Star Group L.P. - Unit Aktie

Good day and welcome to the Star Group Fiscal 2026 Third Quarter Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

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. It may cause the company's actual performance to be materially different than 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, 2025, 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 now need to turn the call over to Jeff Woosnam. Jeff?

Thanks, Chris, and good morning, everyone. Thank you for joining us to discuss our third quarter and fiscal year-to-date results. The results this quarter in non-heating period largely reflected seasonal factors in net customer attrition, which was in line with prior year periods. While temperatures were moderately colder than last year, the volume of home heating oil and propane sold was actually lower given the more muted impact of additional degree days in the shoulder months of April and May.

Operating costs were elevated in the period primarily due to higher insurance expense, which related to some adverse developments regarding certain claims. We continue to be encouraged by the ongoing improvement of our service and installation business, which delivered gross profit of $15.6 million in the quarter, or $1.4 million higher than the prior year period.

Our strategy of selling more value-added products and services to our existing clients while expanding our HVAC offering in select markets beyond our traditional customer base is beginning to take shape. It's exciting to see our employees, particularly our frontline service technicians and sales teams, truly embrace and become energized by these efforts.

While we did not complete any acquisitions within the quarter, we recently closed on a small heating oil dealer after the end of the period. We are actively assessing several attractive businesses and remain very well positioned to take advantage of future opportunities as they are presented. As we've done in years past, we're utilizing the summer to strengthen our operations, streamline where appropriate, and prepare for the coming winter months.

At the same time, we continue to invest in our service and installation business, where we see further room for revenue growth. And we believe Star remains in great shape and on track for strong financial performance in fiscal 2026.

With that, I'll turn the call to Rich to provide additional comments on the quarter's results. Rich?

Thanks, Jeff, and good morning, everyone. For the third quarter, our home heating oil and propane volume decreased by 3.4 million gallons, or 9.4%, to 33 million gallons, as the additional volume provided from acquisitions was more than offset by net customer attrition and other factors. In terms of weather conditions, degree days for the fiscal 2026 third quarter were 16% colder than last year but 6% warmer than normal. But please keep in mind that the temperatures during this non-heating season period are not as impactful as during the winter season.

Our product gross profit was virtually unchanged at $72 million as an increase in home heating oil and propane per gallon margins and a higher gross profit from other petroleum products was offset by the lower home heating oil and propane volume sold. As Jeff stated, we realized the combined gross profit from service and installation of $15.6 million, or $1.4 million higher than the prior year's comparable period, as we continue to focus on improving revenue and controlling costs. Delivery, branch, and G&A expenses increased by $8.7 million year-over-year, primarily due to $6.2 million of higher insurance claims reflecting an adverse development.

We posted a net loss of $28 million in the third quarter of fiscal 2026, or $11.4 million more than the prior year period, reflecting a $7 million increase year-over-year in our adjusted EBITDA loss and an unfavorable non-cash change in the fair value of derivative instruments of $8.6 million, partially offset by a $3.4 million greater income tax benefit and lower depreciation and amortization expense of $900,000. The adjusted EBITDA loss increased by $7 million to $17.7 million as higher per gallon home heating oil and propane margins and improvement in service and installation profitability and the additional gross profit from other petroleum products was more than offset by higher operating expenses, including the insurance costs I just mentioned and lower home heating oil and propane volume sold.

Now turning to the results for the nine months of fiscal 2026, our home heating oil and propane volume increased by 8.6 million gallons, or 3.3%, to 271 million gallons, 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 operations fiscal year-to-date were 11.5% colder than the prior year period and 3% colder than normal.

Our product gross profit increased by $48 million, or 10%, to $529 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 an increase in gross profit from other petroleum products. As previously mentioned on other calls, colder weather conditions and numerous snowstorms during the first half of fiscal 2026 increased the demand for service, which led to higher service-related expenses. While installation gross profit increased by $2.5 million, service gross loss increased by $5.7 million due to the increase in demand for service and an increase in propane tank sets.

