STAR GROUP, L.P.

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, 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 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, pandemic and 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 federal, state and municipal laws restricting greenhouse gases ("GHG") emissions and federal, state and local 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 2025 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 2025 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 Stat…

Excerpt shortened here; the source contains the full paragraph.

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, 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 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 federal, state and municipal laws restricting greenhouse gases ("GHG") emissions and federal, state and local 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 2025 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 2025 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 …

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, 2022, through 2026, 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. Our customers are sensitive to wholesale product cost increases, and this often leads to customer conservation and increased gross customer losses. As a commodity, the price of the products that we sell 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, 2022, through 2026, on a quarterly basis, is illustrated in the following chart (price per gallon):

Previous wording

(a) On February 2, 2026, the NYMEX ultra low sulfur diesel contract closed at $2.36 per gallon.

Current wording

(a) On April 30, 2026, the NYMEX ultra low sulfur diesel contract closed at $4.14 per gallon.

Previous wording

The Company entered into weather hedge contracts for fiscal years 2026 and 2025. 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 could receive is $15.0 million and is additionally obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold.

Current wording

The Company entered into weather hedge contracts for fiscal years 2026 and 2025. 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 could receive is $15.0 million and the Company is additionally obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold.

Previous wording

The temperatures experienced during the hedge period through December 31, 2025, were colder than the strikes in the weather hedge contracts. As a result as of December 31, 2025, we increased delivery and branch expense under those weather hedge contracts by $5.0 million. As of December 31, 2024, in accordance with ASC 815-45, we did not incur a benefit or expense related to the weather hedge contracts.

Current wording

The temperatures experienced during the hedge periods through March 31, 2026, and March 31 2025, were colder than the strike prices in the weather hedge contracts. As a result, as of March 31, 2026, and March 31, 2025, we increased delivery and branch expense and recorded a payable under those weather hedge contracts of $5.0 million and $3.1 million, respectively.

Previous wording

FASB ASC 815-10-05 Derivatives and Hedging requires that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities. We follow hedge accounting for our interest rate swaps, but we have opted out of, and do not follow hedge accounting for our commodity derivative instruments as hedging instruments. Regarding our interest rate hedges, to the extent our interest rate derivative instruments designated as cash flow hedges are effective, as defined under this guidance, changes in fair value are recognized in other comprehensive income until the forecasted hedged item is recognized in earnings. As mentioned, we have elected not to designate our commodity derivative instruments as hedging instruments under this guidance and, as a result, the changes in fair value of the commodity derivative instruments are recognized in our statement of operations. Therefore, we experience volatility in earnings as outstanding derivative instruments are marked-to-market and non-cash gains and losses are recorded prior to the sale of the commodity to the customer. The volatility in any given period related to unrealized non-cash gains or losses on derivative instruments can be significant to our overall results. However, we ultimately expect those gains and losses to be offset by the cost of product when purchased.

Current wording

FASB ASC 815-10-05 Derivatives and Hedging requires that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities. We follow hedge accounting for our interest rate swaps; to the extent our interest rate derivative instruments designated as cash flow hedges are effective, as defined under this guidance, changes in fair value are recognized in other comprehensive income until the forecasted hedged item is recognized in earnings. We have opted out of, and do not follow hedge accounting for our commodity derivative instruments as hedging instruments, as a result, the changes in fair value of the commodity derivative instruments are recognized in our statement of operations. Therefore, we experience volatility in earnings as outstanding derivative instruments are marked-to-market and non-cash gains and losses are recorded prior to the sale of the commodity to the customer. The volatility in any given period related to unrealized non-cash gains or losses on derivative instruments can be significant to our overall results. However, we ultimately expect those gains and losses to be offset by the cost of product when purchased.

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, conversions to natural gas 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 buying group and association partners are included in our home heating oil and propane customer base. Therefore, any changes in the relationships with these 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 buying group and association partners are included in our home heating oil and propane customer base. Therefore, any changes in the relationships with these partners could impact gross customer gains and losses going forward.

Previous wording

For the three months ended December 31, 2025, the Company lost 1,500 accounts (net), or 0.4% of its home heating oil and propane customer base, compared to 1,400 accounts lost (net), or 0.3% of its home heating and oil propane customer base in the prior year comparable period. Gross customer gains were 500 accounts higher and gross customer losses were 600 accounts higher than the prior year's comparable period.

