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Star Group Q2 Earnings Rise Y/Y on Acquisitions & Colder Weather
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Shares of Star Group, L.P. (SGU - Free Report) have declined 0.5% since the partnership reported results for the second quarter of fiscal 2026. This compares with the S&P 500 index’s 2% return over the same time frame. Over the past month, the stock has gained 2.4% compared with the S&P 500’s 7.1% advance.
For the fiscal quarter ended March 31, 2026, Star Group reported a 3.2% increase in total revenues to $766.7 million from $743 million for the same period last year. This growth was largely driven by a modest rise in home heating oil and propane volumes sold, which grew 0.4% year over year, reflecting the cold weather and the impacts of acquisitions.
However, the partnership's net income showed a significant year-over-year improvement of $22.4 million to $108.3 million, thanks to a $20.7-million positive swing in the fair value of derivative instruments. On a per-unit basis, both basic and diluted income per unit rose to $2.66 from $2.01 in the prior-year quarter.
Adjusted EBITDA increased year over year by $10.5 million, or 8.2%, to $138.7 million, driven by higher per-gallon margins for heating oil and propane, as well as higher installation profitability.
Star Group, L.P. Price, Consensus and EPS Surprise
Star Group's product gross profit grew by $19 million, or 7%, to $277 million, benefiting from higher product margins in home heating oil and propane.
However, extreme weather conditions led to higher service-related expenses, widening service losses by $3.4 million. Delivery and branch expenses rose by $5.4 million due to weather impacts, with insurance expenses increasing by $4 million due to higher claims from the severe weather conditions.
The partnership did not recognize any benefit or expenses from its weather hedge contracts in second-quarter fiscal 2026, a significant improvement over $3.1 million in expenses recorded for the same period in fiscal 2025.
Management Commentary
Management expressed satisfaction with the performance despite the challenges posed by extreme weather, which included temperatures 6.4% colder than the previous year and 2.8% colder than normal. CEO Jeff Woosnam noted the partnership’s ability to increase adjusted EBITDA to $139 million, reflecting both improved operational performance and the partnership's adaptability to tough market conditions.
Woosnam emphasized the team's resilience, highlighting their dedication to delivering services under adverse weather conditions. The partnership also managed to maintain a low customer attrition rate of 0.6%, which was another key achievement. Star closed one small heating oil acquisition during the quarter and is reviewing acquisition opportunities.
Factors Influencing the Headline Numbers
Strong growth in adjusted EBITDA and net income can be attributed to several key factors: the volume boost from acquisitions, favorable cold weather conditions and improved margins per gallon for home heating oil and propane. Despite higher operating costs, driven by the severe winter weather, these positive drivers helped offset increased service-related expenses and operational inefficiencies.
On the downside, the colder-than-expected temperatures and snowstorms led to disruptions in field productivity, which raised operating expenses by $5.4 million.
Guidance & Outlook
Star Group's management expressed confidence in the partnership’s ability to sustain its performance for the remainder of fiscal 2026. Management's optimism is supported by the expectation of continued operational improvements, particularly in terms of cost management and margin optimization.
The partnership is also positioning itself for growth in the second half of the year by focusing on investing in its workforce and business development initiatives. Management remains cautious about the impacts of rising wholesale product costs but indicated that the challenges are somewhat mitigated as the heating season winds down.
Other Developments
In terms of strategic growth, Star Group closed one small heating oil acquisition during the quarter. This acquisition contributed to the overall increase in product volume sold and bolstered the partnership’s position in the market. The partnership is actively exploring acquisition opportunities that could expand its footprint and contribute to its growth in fiscal 2026.
In conclusion, while Star Group faced significant weather-related challenges in second-quarter fiscal 2026, the partnership managed to improve its financial performance year over year, driven by increased volumes and higher per-gallon margins. Despite the operational pressures, the partnership has positioned itself well for the future, with acquisitions and strategic investments in its workforce expected to support continued growth in the second half of fiscal 2026.
