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 fourth quarter and year ended September
30, 2022.
Three Months Ended September 30, 2022
Compared to the Three Months Ended September 30, 2021For
the fiscal 2022 fourth quarter, Star reported a 25.4 percent
increase in total revenue to $296.6 million compared with $236.6
million in the prior-year period, as an increase in selling prices
more than offset the impact from a decline in total petroleum
product demand. The volume of home heating oil and propane sold
during the fiscal 2022 fourth quarter decreased by 1.4 million
gallons, or 7.0 percent, to 19.4 million gallons, as the additional
volume provided by acquisitions was more than offset by net
customer attrition and other factors.
Star’s net loss increased by $26.8 million in
the quarter, to $50.0 million, due to an unfavorable change in the
fair value of derivative instruments of $35.0 million and an
increase in the Adjusted EBITDA loss of $3.1 million, which were
partially offset by an increase in the Company’s income tax benefit
of $11.8 million.
The Company reported a fourth quarter Adjusted
EBITDA loss (a non-GAAP measure defined below) of $30.8 million, an
increase of $3.1 million, reflecting the lower sales volume, a
2.4 percent decline in home heating oil and propane per-gallon
margins, and an increase in operating costs of 1.9 percent.
“Looking back, fiscal 2022 was certainly a year
full of unique challenges – including fluctuating fuel prices and
higher operating costs – but one in which we believe the breadth of
Star’s offerings, size of our operating footprint, and dedication
to customer service set us apart from the competition,” said Jeff
Woosnam, Star Group’s President and Chief Executive Officer. “While
no major acquisitions were completed during the fourth quarter, we
closed on two small heating oil companies in the first quarter of
fiscal 2023 and completed a few key transactions earlier in 2022.
We were also successful in reducing overall customer attrition to
levels slightly below last year. I’m quite proud of the way our
team navigated through the external market forces we faced and,
while hiring conditions remain tight, we believe the Company
continues to employ the best and brightest in the industry. Given
our strong operating platform and recently-expanded credit
facilities, we believe Star is prepared and well positioned for the
heating season ahead.”
Fiscal Year Ended September 30, 2022
Compared to Fiscal Year Ended September 30, 2021For fiscal
2022, Star reported a 34.0 percent increase in total revenue to
$2.0 billion, reflecting an increase in selling prices in response
to higher wholesale product costs, partially offset by a decline in
total petroleum product demand. The volume of home heating oil and
propane sold during fiscal 2022 decreased by 9.8 million gallons,
or 3.2 percent, to 296.1 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 fiscal year were 0.5 percent
warmer than during fiscal 2021 and 9.3 percent warmer than normal,
as reported by the National Oceanic and Atmospheric
Administration.
Net income decreased by $52.4 million, to $35.3
million, due to an unfavorable change in the fair value of
derivative instruments of $53.4 million and a decrease in Adjusted
EBITDA of $17.2 million, which were partially offset by a decline
in the Company’s income tax expense of $20.0 million.
Fiscal 2022 Adjusted EBITDA decreased by $17.2
million, to $110.3 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 higher home heating oil and
propane per-gallon margins. Operating expenses rose by $25.4
million reflecting a $2.3 million lower benefit recorded from the
Company’s weather hedge, additional costs from acquisitions of $4.8
million, and a $18.3 million, or 5.2 percent, increase in expense
within the base business reflecting higher credit card fees and bad
debt reserves (in aggregate, $7.0 million), higher vehicle fuel
costs ($1.7 million), and higher medical ($2.5 million). The
remaining expense increase in the base business of $7.1 million, or
2.0 percent, was due to wage, benefit and other increases.
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, December 8, 2022. The webcast will be
accessible on the company’s website, at www.stargrouplp.com, and
the telephone number for the conference call is 877-327-7688 (or
412-317-5112 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 InformationThis
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, such as the war in the Ukraine, and its impact
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 approaching 40-year highs, uncertain
economic conditions, 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, the impact of the novel coronavirus, or COVID-19,
pandemic and future global health pandemics, on US and global
economies, 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, increases in interest
rates, global supply chain issues, labor shortages 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, 2022.