Current wording

For the six months ended March 31, 2026, the Company lost 4,100 accounts (net), or 1.0% of its home heating oil and propane customer base, compared to 6,000 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 1,800 accounts higher and gross customer losses were 100 accounts lower than the prior year's comparable period.

Previous wording

During the three months ended December 31, 2025, 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, 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.

Current wording

During the six months ended March 31, 2026, 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% lost for the six months ended March 31, 2025 and 2024, 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

The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons. The Company did not complete any acquisitions during the three months ended December 31, 2025. In February 2026, the Company acquired one heating oil business for approximately $0.9 million. During fiscal 2025, the Company acquired one heating oil and three propane businesses for approximately $80.5 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, 2026, the Company acquired one heating oil business for approximately $1.0 million. During fiscal 2025, the Company acquired one heating oil and three propane businesses for approximately $80.5 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, 2025, retail volume of home heating oil and propane sold increased by 11.5 million gallons, or 13.9%, to 93.9 million gallons, compared to 82.4 million gallons for the three months ended December 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 December 31, 2025 were 18.8% colder than the three months ended December 31, 2024 and 6.1% colder than normal, as reported by NOAA. For the twelve months ended December 31, 2025, net customer attrition for the base business was 4.9%. 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, 2026, retail volume of home heating oil and propane sold increased by 0.6 million gallons, or 0.4%, to 144.5 million gallons, compared to 143.9 million gallons for the three months ended March 31, 2025. 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, 2026, were 6.4% colder than the three months ended March 31, 2025, and 2.8% colder than normal, as reported by NOAA. For the twelve months ended March 31, 2026, 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 0.8 million gallons, or 2.6%, to 29.9 million gallons for the three months ended December 31, 2025, compared to 30.7 million gallons for the three months ended December 31, 2024.

Current wording

Volume of motor fuel and other petroleum products sold decreased by 2.1 million gallons, or 7.3%, to 26.8 million gallons for the three months ended March 31, 2026, compared to 28.9 million gallons for the three months ended March 31, 2025.

Previous wording

For the three months ended December 31, 2025, cost of product increased $19.8 million, or 8.0%, to $268.5 million, compared to $248.7 million for the three months ended December 31, 2024, due to an increase in total volume sold of 9.4% slightly offset by a decrease in wholesale product cost of $0.0290 per gallon, or 1.3% calculated on a weighted average basis. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.

Current wording

For the three months ended March 31, 2026, cost of product increased $5.5 million, or 1.3%, to $412.4 million, compared to $406.9 million for the three months ended March 31, 2025, due to an increase in combined wholesale product cost of $0.0530 per gallon, or 2.3% calculated on a weighted average basis, partially offset by a decrease in total volume sold of 0.9%. Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products.

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 transactions. On that basis, home heating oil and propane margins, for the three months ended December 31, 2025, increased by $0.0971 per gallon, or 5.7%, to $1.8010 per gallon, from $1.7039 per gallon during the three months ended December 31, 2024. Going forward, we cannot assume that per gallon margins realized during the three months ended December 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 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, 2026, increased by $0.1251 per gallon, or 7.3%, to $1.8446 per gallon, from $1.7195 per gallon during the three months ended March 31, 2025. Going forward, we cannot assume that per gallon margins realized during the three months ended March 31, 2026, 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, 2025, total product gross profit was $179.5 million, which was $28.7 million, or 19.0%, higher than the three months ended December 31, 2024, due to an increase in home heating oil and propane volume sold ($19.5 million), increase in home heating oil and propane margins ($9.1 million) and an increase in gross profit from other petroleum products ($0.1 million).

Current wording

For the three months ended March 31, 2026, total product gross profit was $277.4 million, which was $19.2 million, or 7.4%, higher than the three months ended March 31, 2025, due to increase in home heating oil and propane margins ($18.1 million), an increase in home heating oil and propane volume sold ($1.0 million) and an increase in gross profit from other petroleum products ($0.1 million).

Previous wording

Total installation costs, for the three months ended December 31, 2025, increased by $0.4 million or 1.3%, to $30.7 million, compared to $30.3 million of installation costs for the three months ended December 31, 2024. This increase was largely due to higher installation sales. Installation costs as a percentage of installation sales were 77.4% for the three months ended December 31, 2025, and 79.9% for the three months ended December 31, 2024. The gross profit from installation increased by $1.4 million, compared to the three months ended December 31, 2024.

