Star Group, L.P. Common Units (SGU) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals. Financial performance shows positives, such as increased EBITDA and net income, but also negatives like rising expenses and service gross profit decline. The Q&A reflects confidence in handling weather challenges, but operational difficulties and higher costs persist. No new partnerships or major strategic shifts were announced. Given these factors, the overall sentiment is neutral.
Key Financial Performance
Adjusted EBITDA Increased by $16.5 million or 32% year-over-year, net of a $5 million charge to the weather hedge program. This increase was driven by recent acquisitions, physical supply and per gallon margin management, focus on service and installation profitability, and colder temperatures.
Home heating oil and propane volume Rose by 11.5 million gallons or 14% to approximately 94 million gallons. This increase was due to additional volume from acquisitions and colder temperatures, partially offset by net customer attrition and other factors.
Product gross profit Increased by $29 million or 19% to approximately $179 million. This was due to an increase in home heating oil and propane volumes sold and higher per gallon margins.
Service and installations gross profit Realized a combined gross profit of $5.6 million for the 3 months ending December 31, 2025, compared to $6.9 million for the same period in 2024. Installation gross profit increased by $1.4 million, but service gross profit loss increased by $2.7 million due to high demand for service related to colder temperatures and additional costs from increased propane tank sets.
Delivery, branch, and G&A expenses Rose by $11 million in the first quarter of fiscal 2026 versus the prior year period. This includes a $5 million increase due to weather hedge contracts, a $3.8 million (13%) rise in delivery expenses due to increased home heating oil and propane volumes, and a $2.2 million (2%) increase in other operating costs.
Net income Increased by $3 million to $36 million. This was driven by a $16.5 million increase in adjusted EBITDA, offset by a $10 million unfavorable noncash change in the fair value of derivative instruments, $1.7 million higher depreciation and amortization expenses and net interest expense, and $1.3 million higher income tax expense.
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Operating Highlights
Acquisition of a small heating oil business: The company completed the purchase of a small heating oil business shortly after the first quarter ended. This acquisition aligns with their strategy to grow through acquisitions, although no acquisitions were closed during the first quarter.
Adjusted EBITDA growth: Adjusted EBITDA increased by $16.5 million or 32% year-over-year, driven by colder temperatures, margin management, and operational efficiencies.
Volume growth: Home heating oil and propane volume rose by 11.5 million gallons or 14% to approximately 94 million gallons, supported by acquisitions and colder weather.
Gross profit increase: Product gross profit increased by $29 million or 19% to $179 million, driven by higher volumes and per gallon margins.
Service and installation profitability: Combined gross profit from service and installations was $5.6 million, with installation gross profit increasing by $1.4 million but service gross profit declining by $2.7 million due to high demand and increased costs.
Expense management: Delivery, branch, and G&A expenses rose by $11 million, with $5 million attributed to weather hedge contracts and $3.8 million to increased delivery expenses due to higher volumes.
Focus on service and installation profitability: The company emphasized improving service and installation profitability as a key operational focus.
Acquisition strategy: The company remains focused on acquisitions, with several opportunities under review and expectations for new prospects in the spring.
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Risk or Challenges
Weather-related operational challenges: Persistent cold temperatures and snow/ice conditions have created operational difficulties, including increased demand and challenges in making deliveries.
Weather hedge program costs: The company incurred a $5 million charge to its weather hedge program due to colder-than-expected temperatures.
Service gross profit decline: Service gross profit decreased by $2.7 million due to high demand for services related to colder temperatures and increased costs from propane tank sets.
Increased delivery expenses: Delivery expenses rose by $3.8 million (13%) due to a 14% increase in home heating oil and propane volumes sold.
Higher operating costs: Operating costs increased by $2.2 million (2%), adding financial pressure.
Noncash charge on derivative instruments: A $5 million noncash charge was recorded due to changes in the fair value of derivative instruments, negatively impacting net income.
Higher depreciation, amortization, and interest expenses: These expenses increased by $1.7 million due to the company's acquisition program, adding financial strain.
Higher income tax expense: Income tax expense increased by $1.3 million, further impacting net income.
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Guidance & Outlook
Future acquisitions: The company anticipates new acquisition opportunities to emerge closer to spring, despite a lull in prospect activity during the busy heating season.
Operational focus: The company remains vigilant in providing excellent customer service, keeping costs down, and growing service and installation profitability for the remainder of fiscal 2026.
Market conditions: The company is prepared to address challenges or opportunities that may arise during the remainder of the heating season.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide any commentary on operational performance or general updates given the cold weather conditions in the second quarter?
A:Jeffrey Woosnam stated that January was colder than normal, February started similarly, and the forecast remains strong. Despite challenging conditions, the company is well-prepared as a full-service provider. He expressed pride in employees' efforts to serve customers and felt confident about the company's current position.
Q:Review of Unclear Management Responses
A:No questions were avoided or lacked clarity in the responses provided by management.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Adviser statement
GA period
Heat LLC
Improvement efficiency
Kestrel Heat
LLC result
SEC obligation
acquisition purchase
acquisition supply
activity heating
addition delivery
addition income
aggregate income
area month
attrition period
challenge delivery
challenge opportunity
challenge temperature
charge change
charge weather
comparison credit
condition level
condition time
confluence factor
contract increase
contract strike
demand
expense
focus
hedge contract
increase home
installation profitability
noncash
temperature increase
weather hedge
SGU Transcript
Rogers Sugar Inc. (RSI:CA) Q1 2026 Earnings Call Transcript
Positive2-5
The earnings call reveals a stable financial performance with improved EBITDA and sales volume, alongside effective supply management. The Q&A section addresses concerns like sugar volume issues and pricing, with management providing clear resolutions and optimistic guidance. The company is pursuing growth opportunities and managing inflation impacts well. Despite some vague responses, the overall sentiment is positive, supported by stable margins and strategic growth initiatives.
Star Group, L.P. Common Units (SGU) Q1 2026 Earnings Call Transcript
Unknown2-5
The earnings call presents mixed signals. Financial performance shows positives, such as increased EBITDA and net income, but also negatives like rising expenses and service gross profit decline. The Q&A reflects confidence in handling weather challenges, but operational difficulties and higher costs persist. No new partnerships or major strategic shifts were announced. Given these factors, the overall sentiment is neutral.
Star Group, L.P. Common Units (SGU) Q4 2025 Earnings Call Transcript
Positive12-9
The earnings call highlights strong financial performance with increased volumes, revenue, and net income. Despite some challenges like customer attrition and regulatory uncertainties, the company has shown resilience with strategic expansions and acquisitions. The Q&A section reveals management's proactive approach to addressing challenges, albeit with some uncertainty in regulatory impacts. The overall sentiment remains positive due to strong financial metrics and optimistic guidance.
Star Group, L.P. Common Units (SGU) Q3 2025 Earnings Call Transcript
Unknown8-8
The earnings report shows mixed results: increased net loss and expenses due to acquisitions and adverse weather, but also increased net income and adjusted EBITDA over nine months. The Q&A reveals a positive acquisition pipeline and AI integration, but no major catalysts. The lack of clear guidance and mixed financial performance suggest a neutral stock price movement in the short term.
SGU Report
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