Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home
energy distributor and services provider, today announced financial
results for the fiscal 2021 third quarter and nine months ended
June 30, 2021.
Three Months Ended June 30, 2021
Compared to the Three Months Ended June 30, 2020For the
fiscal 2021 third quarter, Star reported a 21.9 percent increase in
total revenue to $283.1 million compared with $232.2 million in the
prior-year period, reflecting an increase in selling prices, higher
volume of motor fuel and other petroleum products sold, greater
installation and service revenue partially offset by a lower volume
of home heating oil and propane sold.
The volume of home heating oil and propane sold
during the fiscal 2021 third quarter decreased by 13.2 million
gallons, or 25.9 percent, to 38.0 million gallons as warmer
temperatures, net customer attrition and other factors more than
offset the impact from acquisitions. Temperatures in Star's
geographic areas of operation for the fiscal 2021 third quarter
were 24.1 percent warmer than during the fiscal 2020 third quarter
and 5.2 percent warmer than normal, as reported by the National
Oceanic and Atmospheric Administration.
Star’s net loss rose by $12.0 million in the
quarter, to $12.1 million, primarily due to a $15.6 million
decrease in Adjusted EBITDA that was partially offset by an
increase in the Company’s income tax benefit of $1.9 million and a
favorable change in the fair value of derivative instruments of
$1.4 million.
Third quarter Adjusted EBITDA declined by
$15.6 million, to a loss of $9.9 million, as lower home
heating oil and propane volumes and higher operating expenses more
than offset the impact from improved home heating oil and propane
per gallon margins. In the prior-year period – the three months
ended June 30, 2020 – Star’s operating costs were favorably
impacted due to “sheltering in place” and “stay at home” orders
during the COVID-19 pandemic, which lowered certain delivery and
branch expenses as well as service expense.
“While summer is typically a less active time
for Star than is the heating season, a mix of factors – both
positive and negative – impacted results versus the prior-year
period,” said Jeff Woosnam, Star Group’s President and Chief
Executive Officer. “Volume of home heating oil and propane fell,
reflecting warmer temperatures compared to the third quarter of
fiscal 2020, which was the second coldest on record over the last
50 years within the New York metropolitan area. However, we
benefitted from increased installation and service revenue along
with higher sales of other petroleum products, which was somewhat
anticipated given pent-up demand versus the prior year’s third
quarter, when customers held off purchasing due to the pandemic.
These same factors increased operating costs, negatively impacting
Adjusted EBITDA, which was more in line with historical
levels.”
Nine Months Ended June 30, 2021 Compared
to the Nine Months Ended June 30, 2020For the first nine
months of fiscal 2021, Star reported a 1.8 percent decrease in
total revenue to $1.3 billion, reflecting lower home heating oil
and propane volumes and reduced selling prices, even as the Company
saw higher sales of motor fuel and other petroleum products and
greater installation and service revenue.
The volume of home heating oil and propane sold
during the first nine months of fiscal 2021 decreased by 9.5
million gallons, or 3.2 percent, to 285.1 million gallons, as
slightly warmer temperatures and net customer attrition more than
offset the impact from acquisitions and other factors. Temperatures
in Star's geographic areas of operation for the first nine months
of fiscal 2021 were 1.1 percent warmer than during the prior year
comparable period and 10.7 percent warmer than normal, as reported
by the National Oceanic and Atmospheric Administration.
Net income rose by $24.9 million, to $111.0
million, due to a favorable change in the fair value of derivative
instruments of $32.3 million, lower interest expense of $1.8
million and lower depreciation and amortization expense of $1.8
million that was partially offset by an increase in income tax
expense of $8.6 million and a $2.4 million decrease in Adjusted
EBITDA.
Adjusted EBITDA decreased by $2.4 million, to
$155.2 million. Lower total operating expenses in the base business
of $7.4 million, higher home heating oil and propane margins and
the Adjusted EBITDA from acquisitions of $2.4 million were more
than offset by a $6.7 million decline in the benefit recorded under
the Company’s weather hedge contract and the impact from lower home
heating oil and propane volumes. While temperatures were warmer for
the nine months ended June 30, 2021 than in the prior year’s
comparable period, temperatures during the weather hedge period for
fiscal 2021 were colder than in fiscal 2020.
