Q1 2025 Star Group L.P. Earnings Call

Speaker Change: [music].

Good day and welcome to the Star Group fiscal 'twenty five first quarter results conference call.

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Speaker Change: Now like to turn the conference over to Chris Witty Investor Relations adviser. Please go ahead.

Speaker Change: 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.

Speaker Change: This conference call May include forward looking statements that represent the companys expectations and beliefs concerning future events that involve risks and uncertainties that may cause.

Speaker Change: Cause the company's actual performance to be materially different from the performance indicated or implied by such statements.

Speaker Change: All statements other than statements of historical facts included in this conference call are 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 have been correct.

Speaker Change: 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 30th 2024, and the company's other filings with the SEC.

Speaker Change: 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 risk factors and other cautionary statements contained in the company's disclosures 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.

Jeff Wisdom: Events or otherwise after the date of this conference call I'd now like to turn the call over to Jeff Who's now Jeff.

Thanks, Chris and good morning, everyone. The first quarter was a busy one for star due to our acquisition related activities combined with slightly colder temperatures temperatures were four 1% colder than the prior year quarter, and adjusted EBITDA rose $3 million year over year. Despite our increased workload from a busy quarter I am pleased.

Jeff Wisdom: With our overall ability to control expenses as well as our ongoing improvement in the performance and contribution of our service and installation business.

Jeff Wisdom: Increased productivity and efficiency within our base business has been a specific area of focus for our operating team. So it's quite encouraging to see our work having a positive and.

Jeff Wisdom: Meaningful impact on the bottom line results.

Jeff Wisdom: Looking ahead, we are benefiting from colder temperatures thus far in the second quarter and in fact January finished 20% colder than last year and 7% colder than normal through this period, our employees have been working tirelessly to serve our customers and keep up keep pace with the added demand.

Jeff Wisdom: I'm always delighted to see how well our entire team steps up when it matters, the most and I could not be more proud of their efforts.

Jeff Wisdom: As previously reported we completed a sizable strategic acquisition.

Jeff Wisdom: After the quarter ended.

Jeff Wisdom: This is further strengthens our propane propane presence within the company's existing operating footprint and we're excited to welcome our new employees as well as a quality well regarded brand to the starboard family.

Well have to see how the remainder of the heating season progresses, but we remain 100% committed to providing our customers with the outstanding reliability and service they've come to expect and at the same time, we will continue to focus on operational efficiency and controlling costs. I believe we are well positioned for the remainder of fiscal 2025.

Jeff Wisdom: With that I'll turn the call over to rich to provide additional comments on the quarters financial results rich.

Rich: Thanks, Jeff and good morning, everyone for the quarter, our home heating oil and propane volume rose by 2 million gallons or 3% to approximately 82 million gallons as the additional volume provided from acquisitions and somewhat colder temperatures was slightly offset by the impact of net customer attrition and other factors.

Rich: Temperatures for the three months ending December 31st 2024.

Rich: Were 4% colder than the prior year, and 10, 5% warmer than normal our product gross profit increased by $5 6 million or 4% to approximately $151 million due to an increase in per gallon margins and higher home heating oil and propane volume sold we realize.

Rich: Combined gross profit from service and installation of $6 9 million for the three months ending December 31, 2024, compared to gross profit of $4 4 million in the prior year with a two and a half million dollar increase due in part to recent acquisitions as well as.

Rich: In the base business.

Rich: Branch.

Rich: Delivery and G&A expenses increased by $5 million in the first quarter of fiscal 2025, largely due to recent acquisitions expenses in the base business were largely unchanged.

Rich: During the first quarter of fiscal 2025, we recorded a $5 million noncash credit related to the change in fair value of our derivative instruments by comparison in the first quarter of fiscal 2024, we recorded a $19 million noncash charge.

Rich: Net income did increase by $20 million in the quarter to $33 million as the favorable noncash change in the fair value of derivative instruments of $24 million.

Rich: And an increase in adjusted EBITDA of $3 million was only partially offset by higher income taxes of $8 million adjust.

Rich: Adjusted EBITDA increased by 3 million to $52 million as a $4 million increase in adjusted EBITDA from recent acquisitions.

Jeff Wisdom: And an increase in per gallon margins in the base business more than offset the impact of a $3 8 million, but $3 8 million gallon decrease in home heating oil and propane volumes sold in the base business and with that I'll turn the conversation to call back to Jeff.

Rich: Thanks.

Speaker Change: Thanks Rich at this time, we're pleased to address any questions. You may have Wyatt. Please open the phone lines for questions.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you were using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you'd like to withdraw. Your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Speaker Change: And our first questioner comes from Jim Mullen with Arlington Management. Please go ahead.

Jim Mullen: Hi, Thanks very much.

Speaker Change: Two quick questions one is.

Speaker Change: Just curious to hear your views in terms of what's driving the increase in service and installation business.

Speaker Change: So if there was maybe a focus for some of the recent acquisitions.

Speaker Change: Or maybe it's a function of kind of colder weather.

Speaker Change: Requiring more service.

Speaker Change: Services to be completed.

Speaker Change: And then the second question is just in terms of customer credit. It didn't seem like there was any dramatic changes in terms of provisions and write offs, but just curious anecdotally if you've seen any.

Speaker Change: In terms of People's ability to pay and pay on time.

Speaker Change: Yes, Tim in regards to service and installation the improvement in the results certainly there is a component of that rather significant ponant that's related to recent acquisitions.

