U.S. Markets close in 2 hrs 12 mins
  • S&P 500

    4,205.84
    +83.37 (+2.02%)
     
  • Dow 30

    33,286.75
    +512.34 (+1.56%)
     
  • Nasdaq

    12,829.93
    +336.00 (+2.69%)
     
  • Russell 2000

    1,962.70
    +49.80 (+2.60%)
     
  • Crude Oil

    91.92
    +1.42 (+1.57%)
     
  • Gold

    1,813.20
    +0.90 (+0.05%)
     
  • Silver

    20.70
    +0.22 (+1.09%)
     
  • EUR/USD

    1.0324
    +0.0107 (+1.0427%)
     
  • 10-Yr Bond

    2.7590
    -0.0380 (-1.36%)
     
  • Vix

    19.81
    -1.96 (-9.00%)
     
  • GBP/USD

    1.2259
    +0.0183 (+1.5152%)
     
  • USD/JPY

    132.4940
    -2.6220 (-1.9406%)
     
  • BTC-USD

    23,932.57
    +886.87 (+3.85%)
     
  • CMC Crypto 200

    563.36
    +32.14 (+6.05%)
     
  • FTSE 100

    7,507.11
    +18.96 (+0.25%)
     
  • Nikkei 225

    27,819.33
    -180.67 (-0.65%)
     

Star Group, L.P. Reports Fiscal 2022 Third Quarter Results

  • Oops!
    Something went wrong.
    Please try again later.
·15 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
Star Group, L.P.
Star Group, L.P.

STAMFORD, Conn., Aug. 03, 2022 (GLOBE NEWSWIRE) -- Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home energy distributor and services provider, today announced financial results for the fiscal 2022 third quarter and nine months ended June 30, 2022.

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
For the fiscal 2022 third quarter, Star reported a 55.1 percent increase in total revenue to $439.1 million compared with $283.1 million in the prior-year period, reflecting an increase in selling prices for all petroleum products in response to higher wholesale costs.

The volume of home heating oil and propane sold during the fiscal 2022 third quarter increased by 2.7 million gallons, or 7.3 percent, to 40.7 million gallons as the additional volume provided from acquisitions and other factors more than offset the impact from net customer attrition. Temperatures in Star's geographic areas of operation for the fiscal 2022 third quarter were similar to the fiscal 2021 third quarter and 8.0 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Star’s net loss decreased by $1.5 million in the quarter, to $10.6 million, as a favorable change in the fair value of derivative instruments of $3.0 million more than offset an increase in the Adjusted EBITDA loss of $1.2 million.

The Company’s third quarter Adjusted EBITDA loss increased by $1.2 million, to a loss of $11.1 million, as higher operating expenses more than offset the impact of a 2.7 million gallon increase in home heating oil and propane volume and higher home heating oil and propane per gallon margins.

“As with last quarter, Star continued to be challenged by higher commodity prices and related expenses this period, exemplified by wholesale product costs which were nearly double those of 2021,” said Jeff Woosnam, Star Group’s President and Chief Executive Officer. “Temperatures were roughly the same year-over-year, and we focused on new business development, growing installation and service revenue, and preparing Star for the upcoming heating season. I’m pleased to report that we acquired one heating oil dealer in the period – adding approximately 3.8 million gallons annually to our portfolio – then, just after the quarter, we extended our credit facilities to 2027; this expanded our ability to borrow up to $550 million for our seasonal working capital requirements. We also increased the Company’s term loan to $165 million. We believe these changes will expand and extend our financial flexibility during periods of significant product cost increases.”

Nine Months Ended June 30, 2022 Compared to the Nine Months Ended June 30, 2021
For the first nine months of fiscal 2022, Star reported a 35.6 percent increase in total revenue to $1.7 billion, reflecting an increase in selling prices in response to higher wholesale product costs, partially offset by a decrease in total volume sold.

The volume of home heating oil and propane sold during the first nine months of fiscal 2022 decreased by 8.4 million gallons, or 2.9 percent, to 276.7 million gallons, as slightly warmer temperatures, net customer attrition and other factors more than offset the impact from acquisitions. Temperatures in Star's geographic areas of operation for the first nine months of fiscal 2022 were 0.5 percent warmer than during the prior-year comparable period and 9.3 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Net income decreased by $25.7 million, to $85.3 million, as an unfavorable change in the fair value of derivative instruments of $18.5 million and a decrease in Adjusted EBITDA of $14.1 million more than offset a decrease in the Company’s income tax expense of $8.1 million.