EBITDA and Adjusted EBITDA (Non-GAAP
Financial Measures)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 the Company’s
financial statements, such as investors, commercial banks and
research analysts, to assess Star’s position with regard to the
following:
- compliance with certain financial
covenants included in our debt agreements;
- financial performance without
regard to financing methods, capital structure, income taxes or
historical cost basis;
- 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;
- ability to generate cash sufficient
to pay interest on our indebtedness and to make distributions to
our partners; and
- the viability of acquisitions and
capital expenditure projects and the overall rates of return of
alternative investment opportunities.
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 as follows:
- EBITDA and Adjusted EBITDA do not
reflect cash used for capital expenditures;
- 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;
- EBITDA and Adjusted EBITDA do not
reflect changes in, or cash requirements for, working capital;
- EBITDA and Adjusted EBITDA do not
reflect the cash necessary to make payments of interest or
principal on indebtedness; and
- EBITDA and Adjusted EBITDA do not
reflect the cash required to pay taxes.
REMINDER:Members of Star's
management team will host a webcast and conference call at 11:00
a.m. Eastern Time tomorrow, August 5, 2021. The webcast will be
accessible on the company’s website, at www.stargrouplp.com, and
the telephone number for the conference call is 877-327-7688 (or
412-317-5112 for international callers).
About Star Group, L.P.Star
Group, L.P. is a full service provider specializing in the sale of
home heating products and services to residential and commercial
customers to heat their homes and buildings. The Company also sells
and services heating and air conditioning equipment to its home
heating oil and propane customers and, to a lesser extent, provides
these offerings to customers outside of its home heating oil and
propane customer base. In certain of Star's marketing areas, the
Company provides plumbing services, primarily to its home heating
oil and propane customer base. Star also sells diesel, gasoline and
home heating oil on a delivery only basis. We believe Star is the
nation's largest retail distributor of home heating oil based upon
sales volume. Including its propane locations, Star serves
customers in the more northern and eastern states within the
Northeast and Mid-Atlantic U.S. regions. Additional information is
available by obtaining the Company's SEC filings at www.sec.gov and
by visiting Star's website at www.stargrouplp.com, where unit
holders may request a hard copy of Star’s complete audited
financial statements free of charge.
Forward Looking InformationThis
news release includes "forward-looking statements" which represent
the Company’s expectations or beliefs concerning future events that
involve risks and uncertainties, including those associated with
the severity and duration of the novel coronavirus, or COVID-19,
pandemic, the pandemic’s impact on the U.S. and global economies,
the timing, scope and effectiveness of federal, state and local
governmental responses to the pandemic, the effect of weather
conditions on our financial performance; the price and supply of
the products that we sell; the consumption patterns of our
customers; our ability to obtain satisfactory gross profit margins;
our ability to obtain new customers and retain existing customers;
our ability to make strategic acquisitions; the impact of
litigation; our ability to contract for our current and future
supply needs; natural gas conversions; 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 creditworthiness;
counterparty creditworthiness; marketing plans; potential
cyber-attacks; general economic conditions and new technology. All
statements other than statements of historical facts included in
this news release 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 the Company believes that the
expectations reflected in such forward-looking statements are
reasonable, it 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 under the heading "Risk Factors" and "Business
Strategy" in our Annual Report on Form 10-K (the "Form 10-K") for
the fiscal year ended September 30, 2020. Important factors that
could cause actual results to differ materially from the Company’s
expectations ("Cautionary Statements") are disclosed in this news
release and in the Company’s Form 10-K and our Quarterly Reports on
Form 10-Q. Currently, one of the most significant factors, however,
is the potential adverse effect of the pandemic of the novel
coronavirus, or COVID-19, on the financial condition, results of
operations, cash flows and performance of the Company and its
customers and counterparties and the global economy and financial
markets. The extent to which COVID-19 impacts us and our customers
will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, including the scope, severity
and duration of the pandemic, the actions taken to contain the
pandemic or mitigate its impact, and the direct and indirect
economic effects of the pandemic and containment measures, among
others. 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, the Company undertakes 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 news release.
