Star Group, L.P. Q1 FY2026 earnings call

• Fiscal 2026 started well with benefits from acquisitions, margin management, and colder temperatures, leading to an adjusted EBITDA increase of $16.5 million or 32% YOY, net of a $5 million weather hedge charge.
• Net customer attrition was modest. Employees responded to challenges of delivering in cold weather.
• Completed a small heating oil business purchase recently, with several acquisition opportunities under review.
• Product gross profit increased due to volume and margin, but service/installations profit had mixed results with installation up and service down.
• Delivery, branch, and G&A expenses increased, with weather hedge and volume contributing to the rise.

For the first quarter of Fiscal 2026, home heating oil and propane volume rose by 11.5 million gallons or 14% to approximately 94 million gallons. Product gross profit increased by $29 million or 19% to approximately $179 million due to higher volumes sold and higher per gallon margins. The combined gross profit from service and installations was $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 decreased by $2.7 million due to high service demand from colder temperatures and increased propane tank sets. Delivery, branch, and G&A expenses rose by $11 million in the first quarter of Fiscal 2026, with $5 million attributed to the weather hedge program as temperatures were colder than contract strike prices.

• It's too early to determine fiscal 2026's full outcome, but the company remains vigilant in providing excellent customer service, controlling costs, and growing service/installation profitability.
• Anticipates new acquisition opportunities to present themselves closer to spring.

• Forward-looking statements involve risks and uncertainties that could cause actual performance to differ from expectations. Important factors are disclosed in the company's filings with the SEC. The weather hedge program and operational challenges from cold temperatures are relevant risks.

Q: Just wondering if you had any commentary given we're now a month in -- a little over a month into the second quarter for the fiscal year, given obviously this cold weather has persisted in terms of how it's going operationally or any other kind of general commentary you can provide?

A: Sure, Tim. Yes. I mean, obviously, January was colder than normal. February is starting off that way, and we've got a pretty strong forecast in front of us. And we've been dealing with some storms. So conditions have definitely been a challenge for us. But frankly, this is what we're built for as a full-service provider, and this is what we plan for. So I'm just always amazed at how our employees really just step up and get a lot of satisfaction out of taking care of our customers. So I feel very good about our current position right now, given some very difficult conditions.