10-Q
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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, 2022

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)

(Zip Code)

 

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 Units

 

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, 2022, the registrant had 36,335,851 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, 2022 (unaudited) and September 30, 2021

 

3

Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended June 30, 2022 and June 30, 2021

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and nine months ended June 30, 2022 and June 30, 2021

 

5

Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and nine months ended June 30, 2022 and June 30, 2021

 

6-7

Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended June 30, 2022 and June 30, 2021

 

8

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9-20

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

 

21-37

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

 

38

Item 4 - Controls and Procedures

 

38

Part II Other Information:

 

39

Item 1 - Legal Proceedings

 

39

Item 1A - Risk Factors

 

39

Item 2 - Purchase of Equity Securities by Issuer

 

39

Item 3 - Defaults Upon Senior Securities

 

39

Item 4 - Mine Safety Disclosures

 

39

Item 5 - Other Information

 

39

Item 6 - Exhibits

 

40

Signatures

 

41

 

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,

 

 

 

2022

 

 

2021

 

(in thousands)

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,964

 

 

$

4,767

 

   Receivables, net of allowance of $8,897 and $4,779, respectively

 

 

187,355

 

 

 

99,680

 

Inventories

 

 

82,424

 

 

 

61,183

 

Fair asset value of derivative instruments

 

 

45,868

 

 

 

26,222

 

Prepaid expenses and other current assets

 

 

34,358

 

 

 

30,140

 

Total current assets

 

 

358,969

 

 

 

221,992

 

Property and equipment, net

 

 

104,563

 

 

 

99,123

 

Operating lease right-of-use assets

 

 

89,279

 

 

 

95,839

 

Goodwill

 

 

256,471

 

 

 

253,398

 

Intangibles, net

 

 

88,924

 

 

 

95,474

 

Restricted cash

 

 

250

 

 

 

250

 

Captive insurance collateral

 

 

66,893

 

 

 

69,933

 

Deferred charges and other assets, net

 

 

18,092

 

 

 

17,854

 

Total assets

 

$

983,441

 

 

$

853,863

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

43,401

 

 

$

37,291

 

Revolving credit facility borrowings

 

 

60,395

 

 

 

8,618

 

Current maturities of long-term debt

 

 

11,500

 

 

 

17,621

 

Current portion of operating lease liabilities

 

 

16,164

 

 

 

16,446

 

Accrued expenses and other current liabilities

 

 

140,161

 

 

 

121,221

 

Unearned service contract revenue

 

 

60,175

 

 

 

56,972

 

Customer credit balances

 

 

49,254

 

 

 

86,828

 

Total current liabilities

 

 

381,050

 

 

 

344,997

 

Long-term debt (1)

 

 

153,129

 

 

 

92,385

 

Long-term operating lease liabilities

 

 

77,961

 

 

 

84,019

 

Deferred tax liabilities, net

 

 

37,050

 

 

 

29,014

 

Other long-term liabilities

 

 

15,549

 

 

 

25,244

 

Partners’ capital

 

 

 

 

 

 

Common unitholders

 

 

335,780

 

 

 

295,063

 

General partner

 

 

(2,916

)

 

 

(2,821

)

Accumulated other comprehensive loss, net of taxes

 

 

(14,162

)

 

 

(14,038

)

Total partners’ capital

 

 

318,702

 

 

 

278,204

 

Total liabilities and partners’ capital

 

$

983,441

 

 

$

853,863

 

 

(1) See Note 16 - Subsequent Events.

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)

2022

 

2021

 

 

2022

 

 

2021

 

Sales:

 

 

 

 

 

 

 

 

 

 

Product

$

358,236

 

$

205,045

 

 

$

1,481,963

 

 

$

1,044,748

 

Installations and services

 

80,865

 

 

78,055

 

 

 

227,951

 

 

 

215,787

 

Total sales

 

439,101

 

 

283,100

 

 

 

1,709,914

 

 

 

1,260,535

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

Cost of product

 

291,236

 

 

146,108

 

 

 

1,058,164

 

 

 

631,807

 

Cost of installations and services

 

70,560

 

 

66,901

 

 

 

214,744

 

 

 

200,565

 

(Increase) decrease in the fair value of derivative instruments

 

(7,669

)

 

(4,714

)

 

 

(11,881

)

 

 

(30,333

)

