Washington, D.C. 20549

Form 8-K


Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): February 3, 2020  

(Exact Name of Registrant as Specified in Charter)

(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)


9 West Broad Street, Suite 310, Stamford, CT 06902
(Address of Principal Executive Offices) (Zip Code)

(203) 328-7310
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:


Title of each class 



 Name of each exchange on which registered
Common Units SGU New York Stock Exchange


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]


Item 2.02. Results of Operations and Financial Condition.

On February 3, 2020, Star Group, L.P., a Delaware partnership, issued a press release announcing its financial results for the fiscal first quarter ended December 31, 2019.  A copy of the press release is furnished within this report as Exhibit 99.1.

The information in this report is being furnished and is not deemed as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended, unless specifically stated so therein.

Item 7.01. Regulation FD Disclosure.


Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1   A copy of the Star Group, L.P. Press Release dated February 3, 2020.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

By: Kestrel Heat, LLC (General Partner)
Date: February 3, 2020By: /s/ Richard F. Ambury        
  Richard F. Ambury
  Chief Financial Officer
Principal Financial Officer



Star Group, L.P. Reports Fiscal 2020 First Quarter Results

STAMFORD, Conn., Feb. 03, 2020 (GLOBE NEWSWIRE) -- Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home energy distributor and services provider, today announced financial results for its fiscal 2020 first quarter, the three month period ended December 31, 2019.

For the fiscal 2020 first quarter, Star reported a 4.9 percent decrease in total revenue to $508.9 million compared with revenue of $535.0 million in the prior-year period, primarily due to a 4.3 percent decline in total volume sold as well as lower wholesale per-gallon product costs.

The volume of home heating oil and propane sold during the fiscal 2020 first quarter decreased by 6.2 million gallons, or 5.5 percent, to 107.1 million gallons, as the additional volume provided by acquisitions was more than offset by warmer temperatures, net customer attrition and other factors. Temperatures in Star's geographic areas of operation for the fiscal 2020 first quarter were 2.4 percent warmer than during the fiscal 2019 first quarter and 2.3 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Net income increased by $25.4 million, to $27.8 million, largely due to a non-cash favorable change in the fair value of derivative instruments of $37.5 million. During the first quarter of fiscal 2020, a non-cash gain of $6.4 million was recorded as product costs increased; conversely, during the first quarter of fiscal 2019, a non-cash charge of $31.1 million was recorded as product costs declined.

Adjusted EBITDA increased by $0.2 million, or 0.5 percent, to $45.1 million. While acquisitions provided $2.8 million of Adjusted EBITDA, Adjusted EBITDA in the base business declined by $2.6 million as the impact of lower volume sold – reflecting net customer attrition and slightly warmer weather – and a $1.1 million increase in the amount due under the Company’s weather hedge program more than offset a slight increase in home heating oil and propane per gallon margins and lower operating expenses. During the weather hedge period (November 1-December 31, 2019), colder temperatures necessitated a charge of $3.0 million, even though temperatures for the entire first quarter were 2.4% warmer year-over-year due to October 2019 being more than 30% warmer than October 2018. However, warmer temperatures in January, 2020 have resulted in a complete reversal of this charge under the guidelines of the weather hedge.

“Fiscal 2020 has already brought with it some interesting weather trends, challenges, and opportunities for the Company,” said Jeff Woosnam, Star Group’s President and Chief Executive Officer. “While November and December were cold enough to necessitate a charge against our weather hedge contract, the warmer temperatures for the entire quarter resulted in lower demand. However, we continued our focus on increasing operating efficiency and customer retention. I’m proud of the many steps taken over the past year to improve service and reduce costs, which resulted in $12.3 million of lower operating expenses in the base business – a huge accomplishment for the Company. At the same time, we completed one small acquisition that brought with it approximately one million gallons of annualized volume, and we are assessing other potential transactions that may be attractive to the Company. While January started off warmer than last year, we remain prepared for normal, fluctuating weather patterns as we proceed through the rest of the heating season.”

As noted previously, on December 4, 2019 the Company entered into a fifth amended and restated revolving credit facility agreement with a bank syndicate that enables the Company to borrow up to $300 million ($450 million during the heating season) on a revolving line of credit and provides for a $130 million five-year senior secured term loan, up from $100 million prior to the fifth amendment. Proceeds from the new term loan were used to repay the outstanding balance of the existing term loan of $90 million and $40 million of the revolving credit facility. The new credit facility allows for greater financial flexibility, particularly with regard to potential acquisitions.

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)
EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization) and Adjusted EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization, (increase) decrease in the fair value of derivatives, multiemployer pension plan withdrawal charge, net other income, gain or loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges) are non-GAAP financial measures that are used as supplemental analytical tools by management and external users of our financial statements, such as investors, commercial banks and research analysts, to assess:

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations as analytical tools and so should not be viewed in isolation but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are:

Members of Star's management team will host a webcast and conference call at 11:00 a.m. Eastern Time tomorrow, February 4, 2020. The webcast will be accessible on the company’s website, at www.stargrouplp.com, and the telephone number for the conference call is 877-327-7688 (or 412-317-5112 for international callers).

About Star Group, L.P.
Star Group, L.P. is a full service energy provider specializing in the sale of home heating oil and propane to residential and commercial customers primarily within the Northeast, Central and Southeast United States. The Company also sells gasoline and diesel fuel as well as installs, maintains, and repairs various heating and air conditioning equipment; to a lesser extent, it provides these ancillary services outside its product customer base, including service contracts for natural gas and other heating systems. Star is the nation's largest retail distributor of home heating oil based upon sales volume. Additional information is available by obtaining the Company's SEC filings at www.sec.gov and by visiting Star's website at www.stargrouplp.com, where unit holders may request a hard copy of Star’s complete audited financial statements free of charge.

