STAR GROUP, L.P. Q1 FY2025 earnings call

• The first quarter was busy with acquisition-related activities and colder temperatures; adjusted EBITDA rose $3M year over year.
• Temperatures for the three months ending December 31, 2024, were 4% colder than the prior year and 10.5% colder than normal.
• Product gross profit increased due to higher volume and per-gallon margins. Service and installation gross profit improved. Branch delivery and G&A expenses increased due to acquisitions. Base business expenses were largely unchanged.
• Recorded a $5 million non-cash credit related to derivative instruments, compared to a $19 million non-cash charge prior year. Net income increased by $20 million to $33 million. Adjusted EBITDA increased by $3 million to $52 million.
• Completed a sizable strategic acquisition, strengthening propane presence within the existing operating footprint.

Home heating oil and propane volume rose by 2 million gallons or 3% to approximately 82 million gallons. Product gross profit increased by $5.6 million or 4% to approximately $151 million. Service and installation gross profit was $6.9 million for the three months ending December 31, 2024, compared to $4.4 million in the prior year, with a $2.5 million increase due in part to recent acquisitions and improvements in the base business.

• Benefiting from colder temperatures thus far in the second quarter; January finished 20% colder than last year and 7% colder than normal.
• Remain 100% committed to providing customers with outstanding reliability and service, while focusing on operational efficiency and cost control for the remainder of fiscal 2025.

• General economy credit weakness could impact customer payments; need to monitor how the remainder of the heating season progresses.

Q: Views on what's driving the increase in the service and installation business and customer credit?

A: Service and installation improvement due to recent acquisitions and internal productivity initiatives; credit has some weakness but product cost and price factors affected sales.

Q: Thoughts on capital allocation, additional acquisitions, and dividends?

A: Capital allocation decisions await after heating season; focus on replacement acquisitions, unit repurchases, and growth; distribution decisions in April.

Q: Observations on customer churn?

A: Customer losses in check; new customer additions sluggish but rebounded in January; stable February forecast.