Q4 2022 Star Group LP Earnings Call

Speaker 2: And in total, we completed five separate transactions during Fiscal 22, adding nearly 8 million gallons of heating oil volume annually. While no acquisitions were completed during the fourth quarter, we closed on two small heating oil companies after the end of the fiscal year, one in October and another in November . We have also taken steps to better physician star for the future as part of our ongoing evaluations of our operations and core markets and the resources and capital required to optimize the company's potential. We sold our heating oil and propane assets in New Hampshire and Maine during October . Our business in these markets was small and somewhat geographically detached, making it difficult for us to achieve certain operational efficiencies and a desired level of profitability. We ultimately decided it was best to divest ourselves of these assets and direct our internal focus and capital in areas that produce greater and more consistent returns. Our long-term goal of expanding our heating oil and propane business, both organically and through acquisitions, remains unchanged. To that end, reducing net customer attrition continues to be a critical metric for our team. While there's still much progress to be made, I believe that this past year's net customer attrition further validates the investments we've made in improving the overall customer experience as well as the strength and appeal of STAR's product offerings. I'm very proud of the way our team navigated through the external market forces we faced in fiscal 2022. Given our strong operating platform and recently expanded credit facilities, we believe STAR is prepared and well positioned for the heating season ahead. So with that, I'll turn the call over to Rich to provide additional comments.

Speaker 3: on the quarter and year-end results. Rich? Thanks, Jeff, and good morning, everyone. For the fiscal 22 fourth quarter, our home heating oil and propane volume decreased by 1.5 million gallons, or about 7% to 19 million gallons, as the additional volume provided from acquisitions was more than offset by the impact of net customer attrition and other factors. Our product growth profits decreased by 2 million bucks.

Speaker 4: or 5% to $35 million, largely due to lower volume of liquid products sold.

Speaker 5: Delivery, branch, and G&A expenses increased by $1.4 million, or just 2%, to $79 million.

Speaker 6: Our net loss increased by $27 million for the quarter to $50 million as an unfavorable non-cash change in the fair value of derivative instruments of $35 million and an increase in the adjusted EBITDA loss of $3 million more than offset an increase in the company's income tax benefit of $12 million.

Speaker 7: The adjusted EBITDA loss rose by $3 million to a loss of $31 million, reflecting lower sales volume, a 2.4% decline in home heating oil and propane per gallon margins, and an increase in operating costs of 2%.

Speaker 8: For fiscal 2022, our home heating oil and propane volume decreased by 10 million gallons, or 3%, to 296 million gallons at slightly warmer temperatures. That customer attrition and other factors more than offset the impact from acquisitions.

Speaker 9: Temperatures and STARS geographic areas of operations for the fiscal year were about a half a percent warmer during the prior year comparable period and nine percent warmer than normal. Our product gross profit increased by $9 million, compared to 2%.

Speaker 10: As an increase in home heating oil per gallon margins, and higher motor fuel gross profit, more than offset the impact from a decline in liquid products sold.

Speaker 11: Operating expenses did rise by $26 million, reflecting a $2 million lower benefit recorded under the company's Weather Hedge program, additional costs from acquisitions of $5 million, and an $18 million, or 6%, increase in expenses within the base business.

Speaker 12: As mentioned on previous calls, higher petroleum costs drove an increase in credit card fees reserved for doubtful accounts, and higher vehicle fuels totaling $9 million in the aggregate. Higher medical expenses accounted for an increase of $2.5 million in other areas in the base business.

Speaker 13: rose by $6.5 million for 2%. Net income declined by $52 million to $35 million as an unfavorable, again, non-cash change in the fair value of derivative instruments of $53 million.

Speaker 14: and a decrease in adjusted EBITDA of $17.6 million was only slightly offset by a decrease in the company's income tax expense of $20 million.

Speaker 15: Adjusted EBITDA for fiscal 2022 declined by $17.6 million to $110 million as lower home heating oil and propane volumes sold and an increase in operating expenses more than offset the impact from higher per-gallon margins. And now I'd like to turn the call back over to Jeff.

Speaker 16: Thanks, Rich. At this time, we'd be pleased to address any questions you may have. Joe, please open the phone lines for questions.

Speaker 17: We'll now begin the question and answer session.

Speaker 18: To ask a question, you may press star then 1 on your telephone keypad.

Speaker 19: If you're using your speakerphone, please pick up your handset before pressing the keys.

Speaker 20: To withdraw your question, please press star then 2.

Speaker 21: At this time, we will pause this momentarily to assemble a roster.

Speaker 22: And again, as a reminder, if you have a question, please press star then 1 to join the question button if that comes to mind.

Speaker 23: Our first question here will come from Tim Mullen with Littleton Management. Please go ahead, sir.

Speaker 24: Can you speak to how product margins are impacted by the absolute price level? Do you see as prices rise the ability to take more margin is diminished?

Speaker 25: No, not necessarily. For the most part, rising energy costs for us become a little bit of a challenge because there's greater price sensitivity, customer price sensitivity in the marketplace. In times like these, it's...

Speaker 26: very important that we employ very strong margin management. I think we've done that this year.

Speaker 27: Thank you.

Speaker 28: And you know, I just like to add even though the margins were down in the quarter a couple of pennies They were up for the year, which is which is more than more important. They're up by you know five point six cents per gallon

Speaker 29: and you get into a summer quarter where you don't sell very much volume.

Speaker 30: you can easily get a two or three cent increase or decrease in margins.

Speaker 31: Yep.

Speaker 32: Thank you..

Again, if you have a question, you may press star, the one to join the queue. And if you're using a speakerphone, please pick up your handset before pressing the keys.

And this concludes our question and answer session. I would like to turn the conference back over to Jeff Woosnam for any closing remarks.

Well, thank you for taking the time to join us today and your ongoing interest in STAR Group. We look forward to sharing our webinar.

2023 fiscal first quarter results in February . In the meantime, have a wonderful holiday. Thank you, everybody.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.