Sign in

You're signed outSign in or to get full access.

SG

STAR GROUP, L.P. (SGU)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue declined 7.8% year-over-year to $305.6M as warmer temperatures (+2% YoY; ~19% warmer than normal), net customer attrition, and lower selling prices drove reduced product sales and volumes; Adjusted EBITDA loss widened to $(10.6)M and net loss increased to $(16.6)M, with acquisitions providing a partial offset .
  • Home heating oil and propane volumes fell 3.8% YoY to 36.2M gallons, while product margins were slightly lower; service and installation gross profit improved by ~$0.6M YoY, reflecting operational focus and acquisition mix .
  • Management emphasized continued progress improving service/installation profitability and contribution from recent propane acquisitions; net customer attrition was “roughly flat” YoY, and the team remains active on acquisitions, with four deals closed fiscal year-to-date and AI deployed in customer interfaces for selective use .
  • Dividend actions remained supportive: the Board previously increased annual distribution by $0.05 to $0.74 per unit (April) and declared $0.1850 per common unit for Q3 (payable Aug 6); FY2026 weather hedges of ~$15M are in place, similar to FY2025 .

What Went Well and What Went Wrong

What Went Well

  • Continued improvement in service and installation performance; combined service/installation gross profit rose ~$0.6M YoY in the quarter and contributed meaningfully year-to-date as operational initiatives took hold .
  • Acquisition-related Adjusted EBITDA positively contributed in Q3 and year-to-date, with propane assets described as “slightly less seasonal,” supporting resiliency during non-heating periods .
  • YTD Adjusted EBITDA increased by $28.2M to $169.5M, driven by higher per-gallon margins, increased volumes from colder weather and acquisitions, and better service/installation profitability despite a $10.6M headwind from the weather hedge contracts .

What Went Wrong

  • Volumes declined 3.8% YoY to 36.2M gallons in Q3 due to warmer weather, net customer attrition, and other factors; selling prices fell with wholesale costs down ~$0.3525/gal (14.3%), pressuring product revenue .
  • Adjusted EBITDA loss widened to $(10.6)M from $(4.1)M YoY as lower volumes and slightly lower per-gallon margins in the base business outweighed lower operating costs and positive acquisition contribution .
  • Delivery, branch, and G&A increased by $4.3M YoY (acquisitions +$5.8M, base business −$1.5M), D&A rose $2.0M, and net interest expense increased ~$0.9–$1.0M, reflecting the impact of recent acquisitions .

Financial Results

Quarterly Financials (Q1–Q3 FY2025)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$488.1 $743.0 $305.6
Basic & Diluted EPS ($/Unit)$0.79 $2.01 $(0.48)
Net Income (Loss) ($USD Millions)$32.9 $85.9 $(16.6)
Adjusted EBITDA ($USD Millions)$51.9 $128.2 $(10.6)
EBITDA Margin (%)10.6% (51.9/488.1) 17.3% (128.2/743.0) −3.5% (−10.6/305.6)
Gross Profit ($USD Millions)$157.7 (488.1−248.7−81.7) $259.9 (743.0−406.9−76.2) $85.9 (305.6−144.5−75.2)
Gross Profit Margin (%)32.3% (157.7/488.1) 35.0% (259.9/743.0) 28.1% (85.9/305.6)
Heating Oil & Propane Gallons (MM)82.4 143.9 36.2
Other Petroleum Products (MM)30.7 28.9 32.0

Q3 YoY Comparison (Q3 2025 vs Q3 2024)

MetricQ3 2024Q3 2025YoY Change
Revenue ($USD Millions)$331.6 $305.6 −7.8%
Basic & Diluted EPS ($/Unit)$(0.31) $(0.48) Loss widened
Net Loss ($USD Millions)$(11.0) $(16.6) $(5.6) worse
Adjusted EBITDA ($USD Millions)$(4.1) $(10.6) $(6.5) worse
Heating Oil & Propane Gallons (MM)37.7 36.2 −3.8%
Temperature vs Prior Year—+2.0% warmer; ~19.3% warmer than normal Warmer headwind

Segment Sales Mix

MetricQ1 2025Q2 2025Q3 2025
Product Sales ($USD Millions)$399.5 $665.1 $216.2
Installations & Services ($USD Millions)$88.6 $77.9 $89.5

KPIs and Operating Drivers

KPIQ1 2025Q2 2025Q3 2025
NOAA Temperature vs Prior Year+4.1% colder vs LY; +10.5% warmer than normal +12.9% colder vs LY; +4.5% warmer than normal +2.0% warmer vs LY; ~19.3% warmer than normal
Weather Hedge Impact (YTD)Credit vs PY due to hedge difference (context) $(3.1)M expense in Q2’25 vs +$6.5M credit in Q2’24 YTD $(3.1)M expense vs +$7.5M credit PY
Per-Gallon Cost ChangeWholesale product cost −$0.4969/gal YoY −$0.2887/gal YoY −$0.3525/gal YoY