(financials follow)
|
STAR GROUP,
L.P. AND SUBSIDIARIESCONDENSED CONSOLIDATED
BALANCE SHEETS |
|
|
|
June 30, |
|
September 30, |
(in
thousands) |
|
2021 |
|
2020 |
ASSETS |
|
(unaudited) |
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,500 |
|
|
$ |
56,911 |
|
Receivables, net of allowance of $5,912 and $6,121,
respectively |
|
|
119,348 |
|
|
|
83,594 |
|
Inventories |
|
|
56,669 |
|
|
|
50,256 |
|
Fair asset value of derivative instruments |
|
|
18,866 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
|
32,178 |
|
|
|
29,554 |
|
Assets held for sale |
|
|
— |
|
|
|
6,030 |
|
Total current assets |
|
|
232,561 |
|
|
|
226,345 |
|
Property and
equipment, net |
|
|
99,266 |
|
|
|
93,495 |
|
Operating
lease right-of-use assets |
|
|
96,613 |
|
|
|
99,776 |
|
Goodwill |
|
|
253,298 |
|
|
|
240,327 |
|
Intangibles,
net |
|
|
100,434 |
|
|
|
90,293 |
|
Restricted
cash |
|
|
250 |
|
|
|
250 |
|
Captive
insurance collateral |
|
|
69,795 |
|
|
|
69,787 |
|
Deferred
charges and other assets, net |
|
|
18,094 |
|
|
|
18,343 |
|
Total assets |
|
$ |
870,311 |
|
|
$ |
838,616 |
|
LIABILITIES AND PARTNERS’ CAPITAL |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
32,232 |
|
|
$ |
30,827 |
|
Liabilities held for sale |
|
|
— |
|
|
|
1,265 |
|
Fair liability value of derivative instruments |
|
|
— |
|
|
|
11,437 |
|
Current maturities of long-term debt |
|
|
13,000 |
|
|
|
13,000 |
|
Current portion of operating lease liabilities |
|
|
16,712 |
|
|
|
19,139 |
|
Accrued expenses and other current liabilities |
|
|
143,893 |
|
|
|
127,286 |
|
Unearned service contract revenue |
|
|
57,325 |
|
|
|
58,430 |
|
Customer credit balances |
|
|
53,255 |
|
|
|
83,471 |
|
Total current liabilities |
|
|
316,417 |
|
|
|
344,855 |
|
Long-term
debt |
|
|
100,208 |
|
|
|
109,805 |
|
Long-term
operating lease liabilities |
|
|
84,440 |
|
|
|
85,908 |
|
Deferred tax
liabilities, net |
|
|
30,253 |
|
|
|
17,227 |
|
Other
long-term liabilities |
|
|
25,670 |
|
|
|
25,001 |
|
Partners’ capital |
|
|
|
|
Common unitholders |
|
|
329,892 |
|
|
|
273,283 |
|
General partner |
|
|
(2,362 |
) |
|
|
(2,506 |
) |
Accumulated other comprehensive loss, net of taxes |
|
|
(14,207 |
) |
|
|
(14,957 |
) |
Total partners’ capital |
|
|
313,323 |
|
|
|
255,820 |
|
Total liabilities and partners’ capital |
|
$ |
870,311 |
|
|
$ |
838,616 |
|
|
|
|
|
|
|
STAR GROUP,
L.P. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
|
|
Three MonthsEnded June 30, |
|
Nine MonthsEnded June 30, |
(in thousands, except per unit data -
unaudited) |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Sales: |
|
|
|
|
|
|
|
|
Product |
|
$ |
205,045 |
|
|
$ |
165,182 |
|
|
$ |
1,044,748 |
|
|
$ |
1,079,145 |
|
Installations and services |
|
|
78,055 |
|
|
|
66,973 |
|
|
|
215,787 |
|
|
|
205,018 |
|
Total sales |
|
|
283,100 |
|
|
|
232,155 |
|
|
|
1,260,535 |
|
|
|
1,284,163 |
|