Delivery, branch, and G&A expenses rose by $25 million year-over-year, of which $1.9 million was attributable to our weather hedging program. As I've previously mentioned, in fiscal 2026, we recorded an expense of $5 million under our weather hedge compared to an expense of $3.1 million recorded in fiscal 2025, reflecting weather conditions in both periods. Recent acquisitions accounted for an increase of $3.2 million to delivery, branch, and G&A expenses, while associated costs in the base business rose by $20 million, reflecting an increase in volume and the impact of severe weather conditions on operating expenses, including insurance claims.

We posted net income of $116 million for the first nine months of fiscal 2026, or $14 million higher than the prior year period as an increase in adjusted EBITDA of $20 million, $1.5 million, was somewhat offset by higher income tax expense of $7.6 million and other factors. Adjusted EBITDA rose by $20 million to $189 million due to an increase in home heating oil and propane volume sold in the base business, an increase from acquisitions, and higher home heating oil and propane per gallon margins, which were more than offset by higher operating expenses.

And with that, I'd like to turn the call back over to Jeff.

Thanks, Rich. At this time, we'd be pleased to address any questions you may have. Michael, please open the phone lines for questions.

[Operator Instructions] And your first question today comes from Michael Prouting with 10K Capital. Please go ahead.

Jeff, by the way, congratulations on the well-deserved salary increase. Just a couple questions. One thing I'm curious about is assuming things continue as they are with vis-a-vis Iran, I'm just wondering what risks you might see in terms of product availability or competitive dynamics or customer behavior in terms of the upcoming heating season.

We don't see at this time any issues with product availability. I mean, we're in the process now of securing from our wholesalers contracts for next year. So we're well on our way for securing contracts for next year. And naturally, oil prices are up, so that will impact customer behavior somewhat. The question is when these customers will commit to either a ceiling or a fixed price. And some of our customers are on those products, and they might just want to wait for the market to come off. But come October, folks are going to need to sign up on a price-protected plan or remain on variable.

Okay. And I guess just a quick question on the acquisition pipeline. I can't help asking any potential for transformational acquisitions or any other way that you could characterize the acquisition pipeline process? And that's all the questions I have for this morning. Thanks.

Yes, obviously, Michael, we've completed two transactions so far this year, smaller deals. We are certainly continuing to work together and look at and assess several attractive businesses. I wouldn't categorize any of those as transformational, but we certainly have a full pipeline and the team is busy. And we haven't changed our approach at all. And sometimes these things kind of come in bunches and we'll just see how all that works out.

[Operator Instructions] Seeing no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Woosnam for any closing remarks.

Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2026 fiscal fourth quarter results in December. Thanks, everyone.

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

Good day, and welcome to the Star Group Fiscal 2026 Second Quarter Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Chris Witty, the Investor Relations Adviser. Please go ahead.

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, 2025, 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?

Thanks, Chris, and good morning, everyone. Thank you for joining us to discuss our second quarter and fiscal year-to-date results. The second quarter was, in many ways, a continuation of conditions experienced in the first. Temperatures across our operating footprint were 6.4% colder than last year and 2.8% colder than normal resulting in slightly higher volumes of products sold. However, the severe weather, including several very large snow events at times impacted our field productivity, thereby raising operating expenses. That said, we were still able to post adjusted EBITDA of $139 million, which represents a year-over-year improvement of $10.5 million. At the same time, we kept net customer attrition to 0.6% both of which are meaningful accomplishments for the company. Lastly, we closed on one small heating oil acquisition during the quarter and have several other opportunities under various stages of review.

I've often talked on this call about the hard work and dedication of our loyal employees. Never has there been a more appropriate time to reflect on their value to our organization. With the added demand brought on by periods of near record low temperatures combined with significant snowfall, our team worked tirelessly, often through very difficult conditions to provide our customers with the level of service and responsiveness they have come to expect. I simply could not be more proud and appreciative of their efforts.

