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 first quarter ended December 31, 2021.
Three Months Ended December 31, 2021
Compared to the Three Months Ended December 31, 2020For
the fiscal 2022 first quarter, Star reported a 30.8 percent
increase in total revenue to $488.3 million compared with $373.3
million in the prior-year period, 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 fiscal 2022 first quarter decreased by 2.5 million
gallons, or 2.8 percent, to 87.0 million gallons as the additional
volume provided from acquisitions and other factors was reduced by
the impact of warmer weather and net customer attrition.
Temperatures in Star's geographic areas of operation for the fiscal
2022 first quarter were 6.3 percent warmer than during the fiscal
2021 first quarter and 18.6 percent warmer than normal, as reported
by the National Oceanic and Atmospheric Administration.
Star’s net income declined by $23.4 million in
the quarter, to $14.5 million, primarily due to an unfavorable
non-cash change in the fair value of derivative instruments of
$30.8 million, partially offset by a decrease in income tax expense
of $9.0 million.
First quarter Adjusted EBITDA decreased by
$0.9 million, or 1.9 percent, to $44.5 million, as the
impact from the decline in home heating oil and propane volume and
higher operating expenses (including a $1.8 million unfavorable
change in the impact from the Company’s weather hedge) more than
offset an increase in home heating oil and propane per gallon
margins. As of December 31, 2021, Star recorded a benefit of $2.2
million under its weather hedging contract (versus $4.0 million in
the prior-year period), reducing delivery and branch expense. The
final benefit (if any) for fiscal 2022 may be lower or higher
depending on the accumulation of actual heating degree-days
recorded in the period January 1, 2022 through
March 31, 2022; thus far, temperatures recorded for
January 2022 have been colder than expected.
“Despite temperatures that were 6.3 percent
warmer than last year and 18.6 percent warmer than normal,
negatively affecting demand, I’m pleased with our overall results
in the quarter which included solid margin management and expense
control as well as improved customer retention,” said Jeff Woosnam,
Star Group’s President and Chief Executive Officer. “We also
continued to make progress with our acquisition program during the
period, adding three heating oil dealers that brought with them
approximately 3.0 million gallons of annual product sales. It’s too
early to say how fiscal 2022 will play out, but we were encouraged
to see much colder weather in January and believe we are well
positioned to address whatever challenges or opportunities might
present themselves for the remainder of the heating season.”
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 3, 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 InformationThis
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 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS
|
December 31, |
|
September 30, |
(in thousands) |
|
2021 |
|
|
|
2021 |
|
ASSETS |
|
(unaudited) |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
21,239 |
|
|
$ |
4,767 |
|
Receivables, net of allowance of $4,662 and $4,779,
respectively |
|
178,774 |
|
|
|
99,680 |
|
Inventories |
|
77,735 |
|
|
|
61,183 |
|
Fair asset value of derivative instruments |
|
16,603 |
|
|
|
26,222 |
|
Prepaid expenses and other current assets |
|
44,932 |
|
|
|
30,140 |
|
Total current assets |
|
339,283 |
|
|
|
221,992 |
|
Property and
equipment, net |
|
100,788 |
|
|
|
99,123 |
|
Operating
lease right-of-use assets |
|
95,873 |
|
|
|
95,839 |
|
Goodwill |
|
254,198 |
|
|
|
253,398 |
|
Intangibles,
net |
|
92,777 |
|
|
|
95,474 |
|
Restricted
cash |
|
250 |
|
|
|
250 |
|
Captive
insurance collateral |
|
69,482 |
|
|
|
69,933 |
|
Deferred
charges and other assets, net |
|
18,103 |
|
|
|
17,854 |
|
Total assets |
$ |
970,754 |
|
|
$ |
853,863 |
|
LIABILITIES AND PARTNERS' CAPITAL |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
52,225 |
|
|
$ |
37,291 |
|
Revolving credit facility borrowings |
|
123,682 |
|
|
|
8,618 |
|
Current maturities of long-term debt |
|
13,000 |
|
|
|
17,621 |
|
Current portion of operating lease liabilities |
|
16,467 |
|
|
|
16,446 |
|
Accrued expenses and other current liabilities |
