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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-14129

 

STAR GROUP, L.P.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

06-1437793

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

9 West Broad Street

Stamford, Connecticut

06902

(Address of principal executive office)

                                                      (Zip Code)

 

Registrant’s telephone number, including area code: (203) 328-7310

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Units

 

SGU

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non- accelerated filer

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

At April 30, 2022, the registrant had 36,783,664 Common Units outstanding.

 

 

 

 


 

STAR GROUP, L.P. AND SUBSIDIARIES

INDEX TO FORM 10-Q

 

 

 

Page

Part I Financial Information

 

 

Item 1 - Condensed Consolidated Financial Statements

 

3

Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and September 30, 2021

 

3

Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended March 31, 2022 and March 31, 2021

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended March 31, 2022 and March 31, 2021

 

5

Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and six months ended March 31, 2022 and March 31, 2021

 

6-7

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended March 31, 2022 and March 31, 2021

 

8

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9-20

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21-38

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

 

39

Item 4 - Controls and Procedures

 

40

Part II Other Information:

 

40

Item 1 - Legal Proceedings

 

40

Item 1A - Risk Factors

 

40

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

 

40

Item 3 - Defaults Upon Senior Securities

 

40

Item 4 - Mine Safety Disclosures

 

40

Item 5 - Other Information

 

40

Item 6 - Exhibits

 

41

Signatures

 

42

 

2


 

Part I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

September 30,

 

 

 

2022

 

 

2021

 

(in thousands)

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,682

 

 

$

4,767

 

   Receivables, net of allowance of $6,781 and $4,779, respectively

 

 

262,738

 

 

 

99,680

 

Inventories

 

 

79,698

 

 

 

61,183

 

Fair asset value of derivative instruments

 

 

37,777

 

 

 

26,222

 

Prepaid expenses and other current assets

 

 

64,310

 

 

 

30,140

 

Total current assets

 

 

462,205

 

 

 

221,992

 

Property and equipment, net

 

 

101,456

 

 

 

99,123

 

Operating lease right-of-use assets

 

 

96,076

 

 

 

95,839

 

Goodwill

 

 

254,842

 

 

 

253,398

 

Intangibles, net

 

 

89,601

 

 

 

95,474

 

Restricted cash

 

 

250

 

 

 

250

 

Captive insurance collateral

 

 

67,511

 

 

 

69,933

 

Deferred charges and other assets, net

 

 

18,201

 

 

 

17,854

 

Total assets

 

$

1,090,142

 

 

$

853,863

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

53,098

 

 

$

37,291

 

Revolving credit facility borrowings

 

 

185,723

 

 

 

8,618

 

Current maturities of long-term debt

 

 

13,000

 

 

 

17,621

 

Current portion of operating lease liabilities

 

 

16,717

 

 

 

16,446

 

Accrued expenses and other current liabilities

 

 

157,093

 

 

 

121,221

 

Unearned service contract revenue

 

 

66,801

 

 

 

56,972

 

Customer credit balances

 

 

36,542

 

 

 

86,828

 

Total current liabilities

 

 

528,974

 

 

 

344,997

 

Long-term debt

 

 

85,734

 

 

 

92,385

 

Long-term operating lease liabilities

 

 

84,182

 

 

 

84,019

 

Deferred tax liabilities, net

 

 

33,705

 

 

 

29,014

 

Other long-term liabilities

 

 

17,193

 

 

 

25,244

 

Partners’ capital

 

 

 

 

 

 

 

 

Common unitholders

 

 

357,020

 

 

 

295,063

 

General partner

 

 

(2,524

)

 

 

(2,821

)

Accumulated other comprehensive loss, net of taxes

 

 

(14,142

)

 

 

(14,038

)

Total partners’ capital

 

 

340,354

 

 

 

278,204

 

Total liabilities and partners’ capital

 

$

1,090,142

 

 

$

853,863

 

 

See accompanying notes to condensed consolidated financial statements.

 

3


 

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months

Ended March 31,

 

 

Six Months

Ended March 31,

 

(in thousands, except per unit data - unaudited)

2022

 

2021

 

 

2022

 

 

2021

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

$

712,462

 

$

539,371

 

 

$

1,123,727

 

 

$

839,703

 

Installations and services

 

70,081

 

 

64,744

 

 

 

147,086

 

 

 

137,732

 

Total sales

 

782,543

 

 

604,115

 

 

 

1,270,813

 

 

 

977,435

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

492,334

 

 

313,552

 

 

 

766,928

 

 

 

485,699

 

Cost of installations and services

 

70,136

 

 

64,361

 

 

 

144,184

 

 

 

133,664

 

(Increase) decrease in the fair value of derivative instruments

 

(17,615

)

 

(8,224

)

 

 

(4,212

)

 

 

(25,619

)

Delivery and branch expenses

 

107,486

 

 

100,942

 

 

 

196,475

 

 

 

181,629

 

Depreciation and amortization expenses

 

8,081

 

 

8,268

 

 

 

16,529

 

 

 

16,225

 

General and administrative expenses

 

5,902

 

 

6,320

 

 

 

12,578

 

 

 

12,561

 

Finance charge income

 

(1,026

)

 

(799

)

 

 

(1,538

)

 

 

(1,205

)

Operating income

 

117,245

 

 

119,695

 

 

 

139,869

 

 

 

174,481

 

Interest expense, net

 

(2,729

)

 

(2,136

)

