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Operator: Good day, and welcome to the Star Group Fiscal 2025 Second Quarter Results Conference Call. All participants will be in the listen only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Adviser. Please go ahead.

Chris Witty : Thank you, and good morning. With me on the call today are Jeff Woosnam, President and Chief Executive Officer; and Rich Ambury, Chief Financial Officer. I would now like to provide a brief safe harbor statement. This conference call may include forward-looking statements that represent the company’s expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company’s actual performance to be materially different from the performance indicated or implied by such statements. All statements other than statements of historical facts included in this conference call are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

Important factors that could cause actual results to differ materially from the company’s expectations are disclosed in this conference call, the company’s annual report on Form 10-K for the fiscal year ended September 30, 2024, and the company’s other filings with the SEC. All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this conference call. I’d now like to turn the call over to Jeff Woosnam.

Jeff?

Jeff Woosnam : Thanks, Chris, and good morning, everyone. Thank you for joining us to discuss our second quarter and fiscal year-to-date results. Our performance this quarter was positively impacted by recent acquisitions and weather that, while 4.5% warmer than normal, was almost 13% colder than in fiscal 2024. This led to a nearly 23% increase in home heating oil and propane volume and a $32 million improvement in adjusted EBITDA versus the prior year period. We’ve been rather busy on the acquisition front this year. As a matter of fact, since February 1, 2024, we’ve completed $126.5 million of transactions, some of which were acquired during our current heating season and therefore, are not fully reflected in our results.

Our pipeline of opportunities remains active and we closed on 2 businesses during the quarter as well as a very small transaction in April. All of these companies are within our existing operating footprint and serve to further strengthen our presence in these respective markets. Along with strategically using capital to grow the business, we recently raised our annual dividend by $0.05 to $0.74 per unit, increasing value for our shareholders. All of this is consistent with our goal of allocating capital in ways that maximize returns for our investors. Let me add that it was quite rewarding to see how our team responded to the added demand brought on by colder temperatures. Our frontline employees once again proved themselves working tirelessly to provide our customers with the best service possible.

I simply couldn’t be more proud of their efforts. As we come to the end of the heating season, we continue to focus on operational execution and efficiency as well as the ongoing expansion and improvement of our HVAC business. We are pleased with our results year-to-date and look forward to the opportunities that summer brings to further invest in our people and advance various business development initiatives. With that, I’ll turn the call over to Rich to provide additional comments on the quarter’s results. Rich?

Rich Ambury : Thanks, Jeff, and good morning, everyone. For the second quarter, our home heating oil and propane volume rose by 27 million gallons or 23% to 144 million gallons, as the additional volume provided from acquisitions and colder weather more than offset the impact of net customer attrition and other factors. Temperatures for the fiscal 2025 second quarter were 13% colder than last year, but still 4.5% warmer than normal. Our product gross profit increased by $52 million or 25% to $258 million due to an increase in home heating oil and propane volumes sold, higher home heating oil and propane per gallon margins and an increase in gross profit from other petroleum products. We continue to make strides in our service and installation business, which contributed an increase in adjusted EBITDA of $1.6 million.

Delivery, branch and G&A expenses increased by $22 million year-over-year, of which $9.6 million was attributable to our weather hedging program. In the second quarter of fiscal 2025, we recorded an expense of $3.1 million under our contract due to the colder weather compared to a benefit of $6.5 million recorded in the second quarter of fiscal 2024, reflecting warmer temperatures last year. Recent acquisitions accounted for an increase of $7 million in expenses while expenses in the base business rose by $5 million or 4.5%, largely due to the related 12% increase in volume in the base business. We posted net income of $86 million in the second quarter of fiscal 2025 or $18 million higher than the prior year period, reflecting a $32 million increase in adjusted EBITDA and a noncash unfavorable change in the fair value of derivative instruments of $6 million, more than offsetting higher income tax expense.

Adjusted EBITDA rose by $32 million to $128 million due to higher home heating oil and propane volumes sold in the base business, the impact of adjusted EBITDA attributable to acquisitions and an increase in home heating oil and propane per gallon margins in the base business and improvement in service and installation profitability. Now turning to the results for the first half of fiscal 2025. Our home heating oil and propane volume increased by 29 million gallons or 14.7% to 226 million gallons, again, reflecting colder temperatures and the additional volume provided from acquisitions more than offsetting net customer attrition and other factors. Temperatures in Star’s geographic areas of operation during the fiscal year-to-date were 9.4% colder than the prior year, but still, again, 6.8% warmer than normal.

