Release Date: December 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Full-year adjusted EBITDA increased by $14.7 million compared to fiscal 2023, driven by higher margins in home heating oil and propane, as well as improved service and installation profitability.
- Star Group LP completed five acquisitions during fiscal 2024, adding over 20,000 customers and 23 million gallons of heating oil and propane volume annually.
- The company has an active pipeline of acquisition opportunities and recently completed a credit facility, providing additional liquidity for future acquisitions.
- Product gross profit increased by $21 million or 5% for the full year, due to higher margins in home heating oil and propane.
- Net income rose by $3 million to $35 million, supported by an increase in adjusted EBITDA and a decrease in net interest expense.
Negative Points
- Total revenue fell modestly due to slightly lower volumes and selling prices, impacted by warmer than normal temperatures.
- Net customer attrition increased slightly to 4.2% in fiscal 2024, influenced by lower real estate activity and lack of major weather events.
- Home heating oil and propane volume decreased by 6 million gallons or 2% for the full year, despite additional volume from acquisitions.
- Delivery, branch, and G&A expenses increased by $15 million to $395 million, partly due to recent acquisitions.
- The company recorded a $5 million increase in expense related to a reduction in the weather hedge benefit compared to fiscal 2023.
Q & A Highlights
Q: What are your expectations for the upcoming heating season based on weather forecasts?
A: Jeffrey Woosnam, President and CEO, mentioned that while long-term weather forecasts are unreliable, the first two months of fiscal 2025 have been milder than normal. November was about 20% milder than usual, but December is starting more favorably. They plan for normal conditions without making strong predictions.
Q: Can you provide an update on current customer retention?
A: Jeffrey Woosnam noted that customer attrition was slightly up at 4.2% in fiscal 2024. Despite improved internal customer satisfaction indicators and Net Promoter Scores, lower real estate market activity and the absence of significant weather events impacted new customer additions.
Q: What is your outlook on the acquisition environment for the upcoming fiscal year?
A: Jeffrey Woosnam stated that the acquisition pipeline remains strong and encouraging. The company completed five acquisitions in 2024 and another smaller one in October. They are optimistic about several opportunities currently under review, including some in later stages.
Q: How did the weather impact your operations in fiscal 2024?
A: Jeffrey Woosnam explained that fiscal 2024 was one of the warmest winters on record, which reduced service disruptions that typically attract customers to their full-service brands. This impacted customer gains and overall market activity.
Q: How has the company managed its cash conversion cycle?
A: Jeffrey Woosnam did not provide specific details on the cash conversion cycle during the call, but the positive feedback from Michael Prouting suggests that the company is performing well in this area.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