We are also working to contain the impact from recent increases in wholesale product costs through the use of effective inventory controls, supply chain initiatives and active margin management. While higher prices can create certain challenges for us, the immediate impact of this current escalation has been somewhat muted by the fact that we are coming out of the heating season.

Although there is still much work to be done, I'm very pleased with how Star has performed as we crossed the midpoint of the year. We believe we are well positioned for the remainder of fiscal 2026 and look forward to the opportunities that summer brings to further invest in our people and business development initiatives.

With that, I'll turn the call over to Rich to provide additional comments on the quarter's results. Rich?

Thanks, Jeff, and good morning, everyone. In analyzing our results for the 3- and 6-month periods of fiscal 2026, please keep in mind that service costs and operating expenses were impacted by extreme weather conditions, including at times temperatures that were 25% colder than expected for a 3-week period and in some areas, experienced over 60 inches of snow, which obviously negatively affected our overall operational efficiency.

For the second quarter, our home heating oil and propane volume rose by 600,000 gallons or [ 0.004% ] to 144.5 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 2026 second quarter were 6.4% colder than last year and 2.8% colder than normal.

Our product gross profit increased by $19 million or 7% to $277 million due to a slight increase in home heating oil and propane volumes sold and higher home heating oil and propane per gallon margins. Colder weather conditions and numerous snowstorms increases the demand for service which led to higher service-related expenses, including greater labor and other costs, which increased our service loss by $3.4 million. Delivery, branch and G&A expenses increased by $5.4 million year-over-year. Delivery-related expenses rose by $4 million, largely due to the extreme weather conditions while insurance expense increased by $4 million as well as claims rose due to the severe weather.

During the second quarter of fiscal 2026, the company did not recognize any benefit or expense under its weather hedge versus a $3.1 million expense recorded for the 3 months ending March 31, 2025. We have previously expensed a cap of about $5 million in the first quarter of fiscal 2026 due to the cold weather. We posted net income of $108 million in the second quarter of fiscal 2026 or $22 million more than the prior year period reflecting a $10.5 million increase in adjusted EBITDA and the impact of a noncash favorable change in the fair value of derivative instruments of $21 million more than offsetting higher income tax expense of about $10 million and certain other factors. Adjusted EBITDA rose by $10.5 million to $139 million as an increase in home heating oil and propane per gallon margins more than offset higher operating expenses I just discussed.

Now turning to the results for the first half of fiscal 2026. Our home heating oil and propane volume increased by 12 million gallons or 5.3% to 238 million gallons, again, reflecting colder temperatures and the additional volume provided from acquisitions, again, more than offsetting net customer attrition and other factors. Temperatures in Star's geographic areas of operations fiscal year-to-date were 11% colder than the prior year comparable period and 4.1% colder than normal.

Our product gross profit increased by $48 million or 12% to $457 million due to an increase in the volume of home heating oil and propane sold and higher home heating oil and propane per gallon margins. As previously mentioned, colder weather conditions and numerous snow storms in the second quarter of fiscal 2026 increased the demand for service, which led to higher service-related expenses while installation gross profit increased by $1.5 million, the service gross loss rose by $6.1 million, again due to higher expenses and an increased demand for service as well as an increase in propane tank sets.

Delivery, branch and G&A expenses rose by a little over $16 million year-over-year, of which $1.9 million was attributable to our weather hedging program. As I previously mentioned, in fiscal 2026, we recorded an expense of $5 million under our weather hedge compared to $3.1 million recorded in fiscal 2025, again, reflecting weather conditions in both periods. Recent acquisitions accounted for an increase of $3 million to delivery, branch and G&A expenses while costs associated with the base business rose by $11.3 million, reflecting a 2.7% increase in volume and the impact of the severe weather conditions on operating expenses, including insurance claims.

