Shares of Star Group, L.P. SGU have declined 0.9% since reporting results for the third quarter of fiscal 2026. This compares with the S&P 500 index’s 0.2% fall over the same time frame. Over the past month, the stock has decreased 2.7% against the S&P 500’s 2.9% return.
Earnings & Revenue Performance
For the fiscal third quarter ended June 30, 2026, Star Group’s total revenues increased 17.2% to $358.1 million from $305.6 million a year earlier. Product sales rose 23.5% year over year to $267 million, while installation and service revenues increased 1.8% to $91.1 million.
However, the seasonal net loss widened to $28 million from $16.6 million in the prior-year quarter. The net loss available to limited partners was $27.7 million, or 84 cents per unit, compared with $16.5 million, or 48 cents per unit, in the prior-year quarter. The adjusted EBITDA loss deteriorated to $17.7 million from $10.6 million.
Operating Metrics Reflect Lower Fuel Volumes
Home heating oil and propane volume decreased 9.4% to 32.8 million gallons from 36.2 million gallons. Acquisition-related volume and colder weather were more than offset by net customer attrition and other factors. Temperatures in Star Group’s operating regions were 15.9% colder year over year but 5.9% warmer than normal. Because the quarter covered the non-heating season, the additional degree days had a relatively limited impact, particularly during April and May.
Motor fuel and other petroleum-product volume declined 9.2% to 29.1 million gallons. Nevertheless, the total product gross profit inched up 0.2% to $71.8 million, as stronger per-gallon margins and higher gross profit from other petroleum products offset reduced heating oil and propane volume. The heating oil and propane margin improved 8.3% to $1.7915 per gallon. Combined service and installation gross profit increased $1.4 million to $15.6 million.
For the first nine months of 2026, revenues rose 8.3% year over year to $1.66 billion. Heating oil and propane volume increased 3.3% to 271.2 million gallons, while net income advanced 13.6% to $116.1 million. Adjusted EBITDA grew 11.7% to $189.3 million. Net customer attrition for the nine months improved to 2.7%, representing 11,000 accounts, from 3.1%, or 13,000 accounts, a year earlier.
Costs & Derivatives Pressure Results
The revenue increase primarily reflected higher average selling prices following a 48.9% increase in weighted-average wholesale product costs, partly offset by lower overall volume. Cost of product rose 35.1% to $195.2 million.
Delivery and branch expenses increased 9.2% to $98.9 million, driven principally by a $6.2-million rise in insurance-related expenses stemming from adverse claims developments. General and administrative expenses grew 6.3% to $8 million. An $8-million charge from changes in derivative fair values compared with a $0.6-million benefit last year, creating an $8.6-million unfavorable swing. Lower depreciation and amortization, and a larger income-tax benefit provided partial offsets.
Management Commentary
CEO Jeff Woosnam said that the quarter largely reflected normal seasonal factors and customer attrition consistent with prior-year periods. Management remains encouraged by improvements in the service and installation operation and is expanding value-added offerings to existing customers while extending HVAC services beyond its traditional customer base in selected markets.
Management said that it is using the summer to strengthen and streamline operations ahead of winter. Regarding elevated oil prices, the company reported no current product-availability issues and said that it was securing wholesale contracts for the next heating season. Higher prices could, however, cause some customers to delay selecting fixed-price or price-protected plans.
Outlook & Capital Plans
Management said that the partnership remained on track for strong fiscal 2026 financial performance. It projected maintenance capital expenditure of $5.5-$6.5 million for the remainder of the year, plus $0.1-$0.2 million for propane operations. Star Group also intends to continue unit repurchases and pursue acquisitions, subject to liquidity and wholesale-price conditions.
Other Developments
Star Group completed no acquisitions during the quarter. After June 30, it acquired the customer list and assets of a small heating oil business for approximately $2 million before working-capital adjustments. Management described the acquisition pipeline as full but said none of the opportunities under review were transformational.
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Star Group, L.P. (SGU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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