STAR GROUP, L.P.
For the period ended Mar 31, 2025. Filed May 7, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
SGU$13.18+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-05.
0000950170-25-014482
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000950170-25-065692
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 181 current paragraphs.
80 unchanged; 38 reworded; 41 added; 6 removed; 0 previous and 22 current paragraphs rearranged.
Tables are not compared: 12 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
The temperatures experienced during the hedge period through March 31, 2025 were colder than the strikes in the weather hedge contracts. As a result at March 31, 2025, we increased delivery and branch expense and recorded a payable under those weather hedge contracts of $3.1 million, and paid the amount in full in April 2025. By comparison, the temperatures experienced during the hedge period through March 31, 2024 were warmer than the strike in the weather hedge contract. As of March 31, 2024, we reduced delivery and branch expenses and recorded a receivable of $7.5 million under the weather hedge contract, and received the amount in full in April 2024.
Current report
Tariffs
Current report
In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on some countries, including Canada and China. Current uncertainties about tariffs and their effects on trading relationships may affect the cost and availability of the Company's assets, such as trucks, and potentially the products and services we sell as well as potentially contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain.
Current report
Increases in State Law Minimum Biofuel Blending Requirements
Current report
Commencing July 1, 2025, we and our home heating oil competitors will become subject to an increase from the current level of 5% to 10% in the minimum percentage of biodiesel that is required be blended with home heating oil sold for heating purposes in buildings located in the States of New York and Connecticut (where a significant portion of our customers are located), and an increase from the current level of 10% to 20% in the minimum percentage of biodiesel that is required be blended with home heating oil sold for heating purposes in buildings in Rhode Island. Depending upon the relationship of home heating oil and biodiesel, these regulations may decrease or increase the cost of home heating oil for Star and our competition in New York, Connecticut or Rhode Island.
Current report
For the three months ended March 31, 2025, product sales increased by $69.8 million, or 11.7%, to $665.1 million, compared to $595.3 million for the three months ended March 31, 2024, due to an increase in total volume sold of 17.3% and slightly offset by a decrease in wholesale product cost of $0.2887 per gallon, or 10.9%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Current report
For the three months ended March 31, 2025, cost of product increased $17.5 million, or 4.5%, to $406.9 million, compared to $389.4 million for the three months ended March 31, 2024, due to an increase in total volume sold of 17.3% and slightly offset by a decrease in wholesale product cost of $0.2887 per gallon, or 10.9%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Current report
During the three months ended March 31, 2024, the change in the fair value of derivative instruments resulted in an $11.8 million credit due to an increase in the market value for unexpired hedges (a $0.7 million credit) and an $11.1 million credit due to the expiration of certain hedged positions.
Current report
For the three months ended March 31, 2025, general and administrative expenses increased by $1.3 million or 18.9%, to $8.2 million, from $6.9 million for the three months ended March 31, 2024, due to a $1.2 million increase in profit sharing expense and $0.1 million of other net expense increases. The Company accrues approximately 6.0% of Adjusted EBITDA as defined in its profit sharing plan for distribution to its employees. This amount is payable when the Company achieves Adjusted EBITDA of at least 70% of the amount budgeted. The dollar amount of the profit sharing pool adjusts accordingly based on Adjusted EBITDA levels achieved.
Current report
For the three months ended March 31, 2025, finance charge income was $1.4 million, essentially unchanged from the three months ended March 31, 2024.
Current report
Six Months Ended March 31, 2025
Current report
Compared to the Six Months Ended March 31, 2024
Current report
Volume
Current report
Volume of motor fuel and other petroleum products sold decreased by 2.9 million gallons, or 4.8%, to 59.6 million gallons for the six months ended March 31, 2025, compared to 62.5 million gallons for the six months ended March 31, 2024.
Current report
Product Sales
Current report
Installations and Service
Current report
Cost of Product
Current report
Gross Profit — Product
Current report
For the six months ended March 31, 2025, total product gross profit was $408.9 million, which was $57.8 million, or 16.5%, higher than the six months ended March 31, 2024, due to an increase in home heating oil and propane volume sold ($48.7 million), an increase in home heating oil and propane margins ($8.5 million) and an increase in gross profit from other petroleum products ($0.6 million).
Current report
Cost of Installations and Service
Current report
During the six months ended March 31, 2025, the change in the fair value of derivative instruments resulted in an $11.4 million credit as a decrease in the market value for unexpired hedges (a $2.0 million charge) was more than offset by a $13.4 million credit due to the expiration of certain hedged positions.
Current report
During the six months ended March 31, 2024, the change in the fair value of derivative instruments resulted in a $7.3 million charge due to a decrease in the market value for unexpired hedges (a $3.5 million charge) and a $3.8 million charge due to the expiration of certain hedged positions.
Current report
Delivery and Branch Expenses
Current report
For the six months ended March 31, 2025, delivery and branch expense increased $25.9 million, or 13.0%, to $224.3 million, compared to $198.4 million for the six months ended March 31, 2024. During the six months ended March 31, 2025, the Company's weather hedge contracts accounted for a $10.6 million increase in expense. The temperatures experienced during the second quarter of fiscal 2025 were colder than the strike prices and, therefore, the Company recorded an expense under those weather hedge contracts of $3.1 million. This compares to the prior-year period which, due to warmer weather, the Company recorded a credit of $7.5 million under its weather hedge contract. The increase was also driven by $13.0 million of expenses from recent acquisitions and a $2.3 million increase in net base business expenses. The increase in the base business expenses was driven by a $2.1 million, or 3.2%, increase in delivery expenses due to a 9.4 million gallon, or 4.8%, increase in home heating oil and propane volume sold in the base business compared to the prior year and $2.3 million of other net expense increases that were partially offset by a $2.1 million decrease in insurance related costs.
Current report
Depreciation and Amortization Expenses
Current report
For the six months ended March 31, 2025, depreciation and amortization expenses increased $0.7 million, or 4.2%, to $16.8 million, compared to $16.1 million for the six months ended March 31, 2024, primarily due acquisitions and slightly offset by intangible assets that fully amortized in the prior fiscal year.
