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 fourth quarter and year ended September
30, 2021.
Three Months Ended September 30, 2021
Compared to the Three Months Ended September 30, 2020For
the fiscal 2021 fourth quarter, Star reported a 29.1 percent
increase in total revenue to $236.6 million compared with $183.3
million in the prior-year period, reflecting an increase in selling
prices and higher volume of home heating oil and propane sold.
The volume of home heating oil and propane sold
during the fiscal 2021 fourth quarter increased by 1.8 million
gallons, or 9.7 percent, to 20.8 million gallons as the additional
volume provided by acquisitions was only partially offset by net
customer attrition.
Star’s net loss declined by $7.0 million in the
quarter, to $23.2 million, due to a favorable change in the fair
value of derivative instruments of $6.6 million and the absence of
a non-cash charge of $5.7 million recorded in the fourth quarter of
fiscal 2020 relating to the sale of certain non-strategic assets,
subsequently completed in October 2020. The positive impact from
these factors was partially offset by a decline in the Company’s
income tax benefit of $4.5 million.
The Company reported a fourth quarter Adjusted
EBITDA loss (a non-GAAP measure defined below) that increased by
$0.4 million, to $27.6 million, as higher operating
expenses were almost entirely offset by higher home heating oil and
propane volumes and the impact from improved home heating oil and
propane per gallon margins.
“I’m pleased to say that, as we turn the corner
on fiscal 2021, we ended the year with solid adjusted EBITDA and
underlying results, even with slightly lower volumes and the
lingering impact from COVID-19 on certain parts of our business,”
said Jeff Woosnam, Star Group’s President and Chief Executive
Officer. “Given that we did not benefit as much from our weather
hedge in 2021 – nor, conversely, experience unusually cold weather
as in last year’s fiscal third quarter – the Company performed
well, which speaks to the talent of our staff, dedication to
customer service, and broad operating footprint. Our net customer
attrition was in line with fiscal 2020, and we completed five
acquisitions which, in aggregate, generate nearly 13 million
gallons of product annually. While facing the normal challenges
associated with higher oil and propane costs going forward, we’re
ready for the next heating season and remain dedicated to
delivering high quality service and solid shareholder returns.”
Fiscal Year Ended September 30, 2021
Compared to Fiscal Year Ended September 30, 2020For fiscal
2021, Star reported a 2.0 percent increase in total revenue to $1.5
billion, as higher sales of motor fuel and other petroleum products
and greater installation and service revenue more than offset the
impact from lower home heating oil and propane volumes and reduced
selling prices during the heating season.
The volume of home heating oil and propane sold
during fiscal 2021 decreased by 7.7 million gallons, or 2.4
percent, to 305.9 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 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 $31.8 million, to $87.7
million, primarily due to a favorable change in the fair value of
derivative instruments of $38.9 million, the absence of a non-cash
charge of $5.7 million recorded in the fourth quarter of fiscal
2020 relating to the subsequent sale of certain non-strategic
assets, and lower interest expense of $1.9 million, partially
offset by an increase in income tax expense of $13.1 million and a
$2.8 million decrease in Adjusted EBITDA.
Adjusted EBITDA decreased by $2.8 million, to
$127.5 million, in fiscal 2021. Lower total operating expenses in
the base business of $5.8 million, higher home heating oil and
propane margins and the Adjusted EBITDA from acquisitions of $2.8
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 fiscal 2021 than in the prior year’s
comparable period, temperatures during the weather hedge period for
fiscal 2021 were colder than in fiscal 2020, thus the lower weather
hedge benefit.