Our product gross profit rose by $58 million or 17% to $409 million due to an increase in the volume of home heating oil and propane sold, higher home heating oil and propane per gallon margins and again, an increase in gross profit from other petroleum products. As previously mentioned, improvements in our service and installation business profitability continued as an increase in — provided an increase in adjusted EBITDA of $4.1 million during the 6 months of fiscal 2025. Delivery, branch and G&A expenses rose by $27 million year-over-year, of which $10.6 million was attributable to our weather hedging program. In fiscal 2025, we recorded an expense of $3.1 million under our weather hedge, compared to a benefit of $7.5 million recorded in fiscal 2024, reflecting weather conditions in both periods.

Recent acquisitions accounted for an increase of $13 million and expenses in the base business rose by $3.7 million or just 1.7% largely due to a 5% increase in volume in the base business. Net income posted was $119 million for the 6 months of fiscal 2025, or $37 million higher than the prior year period, largely due to an increase in adjusted EBITDA of $34.6 million, and the after-tax impact of a noncash favorable change in the fair value of derivative instruments of $19 million. Adjusted EBITDA rose by $34.6 million to $180 million due to an increase in home heating oil and propane volumes sold in the base business, an increase in adjusted EBITDA from recent acquisitions, higher home heating oil and propane per gallon margins in the base business and an improvement in service and installation profitability.

Please note that for fiscal 2026, we have put in place $15 million of weather hedges with similar terms to those in 2025. And also note that while we did benefit from the winter profits of the recent acquisitions, these acquisitions will also have losses in the nonheating season, which will temper these profits. And with that, I’d like to turn the conversation back to Jeff.

Jeff Woosnam : Thanks, Rich. At this time, we’re pleased to address any questions you may have. Operator, please open the phone lines for questions.

Operator: [Operator Instructions] The first question comes from Tim Mullen from Laurelton Management.

Tim Mullen: First, I was just curious, given the lack of buybacks that have occurred in the past couple of months. I was curious if there’s any changes to that program and if the recent acquisitions, given their size had any impact on that program?

Rich Ambury : There’s really been no change to the program. It’s still operating as we have it in place at the strike price that we have in place with JPMorgan. I mean it’s not an automatic pilot. We don’t enter the market every day and say, buy, sell or buy, buy, buy. We’re out of it, it’s an automatic pilot.

Tim Mullen: Understood. And then switching gears, in terms of the acquisition pipeline, are you looking at any that are kind of in the HVAC installation servicing business? Or is this really just more on the distribution side?

Jeff Woosnam : It’s more on the distribution side, primarily heating oil and propane businesses. We are undertaking an initiative on a limited basis to try to build out our own HVAC business internally organically.

Tim Mullen: Okay. Great. And if I could just ask one last one. In terms of just the consumer, it didn’t seem like there was much in terms of changes to various allowances for credit losses. But I was just curious just qualitatively, if you’ve seen any difference in terms of customers’ ability to pay, timeliness that kind of thing?

Rich Ambury : Historically, and I’ve been here for 42 years, our bad debt rate has been [indiscernible] sales or pretty close to that on an annual basis. Now it has been cold and people need home heating oil to heat their homes. So they will pay that bill during the winter. So we’ll have to see how all that kind of settles up at the end of the summer when they don’t really need it, so to speak, because there won’t be any deliveries. But historically, that’s been our bad debt rate for almost ever.

Operator: [Operator Instructions] The next question comes from Michael Prouting from 10K Capital.

Michael Prouting: Congratulations to the entire team, a terrific execution. Just a couple of questions. One is, do you anticipate any impact from tariffs on heating oil prices in your markets? And then secondly, on the acquisition front, I’m just wondering, is there anything that’s happened tax-wise or otherwise, do you think increased the availability of acquisitions? And do you feel like you have sufficient firepower right now to execute on the opportunities in front of you?

Jeff Woosnam : So Michael, in regards to tariffs, obviously, it’s a fluid situation, as I think everybody can understand. We have experienced some price increases, particularly on the HVAC side of our business with parts and equipment. That ranges anywhere from 3% to 15% roughly is what we’ve seen so far. Fortunately, our vendors have provided us enough notice in order to adjust and adjust our pricing. So that’s kind of what we’re experiencing right now. And that’s where we are on that. On the acquisition front, I don’t know that we’ve seen any difference related to taxes or anything like that. I would say that we had some pent-up demand going into the heating season, and we had obviously a busier season overall. We had heard from various sources that there were going to be additional opportunities hitting the market after the season concluded, and it’s pretty much what we’re seeing right now.

Michael Prouting: Keep up the good work. Congratulations.

Operator: [Operator Instructions] At this point, there’s no further questions in the queue. I’d like to turn the call back over to Mr. Woosnam for closing remarks.

Jeff Woosnam : Okay. Thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2025 fiscal third quarter results in August. Have a great summer.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.