Star Group LP Reports Q2 2025 Revenue of $743 Million and Net Income of $85.9 Million, Driven by Higher Volumes and Strategic Acquisitions.

Star Group LP (SGU) reported a 23% increase in home heating oil and propane volume due to colder weather and recent acquisitions. The company completed $126.5 million in acquisitions and raised its annual dividend by $0.05 to $0.74 per unit. However, expenses increased by $22 million year over year and the company anticipates losses from recent acquisitions during the non-heating season.

Star Group LP (SGU), a home energy distributor and services provider, released its second quarter financial results for the fiscal year 2025, highlighting significant growth in home heating oil and propane volumes, driven by colder weather and recent acquisitions. The company reported an 11.6% increase in total revenue to $743.0 million compared to the same period in the prior year, with a notable 26.8 million gallons increase in home heating oil and propane sold, representing a 22.9% surge in volume.

The company's President and Chief Executive Officer, Jeff Woosnam, attributed the performance to colder temperatures and strategic acquisitions. "Our performance this quarter was positively impacted by recent acquisitions and weather that, while 4.5 percent warmer than normal, was almost 13 percent colder than in fiscal 2024," Woosnam stated. The company completed $126.5 million in acquisitions since February 1, 2024, which included some purchases during the current heating season.

Despite the revenue and volume growth, Star Group faced increased expenses. Net income increased by $17.5 million to $85.9 million, but this was partially offset by a $6.9 million increase in income tax expense, a $5.7 million unfavorable change in the fair value of derivative instruments, and other expenses. The company also reported a $3.1 million expense under its weather hedge contracts due to colder temperatures, compared to a $6.5 million credit in the prior year.

Looking ahead, Star Group anticipates losses from recent acquisitions during the non-heating season. The company also raised its annual dividend by 5 cents to 74 cents per unit. For the first six months of fiscal 2025, total revenue increased by 3.1% to $1.2 billion, with a 14.7% increase in home heating oil and propane volume. Net income increased by $37.4 million to $118.8 million, driven by higher Adjusted EBITDA and a favorable change in the fair value of derivative instruments.

Star Group's results underscore the impact of colder weather and strategic acquisitions on its financial performance. However, the company faces challenges in managing expenses and the potential losses from recent acquisitions during the non-heating season. Investors will closely monitor the company's ability to navigate these challenges and maintain its growth trajectory.

References:
[1] https://finance.yahoo.com/news/star-group-l-p-reports-203000581.html