Current report
General and Administrative Expenses
Current report
For the six months ended March 31, 2025, general and administrative expenses increased by $1.5 million or 10.5%, to $15.4 million, from $13.9 million for the six months ended March 31, 2024, due to a $1.3 million increase in profit sharing expense and $0.2 million of other net expense increases. The Company accrues approximately 6.0% of Adjusted EBITDA as defined in its profit sharing plan for distribution to its employees. This amount is payable when the Company achieves Adjusted EBITDA of at least 70% of the amount budgeted. The dollar amount of the profit sharing pool adjusts accordingly based on Adjusted EBITDA levels achieved.
Current report
Finance Charge Income
Current report
For the six months ended March 31, 2025, finance charge income was $2.1 million, essentially unchanged from the six months ended March 31, 2024.
Current report
Interest Expense, Net
Current report
Amortization of Debt Issuance Costs
Current report
For the six months ended March 31, 2025, amortization of debt issuance cost was $0.5 million, essentially unchanged from the six months ended March 31, 2024.
Current report
Income Tax Expense
Current report
For the six months ended March 31, 2025, the Company’s income tax expense increased by $14.8 million to $47.8 million, from $33.0 million for the six months ended March 31, 2024. The increase in the income tax expense was driven by a $52.2 million increase in income before income taxes.
Current report
Net Income
Current report
For the six months ended March 31, 2025, Star’s net income increased $37.4 million, to $118.8 million, compared to the six months ended March 31, 2024, primarily due to a $34.7 million increase in Adjusted EBITDA and a favorable change in the fair value of derivative instruments of $18.6 million that was partially offset by a $14.8 million increase in income tax expense, a $0.7 million increase in depreciation and amortization expenses and a $0.4 million increase in net interest expense.
Current report
Adjusted EBITDA
Current report
For the six months ended March 31, 2025, Adjusted EBITDA increased $34.7 million, to $180.0 million, compared to the six months ended March 31, 2024, primarily due to an increase in Adjusted EBITDA from recent acquisitions, an increase in home heating oil and propane per gallon margins in the base business, higher home heating oil and propane volume sold in the base business due to colder weather and an improvement in service and installation profitability.
Showing the first 40 of 41 passages. Open the source sections for the rest.
Removed paragraphs (6)
Previous report
In accordance with ASC 815-45, we did not incur a benefit or expense related to the weather hedge contracts for the first quarter of fiscal 2025. The final settlement under the weather hedge contracts for fiscal 2025 may differ depending on the actual degree-days recorded in the period from January 1, 2025 through March 31, 2025. For the first quarter of fiscal 2024, we reduced delivery and branch expenses and recorded a receivable of $1.0 million under our weather hedge contract.
Previous report
The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons. During the three months ended December 31, 2024, the Company acquired one heating oil business for approximately $0.7 million and in January 2025 purchased the customer list and assets of one propane business for an aggregate amount of approximately $68.0 million.
Previous report
During the three months ended December 31, 2023, the change in the fair value of derivative instruments resulted in a $19.0 million charge as a decrease in the market value for unexpired hedges (a $19.1 million charge) was partially offset by a $0.1 million credit due to the expiration of certain hedged positions.
Previous report
For the three months ended December 31, 2024, general and administrative expenses increased by $0.2 million or 2.3%, to $7.2 million, from $7.0 million for the three months ended December 31, 2023, due to a $0.2 million increase in salaries and benefits expenses.
Previous report
For the three months ended December 31, 2024, finance charge income decreased by $0.1 million or 12.4% to $0.7 million, from $0.8 million for the three months ended December 31, 2023, due to less late customer payment charges received on aged receivables.
Previous report
During the three months ended December 31, 2024, cash used in operating activities increased $4.3 million, to $64.6 million, compared to $60.3 million in cash used in operating activities during the three months ended December 31, 2023. The increase was driven by a $7.7 million increase in net cash paid for certain hedge positions, a $2.2 million decrease in collection of trade receivables on a comparable basis (including accounts receivable and customer credit balance accounts) and $0.5 million of other net changes in working capital. The increases were partially offset by a $6.1 million favorable change in accounts payable due to timing of inventory purchases.
Reworded paragraphs (38)
Previous wording
This Quarterly Report on Form 10-Q (this “Report”) includes “forward-looking statements” which represent our expectations or beliefs concerning future events that involve risks and uncertainties, including the impact of geopolitical events 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, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, the effect of weather conditions on our operational and 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 and electrification of heating systems, future global health pandemics, recessionary economic conditions, 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, global supply chain issues, labor shortages and new technology, including alternative methods for heating and cooling residences. All statements other than statements of historical facts included in this Report including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, 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 we believe that the expectations reflected in such forward-looking statements are reasonable, we 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 in this Report under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Fiscal 2024 Form 10-K under Part I Item 1A “Risk Factors.” Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this Report and in our Fiscal 2024 Form 10-K. 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, we undertake 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 Report.
Current wording
This Quarterly Report on Form 10-Q (this “Report”) includes “forward-looking statements” which represent our expectations or beliefs concerning future events that involve risks and uncertainties, including the impact of geopolitical events on wholesale product cost volatility, tariff regimes, including newly imposed U.S. tariffs and any additional responsive non-U.S. tariffs or additional U.S. tariffs, 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, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, the effect of weather conditions on our operational and 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 and electrification of heating systems, future global health pandemics, recessionary economic conditions, 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, global supply chain issues, labor shortages and new technology, including alternative methods for heating and cooling residences. All statements other than statements of historical facts included in this Report including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, 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 we believe that the expectations reflected in such forward-looking statements are reasonable, we 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 in this Report under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Fiscal 2024 Form 10-K under Part I Item 1A “Risk Factors.” Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this Report and in our Fiscal 2024 Form 10-K. 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, we undertake no obligation to update or revise an…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Volatility, which is reflected in the wholesale price of liquid products, including home heating oil, propane and motor fuels, has a larger impact on our business when prices rise. Home heating oil consumers are sensitive to heating cost increases, and this often leads to customer conservation and increased gross customer losses. As a commodity, the price of home heating oil is generally impacted by many factors, including economic and geopolitical forces and is closely linked to the price of diesel fuel. The volatility in the wholesale cost of diesel fuel as measured by the New York Mercantile Exchange (“NYMEX”), for the fiscal years ending September 30, 2021, through 2025, on a quarterly basis, is illustrated in the following chart (price per gallon):
Current wording
Volatility, which is reflected in the wholesale price of liquid products, including home heating oil, propane and motor fuels, has a larger impact on our business when prices rise. Home heating oil consumers are sensitive to heating cost increases, and this often leads to customer conservation and increased gross customer losses. As a commodity, the price of home heating oil is generally impacted by many factors, including economic and geopolitical forces, tariff regimes and is closely linked to the price of diesel fuel. The volatility in the wholesale cost of diesel fuel as measured by the New York Mercantile Exchange (“NYMEX”), for the fiscal years ending September 30, 2021, through 2025, on a quarterly basis, is illustrated in the following chart (price per gallon):
Previous wording
(a) On January 31, 2025, the NYMEX ultra low sulfur diesel contract closed at $2.48 per gallon.