Year-to-date Adjusted EBITDA decreased by $14.1 million, to $141.1 million, compared to the prior-year period as a decline in home heating oil and propane volume and an increase in operating expenses more than offset an increase in home heating oil and propane per gallon margins. Operating expenses rose by $23.9 million reflecting a $2.3 million lower benefit recorded from the Company’s weather hedge, additional costs from acquisitions of $3.9 million and a $17.7 million, or 6.9%, increase in expense within the base business reflecting higher credit card fees and bad debt reserves (in aggregate, $5.7 million), higher vehicle fuel costs ($1.3 million), and greater medical and other insurance related expenses ($4.8 million). The remaining increase of expenses in the base business of $5.9 million, or 2.3% was due to wage, benefit and other expense increase.

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization) and Adjusted EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization, (increase) decrease in the fair value of derivatives, other income (loss), net, multiemployer pension plan withdrawal charge, gain or loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges) are non-GAAP financial measures that are used as supplemental financial measures by management and external users of the Company’s financial statements, such as investors, commercial banks and research analysts, to assess Star’s position with regard to the following:

  • compliance with certain financial covenants included in our debt agreements;

  • financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;

  • operating performance and return on invested capital compared to those of other companies in the retail distribution of refined petroleum products, without regard to financing methods and capital structure;

  • ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and

  • the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations as analytical tools and so should not be viewed in isolation but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are as follows:

  • EBITDA and Adjusted EBITDA do not reflect cash used for capital expenditures;

  • although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacements;

  • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital;

  • EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on indebtedness; and

  • EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.

REMINDER:
Members of Star's management team will host a webcast and conference call at 11:00 a.m. Eastern Time tomorrow, August 4, 2022. The webcast will be accessible on the company’s website, at www.stargrouplp.com, and the telephone number for the conference call is 888-346-3470 (or 412-317-5169 for international callers).

About Star Group, L.P.
Star Group, L.P. is a full service provider specializing in the sale of home heating products and services to residential and commercial customers to heat their homes and buildings. The Company also sells and services heating and air conditioning equipment to its home heating oil and propane customers and, to a lesser extent, provides these offerings to customers outside of its home heating oil and propane customer base. In certain of Star's marketing areas, the Company provides plumbing services, primarily to its home heating oil and propane customer base. Star also sells diesel, gasoline and home heating oil on a delivery only basis. We believe Star is the nation's largest retail distributor of home heating oil based upon sales volume. Including its propane locations, Star serves customers in the more northern and eastern states within the Northeast and Mid-Atlantic U.S. regions. Additional information is available by obtaining the Company's SEC filings at www.sec.gov and by visiting Star's website at www.stargrouplp.com, where unit holders may request a hard copy of Star’s complete audited financial statements free of charge.

Forward Looking Information
This news release includes "forward-looking statements" which represent the Company’s expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the severity and duration of the novel coronavirus, or COVID-19, pandemic, the pandemic’s impact on the U.S. and global economies, the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic, the impact of geopolitical events, such as the crisis in the Ukraine, on wholesale product cost volatility, the effect of weather conditions on our financial performance; the price and supply of the products that we sell; the consumption patterns of our customers; our ability to obtain satisfactory gross profit margins; our ability to obtain new customers and retain existing customers; our ability to make strategic acquisitions; the impact of litigation; our ability to contract for our current and future supply needs; natural gas conversions; 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 creditworthiness; counterparty creditworthiness; marketing plans; cyber-attacks; inflation; global supply chain issues; labor shortages; general economic conditions and new technology. All statements other than statements of historical facts included in this news release 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 the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to 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 under the heading "Risk Factors" and "Business Strategy" in our Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended September 30, 2021. Important factors that could cause actual results to differ materially from the Company’s expectations ("Cautionary Statements") are disclosed in this news release and in the Company’s Form 10-K and our Quarterly Reports on Form 10-Q. Currently, one of the most significant factors, however, is the potential adverse effect of the pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its customers and counterparties and the global economy and financial markets. The extent to which COVID-19 impacts us and our customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. Unless otherwise required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this news release.

