Part I Financial Information Item 1. Condensed Consolidated Financial Statements This section presents Star Group, L.P.'s unaudited condensed consolidated financial statements for the three and nine months ended June 30, 2025, with comparative data for 2024, including balance sheets, statements of operations, comprehensive income, partners' capital, and cash flows, along with detailed notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $28,082 | $117,335 | | Total current assets | $233,495 | $281,469 | | Goodwill | $293,350 | $275,829 | | Total assets | $963,799 | $939,611 | | Total current liabilities | $331,470 | $373,796 | | Long-term debt | $172,297 | $187,811 | | Total partners' capital | $337,568 | $263,893 | | Total liabilities and partners' capital | $963,799 | $939,611 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per unit data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total sales | $305,618 | $331,640 | $1,536,726 | $1,525,768 | | Operating income (loss) | $(19,177) | $(12,291) | $155,414 | $109,661 | | Net income (loss) | $(16,629) | $(11,044) | $102,166 | $70,309 | | Basic and diluted income (loss) per Limited Partner Unit | $(0.48) | $(0.31) | $2.45 | $1.66 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | 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) | | Net (decrease) increase in cash | $(89,253) | $510 | Note 1 & 2: Organization and Significant Accounting Policies Star Group, L.P. is the nation's largest retail distributor of home heating oil, providing full-service home heating and air conditioning products, with interim financial statements prepared under U.S. GAAP - The company specializes in selling home heating and air conditioning products and services to residential and commercial customers, and believes it is the largest retail distributor of home heating oil in the U.S. based on sales volume26 - As of June 30, 2025, the company served approximately 413,600 full-service residential and commercial accounts and 66,500 delivery-only accounts for home heating oil and propane31 - The company utilizes weather hedge contracts to mitigate adverse effects of warm weather on cash flows, with a potential maximum receipt of $15.0 million for fiscal 2025 and an obligation to make payments up to $5.0 million if weather was colder than the threshold3738 Note 3: Revenue Recognition This note disaggregates company revenue by major sources, showing a slight increase in total sales for the nine-month period ended June 30, 2025, driven by growth in installations and services, which offset a slight decline in petroleum product sales Disaggregated Revenue by Source (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Petroleum Products | | | | | | Home heating oil and propane | $136,146 | $155,161 | $1,046,864 | $1,014,530 | | Other petroleum products | $80,012 | $93,840 | $233,858 | $278,319 | | Installations and Services | | | | | | Equipment installations | $33,317 | $30,143 | $100,082 | $90,682 | | Equipment maintenance | $36,888 | $35,164 | $98,863 | $93,466 | | Billable call services | $19,255 | $17,332 | $57,059 | $48,771 | | Total Sales | $305,618 | $331,640 | $1,536,726 | $1,525,768 | Note 4: Common Unit Repurchase and Retirement The company continued its Common Unit Repurchase Plan, repurchasing 817,000 units at an average price of $12.01 per unit during the third quarter of fiscal 2025, with approximately 1.3 million units remaining available for repurchase as of July 2025 Common Unit Repurchases (Q3 FY2025) | Period | Total Units Purchased (thousands) | Average Price Paid per Unit | | :--- | :--- | :--- | | April 2025 | 1 | $12.03 | | May 2025 | 708 | $12.04 | | June 2025 | 108 | $11.83 | | Q3 2025 Total | 817 | $12.01 | Note 9: Business Combinations and Divestitures During the first nine months of fiscal 2025, the company significantly increased its acquisition activity, purchasing one heating oil and three propane businesses for approximately $80.5 million in cash, compared to $22.6 million in the same period of fiscal 2024 - In the nine months ended June 30, 2025, the company acquired four businesses for approximately $80.5 million in cash, allocating $38.7 million to intangible assets and $17.7 million to goodwill73 - For comparison, in the nine months ended June 30, 2024, the company acquired four businesses for an aggregate price of approximately $22.6 million75 Note 11: Long-Term Debt and Bank Facility Borrowings The company's debt primarily consists of a Senior Secured Term Loan with a carrying amount of $193.3 million as of June 30, 2025, following a September 2024 refinancing that secured a $210 million term loan and a revolving credit facility of up to $475 million, with $167.6 million available under the revolver as of June 30, 2025 Total Debt (in thousands) | Debt Component | June 30, 2025 (Carrying Amount) | September 30, 2024 (Carrying Amount) | | :--- | :--- | :--- | | Revolving Credit Facility Borrowings | $0 | $5 | | Senior Secured Term Loan | $193,297 | $208,811 | | Total debt | $193,297 | $208,816 | - On September 27, 2024, the company executed a new credit agreement providing a $210 million five-year term loan and a revolving credit facility of up to $400 million ($475 million seasonally), maturing September 27, 202980 - As of June 30, 2025, the company had $167.6 million of availability under its credit facility and was in compliance with all financial covenants88 Note 16: Subsequent Events In July 2025, subsequent to the quarter end, the company declared a quarterly distribution of $0.1850 per unit, repurchased approximately 0.1 million Common Units, and completed the sale of a New Jersey property for $4.9 million in cash - In July 2025, a quarterly distribution of $0.1850 per unit was declared, paid on August 6, 202597 - In July 2025, the company sold land and a building in New Jersey for cash proceeds of $4.9 million, which had a carrying value of $1.0 million99 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides a detailed analysis of the company's financial performance, highlighting the impact of commodity price volatility, weather, customer attrition, and acquisitions, comparing operating results for the three and nine-month periods ended June 30, 2025, and 2024, and covering liquidity, capital resources, and critical accounting policies Key Business Factors and Trends This section outlines primary business drivers, including significant impacts from liquid