
|
|
2024 |
|
||||
Income (loss) before income taxes |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|
$ |
|
||
Current income tax expense (benefit) |
|
|
( |
) |
|
( |
) |
|
|
|
|
|
||
Deferred income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
||
Total income tax expense (benefit) |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
|
$ |
|
||
At June 30, 2025, we did
Our continuing practice is to recognize interest and penalties related to income tax matters as a component of income tax expense. We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut and Pennsylvania, we have
13) Supplemental Disclosure of Cash Flow Information
|
|
Nine Months Ended |
|
|
|||||
Cash paid during the period for: |
|
June 30, |
|
|
|||||
(in thousands) |
|
2025 |
|
|
2024 |
|
|
||
Income taxes, net |
|
$ |
|
|
$ |
|
|
||
Interest |
|
$ |
|
|
$ |
|
|
||
14) Commitments and Contingencies
The Company’s operations are subject to the operating hazards and risks normally incidental to handling, storing and transporting and otherwise providing for use by consumers hazardous liquids such as home heating oil and propane. In the ordinary course of business, the Company is a defendant in various legal proceedings and litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. We do not believe these matters, when considered individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.
The Company maintains insurance policies with insurers in amounts and with coverages and deductibles we believe are reasonable and prudent. However, the Company cannot assure that this insurance will be adequate to protect it from all material expenses related to current and potential future claims, legal proceedings and litigation, as certain types of claims may be excluded from our insurance coverage. If we incur substantial liability and the damages are not covered by insurance, or are in excess of policy limits, or if we incur liability at a time when we are not able to obtain liability insurance, then our business, results of operations and financial condition could be materially adversely affected.
20
15) Earnings Per Limited Partner Unit
The following table presents the net income allocation and per unit data:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||
Basic and Diluted Earnings Per Limited Partner: |
|
June 30, |
|
|
June 30, |
|
||||||||
(in thousands, except per unit data) |
|
2025 |
|
2024 |
|
|
2025 |
|
2024 |
|
||||
Net income (loss) |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
|
$ |
|
||
Less General Partner’s interest in net income (loss) |
|
|
( |
) |
|
( |
) |
|
|
|
|
|
||
Net income (loss) available to limited partners |
|
|
( |
) |
|
( |
) |
|
|
|
|
|
||
Less dilutive impact of theoretical distribution of earnings * |
|
|
|
|
|
|
|
|
|
|
||||
Limited Partner’s interest in net income (loss) |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
|
$ |
|
||
Per unit data: |
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted net income (loss) available to limited partners |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
|
$ |
|
||
Less dilutive impact of theoretical distribution of earnings * |
|
|
— |
|
|
|
|
|
|
|
|
|||
Limited Partner’s interest in net income (loss) |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
|
$ |
|
||
Weighted average number of Limited Partner units outstanding |
|
|
|
|
|
|
|
|
|
|
||||
*
16) Subsequent Events
Quarterly Distribution Declared
In July 2025, we declared a quarterly distribution of $
Common Units Repurchased and Retired
In July 2025, in accordance with the Repurchase Plan, the Company repurchased and retired approximately
Sale of Property
In July 2025, we completed the sale of land and a building at a New Jersey operating location with a carrying value of $
21
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statement Regarding Forward-Looking Disclosure
This Quarterly Report on Form 10-Q (this “Report”) includes “forward-looking statements” which represent our 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, and 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 in this Report under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Fiscal 2024 Form 10-K under Part I Item 1A “Risk Factors.” Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this Report and in our Fiscal 2024 Form 10-K. 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, we undertake 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 Report.
Liquid Product Price Volatility
Volatility, which is reflected in the wholesale price of liquid products, including home heating oil, propane and motor fuels, has a larger impact on our business when prices rise. Home heating oil consumers are sensitive to heating cost increases, and this often leads to customer conservation and increased gross customer losses. As a commodity, the price of home heating oil is generally impacted by many factors, including economic and geopolitical forces, tariff regimes and is closely linked to the price of diesel fuel. The volatility in the wholesale cost of diesel fuel as measured by the New York Mercantile Exchange (“NYMEX”), for the fiscal years ending September 30, 2021, through 2025, on a quarterly basis, is illustrated in the following chart (price per gallon):
|
|
Fiscal 2025 |
|
|
Fiscal 2024 |
|
|
Fiscal 2023 |
|
|
Fiscal 2022 |
|
|
Fiscal 2021 |
|
|||||||||||||||||||||||||
Quarter Ended |
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
|
Low |
|
|
High |
|
||||||||||
December 31 |
|
$ |
2.13 |
|
|
$ |
2.40 |
|
|
$ |
2.51 |
|
|
$ |
3.22 |
|
|
$ |
2.78 |
|
|
$ |
4.55 |
|
|
$ |
2.06 |
|
|
$ |
2.59 |
|
|
$ |
1.08 |
|
|
$ |
1.51 |
|
March 31 |
|
|
2.16 |
|
|
|
2.62 |
|
|
|
2.53 |
|
|
|
2.96 |
|
|
|
2.61 |
|
|
|
3.55 |
|
|
|
2.36 |
|
|
|
4.44 |
|
|
|
1.46 |
|
|
|
1.97 |
|
June 30 |
|
|
1.97 |
|
|
|
2.54 |
|
|
|
2.29 |
|
|
|
2.77 |
|
|
|
2.23 |
|
|
|
2.73 |
|
|
|
3.27 |
|
|
|
5.14 |
|
|
|
1.77 |
|
|
|
2.16 |
|
September 30 |
|
|
— |
|
|
|
— |
|
|
|
2.06 |
|
|
|
2.63 |
|
|
|
2.38 |
|
|
|
3.48 |
|
|
|
3.13 |
|
|
|
4.01 |
|
|
|
1.91 |
|
|
|
2.34 |
|
(a) On July 31, 2025, the NYMEX ultra low sulfur diesel contract closed at $2.40 per gallon.
22
Income Taxes
Book versus Tax Deductions
The amount of cash flow generated in any given year depends upon a variety of factors including the amount of cash income taxes required, which will increase as depreciation and amortization decreases. The amount of depreciation and amortization that we deduct for book (i.e., financial reporting) purposes will differ from the amount that the Company can deduct for Federal tax purposes. The table below compares the estimated depreciation and amortization for book purposes to the amount that we expect to deduct for Federal tax purposes, based on currently owned assets. While we file our tax returns based on a calendar year, the amounts below are based on our September 30 fiscal year, and the tax amounts include any bonus depreciation available for fixed assets purchased. However, this table does not include any forecast of future annual capital purchases.
Estimated Depreciation and Amortization Expense
(In thousands) Fiscal Year |
|
Book |
|
Tax |
|
||
2025 |
|
$ |
36,117 |
|
$ |
47,834 |
|
2026 |
|
|
32,720 |
|
|
32,835 |
|
2027 |
|
|
29,858 |
|
|
30,245 |
|
2028 |
|
|
26,425 |
|
|
28,381 |
|
2029 |
|
|
24,128 |
|
|
25,228 |
|
2030 |
|
|
20,453 |
|
|
22,204 |
|
Weather Hedge Contracts
Weather conditions have a significant impact on the demand for home heating oil and propane because certain customers depend on these products principally for space heating purposes. Actual weather conditions may vary substantially from year to year, significantly affecting the Company’s financial performance. To partially mitigate the adverse effect of warm weather on cash flow, we have used weather hedging contracts for a number of years with several providers.
