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What is the market's earnings forecast for Star Group next quarter?

What does Star Group do and what are its main business segments?

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What were the key takeaways from Star Group’s earnings call?

What is Star Group's gross profit margin?

- **Top-Line Growth**: 12% volume increase and 22.2% EBITDA expansion highlight operational success despite colder-than-normal weather.
- **Customer Resilience**: Attrition up but satisfaction metrics at historical lows, signaling strong retention efforts.
- **Acquisition Momentum**: 4 deals in FY2025 added $12 million in annual volume, with pipeline activity continuing.
- **Financial Health**: Net income up 106% YoY to $73.5 million, offset by challenges in free cash flow management.
- **Risk Watch**: Regulatory uncertainty in NY and macroeconomic factors (real estate activity) pose near-term risks.

**【CEO Summary Section】**
- **Volume Growth**: Home heating oil and propane volume increased by 12% YoY to 283 million gallons, driven by 8% colder-than-prior-year temperatures and 4 acquisitions adding 12 million gallons annually.
- **EBITDA Expansion**: Adjusted EBITDA rose 22.2% to $136.4 million, fueled by higher volumes, improved margins, and $24.8 million in incremental EBITDA from acquisitions.
- **Customer Dynamics**: Net customer attrition rose modestly, but internal satisfaction metrics and loss rates improved to historical lows, despite lower real estate activity.
- **Capital Allocation**: Invested $81 million in acquisitions, $16 million in share repurchases, and $26 million in distributions, balancing growth and returns.
- **Strategic Focus**: Emphasized service and installation profitability (10% YoY growth) and disciplined margin management to offset attrition.

**【CFO Financial Commentary】**
- **Q4 Financials**: 
  - Net loss of $28.7 million (vs. $32.1 million prior year), driven by $12.2 million derivative valuation benefit and $3.8 million real estate sale gain.
  - Adjusted EBITDA loss of $33 million (up $3.3 million YoY) due to higher operating expenses ($5 million) and margin compression from acquisitions.
- **FY2025 Results**: 
  - Net income of $73.5 million (vs. $35.3 million prior year), supported by $24.8 million EBITDA growth and $32 million derivative valuation benefit.
  - Gross profit rose 12% to $525 million, with $3.8 million contribution from installation/service.
- **Cash Flow**: Free cash flow constrained by working capital (receivables, inventory) and higher interest expenses ($1.4 million YoY).

**【Q&A Key Highlights】**
- **Regulatory Environment**: CEO noted uncertainty around New York fossil fuel bans, stating it's too early to assess impacts.
- **Attrition Trends**: Attrition up due to lower real estate activity, but improving satisfaction metrics and loss rates suggest long-term stability.
- **Acquisition Pipeline**: Active pipeline with several tuck-in opportunities, though no large deals in sight.
- **Cash Flow Challenges**: CFO cited timing of inventory purchases, tax payments, and higher interest costs as key drivers of lower free cash flow.

Star Group, L.P.(SGU)-20251209-2025 Q4 Earnings call transcript

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