We posted net income of $144 million for the first 6 months of fiscal 2026 or $25 million in the prior year period as an increase in adjusted EBITDA of $27 million and the impact of a favorable change in the fair value of derivatives of $10 million, more than offset higher income tax expense of $11 million and other factors. Adjusted EBITDA rose by $27 million to $207 million due to an increase in home heating oil and propane volumes sold in the base business and increase in adjusted EBITDA from acquisitions and higher home heating oil and propane per gallon margins, which more than offset higher operating expenses. Note that for fiscal 2027, we have put in place a $12.5 million weather hedge.

And now I'll turn the call back over to Jeff.

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

[Operator Instructions] At this point, there appear to be no callers in the queue, so I'll hand it back to Mr. Woosnam for any closing remarks.

Okay. Thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2026 fiscal third quarter results in August. Have a great summer.

The conference has now concluded. Thank you for attending today's presentation. You may all disconnect.

Good day, and welcome to the Star Group Fiscal 2026 First Quarter Results Conference Call. [Operator Instructions] 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.

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, 2025, 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?

Thanks, Chris, and good morning, everyone. Thank you for joining us to discuss our first quarter results. Fiscal 2026 has started off very well as our performance benefited from recent acquisitions, physical supply and per gallon margin management, the continued focus on service and installation profitability and last but not least, temperatures that were almost 19% colder than last year and 6% colder than normal.

The confluences of these factors, even given the operational challenges associated with persistent cold temperatures resulted in an increase of adjusted EBITDA of $16.5 million or 32% year-over-year, net of a $5 million charge to our weather hedge program. At the same time, net customer attrition was modest during the period. Improvement efficiency and operational execution have been specific areas of focus for us, so it's quite rewarding to see our work have a meaningful impact on bottom line results.

The cold weather has continued thus far into the second quarter and, in fact, January finished 2% colder than last year and 9% colder than normal. I'm very proud of the way our employees have responded to the added demand and the challenges of making deliveries in snow and ice conditions. They've worked tirelessly at times through difficult conditions to provide our customers with the level of service and responsiveness they have come to expect.

While we did not close on any acquisitions in the first quarter, we did complete one purchase of a small heating oil business just a few days ago. It's not at all unusual to experience a slight lull in prospect activity, during a busy heating season, but we still have several opportunities under various stages of review. And I anticipate that we will see new ones presented as we get closer to spring.

Although it's too early to say how fiscal 2026 will play out, we remain vigilant in providing excellent customer service, keeping costs down and growing our service and installation profitability. I believe we are well prepared to address whatever challenges or opportunities might present themselves over the remainder of the heating season.

With that, I'll turn the call over to Rich to provide additional comments on the quarter's financial results. Rich?

Thanks, Jeff, and good morning, everyone. For the quarter, our home heating oil and propane volume rose by 11.5 million gallons or 14% to approximately 94 million gallons as the additional volume provided from acquisitions and colder temperatures was reduced by net customer attrition and other factors. Temperatures in our geographic areas of operations for the 3 months ending December 31, 2025, were 19% colder than the 3 months ending December 31, 2024, and 6% colder than normal.

Our product gross profit increased by $29 million or 19% to approximately 179 million gallons due to an increase in home heating oil and propane volumes sold and higher per gallon margins. We realized a combined gross profit from service and installations of $5.6 million for the 3 months ending December 31, 2025, compared to gross profit of $6.9 million for the 3 months ending December 31, 2024. While installation gross profit increased by $1.4 million, the service gross profit loss did increase by $2.7 million due to the high demand for service relating to the 19% colder temperatures and the additional costs attributable to an increase in our propane tank sets.

Delivery, branch and G&A expenses rose by $11 million in the first quarter of fiscal 2026 versus the prior year period. The company's weather hedge contracts accounted for $5 million of the increase as temperatures experienced from November through December of 2025 were colder than the contract strike price. In addition, delivery expenses rose by $3.8 million or 13%, largely due to the 14% increase in home heating oil and propane volumes sold.