 

 

(4,787

)

 

 

(3,987

)

Amortization of debt issuance costs

 

(237

)

 

(243

)

 

 

(476

)

 

 

(490

)

Income before income taxes

 

114,279

 

 

117,316

 

 

 

134,606

 

 

 

170,004

 

Income tax expense

 

32,900

 

 

32,152

 

 

 

38,738

 

 

 

46,980

 

Net income

$

81,379

 

$

85,164

 

 

$

95,868

 

 

$

123,024

 

General Partner’s interest in net income

 

697

 

 

681

 

 

 

819

 

 

 

977

 

Limited Partners’ interest in net income

$

80,682

 

$

84,483

 

 

$

95,049

 

 

$

122,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income per Limited Partner Unit (1):

$

1.75

 

$

1.71

 

 

$

2.05

 

 

$

2.43

 

Weighted average number of Limited Partner units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

37,634

 

 

40,382

 

 

 

38,218

 

 

 

41,324

 

 

(1)

See Note 15 - Earnings Per Limited Partner Unit.

See accompanying notes to condensed consolidated financial statements.

 

4


 

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

 

Three Months

Ended March 31,

 

 

Six Months

Ended March 31,

 

(in thousands - unaudited)

 

2022

 

2021

 

 

2022

 

 

2021

 

Net income

 

$

81,379

 

$

85,164

 

 

$

95,868

 

 

$

123,024

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on pension plan obligation

 

 

224

 

 

235

 

 

 

448

 

 

 

470

 

Tax effect of unrealized gain on pension plan obligation

 

 

(61

)

 

(64

)

 

 

(106

)

 

 

(128

)

Unrealized loss on captive insurance collateral

 

 

(2,062

)

 

(526

)

 

 

(2,674

)

 

 

(866

)

Tax effect of unrealized loss on captive insurance collateral

 

 

435

 

 

110

 

 

 

564

 

 

 

182

 

Unrealized gain on interest rate hedges

 

 

1,549

 

 

719

 

 

 

2,267

 

 

 

1,051

 

Tax effect of unrealized gain on interest rate hedges

 

 

(410

)

 

(190

)

 

 

(603

)

 

 

(278

)

Total other comprehensive income (loss)

 

 

(325

)

 

284

 

 

 

(104

)

 

 

431

 

Total comprehensive income

 

$

81,054

 

$

85,448

 

 

$

95,764

 

 

$

123,455

 

See accompanying notes to condensed consolidated financial statements.

 

5


 

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

 

 

 

Three Months Ended March 31, 2022

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of December 31, 2021

 

 

37,942

 

 

 

326

 

 

$

292,139

 

 

$

(2,963

)

 

$

(13,817

)

 

$

275,359

 

Net income

 

 

 

 

 

 

 

 

80,682

 

 

 

697

 

 

 

 

 

 

81,379

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

224

 

 

 

224

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(61

)

 

 

(61

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,062

)

 

 

(2,062

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

435

 

 

 

435

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,549

 

 

 

1,549

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(410

)

 

 

(410

)

Distributions

 

 

 

 

 

 

 

 

(5,384

)

 

 

(258

)

 

 

 

 

 

(5,642

)

Retirement of units

 

 

(992

)

 

 

 

 

 

(10,417

)

 

 

 

 

 

 

 

 

(10,417

)

Balance as of March 31, 2022 (unaudited)

 

 

36,950

 

 

 

326

 

 

$

357,020

 

 

$

(2,524

)

 

$

(14,142

)

 

$

340,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of December 31, 2020

 

 

40,737

 

 

 

326

 

 

$

279,873

 

 

$

(2,447

)

 

$

(14,810

)

 

$

262,616

 

Net income

 

 

 

 

 

 

 

 

84,483

 

 

 

681

 

 

 

 

 

 

85,164

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

235

 

 

 

235

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(64

)

 

 

(64

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(526

)

 

 

(526

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

110

 

 

 

110

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

719

 

 

 

719

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(190

)

 

 

(190

)

Distributions

 

 

 

 

 

 

 

 

(5,369

)

 

 

(225

)

 

 

 

 

 

(5,594

)

Retirement of units

 

 

(538

)

 

 

 

 

 

(5,194

)

 

 

 

 

 

 

 

 

(5,194

)

Balance as of March 31, 2021 (unaudited)

 

 

40,199

 

 

 

326

 

 

$

353,793

 

 

$

(1,991

)

 

$

(14,526

)

 

$

337,276

 

See accompanying notes to condensed consolidated financial statements.

6


STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL

 

 

 

Six Months Ended March 31, 2022

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of September 30, 2021

 

 

39,046

 

 

 

326

 

 

$

295,063

 

 

$

(2,821

)

 

$

(14,038

)

 

$

278,204

 

Net income

 

 

 

 

 

 

 

 

95,049

 

 

 

819

 

 

 

 

 

 

95,868

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

448

 

 

 

448

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(106

)

 

 

(106

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,674

)

 

 

(2,674

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

564

 

 

 

564

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,267

 

 

 

2,267

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(603

)

 

 

(603

)

Distributions

 

 

 

 

 

 

 

 

(10,910

)

 

 

(522

)

 

 

 

 

 

(11,432

)

Retirement of units

 

 

(2,096

)

 

 

 

 

 

(22,182

)

 

 

 

 

 

 

 

 

(22,182

)

Balance as of March 31, 2022 (unaudited)