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!8

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-14129

 

STAR GROUP, L.P.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

06-1437793

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

9 West Broad Street

Stamford, Connecticut

06902

(Address of principal executive office)

 

 

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

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Unit

 

SGU

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non- accelerated filer

Smaller reporting company

 

 

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

At July 31, 2021, the registrant had 39,605,820 Common Units outstanding.

 

 

 

 


 

STAR GROUP, L.P. AND SUBSIDIARIES

INDEX TO FORM 10-Q

 

 

 

Page

Part I Financial Information

 

 

Item 1 - Condensed Consolidated Financial Statements

 

3

Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and September 30, 2020

 

3

Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended June 30, 2021 and June 30, 2020

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended June 30, 2021 and June 30, 2020

 

5

Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and nine months ended June 30, 2021 and June 30, 2020

 

6-7

Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended June 30, 2021 and June 30, 2020

 

8

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9-20

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21-38

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

 

39

Item 4 - Controls and Procedures

 

39

Part II Other Information:

 

40

Item 1 - Legal Proceedings

 

40

Item 1A - Risk Factors

 

40

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

 

40

Item 6 - Exhibits

 

41

Signatures

 

42

 

2


 

Part I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

(in thousands)

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,500

 

 

$

56,911

 

Receivables, net of allowance of $5,912 and $6,121, respectively

 

 

119,348

 

 

 

83,594

 

Inventories

 

 

56,669

 

 

 

50,256

 

Fair asset value of derivative instruments

 

 

18,866

 

 

 

 

Prepaid expenses and other current assets

 

 

32,178

 

 

 

29,554

 

Assets held for sale

 

 

 

 

 

6,030

 

Total current assets

 

 

232,561

 

 

 

226,345

 

Property and equipment, net

 

 

99,266

 

 

 

93,495

 

Operating lease right-of-use assets

 

 

96,613

 

 

 

99,776

 

Goodwill

 

 

253,298

 

 

 

240,327

 

Intangibles, net

 

 

100,434

 

 

 

90,293

 

Restricted cash

 

 

250

 

 

 

250

 

Captive insurance collateral

 

 

69,795

 

 

 

69,787

 

Deferred charges and other assets, net

 

 

18,094

 

 

 

18,343

 

Total assets

 

$

870,311

 

 

$

838,616

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

32,232

 

 

$

30,827

 

Liabilities held for sale

 

 

 

 

 

1,265

 

Fair liability value of derivative instruments

 

 

 

 

 

11,437

 

Current maturities of long-term debt

 

 

13,000

 

 

 

13,000

 

Current portion of operating lease liabilities

 

 

16,712

 

 

 

19,139

 

Accrued expenses and other current liabilities

 

 

143,893

 

 

 

127,286

 

Unearned service contract revenue

 

 

57,325

 

 

 

58,430

 

Customer credit balances

 

 

53,255

 

 

 

83,471

 

Total current liabilities

 

 

316,417

 

 

 

344,855

 

Long-term debt

 

 

100,208

 

 

 

109,805

 

Long-term operating lease liabilities

 

 

84,440

 

 

 

85,908

 

Deferred tax liabilities, net

 

 

30,253

 

 

 

17,227

 

Other long-term liabilities

 

 

25,670

 

 

 

25,001

 

Partners’ capital

 

 

 

 

 

 

 

 

Common unitholders

 

 

329,892

 

 

 

273,283

 

General partner

 

 

(2,362

)

 

 

(2,506

)

Accumulated other comprehensive loss, net of taxes

 

 

(14,207

)

 

 

(14,957

)

Total partners’ capital

 

 

313,323

 

 

 

255,820

 

Total liabilities and partners’ capital

 

$

870,311

 

 

$

838,616

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


 

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months

Ended June 30,

 

 

Nine Months

Ended June 30,

 

(in thousands, except per unit data - unaudited)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

205,045

 

 

$

165,182

 

 

$

1,044,748

 

 

$

1,079,145

 

Installations and services

 

 

78,055

 

 

 

66,973

 

 

 

215,787

 

 

 

205,018

 

Total sales

 

 

283,100

 

 

 

232,155

 

 

 

1,260,535

 

 

 

1,284,163

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

146,108

 

 

 

93,264

 

 

 

631,807

 

 

 

666,287

 

Cost of installations and services

 

 

66,901

 

 

 

54,732

 

 

 

200,565

 

 

 

189,674

 

(Increase) decrease in the fair value of derivative instruments

 

 

(4,714

)

 

 

(3,279

)

 

 

(30,333

)

 

 

1,974

 

Delivery and branch expenses

 

 

74,871

 

 

 

72,756

 

 

 

256,500

 

 

 

254,945

 

Depreciation and amortization expenses

 

 

8,568

 

 

 

8,447

 

 

 

24,793

 

 

 

26,586

 

General and administrative expenses

 

 

6,209

 

 

 

6,954

 

 

 

18,770

 

 

 

18,882

 

Finance charge income

 

 

(1,079

)

 

 

(1,217

)

 

 

(2,284

)

 

 

(3,251

)

Operating income (loss)

 

 

(13,764

)

 

 

498

 

 

 

160,717

 

 

 

129,066

 

Interest expense, net

 

 

(1,957

)

 

 

(2,308

)

 

 

(5,944

)

 

 

(7,743

)