Speaker Change: And that's helped improve the results overall, but we are also undertaking initiatives internally on our base business to really focus on improving.

Performance, notably.

Speaker Change: Productivity.

Speaker Change: Our employees have really bought into and we've seen some progress and gain some traction there.

Speaker Change: And then just also look too.

Speaker Change: Every opportunity really to sell more products and services to our existing customers and that's.

Speaker Change: Been a program that has been recently launched that is so far going well for us. So we're optimistic about that wants to see how it goes but certainly we're pleased with the results overall.

Speaker Change: Yeah with regard to credit.

Speaker Change: Yeah. There has been some in the general economy, you keep hearing about weakness in credit I can't say that that that doesn't exist but.

Speaker Change: To a certain extent.

Speaker Change: Our customers they get a bit of a relief if you will in the quarter as as cost of product is down and selling prices Jed.

Speaker Change: Generally our down this year versus last year because of the lower cost of product, we did sell a little bit more.

Speaker Change: It was a bit colder and we had some acquisitions but.

Speaker Change: Sales are down even though EBITDA is up because of the lower underlying cost of product.

Speaker Change: But we'll have to see how this all settles up at the end of the heating season right.

Speaker Change: Sure Alright, thanks very much.

Speaker Change: You bet.

Ken: Ken If you have a question. Please press Star then one please.

Speaker Change: Please wait as we assemble our roster.

Speaker Change: Okay.

Speaker Change: And our next question comes from Michael Pruning with 10-K capital. Please go ahead.

Michael Pruning: Hi morning, guys. Congratulations on just terrific execution across the board.

Speaker Change: Just a couple of questions.

Michael Pruning: So as.

Speaker Change: As far as capital allocation is concerned.

Speaker Change: Congratulations on the recent spate of acquisitions I'm just wondering what your thinking is at this point in terms of your.

Speaker Change: In terms of both.

Speaker Change: Additional further acquisitions.

Speaker Change: Our ability to execute on those.

Speaker Change: And also capital allocation in terms of a.

Speaker Change: Dividends.

Speaker Change: Share buybacks. Thanks.

Speaker Change: So Michael I would say in terms of capital allocation, we typically wait when we talk about the distribution, we typically wait until after the heating season to make any decisions on changes or increase to that.

Speaker Change: Distribution, we just wanted to have a better sense of how the year is progressing.

Speaker Change: We know we.

Speaker Change: We want to we need to make what we would consider to be replacement acquisitions to replace any business that has has been lost and then.

Speaker Change: No it really basically boils down to unit repurchases in growth acquisitions and those are decisions we make.

Speaker Change: You know make it on a regular basis just in terms of the economics and the return as well as just the timing because.

Speaker Change: As you are aware.

Speaker Change: So some of the most ideal acquisitions and sizeable deals arent always.

Speaker Change: Available they kind of tend to come in chunks, So it's timing and things that we talked about all the time in terms of what's the best investment for the company.

Speaker Change: Okay terrific.

Speaker Change: It doesn't sound like then obviously this is a as I'm sure rich.

Speaker Change: There's wanting to remind us.

Speaker Change: Obviously it is a decision for the board of directors, but it doesn't sound like the recent acquisitions, you've made should prevent further modest increases in the distribution going forward.

Speaker Change: Yeah, I would say youre trying to put words in my mouth, but.

Speaker Change: One of them.

Speaker Change: Make that decision and at the next time, we get together, which I believe is there is it is in April.

Speaker Change: But we'll have to see.

Jeff Wisdom: Okay terrific, Thanks, and just finally, Jeff any observation.

Speaker Change: On customer churn.

Jeff Wisdom: Hum.

Jeff Wisdom: You know either as a function of the current heating season or acquisitions, you've made or just I guess anything new on the customer churn front. Thanks.

Jeff Wisdom: Yeah, I'd say reflected on the first quarter.

Jeff Wisdom: Our customer losses remained in check and in fact on a percentage basis on a gross basis, we probably had one of our better quarters.

Speaker Change: A year's wall standpoint.

Speaker Change: The gains have been new customer additions have continued to be sluggish.

Speaker Change: I think to some degree that's a reflection of.

While the temperatures were slightly cooler than last year the prior quarter.

Speaker Change: Last year.

Speaker Change: But theres still 10% warmer than normal and there was relative price stability in that period. So there wasn't as much movement in the marketplace. As there was let's just say in fiscal 2023 in the first quarter we observed.

Speaker Change: So those things all combined.

Speaker Change: For fewer games.

Speaker Change: In the first quarter I am pleased to report and we'll just have to see how the rest of the quarter progresses, but we're off to.

Speaker Change: We've got off to a pretty cold January and it looks like we've got a pretty stable forecast for February.

Speaker Change: Thus far in January it seems like our new customer additions of every town to the bit, but we'll see how the quarter progresses.

Speaker Change: Okay, great. Thanks for the updates.

Speaker Change: Yes.

Speaker Change: Again, if you have a question. Please press Star then one and police weight as we assemble any additional questions.

Speaker Change: Okay.

Speaker Change: With no further questions. This concludes our question and answer session I would like to turn the conference back over to Jeff Watson for any closing remarks.

Speaker Change: Well. Thank you for taking the time to join US today and your ongoing interest in Star Group, We look forward to sharing our 2025 fiscal second quarter results in May.

Speaker Change: Everybody.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yeah.

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Speaker Change: All right.

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