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
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
|
September 30, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
14,620 |
|
|
$ |
4,767 |
|
Receivables, net of allowance of $7,755 and $4,779,
respectively |
|
|
138,252 |
|
|
|
99,680 |
|
Inventories |
|
|
83,557 |
|
|
|
61,183 |
|
Fair asset value of derivative instruments |
|
|
16,823 |
|
|
|
26,222 |
|
Prepaid expenses and other current assets |
|
|
32,016 |
|
|
|
30,140 |
|
Assets held for sale |
|
|
2,995 |
|
|
|
– |
|
Total current assets |
|
|
288,263 |
|
|
|
221,992 |
|
Property and
equipment, net |
|
|
107,744 |
|
|
|
99,123 |
|
Operating
lease right-of-use assets |
|
|
93,435 |
|
|
|
95,839 |
|
Goodwill |
|
|
254,110 |
|
|
|
253,398 |
|
Intangibles,
net |
|
|
84,510 |
|
|
|
95,474 |
|
Restricted
cash |
|
|
250 |
|
|
|
250 |
|
Captive
insurance collateral |
|
|
66,662 |
|
|
|
69,933 |
|
Deferred
charges and other assets, net |
|
|
17,501 |
|
|
|
17,854 |
|
Total assets |
|
$ |
912,475 |
|
|
$ |
853,863 |
|
LIABILITIES AND PARTNERS' CAPITAL |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
49,061 |
|
|
$ |
37,291 |
|
Revolving credit facility borrowings |
|
|
20,276 |
|
|
|
8,618 |
|
Fair liability value of derivative instruments |
|
|
183 |
|
|
|
– |
|
Current maturities of long-term debt |
|
|
12,375 |
|
|
|
17,621 |
|
Current portion of operating lease liabilities |
|
|
17,211 |
|
|
|
16,446 |
|
Accrued expenses and other current liabilities |
|
|
125,561 |
|
|
|
121,221 |
|
Unearned service contract revenue |
|
|
62,858 |
|
|
|
56,972 |
|
Customer credit balances |
|
|
93,555 |
|
|
|
86,828 |
|
Total current liabilities |
|
|
381,080 |
|
|
|
344,997 |
|
Long-term
debt |
|
|
151,709 |
|
|
|
92,385 |
|
Long-term
operating lease liabilities |
|
|
81,385 |
|
|
|
84,019 |
|
Deferred tax
liabilities, net |
|
|
25,620 |
|
|
|
29,014 |
|
Other
long-term liabilities |
|
|
14,766 |
|
|
|
25,244 |
|
Partners' capital |
|
|
|
|
Common unitholders |
|
|
277,177 |
|
|
|
295,063 |
|
General partner |
|
|
(3,656 |
) |
|
|
(2,821 |
) |
Accumulated other comprehensive loss, net of taxes |
|
|
(15,606 |
) |
|
|
(14,038 |
) |
Total partners' capital |
|
|
257,915 |
|
|
|
278,204 |
|
Total liabilities and partners' capital |
|
$ |
912,475 |
|
|
$ |
853,863 |
|
|
|
|
|
|
STAR GROUP, L.P. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
Three Months Ended September 30, |
|
Twelve Months Ended September 30, |
(in thousands, except per unit data) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
Sales: |
|
|
|
|
|
|
|
|
Product |
|
$ |
216,318 |
|
|
$ |
159,571 |
|
|
$ |
1,698,281 |
|
|
$ |
1,204,319 |
|
Installations and services |
|
|
80,326 |
|
|
|
76,980 |
|
|
|
308,277 |
|
|
|
292,767 |
|
Total sales |
|
|
296,644 |
|
|
|
236,551 |
|
|
|
2,006,558 |
|
|
|
1,497,086 |
|
Cost and
expenses: |
|
|
|