|
126,588 |
|
|
|
121,221 |
|
Unearned service contract revenue |
|
69,773 |
|
|
|
56,972 |
|
Customer credit balances |
|
72,864 |
|
|
|
86,828 |
|
Total current liabilities |
|
474,599 |
|
|
|
344,997 |
|
Long-term
debt |
|
89,183 |
|
|
|
92,385 |
|
Long-term
operating lease liabilities |
|
84,226 |
|
|
|
84,019 |
|
Deferred tax
liabilities, net |
|
28,439 |
|
|
|
29,014 |
|
Other
long-term liabilities |
|
18,948 |
|
|
|
25,244 |
|
Partners' capital |
|
|
|
Common unitholders |
|
292,139 |
|
|
|
295,063 |
|
General partner |
|
(2,963 |
) |
|
|
(2,821 |
) |
Accumulated other comprehensive loss, net of taxes |
|
(13,817 |
) |
|
|
(14,038 |
) |
Total partners' capital |
|
275,359 |
|
|
|
278,204 |
|
Total liabilities and partners' capital |
$ |
970,754 |
|
|
$ |
853,863 |
|
|
|
|
|
STAR GROUP, L.P. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
Three MonthsEnded December 31, |
(in thousands, except per unit data -
unaudited) |
|
2021 |
|
|
|
2020 |
|
Sales: |
|
|
|
Product |
$ |
411,265 |
|
|
$ |
300,332 |
|
Installations and services |
|
77,005 |
|
|
|
72,988 |
|
Total sales |
|
488,270 |
|
|
|
373,320 |
|
Cost and
expenses: |
|
|
|
Cost of product |
|
274,594 |
|
|
|
172,147 |
|
Cost of installations and services |
|
74,048 |
|
|
|
69,303 |
|
(Increase) decrease in the fair value of derivative
instruments |
|
13,403 |
|
|
|
(17,395 |
) |
Delivery and branch expenses |
|
88,989 |
|
|
|
80,687 |
|
Depreciation and amortization expenses |
|
8,448 |
|
|
|
7,957 |
|
General and administrative expenses |
|
6,676 |
|
|
|
6,241 |
|
Finance charge income |
|
(512 |
) |
|
|
(406 |
) |
Operating income |
|
22,624 |
|
|
|
54,786 |
|
Interest
expense, net |
|
(2,058 |
) |
|
|
(1,851 |
) |
Amortization
of debt issuance costs |
|
(239 |
) |
|
|
(247 |
) |
Income before income taxes |
|
20,327 |
|
|
|
52,688 |
|
Income tax
expense |
|
5,838 |
|
|
|
14,828 |
|
Net income |
$ |
14,489 |
|
|
$ |
37,860 |
|
General Partner's interest in net income |
|
122 |
|
|
|
296 |
|
Limited
Partners' interest in net income |
$ |
14,367 |
|
|
$ |
37,564 |
|
|
|
|
|
|
|
|
|
Per unit
data (Basic and Diluted): |
|
|
|
Net income
available to limited partners |
$ |
0.37 |
|
|
$ |
0.89 |
|
Dilutive
impact of theoretical distribution of earnings |
|
0.05 |
|
|
|
0.15 |
|
Basic and
diluted income per Limited Partner Unit: |
$ |
0.32 |
|
|
$ |
0.74 |
|
|
|
|
|
Weighted
average number of Limited Partner units outstanding (Basic and
Diluted) |
|
38,789 |
|
|
|
42,246 |
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIESRECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited)
|
Three
MonthsEnded December 31, |
(in thousands) |
|
2021 |
|
|
|
2020 |
|
Net
income |
$ |
14,489 |
|
|
$ |
37,860 |
|
Plus: |
|
|
|
Income tax
expense |
|
5,838 |
|
|
|
14,828 |
|
Amortization
of debt issuance costs |
|
239 |
|
|
|
247 |
|
Interest
expense, net |
|
2,058 |
|
|
|
1,851 |
|
Depreciation
and amortization |
|
8,448 |
|
|
|
7,957 |
|
EBITDA |
|
31,072 |
|
|
|
62,743 |
|
(Increase) /
decrease in the fair value of derivative instruments |
|
13,403 |
|
|
|
(17,395 |
) |
Adjusted
EBITDA |
|
44,475 |
|
|
|
45,348 |
|
Add /
(subtract) |
|
|
|
Income tax
expense |
|
(5,838 |
) |
|
|
(14,828 |
) |
Interest
expense, net |
|
(2,058 |
) |
|
|
(1,851 |
) |
Recovery for
losses on accounts receivable |
|
(288 |
) |
|
|
(476 |
) |
Increase in
accounts receivables |
|
(78,794 |
) |
|
|
(62,989 |
) |
Increase in
inventories |
|
(16,388 |
) |
|
|
(7,177 |
) |
Decrease in
customer credit balances |
|
(14,504 |
) |
|
|
(8,987 |
) |
Change in
deferred taxes |
|
(684 |
) |
|
|
3,601 |
|
Change in
other operating assets and liabilities |
|
8,214 |
|
|
|
20,358 |
|
Net cash
used in operating activities |
$ |
(65,865 |
) |
|
$ |
(27,001 |
) |
Net cash
used in investing activities |
$ |
(7,034 |
) |
|
$ |
(35,903 |
) |
Net cash
provided by financing activities |
$ |
89,371 |
|
|
$ |
24,840 |
|
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
87,000 |
|
|
|
89,500 |
|
Other
petroleum products |
|
39,300 |
|
|
|
37,700 |
|
Total all products |
|
126,300 |
|
|
|
127,200 |
|
|
|
|
|
CONTACT: |
|
Star Group, L.P. |
Chris Witty |
Investor Relations |
Darrow Associates |
203/328-7310 |
646/438-9385 or cwitty@darrowir.com |
Source: Star Group, L.P.
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