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Star Group Q2 Earnings Rise Y/Y on Cold Weather, Acquisition Boost
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Shares of Star Group, L.P. (SGU - Free Report) 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 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.
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.
Expenses also rose across categories. Delivery, branch and G&A expenses increased by $22 million, including $7.5 million from acquisitions and a $3.7-million increase in the base business. The remaining $9.6 million was attributed to the weather hedge impacts. Additionally, depreciation and amortization climbed 15% to $8.9 million, while interest expenses rose 16.3% to $4.5 million due to higher borrowing levels and rates.
Expansion Plans
The company emphasized an active acquisition pipeline focused on the distribution side of the business. Management expressed confidence in their operational readiness for the non-heating season and a continued focus on efficiency and HVAC business expansion.
Other Developments: Acquisitions & Unit Repurchases
Star Group continued its acquisition strategy, completing three transactions in the quarter totaling $79.6 million in cash. The deals included one heating oil and two propane businesses, collectively adding 14.7 million gallons in annualized volume. This followed $49.4 million in acquisitions in fiscal 2024.
The company also repurchased 13,000 common units in the first quarter and another 6,000 in the second quarter at an average price of $11.24 per unit. As of the end of March 2025, 1.5 million units remained authorized for repurchase under its plan.
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Star Group Q2 Earnings Rise Y/Y on Cold Weather, Acquisition Boost
Shares of Star Group, L.P. (SGU - Free Report) 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.
Expenses also rose across categories. Delivery, branch and G&A expenses increased by $22 million, including $7.5 million from acquisitions and a $3.7-million increase in the base business. The remaining $9.6 million was attributed to the weather hedge impacts. Additionally, depreciation and amortization climbed 15% to $8.9 million, while interest expenses rose 16.3% to $4.5 million due to higher borrowing levels and rates.
Expansion Plans
The company emphasized an active acquisition pipeline focused on the distribution side of the business. Management expressed confidence in their operational readiness for the non-heating season and a continued focus on efficiency and HVAC business expansion.
Other Developments: Acquisitions & Unit Repurchases
Star Group continued its acquisition strategy, completing three transactions in the quarter totaling $79.6 million in cash. The deals included one heating oil and two propane businesses, collectively adding 14.7 million gallons in annualized volume. This followed $49.4 million in acquisitions in fiscal 2024.
The company also repurchased 13,000 common units in the first quarter and another 6,000 in the second quarter at an average price of $11.24 per unit. As of the end of March 2025, 1.5 million units remained authorized for repurchase under its plan.