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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): February 7, 2024

 

 

  

STAR GROUP, L.P.

(Exact name of registrant as specified in its charter)

 

 

  

Delaware 001-14129 06-1437793

(State or other jurisdiction

of incorporation)

(Commission

File Number) 

(IRS 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 (see General Instruction A.2. below):

 

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 class

Trading

Symbol(s)

Name of each exchange on which registered
Common Units SGU New York Stock Exchange
Common Unit Purchase Rights N/A New 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 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

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 February 7, 2024 Star Group, L.P., a Delaware partnership, issued a press release announcing its financial results for the fiscal first quarter ended December 31, 2023. 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 February 7, 2024
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: February 7, 2024 By:  /s/ Richard F. Ambury        
    Richard F. Ambury
    Chief Financial Officer
Principal Financial Officer

 

 

EdgarFiling

EXHIBIT 99.1

Star Group, L.P. Reports Fiscal 2024 First Quarter Results

STAMFORD, Conn., Feb. 07, 2024 (GLOBE NEWSWIRE) -- Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home energy distributor and services provider, today announced financial results for its fiscal 2024 first quarter, the three month period ended December 31, 2023.

Three Months Ended December 31, 2023 Compared to the Three Months Ended December 31, 2022
For the fiscal 2024 first quarter, Star reported an 18.5 percent decrease in total revenue to $528.1 million compared with $648.2 million in the prior-year period, reflecting both a decline in volume sold and lower selling prices for petroleum products. The volume of home heating oil and propane sold during the fiscal 2024 first quarter decreased by 9.1 million gallons, or 10.2 percent, to 80.1 million gallons, as the additional volume provided from acquisitions and other factors was more than offset by the impact of warmer weather and net customer attrition. Temperatures in Star's geographic areas of operation for the three months ended December 31, 2023 were 9.6 percent warmer than the three months ended December 31, 2022 and 13.8 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration. Selling prices decreased largely due to a decline in wholesale product cost of $0.6605 per gallon, or 19.7 percent.

Star’s net income decreased by $0.6 million in the quarter, to $13.0 million, as an unfavorable non-cash change in the fair value of derivative instruments of $1.4 million and higher depreciation and amortization expense of $0.6 million more than offset lower interest expense of $1.1 million and a $0.3 million decrease in income tax expense.

The Company reported first quarter Adjusted EBITDA (a non-GAAP measure defined below) of $49.0 million, virtually unchanged from the prior year’s period, as an increase in home heating oil and propane per-gallon margins, higher service and installation profitability and lower operating costs almost entirely offset the decline in home heating oil and propane volume of 10.2 percent.

“The beginning of fiscal 2024 has provided both challenges and opportunities, which we believe we have navigated well,” Jeff Woosnam, Star Group’s President and Chief Executive Officer. “While product costs declined, providing relief to customers, warmer temperatures resulted in lower demand and, thus, reduced overall volumes. New customer additions were also down from the extraordinary levels we experienced during the first quarter of fiscal 2023, due in part to the mild weather but also the result of much different market conditions, resulting in lower lead activity. However, by employing strong cost discipline, a weather hedge benefit, and achieving higher per-gallon margins, Adjusted EBITDA was nearly equivalent to the prior-year period. In addition, we closed on two strategic acquisitions after the end of the quarter, in February. Both are located on Long Island and further strengthen our presence in that market.”

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, February 8, 2024. 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. 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 the impact of geopolitical events on wholesale product cost volatility, the price and supply of the products that we sell, our ability to purchase sufficient quantities of product to meet our customer’s needs, rapid increases in levels of inflation, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, the effect of weather conditions on our financial performance, our ability to obtain new customers and retain existing customers, our ability to make strategic acquisitions, the impact of litigation, natural gas conversions and electrification of heating systems, pandemic and future global health pandemics, recessionary economic conditions, 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 credit worthiness, counterparty credit worthiness, marketing plans, cyber-attacks, global supply chain issues, labor shortages and new technology, including alternative methods for heating and cooling residences. All statements other than statements of historical facts included in this Report including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, 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 we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. 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, 2023. 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. 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
 
