Star Group's Q2 2025 Earnings Call: Unpacking Contradictions in Acquisitions, HVAC Strategy, and Customer Credit

Acquisition strategy and availability of opportunities, HVAC business strategy, impact of tariffs on pricing, customer credit and ability to pay, impact of acquisitions on business growth are the key contradictions discussed in Star's latest 2025Q2 earnings call.



Revenue and Volume Growth:
- Star Group reported a 23% increase in home heating oil and propane volume, with 144 million gallons sold in the second quarter.
- The growth was primarily driven by colder weather conditions, which were 13% colder than the previous fiscal year, and recent acquisitions.

Adjusted EBITDA Improvement:
- Adjusted EBITDA rose by $32 million to $128 million, reflecting a 25% increase in product gross profit.
- This improvement was due to increased home heating oil and propane volumes, higher per gallon margins, and better service and installation profitability.

Acquisition and Market Expansion:
- The company completed $126.5 million in acquisitions since February 1, 2024, with two businesses closed during the quarter.
- These acquisitions further strengthened Star Group's presence in existing markets and were strategically aligned with capital allocation goals.

Operational Efficiency:
- The company's service and installation business contributed an increase in adjusted EBITDA of $1.6 million.
- This improvement was attributed to operational execution and efficiency during the heating season, as well as the ongoing expansion and improvement of the HVAC business.