The Company entered into weather hedge contracts for fiscal year 2025 and 2024. The hedge period runs from November 1 through March 31, taken as a whole. The “Payment Thresholds,” or strikes, are set at various levels and are referenced against degree days for the prior ten year average. Under these contracts, the maximum amount the Company can receive is $15.0 million for fiscal 2025 and $12.5 million for fiscal 2024. For the contracts applicable to fiscal 2025, we are additionally obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold. This obligation did not exist under the contract applicable for 2024.
The temperatures experienced during the hedge period through March 31, 2025 were colder than the strikes in the weather hedge contracts. As a result as of March 31, 2025, we increased delivery and branch expense and recorded a payable under those weather hedge contracts of $3.1 million, and paid the amount in full in April 2025. By comparison, the temperatures experienced during the hedge period through March 31, 2024 were warmer than the strike in the weather hedge contract. As of March 31, 2024, we reduced delivery and branch expenses and recorded a receivable of $7.5 million under the weather hedge contract, and received the amount in full in April 2024.
For fiscal 2026, the Company entered into weather hedge contracts with the similar hedge period described above. The maximum that the Company can receive is $15.0 million annually and we are obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold.
Tariffs
In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on some countries, including Canada and China. Current uncertainties about tariffs and their effects on trading relationships may affect the cost and availability of the Company's assets, such as trucks, and potentially the products and services we sell as well as potentially contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.
Increases in State Law Minimum Biofuel Blending Requirements
Commencing July 1, 2025, we and our home heating oil competitors will become subject to an increase from the current level of 5% to 10% in the minimum percentage of biodiesel that is required be blended with home heating oil sold for heating purposes in buildings located in the States of New York and Connecticut (where a significant portion of our customers are located), and an increase from the current level of 10% to 20% in the minimum percentage of biodiesel that is required be blended with home heating oil sold for heating purposes in buildings in Rhode Island. Depending upon the relationship of home heating oil and biodiesel, these
23
regulations may decrease or increase the cost of home heating oil for Star and our competition in New York, Connecticut or Rhode Island.
Per Gallon Gross Profit Margins
We believe home heating oil and propane margins should be evaluated on a cents per gallon basis before the effects of increases or decreases in the fair value of derivative instruments, as we believe that such per gallon margins are best at showing profit trends in the underlying business without the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction.
A significant portion of our home heating oil volume is sold to individual customers under an arrangement pre-establishing a ceiling price or fixed price for home heating oil over a set period of time, generally twelve to twenty-four months (“price-protected” customers). When these price-protected customers agree to purchase home heating oil from us for the next heating season, we purchase option contracts, swaps and futures contracts for a substantial majority of the heating oil that we expect to sell to these customers. The amount of home heating oil volume that we hedge per price-protected customer is based upon the estimated fuel consumption per average customer per month. In the event that the actual usage exceeds the amount of the hedged volume on a monthly basis, we may be required to obtain additional volume at unfavorable costs. In addition, should actual usage in any month be less than the hedged volume, our hedging costs and losses could be greater, thus reducing expected margins.
Derivatives
FASB ASC 815-10-05 Derivatives and Hedging requires that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities. To the extent our interest rate derivative instruments designated as cash flow hedges are effective, as defined under this guidance, changes in fair value are recognized in other comprehensive income (loss) until the forecasted hedged item is recognized in earnings. We have elected not to designate our commodity derivative instruments as hedging instruments under this guidance and, as a result, the changes in fair value of the derivative instruments are recognized in our statement of operations. Therefore, we experience volatility in earnings as outstanding derivative instruments are marked to market and non-cash gains and losses are recorded prior to the sale of the commodity to the customer. The volatility in any given period related to unrealized non-cash gains or losses on derivative instruments can be significant to our overall results. However, we ultimately expect those gains and losses to be offset by the cost of product when purchased.
Customer Attrition
We measure net customer attrition on an ongoing basis for our full service residential and commercial home heating oil and propane customers. Net customer attrition is the difference between gross customer losses and customers added through marketing efforts. Customers added through acquisitions are not included in the calculation of gross customer gains. However, additional customers that are obtained through marketing efforts or lost at newly acquired businesses are included in these calculations from the point of closing going forward. Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date. Gross customer losses are the result of a number of factors, including price competition, move-outs, credit losses, natural gas and electric conversions and service disruptions. When a customer moves out of an existing home, we count the “move out” as a loss, and, if we are successful in signing up the new homeowner, the “move in” is treated as a gain. Customers sourced by our alliance partners are included in our home heating oil and propane customer base. Therefore, any changes in the relationships with our alliance partners could impact gross customer gains and losses going forward.
Customer gains and losses of home heating oil and propane customers
|
|
Fiscal Year Ended |
||||||||||||||||
|
|
2025 |
|
2024 |
|
2023 |
||||||||||||
|
|
|
|
|
|
Net |
|
|
|
|
|
Net |
|
|
|
|
|
Net |
|
|
Gross Customer |
|
Gains / |
|
Gross Customer |
|
Gains / |
|
Gross Customer |
|
Gains / |
||||||
|
|
Gains |
|
Losses |
|
(Attrition) |
|
Gains |
|
Losses |
|
(Attrition) |
|
Gains |
|
Losses |
|
(Attrition) |
First Quarter |
|
15,300 |
|
16,700 |
|
(1,400) |
|
17,100 |
|
17,800 |
|
(700) |
|
26,500 |
|
19,500 |
|
7,000 |
Second Quarter |
|
9,900 |
|
14,500 |
|
(4,600) |
|
9,300 |
|
14,400 |
|
(5,100) |
|
9,300 |
|
18,100 |
|
(8,800) |
Third Quarter |
|
4,600 |
|
11,600 |
|
(7,000) |
|
4,700 |
|
11,000 |
|
(6,300) |
|
5,300 |
|
12,600 |
|
(7,300) |
Fourth Quarter |
|
— |
|
— |
|
— |
|
7,900 |
|
12,400 |
|
(4,500) |
|
8,900 |
|
14,600 |
|
(5,700) |
Total |
|
29,800 |
|
42,800 |
|
(13,000) |
|
39,000 |
|
55,600 |
|
(16,600) |
|
50,000 |
|
64,800 |
|
(14,800) |
24
Customer gains (attrition) as a percentage of home heating oil and propane customer base
|
|
Fiscal Year Ended |
||||||||||||||||
|
|
2025 |
|
2024 |
|
2023 |
||||||||||||
|
|
|
|
|
|
Net |
|
|
|
|
|
Net |
|
|
|
|
|
Net |
|
|
Gross Customer |
|
Gains / |
|
Gross Customer |
|
Gains / |
|
Gross Customer |
|
Gains / |
||||||
|
|
Gains |
|
Losses |
|
(Attrition) |
|
Gains |
|
Losses |
|
(Attrition) |
|
Gains |
|
Losses |
|
(Attrition) |
First Quarter |
|
3.8% |
|
4.1% |
|
(0.3%) |
|
4.3% |
|
4.5% |
|
(0.2%) |
|
6.4% |
|
4.7% |
|
1.7% |
Second Quarter |
|
2.5% |
|
3.7% |
|
(1.2%) |
|
2.3% |
|
3.6% |
|
(1.3%) |
|
2.2% |
|
4.3% |
|
(2.1%) |
Third Quarter |
|
0.9% |
|
2.5% |
|
(1.6%) |
|
1.2% |
|
2.8% |
|
(1.6%) |
|
1.3% |
|
3.1% |
|
(1.8%) |
Fourth Quarter |
|
— |
|
— |
|
— |
|
2.0% |
|
3.1% |
|
(1.1%) |
|
2.1% |
|
3.5% |
|
(1.4%) |
Total |
|
7.2% |
|
10.3% |
|
(3.1%) |
|
9.8% |
|
14.0% |
|
(4.2%) |
|
12.0% |
|
15.6% |
|
(3.6%) |
For the nine months ended June 30, 2025, the Company lost 13,000 accounts (net), or 3.1% of its home heating oil and propane customer base, compared to 12,100 accounts lost (net), or 3.1% of its home heating and oil propane customer base in the prior year comparable period. Gross customer gains were 1,300 accounts less than the prior year's comparable period and gross customer losses were 400 accounts less.
