Star Group, L.P. SGU reported strong third-quarter fiscal 2024 results, fueled by increased volumes and enhanced per-gallon gross margins. Strategic acquisitions have bolstered volume growth and operational efficiency. The company highlighted stable net customer attrition, underscoring its dedication to superior customer service and retention strategies.
Star Group, L.P. Price, Consensus and EPS Surprise
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Q3 Results
SGU reported a third-quarter fiscal 2024 loss per share of 31 cents, narrower than a loss of 67 cents incurred in the year-ago quarter. The net loss was reduced by 53.7% compared with the same quarter last year.
Star Group’s total quarterly revenues of $331.6 million increased 10.5% from the $300.1 million reported in the prior-year period.
The strong quarterly results were mainly attributed to increased sales volumes of home heating oil and propane, driven by recent acquisitions and higher selling prices for petroleum products.
Sales Volume Performance
The volume of home heating oil and propane sold reached 37.7 million gallons in the third quarter of fiscal 2024, up 25.3% from 30.1 million gallons in the prior-year quarter.
The volume increase is attributable to recent acquisitions and higher selling prices for petroleum products. Despite slightly colder temperatures in the current quarter than the previous year, the overall weather was 17.7% warmer than usual.
Net Loss & Adjusted EBITDA
The company significantly reduced its net loss to $11 million in third-quarter fiscal 2024, down from the $23.9 million reported in the prior-year quarter. This improvement primarily resulted from a reduction in interest expenses, partially offset by a decrease in income tax benefits and an unfavorable change in the fair value of derivative instruments.
Adjusted EBITDA for the quarter showed a marked improvement, posting a loss of $4.1 million compared with a $22.9 million loss in the prior-year period. This improvement was driven by higher per-gallon margins for home heating oil and propane, increased service and installation profitability, and contributions from acquisitions, which more than offset the rise in operating expenses.
Operating Costs
The cost of products sold rose slightly to $174.3 million in third-quarter fiscal 2024 from $169.1 million in the previous year, attributed to higher product volumes and increased procurement costs.
Delivery and branch expenses increased year over year to $86.5 million from $83.1 million, highlighting the higher logistics and operational activities tied to the increased sales volumes.
Additionally, general and administrative expenses rose year over year to $7.4 million from $6.1 million primarily due to increased personnel costs, and investments in customer service and retention programs.
Cash & Debt
As of Jun 30, 2024, Star Group's cash and cash equivalents totaled $45.7 million, up from $45.2 million as of Sep 30, 2023. The company’s long-term debt was $115 million.
Management Guidance
The company entered a definitive agreement to acquire a high-quality fuel oil dealer for approximately $35 million, expected to deliver an additional 19 million gallons of heating oil annually.
The acquisition is within Star Group's existing operational footprint and is anticipated to close in the fourth quarter of fiscal 2024. The strategic move is expected to further bolster the company's volume and revenue growth. Looking forward, SGU is optimistic about the upcoming winter season, anticipating a sustained strong performance.
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Star Group, L.P. (SGU): Free Stock Analysis Report
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