Current wording
(a) On April 30, 2025, the NYMEX ultra low sulfur diesel contract closed at $2.04 per gallon.
Previous wording
The Company entered into weather hedge contracts for fiscal year 2025 and 2024. The hedge period runs from November 1 through March 31, taken as a whole. The “Payment Thresholds,” or strikes, are set at various levels and are referenced against degree days for the prior ten year average. Under these contracts the maximum amount the Company can receive is $15.0 million annually for fiscal 2025 and $12.5 million annually for fiscal 2024. For the contracts applicable to fiscal 2025, we are additionally obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold. This obligation did not exist under the contract applicable for 2024.
Current wording
The Company entered into weather hedge contracts for fiscal year 2025 and 2024. The hedge period runs from November 1 through March 31, taken as a whole. The “Payment Thresholds,” or strikes, are set at various levels and are referenced against degree days for the prior ten year average. Under these contracts, the maximum amount the Company can receive is $15.0 million for fiscal 2025 and $12.5 million for fiscal 2024. For the contracts applicable to fiscal 2025, we are additionally obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold. This obligation did not exist under the contract applicable for 2024.
Previous wording
We measure net customer attrition on an ongoing basis for our full service residential and commercial home heating oil and propane customers. Net customer attrition is the difference between gross customer losses and customers added through marketing efforts. Customers added through acquisitions are not included in the calculation of gross customer gains. However, additional customers that are obtained through marketing efforts or lost at newly acquired businesses are included in these calculations from the point of closing going forward. Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date. Gross customer losses are the result of a number of factors, including price competition, move-outs, credit losses, natural gas and electric conversions and service disruptions. When a customer moves out of an existing home, we count the “move out” as a loss, and, if we are successful in signing up the new homeowner, the “move in” is treated as a gain. Customers sourced by alliance partners are included in our home heating oil and propane customer base. Therefore, any changes in the relationships with our alliance partners could impact gross customer gains and losses going forward.
Current wording
We measure net customer attrition on an ongoing basis for our full service residential and commercial home heating oil and propane customers. Net customer attrition is the difference between gross customer losses and customers added through marketing efforts. Customers added through acquisitions are not included in the calculation of gross customer gains. However, additional customers that are obtained through marketing efforts or lost at newly acquired businesses are included in these calculations from the point of closing going forward. Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date. Gross customer losses are the result of a number of factors, including price competition, move-outs, credit losses, natural gas and electric conversions and service disruptions. When a customer moves out of an existing home, we count the “move out” as a loss, and, if we are successful in signing up the new homeowner, the “move in” is treated as a gain. Customers sourced by our alliance partners are included in our home heating oil and propane customer base. Therefore, any changes in the relationships with our alliance partners could impact gross customer gains and losses going forward.
Previous wording
For the three months ended December 31, 2024, the Company lost 1,400 accounts (net), or 0.3% of its home heating oil and propane customer base, compared to 700 accounts lost (net), or 0.2% of its home heating and oil propane customer base in the prior year comparable period. Gross customer gains were 1,800 accounts less than the prior year's comparable period and gross customer losses were 1,100 accounts less.
Current wording
For the six months ended March 31, 2025, the Company lost 6,000 accounts (net), or 1.5% of its home heating oil and propane customer base, compared to 5,800 accounts lost (net), or 1.5% of its home heating and oil propane customer base in the prior year comparable period. Gross customer gains were 1,200 accounts less than the prior year's comparable period and gross customer losses were 1,000 accounts less.
Previous wording
During the three months ended December 31, 2024, we estimate that we lost 0.4% of our home heating oil and propane accounts to natural gas and electricity conversions, consistent with the 0.4% lost for the three months ended December 31, 2023 and 2022, respectively. Losses to natural gas and electricity in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates.
Current wording
During the six months ended March 31, 2025, we estimate that we lost 0.7% of our home heating oil and propane accounts to natural gas and electricity conversions, consistent with the 0.7% and 0.9% lost for the six months ended March 31, 2024 and 2023, respectively. Losses to natural gas and electricity in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates.
Previous wording
During fiscal 2024, the Company acquired one propane and four heating oil businesses for approximately $49.4 million. The following tables detail the Company’s acquisition activity and the associated volume sold during the 12-month period prior to the date of acquisition.
Current wording
The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons. During the six months ended March 31, 2025, the Company acquired one heating oil and two propane businesses for approximately $79.6 million. During fiscal 2024, the Company acquired one propane and four heating oil businesses for approximately $49.4 million. The following tables detail the Company’s acquisition activity and the associated volume sold during the 12-month period prior to the date of acquisition.
