Star Group Q3 Earnings Call Highlights

Star Group NYSE: SGU reported a wider fiscal third-quarter loss as higher insurance claims, lower heating-oil and propane volumes and an unfavorable change in derivative values outweighed improved service and installation profitability. The company posted a net loss of $28 million for the fiscal 2026 third quarter, $11.4 million greater than the loss recorded in the prior-year period. Adjusted EBITDA loss widened by $7 million to $17.7 million.

Chief Financial Officer Richard Ambury said third-quarter home heating oil and propane volume declined by 3.4 million gallons, or 9.4%, to 33 million gallons. Volume added through acquisitions was more than offset by net customer attrition and other factors.

Although degree days were 16% colder than the prior-year quarter, they remained 6% warmer than normal. Ambury noted that temperatures during the April-and-May shoulder months had a less significant impact on demand than winter weather.

Product gross profit was essentially unchanged at $72 million. Higher per-gallon margins on home heating oil and propane, along with increased gross profit from other petroleum products, offset the impact of lower fuel volume. Service and installation operations continued to improve. President and Chief Executive Officer Jeff Woosnam said the segment generated combined gross profit of $15.6 million, up $1.4 million from the comparable quarter a year earlier. “Our strategy of selling more value-added products and services to our existing clients while expanding our HVAC offering in select markets beyond our traditional customer base is beginning to take shape,” Woosnam said.

However, delivery, branch and general-and-administrative expenses rose $8.7 million year over year. The increase was driven primarily by $6.2 million in higher insurance claims expense related to adverse developments involving certain claims. The quarterly net loss also reflected an $8.6 million unfavorable non-cash change in the fair value of derivative instruments. A $3.4 million larger income-tax benefit and $900,000 lower depreciation and amortization expense partly offset those effects, according to Chris Witty, Star Group’s investor relations advisor.

For the first nine months of fiscal 2026, Star Group reported net income of $116 million, an increase of $14 million from the prior-year period. Adjusted EBITDA rose $20 million to $189 million. Home heating oil and propane volume for the nine-month period increased by 8.6 million gallons, or 3.3%, to 271 million gallons. Ambury attributed the gain to colder weather and acquisition-related volume, which more than offset customer attrition and other factors. Temperatures across the company’s operating regions were 11.5% colder than the prior-year period and 3% colder than normal. Product gross profit increased $48 million, or 10%, t...