  December 31, September 30,
(in thousands) 2023 2023
ASSETS (unaudited)  
Current assets    
Cash and cash equivalents $19,925  $45,191 
Receivables, net of allowance of $8,074 and $8,375, respectively  187,122   114,079 
Inventories  84,033   56,463 
Fair asset value of derivative instruments     10,660 
Prepaid expenses and other current assets  38,409   28,308 
Total current assets  329,489   254,701 
Property and equipment, net  105,158   105,404 
Operating lease right-of-use assets  87,725   90,643 
Goodwill  262,347   262,103 
Intangibles, net  73,969   76,306 
Restricted cash  250   250 
Captive insurance collateral  72,020   70,717 
Deferred charges and other assets, net  13,981   15,354 
Total assets $944,939  $875,478 
LIABILITIES AND PARTNERS’ CAPITAL    
Current liabilities    
Accounts payable $45,881  $35,609 
Revolving credit facility borrowings  51,877   240 
Fair liability value of derivative instruments  14,832   118 
Current maturities of long-term debt  20,625   20,500 
Current portion of operating lease liabilities  17,923   18,085 
Accrued expenses and other current liabilities  118,382   115,606 
Unearned service contract revenue  75,371   63,215 
Customer credit balances  90,916   111,508 
Total current liabilities  435,807   364,881 
Long-term debt  123,258   127,327 
Long-term operating lease liabilities  74,752   77,600 
Deferred tax liabilities, net  24,172   25,771 
Other long-term liabilities  16,298   16,175 
Partners’ capital    
Common unitholders  288,789   281,862 
General partner  (4,831)  (4,615)
Accumulated other comprehensive loss, net of taxes  (13,306)  (13,523)
Total partners’ capital  270,652   263,724 
Total liabilities and partners’ capital $944,939  $875,478 
         


 
STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
  Three Months
Ended December 31,
(in thousands, except per unit data - unaudited) 2023 2022
Sales:    
Product $448,550  $569,929 
Installations and services  79,546   78,258 
Total sales  528,096   648,187 
Cost and expenses:    
Cost of product  303,338   419,093 
Cost of installations and services  75,107   76,543 
(Increase) decrease in the fair value of derivative instruments  19,030   17,636 
Delivery and branch expenses  94,364   97,936 
Depreciation and amortization expenses  8,386   7,837 
General and administrative expenses  7,021   6,856 
Finance charge income  (771)  (1,319)
Operating income  21,621   23,605 
Interest expense, net  (3,218)  (4,274)
Amortization of debt issuance costs  (250)  (329)
Income before income taxes  18,153   19,002 
Income tax expense  5,174   5,463 
Net income $12,979  $13,539 
General Partner’s interest in net income  118   122 
Limited Partners’ interest in net income $12,861  $13,417 
     
     
Per unit data (Basic and Diluted):    
Net income available to limited partners $0.36  $0.37 
Dilutive impact of theoretical distribution of earnings  0.04   0.04 
Basic and diluted income per Limited Partner Unit: $0.32  $0.33 
     
Weighted average number of Limited Partner units outstanding (Basic and Diluted)  35,593   35,916 
     


 
SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)
 
  Three Months
Ended December 31,
(in thousands) 2023 2022
Net income $12,979  $13,539 
Plus:    
Income tax expense  5,174   5,463 
Amortization of debt issuance costs  250   329 
Interest expense, net  3,218   4,274 
Depreciation and amortization  8,386   7,837 
EBITDA  30,007   31,442 
(Increase) / decrease in the fair value of derivative instruments  19,030   17,636 
Adjusted EBITDA  49,037   49,078 
Add / (subtract)    
Income tax expense  (5,174)  (5,463)
Interest expense, net  (3,218)  (4,274)
Provision for losses on accounts receivable  649   1,046 
Increase in accounts receivables  (73,590)  (115,164)
Increase in inventories  (26,805)  (28,717)
Decrease in customer credit balances  (21,852)  (14,700)
Change in deferred taxes  (1,591)  (1,224)
Change in other operating assets and liabilities  22,236   26,677 
Net cash used in operating activities $(60,308) $(92,741)
Net cash used in investing activities $(5,875) $(2,086)
Net cash provided by financing activities $40,917  $102,798 
     
     
Home heating oil and propane gallons sold  80,100   89,200 
Other petroleum products  32,400   35,600 
Total all products  112,500   124,800 


CONTACT:  
Star Group, L.P. Chris Witty
Investor Relations Darrow Associates
203/328-7310 646/438-9385 or cwitty@darrowir.com