Previous wording
For the three months ended December 31, 2024, retail volume of home heating oil and propane sold increased by 2.3 million gallons, or 2.8%, to 82.4 million gallons, compared to 80.1 million gallons for the three months ended December 31, 2023. For those locations where we had existing operations during both periods, which we sometimes refer to as the “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the three months ended December 31, 2024 were 4.1% colder than the three months ended December 31, 2023 and 10.5% warmer than normal, as reported by NOAA. For the twelve months ended December 31, 2024, net customer attrition for the base business was 4.3%. The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.” An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below:
Current wording
For the three months ended March 31, 2025, retail volume of home heating oil and propane sold increased by 26.8 million gallons, or 22.9%, to 143.9 million gallons, compared to 117.1 million gallons for the three months ended March 31, 2024. For those locations where we had existing operations during both periods, which we sometimes refer to as our “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the three months ended March 31, 2025 were 12.9% colder than the three months ended March 31, 2024 and 4.5% warmer than normal, as reported by NOAA. For the twelve months ended March 31, 2025, net customer attrition for the base business was 4.2%. The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.” An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below:
Previous wording
Volume of motor fuel and other petroleum products sold decreased by 1.7 million gallons, or 5.2%, to 30.7 million gallons for the three months ended December 31, 2024, compared to 32.4 million gallons for the three months ended December 31, 2023.
Current wording
Volume of motor fuel and other petroleum products sold decreased by 1.3 million gallons, or 4.3%, to 28.9 million gallons for the three months ended March 31, 2025, compared to 30.2 million gallons for the three months ended March 31, 2024.
Previous wording
For the three months ended December 31, 2024, installation and service revenue increased by $9.1 million, or 11.4%, to $88.6 million, compared to $79.5 million for the three months ended December 31, 2023 driven by $6.2 million of sales generated from recent acquisitions and the remainder was driven by a concerted effort to expand these offerings to our customers as well as annual price increases.
Current wording
For the three months ended March 31, 2025, installation and service revenue increased by $7.2 million, or 10.2%, to $77.9 million, compared to $70.7 million for the three months ended March 31, 2024 driven by $5.8 million of sales generated from recent acquisitions and the remainder was driven by a concerted effort to expand these offerings to our customers as well as annual price increases.
Previous wording
The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction. On that basis, home heating oil and propane margins for the three months ended December 31, 2024 increased by $0.0281 per gallon, or 1.7%, to $1.7039 per gallon, from $1.6758 per gallon during the three months ended December 31, 2023. In the base business, home heating and propane margins for the three months ended December 31, 2024 increased by $0.0660 per gallon, or 3.9% to $1.7419 per gallon. Going forward, we cannot assume that per gallon margins realized during the three months ended December 31, 2024 are sustainable especially with the volatility in heating oil and propane costs. Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.
Current wording
The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transactions. On that basis, home heating oil and propane margins for the three months ended March 31, 2025 increased by $0.0427 per gallon, or 2.5%, to $1.7195 per gallon, from $1.6768 per gallon during the three months ended March 31, 2024. In the base business, home heating and propane margins for the three months ended March 31, 2025 increased by $0.0738 per gallon, or 4.4% to $1.7506 per gallon. Going forward, we cannot assume that per gallon margins realized during the three months ended March 31, 2025 are sustainable especially with the volatility in heating oil and propane costs. Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.
Previous wording
For the three months ended December 31, 2024, total product gross profit was $150.8 million, which was $5.6 million, or 3.8%, higher than the three months ended December 31, 2023, due to an increase in home heating oil and propane volume sold ($3.8 million) and an increase in home heating oil and propane margins ($2.4 million), that was partially offset by a decrease in gross profit from other petroleum products ($0.6 million).
Current wording
For the three months ended March 31, 2025, total product gross profit was $258.2 million, which was $52.3 million, or 25.4%, higher than the three months ended March 31, 2024, due to an increase in home heating oil and propane volume sold ($45.0 million), increase in home heating oil and propane margins ($6.1 million) and an increase in gross profit from other petroleum products ($1.2 million).
Previous wording
Total installation costs for the three months ended December 31, 2024 increased by $2.8 million or 10.1%, to $30.3 million, compared to $27.5 million of installation costs for the three months ended December 31, 2023. This increase was largely due to higher installation sales from recent acquisitions. Installation costs as a percentage of installation sales were 79.9% for the three months ended December 31, 2024 and 80.1% for the three months ended December 31, 2023. The gross profit from installation increased by $0.8 million.
Current wording
Total installation costs for the three months ended March 31, 2025 increased by $2.6 million or 11.8%, to $24.3 million, compared to $21.7 million of installation costs for the three months ended March 31, 2024. This increase was largely due to higher installation sales from recent acquisitions. Installation costs as a percentage of installation sales were 84.2% for the three months ended March 31, 2025 and 82.9% for the three months ended March 31, 2024. The gross profit from installation increased by $0.1 million.
Previous wording
Service expense increased by $3.8 million, or 8.0%, to $51.4 million for the three months ended December 31, 2024, representing 101.3% of service sales, versus $47.6 million, or 105.3% of service sales, for the three months ended December 31, 2023. This increase was largely due to higher service sales from recent acquisitions. In addition, a large proportion of our service expenses are incurred under fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues. The gross loss from service decreased by $1.7 million.
Current wording
Service expense increased by $3.1 million, or 6.3%, to $51.9 million for the three months ended March 31, 2025, representing 105.8% of service sales, versus $48.8 million, or 109.7% of service sales, for the three months ended March 31, 2024. This increase was largely due to higher service sales from recent acquisitions. In addition, a large proportion of our service expenses are incurred under fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues. The gross loss from service decreased by $1.5 million.
Previous wording
We realized a combined gross profit from service and installation of $6.9 million for the three months ended December 31, 2024 compared to a gross profit of $4.4 million for the three months ended December 31, 2023, a $2.5 million increase.
Current wording
We realized a combined gross profit from service and installation of $1.7 million for the three months ended March 31, 2025 compared to a gross profit of $0.1 million for the three months ended March 31, 2024, a $1.6 million increase.
Previous wording
During the three months ended December 31, 2024, the change in the fair value of derivative instruments resulted in a $5.3 million credit as a decrease in the market value for unexpired hedges (a $1.2 million charge) was more than offset by a $6.5 million credit due to the expiration of certain hedged positions.
