Star Group (SGU) Q1 2025 earnings summary

Executive summary

• First quarter performance improved due to acquisitions, colder temperatures, and operational efficiency, despite a 7.6% revenue decline to $488.1 million from lower petroleum prices.

• Service and installation business showed notable improvement from acquisitions and internal productivity initiatives.

• Employees maintained high service levels in response to increased demand.

• Net income rose by $19.9 million to $32.9 million, driven by a $24.3 million favorable change in derivative fair value, higher Adjusted EBITDA, and lower depreciation and amortization, partially offset by higher income taxes.

• A strategic propane acquisition was completed post-quarter, strengthening the business footprint.

Financial highlights

• Home heating oil and propane volume increased 2.8% year-over-year to 82.4 million gallons, driven by acquisitions and colder weather.

• Product gross profit rose by $5.6 million (4%) to $151 million, with higher per-gallon margins and volumes.

• Service and installation gross profit increased to $6.9 million from $4.4 million, aided by acquisitions and base business improvements.

• Operating income more than doubled to $49.2 million from $21.6 million year-over-year.

• Adjusted EBITDA grew by $3 million to $52 million, with margin improvements and acquisitions offsetting a base business volume decline.

Outlook and guidance

• Colder temperatures in January (20% colder year-over-year, 7% colder than normal) are expected to benefit the second quarter.

• Management remains focused on operational efficiency, cost control, and service quality for the remainder of fiscal 2025.