During the nine months ended June 30, 2025, we estimate that we lost 1.0% of our home heating oil and propane accounts to natural gas and electricity conversions, consistent with the 1.1% and 1.3% lost for the nine months ended June 30, 2024 and 2023, respectively. Losses to natural gas and electricity in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates.
Acquisitions
The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons. During the nine months ended June 30, 2025, the Company acquired one heating oil and three propane businesses for approximately $80.5 million. During fiscal 2024, the Company acquired one propane and four heating oil businesses for approximately $49.4 million. The following tables detail the Company’s acquisition activity and the associated volume sold during the 12-month period prior to the date of acquisition.
(in thousands of gallons) |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2025 Acquisitions |
|
|||||||||||||
Acquisition Number |
|
Month of Acquisition |
|
Home Heating Oil and Propane |
|
|
Other Petroleum Products |
|
|
Total |
|
|||
1 |
|
October |
|
|
709 |
|
|
|
1,126 |
|
|
|
1,835 |
|
2 |
|
January |
|
|
7,209 |
|
|
|
758 |
|
|
|
7,967 |
|
3 |
|
March |
|
|
3,078 |
|
|
|
1,810 |
|
|
|
4,888 |
|
4 |
|
April |
|
|
722 |
|
|
|
— |
|
|
|
722 |
|
|
|
|
|
|
11,718 |
|
|
|
3,694 |
|
|
|
15,412 |
|
(in thousands of gallons) |
|
|
|
|
|
|
|
|
|
|
|
|||
Fiscal 2024 Acquisitions |
|
|||||||||||||
Acquisition Number |
|
Month of Acquisition |
|
Home Heating Oil and Propane |
|
|
Other Petroleum Products |
|
|
Total |
|
|||
1 |
|
November |
|
|
1,210 |
|
|
|
222 |
|
|
|
1,432 |
|
2 |
|
November |
|
|
885 |
|
|
|
369 |
|
|
|
1,254 |
|
3 |
|
February |
|
|
1,473 |
|
|
|
1,097 |
|
|
|
2,570 |
|
4 |
|
February |
|
|
1,936 |
|
|
|
— |
|
|
|
1,936 |
|
5 |
|
September |
|
|
17,752 |
|
|
|
— |
|
|
|
17,752 |
|
|
|
|
|
|
23,256 |
|
|
|
1,688 |
|
|
|
24,944 |
|
Protected Price Account Renewals
A substantial majority of the Company’s price-protected customers have agreements with us that are subject to annual renewal in the period between April and November of each fiscal year. If a significant number of these customers elect not to renew their price-protected agreements with us and do not continue as our customers under a variable price-plan, the Company’s near term profitability, liquidity and cash flow will be adversely impacted.
25
Seasonality
The Company’s fiscal year ends on September 30. All references to quarters and years, respectively, in this document are to the fiscal quarters and fiscal years unless otherwise noted. The seasonal nature of our business has resulted, on average, during the last five years, in the sale of approximately 30% of the volume of home heating oil and propane in the first fiscal quarter and 50% of the volume in the second fiscal quarter, the peak heating season. Approximately 25% of the volume of motor fuel and other petroleum products is sold in each of the four fiscal quarters. We generally realize net income during the quarters ending December and March and net losses during the quarters ending June and September. In addition, sales volume typically fluctuates from year to year in response to variations in weather, wholesale energy prices and other factors.
Degree Day
A “degree day” is an industry measurement of temperature designed to evaluate energy demand and consumption. Degree days are based on how far the average daily temperature departs from 65°F. Each degree of temperature above 65°F is counted as one cooling degree day, and each degree of temperature below 65°F is counted as one heating degree day. Degree days are accumulated each day over the course of a year and can be compared to a monthly or a long-term (multi-year) average to see if a month or a year was warmer or cooler than usual. Degree days are officially observed by the National Weather Service.
Every ten years, the National Oceanic and Atmospheric Administration (“NOAA”) computes and publishes average meteorological statistics, including the average temperature for the last 30 years by geographical location, and the corresponding degree days. The latest and most widely used data covers the years from 1991 to 2020. Our calculations of “normal” weather are based on these published 30 year averages for heating degree days, weighted by volume for the locations where we have existing operations.
Consolidated Results of Operations
The following is a discussion of the consolidated results of operations of the Company and its subsidiaries and should be read in conjunction with the historical financial and operating data and Notes thereto included elsewhere in this Quarterly Report.
26
Three Months Ended June 30, 2025
Compared to the Three Months Ended June 30, 2024
Volume
For the three months ended June 30, 2025, retail volume of home heating oil and propane sold decreased by 1.5 million gallons, or 3.8%, to 36.2 million gallons, compared to 37.7 million gallons for the three months ended June 30, 2024. For those locations where we had existing operations during both periods, which we sometimes refer to as our “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the three months ended June 30, 2025 were 2.0% warmer than the three months ended June 30, 2024 and 19.3% warmer than normal, as reported by NOAA. For the twelve months ended June 30, 2025, net customer attrition for the base business was 4.4%. The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.” An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below:
(in millions of gallons) |
|
Heating Oil |
|
|
Volume - Three months ended June 30, 2024 |
|
|
37.7 |
|
Net customer attrition |
|
|
(1.7 |
) |
Impact of warmer temperatures (a) |
|
|
(0.4 |
) |
Acquisitions |
|
|
3.8 |
|
Other (a) |
|
|
(3.2 |
) |
Change |
|
|
(1.5 |
) |
Volume - Three months ended June 30, 2025 |
|
|
36.2 |
|
The following chart sets forth the percentage by volume of total home heating oil sold to residential variable-price customers, residential price-protected customers and commercial/industrial/other customers for the three months ended June 30, 2025, compared to the three months ended June 30, 2024:
|
|
Three Months Ended |
|
|||||
Customers |
|
June 30, |
|
|
June 30, |
|
||
Residential Variable |
|
|
42.2 |
% |
|
|
40.6 |
% |
Residential Price-Protected (Ceiling and Fixed Price) |
|
|
42.9 |
% |
|
|
46.7 |
% |
Commercial/Industrial/Other |
|
|
14.9 |
% |
|
|
12.7 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
Volume of motor fuel and other petroleum products sold decreased by 0.9 million gallons, or 2.7%, to 32.0 million gallons for the three months ended June 30, 2025, compared to 32.9 million gallons for the three months ended June 30, 2024.