Current wording
During the three months ended March 31, 2025, the change in the fair value of derivative instruments resulted in a $6.1 million credit as a decrease in the market value for unexpired hedges (a $2.1 million charge) was more than offset by an $8.2 million credit due to the expiration of certain hedged positions.
Previous wording
For the three months ended December 31, 2024, delivery and branch expense increased $4.9 million, or 5.3%, to $99.3 million, compared to $94.4 million for the three months ended December 31, 2023. The increase was driven by $5.5 million of expenses from recent acquisitions and a $1.0 million increase in expense related to the weather hedge. These increases were partially offset by a $1.6 million reduction in net base business expenses that primarily related to a $1.1 million, or 3.8%, reduction in delivery expenses due to a 3.8 million gallon, or 4.7%, decrease in home heating oil and propane volume sold in the base business compared to the prior year. During the first quarter of fiscal 2025 the weather hedge had no impact on Company's financial statements compared to a benefit of $1.0 million in the prior year’s comparable quarter.
Current wording
For the three months ended March 31, 2025, delivery and branch expense increased $20.8 million, or 20.0%, to $124.9 million, compared to $104.1 million for the three months ended March 31, 2024. During the quarter ended March 31, 2025, the Company's weather hedge contracts accounted for an increase in expense of $9.6 million. The temperatures experienced during the second quarter of fiscal 2025 were colder than the strike prices and, therefore, the Company recorded an expense under those weather hedge contracts of $3.1 million. This compares to the prior-year period which, due to warmer weather, the Company recorded a benefit of $6.5 million under its weather hedge contract. The increase was also driven by $7.5 million of expenses from recent acquisitions and a $3.7 million increase in net base business expenses. The increase in the base business expenses was driven by a $3.2 million, or 4.9%, increase in delivery expenses due to a 13.2 million gallon, or 11.2%, increase in home heating oil and propane volume sold in the base business.
Previous wording
For the three months ended December 31, 2024, depreciation and amortization expenses decreased $0.5 million, or 5.8%, to $7.9 million, compared to $8.4 million for the three months ended December 31, 2023, primarily due to intangible assets that fully amortized in the prior fiscal year.
Current wording
For the three months ended March 31, 2025, depreciation and amortization expenses increased $1.2 million, or 15.0%, to $8.9 million, compared to $7.7 million for the three months ended March 31, 2024, primarily due to acquisitions and slightly offset by intangible assets that fully amortized in the prior fiscal year.
Previous wording
For the three months ended December 31, 2024, net interest expense decreased by $0.2 million, or 6.4%, to $3.0 million compared to $3.2 million for the three months ended December 31, 2023. The year-over-year change was driven by a decrease in the weighted average interest rate from 7.4% for the three months ended December 31, 2023 to 7.2% for the three months ended December 31, 2024 that was partially offset by an increase in average borrowings of $54.1 million from $156.6 million for the three months ended December 31, 2023 to $210.7 million for the three months ended December 31, 2024. To hedge against rising interest rates, the Company utilizes interest rate swaps. At December 31, 2024, approximately 38% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases as a result of interest rate swaps.
Current wording
For the three months ended March 31, 2025, net interest expense increased by $0.7 million, or 16.3%, to $4.5 million compared to $3.8 million for the three months ended March 31, 2024. The year-over-year change was driven by an increase in average borrowings of $60.1 million from $200.8 million for the three months ended March 31, 2024 to $260.9 million for the three months ended March 31, 2025 that was partially offset by a decrease in the weighted average interest rate from 7.1% for the three months ended March 31, 2024 to 6.8% for the three months ended March 31, 2025. To hedge against rising interest rates, the Company utilizes interest rate swaps. At March 31, 2025, approximately 38% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases as a result of interest rate swaps.
Previous wording
For the three months ended December 31, 2024, amortization of debt issuance cost was $0.3 million, essentially unchanged from the three months ended December 31, 2023.
Current wording
For the three months ended March 31, 2025, amortization of debt issuance cost was $0.2 million, essentially unchanged from the three months ended March 31, 2024.
Previous wording
For the three months ended December 31, 2024, the Company’s income tax expense increased by $7.8 million to $13.0 million, from $5.2 million for the three months ended December 31, 2023. The increase in the income tax expense was driven by a $27.8 million increase in income before income taxes.
Current wording
For the three months ended March 31, 2025, the Company’s income tax expense increased by $6.9 million to $34.8 million, from $27.9 million for the three months ended March 31, 2024. The increase in the income tax expense was driven by a $24.4 million increase in income before income taxes.
Previous wording
For the three months ended December 31, 2024, Star’s net income increased $19.9 million, to $32.9 million, compared to the three months ended December 31, 2023, primarily due to a favorable change in the fair value of derivative instruments of $24.3 million, a $2.8 million increase in Adjusted EBITDA, a $0.5 million decrease in depreciation and amortization expenses and a $0.2 million decrease in interest expense that was partially offset by a $7.8 million increase in income tax expense.
Current wording
For the three months ended March 31, 2025, Star’s net income increased $17.5 million, to $85.9 million, compared to the three months ended March 31, 2024, primarily due to a $31.9 million increase in Adjusted EBITDA that was partially offset by a $6.9 million increase in income tax expense, an unfavorable change in the fair value of derivative instruments of $5.7 million, a $1.2 million increase in depreciation and amortization expenses and a $0.7 million increase in net interest expense.
Previous wording
For the three months ended December 31, 2024, Adjusted EBITDA increased $2.8 million, to $51.9 million, for the three months ended December 31, 2023, as a $4.0 million increase in Adjusted EBITDA from recent acquisitions and an increase in per gallon margins in the base business more than offset the impact of a 3.8 million gallon decrease in home heating oil and propane volume sold in the base business.
Current wording
For the three months ended March 31, 2025, Adjusted EBITDA increased $31.9 million, to $128.2 million, compared to the three months ended March 31, 2024, due to an increase in Adjusted EBITDA from recent acquisitions, an increase in home heating oil and propane per gallon margins in the base business, higher home heating oil and propane volume sold in the base business due to colder weather and an improvement in service and installation profitability.
