Star's Q3 2025 Earnings Call: Unpacking Contradictions on Acquisitions, AI Integration, and Customer Dynamics

Acquisition pipeline and availability of opportunities, AI integration in customer service, customer churn and new customer additions, AI integration in customer service, acquisition pipeline and activity are the key contradictions discussed in Star's latest 2025Q3 earnings call.



Volume and Weather Impact:
- Star's home heating oil and propane volume decreased by 1.5 million gallons or 3.8% to 36 million gallons in Q3.
- The decline was due to warmer weather (2% warmer than last year), net customer attrition, and other factors.

Service and Installation Profitability:
- Gross profit from service and installation increased by $600,000 to $14 million, leading to a $2.7 million YTD increase due to acquisition contributions and base business initiatives.
- Improvement was driven by efforts to enhance service performance and control expenses.

Acquisition Impact:
- Recent acquisitions contributed a combined gross profit of $17 million YTD, but also increased expenses by $18.7 million due to additional operating costs.
- Acquisitions, particularly in the propane segment, positively contributed to Q3 adjusted EBITDA despite overall challenging conditions.

Financial Performance YTD:
- Star reported a YTD net income of $102 million, an increase of $32 million from the prior year period, driven by an $28 million increase in adjusted EBITDA.
- The growth was primarily due to increased volume and margin improvements, partially offset by higher expenses from acquisitions and weather hedging.