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, December 9, 2021. The webcast will be
accessible on the company’s website, at www.stargrouplp.com, and
the telephone number for the conference call is 888-346-3470 (or
412-317-5169 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; cyber-attacks;
inflation, global supply chain issues, labor shortages, 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, 2021. 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
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
September 30, |
(in
thousands) |
2021 |
|
2020 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
4,767 |
|
|
$ |
56,911 |
|
Receivables, net of allowance of $4,779 and $6,121,
respectively |
|
99,680 |
|
|
|
83,594 |
|
Inventories |
|
61,183 |
|
|
|
50,256 |
|
Fair asset value of derivative instruments |
|
26,222 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
30,140 |
|
|
|
29,554 |
|
Assets held for sale |
|
— |
|
|
|
6,030 |
|
Total current assets |
|
221,992 |
|
|
|
226,345 |
|
Property and
equipment, net |
|
99,123 |
|
|
|
93,495 |
|
Operating
lease right-of-use assets |
|
95,839 |
|
|
|
99,776 |
|
Goodwill |
|
253,398 |
|
|
|
240,327 |
|
Intangibles,
net |
|
95,474 |
|
|
|
90,293 |
|
Restricted
cash |
|
250 |
|
|
|
250 |
|
Captive
insurance collateral |
|
69,933 |
|
|
|
69,787 |
|
Deferred
charges and other assets, net |
|
17,854 |
|
|
|
18,343 |
|
Total assets |
$ |
853,863 |
|
|
$ |
838,616 |
|
LIABILITIES AND PARTNERS' CAPITAL |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
37,291 |
|
|
$ |
30,827 |
|
Liabilities held for sale |
|
— |
|
|
|
1,265 |
|
Revolving credit facility borrowings |
|
8,618 |
|
|
|
— |
|
Fair liability value of derivative instruments |
|
— |
|
|
|
11,437 |
|
Current maturities of long-term debt |
|
17,621 |
|
|
|
13,000 |
|
Current portion of operating lease liabilities |
|
16,446 |
|
|
|
19,139 |
|
Accrued expenses and other current liabilities |
|
121,221 |
|
|
|
127,286 |
|
Unearned service contract revenue |
|
56,972 |
|
|
|
58,430 |
|
Customer credit balances |
|
86,828 |
|
|
|
83,471 |
|
Total current liabilities |
|
344,997 |
|
|
|
344,855 |
|
Long-term
debt |
|
92,385 |
|
|
|
109,805 |
|
Long-term
operating lease liabilities |
|
84,019 |
|
|
|
85,908 |
|
Deferred tax
liabilities, net |
|
29,014 |
|
|
|
17,227 |
|
Other
long-term liabilities |
|
25,244 |
|
|
|
25,001 |
|
Partners' capital |
|
|
|
|
|
|
|
Common unitholders |
|
295,063 |
|
|
|
273,283 |
|
General partner |
|
(2,821 |
) |
|
|
(2,506 |
) |
Accumulated other comprehensive loss, net of taxes |
|
(14,038 |
) |
|
|
(14,957 |
) |
Total partners' capital |
|
278,204 |
|
|
|
255,820 |
|
Total liabilities and partners' capital |
$ |
853,863 |
|
|
$ |
838,616 |
|
|
|
|
|
STAR GROUP, L.P. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS
|
Three MonthsEnded September 30, |
|
Twelve MonthsEnded September 30, |
(in thousands, except per unit data -
unaudited) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(unaudited) |
|
