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!8

 

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, 2020

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)

 

 

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 Unit

 

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, 2020, the registrant had 45,197,331 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, 2020 (unaudited) and September 30, 2019

 

3

Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended March 31, 2020 and March 31, 2019

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended March 31, 2020 and March 31, 2019

 

5

Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and six months ended March 31, 2020 and March 31, 2019

 

6-7

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended March 31, 2020 and March 31, 2019

 

8

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9-22

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

 

23-39

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

 

40

Item 4 - Controls and Procedures

 

40

Part II Other Information:

 

41

Item 1 - Legal Proceedings

 

41

Item 1A - Risk Factors

 

41-42

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

 

42

Item 6 - Exhibits

 

43

Signatures

 

44

 

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,

 

 

 

2020

 

 

2019

 

(in thousands)

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,301

 

 

$

4,899

 

Receivables, net of allowance of $9,017 and $8,378, respectively

 

 

187,091

 

 

 

120,245

 

Inventories

 

 

52,826

 

 

 

64,788

 

Prepaid expenses and other current assets

 

 

43,319

 

 

 

36,898

 

Total current assets

 

 

293,537

 

 

 

226,830

 

Property and equipment, net

 

 

95,204

 

 

 

98,239

 

Operating lease right-of-use assets

 

 

103,672

 

 

 

—

 

Goodwill

 

 

244,574

 

 

 

244,574

 

Intangibles, net

 

 

98,245

 

 

 

107,688

 

Restricted cash

 

 

250

 

 

 

250

 

Captive insurance collateral

 

 

65,776

 

 

 

58,490

 

Deferred charges and other assets, net

 

 

17,823

 

 

 

16,635

 

Total assets

 

$

919,081

 

 

$

752,706

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,898

 

 

$

33,973

 

Revolving credit facility borrowings

 

 

24,043

 

 

 

24,000

 

Fair liability value of derivative instruments

 

 

14,017

 

 

 

8,262

 

Current maturities of long-term debt

 

 

13,000

 

 

 

9,000

 

Current portion of operating lease liabilities

 

 

19,567

 

 

 

—

 

Accrued expenses and other current liabilities

 

 

158,989

 

 

 

120,839

 

Unearned service contract revenue

 

 

65,176

 

 

 

61,213

 

Customer credit balances

 

 

36,202

 

 

 

68,270

 

Total current liabilities

 

 

354,892

 

 

 

325,557

 

Long-term debt

 

 

116,188

 

 

 

120,447

 

Long-term operating lease liabilities

 

 

89,373

 

 

 

—

 

Deferred tax liabilities, net

 

 

20,229

 

 

 

20,116

 

Other long-term liabilities

 

 

22,444

 

 

 

25,746

 

Partners’ capital

 

 

 

 

 

 

 

 

Common unitholders

 

 

334,968

 

 

 

279,709

 

General partner

 

 

(1,792

)

 

 

(1,968

)

Accumulated other comprehensive loss, net of taxes

 

 

(17,221

)

 

 

(16,901

)

Total partners’ capital

 

 

315,955

 

 

 

260,840

 

Total liabilities and partners’ capital

 

$

919,081

 

 

$

752,706

 

 

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)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

481,275

 

 

$

637,400

 

 

$

913,963

 

 

$

1,096,107

 

Installations and services

 

 

61,788

 

 

 

62,182

 

 

 

138,045

 

 

 

138,502

 

Total sales

 

 

543,063

 

 

 

699,582

 

 

 

1,052,008

 

 

 

1,234,609

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

285,350

 

 

 

415,639

 

 

 

573,023

 

 

 

721,865

 

Cost of installations and services

 

 

61,273

 

 

 

65,394

 

 

 

134,942

 

 

 

139,711

 

(Increase) decrease in the fair value of derivative instruments

 

 

11,670

 

 

 

(13,401

)

 

 

5,253

 

 

 

17,638

 

Delivery and branch expenses

 

 

85,463

 

 

 

110,684

 

 

 

182,189

 

 

 

213,357

 

Depreciation and amortization expenses

 

 

9,089

 

 

 

7,858

 

 

 

18,139

 

 

 

15,603

 

General and administrative expenses

 

 

5,422

 

 

 

9,849

 

 

 

11,928

 

 

 

17,664

 

Finance charge income

 

 

(1,321

)

 

 

(1,443

)

 

 

(2,034

)

 

 

(2,294

)

Operating income

 

 

86,117

 

 

 

105,002

 

 

 

128,568

 

 

 

111,065

 

Interest expense, net

 

 

(2,756

)

 

 

(3,194

)

 

 

(5,435

)

 

 

(5,710

)

Amortization of debt issuance costs

 

 

(253

)

 

 

(244

)

 

 

(488

)

 

 

(503

)

Income before income taxes

 

 

83,108

 

 

 

101,564

 

 

 

122,645

 

 

 

104,852

 

Income tax expense

 

 

24,700

 

 

 

29,239

 

 

 

36,482

 

 

 

30,212

 

Net income

 

$

58,408

 

 

$

72,325

 

 

$

86,163

 

 

$

74,640

 

General Partner’s interest in net income

 

 

409

 

 

 

454

 

 

 

601

 

 

 

469

 

Limited Partners’ interest in net income

 

$

57,999

 

 

$

71,871

 

 

$

85,562

 

 

$

74,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

1.03

 

 

$

1.15

 

 

$

1.52

 

 

$

1.19

 

Weighted average number of Limited Partner units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

46,244

 

 

 

51,427

 

 

 

46,760

 

 

 

52,174

 

 

(1)

See Note 16 - 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)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

58,408

 

 

$

72,325

 

 

$

86,163

 

 

$

74,640

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on pension plan obligation (1)

 

 

455

 

 

 

457

 

 

 

910

 

 

 

911

 

Tax effect of unrealized gain on pension plan obligation

 

 

(133

)

 

 

(125

)

 

 

(258

)

 

 

(249

)

Unrealized gain on captive insurance collateral

 

 

107

 

 

 

905

 

 

 

43

 

 

 

1,294

 

Tax effect of unrealized gain on captive insurance collateral

 

 

(15

)

 

 

(194

)

 

 

(7

)

 

 

(276

)

Unrealized loss on interest rate hedges

 

 

(1,716

)

 

 

(367

)

 

 

(1,382

)

 

 

(1,112

)

Tax effect of unrealized loss on interest rate hedges

 

 

460

 

 

 

95

 

 

 

374

 

 

 

292

 

Total other comprehensive income (loss)

 

 

(842

)

 

 

771

 

 

 

(320

)

 

 

860

 

Total comprehensive income

 

$

57,566

 

 

$

73,096

 

 

$

85,843

 

 

$

75,500

 

 

(1)

This item is included in the computation of net periodic pension cost.    

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, 2020

 

 

 

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, 2019

 

 

46,404

 

 

 

326

 

 

$

289,268

 

 

$

(1,991

)

 

$

(16,379

)

 

$

270,898

 

Net income

 

 

—

 

 

 

—

 

 

 

57,999

 

 

 

409

 

 

 

—

 

 

 

58,408

 

Unrealized gain on pension plan obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

455

 

 

 

455

 

Tax effect of unrealized gain on pension plan obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(133

)

 

 

(133

)

Unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

107

 

 

 

107

 

Tax effect of unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(15

)

 

 

(15

)

Unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,716

)

 

 

(1,716

)

Tax effect of unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

460

 

 

 

460

 

Distributions

 

 

—

 

 

 

—

 

 

 

(5,788

)

 

 

(210

)

 

 

—

 

 

 

(5,998

)

Retirement of units (1)

 

 

(782

)

 

 

—

 

 

 

(6,511

)

 

 

—

 

 

 

—

 

 

 

(6,511

)

Balance as of March 31, 2020 (unaudited)

 

 

45,622

 

 

 

326

 

 

$

334,968

 

 

$

(1,792

)

 

$

(17,221

)

 

$

315,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2019

 

 

 

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, 2018

 

 

52,489

 

 

 

326

 

 

$

328,633

 

 

$

(1,416

)

 

$

(17,952

)

 

$

309,265

 

Net income

 

 

—

 

 

 

—

 

 

 

71,871

 

 

 

454

 

 

 

—

 

 

 

72,325

 

Unrealized gain on pension plan obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

457

 

 

 

457

 

Tax effect of unrealized gain on pension plan

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(125

)

 

 

(125

)

Unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

905

 

 

 

905

 

Tax effect of unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(194

)

 

 

(194

)

Unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(367

)

 

 

(367

)

Tax effect of unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

95

 

 

 

95

 

Distributions

 

 

—

 

 

 

—

 

 

 

(6,120

)

 

 

(184

)

 

 

—

 

 

 

(6,304

)

Retirement of units (1)

 

 

(2,187

)

 

 

—

 

 

 

(20,636

)

 

 

—

 

 

 

—

 

 

 

(20,636

)

Balance as of March 31, 2019 (unaudited)

 

 

50,302

 

 

 

326

 

 

$

373,748

 

 

$

(1,146

)

 

$

(17,181

)

 

$

355,421

 

(1)

See Note 4 – Common Unit Repurchase and Retirement.