(financials follow)

STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 

June 30,

 

September 30,

 

2022

 

2021

(in thousands)

(unaudited)

 

 

ASSETS

 

 

Current assets

 

 

 

Cash and cash equivalents

$

8,964

 

 

$

4,767

 

Receivables, net of allowance of $8,897 and $4,779, respectively

 

187,355

 

 

 

99,680

 

Inventories

 

82,424

 

 

 

61,183

 

Fair asset value of derivative instruments

 

45,868

 

 

 

26,222

 

Prepaid expenses and other current assets

 

34,358

 

 

 

30,140

 

Total current assets

 

358,969

 

 

 

221,992

 

Property and equipment, net

 

104,563

 

 

 

99,123

 

Operating lease right-of-use assets

 

89,279

 

 

 

95,839

 

Goodwill

 

256,471

 

 

 

253,398

 

Intangibles, net

 

88,924

 

 

 

95,474

 

Restricted cash

 

250

 

 

 

250

 

Captive insurance collateral

 

66,893

 

 

 

69,933

 

Deferred charges and other assets, net

 

18,092

 

 

 

17,854

 

Total assets

$

983,441

 

 

$

853,863

 

LIABILITIES AND PARTNERS' CAPITAL

 

 

 

Current liabilities

 

 

 

Accounts payable

$

43,401

 

 

$

37,291

 

Revolving credit facility borrowings

 

60,395

 

 

 

8,618

 

Current maturities of long-term debt

 

11,500

 

 

 

17,621

 

Current portion of operating lease liabilities

 

16,164

 

 

 

16,446

 

Accrued expenses and other current liabilities

 

140,161

 

 

 

121,221

 

Unearned service contract revenue

 

60,175

 

 

 

56,972

 

Customer credit balances

 

49,254

 

 

 

86,828

 

Total current liabilities

 

381,050

 

 

 

344,997

 

Long-term debt

 

153,129

 

 

 

92,385

 

Long-term operating lease liabilities

 

77,961

 

 

 

84,019

 

Deferred tax liabilities, net

 

37,050

 

 

 

29,014

 

Other long-term liabilities

 

15,549

 

 

 

25,244

 

Partners' capital

 

 

 

Common unitholders

 

335,780

 

 

 

295,063

 

General partner

 

(2,916

)

 

 

(2,821

)

Accumulated other comprehensive loss, net of taxes

 

(14,162

)

 

 

(14,038

)

Total partners' capital

 

318,702

 

 

 

278,204

 

Total liabilities and partners' capital

$

983,441

 

 

$

853,863

 

 

 

 

 

STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended June 30,

 

Nine Months Ended June 30,

(in thousands, except per unit data - unaudited)

2022

 

2021

 

2022

 

2021

Sales:

 

 

 

 

 

 

Product

$

358,236

 

 

$

205,045

 

 

$

1,481,963

 

 

$

1,044,748

 

Installations and services

 

80,865

 

 

 

78,055

 

 

 

227,951

 

 

 

215,787

 

Total sales

 

439,101

 

 

 

283,100

 

 

 

1,709,914

 

 

 

1,260,535

 

Cost and expenses:

 

 

 

 

 

 

Cost of product

 

291,236

 

 

 

146,108

 

 

 

1,058,164

 

 

 

631,807

 

Cost of installations and services

 

70,560

 

 

 

66,901

 

 

 

214,744

 

 

 

200,565

 

(Increase) decrease in the fair value of derivative instruments

 

(7,669

)

 

 

(4,714

)

 

 

(11,881

)

 

 

(30,333

)

Delivery and branch expenses

 

83,914

 

 

 

74,871

 

 

 

280,389

 

 

 

256,500

 

Depreciation and amortization expenses

 

8,067

 

 

 

8,568

 

 

 

24,596

 

 

 

24,793

 

General and administrative expenses

 

6,251

 

 

 

6,209

 

 

 

18,829

 

 

 

18,770

 

Finance charge income

 

(1,762

)

 

 

(1,079

)

 

 

(3,300

)

 

 

(2,284

)

Operating income (loss)

 

(11,496

)

 

 

(13,764

)

 

 

128,373

 

 

 

160,717

 

Interest expense, net

 

(2,635

)

 

 

(1,957

)

 

 

(7,422

)

 

 

(5,944

)

Amortization of debt issuance costs

 

(222

)

 

 

(242

)

 

 

(698

)

 

 

(732

)

Income (loss) before income taxes

 

(14,353

)

 

 

(15,963

)

 

 

120,253

 

 

 

154,041

 

Income tax expense (benefit)

 

(3,766

)

 

 

(3,909

)

 

 

34,972

 

 

 

43,071

 

Net income (loss)

$

(10,587

)

 

$

(12,054

)

 

$

85,281

 

 

$

110,970

 

General Partner's interest in net income (loss)

 

(93

)

 

 

(98

)

 

 

726

 

 

 

879

 

Limited Partners' interest in net income (loss)

$

(10,494

)

 

$

(11,956

)

 

$

84,555

 

 