Previous wording
For the three months ended December 31, 2024, product sales decreased by $49.1 million, or 10.9%, to $399.5 million, compared to $448.6 million for the three months ended December 31, 2023, due to a decrease in average selling prices. Selling prices decreased largely due to a decrease in wholesale product cost of $0.4969 per gallon, or 18.4%, compared to the three months ended December 31, 2023. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Current wording
For the six months ended March 31, 2025, product sales increased by $20.8 million, or 2.0%, to $1,064.6 million, compared to $1,043.8 million for the six months ended March 31, 2024, due to an increase in total volume sold of 10.0% and slightly offset by a decrease in average selling prices. Selling prices decreased largely due to a decrease in wholesale product cost of $0.3730 per gallon, or 14.0%, compared to the six months ended March 31, 2024. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Previous wording
For the three months ended December 31, 2024, cost of product decreased $54.6 million, or 18.0%, to $248.7 million, compared to $303.3 million for the three months ended December 31, 2023, due to a decrease in wholesale product cost of $0.4969 or 18.4% per gallon slightly offset by an increase in total volume sold of 0.5%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Current wording
For the six months ended March 31, 2025, cost of product decreased $37.1 million, or 5.4%, to $655.6 million, compared to $692.7 million for the six months ended March 31, 2024, due to a decrease in wholesale product cost of $0.3730 per gallon, or 14.0%, slightly offset by an increase in total volume sold of 10.0%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.
Previous wording
During the three months ended December 31, 2024, the Company acquired a heating oil business for approximately $0.7 million in cash. The gross purchase price was allocated $0.8 million to intangible assets, $0.4 million to goodwill, $0.3 million to fixed assets and reduced by $0.8 million of negative working capital. The Company also sold certain assets for cash proceeds of $0.3 million.
Current wording
During the six months ended March 31, 2025, the Company acquired one heating oil and two propane businesses for approximately $79.6 million in cash. The gross purchase price was allocated $37.5 million to intangible assets, $16.8 million to goodwill, $25.2 million to fixed assets and $0.1 million of working capital. The Company also sold certain assets for cash proceeds of $0.3 million.
Previous wording
Our capital expenditures for the three months ended December 31, 2023 totaled $3.2 million, as we invested in computer hardware and software ($0.3 million), refurbished certain physical plants ($0.9 million), expanded our propane operations ($0.4 million) and made additions to our fleet and other equipment ($1.6 million).
Current wording
Our capital expenditures for the six months ended March 31, 2025 totaled $6.5 million, as we invested in computer hardware and software ($0.5 million), refurbished certain physical plants ($0.9 million), expanded our propane operations ($0.8 million) and made additions to our fleet and other equipment ($4.3 million).
Previous wording
During the three months ended December 31, 2024, $0.4 million of earnings were reinvested into an irrevocable trust established in connection with our captive insurance company. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet. We believe that investments into the irrevocable trust lower our letter of credit fees, increase interest income on invested cash balances, and provide us with certain tax advantages attributable to a captive insurance company.
Current wording
During the six months ended March 31, 2025, $1.0 million of earnings were reinvested into an irrevocable trust established in connection with our captive insurance company. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet. We believe that investments into the irrevocable trust lower our letter of credit fees, increase interest income on invested cash balances, and provide us with certain tax advantages attributable to a captive insurance company.
Previous wording
During the three months ended December 31, 2023, the Company acquired two heating oil businesses for an aggregate price of approximately $2.5 million in cash. The gross purchase price was allocated $2.7 million to intangible assets, $0.2 million to goodwill, $0.8 million to fixed assets and reduced by $1.2 million of negative working capital.
Current wording
During the six months ended March 31, 2024, the Company acquired one propane and three heating oil businesses for an aggregate price of approximately $22.6 million in cash. The gross purchase price was allocated $14.4 million to intangible assets, $6.3 million to goodwill, $2.8 million to fixed assets and reduced by $0.9 million of negative working capital.
Previous wording
Our capital expenditures for the three months ended December 31, 2024 totaled $4.0 million, as we invested in computer hardware and software ($0.4 million), refurbished certain physical plants ($0.7 million), expanded our propane operations ($0.3 million) and made additions to our fleet and other equipment ($2.6 million).
Current wording
Our capital expenditures for the six months ended March 31, 2024 totaled $6.0 million, as we invested in computer hardware and software ($0.9 million), refurbished certain physical plants ($1.3 million), expanded our propane operations ($0.8 million) and made additions to our fleet and other equipment ($3.0 million).
Previous wording
During the three months ended December 31, 2023, $0.4 million of earnings were reinvested into the irrevocable trust.
Current wording
During the six months ended March 31, 2024, $0.9 million of earnings were reinvested into the irrevocable trust.
Previous wording
During the three months ended December 31, 2023, we repaid $4.0 million of our term loan, borrowed $51.6 million under our revolving credit facility, repurchased fewer than 0.1 million Common Units, at an average price paid of $11.27 per unit, for $0.2 million, in connection with our unit repurchase plan, and paid distributions of $5.8 million to our Common Unit holders and $0.3 million to our General Partner unit holders (including $0.3 million of incentive distributions as provided in our Partnership Agreement).
Current wording
During the six months ended March 31, 2025, we repaid $5.3 million of our term loan, borrowed $75.4 million under our revolving credit facility and subsequently repaid $53.0 million, repurchased fewer than 0.1 million Common Units, at an average price paid of $11.24 per unit, for $0.2 million, in connection with our unit repurchase plan, and paid distributions of $12.0 million to our Common Unit holders and $0.7 million to our General Partner unit holders (including $0.7 million of incentive distributions as provided in our Partnership Agreement).
Previous wording
During the three months ended December 31, 2024, we borrowed $7.8 million under our revolving credit facility, repurchased fewer than 0.1 million Common Units, at an average price paid of $11.20 per unit, for $0.1 million, in connection with our unit repurchase plan, and paid distributions of $6.0 million to our Common Unit holders and $0.4 million to our General Partner unit holders (including $0.3 million of incentive distributions as provided in our Partnership Agreement).
