Star Gas Partners L.P. (SGU, Financial) filed Quarterly Report for the period ended 2009-06-30.
Star Gas Partners L.P. is a publicly traded limited partnership.The Partnership is primarily engaged in the retail distribution of propane andrelated supplies and equipment to residential commercial industrialagricultural and motor fuel customers. Star Gas Partners L.P. has a market cap of $263.4 million; its shares were traded at around $3.46 with and P/S ratio of 0.2. The dividend yield of Star Gas Partners L.P. stocks is 7.9%.
For the three months ended June 30, 2009, installation and service sales decreased $4.6 million, or 10%, to $41.2 million, as compared to $45.8 million for the three months ended June 30, 2008. While service contract revenues increased by $0.5 million, revenue from non-essential services such as plumbing and air conditioning declined by $0.6 million. Demand for installation sales declined by $4.2 million due to rising unemployment, reduced home equity loans and consumer credit, and reduced consumer confidence. The cool spring also adversely impacted the demand for new air conditioning systems. We believe that this trend will continue and that our installation sales will be lower for the balance of fiscal 2009.
For the three months ended June 30, 2009, cost of installations and service decreased $2.8 million, or 7.0% to $37.6 million, as compared to $40.4 million for the three months ended June 30, 2008, as an increase in service costs of $0.5 million was reduced by lower installation expenses of approximately $3.3 million. Service expenses were higher due to an increase in vehicle fuel costs of $0.5 million, as the Partnership hedged a portion of its vehicle fuel costs during a higher cost period. For fiscal 2010, the Partnership has again hedged its vehicle fuels, which would lower this expense by approximately $2.5 million in fiscal 2010. Installation costs were lower, due to the decrease in installation sales as described above. The gross profit realized from service (including installations) decreased by $1.8 million, from $5.4 million for the three months ended June 30, 2008 to $3.6 million for the three months ended June 30, 2009. Installation costs were $11.9 million, or 89.7% of installation sales during the three months ended June 30, 2009, and were $15.3 million, or 87.5% of installation sales during the three months ended June 30, 2008. Service expenses increased to $25.7 million, or 91.9% of service sales during the three months ended June 30, 2009, from $25.1 million in the three months ended June 30, 2008, or 88.7% of service sales. Service costs as a percentage of total service revenue increased due to the increase in vehicle fuel costs and the Partnership was not able to fully reduce its service expenses in response to unforeseen reductions in non-essential service billings such as air conditioning and plumbing services.
For the three months ended June 30, 2009, delivery and branch expenses decreased $2.9 million, or 6.2%, to $44.3 million, as compared to $47.2 million for the three months ended June 30, 2008, due to lower bad debt expense of $1.8 million and lower insurance expense of $2.2 million. Bad debt expense declined due to a decline in sales for the three and nine months ended June 30, 2009 of 35% and 21%, respectively, and an improvement in days sales outstanding to 48 days as of June 30, 2009 from 58 days as of June 30, 2008. The reduction in insurance expense was due to changes in prior year reserves.
For the three months ended June 30, 2009, operating income decreased $12.8 million to $1.0 million, as compared to $13.8 million for the three months ended June 30, 2008, as an increase in product gross profit of $4.1 million and lower operating expenses (including depreciation and amortization) of $5.1 million, were reduced by lower non-cash gains from the change in the fair value of derivative instruments of $20.4 million, and lower installation and service profitability of $1.8 million.
For the three months ended June 30, 2009, a net loss of $1.9 million was recorded, as compared to net income of $11.8 million for the three months ended June 30, 2008. This change of $13.8 million was due to a $12.8 million decrease in operating income and a decrease in the income tax benefit of $1.2 million.
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Star Gas Partners L.P. is a publicly traded limited partnership.The Partnership is primarily engaged in the retail distribution of propane andrelated supplies and equipment to residential commercial industrialagricultural and motor fuel customers. Star Gas Partners L.P. has a market cap of $263.4 million; its shares were traded at around $3.46 with and P/S ratio of 0.2. The dividend yield of Star Gas Partners L.P. stocks is 7.9%.