Delivery and branch expenses

 

83,914

 

 

74,871

 

 

 

280,389

 

 

 

256,500

 

Depreciation and amortization expenses

 

8,067

 

 

8,568

 

 

 

24,596

 

 

 

24,793

 

General and administrative expenses

 

6,251

 

 

6,209

 

 

 

18,829

 

 

 

18,770

 

Finance charge income

 

(1,762

)

 

(1,079

)

 

 

(3,300

)

 

 

(2,284

)

Operating income (loss)

 

(11,496

)

 

(13,764

)

 

 

128,373

 

 

 

160,717

 

Interest expense, net

 

(2,635

)

 

(1,957

)

 

 

(7,422

)

 

 

(5,944

)

Amortization of debt issuance costs

 

(222

)

 

(242

)

 

 

(698

)

 

 

(732

)

Income (loss) before income taxes

 

(14,353

)

 

(15,963

)

 

 

120,253

 

 

 

154,041

 

Income tax expense (benefit)

 

(3,766

)

 

(3,909

)

 

 

34,972

 

 

 

43,071

 

Net income (loss)

$

(10,587

)

$

(12,054

)

 

$

85,281

 

 

$

110,970

 

General Partner’s interest in net income (loss)

 

(93

)

 

(98

)

 

 

726

 

 

 

879

 

Limited Partners’ interest in net income (loss)

$

(10,494

)

$

(11,956

)

 

$

84,555

 

 

$

110,091

 

 

 

 

 

 

 

 

 

 

 

 

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

$

(0.29

)

$

(0.30

)

 

$

1.88

 

 

$

2.24

 

Weighted average number of Limited Partner units outstanding:

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

36,781

 

 

40,041

 

 

 

37,739

 

 

 

40,897

 

 

(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)

 

2022

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

 

$

(10,587

)

$

(12,054

)

 

$

85,281

 

 

$

110,970

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on pension plan obligation

 

 

224

 

 

234

 

 

 

672

 

 

 

704

 

Tax effect of unrealized gain on pension plan obligation

 

 

(61

)

 

(65

)

 

 

(167

)

 

 

(193

)

Unrealized loss on captive insurance collateral

 

 

(812

)

 

(47

)

 

 

(3,486

)

 

 

(913

)

Tax effect of unrealized loss on captive insurance collateral

 

 

171

 

 

11

 

 

 

735

 

 

 

193

 

Unrealized gain on interest rate hedges

 

 

623

 

 

252

 

 

 

2,890

 

 

 

1,303

 

Tax effect of unrealized gain on interest rate hedges

 

 

(165

)

 

(66

)

 

 

(768

)

 

 

(344

)

Total other comprehensive income (loss)

 

 

(20

)

 

319

 

 

 

(124

)

 

 

750

 

Total comprehensive income (loss)

 

$

(10,607

)

$

(11,735

)

 

$

85,157

 

 

$

111,720

 

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, 2022

 

 

 

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, 2022

 

 

36,950

 

 

 

326

 

 

$

357,020

 

 

$

(2,524

)

 

$

(14,142

)

 

$

340,354

 

Net loss

 

 

 

 

 

 

 

 

(10,494

)

 

 

(93

)

 

 

 

 

 

(10,587

)

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

224

 

 

 

224

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(61

)

 

 

(61

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(812

)

 

 

(812

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

171

 

 

 

171

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

623

 

 

 

623

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(165

)

 

 

(165

)

Distributions

 

 

 

 

 

 

 

 

(5,619

)

 

 

(299

)

 

 

 

 

 

(5,918

)

Retirement of units

 

 

(487

)

 

 

 

 

 

(5,127

)

 

 

 

 

 

 

 

 

(5,127

)

Balance as of June 30, 2022 (unaudited)

 

 

36,463

 

 

 

326

 

 

$

335,780

 

 

$

(2,916

)

 

$

(14,162

)

 

$

318,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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, 2022

 

 

 

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, 2021

 

 

39,046

 

 

 

326

 

 

$

295,063

 

 

$

(2,821

)

 

$

(14,038

)

 

$

278,204

 

Net income

 

 

 

 

 

 

 

 

84,555

 

 

 

726

 

 

 

 

 

 

85,281

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

672

 

 

 

672

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(167

)

 

 

(167

)

Unrealized loss on captive insurance collateral