Star Group Q3 Net Loss Widens Y/Y on Lower Sales, Revenues Fall

Shares of Star Group, L.P. SGU have declined 0.9% since reporting third-quarter fiscal 2025 results, underperforming the S&P 500 index’s 1.7% growth. Over the past month, SGU has slipped 0.2% against the S&P 500’s 2.5% advance, reflecting a period of relative underperformance against the broader market backdrop.

Q3 Results

For the fiscal quarter ended June 30, 2025, Star Group reported revenues of $305.6 million, down 7.8% from $331.6 million in the prior-year quarter due to lower product sales volumes and decreased selling prices tied to lower wholesale product costs. Home heating oil and propane volume fell 3.8% to 36.2 million gallons, as acquisition-driven gains were outweighed by net customer attrition, warmer weather and other factors.

The company reported a net loss of $16.6 million compared with a loss of $11 million incurred in the same period a year earlier, as a $6.5 million rise in the adjusted EBITDA loss, higher depreciation and amortization, and increased interest costs offset certain favorable derivative valuation changes and tax benefits. The company reported a loss per share of 48 cents in the third quarter, wider than a loss of 31 cents in the same period last year. The adjusted EBITDA loss widened to $10.6 million from $4.1 million in the year-ago period.

Star Group, L.P. Price, Consensus and EPS Surprise

 

Star Group, L.P. price-consensus-eps-surprise-chart | Star Group, L.P. Quote

Other Key Business Metrics

In the quarter, service and installation performance improved, with gross profit from these operations rising $0.6 million from the year-ago period to $14 million, reflecting expense control and operational initiatives. Delivery, branch, and general and administrative expenses climbed by $4.3 million year over year due to $5.8 million in additional costs from acquisitions, partly offset by base business expense reductions. Depreciation and amortization rose by $2 million and net interest expenses increased $0.9 million, both primarily acquisition-related.

In the first nine months of fiscal 2025, volumes rose 11.8% to 262.6 million gallons, aided by colder weather and acquisitions. Product gross profit for the nine months grew 13% to $480 million, driven by higher volumes, improved margins and a modest contribution from other petroleum products. Net income rallied 45% year over year to $102.2 million, fueled by a $28.2-million increase in adjusted EBITDA, split between $21.1 million from the base business and $17.7 million from acquisitions, alongside favorable derivative valuations.

Management Commentary

President and CEO Jeff Woosnam emphasized that despite the seasonal weakness of the quarter and headwinds from warmer weather and customer attrition, the company delivered improved service metrics and benefited from recent propane acquisitions, which have a less pronounced seasonal profile. Management reiterated its strategic focus on expanding the customer base in propane and heating oil, enhancing service profitability and diversifying revenue streams to reduce sensitivity to weather fluctuations. Woosnam also noted that net customer attrition was roughly flat year over year, a key operational goal.

Factors Influencing the Headline Numbers

Quarterly revenue softness stemmed from reduced heating oil and propane demand due to temperatures that were 2% warmer than last year and 19.3% warmer than normal, according to the National Oceanic and Atmospheric Administration. Selling prices dropped in tandem with a 14.3% decline in wholesale product costs.

Margins also faced pressure from acquisition-related mix effects, though acquisitions provided positive adjusted EBITDA during a historically loss-making quarter. Expense growth was driven mainly by acquisition-related integration costs, while base business expenses remained tightly managed.

View

Management expressed confidence in achieving strong fiscal 2025 performance, citing the ongoing benefits of acquisitions, improved operational execution, and efforts to expand value-added product and service offerings. The company signaled that its strategy positions it as a more resilient, diversified energy provider capable of adapting to varied weather conditions over time.

Other Developments

Star Group remained active on the acquisition front, completing four transactions in fiscal 2025 through April, including sizable deals over the past 14 months. These acquisitions, particularly in propane, were cited as significant contributors to the quarterly results and as a continuing focus area. Management also confirmed that AI technology has been introduced into customer service interfaces to enhance responsiveness, though it intends to balance automation with maintaining a personal, human touch in customer interactions.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research