Form 8-K
0001002590 False 0001002590 2021-05-05 2021-05-05 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

_________________

CURRENT REPORT

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

Date of Report (Date of earliest event reported):  May 5, 2021

_______________________________

STAR GROUP, L.P.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware001-1412906-1437793
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

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 classTrading Symbol(s)Name of each exchange on which registered
Common UnitsSGUNew 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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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 May 5, 2021, Star Group, L.P., a Delaware partnership, issued a press release announcing its financial results for the fiscal second quarter and six months ended March 31, 2021. 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 May 5, 2021.
Exhibit 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

SIGNATURE

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.

 STAR GROUP, L.P.
 By: Kestrel Heat, LLC (General Partner)
   
  
Date: May 5, 2021By: /s/ Richard F. Ambury        
  Richard F. Ambury
  Chief Financial Officer
Principal Financial Officer
  

 

EdgarFiling

EXHIBIT 99.1

Star Group, L.P. Reports Fiscal 2021 Second Quarter Results

STAMFORD, Conn., May 05, 2021 (GLOBE NEWSWIRE) -- Star Group, L.P. (the "Company" or "Star") (NYSE:SGU), a home energy distributor and services provider, today announced financial results for the fiscal 2021 second quarter and six months ended March 31, 2021.

Three Months Ended March 31, 2021 Compared to the Three Months Ended March 31, 2020
For the fiscal 2021 second quarter, Star reported an 11.2 percent increase in total revenue to $604.1 million compared with $543.1 million in the prior-year period, reflecting greater volumes sold.

The volume of home heating oil and propane sold during the fiscal 2021 second quarter increased by 21.4 million gallons, or 15.7 percent, to 157.6 million gallons as colder temperatures, acquisitions and other factors more than offset the impact of net customer attrition. Temperatures in Star's geographic areas of operation for the fiscal 2021 second quarter were 16.2 percent colder than during the fiscal 2020 second quarter but 8.6 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Star’s net income rose by $26.8 million in the quarter, to $85.2 million, due to a favorable change in the fair value of derivative instruments of $19.9 million, a $12.9 million increase in Adjusted EBITDA, and lower depreciation and amortization expense of $0.8 million, partially offset by an increase in income tax expense of $7.5 million.

Second quarter Adjusted EBITDA improved by $12.9 million, to $119.7 million, as the impact of higher home heating oil and propane volumes more than offset a $13.6 million decline in the Company’s benefit recorded from the weather hedge and an increase in total operating expenses of $2.7 million. For the three months ended of March 31, 2021, Star recorded a $0.5 million charge under its weather hedging contract, increasing delivery and branch expense; this slightly offset the $4.0 million benefit booked in the quarter ended December 31, 2020. By comparison, in the prior-year period – the three months ended March 31, 2020 – the Company (due to warmer weather) recorded a weather hedge benefit of $13.1 million.

“Although temperatures in the second quarter were 8.6% warmer than normal, they were 16.2% colder than the same period last year, driving overall improved performance while the pandemic ran its course,” said Jeff Woosnam, Star Group’s President and Chief Executive Officer. “The volume of home heating oil and propane rose, as did net income and Adjusted EBITDA, and we continued to focus on customer service and operating fundamentals. In addition, during the quarter, Star purchased two small oil dealers and, in April, purchased another, adding approximately six million gallons, in aggregate, of annual volume. With these acquisitions we have now closed five transactions since the beginning of the fiscal year, equating to some 13 million gallons of product annually.”

Six Months Ended March 31, 2021 Compared to the Six Months Ended March 31, 2020
For the first half of fiscal 2021, Star reported a 7.1 percent decrease in total revenue to $1.0 billion compared with $1.1 billion in the prior-year period, reflecting the impact of lower selling prices, even as volumes rose, largely attributable to a decrease in product cost.

The volume of home heating oil and propane sold during the first six months of fiscal 2021 increased by 3.8 million gallons, or 1.5 percent, to 247.1 million gallons, as cooler temperatures, acquisitions and other factors more than offset the impact of net customer attrition. Temperatures in Star's geographic areas of operation for the first half of fiscal 2021 were 2.9 percent colder than during the prior year comparable period but 11.4 percent warmer than normal, as reported by the National Oceanic and Atmospheric Administration.