Cost and
expenses: |
|
|
|
|
|
|
|
|
Cost of product |
|
|
146,108 |
|
|
|
93,264 |
|
|
|
631,807 |
|
|
|
666,287 |
|
Cost of installations and services |
|
|
66,901 |
|
|
|
54,732 |
|
|
|
200,565 |
|
|
|
189,674 |
|
(Increase) decrease in the fair value of derivative
instruments |
|
|
(4,714 |
) |
|
|
(3,279 |
) |
|
|
(30,333 |
) |
|
|
1,974 |
|
Delivery and branch expenses |
|
|
74,871 |
|
|
|
72,756 |
|
|
|
256,500 |
|
|
|
254,945 |
|
Depreciation and amortization expenses |
|
|
8,568 |
|
|
|
8,447 |
|
|
|
24,793 |
|
|
|
26,586 |
|
General and administrative expenses |
|
|
6,209 |
|
|
|
6,954 |
|
|
|
18,770 |
|
|
|
18,882 |
|
Finance charge income |
|
|
(1,079 |
) |
|
|
(1,217 |
) |
|
|
(2,284 |
) |
|
|
(3,251 |
) |
Operating income (loss) |
|
|
(13,764 |
) |
|
|
498 |
|
|
|
160,717 |
|
|
|
129,066 |
|
Interest
expense, net |
|
|
(1,957 |
) |
|
|
(2,308 |
) |
|
|
(5,944 |
) |
|
|
(7,743 |
) |
Amortization
of debt issuance costs |
|
|
(242 |
) |
|
|
(241 |
) |
|
|
(732 |
) |
|
|
(729 |
) |
Income (loss) before income taxes |
|
|
(15,963 |
) |
|
|
(2,051 |
) |
|
|
154,041 |
|
|
|
120,594 |
|
Income tax
expense (benefit) |
|
|
(3,909 |
) |
|
|
(2,005 |
) |
|
|
43,071 |
|
|
|
34,477 |
|
Net income (loss) |
|
$ |
(12,054 |
) |
|
$ |
(46 |
) |
|
$ |
110,970 |
|
|
$ |
86,117 |
|
General Partner’s interest in net income (loss) |
|
|
(98 |
) |
|
|
(1 |
) |
|
|
879 |
|
|
|
600 |
|
Limited
Partners’ interest in net income (loss) |
|
$ |
(11,956 |
) |
|
$ |
(45 |
) |
|
$ |
110,091 |
|
|
$ |
85,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per unit
data (Basic and Diluted): |
|
|
|
|
|
|
|
|
Net income
(loss) available to limited partners |
|
$ |
(0.30 |
) |
|
$ |
— |
|
|
$ |
2.69 |
|
|
$ |
1.85 |
|
Dilutive
impact of theoretical distribution of earnings |
|
|
— |
|
|
|
— |
|
|
|
0.45 |
|
|
|
0.30 |
|
Basic and
diluted income (loss) per Limited Partner Unit: |
|
$ |
(0.30 |
) |
|
$ |
— |
|
|
$ |
2.24 |
|
|
$ |
1.55 |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of Limited Partner units outstanding (Basic and
Diluted) |
|
|
40,041 |
|
|
|
45,246 |
|
|
|
40,897 |
|
|
|
46,253 |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIES |
|
RECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited) |
|
|
|
Three MonthsEnded June 30, |
(in thousands) |
|
|
2021 |
|
|
|
2020 |
|
Net
loss |
|
$ |
(12,054 |
) |
|
$ |
(46 |
) |
Plus: |
|
|
|
|
Income tax
benefit |
|
|
(3,909 |
) |
|
|
(2,005 |
) |
Amortization
of debt issuance costs |
|
|
242 |
|
|
|
241 |
|
Interest
expense, net |
|
|
1,957 |
|
|
|
2,308 |
|
Depreciation
and amortization |
|
|
8,568 |
|
|
|
8,447 |
|
EBITDA |
|
|
(5,196 |
) |
|
|
8,945 |
|
(Increase) /
decrease in the fair value of derivative instruments |
|
|
(4,714 |
) |
|
|
(3,279 |
) |
Adjusted
EBITDA |
|
|
(9,910 |
) |
|
|
5,666 |
|
Add
/ (subtract) |
|
|
|
|
Income tax
expense |
|
|
3,909 |
|
|
|
2,005 |
|
Interest
