Star Group (SGU 0.47%), the leading retail distributor of home heating oil in the United States, reported fiscal 2025 third quarter earnings on August 6, 2025. The company announced that key metrics declined compared to the prior-year quarter, with revenue (GAAP) down 7.8% to $305.6 million and a net loss per diluted limited partner unit of $(0.48) (GAAP). These results came amid unseasonably warm weather, falling wholesale fuel prices, and flat customer attrition. No analyst estimates were available for direct comparison. The quarter showed ongoing structural challenges, but the company highlighted some offset from improved service operations and recent acquisitions.
| Metric | Q3 2025 | Q3 2024 | Y/Y Change |
|---|---|---|---|
| EPS (GAAP) | $(0.48) | $(0.31) | (54.8 %) |
| Revenue (GAAP) | $305.6 million | $331.6 million | (7.8 %) |
| Adjusted EBITDA (Non-GAAP) | $(10.6) million | $(4.1) million | (158.5 %) |
| Net Income (GAAP) | $(16.6) million | $(11.0) million | (50.9 %) |
| Home Heating Oil & Propane Gallons Sold | 36.2 million | 37.7 million | -4.0 % |
Understanding Star Group and Its Recent Strategic Focus
Star Group is the largest retail distributor of home heating oil in the U.S, with a sizable footprint in the Northeast and Mid-Atlantic. It also distributes propane and offers related services and installations, holding over 5.5% market share and the bulk of its sales from heating fuels. Its stability relies on delivering fuel in a highly seasonal and weather-dependent business, coupled with its strong service offering.
Recently, Star Group has concentrated on several areas to stabilize performance. It is leaning into acquisitions to expand its customer base and shift its mix toward propane, which is less seasonal than heating oil. At the same time, management is targeting improved profitability in service and installation, with investments in customer service, training, and operational efficiency. Efforts to hedge fuel price volatility and retain customers are ongoing, against the backdrop of market decline and evolving regulations.
Key Developments and Quarter Details
The third quarter saw Star Group's headline financials (GAAP) decline. Revenue (GAAP) dropped 7.8% compared to the prior-year period, driven by a double-digit decrease in product sales and a small gain in installations and services. Net loss widened significantly, with adjusted EBITDA (non-GAAP)—a proxy for recurring cash earnings—swinging deeper into negative territory. The company attributed these declines primarily to two factors: unseasonably warm weather and lower average fuel prices. Heating-degree days—a key measure of energy demand—were 2.0% warmer year-over-year and nearly 19.3% warmer than historic norms, muting demand for heating fuel.
Home heating oil and propane gallons sold dropped 3.8%, a reduction of 1.5 million gallons compared to last year. This decline occurred despite the positive contribution from acquisitions finalized since the prior-year period. The company commented: "the additional volume provided from acquisitions was more than offset by the impact from net customer attrition, warmer weather, and other factors." Other petroleum product sales (mainly diesel and gasoline) also faced a modest decline, and total product volume across all fuels slipped to 68.2 million gallons.
Margin trends were unfavorable. Wholesale product costs dropped 14.3% year-over-year The company uses derivative instruments—financial contracts that help manage commodity price swings—to mitigate exposure to price moves in heating oil and propane. These derivatives contributed a $1.6 million favorable change, but such gains can be volatile. Adjusted EBITDA (non-GAAP) from recent acquisitions provided a partial offset, improving overall results during what is traditionally a loss-making period for the business.
Recurring operating costs showed both favorable and unfavorable movement. Depreciation and amortization expenses grew by $2.0 million, mainly reflecting assets and accounts acquired via recent acquisitions. Net interest expense rose by $0.9 million, largely due to acquisitions. Meanwhile, customer credit balances declined steeply—more than 45% compared to September 2024—partly due to seasonal working capital outflows, based on GAAP figures. The cash balance (GAAP) was $28.1 million.
Dividends remain part of the company’s capital return strategy.
Business Mix, Products, and Customer Trends
The company’s product portfolio centers on home heating oil—a liquid fossil fuel used in residential furnaces—and propane, a liquefied petroleum gas with both residential and commercial uses. Star Group has steadily acquired smaller regional fuel and propane distributors.
Beyond fuels, Star Group maintains a sizable installations and services business. This segment covers heating, ventilation, and air conditioning (HVAC) equipment installation, plus ongoing maintenance and repair services. Sales in this area rose 8.2% compared to the prior-year period, showing modest growth despite overall sector softness. Management pointed to "continued improvement in service and installation performance"
Looking Ahead: Financial Outlook and Strategic Priorities
Management did not provide explicit financial guidance for the upcoming quarter or the remainder of fiscal 2025. While it noted confidence in operational priorities and highlighted the contribution of recent acquisitions, there was no specific forward outlook for revenue, earnings, or margins. The company reiterated that it plans to continue expanding its propane business, pursue further acquisitions, and strengthen its installation and service operations to counteract the headwinds in its traditional heating oil base.
Looking forward, investors should monitor several developments closely: the pace of customer attrition, trends in per-gallon margins amid volatile wholesale pricing, and the execution of ongoing acquisition integration. The regulatory environment is becoming increasingly relevant, as several Northeastern states move to phase out fossil fuels, potentially accelerating further attrition. With the lack of formal guidance, following management commentary and future earnings updates will be key to understanding the company's evolving strategy and performance.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