Net income rose by $36.9 million, or 42.8 percent, to $123.0 million due to a favorable change in the fair value of derivative instruments of $30.9 million, a $13.1 million increase in Adjusted EBITDA, and lower depreciation and amortization expense of $1.9 million, partially offset by an increase in income tax expense of $10.5 million.

Adjusted EBITDA increased by $13.1 million, or 8.6 percent, to $165.1 million. The impact of slightly higher home heating oil and propane volumes, an increase in home heating oil and propane margins, and lower total operating expenses of $6.6 million more than offset a $6.7 million decline in the Company’s benefit recorded from the weather hedge, reflecting colder weather in fiscal 2021.

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, other income (loss), net, multiemployer pension plan withdrawal charge, 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 financial measures by management and external users of the Company’s financial statements, such as investors, commercial banks and research analysts, to assess Star’s position with regard to the following:

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 as follows:

REMINDER:
Members of Star's management team will host a webcast and conference call at 12:00 p.m. Eastern Time tomorrow, May 6, 2021. 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 provider specializing in the sale of home heating products and services to residential and commercial customers to heat their homes and buildings. The Company also sells and services heating and air conditioning equipment to its home heating oil and propane customers and, to a lesser extent, provides these offerings to customers outside of its home heating oil and propane customer base. In certain of Star's marketing areas, the Company provides plumbing services, primarily to its home heating oil and propane customer base. Star also sells diesel, gasoline and home heating oil on a delivery only basis. We believe Star is the nation's largest retail distributor of home heating oil based upon sales volume. Including its propane locations, Star serves customers in the more northern and eastern states within the Northeast and Mid-Atlantic U.S. regions. 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 severity and duration of the novel coronavirus, or COVID-19, pandemic, the pandemic’s impact on the U.S. and global economies, the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic, 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 current and future governmental regulations, including climate change, environmental, health and safety regulations; the ability to attract and retain employees; customer creditworthiness; counterparty creditworthiness; marketing plans; potential cyber-attacks; 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, 2020. 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 Company’s Form 10-K and our Quarterly Reports on Form 10-Q. Currently, one of the most significant factors, however, is the potential adverse effect of the pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its customers and counterparties and the global economy and financial markets. The extent to which COVID-19 impacts us and our customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. 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)

 

STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


  March 31, September 30,
   2021   2020 
(in thousands) (unaudited)  
ASSETS  
Current assets    
Cash and cash equivalents $8,883  $56,911 
Receivables, net of allowance of $5,797 and $6,121, respectively  187,457   83,594 
Inventories  59,139   50,256 
Fair asset value of derivative instruments  11,416    
Prepaid expenses and other current assets  40,821   29,554 
Assets held for sale     6,030 
Total current assets  307,716   226,345 
Property and equipment, net  97,929   93,495 
Operating lease right-of-use assets  96,310   99,776 
Goodwill  253,199   240,327 
Intangibles, net  102,479   90,293 
Restricted cash  250   250 
Captive insurance collateral  69,653   69,787 
Deferred charges and other assets, net  18,726   18,343 
Total assets $946,262  $838,616 
LIABILITIES AND PARTNERS CAPITAL    
Current liabilities    
Accounts payable $35,341  $30,827 
Liabilities held for sale     1,265 
Revolving credit facility borrowings  35,000    
Fair liability value of derivative instruments     11,437 
Current maturities of long-term debt  13,000   13,000 
Current portion of operating lease liabilities  18,588   19,139 
Accrued expenses and other current liabilities  159,880   127,286 
Unearned service contract revenue  63,929   58,430 
Customer credit balances  40,257   83,471 
Total current liabilities  365,995   344,855 
Long-term debt  103,408   109,805 
Long-term operating lease liabilities  83,444   85,908 
Deferred tax liabilities, net  30,074   17,227 
Other long-term liabilities  26,065   25,001 
Partners capital    
Common unitholders  353,793   273,283 
General partner  (1,991)  (2,506)
Accumulated other comprehensive loss, net of taxes  (14,526)  (14,957)
Total partners capital  337,276   255,820 
Total liabilities and partners capital $946,262  $838,616 
     