|
|
|
|
|
Cost of product |
|
|
181,441 |
|
|
|
122,815 |
|
|
|
1,239,605 |
|
|
|
754,622 |
|
Cost of installations and services |
|
|
67,979 |
|
|
|
64,245 |
|
|
|
282,723 |
|
|
|
264,810 |
|
(Increase) decrease in the fair value of derivative
instruments |
|
|
29,167 |
|
|
|
(5,805 |
) |
|
|
17,286 |
|
|
|
(36,138 |
) |
Delivery and branch expenses |
|
|
73,128 |
|
|
|
71,410 |
|
|
|
353,517 |
|
|
|
327,910 |
|
Depreciation and amortization expenses |
|
|
8,002 |
|
|
|
8,692 |
|
|
|
32,598 |
|
|
|
33,485 |
|
General and administrative expenses |
|
|
6,053 |
|
|
|
6,326 |
|
|
|
24,882 |
|
|
|
25,096 |
|
Finance charge income |
|
|
(1,206 |
) |
|
|
(615 |
) |
|
|
(4,506 |
) |
|
|
(2,899 |
) |
Operating income (loss) |
|
|
(67,920 |
) |
|
|
(30,517 |
) |
|
|
60,453 |
|
|
|
130,200 |
|
Interest
expense, net |
|
|
(3,050 |
) |
|
|
(1,872 |
) |
|
|
(10,472 |
) |
|
|
(7,816 |
) |
Amortization
of debt issuance costs |
|
|
(257 |
) |
|
|
(240 |
) |
|
|
(955 |
) |
|
|
(972 |
) |
Income (loss) before income taxes |
|
|
(71,227 |
) |
|
|
(32,629 |
) |
|
|
49,026 |
|
|
|
121,412 |
|
Income tax
expense (benefit) |
|
|
(21,234 |
) |
|
|
(9,396 |
) |
|
|
13,738 |
|
|
|
33,675 |
|
Net income (loss) |
|
$ |
(49,993 |
) |
|
$ |
(23,233 |
) |
|
$ |
35,288 |
|
|
$ |
87,737 |
|
General Partner's interest in net income (loss) |
|
|
(445 |
) |
|
|
(190 |
) |
|
|
281 |
|
|
|
689 |
|
Limited
Partners' interest in net income (loss) |
|
$ |
(49,548 |
) |
|
$ |
(23,043 |
) |
|
$ |
35,007 |
|
|
$ |
87,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per unit
data (Basic and Diluted): |
|
|
|
|
|
|
|
|
Net income
(loss) available to limited partners |
|
$ |
(1.36 |
) |
|
$ |
(0.58 |
) |
|
$ |
0.94 |
|
|
$ |
2.15 |
|
Dilutive
impact of theoretical distribution of earnings |
|
|
– |
|
|
|
– |
|
|
|
0.09 |
|
|
|
0.33 |
|
Basic and
diluted income (loss) per Limited Partner Unit: |
|
$ |
(1.36 |
) |
|
$ |
(0.58 |
) |
|
$ |
0.85 |
|
|
$ |
1.82 |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of Limited Partner units outstanding (Basic and
Diluted) |
|
|
36,332 |
|
|
|
39,535 |
|
|
|
37,384 |
|
|
|
40,553 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIESRECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited)
|
|
Three Months
Ended September 30, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Net
loss |
|
$ |
(49,993 |
) |
|
$ |
(23,233 |
) |
Plus: |
|
|
|
|
Income tax
benefit |
|
|
(21,234 |
) |
|
|
(9,396 |
) |
Amortization
of debt issuance costs |
|
|
257 |
|
|
|
240 |
|
Interest
expense, net |
|
|
3,050 |
|
|
|
1,872 |
|
Depreciation
and amortization |
|
|
8,002 |
|
|
|
8,692 |
|
EBITDA |
|
|
(59,918 |
) |
|
|
(21,825 |
) |
(Increase) /
decrease in the fair value of derivative instruments |
|
|
29,167 |
|
|
|
(5,805 |
) |
Adjusted
EBITDA |
|
|
(30,751 |
) |
|
|
(27,630 |
) |
Add
/ (subtract) |
|
|
|
|
Income tax
benefit |