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Star Group Q2 Earnings Rise Y/Y on Acquisitions & Colder Weather
Shares of Star Group, L.P. (SGU - Free Report) have declined 0.5% since the partnership reported results for the second quarter of fiscal 2026. This compares with the S&P 500 index’s 2% return over the same time frame. Over the past month, the stock has gained 2.4% compared with the S&P 500’s 7.1% advance.
For the fiscal quarter ended March 31, 2026, Star Group reported a 3.2% increase in total revenues to $766.7 million from $743 million for the same period last year. This growth was largely driven by a modest rise in home heating oil and propane volumes sold, which grew 0.4% year over year, reflecting the cold weather and the impacts of acquisitions.
However, the partnership's net income showed a significant year-over-year improvement of $22.4 million to $108.3 million, thanks to a $20.7-million positive swing in the fair value of derivative instruments. On a per-unit basis, both basic and diluted income per unit rose to $2.66 from $2.01 in the prior-year quarter.
Adjusted EBITDA increased year over year by $10.5 million, or 8.2%, to $138.7 million, driven by higher per-gallon margins for heating oil and propane, as well as higher installation profitability.
Star Group, L.P. Price, Consensus and EPS Surprise
Star Group, L.P. price-consensus-eps-surprise-chart | Star Group, L.P. Quote
Other Key Business Metrics
Star Group's product gross profit grew by $19 million, or 7%, to $277 million, benefiting from higher product margins in home heating oil and propane.
However, extreme weather conditions led to higher service-related expenses, widening service losses by $3.4 million. Delivery and branch expenses rose by $5.4 million due to weather impacts, with insurance expenses increasing by $4 million due to higher claims from the severe weather conditions.
The partnership did not recognize any benefit or expenses from its weather hedge contracts in second-quarter fiscal 2026, a significant improvement over $3.1 million in expenses recorded for the same period in fiscal 2025.
Management Commentary
Management expressed satisfaction with the performance despite the challenges posed by extreme weather, which included temperatures 6.4% colder than the previous year and 2.8% colder than normal. CEO Jeff Woosnam noted the partnership’s ability to increase adjusted EBITDA to $139 million, reflecting both improved operational performance and the partnership's adaptability to tough market conditions.
Woosnam emphasized the team's resilience, highlighting their dedication to delivering services under adverse weather conditions. The partnership also managed to maintain a low customer attrition rate of 0.6%, which was another key achievement. Star closed one small heating oil acquisition during the quarter and is reviewing acquisition opportunities.
Factors Influencing the Headline Numbers
Strong growth in adjusted EBITDA and net income can be attributed to several key factors: the volume boost from acquisitions, favorable cold weather conditions and improved margins per gallon for home heating oil and propane. Despite higher operating costs, driven by the severe winter weather, these positive drivers helped offset increased service-related expenses and operational inefficiencies.
On the downside, the colder-than-expected temperatures and snowstorms led to disruptions in field productivity, which raised operating expenses by $5.4 million.
Guidance & Outlook
Star Group's management expressed confidence in the partnership’s ability to sustain its performance for the remainder of fiscal 2026. Management's optimism is supported by the expectation of continued operational improvements, particularly in terms of cost management and margin optimization.
The partnership is also positioning itself for growth in the second half of the year by focusing on investing in its workforce and business development initiatives. Management remains cautious about the impacts of rising wholesale product costs but indicated that the challenges are somewhat mitigated as the heating season winds down.
Other Developments
In terms of strategic growth, Star Group closed one small heating oil acquisition during the quarter. This acquisition contributed to the overall increase in product volume sold and bolstered the partnership’s position in the market. The partnership is actively exploring acquisition opportunities that could expand its footprint and contribute to its growth in fiscal 2026.
In conclusion, while Star Group faced significant weather-related challenges in second-quarter fiscal 2026, the partnership managed to improve its financial performance year over year, driven by increased volumes and higher per-gallon margins. Despite the operational pressures, the partnership has positioned itself well for the future, with acquisitions and strategic investments in its workforce expected to support continued growth in the second half of fiscal 2026.