Product Sales
For the three months ended June 30, 2025, product sales decreased by $32.8 million, or 13.2%, to $216.2 million, compared to $249.0 million for the three months ended June 30, 2024, due to a decrease in average selling prices and a decrease in total volume sold of 3.3%. Selling prices decreased largely due to a decrease in wholesale product cost of $0.3525 per gallon, or 14.3%, compared to the three months ended June 30, 2024. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Installations and Service
For the three months ended June 30, 2025, installation and service revenue increased by $6.9 million, or 8.3%, to $89.5 million, compared to $82.6 million for the three months ended June 30, 2024 driven by $6.4 million of sales generated from recent acquisitions and the remainder was driven by a concerted effort to expand these offerings to our customers as well as annual price increases.
27
Cost of Product
For the three months ended June 30, 2025, cost of product decreased $29.8 million, or 17.1%, to $144.5 million, compared to $174.3 million for the three months ended June 30, 2024, due to a decrease in total volume sold of 3.3% and a decrease in wholesale product cost of $0.3525 per gallon, or 14.3%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Gross Profit — Product
The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transactions. On that basis, home heating oil and propane margins for the three months ended June 30, 2025 decreased by $0.0413 per gallon, or 2.4%, to $1.6547 per gallon, from $1.6960 per gallon during the three months ended June 30, 2024. In the base business, home heating and propane margins for the three months ended June 30, 2025 decreased by $0.010 per gallon, or 0.6% to $1.6860 per gallon. Going forward, we cannot assume that per gallon margins realized during the three months ended June 30, 2025 are sustainable especially with the volatility in heating oil and propane costs. Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.
|
|
Three Months Ended |
|
|||||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||
Home Heating Oil and Propane |
|
Amount |
|
|
Per |
|
|
Amount |
|
|
Per |
|
||||
Volume |
|
|
36.2 |
|
|
|
|
|
|
37.7 |
|
|
|
|
||
Sales |
|
$ |
136.2 |
|
|
$ |
3.7578 |
|
|
$ |
155.2 |
|
|
$ |
4.1193 |
|
Cost |
|
$ |
76.2 |
|
|
$ |
2.1031 |
|
|
$ |
91.3 |
|
|
$ |
2.4233 |
|
Gross Profit |
|
$ |
60.0 |
|
|
$ |
1.6547 |
|
|
$ |
63.9 |
|
|
$ |
1.6960 |
|
Motor Fuel and Other Petroleum Products |
|
Amount |
|
|
Per |
|
|
Amount |
|
|
Per |
|
||||
Volume |
|
|
32.0 |
|
|
|
|
|
|
32.9 |
|
|
|
|
||
Sales |
|
$ |
80.0 |
|
|
$ |
2.4985 |
|
|
$ |
93.8 |
|
|
$ |
2.8526 |
|
Cost |
|
$ |
68.3 |
|
|
$ |
2.1336 |
|
|
$ |
83.0 |
|
|
$ |
2.5233 |
|
Gross Profit |
|
$ |
11.7 |
|
|
$ |
0.3649 |
|
|
$ |
10.8 |
|
|
$ |
0.3293 |
|
Total Product |
|
Amount |
|
|
|
|
Amount |
|
|
|
||
Sales |
|
$ |
216.2 |
|
|
|
|
$ |
249.0 |
|
|
|
Cost |
|
$ |
144.5 |
|
|
|
|
$ |
174.3 |
|
|
|
Gross Profit |
|
$ |
71.7 |
|
|
|
|
$ |
74.7 |
|
|
|
For the three months ended June 30, 2025, total product gross profit was $71.7 million, which was $3.0 million, or 4.1%, lower than the three months ended June 30, 2024, due to a decrease in home heating oil and propane volume sold ($2.4 million), decrease in home heating oil and propane margins ($1.5 million) and slightly offset by an increase in gross profit from other petroleum products ($0.9 million).
Cost of Installations and Service
Total installation costs for the three months ended June 30, 2025 increased by $2.5 million or 10.2%, to $27.3 million, compared to $24.8 million of installation costs for the three months ended June 30, 2024. This increase was largely due to higher installation sales from recent acquisitions. Installation costs as a percentage of installation sales were 82.0% for the three months ended June 30, 2025 and 82.2% for the three months ended June 30, 2024. The gross profit from installation increased by $0.7 million.
Service expense increased by $3.6 million, or 8.1%, to $47.9 million for the three months ended June 30, 2025, representing 85.4% of service sales, versus $44.3 million, or 84.4% of service sales, for the three months ended June 30, 2024. This increase was largely due to higher service sales from recent acquisitions. In addition, a large proportion of our service expenses are incurred under fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues. The gross profit from service did not change compared to the three months ended June 30, 2024.
28
We realized a combined gross profit from service and installation of $14.2 million for the three months ended June 30, 2025 compared to a gross profit of $13.5 million for the three months ended June 30, 2024, a $0.7 million increase.
(Increase) Decrease in the Fair Value of Derivative Instruments
During the three months ended June 30, 2025, the change in the fair value of derivative instruments resulted in a $0.6 million credit as a decrease in the market value for unexpired hedges (a $2.2 million charge) was more than offset by an $2.8 million credit due to the expiration of certain hedged positions.
During the three months ended June 30, 2024, the change in the fair value of derivative instruments resulted in a $1.0 million charge due to a decrease in the market value for unexpired hedges (a $3.0 million charge) that was partially offset by a $2.0 million credit due to the expiration of certain hedged positions.
Delivery and Branch Expenses
For the three months ended June 30, 2025, delivery and branch expense increased $4.1 million, or 4.7%, to $90.6 million, compared to $86.5 million for the three months ended June 30, 2024. The increase was driven by $5.8 million of expenses from recent acquisitions and partially offset by a $1.7 million decrease in net base business expenses. The decrease in the base business expenses was driven by a $0.7 million, or 0.8%, decrease in delivery expenses due to a 5.2 million gallon, or 14%, decrease in home heating oil and propane volume sold in the base business, and $1.0 million of other net expense decreases.
Depreciation and Amortization Expenses
For the three months ended June 30, 2025, depreciation and amortization expenses increased $2.0 million, or 27.0%, to $9.2 million, compared to $7.2 million for the three months ended June 30, 2024, primarily due to acquisitions and slightly offset by intangible assets that fully amortized in the prior fiscal year.
General and Administrative Expenses
For the three months ended June 30, 2025, general and administrative expenses increased by $0.2 million or 1.9%, to $7.6 million, from $7.4 million for the three months ended June 30, 2024, due to a $0.2 million increase in salaries and benefits expenses.
Finance Charge Income
For the three months ended June 30, 2025, finance charge income was $1.8 million, essentially unchanged from the three months ended June 30, 2024.
Interest Expense, Net
For the three months ended June 30, 2025, net interest expense increased by $0.9 million, or 36.7%, to $3.6 million compared to $2.7 million for the three months ended June 30, 2024. The year-over-year change was driven by an increase in average borrowings of $60.3 million from $143.2 million for the three months ended June 30, 2024 to $203.5 million for the three months ended June 30, 2025 that was partially offset by a decrease in the weighted average interest rate from 7.2% for the three months ended June 30, 2024 to 7.0% for the three months ended June 30, 2025. The increase in average borrowings was attributable to financing acquisitions. To hedge against rising interest rates, the Company utilizes interest rate swaps. At June 30, 2025, approximately 39% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases as a result of interest rate swaps.