Current wording

Total installation costs, for the three months ended March 31, 2026, decreased by $0.7 million or 3.1%, to $23.6 million, compared to $24.3 million of installation costs for the three months ended March 31, 2025. Installation costs as a percentage of installation sales were 83.2% for the three months ended March 31, 2026, and 84.2% for the three months ended March 31, 2025. The gross profit from installation increased by $0.2 million, compared to the three months ended March 31, 2025.

Previous wording

Service expense increased by $3.6 million, or 7.0%, to $55.0 million for the three months ended December 31, 2025, representing 106.5% of service sales, versus $51.4 million, or 101.3% of service sales, for the three months ended December 31, 2024. The increase in service expense was driven by higher service call volume due to the colder weather and increase in propane tank sets. 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 loss from service increased by $2.7 million compared to the three months ended December 31, 2024.

Current wording

Service expense increased by $2.9 million, or 5.7%, to $54.8 million for the three months ended March 31, 2026, representing 112.9% of service sales, versus $51.9 million, or 105.8% of service sales, for the three months ended March 31, 2025. The increase in service expense was driven by higher service call volume due to the extreme weather conditions that were 6.4% colder than last year and were approximately 25% colder than expected for a three week period. We experienced a significant increase in the number of snowstorms as well as an increase in snowfall levels across our operating areas with some areas experiencing over 60 inches of snow, which negatively impacted our operational efficiency. Propane tank installations were higher as well which led to higher service expenses. 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 loss from service increased by $3.4 million compared to the three months ended March 31, 2025.

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 $2.1 million decrease in the market value for unexpired hedges 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, 2025, general and administrative expenses increased by $0.4 million or 5.7%, to $7.6 million, from $7.2 million for the three months ended December 31, 2024, due primarily a $0.7 million increase in salaries and benefits expenses including profit sharing expense, that was partially offset by a $0.3 million decrease in legal, professional and other expenses. 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 if/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 wording

For the three months ended March 31, 2026, general and administrative expenses increased by $0.5 million or 6.5%, to $8.7 million, from $8.2 million for the three months ended March 31, 2025, due primarily to a $0.4 million increase in profit sharing expense and a $0.3 million increase in salaries and benefits, that was partially offset by a $0.2 million decrease in legal, professional and other expenses. 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 if/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.

Previous wording

For the three months ended December 31, 2025, finance charge income increased $0.2 million or 29.9%, to $0.9 million, from $0.7 million for the three months ended December 31, 2024, due to higher late customer payment charges on aged receivables.

Current wording

For the three months ended March 31, 2026, finance charge income decreased $0.1 million or 9.7%, to $1.3 million, from $1.4 million for the three months ended March 31, 2025, due to less late customer payment charges received on aged receivables.

Previous wording

For the three months ended December 31, 2025, the Company’s income tax expense increased by $1.4 million to $14.4 million, from $13.0 million for the three months ended December 31, 2024. The increase in the income tax expense was driven by a $4.2 million increase in income before income taxes.

Current wording

For the three months ended March 31, 2026, the Company’s income tax expense increased by $9.7 million to $44.5 million, from $34.8 million for the three months ended March 31, 2025. The increase in the income tax expense was driven by a $32.1 million increase in income before income taxes.

Previous wording

For the three months ended December 31, 2025, product sales increased by $48.5 million, or 12.1%, to $448.0 million, compared to $399.5 million for the three months ended December 31, 2024, due to an increase in total volume sold of 9.4% and an increase in average selling prices.

Current wording

For the six months ended March 31, 2026, product sales increased by $73.2 million, or 6.9%, to $1,137.8 million, compared to $1,064.6 million for the six months ended March 31, 2025, due to an increase in average selling prices and an increase in total volume sold of 3.2%.

Previous wording

For the three months ended December 31, 2025, installation and service revenue increased by $2.7 million, or 3.0%, to $91.3 million, compared to $88.6 million for the three months ended December 31, 2024, driven by $0.8 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 price increases.

Current wording

For the six months ended March 31, 2026, installation and service revenue increased by $1.7 million, or 1.0%, to $168.2 million, compared to $166.5 million for the six months ended March 31, 2025, driven by $0.9 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 price increases.

Previous wording

We realized a combined gross profit from service and installation of $5.6 million for the three months ended December 31, 2025 compared to a gross profit of $6.9 million for the three months ended December 31, 2024, a $1.3 million decrease. While installation gross profit increased by $1.4 million, the service gross profit loss increased by $2.7 million due to demand for service and an increase in propane tank sets.