Current wording
During the six months ended March 31, 2024, we repaid $12.3 million of our term loan, borrowed $79.6 million under our revolving credit facility and subsequently repaid $50.6 million, repurchased approximately 0.2 million Common Units, at an average price paid of $10.92 per unit, for $2.5 million, in connection with our unit repurchase plan, and paid distributions of $11.6 million to our Common Unit holders and $0.7 million to our General Partner unit holders (including $0.6 million of incentive distributions as provided in our Partnership Agreement).
Previous wording
Our primary uses of liquidity are to provide funds for our working capital, capital expenditures, distributions on our units, acquisitions and unit repurchases. Our ability to provide funds for such uses depends on our future performance, which will be subject to prevailing economic, financial, geopolitical and business conditions, weather, the ability to collect current and future accounts receivable, the ability to pass on the full impact of high product costs to customers, the effects of high net customer attrition, conservation, inflation and other factors. Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities, cash on hand as of December 31, 2024 ($48.8 million) or a combination thereof. We believe that these cash sources will also be sufficient to satisfy our capital requirements in the longer-term. However, if they are not sufficient, we anticipate that working capital will be financed by our revolving credit facility, as discussed below, and from subsequent seasonal reductions in inventory and accounts receivable. As of December 31, 2024, we had accounts receivable of $176.3 million of which $136.2 million is due from residential customers and $40.1 million is due from commercial customers. Our ability to borrow from our bank group is based in part on the aging of these accounts receivable. If these balances do not meet the eligibility tests as defined in our credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced. As of December 31, 2024, we had $7.8 million of borrowings under our revolving credit facility, $204.8 million outstanding under our term loan, $5.2 million in letters of credit outstanding and $9.9 million hedge positions were secured under the credit agreement.
Current wording
Our primary uses of liquidity are to provide funds for our working capital, capital expenditures, distributions on our units, acquisitions and unit repurchases. Our ability to provide funds for such uses depends on our future performance, which will be subject to prevailing economic, financial, geopolitical and business conditions, tariff regimes, weather, the ability to collect current and future accounts receivable, the ability to pass on the full impact of high product costs to customers, the effects of high net customer attrition, conservation, inflation and other factors. Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities, cash on hand as of March 31, 2025 ($18.5 million) or a combination thereof. We believe that these cash sources will also be sufficient to satisfy our capital requirements in the longer-term. However, if they are not sufficient, we anticipate that working capital will be financed by our revolving credit facility, as discussed below, and from subsequent seasonal reductions in inventory and accounts receivable. As of March 31, 2025, we had accounts receivable of $216.5 million of which $174.1 million is due from residential customers and $42.4 million is due from commercial customers. Our ability to borrow from our bank group is based in part on the aging of these accounts receivables. If these balances do not meet the eligibility tests as defined in our credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced. As of March 31, 2025, we had $22.3 million of borrowings under our revolving credit facility, $199.5 million outstanding under our term loan, $5.2 million in letters of credit outstanding and $3.7 million hedge positions were secured under the credit agreement.
Previous wording
Under the terms of the credit agreement, if Availability (as defined in the credit agreement) is less than the greater of (a) 12.5% of the Line Cap (lesser of the aggregate revolving commitment and the borrowing base) and (b) $35.0 million, we must maintain a fixed charge coverage ratio of 1.10. We are also required to maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30th or September 30th, and no more than 5.5 as of December 31st or March 31st. As of December 31, 2024, Availability, as defined in the credit agreement, as amended, was $170.4 million and we were in compliance with the financial covenants.
Current wording
Under the terms of the credit agreement, if Availability (as defined in the credit agreement) is less than the greater of (a) 12.5% of the Line Cap (lesser of the aggregate revolving commitment and the borrowing base) and (b) $35.0 million, we must maintain a fixed charge coverage ratio of 1.10. We are also required to maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30th or September 30th, and no more than 5.5 as of December 31st or March 31st. As of March 31, 2025, Availability, as defined in the credit agreement, as amended, was $212.6 million and we were in compliance with the financial covenants.
Previous wording
Maintenance capital expenditures for the remainder of fiscal 2025 are estimated to be approximately $8.3 million to $9.3 million, excluding the capital requirements for leased fleet. In addition, we plan to invest $1.0 million to $1.1 million in our propane operations. If, and only to the extent that, cash distributions to our unitholders remain at the current quarterly level of $0.1725 per unit for the balance of fiscal 2025, the Company would make aggregate payments of approximately $17.9 million to Common Unit holders, $1.1 million to our General Partner (including $1.0 million of incentive distribution as provided for in our Partnership Agreement) and $1.0 million to management pursuant to the management incentive compensation plan which provides for certain members of management to receive incentive distributions that would otherwise be payable to the General Partner. The amount of cash distributions payable to our unitholders, if any, depends on the amount of cash flow generated by the Company and our compliance with certain financial covenants under our credit agreement. Under the terms of our credit agreement, our term loan is repayable in quarterly payments of $5.3 million and we expect to pay $15.8 million for the remainder of fiscal 2025. Further, subject to any additional liquidity issues or concerns resulting from wholesale price volatility, we intend to continue to repurchase Common Units pursuant to our unit repurchase plan, as amended from time to time, and seek attractive acquisition opportunities within the Availability constraints of our revolving credit facility and funding resources, including the $68 million acquisition of a propane business in January 2025.
Current wording
Maintenance capital expenditures for the remainder of fiscal 2025 are estimated to be approximately $6.0 million to $7.0 million, excluding the capital requirements for leased fleet. In addition, we plan to invest $0.4 million to $0.5 million in our propane operations. If, and only to the extent that, cash distributions to our unitholders remain at the current quarterly level of $0.1850 per unit for the balance of fiscal 2025, the Company would make aggregate payments of approximately $12.8 million to Common Unit holders, $0.8 million to our General Partner (including $0.8 million of incentive distribution as provided for in our Partnership Agreement) and $0.8 million to management pursuant to the management incentive compensation plan which provides for certain members of management to receive incentive distributions that would otherwise be payable to the General Partner. The amount of cash distributions payable to our unitholders, if any, depends on the amount of cash flow generated by the Company and our compliance with certain financial covenants under our credit agreement. Under the terms of our credit agreement, our term loan is repayable in quarterly payments of $5.3 million and we expect to pay $10.5 million for the remainder of fiscal 2025. Further, subject to any additional liquidity issues or concerns resulting from wholesale price volatility, we intend to continue to repurchase Common Units pursuant to our unit repurchase plan, as amended from time to time, and seek attractive acquisition opportunities within the Availability constraints of our revolving credit facility and funding resources.
