Form 8-K
0001002590 False 0001002590 2022-08-03 2022-08-03 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 3, 2022

_______________________________

STAR GROUP, L.P.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware001-1412906-1437793
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

9 West Broad Street, Suite 310

Stamford, CT 06902

(Address of Principal Executive Offices) (Zip Code)

(203) 328-7310

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

_______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common UnitsSGUNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

On August 3, 2022, Star Group, L.P., a Delaware partnership, issued a press release announcing its financial results for the fiscal third quarter ended June 30, 2022.  A copy of the press release is furnished within this report as Exhibit 99.1.

The information in this report is being furnished and is not deemed as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended, unless specifically stated so therein.

Item 7.01. Regulation FD Disclosure.
 
Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1   A copy of the Star Group, L.P. Press Release dated August 3, 2022.

Exhibit 104    Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 
 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 STAR GROUP, L.P.
 By: Kestrel Heat, LLC (General Partner)
   
  
Date: August 3, 2022By: /s/ Richard F. Ambury        
  Richard F. Ambury
  Chief Financial Officer
Principal Financial Officer
  

 

EdgarFiling

EXHIBIT 99.1

Star Group, L.P. Reports Fiscal 2022 Third Quarter Results

STAMFORD, Conn., Aug. 03, 2022 (GLOBE NEWSWIRE) -- Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home energy distributor and services provider, today announced financial results for the fiscal 2022 third quarter and nine months ended June 30, 2022.

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
For the fiscal 2022 third quarter, Star reported a 55.1 percent increase in total revenue to $439.1 million compared with $283.1 million in the prior-year period, reflecting an increase in selling prices for all petroleum products in response to higher wholesale costs.

The volume of home heating oil and propane sold during the fiscal 2022 third quarter increased by 2.7 million gallons, or 7.3 percent, to 40.7 million gallons as the additional volume provided from acquisitions and other factors more than offset the impact from net customer attrition. Temperatures in Star's geographic areas of operation for the fiscal 2022 third quarter were similar to the fiscal 2021 third quarter and 8.0 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Star’s net loss decreased by $1.5 million in the quarter, to $10.6 million, as a favorable change in the fair value of derivative instruments of $3.0 million more than offset an increase in the Adjusted EBITDA loss of $1.2 million.

The Company’s third quarter Adjusted EBITDA loss increased by $1.2 million, to a loss of $11.1 million, as higher operating expenses more than offset the impact of a 2.7 million gallon increase in home heating oil and propane volume and higher home heating oil and propane per gallon margins.

“As with last quarter, Star continued to be challenged by higher commodity prices and related expenses this period, exemplified by wholesale product costs which were nearly double those of 2021,” said Jeff Woosnam, Star Group’s President and Chief Executive Officer. “Temperatures were roughly the same year-over-year, and we focused on new business development, growing installation and service revenue, and preparing Star for the upcoming heating season. I’m pleased to report that we acquired one heating oil dealer in the period – adding approximately 3.8 million gallons annually to our portfolio – then, just after the quarter, we extended our credit facilities to 2027; this expanded our ability to borrow up to $550 million for our seasonal working capital requirements. We also increased the Company’s term loan to $165 million. We believe these changes will expand and extend our financial flexibility during periods of significant product cost increases.”

Nine Months Ended June 30, 2022 Compared to the Nine Months Ended June 30, 2021
For the first nine months of fiscal 2022, Star reported a 35.6 percent increase in total revenue to $1.7 billion, reflecting an increase in selling prices in response to higher wholesale product costs, partially offset by a decrease in total volume sold.

The volume of home heating oil and propane sold during the first nine months of fiscal 2022 decreased by 8.4 million gallons, or 2.9 percent, to 276.7 million gallons, as slightly warmer temperatures, net customer attrition and other factors more than offset the impact from acquisitions. Temperatures in Star's geographic areas of operation for the first nine months of fiscal 2022 were 0.5 percent warmer than during the prior-year comparable period and 9.3 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Net income decreased by $25.7 million, to $85.3 million, as an unfavorable change in the fair value of derivative instruments of $18.5 million and a decrease in Adjusted EBITDA of $14.1 million more than offset a decrease in the Company’s income tax expense of $8.1 million.

Year-to-date Adjusted EBITDA decreased by $14.1 million, to $141.1 million, compared to the prior-year period as a decline in home heating oil and propane volume and an increase in operating expenses more than offset an increase in home heating oil and propane per gallon margins. Operating expenses rose by $23.9 million reflecting a $2.3 million lower benefit recorded from the Company’s weather hedge, additional costs from acquisitions of $3.9 million and a $17.7 million, or 6.9%, increase in expense within the base business reflecting higher credit card fees and bad debt reserves (in aggregate, $5.7 million), higher vehicle fuel costs ($1.3 million), and greater medical and other insurance related expenses ($4.8 million). The remaining increase of expenses in the base business of $5.9 million, or 2.3% was due to wage, benefit and other expense increase.