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, 2020

 

 

 

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, 2019

 

 

47,685

 

 

 

326

 

 

$

279,709

 

 

$

(1,968

)

 

$

(16,901

)

 

$

260,840

 

Net income

 

 

—

 

 

 

—

 

 

 

85,562

 

 

 

601

 

 

 

—

 

 

 

86,163

 

Unrealized gain on pension plan obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

910

 

 

 

910

 

Tax effect of unrealized gain on pension plan obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(258

)

 

 

(258

)

Unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

43

 

 

 

43

 

Tax effect of unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(7

)

 

 

(7

)

Unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,382

)

 

 

(1,382

)

Tax effect of unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

374

 

 

 

374

 

Distributions

 

 

—

 

 

 

—

 

 

 

(11,728

)

 

 

(425

)

 

 

—

 

 

 

(12,153

)

Retirement of units (1)

 

 

(2,063

)

 

 

—

 

 

 

(18,575

)

 

 

—

 

 

 

—

 

 

 

(18,575

)

Balance as of March 31, 2020 (unaudited)

 

 

45,622

 

 

 

326

 

 

$

334,968

 

 

$

(1,792

)

 

$

(17,221

)

 

$

315,955

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2019

 

 

 

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, 2018

 

 

53,088

 

 

 

326

 

 

$

329,129

 

 

$

(1,303

)

 

$

(18,041

)

 

$

309,785

 

Impact of adoption of ASU No. 2014-09

 

 

—

 

 

 

—

 

 

 

9,164

 

 

 

60

 

 

 

—

 

 

 

9,224

 

Net income

 

 

—

 

 

 

—

 

 

 

74,171

 

 

 

469

 

 

 

—

 

 

 

74,640

 

Unrealized gain on pension plan obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

911

 

 

 

911

 

Tax effect of unrealized gain on pension plan

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(249

)

 

 

(249

)

Unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,294

 

 

 

1,294

 

Tax effect of unrealized gain on captive insurance collateral

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(276

)

 

 

(276

)

Unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,112

)

 

 

(1,112

)

Tax effect of unrealized loss on interest rate hedges

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

292

 

 

 

292

 

Distributions

 

 

—

 

 

 

—

 

 

 

(12,345

)

 

 

(372

)

 

 

—

 

 

 

(12,717

)

Retirement of units (1)

 

 

(2,786

)

 

 

—

 

 

 

(26,371

)

 

 

—

 

 

 

—

 

 

 

(26,371

)

Balance as of March 31, 2019 (unaudited)

 

 

50,302

 

 

 

326

 

 

$

373,748

 

 

$

(1,146

)

 

$

(17,181

)

 

$

355,421

 

(1)

See Note 4 – Common Unit Repurchase and Retirement.

See accompanying notes to condensed consolidated financial statements.

 

 

 

7

STAR GROUP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Six Months

Ended March 31,

 

(in thousands - unaudited)

 

2020

 

 

2019

 

Cash flows provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

86,163

 

 

$

74,640

 

Adjustment to reconcile net income to net cash provided by (used in)

   operating activities:

 

 

 

 

 

 

 

 

(Increase) decrease in fair value of derivative instruments

 

 

5,253

 

 

 

17,638

 

Depreciation and amortization

 

 

18,627

 

 

 

16,106

 

Provision for losses on accounts receivable

 

 

3,203

 

 

 

4,968

 

Change in deferred taxes

 

 

222

 

 

 

(9,335

)

Change in weather hedge contract receivable/payable

 

 

(10,053

)

 

 

2,110

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in receivables

 

 

(69,562

)

 

 

(159,249

)

Decrease (increase) in inventories

 

 

12,008

 

 

 

(3,741

)

Decrease in other assets

 

 

4,812

 

 

 

12,778

 

Decrease in accounts payable

 

 

(8,910

)

 

 

(2,364

)

Decrease in customer credit balances

 

 

(32,462

)

 

 

(38,476

)

Increase in other current and long-term liabilities

 

 

41,574

 

 

 

42,564

 

Net cash provided by (used in) operating activities

 

 

50,875

 

 

 

(42,361

)

Cash flows provided by (used in) investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(5,684

)

 

 

(6,814

)

Proceeds from sales of fixed assets

 

 

201

 

 

 

746

 

Purchase of investments

 

 

(7,218

)

 

 

(7,571

)

Acquisitions

 

 

(496

)

 

 

(13,671

)

Net cash used in investing activities

 

 

(13,197

)

 

 

(27,310

)

Cash flows provided by (used in) financing activities:

 

 

 

 

 

 

 

 

Revolving credit facility borrowings

 

 

90,202

 

 

 

139,331

 

Revolving credit facility repayments

 

 

(127,659

)

 

 

(25,831

)

Loan issuance

 

 

130,000

 

 

 

—

 

Term loan repayments

 

 

(92,500

)

 

 

(2,500

)

Distributions

 

 

(12,153

)

 

 

(12,717

)

Unit repurchases

 

 

(18,575

)

 

 

(26,371

)

Customer retainage payments

 

 

(300

)

 

 

(357

)

Payments of debt issue costs

 

 

(1,291

)

 

 

(43

)

Net cash (used in) provided by financing activities

 

 

(32,276

)

 

 

71,512

 

Net increase in cash, cash equivalents, and restricted cash

 

 

5,402

 

 

 

1,841

 

Cash, cash equivalents, and restricted cash at beginning of period

 

 

5,149

 

 

 

14,781

 

Cash, cash equivalents, and restricted cash at end of period

 

$

10,551

 

 

$

16,622

 

 

See accompanying notes to condensed consolidated financial statements.

 

8

STAR GROUP, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1) Organization

Star Group, L.P. (“Star,” the “Company,” “we,” “us,” or “our”) is a full service provider specializing in the sale of home heating and air conditioning products and services to residential and commercial home heating oil and propane customers. The Company has one reportable segment for accounting purposes.  We also sell diesel fuel, gasoline and home heating oil on a delivery only basis, and in certain of our marketing areas, we provide plumbing services primarily to our home heating oil and propane customer base. We believe we are the nation’s largest retail distributor of home heating oil based upon sales volume. Including our propane locations, we serve customers in the more northern and eastern states within the Northeast, Central and Southeast U.S. regions.

The Company is organized as follows:

 

•

Star is a limited partnership, which at March 31, 2020, had outstanding 45.6 million Common Units (NYSE: “SGU”), representing a 99.3% limited partner interest in Star, and 0.3 million general partner units, representing a 0.7% general partner interest in Star. Our general partner is Kestrel Heat, LLC, a Delaware limited liability company (“Kestrel Heat” or the “general partner”). The Board of Directors of Kestrel Heat (the “Board”) is appointed by its sole member, Kestrel Energy Partners, LLC, a Delaware limited liability company (“Kestrel”).  Since November 1, 2017, Star elected to be treated as a corporation for Federal income tax purposes, so both Star and its subsidiaries (that were already taxable entities) are now subject to Federal and state corporate income taxes. As a result of this election, the Company issued its last Schedule K-1’s for the 2017 calendar year, and now issues Forms 1099-DIV to unitholders.

 

•

Star owns 100% of Star Acquisitions, Inc. (“SA”), a Minnesota corporation that owns 100% of Petro Holdings, Inc. (“Petro”). Star’s operations are conducted through Petro and its subsidiaries. Petro is primarily a Northeast, Central and Southeast U.S. region retail distributor of home heating oil and propane that at March 31, 2020 served approximately 448,000 full service residential and commercial home heating oil and propane customers and 63,000 customers on a delivery only basis. We also sell gasoline and diesel fuel to approximately 26,000 customers. We install, maintain, and repair heating and air conditioning equipment and to a lesser extent provide these services outside our heating oil and propane customer base including approximately 18,000 service contracts for natural gas and other heating systems.

 

•

Petroleum Heat and Power Co., Inc. (“PH&P”) is a 100% owned subsidiary of Star. PH&P is the borrower and Star is the guarantor of the fifth amended and restated credit agreement’s $130 million five-year senior secured term loan and the $300 million ($450 million during the heating season of December through April of each year) revolving credit facility, both due December 4, 2024. (See Note 11—Long-Term Debt and Bank Facility Borrowings)

2) Summary of Significant Accounting Policies

 

Basis of Presentation

The Consolidated Financial Statements include the accounts of Star and its subsidiaries. All material intercompany items and transactions have been eliminated in consolidation.

The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair statement of financial condition and results for the interim periods. Due to the seasonal nature of the Company’s business, the results of operations and cash flows for the six-month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

These interim financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2019.

Comprehensive Income

Comprehensive income is comprised of Net income and Other comprehensive income (loss). Other comprehensive income (loss) consists of the unrealized gain on amortization on the Company’s pension plan obligation for its two frozen defined benefit pension plans, unrealized gain on available-for-sale investments, unrealized loss on interest rate hedge and the corresponding tax effects.

9

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. At March 31, 2020, the $10.6 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of $10.3 million of cash and cash equivalents and $0.3 million of restricted cash. At September 30, 2019, the $5.1 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of $4.9 million of cash and cash equivalents and $0.3 million of restricted cash. Restricted cash represents deposits held by our captive insurance company that are required by state insurance regulations to remain in the captive insurance company as cash.

Captive Insurance Collateral

The captive insurance collateral is held by our captive insurance company in an irrevocable trust as collateral for certain workers’ compensation and automobile liability claims.  The collateral is required by a third party insurance carrier that insures per claim amounts above a set deductible. If we did not deposit cash into the trust, the third party carrier would require that we issue an equal amount of letters of credit, which would reduce our availability under the fifth amended and restated credit agreement.  Due to the expected timing of claim payments, the nature of the collateral agreement with the carrier, and our captive insurance company’s source of other operating cash, the collateral is not expected to be used to pay obligations within the next twelve months.

