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SG

STAR GROUP, L.P. (SGU)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue declined to $240.3M, down 10.0% year over year, with a net loss widening to $35.1M driven primarily by a $28.4M unfavorable non-cash change in derivative fair value .
  • Adjusted EBITDA loss improved modestly to $(29.7)M vs $(31.4)M in Q4 2023, helped by higher per‑gallon margins and stronger service/installation profitability despite lower volumes and higher operating expenses .
  • Management highlighted full‑year Adjusted EBITDA +$14.7M YoY to $111.6M, better per‑gallon margins, and active M&A including a definitive ~$68M acquisition announced after quarter‑end; new credit facility adds liquidity ($400M revolver, $210M term loan) .
  • No formal revenue/EPS guidance provided; management noted FY25 weather hedge max $15M, stable distribution of $0.1725 per unit for Q4, and improving service margins; potential stock catalysts include accretive M&A, weather-driven demand, and margin discipline .

What Went Well and What Went Wrong

What Went Well

  • Higher per‑gallon margins and improved service/installation profitability supported incremental Adjusted EBITDA improvement in Q4 versus prior year; full‑year Adjusted EBITDA rose $14.7M YoY to $111.6M .
  • Active acquisition program: five deals in FY2024 (~20,000 customers and ~23M gallons annually), plus a ~$68M definitive agreement announced post‑quarter to strengthen the footprint .
  • Strategic liquidity: entered a seventh amended and restated credit facility with a $400M revolver ($475M during heating season) and a $210M term loan to repay debt and fund acquisitions and general corporate purposes .
    • “Our recently completed credit facility… provides additional liquidity for acquisitions and general corporate purposes. This leaves us well positioned to complete some near‑term opportunities currently under review.” — CEO Jeff Woosnam .

What Went Wrong

  • Net loss widened in Q4 to $(35.1)M due to a $28.4M unfavorable non‑cash change in derivative fair value; operating loss increased to $(48.6)M .
  • Revenue fell 10.0% YoY to $240.3M on slightly lower volumes and lower selling prices; home heating oil and propane gallons were 18.5M, down 1.5% YoY .
  • Net customer attrition was 4.2% for FY2024, up slightly YoY, with lower real estate activity and lack of severe weather limiting new customer additions and service-driven conversions .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Revenue ($USD Millions)$266.9 $331.6 $240.3
Net Income (Loss) ($USD Millions)$(19.7) $(11.0) $(35.1)
EPS (Basic & Diluted, $/Unit)$(0.55) $(0.31) $(1.00)
Adjusted EBITDA ($USD Millions)$(31.4) $(4.1) $(29.7)
Operating Income (Loss) ($USD Millions)$(23.0) $(12.3) $(48.6)

Segment and activity breakdown

Segment / KPIQ4 2023Q3 2024Q4 2024
Product Sales ($USD Millions)$188.0 $249.0 $155.9
Installations & Services ($USD Millions)$78.9 $82.6 $84.4
Home Heating Oil & Propane Gallons Sold (Millions)18.8 37.7 18.5
Other Petroleum Products Volume (Millions)34.3 32.9 33.7
Product Gross Profit ($USD Millions)—$75.0 $42.0
Net Cash from Operating Activities ($USD Millions)$20.9 $77.5 $38.6

Context and drivers

  • Q4 Adjusted EBITDA loss improved $1.7M YoY as higher per‑gallon margins and service profitability, plus acquisition EBITDA, offset higher operating expenses and lower volumes .
  • The net loss increase was primarily driven by an unfavorable, non‑cash derivative fair value change ($28.4M) .
  • Full‑year 2024: revenue $1.77B (down 9.6%), Adjusted EBITDA $111.6M (up $14.7M), net income $35.2M (up $3.3M) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Distribution per Unit ($)Q4 2024$0.1725 (Q3 2024) $0.1725 Maintained
Weather Hedge Max Potential ($USD Millions)FY 2025FY2024 actual benefit $7.5M (coverage lower) Max payout potential $15M Raised coverage
Credit Facility CapacityAs of Oct 1, 2024Prior facility not disclosed hereRevolver $400M ($475M in heating season), Term Loan $210M; expires Sep 2029 Liquidity increased
M&A Pipeline / Definitive AgreementDec 12, 2024Active pipeline Definitive agreement ~$68M acquisition; closing targeted ~45 days Accretive expansion

