Q3 2026 Star Group LP Earnings Call

August 6, 2026

Speaker #1: Good day and welcome to the STAR GROUP fiscal 2026 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.

Operator: Good day, and welcome to the Star Group Fiscal 2026 Q3 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press STAR then 1 on your telephone keypad.

Speaker #1: To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Advisor.

Speaker #1: Please go ahead.

Speaker #2: Thank you, and good morning. With me on the call today are Jeff Woosnam, President and Chief Executive Officer, and Rich Ambury, Chief Financial Officer.

Chris Witty: Thank you and good morning. With me on the call today are Jeff Woosnam, President and Chief Executive Officer, and Rich Ambury, 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 and may cause the company's actual performance to be materially different than 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.

Speaker #2: 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.

Speaker #2: It may cause the company's actual performance to be materially different than the performance indicated or implied by such statements. All statements other than statements of historical fact included in this conference call are forward-looking statements.

Speaker #2: 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 #2: 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 10-K for the fiscal year ended September 30th, 2025, and the company's other filings with the SEC.

Chris Witty: 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 10-K for the fiscal year ended 30 September 2025, 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 now like to turn the call over to Jeff Woosnam. Jeff?

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: I'd now like to turn the call over to Jeff Woosnam. Jeff?

Speaker #3: Thanks, Chris, and good morning, everyone. Thank you for joining us to discuss our third quarter and fiscal year-to-date results. Our results this quarter are non-heating period largely reflected seasonal factors and net customer attrition, which was in line with prior year periods.

Jeff Woosnam: Thanks, Chris. Good morning, everyone. Thank you for joining us to discuss our Q3 and fiscal year-to-date results. Our results this quarter and non-heating period largely reflected seasonal factors in net customer attrition, which was in line with prior year periods. While temperatures were moderately colder than last year, the volume of home heating oil and propane sold was actually lower given the more muted impact of additional degree days in the shoulder months of April and May. Operating costs were elevated in the period primarily due to higher insurance expense, which related to some adverse developments regarding certain claims. We continue to be encouraged by the ongoing improvement of our service and installation business, which delivered gross profit of $15.6 million in the quarter or $1.4 million higher than the prior year period.

Speaker #3: While temperatures were moderately colder than last year, the volume of home heating oil and propane sold was actually lower given the more muted impact of additional degree days in the shoulder months of April and May.

Speaker #3: Operating costs were elevated in the period primarily due to higher insurance expense, which related to some adverse developments regarding certain claims. We continue to be encouraged by the ongoing improvement of our service and installation business, which delivered gross profit of 15.6 million dollars in the quarter, or 1.4 million dollars higher than the prior year period.

Speaker #3: Our strategy of selling more value-added products and services to our existing clients while expanding our HVAC offering in select markets beyond our traditional customer base is beginning to take shape.

Jeff Woosnam: Our strategy of selling more value-added products and services to our existing clients while expanding our HVAC offering in select markets beyond our traditional customer base is beginning to take shape. It's exciting to see our employees, particularly our frontline service technicians and sales teams, truly embrace and become energized by these efforts. While we did not complete any acquisitions within the quarter, we recently closed on a small heating oil dealer after the end of the period. We are actively assessing several attractive businesses and remain very well positioned to take advantage of future opportunities as they are presented. As we've done in years past, we're utilizing the summer to strengthen our operations, streamline where appropriate, and prepare for the coming winter months.

Speaker #3: It's exciting to see our employees, particularly our frontline service technicians, and sales teams truly embrace and become energized by these efforts. While we did not complete any acquisitions within the quarter, we recently closed in a small heating oil dealer after the end of the period.

Speaker #3: We are actively assessing several attractive businesses and remain very well-positioned to take advantage of future opportunities as they are presented. As we've done in years past, we're utilizing the summer to strengthen our operations, streamline where appropriate, and prepare for the coming winter months.

Speaker #3: At the same time, we continue to invest in our service and installation business, where we see further room for revenue growth. And believe STAR remains in great shape and on track for strong financial performance in fiscal 2026.

