• Adjusted EBITDA: Increased by $3 million to $52 million.
• Home Heating Oil and Propane Volume: Rose by 2 million gallons or 3% to approximately 82 million gallons.
• Product Gross Profit: Increased by $5.6 million or 4% to approximately $151 million.
• Service and Installation Gross Profit: Increased to $6.9 million from $4.4 million, a $2.5 million increase.
• Branch Delivery and G&A Expenses: Increased by $5 million due to recent acquisitions.
• Net Income: Increased by $20 million to $33 million.
• Noncash Credit for Derivative Instruments: Recorded a $5 million noncash credit compared to a $19 million noncash charge in the prior year.

• Warning! GuruFocus has detected 8 Warning Signs with SGU.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Star Group LP (NYSE:SGU) reported a $3 million year-over-year increase in adjusted EBITDA, indicating improved financial performance.
• The company benefited from colder temperatures, which increased demand and contributed to higher sales volumes.
• A strategic acquisition strengthened SGU's propane presence, enhancing its operational footprint.
• SGU achieved a $5.6 million increase in product gross profit due to higher per gallon margins and increased sales volumes.
• The company successfully controlled expenses despite increased workload, demonstrating operational efficiency.

Negative Points

• Net customer attrition slightly offset the volume gains from acquisitions and colder temperatures.
• Branch delivery and general and administrative expenses increased by $5 million, primarily due to recent acquisitions.
• There was a 3.8-million-gallon decrease in home heating oil and propane volume sold in the base business.
• New customer additions were sluggish, attributed to warmer than normal temperatures and market stability.
• The company faces uncertainties related to customer credit and potential weakening in payment abilities.

Q & A Highlights

Q: What is driving the increase in the service and installation business? Is it related to recent acquisitions or colder weather? A: Jeffrey Woosnam, President and CEO, explained that the improvement is significantly due to recent acquisitions. Additionally, there has been an internal focus on improving productivity and selling more products and services to existing customers, which has shown positive results.

Q: Have there been any changes in customer credit provisions or write-offs? A: Richard Ambury, CFO, noted that while there is general economic weakness, their customers experienced some relief due to lower product costs. Sales are down despite increased volume because of these lower costs, and the situation will be clearer at the end of the heating season.

Q: What is the company's approach to capital allocation, particularly regarding acquisitions, dividends, and share buybacks? A: Jeffrey Woosnam stated that decisions on distributions are typically made after the heating season to better assess the year's progress. The company focuses on replacement acquisitions and evaluates unit repurchases and growth acquisitions based on economic returns and timing.

Q: Will recent acquisitions affect potential increases in distributions? A: Jeffrey Woosnam indicated that while the board will decide on distributions, recent acquisitions should not prevent modest increases. The board will review this in their next meeting.

Q: How is customer churn being managed, and what are the trends in customer additions? A: Jeffrey Woosnam reported that customer losses were well-managed, with one of the better quarters in recent years. However, new customer additions were sluggish due to warmer-than-normal temperatures and price stability. January showed improvement in new customer additions, and the outlook for February is stable.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.