At March 31, 2020, captive insurance collateral is comprised of $60.2 million of Level 1 debt securities measured at fair value and $5.6 million of mutual funds measured at net asset value.  At September 30, 2019, the balance was comprised of $58.0 million of Level 1 debt securities measured at fair value and $0.5 million of mutual funds measured at net asset value. Unrealized gains and losses, net of related income taxes, are reported as accumulated other comprehensive gain (loss), except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net income and are included in Interest expense, net, at which time the average cost basis of these securities are adjusted to fair value.

Weather Hedge Contract

To partially mitigate the adverse effect of warm weather on cash flows, the Company has used weather hedge contracts for a number of years. Weather hedge contracts are recorded in accordance with the intrinsic value method defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-45-15 Derivatives and Hedging, Weather Derivatives (EITF 99-2). The premium paid is included in the caption “Prepaid expenses and other current assets” in the accompanying balance sheets and amortized over the life of the contract, with the intrinsic value method applied at each interim period.

The Company entered into weather hedge contracts for fiscal years 2019, 2020 and 2021.  Under these contracts, we are entitled to receive a payment if the total number of degree days within the hedge period is less than the prior ten year average. The “Payment Thresholds,” or strikes, are set at various levels. In addition, we will be obligated to make a payment capped at $5.0 million if degree days exceed the Payment Threshold which approximates the prior ten year average. The hedge period runs from November 1 through March 31, taken as a whole, for each respective fiscal year.  For fiscal 2020 and 2021 the maximum that the Company can receive annually is $12.5 million and the maximum that the Company would be obligated to pay annually is $5.0 million.  As of March 31, 2020, the Company reduced delivery and branch expense and recorded a receivable under these contracts of $10.1 million, and received the amount in full in April 2020.  As of March 31, 2019, the Company increased delivery and branch expense and recorded a payable under these contracts of $2.1 million, and paid the amount in full in April 2019.

New England Teamsters and Trucking Industry Pension Fund (“the NETTI Fund”) Liability

As of March 31, 2020, we had $0.2 million and $16.8 million balances included in the captions “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, on our Condensed Consolidated Balance Sheet representing the remaining balance of the NETTI Fund withdrawal liability. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal liability as of March 31, 2020 and September 30, 2019 was $29.4 million and $21.1 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC Topic 842”).  The update requires all leases with a term greater than twelve months to be recognized on the balance sheet by recording (1) a lease liability that represents a lessee’s obligation to make lease payments arising from a lease, measured at the present value of the remaining lease payments; and (2) a right-of-use (“ROU”) asset that represents the lessee’s right to use a specified asset for the lease term, measured in an amount equal to the lease liability adjusted for accrued lease payments.  The standard also requires the disclosure of key information pertaining to leasing arrangements.  

10

As of October 1, 2019, the Company adopted ASC Topic 842 using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11.  As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. October 1, 2019).  The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.  We also elected a practical expedient to not separate non-lease components from the lease components and excluded short term leases from the calculation of right of use asset and operating lease liability.  For certain leases relating to vehicles and equipment we elected to apply portfolio approach guidance and accounted for leases with similar characteristics as a single lease. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date.

The adoption of ASC Topic 842 had a material impact to the Company’s Condensed Consolidated Balance Sheet, but did not impact the Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Partners’ Capital. The most significant changes to the Condensed Consolidated Balance Sheet relate to the recognition of the following as of October 1, 2019:  “Operating lease right-of-use assets” in the amount of $104.7 million, “Current portion of operating lease liabilities” in the amount of $20.1 million and “Long-term operating lease liabilities” in the amount of $89.9 million. The adoption of ASC Topic 842 also had no impact on operating, investing, or financing cash flows in the Condensed Consolidated Statement of Cash Flows. However, ASC Topic has significantly affected the Company’s disclosures about noncash investing activities. Additionally, the Company’s lease-related disclosures have significantly increased as of and for the six months ended March 31, 2020 as compared to prior years. See Note 13 – Leases for further details on the adoption of ASC Topic 842.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The Company adopted the ASU effective March 12, 2020.  The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. The Company has $66.5 million of interest rate swap agreements at March 31, 2020 that are benchmarked against LIBOR, which the Company has designated as cash flow hedging derivatives.  This guidance includes practical expedients for contract modifications due to reference rate reform. The Company has elected to adopt the practical expedient that the Company may change the contractual terms of the interest rate swap agreements that is expected to be affected by reference rate reform and not be required to de-designate the hedging relationship.  The adoption did not have an impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The update broadens the information that an entity should consider in developing expected credit loss estimates, eliminates the probable initial recognition threshold, and allows for the immediate recognition of the full amount of expected credit losses. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021. The Company is evaluating the effect that ASU No. 2016-13 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 230): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not exceed the total amount of goodwill allocated to the reporting unit. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company has not determined the timing of adoption, but does not expect ASU 2017-04 to have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-14 will have on its consolidated financial statements and related disclosures, and has not determined the timing of adoption.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2022, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-15 will have on its consolidated financial statements and related disclosures, and has not determined the timing of adoption.

11

3) Revenue Recognition

The following disaggregates our revenue by major sources for the three and six months ended March 31, 2020 and March 31, 2019:

 

Three Months

Ended March 31,

 

 

Six Months

Ended March 31,

 

(in thousands)

2020

 

 

2019

 

 

2020

 

 

2019

 

Petroleum Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home heating oil and propane

$

413,466

 

 

$

554,364

 

 

$

756,812

 

 

$

918,566

 

Other petroleum products

 

67,809

 

 

 

83,036

 

 

 

157,151

 

 

 

177,541

 

   Total petroleum products

 

481,275

 

 

 

637,400

 

 

 

913,963

 

 

 

1,096,107

 

Installations and Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment installations

 

20,158

 

 

 

20,384

 

 

 

50,723

 

 

 

50,367

 

Equipment maintenance service contracts

 

27,764

 

 

 

26,678

 

 

 

55,672

 

 

 

54,997

 

Billable call services

 

13,866

 

 

 

15,120

 

 

 

31,650

 

 

 

33,138

 

   Total installations and services

 

61,788

 

 

 

62,182

 

 

 

138,045

 

 

 

138,502

 

   Total Sales

$

543,063

 

 

$

699,582

 

 

$

1,052,008

 

 

$

1,234,609

 

 

Deferred Contract Costs 

We recognize an asset for incremental commission expenses paid to sales personnel in conjunction with obtaining new residential customer product and equipment maintenance service contracts. We defer these costs only when we have determined the commissions are, in fact, incremental and would not have been incurred absent the customer contract. Costs to obtain a contract are amortized and recorded ratably as delivery and branch expenses over the period representing the transfer of goods or services to which the assets relate.  Costs to obtain new residential product and equipment maintenance service contracts are amortized as expense over the estimated customer relationship period of approximately five years.  Deferred contract costs are classified as current or non-current within “Prepaid expenses and other current assets” and “Deferred charges and other assets, net,” respectively.  At March 31, 2020 the amount of deferred contract costs included in “Prepaid expenses and other current assets” and “Deferred charges and other assets, net” was $3.5 million and $6.3 million, respectively.  At September 30, 2019 the amount of deferred contract costs included in “Prepaid expenses and other current assets” and “Deferred charges and other assets, net” was $3.4 million and $5.9 million, respectively.  During the six months ended March 31, 2020 and 2019 we recognized expense of $1.9 million each period associated with the amortization of deferred contract costs within “Delivery and branch expenses” in the Condensed Consolidated Statement of Operations. 

 

Contract Liability Balances

The Company has contract liabilities for advanced payments received from customers for future oil deliveries (primarily amounts received from customers on “smart pay” budget payment plans in advance of oil deliveries) and obligations to service customers with equipment maintenance service contracts.  Contract liabilities are recognized straight-line over the service contract period, generally one year or less.  As of March 31, 2020 and September 30, 2019 the Company had contract liabilities of $97.2 million and $127.0 million, respectively.  During the six months ended March 31, 2020 the Company recognized $95.7 million of revenue that was included in the September 30, 2019 contract liability balance.  During the six months ended March 31, 2019 the Company recognized $90.3 million of revenue that was included in the September 30, 2018 contract liability balance.

 

4) Common Unit Repurchase and Retirement

In July 2012, the Board adopted a plan to repurchase certain of the Company’s Common Units that was amended in fiscal 2018 (the “Repurchase Plan”).  Through the beginning of February 2020, the Company had repurchased approximately 11.8 million Common Units under the Repurchase Plan.  In February 2020, the Board authorized an increase of the number of Common Units that remained available for the Company to repurchase to a total of 1.1 million, of which 1.0 million were available for repurchase in open market transactions and 0.1 million were available for repurchase in privately-negotiated transactions.  During the second fiscal quarter of 2020, the Company repurchased approximately 0.8 million Common Units in open market transactions under the Repurchase Plan and repurchased 0.4 million Common Units in April 2020.  There is no guarantee of the exact number of units that will be purchased under the Repurchase Plan and the Company may discontinue purchases at any time. The Repurchase Plan does not have a time limit. The Board may also approve additional purchases of units from time to time in private transactions. The Company’s repurchase activities take into account SEC safe harbor rules and guidance for issuer repurchases. All of the Common Units purchased in the Repurchase Plan will be retired.

12

Under the Company’s fifth amended and restated credit agreement dated December 4, 2019, in order to repurchase Common Units we must maintain Availability (as defined in the fifth amended and restated credit agreement) of $45 million, 15.0% of the facility size of $300 million (assuming the non-seasonal aggregate commitment is outstanding) on a historical pro forma and forward-looking basis, and a fixed charge coverage ratio of not less than 1.15 measured as of the date of repurchase.  The Company was in compliance with this covenant as of March 31, 2020.

