Shares of Star Group, L.P. Common Units SGU have declined 3.4% since the company reported its earnings for the fourth quarter of fiscal 2024. This compares unfavorably to the S&P 500 index, which gained 0.5% over the same period. Over the past month, SGU has gained 1.3% of its value, while the S&P 500 rose by 1.8%.
SGU’s Revenue and Earnings Overview
SGU reported a fourth-quarter fiscal 2024 loss of $1 per share, wider than a loss of 55 cents incurred in the year-ago quarter. The net loss increased by 81.8% compared to last year's quarter.
For the fiscal fourth quarter ended Sept. 30, 2024, Star Group reported a 10% decline in total revenues to $240.3 million compared to $266.9 million in the year-ago period.
This decrease was driven by slightly lower sales volumes and reduced petroleum product selling prices, partially offset by increased service and installation revenues.
Star Group, L.P. Price, Consensus and EPS Surprise
Star Group, L.P. price-consensus-eps-surprise-chart | Star Group, L.P. Quote
Star Group’s Other Key Business Metrics
Star Group sold 18.5 million gallons of home heating oil and propane during the fourth quarter of 2024, representing a 1.5% year-over-year decrease. This decline was attributed to net customer attrition and other factors despite contributions from acquisitions. Operating expenses rose, which partially offset the benefits of higher per-gallon margins and service revenue growth.
The net loss widened to $35.1 million, a $15.4 million increase from the prior year, driven by a $28.4 million unfavorable change in the fair value of derivative instruments. Adjusted EBITDA showed an improvement, with a loss of $29.7 million compared with a $31.4 million loss in the previous year.
Other profitability metrics also saw shifts. The gross profit for the quarter fell by 3.5% to $126.5 million due to lower revenues, while the gross margin improved slightly due to higher per-gallon profitability and increased service contributions. The operating loss for the fourth quarter was $48.6 million compared with $23 million in the fiscal fourth quarter of 2023, reflecting effective cost management despite revenue declines.
Cost of Products
The cost of products for the fourth quarter was $113.8 million, a 24% decrease from $149.7 million in the same period last year. This reduction aligns with the decline in product sales revenue and reflects lower wholesale product costs.
Star Group’s Cash and Debt Position
SGU significantly strengthened its liquidity position, with cash and cash equivalents rising to $117.3 million as of Sept. 30, 2024 compared to $45.2 million a year earlier. This 159.6% increase reflects effective cash management and operational efficiencies. However, the company’s long-term debt also increased to $187.8 million, up from $127.3 million at the end of fiscal 2023. The rise in debt suggests that acquisitions and strategic investments played a role in the company’s broader operational strategy.
SGU: Management Commentary
CEO Jeff Woosnam highlighted the modest revenue decline but expressed optimism regarding improved margins and service profitability. While acknowledging a slight increase in customer attrition, Woosnam emphasized the company’s commitment to cost containment and strategic acquisitions. “As we enter the heating season, we are well-prepared to meet customer needs while continuing to deliver superior service,” he stated.
Factors Influencing Star Group’s Performance
The fiscal fourth-quarter results were impacted by lower petroleum product prices and volumes, offset partially by improved margins and acquisition-related growth. A $28.4 million unfavorable swing in the fair value of derivative instruments significantly contributed to the net loss. Warmer-than-normal temperatures — 15.1% above historical averages — further pressured heating product volumes for the full year.
SGU’s Other Developments
Star Group actively pursued acquisitions during fiscal 2024, contributing additional volume and revenue streams. The company increased its goodwill and intangible assets to $374.5 million as of Sept. 30, 2024, up from $338.4 million in the prior year, reflecting acquisition-related activity. Star also reduced its net interest expenses for the year, benefiting from lower debt levels compared to fiscal 2023.
While Star Group faced significant revenue and earnings pressures in its latest quarter, operational improvements and strategic acquisitions provide a foundation for potential recovery as it moves into fiscal 2025. Investors are likely to monitor the company’s ability to counter warmer weather and cost headwinds in the coming months.
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