Amortization of debt issuance costs

 

 

(242

)

 

 

(241

)

 

 

(732

)

 

 

(729

)

Income (loss) before income taxes

 

 

(15,963

)

 

 

(2,051

)

 

 

154,041

 

 

 

120,594

 

Income tax expense (benefit)

 

 

(3,909

)

 

 

(2,005

)

 

 

43,071

 

 

 

34,477

 

Net income (loss)

 

$

(12,054

)

 

$

(46

)

 

$

110,970

 

 

$

86,117

 

General Partner’s interest in net income (loss)

 

 

(98

)

 

 

(1

)

 

 

879

 

 

 

600

 

Limited Partners’ interest in net income (loss)

 

$

(11,956

)

 

$

(45

)

 

$

110,091

 

 

$

85,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per Limited Partner Unit (1):

 

$

(0.30

)

 

$

 

 

$

2.24

 

 

$

1.55

 

Weighted average number of Limited Partner units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

40,041

 

 

 

45,246

 

 

 

40,897

 

 

 

46,253

 

 

(1)

See Note 15 - Earnings Per Limited Partner Unit.

See accompanying notes to condensed consolidated financial statements.

 

4


 

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

 

Three Months

Ended June 30,

 

 

Nine Months

Ended June 30,

 

(in thousands - unaudited)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

(12,054

)

 

$

(46

)

 

$

110,970

 

 

$

86,117

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on pension plan obligation

 

 

234

 

 

 

455

 

 

 

704

 

 

 

1,365

 

Tax effect of unrealized gain on pension plan obligation

 

 

(65

)

 

 

(127

)

 

 

(193

)

 

 

(385

)

Unrealized gain (loss) on captive insurance collateral

 

 

(47

)

 

 

986

 

 

 

(913

)

 

 

1,029

 

Tax effect of unrealized gain (loss) on captive insurance collateral

 

 

11

 

 

 

(207

)

 

 

193

 

 

 

(214

)

Unrealized gain (loss) on interest rate hedges

 

 

252

 

 

 

(126

)

 

 

1,303

 

 

 

(1,508

)

Tax effect of unrealized gain (loss) on interest rate hedges

 

 

(66

)

 

 

34

 

 

 

(344

)

 

 

408

 

Total other comprehensive income

 

 

319

 

 

 

1,015

 

 

 

750

 

 

 

695

 

Total comprehensive income (loss)

 

$

(11,735

)

 

$

969

 

 

$

111,720

 

 

$

86,812

 

See accompanying notes to condensed consolidated financial statements.

 

5


 

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

 

 

 

Three Months Ended June 30, 2021

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of March 31, 2021

 

 

40,199

 

 

 

326

 

 

$

353,793

 

 

$

(1,991

)

 

$

(14,526

)

 

$

337,276

 

Net loss

 

 

 

 

 

 

 

 

(11,956

)

 

 

(98

)

 

 

 

 

 

(12,054

)

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

234

 

 

 

234

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

(65

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47

)

 

 

(47

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

11

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

252

 

 

 

252

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(66

)

 

 

(66

)

Distributions

 

 

 

 

 

 

 

 

(5,729

)

 

 

(273

)

 

 

 

 

 

(6,002

)

Retirement of units

 

 

(568

)

 

 

 

 

 

(6,216

)

 

 

 

 

 

 

 

 

(6,216

)

Balance as of June 30, 2021 (unaudited)

 

 

39,631

 

 

 

326

 

 

$

329,892

 

 

$

(2,362

)

 

$

(14,207

)

 

$

313,323

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2020

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of March 31, 2020

 

 

45,622

 

 

 

326

 

 

$

334,968

 

 

$

(1,792

)

 

$

(17,221

)

 

$

315,955

 

Net loss

 

 

 

 

 

 

 

 

(45

)

 

 

(1

)

 

 

 

 

 

(46

)

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

455

 

 

 

455

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(127

)

 

 

(127

)

Unrealized gain on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

986

 

 

 

986

 

Tax effect of unrealized gain on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(207

)

 

 

(207

)

Unrealized loss on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(126

)

 

 

(126

)

Tax effect of unrealized loss on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34

 

 

 

34

 

Distributions

 

 

 

 

 

 

 

 

(5,988

)

 

 

(248

)

 

 

 

 

 

(6,236

)

Retirement of units

 

 

(1,155

)

 

 

 

 

 

(9,413

)

 

 

 

 

 

 

 

 

(9,413

)

Balance as of June 30, 2020 (unaudited)

 

 

44,467

 

 

 

326

 

 

$

319,522

 

 

$

(2,041

)

 

$

(16,206

)

 

$

301,275

 

See accompanying notes to condensed consolidated financial statements.

6


STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

 

 

 

Nine Months Ended June 30, 2021

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of September 30, 2020

 

 

43,328

 

 

 

326

 

 

$

273,283

 

 

$

(2,506

)

 

$

(14,957

)

 

$

255,820

 

Net income

 

 

 

 

 

 

 

 

110,091

 

 

 

879

 

 

 

 

 

 

110,970

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

704

 

 

 

704

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(193

)

 

 

(193

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(913

)

 

 

(913

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

193

 

 

 

193

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,303

 

 

 

1,303

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(344

)

 

 

(344

)

Distributions

 

 

 

 

 

 

 

 

(16,800