The remaining operating costs increased by just $2.2 million or approximately 2%. During the first quarter of fiscal 2026, we recorded a $5 million noncash charge related to the change in the fair value of our derivative instruments. By comparison, in the first quarter of fiscal 2025, we recorded a $5 million credit. Net income increased by $3 million in the quarter to $36 million as an increase in adjusted EBITDA of $16.5 million was reduced by the unfavorable noncash change in the fair value of derivative instruments, as I just mentioned, was $10 million year-over-year.

In addition, net income was also negatively impacted by higher depreciation and amortization expenses and net interest expense due solely to our higher acquisition program and that totaled $1.7 million in aggregate, along with higher income tax expense of $1.3 million. Adjusted EBITDA increased by $16.5 million to $68 million, primarily due to a $16.8 million increase in adjusted EBITDA in the base business and a $4.8 million increase in adjusted EBITDA from recent acquisitions which was partially offset by the $5 million increase in expense relating to the company's weather hedge contracts.

And with that, I'll turn the call back over to Jeff.

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

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

Just wondering if you had any commentary given we're now a month in -- a little over a month into the second quarter for the fiscal year, given obviously this cold weather has persisted in terms of how it's going operationally or any other kind of general commentary you can provide?

Sure, Tim. Yes. I mean, obviously, January was colder than normal. February is starting off that way, and we've got a pretty strong forecast in front of us. And we've been dealing with some storms. So conditions have definitely been a challenge for us. But frankly, this is what we're built for as a full-service provider, and this is what we plan for. So I'm just always amazed at how our employees really just step up and get a lot of satisfaction out of taking care of our customers. So I feel very good about our current position right now, given some very difficult conditions.

Congrats on a good quarter.

[Operator Instructions] At this point, there are nobody in the queue. So I'll turn it back to Jeff Woosnam for any closing remarks. Please go ahead.

Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2026 fiscal second quarter results in May. Thanks, everybody.

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

Good day, and welcome to the Star Group Fiscal 2025 Fourth Quarter Results Conference Call. [Operator Instructions] 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.

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, 2025, 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?

Thanks, Chris, and good morning, everyone. Thank you for joining our fourth quarter conference call.

It's an exciting time for us as we conclude another fiscal year and begin a new heating season. As we close out 2025, it's a great opportunity to reflect on Star's performance over the past 12 months. Most notably, temperatures were 8% warmer than normal this year, but 8% colder than in fiscal 2024. The lower temperatures, coupled with recent acquisitions, resulted in a $29 million gallon or 12% year-over-year increase in heating oil and propane volume.

At the same time, we kept overhead expenses largely in check, maintain disciplined margin management and continued to invest in installation and service as a complementary service offering, which posted revenue growth of over -- of nearly 10% or over fiscal 2024. The resulting bottom line impact on these efforts, along with cooler temperatures, fueled a year-over-year increase in adjusted EBITDA of $24.8 million or 22.2%.

While net customer attrition rose modestly. We believe we are taking the necessary steps to manage through this with our ongoing focus on customer service across our operating footprint. Our internal customer satisfaction indicators and loss rates continue to improve, although we observed a lower level of overall real estate activity in the marketplace, which in part impacted new customer additions.

Our acquisition program remains an important component of our overall business strategy. And in total, we completed 4 separate transactions during fiscal 2025, adding just under 12 million gallons of heating oil and propane volume annually. We continue to have many additional opportunities in various stages of review.

In terms of overall capital allocation in fiscal 2025, we invested approximately $81 million towards acquisitions and $16 million in unit repurchases and paid $26 million in distributions. We believe all of these activities serve to increase shareholder value. A recap of our results would not be complete without mentioning how proud I am of our talented team of employees who have not only supported but taken genuine ownership and effectively executing our strategy of differentiating Star from the competition through providing outstanding service and value to our customers.