The following table shows repurchases under the Repurchase Plan.

 

(in thousands, except per unit amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period

 

Total Number of

Units Purchased

 

 

Average Price

Paid per Unit (a)

 

 

Total Number of

Units Purchased as Part of Publicly Announced Plans or Programs

 

 

Maximum Number

of Units that May

Yet Be Purchased

 

 

Fiscal year 2012 to 2019 total

 

 

13,340

 

 

$

8.08

 

 

 

10,896

 

 

 

956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First quarter fiscal year 2020 total

 

 

1,281

 

 

$

9.42

 

 

 

650

 

 

 

306

 

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 2020

 

 

160

 

 

$

9.48

 

 

 

160

 

 

 

146

 

 

February 2020

 

 

122

 

 

$

9.15

 

 

 

122

 

 

 

1,024

 

(c)

March 2020

 

 

500

 

 

$

7.76

 

 

 

500

 

 

 

524

 

 

Second quarter fiscal year 2020 total

 

 

782

 

 

$

8.33

 

 

 

782

 

 

 

524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 2020

 

 

424

 

 

$

7.71

 

 

 

424

 

 

 

100

 

(d)

 

(a)

Amount includes repurchase costs.

(b)

First quarter of fiscal year 2020 Common Units repurchased include 0.6 million Common Units acquired in a private transaction.

(c)

In February 2020, the Board authorized an increase in the number of Common Units available for repurchase from 0.1 million to 1.1 million.

(d)

The remaining 0.1 million units under the Repurchase Plan are available for repurchase in privately-negotiated transactions.

5) Captive Insurance Collateral

The Company considers all of its captive insurance collateral to be available-for-sale investments. Investments at March 31, 2020 consist of the following (in thousands):

 

 

 

Amortized Cost

 

 

Gross Unrealized Gain

 

 

Gross Unrealized (Loss)

 

 

Fair Value

 

Cash and Receivables

 

$

5,639

 

 

$

—

 

 

$

—

 

 

$

5,639

 

U.S. Government Sponsored Agencies

 

 

33,320

 

 

 

310

 

 

 

(1

)

 

 

33,629

 

Corporate Debt Securities

 

 

22,735

 

 

 

724

 

 

 

—

 

 

 

23,459

 

Foreign Bonds and Notes

 

 

3,010

 

 

 

39

 

 

 

—

 

 

 

3,049

 

Total

 

$

64,704

 

 

$

1,073

 

 

$

(1

)

 

$

65,776

 

 

Investments at September 30, 2019 consist of the following (in thousands):

 

 

 

Amortized Cost

 

 

Gross Unrealized Gain

 

 

Gross Unrealized (Loss)

 

 

Fair Value

 

Cash and Receivables

 

$

509

 

 

$

—

 

 

$

—

 

 

$

509

 

U.S. Government Sponsored Agencies

 

 

29,055

 

 

 

198

 

 

 

(3

)

 

 

29,250

 

Corporate Debt Securities

 

 

23,831

 

 

 

773

 

 

 

—

 

 

 

24,604

 

Foreign Bonds and Notes

 

 

4,066

 

 

 

61

 

 

 

—

 

 

 

4,127

 

Total

 

$

57,461

 

 

$

1,032

 

 

$

(3

)

 

$

58,490

 

 

13

Maturities of investments were as follows at March 31, 2020 (in thousands):

 

 

 

Net Carrying Amount

 

Due within one year

 

$

14,402

 

Due after one year through five years

 

 

42,552

 

Due after five years through ten years

 

 

8,822

 

Total

 

$

65,776

 

 

 

6) Derivatives and Hedging—Disclosures and Fair Value Measurements

The Company uses derivative instruments such as futures, options and swap agreements in order to mitigate exposure to market risk associated with the purchase of home heating oil for price-protected customers, physical inventory on hand, inventory in transit, priced purchase commitments and internal fuel usage. FASB ASC 815-10-05 Derivatives and Hedging, established accounting and reporting standards requiring that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities, along with qualitative disclosures regarding the derivative activity. The Company has elected not to designate its commodity derivative instruments as hedging derivatives, but rather as economic hedges whose change in fair value is recognized in its statement of operations in the caption “(Increase) decrease in the fair value of derivative instruments.” Depending on the risk being economically hedged, realized gains and losses are recorded in cost of product, cost of installations and services, or delivery and branch expenses.

As of March 31, 2020, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: 8.9 million gallons of swap contracts, 5.3 million gallons of call options, 4.0 million gallons of put options, and 52.8 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of March 31, 2020, held 32.6 million gallons of long future contracts, and 52.1 million gallons of short future contracts that settle in future months.  To hedge its internal fuel usage and other activities for fiscal 2020, the Company, as of March 31, 2020, held 7.3 million gallons of call options and swap contracts and 0.2 million gallons of short swap contracts that settle in future months.

As of March 31, 2019, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: 7.2 million gallons of swap contracts, 2.2 million gallons of call options, 3.4 million gallons of put options, and 54.9 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of March 31, 2019, held 33.1 million gallons of long future contracts, and 50.8 million gallons of short future contracts that settle in future months. To hedge its internal fuel usage and other related activities for fiscal 2019, the Company, as of March 31, 2019, held 1.8 million gallons of swap contracts and 0.8 million gallons of short swap contracts that settle in future months.

As of March 31, 2020, the Company has interest rate swap agreements in order to mitigate exposure to market risk associated with variable rate interest on $66.5 million, or 51%, of its long term debt.  The Company has designated its interest rate swap agreements as cash flow hedging derivatives.  To the extent these derivative instruments are effective and the accounting standard’s documentation requirements have been met, changes in fair value are recognized in other comprehensive income until the underlying hedged item is recognized in earnings.  As of March 31, 2020 the fair value of the swap contracts was $(3.3) million. As of September 30, 2019, the notional value of the swap contracts was $45.0 million and the fair value of the swap contracts was $(2.0) million. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of the swap contracts.

The Company’s derivative instruments are with the following counterparties: Bank of America, N.A., Bank of Montreal, Cargill, Inc., Citibank, N.A., JPMorgan Chase Bank, N.A., Key Bank, N.A., Toronto-Dominion Bank and Wells Fargo Bank, N.A. The Company assesses counterparty credit risk and considers it to be low. We maintain master netting arrangements that allow for the non-conditional offsetting of amounts receivable and payable with counterparties to help manage our risks and record derivative positions on a net basis. The Company generally does not receive cash collateral from its counterparties and does not restrict the use of cash collateral it maintains at counterparties. At March 31, 2020, the aggregate cash posted as collateral in the normal course of business at counterparties was $1.8 million and recorded in “Prepaid expense and other current assets.” Positions with counterparties who are also parties to our credit agreement are collateralized under that facility. As of March 31, 2020, $18.6 million of hedge positions and payable amounts were secured under the credit facility.

FASB ASC 820-10 Fair Value Measurements and Disclosures, established a three-tier fair value hierarchy, which classified the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s Level 1 derivative assets and liabilities represent the fair value of commodity contracts

14

used in its hedging activities that are identical and traded in active markets. The Company’s Level 2 derivative assets and liabilities represent the fair value of commodity and interest rate contracts used in its hedging activities that are valued using either directly or indirectly observable inputs, whose nature, risk and class are similar. No significant transfers of assets or liabilities have been made into and out of the Level 1 or Level 2 tiers. All derivative instruments were non-trading positions and were either a Level 1 or Level 2 instrument. The Company had no Level 3 derivative instruments. The fair market value of our Level 1 and Level 2 derivative assets and liabilities are calculated by our counter-parties and are independently validated by the Company. The Company’s calculations are, for Level 1 derivative assets and liabilities, based on the published New York Mercantile Exchange (“NYMEX”) market prices for the commodity contracts open at the end of the period. For Level 2 derivative assets and liabilities the calculations performed by the Company are based on a combination of the NYMEX published market prices and other inputs, including such factors as present value, volatility and duration.

The Company had no assets or liabilities that are measured at fair value on a nonrecurring basis subsequent to their initial recognition. The Company’s financial assets and liabilities measured at fair value on a recurring basis are listed on the following table.

 

(In thousands)

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using:

 

Derivatives Not Designated

   as Hedging Instruments

 

 

 

 

 

 

 

Quoted Prices in

Active Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

Under FASB ASC 815-10

 

Balance Sheet Location

 

Total

 

 

Level 1

 

 

Level 2

 

Asset Derivatives at March 31, 2020

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

35,497

 

 

$

—

 

 

$

35,497

 

Commodity contracts

 

Long-term derivative liabilities included in the deferred charges and other assets, net and other long-term liabilities, net balances

 

 

1,673

 

 

 

—

 

 

 

1,673

 

Commodity contract assets at March 31, 2020

 

$

37,170

 

 

$

—

 

 

$

37,170

 

Liability Derivatives at March 31, 2020

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

(49,514

)

 

$

—

 

 

$

(49,514

)

Commodity contracts

 

Long-term derivative liabilities  included in the deferred charges and other assets, net and other long-term liabilities, net balances

 

 

(1,867

)

 

 

—

 

 

 

(1,867

)

Commodity contract liabilities at March 31, 2020

 

$

(51,381

)

 

$

—

 

 

$

(51,381

)

Asset Derivatives at September 30, 2019

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

13,824

 

 

$

—

 

 

$

13,824

 

Commodity contracts

 

Long-term derivative assets included in the deferred charges and other assets, net balance and other long term liabilities, net

 

 

1,466

 

 

 

—

 

 

 

1,466

 

Commodity contract assets September 30, 2019

 

$

15,290

 

 

$

—

 

 

$

15,290

 

Liability Derivatives at September 30, 2019

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

(22,086

)

 

$

—

 

 

$

(22,086

)

Commodity contracts

 

Long-term derivative liabilities included in the deferred charges and other assets, net balance and other long term liabilities, net

 

 

(1,719

)

 

 

—

 

 

 

(1,719

)

Commodity contract liabilities September 30, 2019

 

$

(23,805

)

 

$

—

 

 

$

(23,805

)

 

15

The Company’s derivative assets (liabilities) offset by counterparty and subject to an enforceable master netting arrangement are listed on the following table.

