A distributor of home heating oil and propane across the Northeast and Mid-Atlantic U.S., Star Group also installs and repairs HVAC systems and sells diesel and gasoline. It operates under familiar local brands like Petro Home Services, Meenan, and Griffith Energy. The company was formed in 1995 as Star Gas Partners, and its Petro brand traces back to 1903, when inventor M.A. Fessler's company installed one of the first oil burners in Boston in 1915.
Star Group's Q3 seasonal loss widened to $28.0M as a 4.4% customer attrition rate and warmer weather cut heating oil volume.
Customer attrition accelerated to 4.4%, deepening the seasonal loss. rose 17.2% to $358.1 million, but the net loss widened to $28.0 million from $16.6 million a year ago, as a 3.8% decline in heating oil volume and a 2.4% drop in per-gallon more than offset gains from recent propane acquisitions. The company's base of customers continues to shrink, and the cost of replacing them is rising.
Key takeaways
The net loss widened to $28.0 million from $16.6 million a year ago, driven by lower heating oil volume and weaker per-gallon margins.
Home heating oil and propane volume fell 3.8% to 36.2 million gallons, which management attributed to net customer attrition of 4.4% and warmer temperatures.
Home heating oil and propane per-gallon declined 2.4% to $1.6547, with base business margins down 0.6%.
Original filing text
Management's Discussion and Analysis
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 41 Item 4 - Controls and Procedures 41 Part II Other Information: 42 Item 1 - Legal Proceedings 42 Item 1A - Risk Factors 42 Item 2 - Unregistered Sale of Equity Securities and Use of Proceeds 42 Item 3 - Defaul…
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Item 3 - Quantitative and Qualitative Disclosures About Market Risk 41
Item 4 - Controls and Procedures 41
Part II Other Information: 42
Item 1 - Legal Proceedings 42
Item 1A - Risk Factors 42
Item 2 - Unregistered Sale of Equity Securities and Use of Proceeds 42
Item 3 - Defaults Upon Senior Securities 42
Item 4 - Mine Safety Disclosures 42
Item 5 - Other Information 42
Item 6 - Exhibits 43
Signatures 44
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Part I. FINANCIAL INFORMATION
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk We are exposed to interest rate risk primarily through our bank credit facilities. We utilize these borrowings to meet our working capital needs. At June 30, 2026, we had outstanding borrowings totaling $173.3 million that are subject to variable interest rate…
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Total product decreased 4.1% to $71.7 million, while delivery and branch expenses rose 4.7% to $90.6 million, including $5.8 million from acquisitions and a $3.1 million weather hedge payable.
swung to a source of $115.8 million from $9.8 million a year ago, as the seasonal liquidation of was larger than in the prior-year quarter.
declined 12.0% to $151.6 million, and variable-rate borrowings fell to $173.3 million, reducing the estimated annual after-tax cash flow impact of a 100-basis-point rate increase to $0.7 million.
What changed
The 4.4% customer attrition rate, last reported at 4.7% in the FY2025 10-K, remains elevated and continues to pressure volume, confirming the acceleration flagged in prior periods.
Per-gallon margins, which were flagged as a key watch item for the seasonally weaker Q3, declined 2.4% to $1.6547, failing to hold the $1.70+ levels seen in the stronger heating quarters.
, a persistent concern, declined to $151.6 million from $156.8 million in the prior quarter, as the seasonal liquidation reduced borrowings.
What to watch
Whether per-gallon margins recover in the seasonally stronger Q4 as the company sets selling prices for the winter heating season against current wholesale costs.
Whether the 4.4% customer attrition rate continues to accelerate in fiscal 2026, and whether the $80.5 million spent on four acquisitions in fiscal 2025 is sufficient to offset organic account losses.
The level of heading into the fiscal 2026 heating season, given the company must refinance a $110.3 million term-loan balloon payment.
The trajectory of on $173.3 million of variable-rate debt as the Federal Reserve adjusts rates, with each 100-basis-point increase now reducing annual after-tax cash flow by $0.7 million.
Interest Rate Risk
We are exposed to interest rate risk primarily through our bank credit facilities. We utilize these borrowings to meet our working capital needs.
At June 30, 2026, we had outstanding borrowings totaling $173.3 million that are subject to variable interest rates under our credit agreement, and $71.9 million of interest rate swaps to mitigate exposure to interest rate risk associated with variable interest rates. In the event that interest rates associated with this facility were to increase 100 basis points, the after tax impact on annual future cash flows would be a decrease of $0.7 million.
Commodity Price Risk
We regularly use derivative financial instruments to manage our exposure to commodity price risk related to changes in the current and future market price of home heating oil and vehicle fuels. The value of market sensitive derivative instruments is subject to change as a result of movements in market prices. Sensitivity analysis is a technique used to evaluate the impact of hypothetical market value changes. Based on a hypothetical ten percent increase in the cost of product at June 30, 2026, the potential impact on our hedging activity would be to increase the fair market value of these outstanding derivatives by $7.5 million from $11.0 million to a fair market value of $18.5 million; and conversely a hypothetical ten percent decrease in the cost of product would decrease the fair market value of these outstanding derivatives by $6.5 million to a fair market value of $4.5 million.
For a broader discussion of risks, including those related to market conditions, please refer to Part I Item 1A "Risk Factors in our Fiscal 2025 Form 10-K.
In the opinion of management, we are not a party to any litigation, which individually or in the aggregate could reasonably be expected to have a material adverse effect on our results of operations, financial position or liquidity.
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In the opinion of management, we are not a party to any litigation, which individually or in the aggregate could reasonably be expected to have a material adverse effect on our results of operations, financial position or liquidity.
In addition to the other information set forth in this Report, investors should carefully review and consider the information regarding certain factors, which could materially affect our business, results of operations, financial condition and cash flows set forth in Part I Item…
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In addition to the other information set forth in this Report, investors should carefully review and consider the information regarding certain factors, which could materially affect our business, results of operations, financial condition and cash flows set forth in Part I Item 1A. “Risk Factors” in our Fiscal 2025 Form 10-K report. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.