SGU · Star Group, L.P.

Star Group’s fiscal 2026 second-quarter results reflect strong operational performance amid unusually cold weather—6.4% colder than the prior-year period and 2.8% below normal—driving modest volume growth (0.4% to 144.5 million gallons) and significant margin expansion. Revenue rose 3.2% to $766.7 million, while net income surged $22.4 million to $108.3 million, largely attributable to a $20.7 million favorable change in the fair value of derivative instruments and a $10.5 million increase in Adjusted EBITDA to $138.7 million. The Adjusted EBITDA growth stemmed from $5.3 million in base business improvement—fueled by higher per-gallon margins and installation profitability—and $2.1 million from recent acquisitions, partially offset by elevated operating costs: direct operating expenses rose $4.0 million (5.9%) and insurance expense increased $4.0 million due to weather-related claims. Notably, the Company recorded no expense under its weather hedge contracts in Q2 (versus $3.1 million in Q2 FY2025), as the $5.0 million annual cap had already been reached in Q1. Management emphasized resilience—net customer attrition remained under 1%, and the team executed one small heating oil acquisition—while acknowledging weather-driven cost pressures. With six-month revenue up 6.1% to $1.3 billion and year-to-date Adjusted EBITDA rising $27.0 million to $207.0 million, the Company demonstrated sustained execution across both organic and inorganic levers despite macro and environmental headwinds.