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Annual Distribution per UnitFY2025$0.69 (implied prior)$0.74 (raised by $0.05) Raised
Quarterly Distribution per UnitQ3 2025—$0.1850 (record 7/28; pay 8/6) Announced
Weather Hedge ProgramFY2026—~$15M of weather hedges placed; similar terms to FY2025 Initiated
Formal Revenue/Margin/OpEx GuidanceFY/QNot providedNot providedMaintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 FY2025)Current Period (Q3 FY2025)Trend
Acquisition PipelineActive; $126.5M since Feb 1, 2024; multiple deals within footprint Four transactions closed FYTD; pipeline remains busy Continued momentum
Service & Installation ProductivityFocused program, improved profitability and contribution Continued improvement; $0.6M YoY GP increase Improving
Weather and Hedge ImpactsQ1 colder vs LY; Q2 colder vs LY; hedge expense in FY2025 vs credit in FY2024 Q3 warmer vs LY; YTD hedge expense $(3.1)M vs PY credit $7.5M Mixed; hedge headwind FYTD
Tariffs/Supply Chain (HVAC)HVAC parts/equipment price increases +3–15% due to tariffs; vendors provided notice for pricing No new tariff detail in Q3; continued monitoring Persistent external pressure
AI/Technology InitiativesNot highlighted earlierAI instituted in customer interface; balanced with “personal touch” Emerging selective use
Capital Allocation (Buybacks)No change to buyback program mechanics; ongoing evaluation No update in Q3; emphasis on acquisitions/dividends Steady framework
Customer Churn/CreditLosses “in check”; additions sluggish in Q1; bad-debt rate historically stable Net attrition “roughly flat” YoY Stable to cautious

Management Commentary

  • CEO: “We were pleased with our continued improvement in service and installation performance, and acquisition-related Adjusted EBITDA positively contributed to the quarter as well as the year-to-date period… we believe we are positioning Star as a fully diversified energy provider… more resilient and adaptable to varied weather conditions” .
  • CFO: “Adjusted EBITDA loss increased by $6.5 million to $10.6 million as… lower volumes in the base business and slightly lower per gallon margins” outweighed base cost reductions and positive acquisition EBITDA .
  • CEO on AI: “We have instituted some of that technology into our customer interface… we always like and prefer that personal touch” .
  • CFO on YTD: Adjusted EBITDA rose by $28M to $170M, driven by base business and acquisitions, partially offset by a $10.6M increase in weather hedge expense .

Q&A Highlights

  • Acquisition pipeline: Management closed four transactions FYTD; sees “plenty of activity” and remains focused on strategic fit within footprint .
  • AI deployment: Selective use in customer interface with emphasis on maintaining human service quality .
  • Tariffs/HVAC: Prior quarter commentary noted 3–15% increases on HVAC parts/equipment; pricing adjusted with vendor notice .
  • Buybacks: No change to program mechanics; capital allocation balances replacement acquisitions, growth deals, and unit repurchases .
  • Customer credit/churn: Bad-debt ratios historically stable; net attrition “roughly flat” YoY, with operational focus on retention .

Estimates Context

  • S&P Global consensus for Q3 2025 EPS, revenue, and target price was unavailable for SGU at the time of this analysis; as a result, a formal beat/miss assessment versus Wall Street estimates cannot be made at this time. Values retrieved from S&P Global.*
  • Actuals: Revenue $305.6M (Q3), Adjusted EBITDA $(10.6)M, EPS $(0.48); prior quarters: Q2 revenue $743.0M, Adjusted EBITDA $128.2M, EPS $2.01; Q1 revenue $488.1M, Adjusted EBITDA $51.9M, EPS $0.79 .

Key Takeaways for Investors

  • Volume/margin sensitivity remains high in non-heating season: Q3 results were pressured by warmer weather and lower selling prices; expect seasonality to drive stronger performance in heating months, with acquisitions moderating seasonality over time .
  • Operational execution is a bright spot: service/installation profitability continues to improve, supporting earnings quality and diversification beyond pure commodity sales .
  • Propane acquisitions are strategically valuable: management highlights less seasonality and positive EBITDA contribution even in a historical loss quarter .
  • Weather hedge dynamics flipped YoY: FY2025 recorded an expense vs FY2024 credit; hedges are in place for FY2026, suggesting continued risk management discipline .
  • Capital returns remain intact: annual distribution increased to $0.74 per unit and Q3 distribution of $0.185 was declared; unit repurchases remain a tactical lever alongside acquisitions .
  • Near-term trading lens: Q3 softness likely viewed as seasonal and weather-driven; watch December quarter update for confirmation of improved trajectory and acquisition integration progress .
  • Medium-term thesis: Continued consolidation (acquisitions), service/installation uplift, and propane mix should support margin stability and resilience, albeit with ongoing exposure to temperatures and wholesale cost volatility .

Citations:

*Values retrieved from S&P Global.