Q3 2025 Star Group LP Earnings Call
Good day, and welcome to the star group. Fiscal, 2025, third quarter results. Conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by zero.
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I would now like to turn the conference over to Chris Whitty the investor relations advisor. Please go ahead.
Call today are Jeff Wenham, President and Chief Executive Officer, and Rich Amber, Chief Financial Officer. I would now like to provide a brief Safe Harbor statement. This conference call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties, which may cause the company's actual performance to be materially different from the performance indicated or implied by such statements.
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 important 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 10K for the fiscal year, ended September 30th 2024 and the company's other filings with the SEC.
Also, I'm just going to written an 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 there is a result of new information, future events or otherwise, after the date of this conference call. I'd now like to turn the call over to Jeff, Wham Jeff.
Thanks, Chris and good morning everyone. Thank you for joining us to discuss our third quarter in fiscal year today at results while outside of our core heating season. The third quarter was still negatively impacted by lower volume due to slightly warmer temperatures than last year, along with net. Customer attrition of the factors. That said we were pleased with our continued Improvement in service and installation performance and adjusted Ava from recent acquisitions. Positively contributed to the quarter, as well as the year to date period.
We believe We are on track for strong financial performance in fiscal 2025.
As I've shared on previous calls, we are dedicated to providing our customers with Superior Service to improve retention and drive additional revenues.
Consistent with that objective. We continue to look at ways to sell more value, added products and services to our existing customers. While also expanding HVAC, our HVAC HVAC offerings in select markets, beyond our traditional Heating Oil and Propane account base to gain access to a larger audience.
To support this initiative, we have made an investment in additional training for our sales and Technical teams.
Fundamentally star is a service provider. So any any effort to improve what truly differentiates us from our competition is a Sound Investment. We are pleased with the way our team has responded to become engaged in what we are trying to accomplish and although there is so much work to be done. I am encouraged with our progress today.
As we pursue a strategy that includes growing our heating on propane customer base through Acquisitions. While at the same time, improving service and installation profitability. We we believe we are positioning Star as a fully Diversified energy provider that over time will be more resilient and adaptable to varied weather conditions.
With that, I'll turn the call. Call over to the rich to provide additional comments on the quarter's results. Rich.
Thanks Jeff and good morning everyone. For the third quarter, our home heating oil and propane volume decreased by 1.5 million gallons or 3.8% to 36 million gallons as the additional volume provided from Acquisitions was more than offset by warmer weather. Net customer attrition and other factors.
In terms of weather conditions, temperatures for fiscal 2025 are projected to be 2% warmer than last year and almost 20% warmer than normal during this non-heating season period.
Our product growth profit decreased by 3 million or 4% to 72 million.
Due to both a lower home, heating oil and propane volume sold, as well as lower per gallon. Margins driven in part by the mix of volume associated with recent acquisitions.
We realize the combined gross profit from service and installation of 14 million or dollars higher than the prior Year's comparable quarter, as we continue to focus on improving service and controlling expenses.
delivery branch and G&A expenses, increase by 4.3 million year over year reflecting additional operating costs associated with Acquisitions of 5.8 million partially offset by lower costs in the base business of 1.5 million or approximately 1.6%
Depreciation and amortization rose by $2 million, and interest expense increased by about $1 million year-over-year. These changes were largely due to the impact of recent acquisitions.
We posted a net loss of 16.6.
Reflecting a 6 and 1.5 million increase in our adjusted ebit out loss, higher depreciation and amortization expense of 2 million and higher acquisition related. Financing costs of 1 million partially offset by a 2.3 million greater income tax benefit in a non-cash. Favorable change. In the fair value of derivative instruments of 1.6 million
The adjusted ebal loss increased by 6.5 million to 10.6 million as the additional positive, even adjusted even though from Acquisitions and lower operating costs than the base business was more than offset by lower home heating oil and propane volumes in the base business and slightly lower per gallon, home heating, oil, and propane per gallon. Margins? The positive adjusted ebi realized from Acquisitions during this historical loss quarter was due in part to our recent propane Acquisitions. Now, turning to the results for the first 9 months of fiscal 2025, our home heating oil and propane volume increase by 28 million gallons of 12% to 263 million. Gal reflecting colder temperatures, and the additional volume provided from Acquisitions more than offsetting. Net customer attrition in other factors temperatures. In our Geographic areas of operations, fiscal year to date were 8%
That's colder than the prior year period, but still 8% warmer than normal.