Current wording

We realized a combined gross profit from service and installation of $4.1 million for the six months ended March 31, 2026 compared to a gross profit of $8.7 million for the six months ended March 31, 2025, a $4.6 million decrease. While installation gross profit increased by $1.5 million, the service gross profit loss increased by $6.1 million due to higher expenses due to increased demand for service and an increase in propane tank installations.

Previous wording

For the three months ended December 31, 2025, delivery and branch expense increased $10.6 million, or 10.7%, to $109.9 million, compared to $99.3 million for the three months ended December 31, 2024. During the three months ended December 31, 2025, the Company's weather hedge contracts accounted for a $5.0 million increase in expense. The temperatures experienced from November 2025 through December 2025 were colder than the strike prices and, therefore, the Company recorded an expense under those weather hedge contracts of $5.0 million, as compared to no liability for the three months ended December 31, 2024. The increase was also driven by a $3.5 million increase in net base business expenses and $2.1 million of expenses from recent acquisitions. The increase in the base business expenses was driven by a $2.7 million, or 9.1%, increase in delivery expenses due to a 7.6 million gallon, or 9.2%, increase in home heating oil and propane volume sold in the base business, and a $0.8 million or 0.8% in other net expense increases.

Current wording

For the six months ended March 31, 2026, delivery and branch expense increased $15.4 million, or 6.9%, to $239.7 million, compared to $224.3 million for the six months ended March 31, 2025. During the six months ended March 31, 2026, the Company's weather hedge contracts accounted for a $1.9 million increase in expense. The temperatures experienced from November 2025 through March 2026 were colder than the strike prices and, therefore, the Company recorded an expense under those weather hedge contracts of $5.0 million, as compared to $3.1 million for the six months ended March 31, 2025. The increase was also driven by a $10.4 million increase in net base business expenses and $3.1 million of expenses from recent acquisitions. The increase in the base business expense was largely driven by temperatures that were 11.0% colder than last year and were approximately 25% colder than planned for a three week period. The Company experienced a significant increase in the number of snowstorms as well as an much higher snowfall levels across our operating areas with some areas experiencing over 60 inches of snow, negatively impacting our business productivity. While home heating oil and propane volume rose by 2.7%, the extreme weather conditions impacted direct operating costs which increased by $6.2 million, or 4.3%. Insurance expense was higher by $5.1 million largely due to higher claims expense attributable to the extreme weather conditions in addition to normal premium increases, and partially offset by $0.9 million of other net expense decreases in the base business.

Previous wording

For the three months ended December 31, 2025, depreciation and amortization expenses increased $0.9 million, or 10.8%, to $8.8 million, compared to $7.9 million for the three months ended December 31, 2024, primarily due to acquisitions and slightly offset by intangible assets that fully amortized in the prior fiscal year.

Current wording

For the six months ended March 31, 2026, depreciation and amortization expenses increased $0.2 million, or 1.3%, to $17.0 million, compared to $16.8 million for the six months ended March 31, 2025, 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, 2025, interest expense, net increased by $0.8 million, or 26.9%, to $3.8 million compared to $3.0 million for the three months ended December 31, 2024. The year-over-year change was attributable to a reduction in interest income of $1.0 million due to lower invested cash balances of $78.0 million. In September 2024, the company increased its term loan and prefunded an acquisition that closed in January 2025 for $66.9 million. Gross interest expense decreased by $0.2 million as an increase in average borrowings of $4.3 million from $210.7 million for the three months ended December 31, 2024, to $215.0 million for the three months ended December 31, 2025, was more than offset by a decline in the weighted average interest rate from 7.2% for the three months ended December 31, 2024 to 6.9% for the three months ended December 31, 2025. To hedge against rising interest rates, the Company utilizes interest rate swaps. At December 31, 2025, approximately 40% of borrowings under Star's variable-rate long term debt were not subject to interest rate changes as a result of interest rate swaps.