We are steadfast in our mission to grow and -- the company by continuing to make both heating oil and propane acquisitions, keeping net attrition as low as possible and maximizing installation and service profitability over time. We look forward to taking advantage of further opportunities to improve the organization and its performance in fiscal 2026.

So with that, I'll turn the call over to Rich to provide additional comments on the quarter and year-end results. Rich?

Thanks, Jeff, and good morning, everyone. For the fourth quarter, our home heating oil and propane volume increased by 1.5 million gallons or 8% to 20 million gallons as the additional volume provided from acquisitions more than offset net customer attrition and other factors. Our product gross profit increased by $2.5 million or 6% to $45 million as the positive impact from higher home heating oil and propane volume was only offset by slightly lower per gallon margins, driven in part by the mix of volume associated with recent acquisitions.

Delivery, branch and G&A expenses increased by $5 million year-over-year, largely reflecting the additional operating costs attributable to acquisitions of $4.2 million.

Operating costs in the base business rose by just $800,000 or less than 1%. Depreciation and amortization rose by $0.3 million and net interest expense increased by $1.4 million year-over-year. These changes were largely attributable to the impact from recent acquisitions.

We posted a net loss of $28.7 million in the fourth quarter of fiscal 2025 or $6.4 million less than the prior year period reflecting a noncash favorable change in the fair value of derivative instruments of $12.2 million and a $3.8 million benefit from the sale of certain real estate.

The impacts of these positive items were largely offset by a $3.6 million lower income tax benefit, a $3.3 million increase in our adjusted EBITDA loss again, higher depreciation and amortization expense and higher acquisition-related financing costs along with other factors.

The adjusted EBITDA loss for the fourth quarter increased by $3.3 million to $33 million as the impact from an increase in volumes sold was more than offset by slightly lower home heating oil and propane per gallon margins and an increase in operating expenses of $5 million, again, of which $4.2 million was due to recent acquisitions.

Now turning to the results of fiscal 2025. Our home heating oil and propane volume increased by 29 million gallons or 12% to 283 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 operations for the full year were 8% colder than the prior year period, but 8% warmer than normal. Our product gross profit rose by $57 million or 12% to $525 million due to an increase in home heating oil and propane volumes sold and higher home heating oil and propane per gallon margins and a slight increase in gross profit from other petroleum products.

In addition, as previously mentioned on prior calls, we've improved our service and installation profitability, which contributed to an increase in gross profit of $3.8 million year-to-date. Delivery, branch and G&A expenses rose by $36.6 million, of which $10.6 million was attributable to our weather hedging program. As a reminder, in fiscal 2025, we recorded an expense of $3.1 million under our weather hedges compared to a benefit of $7.5 million recorded in fiscal 2024, reflecting weather conditions in both periods.

Aside from this, recent acquisitions accounted for an increase in expenses of $23 million year-over-year, while related costs in the base business rose again by just $3 million or [indiscernible]. Depreciation and amortization rose by $3.9 million and net interest expense increased by $2.8 million. These changes, again, were largely attributable to the impact from recent acquisitions.

We posted net income of $73.5 million for fiscal 2025 or $38.2 million higher in the prior year period, largely due to an increase in adjusted EBITDA of $24.8 million and a noncash favorable change in the fair value of derivative instruments of $32 million which more than offset higher income tax expense of $16 million in other factors.

Adjusted EBITDA rose by $24.8 million to $136.4 million, reflecting an $18.5 million increase in adjusted EBITDA in the base business and $17 million increase in adjusted EBITDA from recent acquisitions, partially offset by a $10.6 million change in expenses relating to the company's weather hedge contracts.

And with that, I'll turn the call back to Jeff.

Thanks, Rich. At this time, we'll be pleased to address any questions you may have. Clover, can you please open the phone lines for questions? .