Previous wording
We believe that there have been no significant changes to our critical accounting policy and critical accounting estimates during the three months ended December 31, 2024 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the fiscal year ended September 30, 2024. While our critical accounting policies and estimates have not changed in any significant way during the three months ended December 31, 2024, the following provides disclosures about our critical accounting policy and critical accounting estimates.
Current wording
We believe that there have been no significant changes to our critical accounting policy and critical accounting estimates during the six months ended March 31, 2025 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the fiscal year ended September 30, 2024. While our critical accounting policies and estimates have not changed in any significant way during the six months ended March 31, 2025, the following provides disclosures about our critical accounting policy and critical accounting estimates.
Rearranged current paragraphs (22)
Current report — wording carried from elsewhere
For fiscal 2026, the Company entered into weather hedge contracts with the similar hedge period described above. The maximum that the Company can receive is $15.0 million annually and we are obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold.
Current report — wording carried from elsewhere
For the six months ended March 31, 2025, retail volume of home heating oil and propane sold increased by 29.0 million gallons, or 14.7%, to 226.3 million gallons, compared to 197.3 million gallons for the six months ended March 31, 2024. For those locations where we had existing operations during both periods, which we sometimes refer to as our “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the six months ended March 31, 2025 were 9.4% colder than the six months ended March 31, 2024 and 6.8% warmer than normal, as reported by NOAA. For the twelve months ended March 31, 2025, net customer attrition for the base business was 4.2%. The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.” An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below:
Current report — wording carried from elsewhere
The following chart sets forth the percentage by volume of total home heating oil sold to residential variable-price customers, residential price-protected customers and commercial/industrial/other customers for the six months ended March 31, 2025, compared to the six months ended March 31, 2024:
Current report — wording carried from elsewhere
For the six months ended March 31, 2025, installation and service revenue increased by $16.2 million, or 10.8%, to $166.5 million, compared to $150.3 million for the six months ended March 31, 2024 driven by $12.0 million of sales generated from recent acquisitions and the remainder was driven by a concerted effort to expand these offerings to our customers as well as annual price increases.
Current report — wording carried from elsewhere
The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transactions. On that basis, home heating oil and propane margins for the six months ended March 31, 2025 increased by $0.0374 per gallon, or 2.2%, to $1.7138 per gallon, from $1.6764 per gallon during the six months ended March 31, 2024. In the base business, home heating and propane margins for the six months ended March 31, 2025 increased by $0.0679 per gallon, or 4.0% to $1.7443 per gallon. Going forward, we cannot assume that per gallon margins realized during the six months ended March 31, 2025 are sustainable especially with the volatility in heating oil and propane costs. Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.
Current report — wording carried from elsewhere
Total installation costs for the six months ended March 31, 2025 increased by $5.4 million or 10.8%, to $54.6 million, compared to $49.2 million of installation costs for the six months ended March 31, 2024. This increase was largely due to higher installation sales from recent acquisitions. Installation costs as a percentage of installation sales were 81.7% for the six months ended March 31, 2025 and 81.3% for the six months ended March 31, 2024. The gross profit from installation increased by $0.9 million.
Current report — wording carried from elsewhere
Service expense increased by $6.8 million, or 7.1%, to $103.3 million for the six months ended March 31, 2025, representing 103.5% of service sales, versus $96.5 million, or 107.5% of service sales, for the six months ended March 31, 2024. This increase was largely due to higher service sales from recent acquisitions. In addition, a large proportion of our service expenses are incurred under fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues. The gross loss from service decreased by $3.2 million.
Current report — wording carried from elsewhere
We realized a combined gross profit from service and installation of $8.7 million for the six months ended March 31, 2025 compared to a gross profit of $4.6 million for the six months ended March 31, 2024, a $4.1 million increase.
Current report — wording carried from elsewhere
(Increase) Decrease in the Fair Value of Derivative Instruments
Current report — wording carried from elsewhere
For the six months ended March 31, 2025, net interest expense increased by $0.4 million, or 5.9%, to $7.5 million compared to $7.1 million for the six months ended March 31, 2024. The year-over-year change was driven by an increase in average borrowings of $56.9 million from $178.6 million for the six months ended March 31, 2024 to $235.5 million for the six months ended March 31, 2025 that was partially offset by a decrease in the weighted average interest rate from 7.2% for the six months ended March 31, 2024 to 7.0% for the six months ended March 31, 2025. To hedge against rising interest rates, the Company utilizes interest rate swaps. At March 31, 2025, approximately 38% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases as a result of interest rate swaps.
Current report — wording carried from elsewhere
EBITDA and Adjusted EBITDA should not be considered as an alternative to net income, as an indicator of operating performance, or as an alternative to cash flow, as a measure of liquidity or ability to service debt obligations, but provides additional information for evaluating the Company’s ability to make the Minimum Quarterly Distribution. EBITDA and Adjusted EBITDA are calculated as follows:
Current report — wording carried from elsewhere
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 our financial statements, such as investors, commercial banks and research analysts, to assess:
Current report — wording carried from elsewhere
• our compliance with certain financial covenants included in our debt agreements;
Current report — wording carried from elsewhere
• our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;
Current report — wording carried from elsewhere
• our 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;
Current report — wording carried from elsewhere
• our ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and
Current report — wording carried from elsewhere
• the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.
Current report — wording carried from elsewhere
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:
Current report — wording carried from elsewhere
• EBITDA and Adjusted EBITDA do not reflect our cash used for capital expenditures.
Current report — wording carried from elsewhere
• 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;
Current report — wording carried from elsewhere
• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital requirements;
Current report — wording carried from elsewhere
• EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on our indebtedness; and EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.