Amortization of Debt Issuance Costs
For the three months ended June 30, 2025, amortization of debt issuance cost was $0.3 million, essentially unchanged from the three months ended June 30, 2024.
Income Tax Benefit
For the three months ended June 30, 2025, the Company’s income tax benefit increased by $2.3 million to $6.5 million, from $4.2 million for the three months ended June 30, 2024. The increase in the income tax benefit was driven by a $7.9 million increase in loss before income taxes.
29
Net Loss
For the three months ended June 30, 2025, Star’s net loss increased $5.6 million, to $16.6 million, compared to the three months ended June 30, 2024, primarily due to a $6.5 million increase in the Adjusted EBITDA loss, a $2.0 million increase in depreciation and amortization expenses and a $0.9 million increase in net interest expense that was partially offset by a $2.3 million increase in income tax benefit and a favorable change in the fair value of derivative instruments of $1.6 million.
Adjusted EBITDA Loss
For the three months ended June 30, 2025, Adjusted EBITDA loss increased $6.5 million, to $10.6 million, compared to the three months ended June 30, 2024, as a decrease in home heating oil and propane per gallon margins in the base business and lower home heating oil and propane volume sold in the base business was reduced by lower base business operating expenses and positive Adjusted EBITDA generated from recent acquisitions during this loss historical period. The positive Adjusted EBITDA realized from acquisitions during this historical loss quarter was due to our recent propane acquisitions.
EBITDA and Adjusted EBITDA should not be considered as an alternative to net income, as an indicator of operating performance, or as an alternative to cash flow, as a measure of liquidity or ability to service debt obligations, but provides additional information for evaluating the Company’s ability to make the Minimum Quarterly Distribution. EBITDA and Adjusted EBITDA are calculated as follows:
|
|
Three Months |
|
|||||
(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 (a) |
|
|
(9,980 |
) |
|
|
(5,048 |
) |
(Increase) / decrease in the fair value of derivative instruments |
|
|
(603 |
) |
|
|
984 |
|
Adjusted EBITDA (a) |
|
|
(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 |
) |
• our compliance with certain financial covenants included in our debt agreements;
• our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;
• our 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;
• our 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.
30
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:
• EBITDA and Adjusted EBITDA do not reflect our 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, our working capital requirements;
• EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on our indebtedness; and EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.
31
Nine Months Ended June 30, 2025
Compared to the Nine Months Ended June 30, 2024
Volume
For the nine months ended June 30, 2025, retail volume of home heating oil and propane sold increased by 27.7 million gallons, or 11.8%, to 262.6 million gallons, compared to 234.9 million gallons for the nine months ended June 30, 2024. For those locations where we had existing operations during both periods, which we sometimes refer to as our “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the nine months ended June 30, 2025 were 8.2% colder than the nine months ended June 30, 2024 but 8.3% warmer than normal, as reported by NOAA. For the twelve months ended June 30, 2025, net customer attrition for the base business was 4.4%. The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.” An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below:
(in millions of gallons) |
|
Heating Oil |
|
|
Volume - Nine months ended June 30, 2024 |
|
|
234.9 |
|
Net customer attrition |
|
|
(11.0 |
) |
Impact of colder temperatures |
|
|
18.7 |
|
Acquisitions |
|
|
23.5 |
|
Other |
|
|
(3.5 |
) |
Change |
|
|
27.7 |
|
Volume - Nine months ended June 30, 2025 |
|
|
262.6 |
|
The following chart sets forth the percentage by volume of total home heating oil sold to residential variable-price customers, residential price-protected customers and commercial/industrial/other customers for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024:
|
|
Nine Months Ended |
|
|||||
Customers |
|
June 30, |
|
|
June 30, |
|
||
Residential Variable |
|
|
44.3 |
% |
|
|
42.2 |
% |
Residential Price-Protected (Ceiling and Fixed Price) |
|
|
41.3 |
% |
|
|
44.2 |
% |
Commercial/Industrial/Other |
|
|
14.4 |
% |
|
|
13.6 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
Volume of motor fuel and other petroleum products sold decreased by 3.8 million gallons, or 4.0%, to 91.6 million gallons for the nine months ended June 30, 2025, compared to 95.4 million gallons for the nine months ended June 30, 2024.
Product Sales
For the nine months ended June 30, 2025, product sales decreased by $12.1 million, or 0.9%, to $1,280.7 million, compared to $1,292.8 million for the nine months ended June 30, 2024, due to a decrease in average selling prices and slightly offset by an increase in total volume sold of 7.2%. Selling prices decreased largely due to a decrease in wholesale product cost of $0.3650 per gallon, or 13.9%, compared to the nine months ended June 30, 2024. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Installations and Service
For the nine months ended June 30, 2025, installation and service revenue increased by $23.1 million, or 9.9%, to $256.0 million, compared to $232.9 million for the nine months ended June 30, 2024 driven by $18.4 million of sales generated from recent acquisitions and the remainder was driven by a concerted effort to expand these offerings to our customers as well as annual price increases.
32
Cost of Product
For the nine months ended June 30, 2025, cost of product decreased $66.8 million, or 7.7%, to $800.2 million, compared to $867.0 million for the nine months ended June 30, 2024, due to a decrease in wholesale product cost of $0.3650 per gallon, or 13.9%, slightly offset by an increase in total volume sold of 7.2%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Gross Profit — Product
The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transactions. On that basis, home heating oil and propane margins for the nine months ended June 30, 2025 increased by $0.0260 per gallon, or 1.6%, to $1.7056 per gallon, from $1.6796 per gallon during the nine months ended June 30, 2024. In the base business, home heating and propane margins for the nine months ended June 30, 2025 increased by $0.0568 per gallon, or 3.4% to $1.7364 per gallon. Going forward, we cannot assume that per gallon margins realized during the nine months ended June 30, 2025 are sustainable especially with the volatility in heating oil and propane costs. Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.
|
|
Nine Months Ended |
|
|||||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||
Home Heating Oil and Propane |
|
Amount |
|
|
Per |
|
|
Amount |
|
|
Per |
|
||||
Volume |
|
|
262.6 |
|
|
|
|
|
|
234.9 |
|
|
|
|
||
Sales |
|
$ |
1,046.9 |
|
|
$ |
3.9871 |
|
|
$ |
1,014.5 |
|
|
$ |
4.3186 |
|
Cost |
|
$ |
599.0 |
|
|
$ |
2.2815 |
|
|
$ |
620.0 |
|
|
$ |
2.6390 |
|
Gross Profit |
|
$ |
447.9 |
|
|
$ |
1.7056 |
|
|
$ |
394.5 |
|
|
$ |
1.6796 |
|
Motor Fuel and Other Petroleum Products |
|
Amount |
|
|
Per |
|
|
Amount |
|
|
Per |
|
||||
Volume |
|
|
91.6 |
|
|
|
|
|
|
95.4 |
|
|
|
|
||
Sales |
|
$ |
233.8 |
|
|
$ |
2.5535 |
|
|
$ |
278.3 |
|
|
$ |
2.9161 |
|
Cost |
|
$ |
201.2 |
|
|
$ |
2.1962 |
|
|
$ |
247.0 |
|
|
$ |
2.5885 |
|
Gross Profit |
|
$ |
32.6 |
|
|
$ |
0.3573 |
|
|
$ |
31.3 |
|
|
$ |
0.3276 |
|
Total Product |
|
Amount |
|
|
|
|
Amount |
|
|
|
||
Sales |
|
$ |
1,280.7 |
|
|
|
|
$ |
1,292.8 |
|
|
|
Cost |
|
$ |
800.2 |
|
|
|
|
$ |
867.0 |
|
|
|
Gross Profit |
|
$ |
480.5 |
|
|
|
|
$ |
425.8 |
|
|
|
For the nine months ended June 30, 2025, total product gross profit was $480.5 million, which was $54.7 million, or 12.8%, higher than the nine months ended June 30, 2024, due to an increase in home heating oil and propane volume sold ($46.5 million), an increase in home heating oil and propane margins ($6.9 million) and an increase in gross profit from other petroleum products ($1.3 million).