Current wording

For the six months ended March 31, 2026, interest expense, net increased by $0.5 million, or 6.5%, to $8.0 million compared to $7.5 million for the six months ended March 31, 2025. The year-over-year change was attributable to a reduction in interest income of $1.1 million due to lower invested cash balances of $78 million. In September 2024, the company increased its term loan and prefunded an acquisition that closed in January 2025 for $66.9 million. This was partially offset by a $0.6 million decrease in gross interest expense as average borrowings decreased by $0.3 million from $235.5 million for the six months ended March 31, 2025, to $235.2 million for the six months ended March 31, 2026, and the weighted average interest rate declined from 7.0% for the six months ended March 31, 2025, to 6.6% for the six months ended March 31, 2026. To hedge against rising interest rates, the Company utilizes interest rate swaps. At March 31, 2026, approximately 41% of borrowings under Star's variable-rate long term debt were not subject to interest rate changes as a result of interest rate swaps.

Previous wording

For the three months ended December 31, 2025, Star’s net income increased $2.9 million, to $35.8 million, compared to the three months ended December 31, 2024, primarily due to a $16.5 million increase in the Adjusted EBITDA, that was partially offset by an unfavorable change in the fair value of derivative instruments of $10.7 million, a $1.4 million increase in income tax expense, a $0.9 million increase in depreciation and amortization expenses and a $0.8 million increase in net interest expense.

Current wording

For the six months ended March 31, 2026, Star’s net income increased $25.3 million, to $144.1 million, compared to the six months ended March 31, 2025, primarily due to a $27.0 million increase in the Adjusted EBITDA and a favorable change in the fair value of derivative instruments of $10.1 million, that was partially offset by an $11.1 million increase in income tax expense, a $0.5 million increase in net interest expense and a $0.2 million increase in depreciation and amortization expenses.

Previous wording

For the three months ended December 31, 2025, Adjusted EBITDA increased $16.5 million, to $68.4 million, compared to the three months ended December 31, 2024, primarily due to a $16.8 million increase in Adjusted EBITDA in the base business and a $4.7 million increase in Adjusted EBITDA from recent acquisitions that was partially offset by a $5.0 million increase in expense related to the Company's weather hedge contracts. The increase in Adjusted EBITDA in the base business was driven by higher home heating oil and propane volume sold due to colder weather, an increase in home heating oil and propane per gallon margins, higher installation profitability partially reduced by an increase in operating expenses and an increase in the demand for service also due to colder weather.

Current wording

For the six months ended March 31, 2026, Adjusted EBITDA increased $27.0 million, to $207.0 million, compared to the six months ended March 31, 2025, primarily due to a $22.1 million increase in Adjusted EBITDA in the base business and a $6.8 million increase in Adjusted EBITDA from recent acquisitions that was partially offset by a $1.9 million increase in expense related to the Company's weather hedge contracts due to the colder temperatures. The increase in Adjusted EBITDA in the base business was driven by higher home heating oil and propane volume sold due to colder weather, an increase in home heating oil and propane per gallon margins, higher installation profitability, partially reduced by an increase in delivery, branch and service related expenses due to the extreme weather conditions.

Previous wording

During the three months ended December 31, 2025, cash used in operating activities decreased $9.4 million, to $55.2 million, compared to $64.6 million during the three months ended December 31, 2024, as a $25.7 million increase in accounts receivable due from customers on a comparable basis (including accounts receivable and customer credit balance accounts), more than offset a $17.4 million increase in cash flows from operations, $5.5 million less cash required for collateral at derivative counterparties, $4.1 million less cash used for inventory purchases, a $5.0 million increase in cash from the timing of accounts payable payments and $3.1 million of other changes in working capital.

Current wording

During the six months ended March 31, 2026, cash used in operating activities increased $45.1 million, to $61.1 million, compared to $16.0 million during the six months ended March 31, 2025, primarily due to a $34.1 million increase in accounts receivable due from customers on a comparable basis (including accounts receivable and customer credit balance accounts) of which $23.3 million represents an increase in receivables from customers on budget payment plans due to the increased volume sold and higher selling prices compared to the prior year. In addition, wholesale product costs increased during the month of March 2026, which resulted in an increase of $20.4 million, on a comparable basis, amounts due from our hedging counterparties. We were also required to post additional cash collateral for our inventory hedges of $12.0 million and cash used for inventory purchases increased $11.6 million. These increases in cash uses were partially offset by a $19.7 million increase in cash flows from operations, a $6.0 million increase in insurance related accruals on a comparative basis, a $2.4 million increase in taxes payable on a comparative basis and $4.9 million of other changes in working capital.