Jeff Woosnam: At the same time, we continue to invest in our service and installation business where we see further room for revenue growth and believe Star remains in great shape and on track for strong financial performance in fiscal 2026. With that, I'll turn the call over to Rich to provide additional comments on the quarter's results. Rich?

Speaker #3: With that, I'll turn the call over to Rich to provide additional comments on the quarter's results. Rich?

Speaker #4: Thanks, Jeff. And good morning, everyone. For the third quarter, our home heating oil and propane buying decreased by 3.4 million gallons, or 9.4 percent, to 33 million gallons.

Chris Witty: Thanks, Jeff, good morning, everyone. For the third quarter, our home heating oil and propane volume decreased by 3.4 million gallons or 9.4% to 33 million gallons.

Speaker #4: As the additional volume provided from acquisitions was more than offset by net customer attrition and other factors. In terms of weather conditions, degree days for the fiscal 2026 third quarter were 16 percent colder than last year, but 6 percent warmer than normal, but please keep in mind that the temperatures during this non-heating season period are not as impactful as during the winter season.

Rich Ambury: As the additional volume provided from acquisitions was more than offset by net customer attrition and other factors. In terms of weather conditions, degree days for the fiscal Q3 2026 were 16% colder than last year, but 6% warmer than normal. Please keep in mind that the temperatures during this non-heating season period are not as impactful as during the winter season. Our product gross profit was virtually unchanged at $72 million, as an increase in home heating oil and propane per gallon margins and a higher gross profit from other petroleum products was offset by the lower home heating oil and propane volume sold. As Jeff stated, we realized a combined gross profit from service and installation of $15.6 million, or $1.4 million higher than the prior year's comparable period, as we continue to focus on improving revenue and controlling costs.

Speaker #4: Our product gross profit was virtually unchanged at 72 million dollars as an increase in home heating oil and propane per gallon margins, and a higher gross profit from other petroleum products was offset by the lower home heating oil and propane volume sold.

Speaker #4: As Jeff stated, we realized the combined gross profit from service and installation of 15.6 million dollars, or 1.4 million higher than the prior year's comparable period, as we continue to focus on improving revenue and controlling costs.

Speaker #4: Delivery, branch, and G&A expenses increased by 8.7 million dollars year over year, primarily due to a 6.2 million of higher insurance claims reflecting an adverse development.

Rich Ambury: Delivery, branch, and G&A expenses increased by $8.7 million year over year, primarily due to a $6.2 million of higher insurance claims reflecting an adverse development. We posted a net loss of $28 million in Q3 fiscal 2026, or $11.4 million more than the prior year period, reflecting a $7 million increase in our adjusted EBITDA loss and an unfavorable non-cash change in the fair value of derivative instruments of $8.6 million, partially offset by a $3.4 million greater income tax benefit and lower depreciation and amortization expense of $900,000.

Speaker #4: We posted a net loss of 28 million dollars in the third quarter of fiscal 2026, or 11.4 million more than the prior year period, reflecting a 7 million dollar increase in our adjusted EBITDA loss and an unfavorable non-cash change in the fair value of derivative instruments of 8.6 million, partially offset by a 3.4 million greater income tax benefit and lower depreciation and amortization expense of 900 thousand dollars.

Speaker #4: The adjusted EBITDA loss increased by 7 million dollars to 17.7 as higher per gallon home heating oil and propane margins and improvement in service and installation profitability, and the additional gross profit from other petroleum products was more than offset by higher operating expenses, including the insurance costs I just mentioned, and lower home heating oil and propane volume sold.

Rich Ambury: The adjusted EBITDA loss increased by $7 million to $17.7 as higher per gallon home heating oil and propane margins, an improvement in service and installation profitability, and the additional gross profit from other petroleum products was more than offset by higher operating expenses, including the insurance costs I just mentioned, and lower home heating oil and propane volume sold. Turning to the results for the nine months of fiscal 2026. Our home heating oil and propane volume increased by 8.6 million gallons or 3.3% to 271 million gallons, reflecting colder temperatures and the additional volume provided from acquisitions, more than offsetting net customer attrition and other factors. Temperatures in STAR's geographic areas of operations fiscal year to date were 11.5% colder than the prior year period and 3% colder than normal.

