Core Viewpoint - Star Group, L.P. has demonstrated strong financial performance in the first quarter of fiscal 2026, with significant revenue and net income growth, outperforming the S&P 500 index during the same period [1][2]. Earnings & Revenue Performances - Total revenues for the first quarter of fiscal 2026 reached $539.3 million, a 10.5% increase from $488.1 million in the same period last year, driven by higher product volumes and growth in service and installation revenues [2]. - Net income rose by 9% to $35.8 million from $32.9 million year-over-year [2]. Net Income and Profitability Metrics - Net income available to limited partners increased to $35.4 million from $32.6 million, with basic and diluted income per unit rising 12.7% to 89 cents from 79 cents in the prior-year quarter [3]. - Adjusted EBITDA climbed 32% year-over-year to $68.4 million from $51.9 million [3]. Operational Performance - The quarter benefited from a significant increase in heating demand, with home heating oil and propane volumes rising by 11.5 million gallons, or 13.9%, to 93.9 million gallons [4]. - Total product sales increased to $448 million from $399.5 million, while installation and service revenues grew to $91.3 million from $88.6 million [4]. Product Gross Profit and Margin Analysis - Product gross profit improved due to higher volumes and better per-gallon margins, although service operations faced margin pressure from elevated costs related to cold weather and increased propane tank installations [5]. Management Commentary - Management characterized the start of fiscal 2026 as strong, attributing success to acquisitions, operational execution, and colder weather conditions, which were nearly 19% colder than the previous year [6]. - The CEO highlighted improvements in efficiency and supply management, leading to significant bottom-line gains despite operational challenges [7]. Weather Impact on Financials - Weather conditions significantly influenced quarterly results, with colder temperatures boosting heating volumes but also incurring $5 million in expenses related to weather hedge contracts [8]. - Star Group experienced a $10.7 million unfavorable change in the fair value of derivative instruments, partially offsetting gains from higher Adjusted EBITDA [9]. Outlook - Management noted that cold weather conditions persisted into the second quarter, with January being colder than both the previous year and historical norms [10]. - The company expressed confidence in managing through challenging conditions while maintaining service levels and cost discipline, with a focus on customer service and expense control [11].

Core Viewpoint - Star Group, L.P. reported a mixed performance in its fourth quarter and fiscal 2025 results, showing solid volume gains and improved profitability despite challenges from customer attrition and acquisition-related costs [1][2][3][4]. Earnings & Revenue Performance - Fiscal fourth-quarter revenues increased by 3.1% year over year to $247.7 million, primarily driven by higher installations and services revenues [2]. - The net loss narrowed to $28.7 million from a $35.1 million loss a year earlier, with a fourth-quarter loss of 84 cents per limited partner unit, improving from a $1 loss per unit in the prior-year quarter [3]. - For fiscal 2025, total revenues rose approximately 1% to $1.8 billion, while net income more than doubled to $73.5 million from $35.2 million in fiscal 2024 [4]. Key Business Metrics - Home heating oil and propane volume increased by 8.1% year over year to 20 million gallons in the fourth quarter, with a total volume increase of 11.5% to 282.6 million gallons for the year [5]. - Quarterly product gross profit rose by 6% to $45 million, and full-year product gross profit increased by $57 million, or 12% [6]. Expense Analysis - Operating expenses grew due to acquisition-related costs, higher depreciation and amortization, and weather hedge impacts, with fourth-quarter operating expenses increasing by $5 million [7]. - Full-year delivery, branch, and G&A expenses rose by $36.6 million, including a $10.6 million change in weather hedge expenses and $23 million of acquisition-related costs [7]. Management Commentary - Management highlighted disciplined cost controls, successful integration of acquisitions, and continued investment in installations and services as key drivers of improved profitability [8]. - Internal customer satisfaction indicators are improving, although fewer customer additions due to lower real estate activity remain a challenge [9]. Factors Influencing Performance - Acquisitions and colder weather were central to Star Group's stronger annual performance, with a 29-million-gallon increase in home heating oil and propane volume in fiscal 2025 [10]. - Weather hedge outcomes had a significant year-over-year impact, with hedge expenses of $3.1 million in fiscal 2025 compared to a $7.5 million credit in fiscal 2024 [11]. Other Developments - Star Group completed four acquisitions in fiscal 2025, adding nearly 12 million gallons of annual heating oil and propane volume, part of an ongoing consolidation strategy [12]. - The company invested approximately $81 million in acquisitions, repurchased $16 million in units, and paid out $26 million in distributions, aimed at long-term value creation [12]. Overall Assessment - Star Group achieved meaningful operational progress supported by acquisitions, improved margins, and strong cost discipline, despite challenges in customer gains and regulatory uncertainty heading into fiscal 2026 [13].

Group 1 - The article reaffirms a bullish stance on Star Group, L.P. (SGU), a home heating provider, highlighting encouraging technicals supported by margin improvements [1] - The investment strategy focuses on acquiring undervalued profitable stocks with strong balance sheets and minimal debt, aiming to generate income through these investments [1] - The approach includes writing calls against positions to enhance income, with risk management implemented through position sizing and trailing stop losses [1]