Cost of Installations and Service
Total installation costs for the nine months ended June 30, 2025 increased by $7.9 million or 10.6%, to $81.9 million, compared to $74.0 million of installation costs for the nine months ended June 30, 2024. This increase was largely due to higher installation sales from recent acquisitions. Installation costs as a percentage of installation sales were 81.8% for the nine months ended June 30, 2025 and 81.6% for the nine months ended June 30, 2024. The gross profit from installation increased by $1.6 million.
Service expense increased by $10.4 million, or 7.4%, to $151.2 million for the nine months ended June 30, 2025, representing 97.0% of service sales, versus $140.8 million, or 99.0% of service sales, for the nine months ended June 30, 2024. This increase was largely due to higher service sales from recent acquisitions. In addition, a large proportion of our service expenses are incurred under
33
fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues. The gross profit from service increased by $3.2 million.
We realized a combined gross profit from service and installation of $22.9 million for the nine months ended June 30, 2025 compared to a gross profit of $18.1 million for the nine months ended June 30, 2024, a $4.8 million increase, of which $2.7 million is attributable to acquisitions and $2.1 million is due to operating initiatives in the base business.
(Increase) Decrease in the Fair Value of Derivative Instruments
During the nine months ended June 30, 2025, the change in the fair value of derivative instruments resulted in a $12.0 million credit as a decrease in the market value for unexpired hedges (a $2.3 million charge) was more than offset by a $14.3 million credit due to the expiration of certain hedged positions.
During the nine months ended June 30, 2024, the change in the fair value of derivative instruments resulted in a $8.3 million charge due to a decrease in the market value for unexpired hedges (a $4.0 million charge) and a $4.3 million charge due to the expiration of certain hedged positions.
Delivery and Branch Expenses
For the nine months ended June 30, 2025, delivery and branch expense increased $29.9 million, or 10.5%, to $314.9 million, compared to $285.0 million for the nine months ended June 30, 2024. During the nine months ended June 30, 2025, the Company's weather hedge contracts accounted for a $10.6 million increase in expense. The temperatures experienced from November 2024 through March 2025 (the weather hedge period) 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 which, due to warmer weather, the Company recorded a credit of $7.5 million under its weather hedge contract. The increase was also driven by $18.9 million of expenses from recent acquisitions and a $0.4 million increase in net base business expenses. The increase in the base business expenses was driven by a $1.4 million, or 1.6%, increase in delivery expenses due to a 4.2 million gallon, or 1.8%, increase in home heating oil and propane volume sold in the base business compared to the prior year and $1.9 million of other net expense increases that were partially offset by a $2.9 million decrease in insurance related costs.
Depreciation and Amortization Expenses
For the nine months ended June 30, 2025, depreciation and amortization expenses increased $2.6 million, or 11.3%, to $26.0 million, compared to $23.4 million for the nine months ended June 30, 2024, primarily due acquisitions and slightly offset by intangible assets that fully amortized in the prior fiscal year.
General and Administrative Expenses
For the nine months ended June 30, 2025, general and administrative expenses increased by $1.6 million, or 7.5%, to $22.9 million, from $21.3 million for the nine months ended June 30, 2024, due to a $1.4 million increase in profit sharing expense and $0.2 million of other net expense increases. The Company accrues approximately 6.0% of Adjusted EBITDA as defined in its profit sharing plan for distribution to its employees. This amount is payable when the Company achieves Adjusted EBITDA of at least 70% of the amount budgeted. The dollar amount of the profit sharing pool adjusts accordingly based on Adjusted EBITDA levels achieved.
Finance Charge Income
For the nine months ended June 30, 2025, finance charge income increased by $0.2 million, or 5.0%, to $3.9 million, compared to $3.7 million for the nine months ended June 30, 2024.
Interest Expense, Net
For the nine months ended June 30, 2025, net interest expense increased by $1.4 million, or 14.4%, to $11.1 million compared to $9.7 million for the nine months ended June 30, 2024. The year-over-year change was driven by an increase in average borrowings of $59.3 million from $165.5 million for the nine months ended June 30, 2024 to $224.8 million for the nine months ended June 30, 2025 that was partially offset by a decrease in the weighted average interest rate from 7.3% for the nine months ended June 30, 2024 to 7.0% for the nine months ended June 30, 2025. The increase in average borrowings was attributable to financing acquisitions. To hedge against rising interest rates, the Company utilizes interest rate swaps. At June 30, 2025, approximately 39% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases as a result of interest rate swaps.
34
Amortization of Debt Issuance Costs
For the nine months ended June 30, 2025, amortization of debt issuance cost was $0.8 million, essentially unchanged from the nine months ended June 30, 2024.
Income Tax Expense
For the nine months ended June 30, 2025, the Company’s income tax expense increased by $12.4 million to $41.3 million, from $28.9 million for the nine months ended June 30, 2024. The increase in the income tax expense was driven by a $44.3 million increase in income before income taxes.
Net Income
For the nine months ended June 30, 2025, Star’s net income increased $31.9 million, to $102.2 million, compared to the nine months ended June 30, 2024, primarily due to a $28.2 million increase in Adjusted EBITDA and a favorable change in the fair value of derivative instruments of $20.2 million that was partially offset by a $12.4 million increase in income tax expense, a $2.6 million increase in depreciation and amortization expenses and a $1.4 million increase in net interest expense.
Adjusted EBITDA
For the nine months ended June 30, 2025, Adjusted EBITDA increased $28.2 million, to $169.5 million, compared to the nine months ended June 30, 2024, primarily due to a $21.1 million increase in Adjusted EBITDA in the base business and a $17.7 million increase in Adjusted EBITDA from recent acquisitions that was partially offset by a $10.6 million increase in expense related to the Company's weather hedge contracts. The increase in 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.
EBITDA and Adjusted EBITDA should not be considered as an alternative to net income, as an indicator of operating performance, or as an alternative to cash flow, as a measure of liquidity or ability to service debt obligations, but provides additional information for evaluating the Company’s ability to make the Minimum Quarterly Distribution. EBITDA and Adjusted EBITDA are calculated as follows:
|
|
Nine Months |
|
|||||
(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 (a) |
|
|
181,426 |
|
|
|
133,038 |
|
(Increase) / decrease in the fair value of derivative instruments |
|
|
(11,962 |
) |
|
|
8,262 |
|
Adjusted EBITDA (a) |
|
|
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 |
) |
35
• our compliance with certain financial covenants included in our debt agreements;
• our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;
• our 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;
• our 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:
• EBITDA and Adjusted EBITDA do not reflect our 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, our working capital requirements;
• EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on our indebtedness; and EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.