$

110,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per unit data (Basic and Diluted):

 

 

 

 

 

 

Net income (loss) available to limited partners

$

(0.29

)

 

$

(0.30

)

 

$

2.24

 

 

$

2.69

 

Dilutive impact of theoretical distribution of earnings

-

 

-

 

 

0.36

 

 

 

0.45

 

Basic and diluted income (loss) per Limited Partner Unit:

$

(0.29

)

 

$

(0.30

)

 

$

1.88

 

 

$

2.24

 

 

 

 

 

 

 

 

Weighted average number of Limited Partner units outstanding (Basic and Diluted)

 

36,781

 

 

 

40,041

 

 

 

37,739

 

 

 

40,897

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)

 

Three Months Ended June 30,

(in thousands)

 

2022

 

 

 

2021

 

Net loss

$

(10,587

)

 

$

(12,054

)

Plus:

 

 

 

Income tax benefit

 

(3,766

)

 

 

(3,909

)

Amortization of debt issuance costs

 

222

 

 

 

242

 

Interest expense, net

 

2,635

 

 

 

1,957

 

Depreciation and amortization

 

8,067

 

 

 

8,568

 

EBITDA

 

(3,429

)

 

 

(5,196

)

(Increase) / decrease in the fair value of derivative instruments

 

(7,669

)

 

 

(4,714

)

Adjusted EBITDA

 

(11,098

)

 

 

(9,910

)

Add / (subtract)

 

 

 

Income tax benefit

 

3,766

 

 

 

3,909

 

Interest expense, net

 

(2,635

)

 

 

(1,957

)

Provision for losses on accounts receivable

 

3,097

 

 

 

366

 

Decrease in accounts receivables

 

72,459

 

 

 

68,033

 

(Increase) decrease in inventories

 

(1,924

)

 

 

2,701

 

Increase in customer credit balances

 

12,416

 

 

 

12,902

 

Change in deferred taxes

 

3,292

 

 

 

59

 

Change in other operating assets and liabilities

 

(5,365

)

 

 

(22,118

)

Net cash provided by operating activities

$

74,008

 

 

$

53,985

 

Net cash used in investing activities

$

(11,267

)

 

$

(6,900

)

Net cash used in financing activities

$

(71,459

)

 

$

(50,468

)

 

 

 

 

 

 

 

 

Home heating oil and propane gallons sold

 

40,700

 

 

 

38,000

 

Other petroleum products

 

38,100

 

 

 

40,800

 

Total all products

 

78,800

 

 

 

78,800

 

 

 

 

 

SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)

 

Nine Months Ended June 30,

(in thousands)

2022

 

2021

Net income

$

85,281

 

 

$

110,970

 

Plus:

 

 

 

Income tax expense

 

34,972

 

 

 

43,071

 

Amortization of debt issuance costs

 

698

 

 

 

732

 

Interest expense, net

 

7,422

 

 

 

5,944

 

Depreciation and amortization

 

24,596

 

 

 

24,793

 

EBITDA

 

152,969

 

 

 

185,510

 

(Increase) / decrease in the fair value of derivative instruments

 

(11,881

)

 

 

(30,333

)

Adjusted EBITDA

 

141,088

 

 

 

155,177

 

Add / (subtract)

 

 

 

Income tax expense

 

(34,972

)

 

 

(43,071

)

Interest expense, net

 

(7,422

)

 

 

(5,944

)

Provision for losses on accounts receivable

 

5,264

 

 

 

622

 

Increase in accounts receivables

 

(92,604

)

 

 

(35,954

)

Increase in inventories

 

(19,972

)

 

 

(6,951

)

Decrease in customer credit balances

 

(38,497

)

 

 

(30,519

)

Change in deferred taxes

 

7,837

 

 

 

12,682

 

Change in other operating assets and liabilities

 

7,845

 

 

 

13,416

 

Net cash (used in) provided by operating activities

$

(31,433

)

 

$

59,458

 

Net cash used in investing activities

$

(24,770

)

 

$

(46,862

)

Net cash provided by (used in) financing activities

$

60,400

 

 

$

(64,007

)

 

 

 

 

 

 

 

 

Home heating oil and propane gallons sold

 

276,700

 

 

 

285,100

 

Other petroleum products

 

113,700

 

 

 

114,100

 

Total all products

 

390,400

 

 

 

399,200

 

 

 

 

 

Source: Star Group, L.P.

CONTACT:

 

Star Group, L.P.

Chris Witty

Investor Relations

Darrow Associates

203/328-7310

646/438-9385 or cwitty@darrowir.com