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Statement of Financial Position

 

Offsetting of Financial Assets (Liabilities)

   and Derivative Assets (Liabilities)

 

Gross

Assets

Recognized

 

 

Gross

Liabilities

Offset in the

Statement

of Financial

Position

 

 

Net Assets

(Liabilities)

Presented in the

Statement

of Financial

Position

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amount

 

Long-term derivative assets included in deferred charges and other assets, net

 

$

615

 

 

$

(559

)

 

$

56

 

 

$

—

 

 

$

—

 

 

$

56

 

Fair liability value of derivative instruments

 

 

35,497

 

 

 

(49,514

)

 

 

(14,017

)

 

 

—

 

 

 

—

 

 

 

(14,017

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,058

 

 

 

(1,308

)

 

 

(250

)

 

 

—

 

 

 

—

 

 

 

(250

)

Total at March 31, 2020

 

$

37,170

 

 

$

(51,381

)

 

$

(14,211

)

 

$

—

 

 

$

—

 

 

$

(14,211

)

Long-term derivative assets included in other long-term assets, net

 

$

16

 

 

$

(16

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Fair liability value of derivative instruments

 

 

13,824

 

 

 

(22,086

)

 

 

(8,262

)

 

 

—

 

 

 

—

 

 

 

(8,262

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,450

 

 

 

(1,703

)

 

 

(253

)

 

 

—

 

 

 

—

 

 

 

(253

)

Total at September 30, 2019

 

$

15,290

 

 

$

(23,805

)

 

$

(8,515

)

 

$

—

 

 

$

—

 

 

$

(8,515

)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Effect of Derivative Instruments on the Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of (Gain) or Loss Recognized

 

 

Amount of (Gain) or Loss Recognized

 

Derivatives Not Designated as Hedging Instruments Under FASB ASC 815-10

 

Location of (Gain) or Loss

Recognized in Income on Derivative

 

Three Months Ended March 31,

2020

 

 

Three Months Ended March 31,

2019

 

 

Six Months Ended March 31,

2020

 

 

Six Months Ended March 31,

2019

 

Commodity contracts

 

Cost of product (a)

 

$

(3,700

)

 

$

14,345

 

 

$

2,349

 

 

$

8,193

 

Commodity contracts

 

Cost of installations and service (a)

 

$

233

 

 

$

403

 

 

$

224

 

 

$

650

 

Commodity contracts

 

Delivery and branch expenses (a)

 

$

626

 

 

$

271

 

 

$

597

 

 

$

437

 

Commodity contracts

 

(Increase) / decrease in the fair

value of derivative instruments (b)

 

$

11,670

 

 

$

(13,401

)

 

$

5,253

 

 

$

17,638

 

 

(a)

Represents realized closed positions and includes the cost of options as they expire.

(b)

Represents the change in value of unrealized open positions and expired options.

7) Inventories

The Company’s product inventories are stated at the lower of cost and net realizable value computed on the weighted average cost method. All other inventories, representing parts and equipment are stated at the lower of cost and net realizable value using the FIFO method. The components of inventory were as follows (in thousands):

 

 

 

March 31,

2020

 

 

September 30,

2019

 

Product

 

$

31,823

 

 

$

43,536

 

Parts and equipment

 

 

21,003

 

 

 

21,252

 

Total inventory

 

$

52,826

 

 

$

64,788

 

 

16

8) Property and Equipment

Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the depreciable assets using the straight-line method (in thousands):

 

 

 

March 31,

2020

 

 

September 30,

2019

 

Property and equipment

 

$

234,014

 

 

$

230,690

 

Less: accumulated depreciation

 

 

138,810

 

 

 

132,451

 

Property and equipment, net

 

$

95,204

 

 

$

98,239

 

 

9) Business Combinations

During fiscal year 2020, the Company acquired the customer list and the assets of a heating oil dealer for an aggregate purchase price of approximately $0.5 million.

 

10) Intangibles, net

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows (in thousands):

 

 

 

March 31, 2020

 

 

September 30, 2019

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accum.

 

 

 

 

 

 

Carrying

 

 

Accum.

 

 

 

 

 

 

 

Amount

 

 

Amortization

 

 

Net

 

 

Amount

 

 

Amortization

 

 

Net

 

Customer lists

 

$

383,388

 

 

$

306,657

 

 

$

76,731

 

 

$

382,373

 

 

$

297,221

 

 

$

85,152

 

Trade names and other intangibles

 

 

37,853

 

 

 

16,339

 

 

 

21,514

 

 

 

37,739

 

 

 

15,203

 

 

 

22,536

 

Total

 

$

421,241

 

 

$

322,996

 

 

$

98,245

 

 

$

420,112

 

 

$

312,424

 

 

$

107,688

 

 

Amortization expense for intangible assets was $10.6 million for the six months ended March 31, 2020, compared to $9.3 million for the six months ended March 31, 2019.

11) Long-Term Debt and Bank Facility Borrowings

The Company’s debt is as follows (in thousands):

 

 

March 31,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

 

Carrying

Amount

 

 

Fair Value (a)

 

 

Carrying

Amount

 

 

Fair Value (a)

 

Revolving Credit Facility Borrowings

 

$

24,043

 

 

$

24,043

 

 

$

61,500

 

 

$

61,500

 

Senior Secured Term Loan (b)

 

 

129,188

 

 

 

130,000

 

 

 

91,947

 

 

 

92,500

 

Total debt

 

$

153,231

 

 

$

154,043

 

 

$

153,447

 

 

$

154,000

 

Total short-term portion of debt

 

$

37,043

 

 

$

37,043

 

 

$

33,000

 

 

$

33,000

 

Total long-term portion of debt

 

$

116,188

 

 

$

117,000

 

 

$

120,447

 

 

$

121,000

 

 

(a)

The face amount of the Company’s variable rate long-term debt approximates fair value.

(b)

Carrying amounts are net of unamortized debt issuance costs of $0.8 million as of March 31, 2020 and $0.6 million as of September 30, 2019.

 

17

On December 4, 2019, the Company refinanced its five-year term loan and the revolving credit facility with the execution of the fifth amended and restated revolving credit facility agreement with a bank syndicate currently comprised of eleven participants, which enables the Company to borrow up to $300 million ($450 million during the heating season of December through April of each year) on a revolving credit facility for working capital purposes (subject to certain borrowing base limitations and coverage ratios), provides for a $130 million five-year senior secured term loan (the “Term Loan”), allows for the issuance of up to $25 million in letters of credit, and has a maturity date of December 4, 2024.

The Company can increase the revolving credit facility size by $200 million without the consent of the bank group. However, the bank group is not obligated to fund the $200 million increase. If the bank group elects not to fund the increase, the Company can add additional lenders to the group, with the consent of the Agent (as defined in the credit agreement), which shall not be unreasonably withheld. Obligations under the fifth amended and restated credit facility are guaranteed by the Company and its subsidiaries and are secured by liens on substantially all of the Company’s assets, including accounts receivable, inventory, general intangibles, real property, fixtures and equipment.

All amounts outstanding under the fifth amended and restated revolving credit facility become due and payable on the facility termination date of December 4, 2024. The Term Loan is repayable in quarterly payments of $3.25 million, the first of which was made on April 1, 2020, plus an annual payment equal to 25% of the annual Excess Cash Flow as defined in the credit agreement (an amount not to exceed $12 million annually), less certain voluntary prepayments made during the year, with final payment at maturity.

The interest rate on the fifth amended and restated revolving credit facility and the Term Loan is based on a margin over LIBOR or a base rate. At March 31, 2020, the effective interest rate on the Term Loan was approximately 5.5% and the effective interest rate on revolving credit facility borrowings was approximately 4.0%. At September 30, 2019, the effective interest rate on the term loan and revolving credit facility borrowings was approximately 5.9% and 4.6%, respectively.

The commitment fee on the unused portion of the revolving credit facility is 0.30% from December through April, and 0.20% from May through November.

The fifth amended and restated credit agreement requires the Company to meet certain financial covenants, including a Fixed Charge Coverage Ratio (as defined in the credit agreement) of not less than 1.1 as long as the Term Loan is outstanding or revolving credit facility availability is less than 12.5% of the facility size. In addition, as long as the Term Loan is outstanding, a senior secured leverage ratio cannot be more than 3.0 as calculated as of the quarters ending June or September, and no more than 4.5 as calculated as of the quarters ending December or March.

Certain restrictions are also imposed by the credit agreement, including restrictions on the Company’s ability to incur additional indebtedness, to pay distributions to unitholders, to pay certain inter-company dividends or distributions, repurchase units, make investments, grant liens, sell assets, make acquisitions and engage in certain other activities.

