Michael Prouting

Michael Prouting asked about the trends in customer attrition, noting lower customer gains and higher losses in the fourth quarter, and an overall negative trend in net attrition over the past few years. He sought reasons for the Q4 attrition and future outlook. He also inquired about the acquisition pipeline and the outlook for free cash flow, specifically regarding working capital and inventory.

Answer

President and CEO Jeff Woosnam explained that low prospect activity, reduced real estate transactions, and a lack of disruptive weather impacted new customer gains, despite loss rates being at historical lows and internal customer satisfaction improving. He added that the acquisition pipeline remains active with several tuck-in and smaller standalone opportunities, with no significantly sizable deals currently. CFO Rich Ambury clarified that free cash flow was not significantly different year-over-year, attributing minor variations to the timing of income taxes, inventory inflows, and increased interest expense, rather than a specific deal on heating oil.

Michael Prouting from 10K Capital LLC inquired about Star Group's acquisition pipeline and the potential applications of artificial intelligence (AI) within the business, particularly in customer service.

Answer

President & CEO Jeffrey Woosnam confirmed the acquisition pipeline remains active, with four deals closed in the fiscal year and more opportunities being evaluated. Regarding AI, Woosnam noted its use in the customer interface but stressed the importance of balancing technology with the personal, human touch essential to their service-oriented business model.

Michael Prouting of 10K Capital LLC inquired about the status of Star Group's acquisition pipeline and the company's perspective on implementing Artificial Intelligence (AI) in its operations, particularly for customer service.

Answer

President & CEO Jeffrey Woosnam confirmed a robust acquisition pipeline, noting four deals closed in the fiscal year and ongoing activity. On AI, he stated that while some technology is used for the customer interface, the company prioritizes maintaining a personal, human touch, balancing technological assistance with direct employee support to ensure customer comfort and high-quality service.

Michael Prouting of 10K Capital LLC inquired about the current state of Star Group's acquisition pipeline and the potential applications of artificial intelligence (AI) within the business, particularly in customer service.

Answer

President & CEO Jeffrey Woosnam responded, stating that the acquisition pipeline remains robust with four transactions closed in the current fiscal year and significant market activity. Regarding AI, Woosnam confirmed that Star Group has begun integrating AI into its customer interface but emphasized the importance of maintaining a 'personal touch' as a service-first business, balancing technology with direct employee interaction to ensure customer comfort and support.

Michael Prouting of 10K Capital LLC inquired about the current state of Star Group's acquisition pipeline and the company's perspective on implementing Artificial Intelligence (AI) in its operations, especially for customer service.

Answer

President & CEO Jeffrey Woosnam stated that the acquisition pipeline remains active, with the team busy evaluating opportunities following four successful transactions this fiscal year. Regarding AI, he explained that while the company has begun integrating it into the customer interface, they are carefully balancing technology with the essential 'personal touch' of their service-oriented business to ensure customers can always reach a human representative.

Michael Prouting from 10K Capital LLC inquired about the current state of Star Group's acquisition pipeline and the potential applications of artificial intelligence (AI) within the business, particularly in customer service.

Answer

President & CEO Jeffrey Woosnam confirmed that the acquisition pipeline remains robust, with four transactions closed in the fiscal year and significant market activity. Regarding AI, Woosnam noted that while some AI has been integrated into the customer interface, the company prioritizes maintaining a personal, human touch, viewing it as a balancing act with future technological opportunities.

Michael Prouting of 10K Capital asked about the potential impact of tariffs on product pricing and the current dynamics of the acquisition market, including deal availability and the company's capacity to execute.

Answer

President and CEO Jeffrey Woosnam addressed the tariff question, stating the company has seen 3% to 15% price increases on HVAC parts and equipment but has been able to adjust its own pricing due to advance notice from vendors. Regarding acquisitions, Woosnam noted that he has not seen any tax-related drivers, but that a busy heating season has brought more opportunities to the market as anticipated, and the company has the firepower to execute.

Michael Prouting from 10K Capital asked about the company's capital allocation strategy concerning future acquisitions, dividends, and share buybacks, and also inquired about recent trends in customer churn.

Answer

President and CEO Jeffrey Woosnam explained that decisions on the distribution are typically made after the heating season, while choices between buybacks and M&A depend on economics and timing. He also noted that while gross customer losses were low, new customer additions have been sluggish but showed signs of rebounding in January. CFO Richard Ambury confirmed the Board would review the distribution in April.

Michael Prouting inquired about the company's expectations for the upcoming heating season's weather, current customer retention trends, and the outlook for the M&A environment, including the potential for larger transactions.

Answer

President and CEO Jeffrey Woosnam responded that the company plans for normal weather, as long-term forecasts are unreliable. He explained that while internal customer loss rates have improved, net attrition was impacted by a slow real estate market and mild weather, which reduced new customer gains. On the M&A front, Woosnam described the pipeline as strong and encouraging, highlighting five acquisitions in fiscal 2024, another in October, and several opportunities currently in late-stage review.