Star Group, L.P. Q4 FY2025 earnings call

• Temperatures were 8% warmer than normal in 2025 but 8% colder than in fiscal 2024. Lower temperatures and recent acquisitions led to a 12% year-over-year increase in heating oil and propane volume.
• Overhead expenses were kept largely in check, margin management was disciplined, and installation and service revenue grew nearly 10% over fiscal 2024.
• Adjusted EBITDA increased by $24.8 million or 22.2% year-over-year. Net customer attrition rose modestly but customer service focus continued.
• Completed 4 acquisitions during fiscal 2025, adding nearly 12 million gallons of heating oil and propane volume annually. Invested approximately $81 million in acquisitions, $16 million in unit repurchases, and paid $26 million in distributions in fiscal 2025.
• Talented team supported and owned the strategy of differentiating Star through outstanding service and value to customers.

For the fourth quarter, home heating oil and propane volume increased by 1.5 million gallons or 8% to 20 million gallons. Product gross profit increased by $2.5 million or 6% to $45 million. For fiscal 2025, home heating oil and propane volume increased by 29 million gallons or 12% to 283 million gallons. Product gross profit rose by $57 million or 12% to $525 million. Installation and service revenue posted growth of nearly 10% over fiscal 2024.

• Look forward to improving the organization and its performance in fiscal 2026.
• Expect to take advantage of further opportunities to enhance the business in the coming year.
• Mentioned that the company will share 2026 fiscal first quarter results in February.

• Difficulty in predicting the impact of the regulatory environment, especially in New York regarding fossil fuel bans and other regulations as it is still in flux.
• Lower level of overall real estate activity in the marketplace impacted new customer additions.
• Net customer attrition rose modestly.

Q: Could you share thoughts on the regulatory environment in New York, specifically regarding fossil fuel ban and other regulations, and its impact on Star Gas in the years ahead?

A: It's very difficult to predict how the regulatory environment will impact us as a business as it's still in flux and plans are still being determined, so hard to comment on future impact.

Q: On customer attrition, fourth quarter customer gains were down and losses were up, and net attrition trending unfavorably. Any specific factors affecting fourth quarter attrition and thoughts on attrition going forward?

A: Generally seeing low prospect activity in the marketplace. Loss rates as a percentage of customer base are down and at historical low points. Challenge is new customer gains due to low real estate activity and weather not being disruptive enough to attract prospects. Constantly reviewing sales and marketing structure to attract more customers.

Q: On the acquisition front, how is the pipeline looking and any significantly large deals? Also, on free cash flow in fourth quarter, attributed to working capital in receivables and inventory. Any insights?

A: Pipeline remains active with several opportunities under review, including tuck-in and smaller standalone opportunities. Regarding free cash flow, receivables DSO relatively same as last year, EBITDA $3.3 million less this year vs last year, interest up a bit, timing of income taxes and inventory timing could impact, but no huge differences seen.