36
DISCUSSION OF CASH FLOWS
We use the indirect method to prepare our Consolidated Statements of Cash Flows. Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income for those items that impact net income but do not result in actual cash receipts or payment during the period.
Operating Activities
Due to the seasonal nature of our business, cash is generally used in operations during the winter (our first and second fiscal quarters) as we require additional working capital to support the high volume of sales during this period, and cash is generally provided by operating activities during the spring and summer (our third and fourth fiscal quarters) when customer payments exceed the cost of deliveries.
During the nine months ended June 30, 2025, cash provided by operating activities decreased $15.9 million, to $56.5 million, compared to $72.4 million in cash provided by operating activities during the nine months ended June 30, 2024, as a $26.8 million increase in cash flows from operations and a $4.8 million increase in cash from the timing of accounts payable payments, was more than offset by an $18.5 million increase in accounts receivable due from customers on a comparable basis (including accounts receivable and customer credit balance accounts), a $16.5 million greater use of cash for inventory purchases as we entered the 2025 heating season with a lower level of inventory than in fiscal 2024, $6.3 million of additional cash required for collateral and option premiums at derivative counterparties and $6.2 million of other net changes in working capital. The increase in accounts receivable was due to an increase in budget customer balances in debit positions.
Investing Activities
During the nine months ended June 30, 2025, the Company acquired one heating oil and three propane businesses for approximately $80.5 million in cash. The gross purchase price was allocated $38.7 million to intangible assets, $17.7 million to goodwill, $25.2 million to fixed assets and reduced by $1.1 million of negative working capital. The Company also acquired certain intangible and fixed assets for $7.7 million and sold certain assets for cash proceeds of $0.3 million.
Our capital expenditures for the nine months ended June 30, 2025 totaled $10.4 million, as we invested in computer hardware and software ($1.3 million), refurbished certain physical plants ($1.2 million), expanded our propane operations ($1.0 million) and made additions to our fleet and other equipment ($6.9 million).
During the nine months ended June 30, 2025, $1.8 million of earnings were reinvested into an irrevocable trust established in connection with our captive insurance company. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet. We believe that investments into the irrevocable trust lower our letter of credit fees, increase interest income on invested cash balances, and provide us with certain tax advantages attributable to a captive insurance company.
During the nine months ended June 30, 2024, the Company acquired one propane and three heating oil businesses for an aggregate price of approximately $22.6 million in cash. The gross purchase price was allocated $14.4 million to intangible assets, $6.3 million to goodwill, $2.8 million to fixed assets and reduced by $0.9 million of negative working capital.
Our capital expenditures for the nine months ended June 30, 2024 totaled $7.6 million, as we invested in computer hardware and software ($1.0 million), refurbished certain physical plants ($1.7 million), expanded our propane operations ($1.1 million) and made additions to our fleet and other equipment ($3.8 million).
During the nine months ended June 30, 2024, $1.4 million of earnings were reinvested into the irrevocable trust.
Financing Activities
During the nine months ended June 30, 2025, we repaid $15.8 million of our term loan, borrowed $75.4 million under our revolving credit facility and subsequently repaid $75.4 million, repurchased 0.8 million Common Units, at an average price paid of $11.99 per unit, for $10.0 million, in connection with our unit repurchase plan, and paid distributions of $18.3 million to our Common Unit holders and $1.2 million to our General Partner unit holders (including $1.1 million of incentive distributions as provided in our Partnership Agreement).
During the nine months ended June 30, 2024, we repaid $12.3 million of our term loan, borrowed $79.6 million under our revolving credit facility and subsequently repaid $79.6 million, repurchased approximately 0.8 million Common Units, at an average price paid of $10.88 per unit, for $9.0 million, in connection with our unit repurchase plan, and paid distributions of $17.7 million to our Common Unit holders and $1.0 million to our General Partner unit holders (including $1.0 million of incentive distributions as provided in our Partnership Agreement).
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FINANCING AND SOURCES OF LIQUIDITY
Liquidity and Capital Resources Comparatives
Our primary uses of liquidity are to provide funds for our working capital, capital expenditures, distributions on our units, acquisitions and unit repurchases. Our ability to provide funds for such uses depends on our future performance, which will be subject to prevailing economic, financial, geopolitical and business conditions, tariff regimes, weather, the ability to collect current and future accounts receivable, the ability to pass on the full impact of high product costs to customers, the effects of high net customer attrition, conservation, inflation and other factors. Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities, cash on hand as of June 30, 2025 ($28.1 million) or a combination thereof. We believe that these cash sources will also be sufficient to satisfy our capital requirements in the longer-term. However, if they are not sufficient, we anticipate that working capital will be financed by our revolving credit facility, as discussed below, and from subsequent seasonal reductions in inventory and accounts receivable. As of June 30, 2025, we had accounts receivable of $129.3 million of which $93.0 million is due from residential customers and $36.3 million is due from commercial customers. Our ability to borrow from our bank group is based in part on the aging of these accounts receivables. If these balances do not meet the eligibility tests as defined in our credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced. As of June 30, 2025, we had no borrowings under our revolving credit facility, $194.3 million outstanding under our term loan, $5.2 million in letters of credit outstanding and $2.2 million hedge positions were secured under the credit agreement.
Under the terms of the credit agreement, if Availability (as defined in the credit agreement) is less than the greater of (a) 12.5% of the Line Cap (lesser of the aggregate revolving commitment and the borrowing base) and (b) $35.0 million, we must maintain a fixed charge coverage ratio of 1.10. We are also required to maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30th or September 30th, and no more than 5.5 as of December 31st or March 31st. As of June 30, 2025, Availability, as defined in the credit agreement, as amended, was $167.6 million and we were in compliance with the financial covenants.
Maintenance capital expenditures for the remainder of fiscal 2025 are estimated to be approximately $2.0 million to $3.0 million, excluding the capital requirements for leased fleet. In addition, we plan to invest $0.1 million to $0.2 million in our propane operations. If, and only to the extent that, cash distributions to our unitholders remain at the current quarterly level of $0.1850 per unit for the balance of fiscal 2025, the Company would make aggregate payments of approximately $6.2 million to Common Unit holders, $0.4 million to our General Partner (including $0.4 million of incentive distribution as provided for in our Partnership Agreement) and $0.4 million to management pursuant to the management incentive compensation plan which provides for certain members of management to receive incentive distributions that would otherwise be payable to the General Partner. The amount of cash distributions payable to our unitholders, if any, depends on the amount of cash flow generated by the Company and our compliance with certain financial covenants under our credit agreement. Under the terms of our credit agreement, our term loan is repayable in quarterly payments of $5.3 million and we expect to pay $5.3 million for the remainder of fiscal 2025. Further, subject to any additional liquidity issues or concerns resulting from wholesale price volatility, we intend to continue to repurchase Common Units pursuant to our unit repurchase plan, as amended from time to time, and seek attractive acquisition opportunities within the Availability constraints of our revolving credit facility and funding resources.