At March 31, 2020, $130.0 million of the Term Loan was outstanding, $24.0 million was outstanding under the revolving credit facility, $18.6 million of hedge positions were secured under the credit agreement, and $4.4 million of letters of credit were issued and outstanding. At September 30, 2019, $92.5 million of the Term Loan was outstanding, $61.5 million was outstanding under the revolving credit facility, $7.7 million of hedge positions were secured under the credit agreement, and $4.6 million of letters of credit were issued and outstanding.

At March 31, 2020, availability was $210.4 million, and the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio. At September 30, 2019, availability was $126.1 million, and the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio.

 

12) Income Taxes  

 The accompanying financial statements are reported on a fiscal year, however, the Company and its corporate subsidiaries file Federal and State income tax returns on a calendar year.

18

The current and deferred income tax expense (benefit) for the three and six months ended March 31, 2020, and March 31, 2019 are as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Income before income taxes

 

$

83,108

 

 

$

101,564

 

 

$

122,645

 

 

$

104,852

 

Current income tax expense

 

 

25,814

 

 

 

37,958

 

 

 

36,260

 

 

 

39,547

 

Deferred income tax expense (benefit)

 

 

(1,114

)

 

 

(8,719

)

 

 

222

 

 

 

(9,335

)

Total income tax expense

 

$

24,700

 

 

$

29,239

 

 

$

36,482

 

 

$

30,212

 

 

At March 31, 2020, we did not have unrecognized income tax benefits.

Our continuing practice is to recognize interest and penalties related to income tax matters as a component of income tax expense. We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut and Pennsylvania, we have four years that are subject to examination. In the state tax jurisdiction of New Jersey we have five tax years that are subject to examination. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, based on our assessment of many factors, including past experience and interpretation of tax law, we believe that our provision for income taxes reflect the most probable outcome. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

13) Leases

The Company has entered into certain operating leases for office space, vehicles and other equipment with lease terms between one to twenty years, expiring between 2020 and 2039. Some of the Company’s real estate property lease agreements have options to extend the leases for up to five years.

The Company determines if an arrangement is a lease at inception.  Lease liabilities are measured at the lease commencement date in an amount equal to the present value of the minimum lease payments over the lease term.  Right-of-use (“ROU”) assets are recognized based on the amount of the lease liability adjusted for any lease payments made to the lessor at or before the commencement date, minus any lease incentives received, plus any initial direct costs incurred.  Renewal options are included in the calculation of the ROU asset and lease liability when it is determined that they are reasonably certain of exercise.

 

Certain of our lease arrangements contain non-lease components such as common area maintenance.  We have elected to account for the lease component and its associated non-lease components as a single lease component.  Leases with an initial term of 12 months or less are not recognized on our balance sheet. The Company has leases that have variable payments, including lease payments where lease payment increases are based on the percentage change in the Consumer Price Index. For such leases payment at the lease commencement date is used to measure the ROU assets and operating lease liabilities. Changes in the index and other variable payments are expensed as incurred.  The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in our operating leases is not readily determinable. The basis for an incremental borrowing rate was our Term Loan, market-based yield curves and comparable debt securities.

 

 

19

A summary of total lease costs and other information for the three and six months ended March 31, 2020 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2020

 

 

2020

 

Lease cost:

 

 

 

 

 

 

 

 

Operating lease cost

 

$

6,333

 

 

$

12,932

 

Short-term lease cost

 

 

240

 

 

 

432

 

Variable lease cost

 

 

1,129

 

 

 

2,139

 

Total lease cost

 

$

7,702

 

 

$

15,503

 

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

     Operating cash flows from operating leases

 

$

6,244

 

 

$

12,625

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

5,426

 

 

$

9,436

 

 

As of March 31, 2020, our operating leases had a weighted average remaining lease term of 7.4 years and a weighted average discount rate of 4.9%. Maturities of operating lease liabilities as of March 31, 2020 are as follows:

 

 

 

March 31,

 

(in thousands)

 

2020

 

      Remaining six months of fiscal year 2020

 

$

12,589

 

2021

 

 

22,733

 

2022

 

 

18,669

 

2023

 

 

15,347

 

2024

 

 

13,194

 

Thereafter

 

 

49,172

 

Total undiscounted lease payments

 

 

131,704

 

Less imputed interest

 

 

(22,764

)

Total lease liabilities

 

$

108,940

 

 

Maturities of operating lease liabilities presented undiscounted under ASC Topic 840 as prescribed by ASC Topic 842 as of September 30, 2019 are as follows:

 

 

September 30,

 

(in thousands)

 

2019

 

      2020

 

$

24,082

 

2021

 

 

20,875

 

2022

 

 

16,687

 

2023

 

 

13,344

 

2023

 

 

11,114

 

Thereafter

 

 

43,506

 

Total future minimum lease payments

 

$

129,608

 

 

14) Supplemental Disclosure of Cash Flow Information

 

 

 

Six Months Ended

 

Cash paid during the period for:

 

March 31,

 

(in thousands)

 

2020

 

 

2019

 

Income taxes, net

 

$

9,992

 

 

$

3,748

 

Interest

 

$

6,543

 

 

$

5,770

 

 

20

15) Commitments and Contingencies

 

On April 18, 2017, a civil action was filed in the United States District Court for the Eastern District of New York, entitled M. Norman Donnenfeld v. Petro, Inc., Civil Action Number 2:17-cv-2310-JFB-SIL, against Petro, Inc. By amended complaint filed on August 15, 2017, the Plaintiff alleged he did not receive expected contractual benefits under his protected price plan contract when oil prices fell and asserted various claims for relief including breach of contract, violation of the New York General Business Law and fraudulent inducement. The Plaintiff also sought to have a class certified of similarly situated Petro customers who entered into protected price plan contracts and were denied the same contractual benefits.  The Plaintiff sought compensatory, punitive and other damages in unspecified amounts.  On September 15, 2017, Petro filed a motion to dismiss the amended complaint as time-barred and for failure to state a cause of action.  On September 12, 2018, the district court granted in part and denied in part Petro's motion to dismiss.  The district court dismissed the Plaintiff's claims for breach of the covenant of good faith and fair dealing and fraudulent inducement, but declined to dismiss the Plaintiff's remaining claims.  The district court granted the Plaintiff leave to amend to attempt to replead his fraudulent inducement claim.  On October 10, 2018, the Plaintiff filed a second amended complaint.  The second amended complaint attempted to replead a fraudulent inducement claim and was otherwise substantially similar or identical to the prior complaint.  On November 13, 2018, Petro moved to dismiss the fraudulent inducement and unjust enrichment claims in the second amended complaint.  On January 31, 2019, the court granted the motion and dismissed the fraudulent inducement and unjust enrichment claims with prejudice.  On February 22, 2019, counsel for Petro and the Plaintiff participated in a mediation which, after arms-length negotiations, resulted in a memorandum of understanding to settle the litigation, subject to the completion of confirmatory discovery, negotiation of a final settlement agreement and court approval.  In an order dated March 27, 2019, the district court stayed all discovery deadlines in light of the pending settlement.  On October 4, 2019, upon consent of all parties, Judge Roslynn R. Mauskopf assigned the action to Magistrate Judge Steve I. Locke for final disposition.  On March 26, 2020, the court granted final approval of the class action settlement, certified the class for settlement purposes only and dismissed the action with prejudice.  On March 26, 2020, the court also granted Plaintiff’s unopposed motion for fees, expenses and named plaintiff service award.  The settlement is not an admission of liability or breach to any customers by Petro and the Company continues to believe the allegations lack merit.  If the settlement is not completed for any reason, the Company will continue to vigorously defend the action; in that case, we cannot assess the potential outcome or materiality of this matter.  

The Company’s operations are subject to the operating hazards and risks normally incidental to handling, storing and transporting and otherwise providing for use by consumers hazardous liquids such as home heating oil and propane. In the ordinary course of business, the Company is a defendant in various legal proceedings and litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. We do not believe these matters, when considered individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

The Company maintains insurance policies with insurers in amounts and with coverages and deductibles we believe are reasonable and prudent. However, the Company cannot assure that this insurance will be adequate to protect it from all material expenses related to current and potential future claims, legal proceedings and litigation, including the above mentioned action, as certain types of claims may be excluded from our insurance coverage. If we incur substantial liability and the damages are not covered by insurance, or are in excess of policy limits, or if we incur liability at a time when we are not able to obtain liability insurance, then our business, results of operations and financial condition could be materially adversely affected.

16) Earnings Per Limited Partner Unit

Income per limited partner unit is computed in accordance with FASB ASC 260-10-05 Earnings Per Share, Master Limited Partnerships (EITF 03-06), by dividing the limited partners’ interest in net income by the weighted average number of limited partner units outstanding. The pro forma nature of the allocation required by this standard provides that in any accounting period where the Company’s aggregate net income exceeds its aggregate distribution for such period, the Company is required to present net income per limited partner unit as if all of the earnings for the periods were distributed, regardless of whether those earnings would actually be distributed during a particular period from an economic or practical perspective. This allocation does not impact the Company’s overall net income or other financial results. However, for periods in which the Company’s aggregate net income exceeds its aggregate distributions for such period, it will have the impact of reducing the earnings per limited partner unit, as the calculation according to this standard result in a theoretical increased allocation of undistributed earnings to the General Partner. In accounting periods where aggregate net income does not exceed aggregate distributions for such period, this standard does not have any impact on the Company’s net income per limited partner unit calculation. A separate and independent calculation for each quarter and year-to-date period is performed, in which the Company’s contractual participation rights are taken into account.