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization) and Adjusted EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization, (increase) decrease in the fair value of derivatives, other income (loss), net, multiemployer pension plan withdrawal charge, gain or loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges) are non-GAAP financial measures that are used as supplemental financial measures by management and external users of the Company’s financial statements, such as investors, commercial banks and research analysts, to assess Star’s position with regard to the following:

  • compliance with certain financial covenants included in our debt agreements;
  • financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;
  • operating performance and return on invested capital compared to those of other companies in the retail distribution of refined petroleum products, without regard to financing methods and capital structure;
  • ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and
  • the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations as analytical tools and so should not be viewed in isolation but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are as follows:

  • EBITDA and Adjusted EBITDA do not reflect cash used for capital expenditures;
  • although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacements;
  • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital;
  • EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on indebtedness; and
  • EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.

REMINDER:
Members of Star's management team will host a webcast and conference call at 11:00 a.m. Eastern Time tomorrow, August 4, 2022. The webcast will be accessible on the company’s website, at www.stargrouplp.com, and the telephone number for the conference call is 888-346-3470 (or 412-317-5169 for international callers).

About Star Group, L.P.
Star Group, L.P. is a full service provider specializing in the sale of home heating products and services to residential and commercial customers to heat their homes and buildings. The Company also sells and services heating and air conditioning equipment to its home heating oil and propane customers and, to a lesser extent, provides these offerings to customers outside of its home heating oil and propane customer base. In certain of Star's marketing areas, the Company provides plumbing services, primarily to its home heating oil and propane customer base. Star also sells diesel, gasoline and home heating oil on a delivery only basis. We believe Star is the nation's largest retail distributor of home heating oil based upon sales volume. Including its propane locations, Star serves customers in the more northern and eastern states within the Northeast and Mid-Atlantic U.S. regions. Additional information is available by obtaining the Company's SEC filings at www.sec.gov and by visiting Star's website at www.stargrouplp.com, where unit holders may request a hard copy of Star’s complete audited financial statements free of charge.

Forward Looking Information
This news release includes "forward-looking statements" which represent the Company’s expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the severity and duration of the novel coronavirus, or COVID-19, pandemic, the pandemic’s impact on the U.S. and global economies, the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic, the impact of geopolitical events, such as the crisis in the Ukraine, on wholesale product cost volatility, the effect of weather conditions on our financial performance; the price and supply of the products that we sell; the consumption patterns of our customers; our ability to obtain satisfactory gross profit margins; our ability to obtain new customers and retain existing customers; our ability to make strategic acquisitions; the impact of litigation; our ability to contract for our current and future supply needs; natural gas conversions; future union relations and the outcome of current and future union negotiations; the impact of current and future governmental regulations, including climate change, environmental, health and safety regulations; the ability to attract and retain employees; customer creditworthiness; counterparty creditworthiness; marketing plans; cyber-attacks; inflation; global supply chain issues; labor shortages; general economic conditions and new technology. All statements other than statements of historical facts included in this news release are forward-looking statements. Without limiting the foregoing, the words "believe," "anticipate," "plan," "expect," "seek," "estimate" and similar expressions are intended to identify 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 be correct and actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, those set forth under the heading "Risk Factors" and "Business Strategy" in our Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended September 30, 2021. Important factors that could cause actual results to differ materially from the Company’s expectations ("Cautionary Statements") are disclosed in this news release and in the Company’s Form 10-K and our Quarterly Reports on Form 10-Q. Currently, one of the most significant factors, however, is the potential adverse effect of the pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its customers and counterparties and the global economy and financial markets. The extent to which COVID-19 impacts us and our customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. 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 update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this news release.

(financials follow)

STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 June 30, September 30,
 2022 2021
(in thousands)(unaudited)  
ASSETS  
Current assets   
Cash and cash equivalents$8,964  $4,767 
Receivables, net of allowance of $8,897 and $4,779, respectively 187,355   99,680 
Inventories 82,424   61,183 
Fair asset value of derivative instruments 45,868   26,222 
Prepaid expenses and other current assets 34,358   30,140 
Total current assets 358,969   221,992 
Property and equipment, net 104,563   99,123 
Operating lease right-of-use assets 89,279   95,839 
Goodwill 256,471   253,398 
Intangibles, net 88,924   95,474 
Restricted cash 250   250 
Captive insurance collateral 66,893   69,933 
Deferred charges and other assets, net 18,092   17,854 
Total assets$983,441  $853,863 
LIABILITIES AND PARTNERS' CAPITAL   
Current liabilities   
Accounts payable$43,401  $37,291 
Revolving credit facility borrowings 60,395   8,618 
Current maturities of long-term debt 11,500   17,621 
Current portion of operating lease liabilities 16,164   16,446 
Accrued expenses and other current liabilities 140,161   121,221 
Unearned service contract revenue 60,175   56,972 
Customer credit balances 49,254   86,828 
Total current liabilities 381,050   344,997 
Long-term debt 153,129   92,385 
Long-term operating lease liabilities 77,961   84,019 
Deferred tax liabilities, net 37,050   29,014 
Other long-term liabilities 15,549   25,244 
Partners' capital   
Common unitholders 335,780   295,063 
General partner (2,916)  (2,821)
Accumulated other comprehensive loss, net of taxes (14,162)  (14,038)
Total partners' capital 318,702   278,204 
Total liabilities and partners' capital$983,441  $853,863 
    

STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 Three Months Ended June 30, Nine Months Ended June 30,
(in thousands, except per unit data - unaudited)2022 2021 2022
 2021
Sales:      
Product$358,236  $205,045  $1,481,963  $1,044,748 
Installations and services 80,865   78,055   227,951   215,787 
Total sales 439,101   283,100   1,709,914   1,260,535 
Cost and expenses:      
Cost of product 291,236   146,108   1,058,164   631,807 
Cost of installations and services 70,560   66,901   214,744   200,565 
(Increase) decrease in the fair value of derivative instruments (7,669)  (4,714)  (11,881)  (30,333)
Delivery and branch expenses 83,914   74,871   280,389   256,500 
Depreciation and amortization expenses 8,067   8,568   24,596   24,793 
General and administrative expenses 6,251   6,209   18,829   18,770 
Finance charge income (1,762)  (1,079)  (3,300)  (2,284)
Operating income (loss) (11,496)  (13,764)  128,373   160,717 
Interest expense, net (2,635)  (1,957)  (7,422)  (5,944)
Amortization of debt issuance costs (222)  (242)  (698)  (732)
Income (loss) before income taxes (14,353)  (15,963)  120,253   154,041 
Income tax expense (benefit) (3,766)  (3,909)  34,972   43,071 
Net income (loss)$(10,587) $(12,054) $85,281  $110,970 
General Partner's interest in net income (loss) (93)  (98)  726   879 
Limited Partners' interest in net income (loss)$(10,494) $(11,956) $84,555  $110,091 
       
       
Per unit data (Basic and Diluted):      
Net income (loss) available to limited partners$(0.29) $(0.30) $2.24  $2.69 
Dilutive impact of theoretical distribution of earnings-
 -
  0.36   0.45 
Basic and diluted income (loss) per Limited Partner Unit:$(0.29) $(0.30) $1.88  $2.24 
       
Weighted average number of Limited Partner units outstanding (Basic and Diluted) 36,781   40,041   37,739   40,897 
       

SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)

 Three Months Ended June 30,
(in thousands) 2022   2021 
Net loss$(10,587) $(12,054)
Plus:   
Income tax benefit (3,766)  (3,909)
Amortization of debt issuance costs 222   242 
Interest expense, net 2,635   1,957 
Depreciation and amortization 8,067   8,568 
EBITDA (3,429)  (5,196)
(Increase) / decrease in the fair value of derivative instruments (7,669)  (4,714)
Adjusted EBITDA (11,098)  (9,910)
Add / (subtract)   
Income tax benefit 3,766   3,909 
Interest expense, net (2,635)  (1,957)
Provision for losses on accounts receivable 3,097   366 
Decrease in accounts receivables 72,459   68,033 
(Increase) decrease in inventories (1,924)  2,701 
Increase in customer credit balances 12,416   12,902 
Change in deferred taxes 3,292   59 
Change in other operating assets and liabilities (5,365)  (22,118)
Net cash provided by operating activities$74,008  $53,985 
Net cash used in investing activities$(11,267) $(6,900)
Net cash used in financing activities$(71,459) $(50,468)
    
    
Home heating oil and propane gallons sold 40,700   38,000 
Other petroleum products 38,100   40,800 
Total all products 78,800   78,800 
    

SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)

 Nine Months Ended June 30,
(in thousands)2022 2021
Net income$85,281  $110,970 
Plus:   
Income tax expense 34,972   43,071 
Amortization of debt issuance costs 698   732 
Interest expense, net 7,422   5,944 
Depreciation and amortization 24,596   24,793 
EBITDA 152,969   185,510 
(Increase) / decrease in the fair value of derivative instruments (11,881)  (30,333)
Adjusted EBITDA 141,088   155,177 
Add / (subtract)   
Income tax expense (34,972)  (43,071)
Interest expense, net (7,422)  (5,944)
Provision for losses on accounts receivable 5,264   622 
Increase in accounts receivables (92,604)  (35,954)
Increase in inventories (19,972)  (6,951)
Decrease in customer credit balances (38,497)  (30,519)
Change in deferred taxes 7,837   12,682 
Change in other operating assets and liabilities 7,845   13,416 
Net cash (used in) provided by operating activities$(31,433) $59,458 
Net cash used in investing activities$(24,770) $(46,862)
Net cash provided by (used in) financing activities$60,400  $(64,007)
    
    
Home heating oil and propane gallons sold 276,700   285,100 
Other petroleum products 113,700   114,100 
Total all products 390,400   399,200 
    

 Source: Star Group, L.P.

CONTACT: 
Star Group, L.P.Chris Witty
Investor RelationsDarrow Associates
203/328-7310646/438-9385 or cwitty@darrowir.com