Contractual Obligations and Off-Balance Sheet Arrangements
There has been no material change to Contractual Obligations and Off-Balance Sheet Arrangements since our September 30, 2024 Form 10-K disclosure and therefore, the table has not been included in this Form 10-Q.
Recent Accounting Pronouncements
Refer to Note 2 – Summary of Significant Accounting Policies for discussion regarding the impact of accounting standards that were recently adopted and issued but not yet effective, on our consolidated financial statements.
Critical Accounting Policy and Critical Accounting Estimates
We believe that there have been no significant changes to our critical accounting policy and critical accounting estimates during the nine months ended June 30, 2025 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the fiscal year ended September 30, 2024. While
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our critical accounting policies and estimates have not changed in any significant way during the nine months ended June 30, 2025, the following provides disclosures about our critical accounting policy and critical accounting estimates.
Critical Accounting Policy
Fair Values of Derivatives
FASB ASC 815-10-05, Derivatives and Hedging, requires that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities. The Company has elected not to designate its commodity derivative instruments as hedging instruments under this guidance, and therefore the change in fair value of those derivative instruments are recognized in our statement of operations.
We have established the fair value of our derivative instruments using estimates determined by our counterparties and subsequently evaluated them internally using established index prices and other sources. These values are based upon, among other things, futures prices, volatility, time-to-maturity value and credit risk. The estimate of fair value we report in our financial statements changes as these estimates are revised to reflect actual results, changes in market conditions, or other factors, many of which are beyond our control.
Critical Accounting Estimates
Self-Insurance Liabilities
We currently self-insure a portion of workers’ compensation, auto, general liability and medical claims. We establish and periodically evaluate self-insurance liabilities based upon expectations as to what our ultimate liability may be for outstanding claims using developmental factors based upon historical claim experience, including frequency, severity, demographic factors and other actuarial assumptions, supplemented with the support of a qualified third-party actuary. As of September 30, 2024, we had approximately $76.7 million of self-insurance liabilities. The ultimate resolution of these claims could differ materially from the assumptions used to calculate the self-insurance liabilities, which could have a material adverse effect on results of operations.
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Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to interest rate risk primarily through our bank credit facilities. We utilize these borrowings to meet our working capital needs.
At June 30, 2025, we had outstanding borrowings totaling $194.3 million that are subject to variable interest rates under our credit agreement, and $75.4 million of interest rate swaps to mitigate exposure to interest rate risk associated with variable interest rates. In the event that interest rates associated with this facility were to increase 100 basis points, the after tax impact on annual future cash flows would be a decrease of $0.8 million.
Commodity Price Risk
We regularly use derivative financial instruments to manage our exposure to commodity price risk related to changes in the current and future market price of home heating oil and vehicle fuels. The value of market sensitive derivative instruments is subject to change as a result of movements in market prices. Sensitivity analysis is a technique used to evaluate the impact of hypothetical market value changes. Based on a hypothetical ten percent increase in the cost of product at June 30, 2025, the potential impact on our hedging activity would be to increase the fair market value of these outstanding derivatives by $7.0 million from $(1.5) million to a fair market value of $5.5 million; and conversely a hypothetical ten percent decrease in the cost of product would decrease the fair market value of these outstanding derivatives by $5.5 million to a fair market value of $(7.0) million.
For a broader discussion of risks, including those related to market conditions, please refer to Part I Item 1A "Risk Factors in our Fiscal 2024 Form 10-K.
Item 4.
Controls and Procedures
a) Evaluation of disclosure controls and procedures
The General Partner’s chief executive officer and chief financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of June 30, 2025. Based on that evaluation, such chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025 at the reasonable level of assurance. For purposes of Rule 13a-15(e), the term disclosure controls and procedures means the controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Act”) (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
b) Change in internal control over financial reporting
No changes in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
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c) Other
The General Partner and the Company believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a Company have been detected. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and the chief executive officer and chief financial officer of the General Partner have concluded, as of June 30, 2025, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.
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PART II OTHER INFORMATION
Item 1.
Legal Proceedings
In the opinion of management, we are not a party to any litigation, which individually or in the aggregate could reasonably be expected to have a material adverse effect on our results of operations, financial position or liquidity.
Item 1A.
Risk Factors
In addition to the other information set forth in this Report, investors should carefully review and consider the information regarding certain factors, which could materially affect our business, results of operations, financial condition and cash flows set forth in Part I Item 1A. “Risk Factors” in our Fiscal 2024 Form 10-K report. We may disclose changes to such factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds
Purchase of equity securities by the issuer. Note 4 to the Condensed Consolidated Financial Statements concerning the Company’s repurchase of Common Units during the nine months ended June 30, 2025 is incorporated into this Item 2 by reference.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
N/A
Item 5.
Other Information
(a) N/A
(b) N/A
(c) Trading Plans. During the quarter ended June 30, 2025,
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Item 6.
Exhibits
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3.1 |
Amended and Restated Certificate of Limited Partnership (Incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 9, 2006.) |
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3.2 |
Certificate of Amendment to Amended and Restated Certificate of Limited Partnership (Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K with the Commission on October 27, 2017.) |
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3.3 |
Third Amended and Restated Agreement of Limited Partnership (Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K with the Commission on November 6, 2017.) |
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3.4 |
Amendment No. 1 to Third Amended and Restated Agreement of Limited Partnership of Star Group, L.P. (Incorporated by reference to an exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on March 24, 2023.) |
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4.1 |
Unit Purchase Rights Agreement dated as of March 24, 2023 by and between the Registrant and Computershare Trust Company, N.A., as rights agent (which includes the form of Rights Certificate as Exhibit A thereto) (Incorporated by reference as an exhibit to the Registrant's Form 8-A filed with the Commission on March 24, 2023.) |
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10.01 |
First Amendment to Seventh Amended and Restated Credit Agreement and Seventh Amended and Restated Pledge and Security Agreement, dated as of April 2, 2025 (Incorporated by reference to an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 7, 2025.) |
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10.02* |
Unit Purchase Agreement, dated as of May 30, 2025, between the Company and Bandera Master Fund, L.P (Filed herewith.) |
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31.1* |
Certification of Chief Executive Officer, Star Group, L.P., pursuant to Rule 13a-14(a)/15d-14(a). |
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31.2* |
Certification of Chief Financial Officer, Star Group, L.P., pursuant to Rule 13a-14(a)/15d-14(a). |
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32.1** |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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32.2** |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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101 |
The following materials from the Star Group, L.P. Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Partners’ Capital, (v) the Condensed Consolidated Statements of Cash Flows and (vi) related notes. |
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101.INS |
Inline XBRL Instance Document. |
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101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
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104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized:
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Star Group, L.P. |
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(Registrant) |
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By: |
Kestrel Heat LLC AS GENERAL PARTNER |
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Signature |
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Title |
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Date |
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/s/ Richard F. Ambury Richard F. Ambury |
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Executive Vice President, Chief Financial Officer, Treasurer and Secretary of Kestrel Heat LLC (Principal Financial Officer) |
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August 6, 2025 |
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Signature |
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Title |
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Date |
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/s/ Cory A. Czekanski Cory A. Czekanski |
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Vice President – Controller of Kestrel Heat LLC (Principal Accounting Officer) |
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August 6, 2025 |
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FAQ
How much did Parke Bancorp (PKBK) earn in Q2 2025?
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