Speaker #4: Now, turning to the results for the nine months of fiscal 2026, our home heating oil and propane volume increased by 8.6 million gallons, or 3.3 percent, to 271 million gallons, reflecting colder temperatures and the additional volume provided from acquisitions more than offsetting net customer attrition and other factors.

Speaker #4: Temperatures in STAR's geographic areas of operations fiscal year to date were 11.5 percent colder than the prior year period and 3 percent colder than normal.

Speaker #4: Our product gross profit increased by 48 million dollars, or 10 percent, to 529 million dollars, due to an increase in the volume of home heating oil and propane sold, higher home heating oil and propane per gallon margins, and an increase in gross profit from other petroleum products.

Rich Ambury: Our product gross profit increased by $48 million or 10% to $529 million due to an increase in the volume of home heating oil and propane sold, higher home heating oil and propane per gallon margins, and an increase in gross profit from other petroleum products. As previously mentioned on other calls, colder weather conditions and numerous snowstorms during H1 of fiscal 2026 increased the demand for service, which led to higher service-related expenses. While installation gross profit increased by $2.5 million, service gross loss increased by $5.7 million due to the increase in demand for service and an increase in propane tank sets. Delivery, branch, and G&A expenses rose by $25 million year over year, of which $1.9 million was attributable to our weather hedging program.

Speaker #4: As previously mentioned, on other calls, colder weather conditions and numerous snowstorms during the first half of fiscal 2026 increased the demand for service which led to higher service-related expenses.

Speaker #4: While installation gross profit increased by 2.5 million dollars, service gross loss increased by 5.7 million, due to the increase in demand for service and an increase in propane tank sets.

Speaker #4: Delivery, branch, and G&A expenses rose by 25 million dollars year over year, of which 1.9 million was attributable to our weather hedging program. As I've previously mentioned, in fiscal 2026, we recorded an expense of 5 million dollars under our weather hedge, compared to an expense of 3.1 million recorded in fiscal 2025, reflecting weather conditions in both periods.

Rich Ambury: As I've previously mentioned, in fiscal 2026, we recorded an expense of $5 million under our weather hedge, compared to an expense of $3.1 million recorded in fiscal 2025, reflecting weather conditions in both periods. Recent acquisitions accounted for an increase of $3.2 million to delivery, branch, and G&A expenses, while associated costs in the base business rose by $20 million, reflecting an increase in volume and the impact of severe weather conditions on operating expenses, including insurance claims. We posted net income of $116 million for the first nine months of fiscal 2026, or $14 million higher than the prior year period, as an increase in adjusted EBITDA of $20 million was somewhat offset by higher income tax expense of $7.6 million and other factors.

Speaker #4: Recent acquisitions accounted for an increase of 3.2 million dollars to delivery, branch, and G&A expenses, while associated costs in the base business rose by 20 million dollars, reflecting an increase in volume and the impact of severe weather conditions on operating expenses, including insurance claims.

Speaker #4: We posted net income of 116 million dollars for the first nine months of fiscal 2026, or 14 million dollars higher than the prior year period, as an increase in adjusted EBITDA of 20 million dollars, with somewhat offset by higher income tax expense of 7.6 million dollars and other factors.

Speaker #4: Adjusted EBITDA rose by 20 million dollars to 189 million dollars, due to an increase in home heating oil and propane volume sold in the base business and increase in adjusted EBITDA from acquisitions and higher home heating oil and propane per gallon margins which were more than offset by higher operating expenses.

Rich Ambury: Adjusted EBITDA rose by $20 million to $189 million due to an increase in home heating oil and propane volume sold in the base business, an increase in adjusted EBITDA from acquisitions, and higher home heating oil and propane per gallon margins, which were more than offset by higher operating expenses. With that, I'd like to turn the call back over to Jeff.

Speaker #4: And with that, I'd like to turn the call back over to Jeff.

Speaker #3: Thanks, Rich. At this time, we'd be pleased to address any questions you may have. Michael, please open the phone lines for questions.