Our product growth profit Rose by 55 million or 13% to 480 million due to an increase in the volume of home heating oil and propane, sold higher home heating, oil, and propane per gallon margins. In a slight increase in gross profit from other petroleum products.
As previously mentioned on prior calls, we've successfully improved our service and installation business, which contributed to an increase in gross profit of $4.8 million year to date, with $2.7 million attributable to acquisitions and $2.1 million due to initiatives in the base business.
Delivery branch and G&A expenses rose by $31.5 million year-over-year, of which $10.6 million was attributable to our weather hedging program. As a reminder, in fiscal 2025, we recorded an expense of $3.1 million under our weather hedge compared to a benefit of $7.5 million recorded in fiscal 2024, reflecting weather conditions in both periods. Aside from this, recent acquisitions accounted for an increase in expenses of $18.7 million year-over-year, while expenses in the base business rose by just $2.2 million, or 0.7%.
Depreciation and ammer Rose by 2.6 million. And that interest expense increased by 1.4 million, these changes were largely attributable to the impact of recent acquisitions. We posted a net income of 102 million dollars a year to date or 32 million in the prior year period. Largely due to an increase in adjusted even though of 28 million in a non-cash favorable change. In the fair value of derivative instruments of 20 million, more than offsetting higher income tax, expense of 12 million, and other factors.
Adjusted even though Rose by 28 million to 170 million primarily due to a 21 million increase in adjusted Ava, and the base business and a 17 million dollar increase in adjusted ebita from Acquisitions, partially offsetting, a 10.6 million increase in expense relating. To the company's weather hedge contracts, which apply to both the base business and the recent acquisitions. As I just previously discussed. And with that, I'd like to turn the call back to Jack
Thanks Rich. This time we're pleased to address any questions you may have Chad, please open the phone lines for questions. Thank you. We will now begin our question and answer session to ask a question. You may press star then 1 on your touchtone phone,
To withdraw your question, please press star, then 2 and at this time we will pause momentarily to assemble our roster.
Again, as instructions are to press star, then 1 if you'd like to join the question queue.
And our question, uh, is from Michael prowing from 10K Capital. Please go ahead.
I've tried your first question. I was wondering if you could update us on the acquisition pipeline. Um, and then secondly, um,
I, I just thought I'd have to ask the question but, uh, Kira, as as to whether you see any applications for AI and the business it seems like the obvious would be customer service. Um, but just kind of curious to get your uh feedback on that. Thanks.
You bet Michael. So, uh, in terms of Acquisitions, obviously, we've closed on 4 transaction, uh, so far, this fiscal year. Um, we our last 1 in, in April, the team remains, uh, a very busy, um, with, with opportunities. Um, we just, you know, you never know how that's, um,
Uh, we're going to end up coming out, but, um, we're extremely pleased with, um, you know what we've had in our pipeline, what we've been able to close particularly over the last 14 months. Um, some sizable deals and, um, you know, again we just continue to push forward and there's plenty of activity in the marketplace right now.
And in terms of, in terms of AI. Yeah, we we have, um, uh, certainly instituted some of that technology, uh, into our customer interface, you know, the 1 thing. We always want to keep in mind is, um, we want to remember that, you know, we're a service business first. And, um, you know, to the degree that AI can
Can assist with that and allow us.
Um, to serve our customers in a way, um, that they prefer. Um, but we always like and prefer that, you know, that Personal Touch and and allowing them to be able to talk to an employee that can provide them, you know, appropriate assistance. And, and, um, you know, a comfort level that we're going to react and respond, um, as they need us to. So, we always have to kind of strike that balance, but there's certainly opportunity there for for us in the future.
Okay, great. Yeah. Thanks for the updates and uh, uh, you know, definitely hear what you're saying, as far as the human touch. Um, uh, so yep. Thanks for the updates.
That.
And the final reminder, if you'd like to join the question Cube, please press star, then 1.
And at this time there appears to be no further questions, so I'd like to return the conference to Mr. Wham for any closing remarks
Well, thank you for taking the time to join us today, and for your ongoing interest in Star group. We look forward to sharing our 2025 fiscal fourth, quarter results in December. Thanks, everyone.
And thank you, sir. The conference has now concluded. Thank you for joining today's presentation. You may now disconnect.