21

The following presents the net income allocation and per unit data using this method for the periods presented:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

Basic and Diluted Earnings Per Limited Partner:

 

March 31,

 

 

March 31,

 

(in thousands, except per unit data)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

58,408

 

 

$

72,325

 

 

$

86,163

 

 

$

74,640

 

Less General Partner’s interest in net income

 

 

409

 

 

 

454

 

 

 

601

 

 

 

469

 

Net income available to limited partners

 

 

57,999

 

 

 

71,871

 

 

 

85,562

 

 

 

74,171

 

Less dilutive impact of theoretical distribution of earnings

   under FASB ASC 260-10-45-60

 

 

10,283

 

 

 

12,934

 

 

 

14,631

 

 

 

12,294

 

Limited Partner’s interest in net income under FASB ASC 260-10-45-60

 

$

47,716

 

 

$

58,937

 

 

$

70,931

 

 

$

61,877

 

Per unit data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income available to limited partners

 

$

1.25

 

 

$

1.40

 

 

$

1.83

 

 

$

1.42

 

Less dilutive impact of theoretical distribution of earnings

   under FASB ASC 260-10-45-60

 

 

0.22

 

 

 

0.25

 

 

 

0.31

 

 

$

0.23

 

Limited Partner’s interest in net income under FASB ASC

   260-10-45-60

 

$

1.03

 

 

$

1.15

 

 

$

1.52

 

 

$

1.19

 

Weighted average number of Limited Partner units outstanding

 

 

46,244

 

 

 

51,427

 

 

 

46,760

 

 

 

52,174

 

 

17) Subsequent Events

Quarterly Distribution Declared

In April 2020, we declared a quarterly distribution of $0.1325 per unit, or $0.53 per unit on an annualized basis, on all Common Units with respect to the second quarter of fiscal 2020, payable on May 12, 2020, to holders of record on May 4, 2020. The amount of distributions in excess of the minimum quarterly distribution of $0.0675 are distributed in accordance with our Partnership Agreement, subject to the management incentive compensation plan. As a result, $6.0 million will be paid to the Common Unit holders, $0.2 million to the General Partner unit holders (including $0.2 million of incentive distribution as provided in our Partnership Agreement) and $0.2 million to management pursuant to the management incentive compensation plan which provides for certain members of management to receive incentive distributions that would otherwise be payable to the General Partner.

Common Units Repurchased and Retired

In April 2020, in accordance with the Repurchase Plan, the Company repurchased and retired 0.4 million Common Units at an average price paid of $7.71 per unit.

Impact of COVID-19

We have seen a reduction in certain sales activity in the month of April 2020 when compared to that in April 2019, primarily due to the decrease in economic activity and travel resulting from the current pandemic of the novel coronavirus, or COVID-19.

The volume of Motor Fuel and Other Petroleum Products for April 2020 (which is primarily motor fuels used for both on and off road purposes) is down approximately 35% compared to the volume sold in April 2019.  Service revenues are down approximately 10% in April 2020 when compared to April 2019, as in some locations the company has restricted its service to only emergency services, or customers are electing to defer non-emergency services until a later date.  Installation revenues are also down approximately 40% in April 2020 when compared to April 2019 as, again, many customers are deferring non-emergency installations.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

22

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statement Regarding Forward-Looking Disclosure

This Quarterly Report on Form 10-Q (this “Report”) includes “forward-looking statements” which represent our expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the severity and duration of the novel coronavirus, or COVID-19, pandemic, the pandemic’s impact on the U.S. and global economies, the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic, the effect of weather conditions on our financial performance, the price and supply of the products that we sell, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, our ability to obtain new customers and retain existing customers, our ability to make strategic acquisitions, the impact of litigation, our ability to contract for our current and future supply needs, natural gas conversions, future union relations and the outcome of current and future union negotiations, the impact of current and future governmental regulations, including climate change, environmental, health, and safety regulations, the ability to attract and retain employees, customer credit worthiness, counterparty credit worthiness, marketing plans, potential cyber-attacks, general economic conditions and new technology. All statements other than statements of historical facts included in this Report including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, are forward-looking statements. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “seek,” “estimate,” and similar expressions are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct and actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, those set forth in this Report under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Fiscal 2019 Form 10-K under Part I Item 1A “Risk Factors.”  Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this Report and in our Fiscal 2019 Form 10-K. Currently, one of the most significant factors, however, is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its customers and counterparties and the global economy and financial markets. The extent to which COVID-19 impacts us and our customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. 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, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Report.

Impact of COVID 19 - A Global Pandemic on our Operations and Outlook

In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”). On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures. The United States has declared a national emergency concerning the outbreak, which has adversely impacted global activity and contributed to significant declines and volatility in financial markets. There have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including quarantines, and “stay-at-home” orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Our business is concentrated in the Northeast and Mid-Atlantic sections of the United States. These areas have been significantly impacted by the virus.

To date we have been designated by state and local governmental officials in the markets we serve as providing essential services during the COVID-19 pandemic. We are closely monitoring all official pronouncements and executive orders concerning our status as an essential business.  To date, we have not experienced any significant supply chain issues impacting our ability to deliver products and provide services to our customers.  We believe the various initiatives we have implemented in response to the COVID-19 pandemic, such as certain staff working remotely, have not significantly impacted our ability to serve our customers.  We are still making fuel deliveries and providing emergency services to all areas in which we operate.  The 2019-2020 peak heating season coincides with our first and second fiscal quarters, which historically represent approximately 80% of our annual volume of home heating oil and propane sold. 

As a result of the COVID-19 pandemic, and in order to protect the safety and health of our workforce and our customers, we have expanded certain employee benefit programs and will incur additional operating costs such as sanitizing our facilities and providing IT infrastructure to allow many office, clerical, sales and customer service employees to work from home. At this time, we cannot estimate the cost of these undertakings. In certain areas, we have ceased making non-emergency service calls that would have been performed in the third quarter of fiscal 2020. These service calls may be deferred to subsequent periods and may increase our future service costs.  In addition, we believe that some of our customers are deferring non-emergency services, including the installation of new equipment, which has caused a significant decline in April 2020 in equipment installation sales and reactive service

23

calls and may continue to reduce future service and installation income.  We are experiencing a significant decline in motor fuel sales due to a significant reduction in economic activity and travel in the states in which we operate.  During fiscal 2019 Motor Fuel and Other Petroleum Products represented 32.6% of our Total Product Volume, 25.0% of our Total Product Sales and 9.1%, of our Total Product Gross Profit, and historically we sell more volumes of motor fuels than heating oil and propane in the second half of the fiscal year.  Accordingly, our financial results may suffer accordingly if these trends continue.

As of March 31, 2020, we had accounts receivable of $187.1 million, of which $149.4 million is due from residential customers and $37.7 million is due from commercial customers. Our ability to borrow from our bank group is based in part on the aging of these accounts receivable. If such past due balances that do not meet the eligibility tests as found in our fifth amended and restated credit agreement increase from historic levels, our future ability to borrow would be reduced.

The Company intends to take advantage of certain tax and legislative actions which will permit the Company to defer its April 2020 Federal income tax payment to July 2020 and to defer certain payroll tax withholdings relating to calendar 2020 to calendar 2021 and 2022.  We are also looking into loans available under various Federal stimulus packages, but at the present time our eligibility and need for such loans is uncertain.

We believe COVID-19’s impact on our business, operating results, cash flows (including the collection of accounts receivable) and/or financial condition primarily will be driven by the severity and duration of the pandemic, the pandemic’s impact on the U.S. and global economies, the price of petroleum products, and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Those primary drivers are beyond our knowledge and control and, as a result, at this time we cannot reasonably estimate the adverse impact COVID-19 will have on our business, operating results, cash flows and/or financial condition going forward.

Impact on Liquidity of Increases and Decreases in Wholesale Product Cost

Our liquidity is adversely impacted in times of increasing wholesale product costs, as we must use more cash to fund our hedging requirements as well as the increased levels of accounts receivable and inventory. This may result in higher interest expense as a result of increased working capital borrowing to finance higher receivables and/or inventory balances. We may also incur higher bad debt expense and credit card processing costs as a result of higher selling prices as well as higher vehicle fuel costs due to the increase in energy costs.  In addition, our liquidity can be adversely impacted by sudden and sharp decreases in wholesale product costs, due to the increased margin requirements for futures contracts and collateral requirements for options and swaps that we use to manage market risks.

Liquid Product Price Volatility

Volatility, which is reflected in the wholesale price of liquid products, including home heating oil, propane and motor fuels, has a larger impact on our business when prices rise. Consumers are price sensitive to heating cost increases, which can lead to increased gross customer losses. As a commodity, the price of home heating oil is generally impacted by many factors, including economic and geopolitical forces, and, most recently, the COVID-19 pandemic, and is closely linked to the price of diesel fuel. The volatility in the wholesale cost of diesel fuel as measured by the New York Mercantile Exchange (“NYMEX”), for the fiscal years ending September 30, 2016, through 2020, on a quarterly basis, is illustrated in the following chart (price per gallon):

 

 

 

Fiscal 2020 (a)

 

 

Fiscal 2019

 

 

Fiscal 2018

 

 

Fiscal 2017

 

 

Fiscal 2016

 

Quarter Ended

 

Low

 

 

High

 

 

Low

 

 

High

 

 

Low

 

 

High

 

 

Low

 

 

High

 

 

Low

 

 

High

 

December 31

 

$

1.86

 

 

$

2.05

 

 

$

1.66

 

 

$

2.44

 

 

$

1.74

 

 

$

2.08

 

 

$

1.39

 

 

$

1.70

 

 

$

1.08

 

 

$

1.61

 

March 31

 

 

0.95

 

 

 

2.06

 

 

 

1.70

 

 

 

2.04

 

 

 

1.84

 

 

 

2.14

 

 

 

1.49

 

 

 

1.70

 

 

 

0.87

 

 

 

1.26

 

June 30

 

 

—

 

 

 

—

 

 

 

1.78

 

 

 

2.12

 

 

 

1.96

 

 

 

2.29

 

 

 

1.37

 

 

 

1.65

 

 

 

1.08

 

 

 

1.57

 

September 30

 

 

—

 

 

 

—

 

 

 

1.75

 

 

 

2.08

 

 

 

2.05

 

 

 

2.35

 

 

 

1.45

 

 

 

1.86

 

 

 

1.26

 

 

 

1.53

 

 

(a)

On April 30, 2020, the NYMEX ultra low sulfur diesel contract closed at $0.73 per gallon or $1.00 per gallon lower than the average of $1.73 in the first half of Fiscal 2020.