Note: Company did not issue formal revenue/EPS guidance ranges for Q4 or FY2025 in these materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Weather & HedgeQ2: Temperatures ~15% warmer than normal; FY2024 hedge benefit $7.5M vs $12.5M; FY2025 hedge set to $15M max October–November mild; November ~20% milder than normal; planning on normal; reiterates hedge framework Continued weather variability; hedge protection increased
Per‑Gallon Margins & Service ProfitabilityQ3: Higher volumes and per‑gallon margins; service/installation profit up; Adjusted EBITDA loss reduced by ~$19M Q4: Higher per‑gallon margins; product GP ~$42M; service/installation profitability up Sustained margin focus and service execution
Customer Retention / AttritionQ3: Net attrition stable and down slightly YoY FY2024 net customer attrition 4.2%, up slightly; lower real estate activity and lack of storms impacted additions Attrition modestly worse YoY; operational focus continues
M&A ActivityQ3: Definitive ~$35M deal; five acquisitions in FY2024 pipeline active Post‑Q4: Definitive ~$68M acquisition; pipeline strong with several opportunities under review Pipeline building; deal sizes increasing
Liquidity / Balance Sheet—New credit facility: $400M revolver ($475M peak), $210M term loan; repay $132.1M debt; fund acquisitions Enhanced capacity for M&A and operations

Management Commentary

  • “Full year Adjusted EBITDA rose by $14.7 million… reflecting an increase in home heating oil and propane per‑gallon margins and higher service and installation profitability. We continue to focus on cost containment and the pursuit of attractive acquisitions… net customer attrition… at 4.2% in fiscal 2024” — CEO Jeff Woosnam .
  • “Adjusted EBITDA loss decreased by $1.7 million to approximately $30 million in the quarter, reflecting higher home heating oil and propane per gallon margins, an increase in service and installation profitability, and additional EBITDA from acquisitions…” — CFO Rich Ambury .
  • “Our acquisition program remains an important component of our growth strategy… completed 5 separate transactions during fiscal 2024… recently completed credit facility… provides additional liquidity for acquisitions and general corporate purposes.” — CEO Jeff Woosnam .
  • “Temperatures… were less than 0.1% warmer than the prior year period… product gross profit increased by approximately $21 million… Adjusted EBITDA rose by $14.7 million to $111.6 million…” — CFO Rich Ambury (full‑year context) .

Q&A Highlights

  • Weather outlook: Management avoids long‑range forecasts; early FY2025 months were mild (November ~20% milder than normal), planning on normal; weather remains key demand driver .
  • Customer retention: Internal satisfaction indicators and loss rates improving; however, lower real estate activity and absence of major storms limited net gains; FY2024 attrition 4.2% .
  • M&A environment: Pipeline “strong” with several opportunities in later stages; five deals closed in FY2024; definitive ~$68M acquisition announced post‑quarter .
  • Hedge program: FY2025 weather hedge max potential $15M; designed to mitigate weather volatility and smooth cash flows .

Estimates Context

  • Attempts to retrieve Q4 2024 Wall Street consensus (Revenue Consensus Mean, Primary EPS Consensus Mean) via S&P Global failed due to daily request limit exceeded; therefore, consensus comparisons to estimates are unavailable at this time [Values intended from S&P Global but unavailable].
  • Implication: Absent formal consensus, focus on sequential and YoY comparisons; management cites margin strength and service profitability as offsets to mild weather and attrition .

Key Takeaways for Investors

  • Margin resilience: Per‑gallon margin expansion and stronger service/installation profitability are supporting EBITDA even in mild weather periods; watch for sustainability through peak heating months .
  • Weather and derivatives: Q4 headline net loss was largely driven by non‑cash derivative fair value changes; assess underlying cash generation (Q4 operating cash flow $38.6M) for quality of earnings .
  • M&A acceleration: A larger ~$68M deal post‑quarter and an expanded credit facility indicate capacity to pursue accretive consolidation; near‑term transaction closings could be a catalyst .
  • Customer dynamics: FY2024 attrition at 4.2% and sluggish real estate activity dampen additions; continued retention and service differentiation remain crucial .
  • Liquidity strength: $400M revolver ($475M in season) and $210M term loan extend runway to fund acquisitions and operations; reduces refinancing risk through 2029 .
  • Hedge protection: FY2025 weather hedge program increased to $15M max, providing a buffer against mild winters .
  • Watch narrative into Q1 FY2025: Management will report in February; monitor early-season degree days, margin trends, progress on acquisition closing, and any update on attrition trajectory .