(unaudited) |
|
|
|
|
Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
$ |
159,571 |
|
|
$ |
106,881 |
|
|
$ |
1,204,319 |
|
|
$ |
1,186,026 |
|
Installations and services |
|
76,980 |
|
|
|
76,414 |
|
|
|
292,767 |
|
|
|
281,432 |
|
Total sales |
|
236,551 |
|
|
|
183,295 |
|
|
|
1,497,086 |
|
|
|
1,467,458 |
|
Cost and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product |
|
122,815 |
|
|
|
72,427 |
|
|
|
754,622 |
|
|
|
738,714 |
|
Cost of installations and services |
|
64,245 |
|
|
|
64,050 |
|
|
|
264,810 |
|
|
|
253,724 |
|
(Increase) decrease in the fair value of derivative
instruments |
|
(5,805 |
) |
|
|
781 |
|
|
|
(36,138 |
) |
|
|
2,755 |
|
Delivery and branch expenses |
|
71,410 |
|
|
|
68,428 |
|
|
|
327,910 |
|
|
|
323,373 |
|
Depreciation and amortization expenses |
|
8,692 |
|
|
|
8,037 |
|
|
|
33,485 |
|
|
|
34,623 |
|
General and administrative expenses |
|
6,326 |
|
|
|
6,190 |
|
|
|
25,096 |
|
|
|
25,072 |
|
Finance charge income |
|
(615 |
) |
|
|
(520 |
) |
|
|
(2,899 |
) |
|
|
(3,771 |
) |
Operating income (loss) |
|
(30,517 |
) |
|
|
(36,098 |
) |
|
|
130,200 |
|
|
|
92,968 |
|
Interest
expense, net |
|
(1,872 |
) |
|
|
(1,959 |
) |
|
|
(7,816 |
) |
|
|
(9,702 |
) |
Amortization
of debt issuance costs |
|
(240 |
) |
|
|
(270 |
) |
|
|
(972 |
) |
|
|
(999 |
) |
Other loss,
net |
|
— |
|
|
|
(5,724 |
) |
|
|
— |
|
|
|
(5,724 |
) |
Income (loss) before income taxes |
|
(32,629 |
) |
|
|
(44,051 |
) |
|
|
121,412 |
|
|
|
76,543 |
|
Income tax
expense (benefit) |
|
(9,396 |
) |
|
|
(13,852 |
) |
|
|
33,675 |
|
|
|
20,625 |
|
Net income (loss) |
$ |
(23,233 |
) |
|
$ |
(30,199 |
) |
|
$ |
87,737 |
|
|
$ |
55,918 |
|
General Partner's interest in net income (loss) |
|
(190 |
) |
|
|
(223 |
) |
|
|
689 |
|
|
|
377 |
|
Limited
Partners' interest in net income (loss) |
$ |
(23,043 |
) |
|
$ |
(29,976 |
) |
|
$ |
87,048 |
|
|
$ |
55,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per unit
data (Basic and Diluted): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) available to limited partners |
$ |
(0.58 |
) |
|
$ |
(0.68 |
) |
|
$ |
2.15 |
|
|
$ |
1.22 |
|
Dilutive
impact of theoretical distribution of earnings |
|
— |
|
|
|
— |
|
|
|
0.33 |
|
|
|
0.15 |
|
Basic and
diluted income (loss) per Limited Partner Unit: |
$ |
(0.58 |
) |
|
$ |
(0.68 |
) |
|
$ |
1.82 |
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of Limited Partner units outstanding (Basic and
Diluted) |
|
39,535 |
|
|
|
43,875 |
|
|
|
40,553 |
|
|
|
45,656 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIESRECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited)
|
Three
MonthsEnded September 30, |
(in thousands) |
2021 |
|
2020 |
Net loss |
$ |
(23,233 |
) |
|
$ |
(30,199 |
) |
Plus: |
|
|
|
Income tax
benefit |
|
(9,396 |
) |
|
|
(13,852 |
) |
Amortization
of debt issuance costs |
|
240 |
|
|
|
270 |
|
Interest
expense, net |
|
1,872 |
|
|
|
1,959 |
|
Depreciation
and amortization |
|
8,692 |
|
|
|
8,037 |
|
EBITDA |
|
(21,825 |
) |
|
|
(33,785 |
) |