Forward Looking Information
This news release includes "forward-looking statements" which represent the Company’s expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of weather conditions on our financial performance; the price and supply of the products that we sell; the consumption patterns of our customers; our ability to obtain satisfactory gross profit margins; our ability to obtain new customers and retain existing customers; our ability to make strategic acquisitions; the impact of litigation; our ability to contract for our current and future supply needs; natural gas conversions; future union relations and the outcome of current and future union negotiations; the impact of future governmental regulations, including climate change, environmental, health and safety regulations; the ability to attract and retain employees; customer credit worthiness; counterparty credit worthiness; potential cyber-attacks; marketing plans; general economic conditions and new technology. All statements other than statements of historical facts included in this news release are forward-looking statements. Without limiting the foregoing, the words "believe," "anticipate," "plan," "expect," "seek," "estimate" and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct and actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, those set forth under the heading "Risk Factors" and "Business Strategy" in our Annual Report on Form 10- K (the "Form 10-K") for the fiscal year ended September 30, 2019. Important factors that could cause actual results to differ materially from the Company’s expectations ("Cautionary Statements") are disclosed in this news release and in the Form 10-Q. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. Unless otherwise required by law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this news release.

(financials follow)

  December 31, September 30,
   2019   2019 
(in thousands) (unaudited)  
Current assets    
Cash and cash equivalents $14,542  $4,899 
Receivables, net of allowance of $8,499 and $8,378, respectively  205,038   120,245 
Inventories  80,261   64,788 
Fair asset value of derivative instruments  1,247    
Prepaid expenses and other current assets  38,909   36,898 
Total current assets  339,997   226,830 
Property and equipment, net  96,512   98,239 
Operating lease right-of-use assets  103,492    
Goodwill  244,574   244,574 
Intangibles, net  103,537   107,688 
Restricted cash  250   250 
Captive insurance collateral  62,703   58,490 
Deferred charges and other assets, net  18,083   16,635 
Total assets $969,148  $752,706 
Current liabilities    
Accounts payable $47,302  $33,973 
Revolving credit facility borrowings  112,688   24,000 
Fair liability value of derivative instruments  1,893   8,262 
Current maturities of long-term debt  9,750   9,000 
Current portion of operating lease liabilities  20,202    
Accrued expenses and other current liabilities  132,837   120,839 
Unearned service contract revenue  70,087   61,213 
Customer credit balances  52,766   68,270 
Total current liabilities  447,525   325,557 
Long-term debt  119,525   120,447 
Long-term operating lease liabilities  88,707    
Deferred tax liabilities, net  21,655   20,116 
Other long-term liabilities  20,838   25,746 
Partners’ capital        
Common unitholders  289,268   279,709 
General partner  (1,991)  (1,968)
Accumulated other comprehensive loss, net of taxes  (16,379)  (16,901)
Total partners’ capital  270,898   260,840 
Total liabilities and partners’ capital $969,148  $752,706 

  Three Months
Ended December 31,
(in thousands, except per unit data - unaudited)  2019   2018 
Product $432,688  $458,707 
Installations and services  76,257   76,320 
Total sales  508,945   535,027 
Cost and expenses:        
Cost of product  287,673   306,226 
Cost of installations and services  73,669   74,317 
(Increase) decrease in the fair value of derivative instruments  (6,417)  31,039 
Delivery and branch expenses  96,726   102,673 
Depreciation and amortization expenses  9,050   7,745 
General and administrative expenses  6,506   7,815 
Finance charge income  (713)  (851)
Operating income  42,451   6,063 
Interest expense, net  (2,679)  (2,516)
Amortization of debt issuance costs  (235)  (259)
Income before income taxes  39,537   3,288 
Income tax expense  11,782   973 
Net income $27,755  $2,315 
General Partner’s interest in net income  192   15 
Limited Partners’ interest in net income $27,563  $2,300 
Per unit data (Basic and Diluted):    
Net income available to limited partners $0.58  $0.04 
Dilutive impact of theoretical distribution of earnings under FASB ASC 260-10-45-60  0.09    
Basic and diluted income per Limited Partner Unit: $0.49  $0.04 
Weighted average number of Limited Partner units outstanding (Basic and Diluted)  47,266   52,905 

  Three Months
Ended December 31,
(in thousands)  2019   2018 
Net income $27,755  $2,315 
Income tax expense  11,782   973 
Amortization of debt issuance cost  235   259 
Interest expense, net  2,679   2,516 
Depreciation and amortization  9,050   7,745 
EBITDA  51,501   13,808 
(Increase) / decrease in the fair value of derivative instruments  (6,417)  31,039 
Adjusted EBITDA  45,084   44,847 
Add / (subtract)        
Income tax expense  (11,782)  (973)
Interest expense, net  (2,679)  (2,516)
Provision for losses on accounts receivable  1,010   1,529 
Increase in accounts receivables  (85,745)  (95,743)
Increase in inventories  (15,427)  (20,187)
Decrease in customer credit balances  (15,898)  (14,120)
Change in deferred taxes  1,336   (616)
Change in other operating assets and liabilities  32,510   24,888 
Net cash used in operating activities $(51,591) $(62,891)
Net cash used in investing activities $(7,663) $(8,112)
Net cash provided by financing activities $68,897  $80,261 
Home heating oil and propane gallons sold  107,100   113,300 
Other petroleum products  41,400   41,900 
Total all products  148,500   155,200 

Star Group, L.P.
Investor Relations 
Chris Witty
Darrow Associates
646/438-9385 or cwitty@darrowir.com