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Shares of Star Group, L.P. SGU have declined 3.5% since reporting results for the second quarter of fiscal 2025. This compares with the S&P 500 index’s 0.5% rally over the same time frame. Over the past month, the stock has gained 21.4% compared with the S&P 500’s 9.7% rise.
Earnings & Revenue Growth on Colder Winter & Acquisitions
For the fiscal second quarter ended March 31, 2025, Star Group reported total revenues of $743 million, up 11.6% from $666 million a year earlier. This growth was driven by a 22.9% increase in the volume of home heating oil and propane sold to 143.9 million gallons from 117.1 million gallons in the prior-year period.
Net income rose 25.6% year over year to $85.9 million from $68.4 million. Adjusted EBITDA climbed 33.1% to $128.2 million from $96.3 million. EPS available to limited partners increased to $2.01 from $1.56, reflecting improved operating leverage despite a 10.9% drop in per-gallon selling prices due to lower wholesale costs.
Star Group, L.P. Price, Consensus and EPS Surprise
Star Group, L.P. price-consensus-eps-surprise-chart | Star Group, L.P. Quote
Service Growth & Base Business Margin Strength
Star Group also recorded notable performance improvements across its service and installation segments. Revenues from installations and services rose 10.2% year over year to $77.9 million. The gross profit from these services increased by $1.6 million year over year, supported by efforts to expand offerings and price increases. Margins on home heating oil and propane strengthened. Per-gallon gross profit margins in the base business rose 4.4% to $1.75, reflecting disciplined pricing and cost control.
Management Commentary: Cold Weather & Acquisitions Drive Results
President and CEO Jeff Woosnam attributed the strong quarter to colder-than-expected weather and the positive impacts of recent acquisitions. Although the quarter was still 4.5% warmer than the 30-year average, it was nearly 13% colder than the same period last year, boosting demand.
“Since February 1, 2024, we’ve completed $126.5 million of acquisitions,” said Woosnam, adding that some deals closed during the heating season and, thus, were not fully reflected in current results.
He also highlighted employee performance during high-demand periods and reiterated the company’s focus on growing its HVAC business. The company raised its annual dividend by 5 cents to 74 cents per unit, a move aligned with its capital allocation priorities.
Weather Hedge Headwinds & Cost Pressures
While sales volumes and EBITDA increased significantly, Star Group’s profitability was tempered by a $9.6-million swing in its weather hedge position. In the second quarter of fiscal 2025, colder-than-expected temperatures triggered $3.1 million in expenses under the hedge contracts, contrasting with a $6.5-million gain in the prior year due to unseasonably warm weather.