Highlight of Business Operations:
As of June 30, 2009, the Partnerships accounts receivable balance was $82.2 million (net of allowance) and represents a decrease of $70.3 million or 46% when compared to the balance as of June 30, 2008 of $152.5 million (net of allowance). This decline in accounts receivable of 46% was largely due to the decline in the wholesale cost of product. Days sales outstanding as of June 30, 2009, improved to 48 days, when compared to the level at June 30, 2008 of 58 days. Included in the gross accounts receivable balance as of June 30, 2009 are amounts due that are 90-days or more in arrears of $33.1 million. As of June 30, 2008, the comparable amounts due from customers 90 days or more in arrears was $59.0 million. The Partnership is actively collecting these past due accounts and has established a reserve based on historical data and current economic and pricing conditions. Given the current economic conditions, the collection of these amounts could prove to be more difficult than in the past and bad debt expense could increase.For the three months ended June 30, 2009, installation and service sales decreased $4.6 million, or 10%, to $41.2 million, as compared to $45.8 million for the three months ended June 30, 2008. While service contract revenues increased by $0.5 million, revenue from non-essential services such as plumbing and air conditioning declined by $0.6 million. Demand for installation sales declined by $4.2 million due to rising unemployment, reduced home equity loans and consumer credit, and reduced consumer confidence. The cool spring also adversely impacted the demand for new air conditioning systems. We believe that this trend will continue and that our installation sales will be lower for the balance of fiscal 2009.
For the three months ended June 30, 2009, cost of installations and service decreased $2.8 million, or 7.0% to $37.6 million, as compared to $40.4 million for the three months ended June 30, 2008, as an increase in service costs of $0.5 million was reduced by lower installation expenses of approximately $3.3 million. Service expenses were higher due to an increase in vehicle fuel costs of $0.5 million, as the Partnership hedged a portion of its vehicle fuel costs during a higher cost period. For fiscal 2010, the Partnership has again hedged its vehicle fuels, which would lower this expense by approximately $2.5 million in fiscal 2010. Installation costs were lower, due to the decrease in installation sales as described above. The gross profit realized from service (including installations) decreased by $1.8 million, from $5.4 million for the three months ended June 30, 2008 to $3.6 million for the three months ended June 30, 2009. Installation costs were $11.9 million, or 89.7% of installation sales during the three months ended June 30, 2009, and were $15.3 million, or 87.5% of installation sales during the three months ended June 30, 2008. Service expenses increased to $25.7 million, or 91.9% of service sales during the three months ended June 30, 2009, from $25.1 million in the three months ended June 30, 2008, or 88.7% of service sales. Service costs as a percentage of total service revenue increased due to the increase in vehicle fuel costs and the Partnership was not able to fully reduce its service expenses in response to unforeseen reductions in non-essential service billings such as air conditioning and plumbing services.
For the three months ended June 30, 2009, delivery and branch expenses decreased $2.9 million, or 6.2%, to $44.3 million, as compared to $47.2 million for the three months ended June 30, 2008, due to lower bad debt expense of $1.8 million and lower insurance expense of $2.2 million. Bad debt expense declined due to a decline in sales for the three and nine months ended June 30, 2009 of 35% and 21%, respectively, and an improvement in days sales outstanding to 48 days as of June 30, 2009 from 58 days as of June 30, 2008. The reduction in insurance expense was due to changes in prior year reserves.
For the three months ended June 30, 2009, operating income decreased $12.8 million to $1.0 million, as compared to $13.8 million for the three months ended June 30, 2008, as an increase in product gross profit of $4.1 million and lower operating expenses (including depreciation and amortization) of $5.1 million, were reduced by lower non-cash gains from the change in the fair value of derivative instruments of $20.4 million, and lower installation and service profitability of $1.8 million.
For the three months ended June 30, 2009, a net loss of $1.9 million was recorded, as compared to net income of $11.8 million for the three months ended June 30, 2008. This change of $13.8 million was due to a $12.8 million decrease in operating income and a decrease in the income tax benefit of $1.2 million.
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