product price volatility and weather, with a net weather hedge expense of $3.1 million in fiscal 2025 versus a $7.5 million benefit in fiscal 2024, a net customer attrition of 3.1% for the nine-month period, and robust acquisition activity totaling $80.5 million - The company's weather hedge contracts resulted in a $3.1 million expense for the fiscal 2025 hedge period due to colder-than-strike temperatures, compared to a $7.5 million benefit in the prior year from warmer weather107 Net Customer Attrition (Home Heating Oil and Propane Customers) | Period | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Gross Customer Gains | 29,800 | 31,100 | | Gross Customer Losses | 42,800 | 43,200 | | Net Attrition | (13,000) | (12,100) | | Net Attrition % | (3.1%) | (3.1%) | - During the nine months ended June 30, 2025, the company acquired four businesses for approximately $80.5 million, compared to acquisitions totaling $49.4 million for the full fiscal year 2024122 Results of Operations - Three Months Ended June 30, 2025 vs 2024 For the third quarter of fiscal 2025, the company reported a net loss of $16.6 million, an increase from the $11.0 million loss in the prior-year period, driven by lower product sales due to decreased volumes and selling prices, higher operating expenses from recent acquisitions, and increased interest expense, with Adjusted EBITDA loss also increasing to $10.6 million from $4.1 million - Retail volume of home heating oil and propane decreased by 3.8% to 36.2 million gallons, influenced by 2.0% warmer weather compared to the prior year132 - Total product sales decreased 13.2% to $216.2 million, primarily due to a 14.3% decrease in wholesale product costs and lower volumes133 Q3 Performance Summary (in millions) | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Net Loss | $(16.6) | $(11.0) | $(5.6) | | Adjusted EBITDA Loss | $(10.6) | $(4.1) | $(6.5) | Results of Operations - Nine Months Ended June 30, 2025 vs 2024 For the nine months ended June 30, 2025, net income significantly increased to $102.2 million from $70.3 million in the prior year, driven by a 12.8% increase in total product gross profit resulting from higher volumes due to colder weather (8.2% colder than prior year) and improved per-gallon margins, with Adjusted EBITDA rising to $169.5 million from $141.3 million - Retail volume of home heating oil and propane increased by 11.8% to 262.6 million gallons, largely due to temperatures being 8.2% colder than the prior-year period and contributions from acquisitions157 - Total product gross profit increased by $54.7 million (12.8%) to $480.5 million, driven by higher volumes and a 1.6% increase in home heating oil and propane margins per gallon161162 Nine-Month Performance Summary (in millions) | Metric | Nine Months 2025 | Nine Months 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $102.2 | $70.3 | $31.9 | | Adjusted EBITDA | $169.5 | $141.3 | $28.2 | Discussion of Cash Flows For the nine months ended June 30, 2025, cash provided by operating activities decreased to $56.5 million from $72.4 million, mainly due to increased accounts receivable and inventory purchases, while cash used in investing activities significantly rose to $99.5 million from $31.2 million, driven by $80.5 million in business acquisitions, and financing activities used $46.3 million for debt repayments, unit repurchases, and distributions - Cash from operating activities decreased by $15.9 million year-over-year, primarily due to an $18.5 million increase in accounts receivable and a $16.5 million greater use of cash for inventory182 - Investing activities were dominated by the acquisition of four businesses for approximately $80.5 million in cash183 - Financing activities included $15.8 million in term loan repayments, $10.0 million in common unit repurchases, and $19.5 million in distributions to unitholders188 Financing and Sources of Liquidity The company's primary liquidity sources are cash from operations and its revolving credit facility, with $28.1 million in cash and $167.6 million available under the credit facility as of June 30, 2025, which management believes are sufficient for near-term and long-term capital requirements including working capital, capital expenditures, distributions, acquisitions, and unit repurchases - As of June 30, 2025, the company had $28.1 million in cash and cash equivalents and was in compliance with all financial covenants190 - Availability under the revolving credit facility was $167.6 million as of June 30, 2025191 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to interest rate and commodity price risks, utilizing interest rate swaps and derivative instruments to mitigate these exposures, and provides sensitivity analyses on hypothetical changes in rates and prices - A hypothetical 100 basis point increase in interest rates would decrease annual after-tax cash flows by $0.8 million204 - A hypothetical 10% increase in product costs at June 30, 2025, would increase the fair market value of outstanding derivatives by $7.0 million, while a 10% decrease would lower their value by $5.5 million205 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025, with no material changes to internal control over financial reporting during the most recent fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025208 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls209 Part II Other Information Items 1-5. Other Disclosures This section covers other required information, stating that the company is not a party to any litigation expected to have a material adverse effect, refers to the Fiscal 2024 Form 10-K for risk factors, and incorporates information regarding equity security repurchases by reference from Note 4 - Management believes the company is not a party to any litigation that could reasonably be expected to have a material adverse effect on its financial position or liquidity212 - The report refers investors to the Risk Factors section of the Fiscal 2024 Form 10-K for a comprehensive discussion of potential risks214 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, amendments to credit agreements, a Unit Purchase Agreement, and the required CEO and CFO certifications under the Sarbanes-Oxley Act - Key exhibits filed include an amendment to the credit agreement, a Unit Purchase Agreement with Bandera Master Fund, L.P., and CEO/CFO certifications226
Star Group(SGU) - 2025 Q3 - Quarterly Report