Previous wording

For the three months ended December 31, 2025, our capital expenditures totaled $4.6 million, as we invested in computer hardware and software ($0.4 million), refurbished certain physical plants ($1.7 million), expanded our propane operations ($0.2 million) and made additions to our fleet and other equipment ($2.3 million).

Current wording

For the six months ended March 31, 2026, our capital expenditures totaled $7.7 million, as we invested in computer hardware and software ($1.5 million), refurbished certain physical plants ($2.8 million), expanded our propane operations ($0.4 million) and made additions to our fleet and other equipment ($3.0 million).

Previous wording

During the three months ended December 31, 2025, $0.8 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, 2026, $1.6 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, 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, 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, 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 the irrevocable trust.

Current wording

During the six months ended March 31, 2025, $1.0 million of earnings were reinvested into the irrevocable trust.

Previous wording

During the three months ended December 31, 2025, we repaid $5.3 million of our term loan, borrowed $71.9 million under our revolving credit facility, repurchased 0.4 million Common Units, at an average price paid of $11.87 per unit, for $4.5 million, in connection with our unit repurchase plan, and paid distributions of $6.1 million to our Common Unit holders and $0.4 million to our General Partner unit holders (including $0.4 million of incentive distributions as provided in our Partnership Agreement).

Current wording

During the six months ended March 31, 2026, we repaid $10.5 million of our term loan, borrowed $93.6 million under our revolving credit facility and subsequently repaid $6.1 million, repurchased 0.4 million Common Units, at an average price paid of $11.93 per unit, for $5.2 million, in connection with our unit repurchase plan, and paid distributions of $12.2 million to our Common Unit holders and $0.8 million to our General Partner unit holders (including $0.8 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, 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

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 December 31, 2025 ($19.9 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, 2025, we had accounts receivable of $198.2 million of which $154.9 million is due from residential customers and $43.3 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 December 31, 2025, we had $71.9 million of borrowings under the revolving credit facility, $183.8 million outstanding under our term loan, $5.1 million in letters of credit outstanding and $9.8 million hedge positions were secured under the credit agreement.

Current wording

Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities (including amounts due on our hedges for our protected price customers), cash on hand as of March 31, 2026, of $12.2 million, and amounts due from our hedging counterparties, 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 receivables. Also, as of March 31, 2026, we had accounts receivable of $262.2 million of which $210.2 million is due from residential customers (reflecting a $27.6 million increase in amounts due from customers on budget plans compared to March 31, 2025 due to increased volumes sold resulting from the colder than expected weather) and $52.0 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, 2026, we had $87.4 million of borrowings under the revolving credit facility, $178.5 million outstanding under our term loan, $5.1 million in letters of credit outstanding and $0.3 million hedge positions were secured under the credit agreement. In April 2026, we collected $19.3 million from our hedging counterparties for product purchases in March 2026 for our protected price customers as there is a lag between purchasing the liquid product and collecting on the hedges. In addition, at March 31, 2026, our remaining commodity hedges that will settle in fiscal 2026 were valued at $22.0 million. These hedges will mitigate exposure to market risk in the second half of fiscal 2026 associated with the purchase of home heating oil for price-protected customers, physical inventory on hand, inventory in transit, priced purchase commitments and internal fuel usage.

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) which was $31.9 million as of December 31, 2025 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, 2025, Availability, as defined in the credit agreement, as amended, was $168.6 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) which was $41.8 million as of March 31, 2026 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, 2026, Availability, as defined in the credit agreement, as amended, was $241.8 million and we were in compliance with the financial covenants.

Previous wording

Maintenance capital expenditures for the remainder of fiscal 2026 are estimated to be approximately $8.2 million to $9.2 million, excluding the capital requirements for leased fleet. In addition, we plan to invest $0.5 million to $0.7 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 2026, the Company would make aggregate payments of approximately $18.2 million to Common Unit holders, $1.2 million to our General Partner (including $1.1 million of incentive distribution as provided for in our Partnership Agreement) and $1.1 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 2026. 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.

Current wording

Maintenance capital expenditures for the remainder of fiscal 2026 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 $0.2 million to $0.3 million in our propane operations. If, and only to the extent that, cash distributions to our unitholders remain at the current quarterly level of $0.1975 per unit for the balance of fiscal 2026, the Company would make aggregate payments of approximately $13.0 million to Common Unit holders, $0.9 million to our General Partner (including $0.9 million of incentive distribution as provided for in our Partnership Agreement) and $0.9 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 2026. 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.