Q1 2021 Star Group LP Earnings Call

Good day and welcome to the Star Group fiscal 2021 first quarter results Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one please net.

This event is being recorded I would now like to turn the conference over to Chris witty of Investor.

Investor of relations moderator. Please go ahead.

Thank you and good morning with me on the call today are Jeff Wisdom, President and Chief Executive Officer, and Rich and Barry Chief Financial Officer, I would now like to provide a brief safe Harbor statement.

The conference call May include forward looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company's actual performance to be materially different from the performance indicated or implied by such statements All star.

Payments other than statements of historical facts included in this conference call are forward looking statements, including those related to the impact of COVID-19 of the company. Although the company believes that the expectations reflected in such forward looking statements are reasonable.

We can give no assurance of such expectations will prove to have been correct.

Factors that could cause actual results to differ materially from the company's expectations are disclosed in this conference call. The company's annual report on form 10-K for the fiscal year ended September 32020, and the company's other filings with the SEC.

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 publicly update or revise any forward looking statements whether as a result of new information future events or otherwise after the date of this conference call.

I'd like to turn the call over to Jeff Wisdom, Jeff.

Thanks, Chris and good morning, everyone. We began our new fiscal year of well positioned even in the face of of pandemic, while the impact of COVID-19 on the heating season has somewhat normalized our results reflect the 13.5%.

Warmer weather within our footprint dampening demand for home heating oil and propane. However, we maintained our focus on cost discipline, improving the operating inefficiency and providing a high level of the customer service I am pleased with our overall performance despite.

A mild temperatures, including an increase in adjusted EBITDA of roughly $300000 to $45 million or weather has also worked as designed during the period.

I continue to be encouraged that the strategy, we've been executing over the past two years is making star of stronger and more resilient business better prepared and able to adjust to varying weather conditions and all the challenges.

Even including the global pandemic.

As I've mentioned many times before our ongoing success continues to be a direct reflection of the dedication and professionalism of our employees, who have remained one of 100% committed to serving our customers in the face of some very unusual circumstances.

Could not be more proud of the efforts of this team.

I'm happy to report that we acquired to propane companies in the late December that added in the aggregate approximately 7 million gallons of product annually.

Both of our well established growing businesses located within our current operating footprint the complement our existing propane offering.

We continue to evaluate additional acquisition opportunities that support our strategic growth plan.

During the quarter, we also repurchased two 6 million common units as a part of our ongoing unit repurchase plan, which we believe further enhances long term shareholder value.

As we navigate through the remainder of fiscal 2021, I'm confident in our ability to continue providing the best possible customer experience and improving bottom line results.

So with that I'll turn the call over the rest to provide additional comments on the quarter's results rich.

Jeff and good morning, everyone for the quarter, our home heating oil and propane volume decreased by 18 million gallons or 16% the 90 million gallons as the additional volume provided from acquisitions was more than offset by the impact of warmer temperatures net customer attrition and other factors temperatures were.

The 14% warmer than last year as well as the 16% warmer than normal our product gross profit decreased by $17 million of 12% to $128 million at the 6% increase in home heating oil and propane per gallon margins was more than offset by the decline.

In home heating oil and propane volume, however, our delivery and branch expense decreased by $16 million or 17% of $81 million.

The decline was due to a $3 million or 10% reduction in direct delivery costs due to the lower volume.

Lower insurance expense was $1 $6 million bad debt declined by one of the half million dollars and there were other reductions in operating expenses totaling $4 million.

Please note that our operating costs were also reduced by $7 million due to the impact of our weather hedging program as of December 31, 2020, we recorded a benefit or a credit of $4 million under our weather hedge versus the charge or an expense in the prior year.

The final credit if any for fiscal 2021 will be lower or higher depending on the accumulation of actual heating degree days from January one through March 31 2021.

Net income decreased by $10 million of $38 million largely due to the after tax impact of an $11 million favorable change in the fair value of derivative instruments.

Adjusted EBITDA increased by $300000 of $45 million.

The impact of higher home heating oil and propane per gallon margins lower operating expenses the favorable change in the impact from the company's weather hedges and an improvement in net service and installation of profitability more than offset the impact of a decrease in home heating oil and propane volume sold.

I'd like to turn the conversation back over to Jeff.

Thanks Rich at this time, we're pleased to address any questions you may have.

Could you. Please open the phone lines for questions.

Certainly we will now begin the question and answer session to ask your question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two and that the.

The start and we will pause momentarily to assemble the roster.

Okay.

Okay.

Yes.

And our first question today will come from.

The micro crowding with 10-K capital. Please go ahead.

Yeah, Hey, good morning, guys congrats on a.

Very good quarter in a challenging weather environment.

Thanks.

All right.

Just a couple of questions free.

Firstly on the acquisition side are the.

Two purchases you made in the quarter.

We're reasonably sizable so it's just interesting to see acquisition activity picking up particularly.

Or unusually during the winter season. So I'm just wondering just do you think the syndicates of overall.

Hey, Oh.

The resumption of.

Of deal activity in the industry and the.

And then the other question I had was on capital allocation I noticed that you purchased a lot fewer shares in January and I was just wondering you said was that driven by price or trading volume or rich. If you can just give a little insight into that and what your expectations are in <unk>.

And sort of additional share repurchases going forward. Thanks.

Sure.

I guess on the acquisition side I.

I think it might have been driven by folks.

Thoughts on where were income taxes and income taxes and capital gain rates might go frankly.

And with regard to the share repurchase we did have some private unit repurchases during the quarter and you know we're buying back the same number of units that we can under our unit repurchase program that were allowed that we that is on the.

That's in conformity with the FCC programs. So we're not intervening in that at all and with that maybe Jeff you might have a comment on the acquisition.

Yeah I think.

The acquisition pipeline.

Pipeline of stayed relatively steady.

We're obviously very excited about the two acquisitions, we are a bit of a complete by.

The end of the calendar year.

That we feel are two very high quality businesses. Those are those are transactions, we've been working on for some time and we continue to evaluate other opportunities that.

Are in front of US now so hopefully its a sign of good things to come.

Okay.

Thanks.

Congrats again on a good quarter.

Thanks, Mike.

And again, if you have a question. Please press Star then one.

And our next question will come from Tim Boland with loyalty management. Please go ahead.

Hey could you just remind doug congrats on the corner can you just remind me when you're next.

The next update the share repurchase program in terms of.

Units outstanding and any changes to it.

Yes, we can only we can only make the changes in a in a quiet period and we still do have.

Availability under the plan it's in the.

It's in the 10-Q, but we have.

Roughly a $4 1 million units to continue to the bought so that should last us.

I don't want make a projection of that should last us for a while or until the next open window, which would be after we file of the next 10-Q.

So the next quiet period, then as it is following the next time actually we actually could increase it if we wanted to know we could but we got $4 1 billion units outstanding at the bottom.

We could increase great.

Okay. Thanks, so much.

Okay.

Yeah.

And again, if you'd like to ask your question. Please press Star then one.

Right.

Okay.

Yeah.

Again, the Star then one to ask a question.

Okay.

And this will conclude our question and answer session I would like to turn the conference back over to Mr.

<unk> for any closing remarks.

Okay. Thank you for taking the time to join US today and your ongoing interest in Star Group, We look forward to sharing our 2021 fiscal second quarter results in April.

Everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.

Okay.