|
|
21,234 |
|
|
|
9,396 |
|
Interest
expense, net |
|
|
(3,050 |
) |
|
|
(1,872 |
) |
Provision
(recovery) for losses on accounts receivable |
|
|
147 |
|
|
|
(870 |
) |
Decrease in
accounts receivables |
|
|
49,141 |
|
|
|
20,783 |
|
Increase in
inventories |
|
|
(1,133 |
) |
|
|
(4,521 |
) |
Increase in
customer credit balances |
|
|
44,301 |
|
|
|
33,573 |
|
Change in
deferred taxes |
|
|
(11,018 |
) |
|
|
(1,321 |
) |
Change in
other operating assets and liabilities |
|
|
(3,531 |
) |
|
|
(18,119 |
) |
Net cash
provided by operating activities |
|
$ |
65,340 |
|
|
$ |
9,419 |
|
Net cash
used in investing activities |
|
$ |
(7,856 |
) |
|
$ |
(3,464 |
) |
Net cash
used in financing activities |
|
$ |
(51,828 |
) |
|
$ |
(6,688 |
) |
|
|
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
|
19,400 |
|
|
|
20,800 |
|
Other
petroleum products |
|
|
36,400 |
|
|
|
40,000 |
|
Total all products |
|
|
55,800 |
|
|
|
60,800 |
|
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIESRECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited)
|
|
Twelve
MonthsEnded September 30, |
(in thousands) |
|
|
2022 |
|
|
|
2021 |
|
Net
income |
|
$ |
35,288 |
|
|
$ |
87,737 |
|
Plus: |
|
|
|
|
Income tax
expense |
|
|
13,738 |
|
|
|
33,675 |
|
Amortization
of debt issuance costs |
|
|
955 |
|
|
|
972 |
|
Interest
expense, net |
|
|
10,472 |
|
|
|
7,816 |
|
Depreciation
and amortization |
|
|
32,598 |
|
|
|
33,485 |
|
EBITDA |
|
|
93,051 |
|
|
|
163,685 |
|
(Increase) /
decrease in the fair value of derivative instruments |
|
|
17,286 |
|
|
|
(36,138 |
) |
Adjusted
EBITDA |
|
|
110,337 |
|
|
|
127,547 |
|
Add
/ (subtract) |
|
|
|
|
Income tax
expense |
|
|
(13,738 |
) |
|
|
(33,675 |
) |
Interest
expense, net |
|
|
(10,472 |
) |
|
|
(7,816 |
) |
Provision
(recovery) for losses on accounts receivable |
|
|
5,411 |
|
|
|
(248 |
) |
Increase in
receivables |
|
|
(43,463 |
) |
|
|
(15,171 |
) |
Increase in
inventories |
|
|
(21,105 |
) |
|
|
(11,472 |
) |
Increase in
customer credit balances |
|
|
5,804 |
|
|
|
3,054 |
|
Change in
deferred taxes |
|
|
(3,181 |
) |
|
|
11,361 |
|
Change in
other operating assets and liabilities |
|
|
4,314 |
|
|
|
(4,703 |
) |
Net cash
provided by operating activities |
|
$ |
33,907 |
|
|
$ |
68,877 |
|
Net cash
used in investing activities |
|
$ |
(32,626 |
) |
|
$ |
(50,326 |
) |
Net cash
provided by (used in) financing activities |
|
$ |
8,572 |
|
|
$ |
(70,695 |
) |
|
|
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
|
296,100 |
|
|
|
305,900 |
|
Other
petroleum products |
|
|
150,100 |
|
|
|
154,100 |
|
Total all products |
|
|
446,200 |
|
|
|
460,000 |
|
|
|
|
|
|
Source: Star Group, L.P.
CONTACT: |
|
Star Group, L.P. |
Chris Witty |
Investor Relations |
Darrow Associates |
203/328-7310 |
646/438-9385 or
cwitty@darrowir.com |
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