[Operator Instructions] The first question comes from Tim Mullen with Lyrilton Management.

I'm just curious if you guys could share any thoughts on the regulatory environment, specifically in New York and what impact in the years ahead, do you think it could have on Star gas, things like the fossil fuel band and some of the other regulatory items.

It's really very difficult for us to try to predict how that regulatory environment is going to impact us as a business. A lot of that is still in flux and some of those plans are still trying to being determined. So again, it's just -- it's really difficult to comment on how that might impact us going forward.

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

Jeff, on the customer attrition. I just happen to notice. So looking just the fourth quarter, it looked like customer gains were down, customer losses were up and then also, if you just look at the last few years, if you look at the net attrition for the year. It does seem like things are trending in the wrong direction. Was there anything specifically you think that affected attrition in fourth quarter? And what are your thoughts about attrition going forward for the coming year?

We're just generally seeing a low level of prospect activity in the marketplace, Michael. I would say for the full year, because some of this is timing, but certainly for the full year, the encouraging part of it is that -- you can see that our loss rates as a percentage of our customer base are down and continue to come down each year, and I think they're really at a historical low points and all of our I've mentioned, all of our customer -- like internal customer satisfaction indexes are pointing in the right direction.

So the overall impact of that is it's lower churn on the business. The challenge has been new customer gains. And that's something we're constantly reviewing. There's in part, as I mentioned in my remarks, we've seen a lower level of activity, real estate activity, which just takes fewer prospects out of the market. And I would also note that while fiscal '25 was colder than '24, it was still 8% warmer than normal, and we really didn't have a lot of disruptive weather in that period, which tends to attract prospects to our high-quality brands. So we're just constantly reviewing our sales and marketing structure and activities and to attract more customers to our brands.

Okay. And then I had just actually 2 other questions. Jeff, one for you on the acquisition front. Just wanted to get your color on how the pipeline looks at this point? And will you see the effect of any significantly large deals?

And I also had question for Rich. So in terms of free cash flow, the K was not filed last night, although I have been going through it this morning, but I did happen to notice that free cash flow was lower than I would have expected in the fourth quarter. And it looks like that could be attributed to a combination of working capital tied up in receivables and inventory. And I was just wondering, especially with the inventory if there was anything there like you guys got a really good deal on heating oil or just what it might have driven the lower-than-expected free cash flow in the quarter.

Sure. Related to acquisitions, our pipeline is. It remains active. We have a number of different opportunities currently under review. Nothing significantly sizable, several tuck-in opportunities, some smaller stand-alones, but we'll have to see how all of that kind of transpires and comes to fruition. But I'm very pleased with just the overall level of activities and transactions that we've been able to complete this past year. And really, when you think about it, 4 quality deals in 2025 and 4 in '24, so 9 completed acquisitions that we're very proud of over the last 2 years. But hopefully, we can continue that trend.

Yes, if you look at our receivables, I think we have the same -- relatively same day sales outstanding this year versus last year on our accounts receivable. Now I don't really see any big difference between our free cash flow this year versus last year. We're paying the same taxes. EBITDA was $3.3 million less this year versus last year. Interest is up a little bit.

The timing of income taxes is -- could be possibly impacting free cash flow. But it all depends, too, on the timing of some inventory coming in barges this year versus last year. And the way the cash flows work, it's a change versus the change in the prior year, but I don't see anything really impacting free cash flow or leading to possibly a distributable cash flow calculation because interest expense is up a little bit.

Our cash taxes are not really all that much different. And interest expense is up a bit as well. And we didn't have any tremendous fourth quarter capital purchases this year versus last year, Michael.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jeff Woosnam, CEO for any closing remarks.

Well, thank you for taking the time to join us today and your ongoing interest in Star Group. We look forward to sharing our 2026 fiscal first quarter results in February. Happy holidays, everyone. .

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.