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

Speaker #5: Certainly. We'll now begin the question-and-answer session. To ask a question, you may press STAR, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: Certainly. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Again, if you have a question, please press star then one. Your first question today comes from Michael Prouting with 10-K Capital. Please go ahead.

Speaker #5: If at any time your question has been addressed and you would like to withdraw your question, please press STAR, then 2. At this time, we will pause momentarily to assemble our roster.

Speaker #5: Again, if you have a question, please press STAR, then 1. And your first question today comes from Michael Prouding with 10K Capital. Please go ahead.

Speaker #6: Yeah. Morning, guys. Jeff, by the way, congratulations on the well-deserved salary increase. Just a couple of questions. One thing I'm curious about is, assuming things continue as they are, vis-à-vis Iran, I'm just wondering if you see what risks you might see in terms of avail product availability or competitive dynamics or customer behavior in terms of the upcoming heating season.

Michael Prouting: Yeah. Morning, guys. Jeff, by the way, congratulations on the well-deserved salary increase. Just a couple questions. One thing I'm curious about is, assuming things continue as they are, vis-à-vis Iran, I'm just wondering what risks you might see in terms of product availability or competitive dynamics or customer behavior in terms of the upcoming heating season.

Speaker #4: Yeah. We don't see at this time any issues with product availability. I mean, we're in the process now of securing from our wholesalers contracts for next year.

Jeff Woosnam: We don't see, at this time, any issues with product availability. We're in the process now of securing from our wholesalers contracts for next year. We're well on our way for securing contracts for next year. Naturally, prices are up, so that will impact customer behavior somewhat. The question is when these customers will commit to either a ceiling or a fixed price. Some of our customers are on those products, and they might just want to wait for the market to come off. Come October, folks are going to need to sign up on a price protected plan or remain on variable.

Speaker #4: So we're well on our way for securing contracts for next year. And naturally, prices are up. So that will impact customer behavior. Somewhat, the question is when these customers will commit to either a ceiling or a fixed price.

Speaker #4: And some of our customers are on those products. And they might just want to wait for the market to come off. But come October, folks are going to need to sign up or on a price-protected plan or remain on variable.

Speaker #6: Okay, okay. And I guess just a quick question on the acquisition pipeline. I can't help asking, any potential for transformational acquisitions or anything? Any other way that you could characterize the acquisition pipeline?

Michael Prouting: Okay. I guess just a quick question on the acquisition pipeline. I can't help asking, any potential for transformational acquisitions or anything, any other way that you could characterize the acquisition pipeline? That's all the questions I have for this morning. Thanks.

Speaker #6: And that's all the questions I have for this morning. Thanks.

Speaker #3: Yeah, obviously, Michael, we've completed two transactions so far this year—smaller deals. We are certainly continuing to work on, look at, and assess several attractive businesses.

Jeff Woosnam: Yeah. Obviously, Michael, we've completed two transactions so far this year, smaller deals. We are certainly continuing to work on and look at and assess several attractive businesses. I wouldn't categorize any of those as transformational, but we certainly have a full pipeline, and the team is busy. We haven't changed our approach at all. Sometimes these things kind of come in bunches, and we'll just see how all that works out.

Speaker #3: I wouldn't categorize any of those as transformational, but we certainly have a full pipeline and the team is busy and we haven't changed our approach at all.

Speaker #3: And sometimes these things kind of come in bunches, and we'll just see how all that works out.

Speaker #6: Okay. Great. Thanks.

Michael Prouting: Okay, great. Thanks.

Speaker #3: Thank you.

Jeff Woosnam: Thank you.

Speaker #5: Again, if you have a question, please press STAR, then 1. Seeing no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Woosnam for any closing remarks.

Operator: Again, if you have a question, please press star then one. Seeing no further questions in the queue, this concludes our question and answer session. I would like to turn the conference back over to Mr. Woosnam for any closing remarks.

Speaker #3: Well, thank you for taking the time to join us today and your ongoing interest in STAR Group. We look forward to sharing our 2026 fiscal fourth quarter results in December.

Jeff Woosnam: Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2026 fiscal Q4 results in December. Thanks, everyone.

Speaker #3: Thanks, everyone.

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

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