STAR GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


  Three Months Ended March 31, Six Months Ended March 31,
(in thousands, except per unit data - unaudited)  2021   2020   2021   2020 
Sales:        
Product $539,371  $481,275  $839,703  $913,963 
Installations and services  64,744   61,788   137,732   138,045 
Total sales  604,115   543,063   977,435   1,052,008 
Cost and expenses:        
Cost of product  313,552   285,350   485,699   573,023 
Cost of installations and services  64,361   61,273   133,664   134,942 
(Increase) decrease in the fair value of derivative instruments  (8,224)  11,670   (25,619)  5,253 
Delivery and branch expenses  100,942   85,463   181,629   182,189 
Depreciation and amortization expenses  8,268   9,089   16,225   18,139 
General and administrative expenses  6,320   5,422   12,561   11,928 
Finance charge income  (799)  (1,321)  (1,205)  (2,034)
Operating income  119,695   86,117   174,481   128,568 
Interest expense, net  (2,136)  (2,756)  (3,987)  (5,435)
Amortization of debt issuance costs  (243)  (253)  (490)  (488)
Income before income taxes  117,316   83,108   170,004   122,645 
Income tax expense  32,152   24,700   46,980   36,482 
Net income $85,164  $58,408  $123,024  $86,163 
General Partners interest in net income  681   409   977   601 
Limited Partners interest in net income $84,483  $57,999  $122,047  $85,562 
         
         
Per unit data (Basic and Diluted):        
Net income available to limited partners $2.09  $1.25  $2.95  $1.83 
Dilutive impact of theoretical distribution of earnings  0.38   0.22   0.52   0.31 
Basic and diluted income per Limited Partner Unit: $1.71  $1.03  $2.43  $1.52 
         
Weighted average number of Limited Partner units outstanding (Basic and Diluted)  40,382   46,244   41,324   46,760 
         


SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)


  Three Months Ended March 31,
(in thousands)  2021   2020 
Net income $85,164  $58,408 
Plus:    
Income tax expense  32,152   24,700 
Amortization of debt issuance costs  243   253 
Interest expense, net  2,136   2,756 
Depreciation and amortization  8,268   9,089 
EBITDA  127,963   95,206 
(Increase) / decrease in the fair value of derivative instruments  (8,224)  11,670 
Adjusted EBITDA  119,739   106,876 
Add / (subtract)    
Income tax expense  (32,152)  (24,700)
Interest expense, net  (2,136)  (2,756)
Provision for losses on accounts receivable  732   2,193 
(Increase) decrease in accounts receivables  (40,998)  16,183 
(Increase) decrease in inventories  (2,475)  27,435 
Decrease in customer credit balances  (34,434)  (16,564)
Change in deferred taxes  9,022   (1,114)
Change in other operating assets and liabilities  15,176   (5,087)
Net cash provided by operating activities $32,474  $102,466 
Net cash used in investing activities $(4,059) $(5,534)
Net cash used in financing activities $(38,379) $(101,173)
     
     
Home heating oil and propane gallons sold  157,600   136,200 
Other petroleum products  35,700   36,600 
         Total all products  193,300   172,800 
     


SUPPLEMENTAL INFORMATION
STAR GROUP, L.P. AND SUBSIDIARIES

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
(Unaudited)


  Six Months Ended March 31,
(in thousands)  2021   2020 
Net income $123,024  $86,163 
Plus:    
Income tax expense  46,980   36,482 
Amortization of debt issuance costs  490   488 
Interest expense, net  3,987   5,435 
Depreciation and amortization  16,225   18,139 
EBITDA  190,706   146,707 
(Increase) / decrease in the fair value of derivative instruments  (25,619)  5,253 
Adjusted EBITDA  165,087   151,960 
Add / (subtract)    
Income tax expense  (46,980)  (36,482)
Interest expense, net  (3,987)  (5,435)
Provision for losses on accounts receivable  256   3,203 
Increase in accounts receivables  (103,987)  (69,562)
(Increase) decrease in inventories  (9,652)  12,008 
Decrease in customer credit balances  (43,421)  (32,462)
Change in deferred taxes  12,623   222 
Change in other operating assets and liabilities  35,534   27,423 
Net cash provided by operating activities $5,473  $50,875 
Net cash used in investing activities $(39,962) $(13,197)
Net cash used in financing activities $(13,539) $(32,276)
     
     
Home heating oil and propane gallons sold  247,100   243,300 
Other petroleum products  73,400   78,000 
         Total all products  320,500   321,300 
     

 

Source: Star Group, L.P.


CONTACT:
Star Group, L.P.
Investor Relations
203/328-7310

Chris Witty
Darrow Associates
646/438-9385 or cwitty@darrowir.com