Star Group Fiscal Q3 2026 Earnings: Revenue Rose While the Net Loss Widened

Star Group, L.P. (NYSE: SGU) reported fiscal Q3 2026 revenue of $358.1 million, up 17.2% year over year, while diluted loss per limited partner unit widened to $0.84 from $0.48. Higher average selling prices lifted sales, but lower fuel volume, increased operating expenses and an unfavorable derivative valuation change pushed the quarterly net loss to $28.0 million. Operating cash flow nevertheless increased to $118.3 million.

Core earnings data

Revenue growth primarily reflected higher selling prices in response to increased wholesale product costs rather than higher demand. Home heating oil and propane volume declined 9.4% to 32.8 million gallons despite colder year-over-year temperatures.

The net loss widened by $11.4 million, mainly because of an $8.6 million unfavorable change in the fair value of derivatives and a $7.1 million increase in the adjusted EBITDA loss. A larger income tax benefit and lower depreciation and amortization provided partial offsets.

Gross profit and gross margin are calculated as total sales less product and installation and service costs. Adjusted EBITDA is a non-GAAP measure.

Business and segment performance

Product sales rose approximately 23.5% to $267.0 million, but product cost increased about 35.1% to $195.2 million. As a result, calculated product gross profit was nearly unchanged at $71.8 million, illustrating why higher selling prices did not translate into comparable profit growth.

Installation and service revenue increased approximately 1.8% to $91.1 million, while related costs were nearly flat at $75.5 million. Calculated gross profit for this business improved to about $15.6 million from $14.2 million, consistent with management’s statement that service and installation profitability improved.

Home heating oil and propane volume fell to 32.8 million gallons from 36.2 million, while other petroleum product volume declined to 29.1 million gallons from 32.0 million. Temperatures were 15.9% colder than a year earlier but remained 5.9% warmer than normal. Acquisition-related volume and colder weather were not enough to offset net customer attrition and other factors, and management said additional heating-degree days had a limited effect during the shoulder months of April and May.

Fiscal Q3 is a non-heating period for Star. On a separate year-to-date basis, revenue for the nine months ended June 30 rose 8.3% to $1.7 billion, net income increased to $116.1 million from $102.2 million, and adjusted EBITDA reached $189.3 million versus $169.5 million. Nine-month heating oil and propane volume increased 3.3%, in contrast with the quarterly decline.

Profitability, cash flow and balance sheet

Delivery and branch expenses increased to $98.9 million from $90.6 million, including $6.2 million of additional insurance-related expenses. General and administrative expenses also rose to $8.0 million from $7.6 million. These costs, together with lower fuel volume, more than offset higher per-gallon margins and improved service profitability at the adjusted EBITDA level.

The fair-value adjustment on derivatives changed from a $0.6 million benefit in the prior-year quarter to an $8.0 million expense, producing the $8.6 million unfavorable swing that contributed to the wider GAAP operating and net losses.

Quarterly operating cash flow increased by $45.8 million to $118.3 million. The improvement was supported by a $98.5 million decrease in receivables and a substantially smaller cash use from changes in other operating assets and liabilities. Investing activities used $3.1 million, while financing activities used $100.3 million during the quarter.

At June 30, 2026, cash and cash equivalents stood at $27.0 million, compared with $24.7 million at the September 2025 fiscal year-end. Current and long-term debt totaled approximately $172.6 million, down about $15.5 million from September 30, 2025.

Management commentary

CEO Jeff Woosnam characterized the quarter as seasonally affected and said net attrition was consistent with prior-year periods. Star did not complete an acquisition during the quarter, although management said it was assessing potential opportunities.

The company is using the summer to streamline operations where appropriate and prepare for the winter heating season. Management also continues to invest in installation and service operations, where it sees additional room for growth.

Recent insider transactions

The supplied insider data shows no purchases or sales during the latest six-month period and reports total insider holdings of approximately 4.99 million shares. Over the separate two-year period, the dataset lists four direct purchases and one indirect sale; these transactions should not by themselves be interpreted as an assessment of Star’s outlook.

Risks investors need to watch

• Customer attrition and lower volume: Heating oil and propane gallons declined even though temperatures were colder year over year. Continued attrition could limit the benefit from favorable weather or acquisition-related volume.
• Operating expense pressure: The $6.2 million increase in insurance-related expenses was a major contributor to the weaker adjusted EBITDA result. Persistently higher costs could continue to offset per-gallon margin and service improvements.
• Wholesale cost and margin dynamics: Higher wholesale costs supported selling prices and reported revenue, but calculated gross margin fell as gross profit grew much more slowly than sales.
• Derivative volatility: An $8.6 million unfavorable year-over-year valuation swing materially widened the GAAP loss, showing that derivative fair-value changes can cause reported earnings to diverge from underlying operating measures.
• Weather and seasonality: Star’s fuel demand and profitability depend heavily on winter temperatures, while colder conditions during shoulder months may provide a more limited volume benefit.

Summary

Star Group’s fiscal Q3 revenue increase was driven by higher selling prices rather than volume growth, and it did not translate into stronger quarterly earnings. Lower fuel sales, higher insurance-related expenses and an unfavorable derivative adjustment widened the loss, although service profitability and operating cash flow improved. Customer retention, expense control, winter fuel demand and further progress in the installation and service business are the principal operating factors to monitor.