expense, net |
|
|
(1,957 |
) |
|
|
(2,308 |
) |
Provision
for losses on accounts receivable |
|
|
366 |
|
|
|
1,353 |
|
Decrease in
accounts receivables |
|
|
68,033 |
|
|
|
74,307 |
|
Decrease in
inventories |
|
|
2,701 |
|
|
|
9,127 |
|
Increase in
customer credit balances |
|
|
12,902 |
|
|
|
13,925 |
|
Change in
deferred taxes |
|
|
59 |
|
|
|
(1,376 |
) |
Change in
other operating assets and liabilities |
|
|
(22,118 |
) |
|
|
2,723 |
|
Net cash
provided by operating activities |
|
$ |
53,985 |
|
|
$ |
105,422 |
|
Net cash
used in investing activities |
|
$ |
(6,900 |
) |
|
$ |
(5,521 |
) |
Net cash
used in financing activities |
|
$ |
(50,468 |
) |
|
$ |
(43,484 |
) |
|
|
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
|
38,000 |
|
|
|
51,200 |
|
Other
petroleum products |
|
|
40,800 |
|
|
|
34,200 |
|
Total all
products |
|
|
78,800 |
|
|
|
85,400 |
|
|
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIES |
|
RECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited) |
|
|
|
|
|
Nine MonthsEnded June 30, |
(in thousands) |
|
|
2021 |
|
|
|
2020 |
|
Net
income |
|
$ |
110,970 |
|
|
$ |
86,117 |
|
Plus: |
|
|
|
|
Income tax
expense |
|
|
43,071 |
|
|
|
34,477 |
|
Amortization
of debt issuance costs |
|
|
732 |
|
|
|
729 |
|
Interest
expense, net |
|
|
5,944 |
|
|
|
7,743 |
|
Depreciation
and amortization |
|
|
24,793 |
|
|
|
26,586 |
|
EBITDA |
|
|
185,510 |
|
|
|
155,652 |
|
(Increase) /
decrease in the fair value of derivative instruments |
|
|
(30,333 |
) |
|
|
1,974 |
|
Adjusted
EBITDA |
|
|
155,177 |
|
|
|
157,626 |
|
Add
/ (subtract) |
|
|
|
|
Income tax
expense |
|
|
(43,071 |
) |
|
|
(34,477 |
) |
Interest
expense, net |
|
|
(5,944 |
) |
|
|
(7,743 |
) |
Provision
for losses on accounts receivable |
|
|
622 |
|
|
|
4,556 |
|
(Increase)
decrease in accounts receivables |
|
|
(35,954 |
) |
|
|
4,745 |
|
(Increase)
decrease in inventories |
|
|
(6,951 |
) |
|
|
21,135 |
|
Decrease in
customer credit balances |
|
|
(30,519 |
) |
|
|
(18,537 |
) |
Change in
deferred taxes |
|
|
12,682 |
|
|
|
(1,154 |
) |
Change in
other operating assets and liabilities |
|
|
13,416 |
|
|
|
30,146 |
|
Net cash
provided by operating activities |
|
$ |
59,458 |
|
|
$ |
156,297 |
|
Net cash
used in investing activities |
|
$ |
(46,862 |
) |
|
$ |
(18,718 |
) |
Net cash
used in financing activities |
|
$ |
(64,007 |
) |
|
$ |
(75,760 |
) |
|
|
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
|
285,100 |
|
|
|
294,600 |
|
Other
petroleum products |
|
|
114,100 |
|
|
|
112,200 |
|
Total all
products |
|
|
399,200 |
|
|
|
406,800 |
|
|
|
|
|
|
Source: Star Group, L.P.
CONTACT: |
|
|
Star Group, L.P. Investor Relations 203/328-7310 |
|
Chris Witty Darrow Associates646/438-9385 or
cwitty@darrowir.com |
Star (NYSE:SGU)
Historical Stock Chart
From Sep 2024 to Oct 2024
Star (NYSE:SGU)
Historical Stock Chart
From Oct 2023 to Oct 2024