(Increase) /
decrease in the fair value of derivative instruments |
|
(5,805 |
) |
|
|
781 |
|
Other loss,
net |
|
— |
|
|
|
5,724 |
|
Adjusted
EBITDA |
|
(27,630 |
) |
|
|
(27,280 |
) |
Add
/ (subtract) |
|
|
|
Income tax
expense |
|
9,396 |
|
|
|
13,852 |
|
Interest
expense, net |
|
(1,872 |
) |
|
|
(1,959 |
) |
Recovery for
losses on accounts receivable |
|
(870 |
) |
|
|
(1,115 |
) |
Decrease in
accounts receivables |
|
20,783 |
|
|
|
29,621 |
|
Increase in
inventories |
|
(4,521 |
) |
|
|
(6,547 |
) |
Increase in
customer credit balances |
|
33,573 |
|
|
|
33,312 |
|
Change in
deferred taxes |
|
(1,321 |
) |
|
|
(2,390 |
) |
Change in
other operating assets and liabilities |
|
(18,119 |
) |
|
|
(18,123 |
) |
Net cash
provided by operating activities |
$ |
9,419 |
|
|
$ |
19,371 |
|
Net cash
used in investing activities |
$ |
(3,464 |
) |
|
$ |
(9,423 |
) |
Net cash
used in financing activities |
$ |
(6,688 |
) |
|
$ |
(19,755 |
) |
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
20,800 |
|
|
|
19,000 |
|
Other
petroleum products |
|
40,000 |
|
|
|
39,600 |
|
Total all
products |
|
60,800 |
|
|
|
58,600 |
|
|
|
|
|
SUPPLEMENTAL
INFORMATIONSTAR GROUP, L.P. AND
SUBSIDIARIESRECONCILIATION OF EBITDA AND ADJUSTED
EBITDA(Unaudited)
|
Twelve
Months EndedSeptember 30, |
(in
thousands) |
2021 |
|
2020 |
Net income |
$ |
87,737 |
|
|
$ |
55,918 |
|
Plus: |
|
|
|
Income tax
expense |
|
33,675 |
|
|
|
20,625 |
|
Amortization
of debt issuance costs |
|
972 |
|
|
|
999 |
|
Interest
expense, net |
|
7,816 |
|
|
|
9,702 |
|
Depreciation
and amortization |
|
33,485 |
|
|
|
34,623 |
|
EBITDA |
|
163,685 |
|
|
|
121,867 |
|
(Increase) /
decrease in the fair value of derivative instruments |
|
(36,138 |
) |
|
|
2,755 |
|
Other loss,
net |
|
— |
|
|
|
5,724 |
|
Adjusted
EBITDA |
|
127,547 |
|
|
|
130,346 |
|
Add
/ (subtract) |
|
|
|
Income tax
expense |
|
(33,675 |
) |
|
|
(20,625 |
) |
Interest
expense, net |
|
(7,816 |
) |
|
|
(9,702 |
) |
(Recovery)
provision for losses on accounts receivable |
|
(248 |
) |
|
|
3,441 |
|
(Increase)
decrease in receivables |
|
(15,171 |
) |
|
|
34,366 |
|
(Increase)
decrease in inventories |
|
(11,472 |
) |
|
|
14,588 |
|
Increase in
customer credit balances |
|
3,054 |
|
|
|
14,775 |
|
Change in
deferred taxes |
|
11,361 |
|
|
|
(3,544 |
) |
Change in
other operating assets and liabilities |
|
(4,703 |
) |
|
|
12,023 |
|
Net cash
provided by operating activities |
$ |
68,877 |
|
|
$ |
175,668 |
|
Net cash
used in investing activities |
$ |
(50,326 |
) |
|
$ |
(28,141 |
) |
Net cash
used in financing activities |
$ |
(70,695 |
) |
|
$ |
(95,515 |
) |
|
|
|
|
|
|
|
|
Home heating
oil and propane gallons sold |
|
305,900 |
|
|
|
313,600 |
|
Other
petroleum products |
|
154,100 |
|
|
|
151,800 |
|
Total all
products |
|
460,000 |
|
|
|
465,400 |
|
|
|
|
|
Source: Star Group, L.P.
Star (NYSE:SGU)
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From Mar 2024 to Apr 2024
Star (NYSE:SGU)
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