On December 6, 2023, Star Group LP (SGU, Financial) released its 8-K filing, detailing the financial outcomes for the fiscal 2023 fourth quarter and year ended September 30, 2023. The company, a prominent home energy distributor and services provider, faced a challenging quarter with a 10% decrease in total revenue, amounting to $266.9 million compared to $296.6 million in the same period last year. This decline was primarily attributed to a decrease in selling prices and a slight drop in petroleum product demand.
Financial Performance Overview
During the fiscal 2023 fourth quarter, Star Group LP (SGU, Financial) experienced a 3.1% decrease in the volume of home heating oil and propane sold, totaling 18.8 million gallons. Similarly, motor fuel sales volume declined by 5.8% to 34.3 million gallons. Despite these volume reductions, the company's net loss improved significantly, decreasing by $30.3 million to a loss of $19.7 million. This improvement was largely due to a favorable change in the fair value of derivative instruments, which shifted by $46.8 million.
Adjusted EBITDA, a non-GAAP measure, reflected a loss of $31.4 million, a marginal increase of $0.7 million from the previous year. This was a result of the lower sales volume and a 4.6% rise in operating costs, which was nearly offset by an increase in per-gallon margins of home heating oil and propane.
Annual Financial Highlights
For the fiscal year 2023, Star Group LP (SGU, Financial) reported a stable revenue of approximately $2.0 billion, with the impact of lower volume sales nearly balanced by increased selling prices in response to higher wholesale product costs. The volume of home heating oil and propane sold during the year decreased by 12.5% to 259.2 million gallons, influenced by warmer temperatures, net customer attrition, and other factors.
Net income for the year declined by $3.4 million to $31.9 million, primarily due to a decrease in Adjusted EBITDA and an increase in interest expense. Adjusted EBITDA for the year fell by $13.5 million to $96.9 million, as the decline in volume sold outweighed the increase in per gallon margins and a higher benefit under the company's weather hedge.
Balance Sheet and Cash Flow
Star Group LP (SGU, Financial)'s balance sheet as of September 30, 2023, showed total assets of $875.478 million, a decrease from $912.475 million the previous year. The company's current liabilities stood at $364.881 million, while partners' capital totaled $263.724 million.
The cash flow statements revealed that the company generated $123.658 million in cash from operating activities for the fiscal year, while it used $28.197 million in investing activities and $64.890 million in financing activities.
Management Commentary
Jeff Woosnam, Star Group’s President and CEO, commented on the fiscal year, noting the similarities to the previous year with elevated oil prices and market volatility. He highlighted the company's cost discipline, improved net customer attrition, and strategic acquisitions. Looking forward, Woosnam emphasized the focus on managing working capital, controlling operating expenses, and delivering exceptional customer service.
Outlook and Strategic Focus
As Star Group LP (SGU, Financial) transitions into fiscal 2024, the company remains committed to navigating the challenges posed by market volatility, weather patterns, and customer demand. With a disciplined approach to cost management and strategic growth through acquisitions, Star Group LP (SGU) aims to strengthen its market position and enhance shareholder value in the coming year.
Explore the complete 8-K earnings release (here) from Star Group LP for further details.