Execution of Fifth Amended and Restated Revolving Asset-based Credit Agreement

On December 4, 2019, the Company refinanced its credit facility and entered into the fifth amended and restated revolving credit facility agreement with a bank syndicate of eleven participants, which enables the Company to borrow up to $300 million ($450 million during the heating season of December through April of each year) on a revolving line of credit for working capital purposes (subject to certain borrowing base limitations and coverage ratios), provides for a $130 million five-year senior secured term loan, allows for the issuance of up to $25 million in letters of credit, and extends the maturity date of the previous agreement to December 4, 2024. Proceeds from the new term loan were used to repay the $90.0 million outstanding balance of the term loan and $40.0 million of the revolving credit facility borrowings under the old credit facility.  Availability as a result of the new credit agreement increased $40.0 million.

24

Consistent with the fourth amended and restated revolving credit facility, under the Company’s fifth amended and restated credit agreement, in order to repurchase Common Units we must maintain availability of $45 million, equivalent to 15.0% of the facility size of $300 million (assuming the non-seasonal aggregate commitment is outstanding) on a historical pro forma and forward-looking basis, and a fixed charge coverage ratio of not less than 1.15 measured as of the date of repurchase.

Income Taxes

Book versus Tax Deductions

The amount of cash flow generated in any given year depends upon a variety of factors including the amount of cash income taxes required, which will increase as depreciation and amortization decreases. The amount of depreciation and amortization that we deduct for book (i.e., financial reporting) purposes will differ from the amount that the Company can deduct for Federal tax purposes. The table below compares the estimated depreciation and amortization for book purposes to the amount that we expect to deduct for Federal tax purposes, based on currently owned assets. While we file our tax returns based on a calendar year, the amounts below are based on our September 30 fiscal year, and the tax amounts include any 100% bonus depreciation available for fixed assets purchased.  However, this table does not include any forecast of future annual capital purchases. 

Estimated Depreciation and Amortization Expense

 

(In thousands) Fiscal Year

 

Book

 

Tax

 

2020

 

$

32,045

 

$

28,628

 

2021

 

 

26,651

 

 

21,644

 

2022

 

 

23,064

 

 

19,598

 

2023

 

 

19,778

 

 

17,812

 

2024

 

 

15,944

 

 

16,771

 

2025

 

 

13,047

 

 

16,279

 

Weather Hedge Contracts

Weather conditions have a significant impact on the demand for home heating oil and propane because certain customers depend on these products principally for space heating purposes. Actual weather conditions may vary substantially from year to year, significantly affecting the Company’s financial performance. To partially mitigate the adverse effect of warm weather on cash flow, we have used weather hedging contracts for a number of years with several providers.

Under these contracts, we are entitled to a payment if the total number of degree days within the hedge period is less than the ten-year average. The “Payment Thresholds,” or strikes, are set at various levels. Conversely, we are obligated to make a payment capped at $5.0 million if degree days exceed the ten-year average. The hedge period runs from November 1 through March 31, taken as a whole, for each respective fiscal year. For the six months ended March 31, 2020 we recorded a $10.1 million benefit and for the six months ended March 31, 2019 we recorded a charge of $2.1 million.

Per Gallon Gross Profit Margins

We believe home heating oil and propane margins should be evaluated on a cents per gallon basis (before the effects of increases or decreases in the fair value of derivative instruments), as we believe that such per gallon margins are best at showing profit trends in the underlying business, without the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction.

A significant portion of our home heating oil volume is sold to individual customers under an arrangement pre-establishing a ceiling price or fixed price for home heating oil over a set period of time, generally twelve to twenty-four months (“price-protected” customers). When these price-protected customers agree to purchase home heating oil from us for the next heating season, we purchase option contracts, swaps and futures contracts for a substantial majority of the heating oil that we expect to sell to these customers. The amount of home heating oil volume that we hedge per price-protected customer is based upon the estimated fuel consumption per average customer per month. In the event that the actual usage exceeds the amount of the hedged volume on a monthly basis, we may be required to obtain additional volume at unfavorable costs. In addition, should actual usage in any month be less than the hedged volume, our hedging costs and losses could be greater, thus reducing expected margins.

 

Derivatives

FASB ASC 815-10-05 Derivatives and Hedging requires that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities. To the extent our interest rate derivative instruments designated as cash flow hedges are effective, as defined under this guidance, changes in fair value are recognized in other comprehensive income until the forecasted hedged item is recognized in earnings. We have elected not to designate our commodity derivative instruments as hedging instruments under this guidance and, as a result, the changes in fair value of the derivative instruments are recognized in our statement

25

of operations. Therefore, we experience volatility in earnings as outstanding derivative instruments are marked to market and non-cash gains and losses are recorded prior to the sale of the commodity to the customer. The volatility in any given period related to unrealized non-cash gains or losses on derivative instruments can be significant to our overall results. However, we ultimately expect those gains and losses to be offset by the cost of product when purchased.

Customer Attrition

We measure net customer attrition on an ongoing basis for our full service residential and commercial home heating oil and propane customers. Net customer attrition is the difference between gross customer losses and customers added through marketing efforts. Customers added through acquisitions are not included in the calculation of gross customer gains. However, additional customers that are obtained through marketing efforts or lost at newly acquired businesses are included in these calculations. Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis. Gross customer losses are the result of a number of factors, including price competition, move-outs, credit losses, conversions to natural gas and service disruptions. When a customer moves out of an existing home, we count the “move out” as a loss, and if we are successful in signing up the new homeowner, the “move in” is treated as a gain.  The economic impact of COVID-19 could increase future attrition due to higher losses from credit related issues.

Customer gains and losses of home heating oil and propane customers

 

 

 

Fiscal Year Ended

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

Gross Customer

 

 

Gains /

 

 

Gross Customer

 

 

Gains /

 

 

Gross Customer

 

 

Gains /

 

 

 

Gains

 

 

Losses

 

 

(Attrition)

 

 

Gains

 

 

Losses

 

 

(Attrition)

 

 

Gains

 

 

Losses

 

 

(Attrition)

 

First Quarter

 

 

23,900

 

 

 

23,100

 

 

 

800

 

 

 

26,200

 

 

 

25,400

 

 

 

800

 

 

 

24,700

 

 

 

19,900

 

 

 

4,800

 

Second Quarter

 

 

12,600

 

 

 

18,200

 

 

 

(5,600

)

 

 

12,600

 

 

 

22,300

 

 

 

(9,700

)

 

 

14,100

 

 

 

18,900

 

 

 

(4,800

)

Third Quarter

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7,100

 

 

 

15,900

 

 

 

(8,800

)

 

 

7,900

 

 

 

16,200

 

 

 

(8,300

)

Fourth Quarter

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,200

 

 

 

20,600

 

 

 

(7,400

)

 

 

13,100

 

 

 

19,400

 

 

 

(6,300

)

Total

 

 

36,500

 

 

 

41,300

 

 

 

(4,800

)

 

 

59,100

 

 

 

84,200

 

 

 

(25,100

)

 

 

59,800

 

 

 

74,400

 

 

 

(14,600

)

 

Customer gains (attrition) as a percentage of home heating oil and propane customer base

 

 

 

Fiscal Year Ended

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

Gross Customer

 

 

Gains /

 

 

Gross Customer

 

 

Gains /

 

 

Gross Customer

 

 

Gains /

 

 

 

Gains

 

 

Losses

 

 

(Attrition)

 

 

Gains

 

 

Losses

 

 

(Attrition)

 

 

Gains

 

 

Losses

 

 

(Attrition)

 

First Quarter

 

 

5.3

%

 

 

5.1

%

 

 

0.2

%

 

 

5.8

%

 

 

5.6

%

 

 

0.2

%

 

 

5.4

%

 

 

4.3

%

 

 

1.1

%

Second Quarter

 

 

2.8

%

 

 

4.0

%

 

 

(1.2

%)

 

 

2.8

%

 

 

5.0

%

 

 

(2.2

%)

 

 

3.0

%

 

 

4.1

%

 

 

(1.1

%)

Third Quarter

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1.6

%

 

 

3.5

%

 

 

(1.9

%)

 

 

1.7

%

 

 

3.5

%

 

 

(1.8

%)

Fourth Quarter

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2.7

%

 

 

4.2

%

 

 

(1.5

%)

 

 

2.9

%

 

 

4.3

%

 

 

(1.4

%)

Total

 

 

8.1

%

 

 

9.1

%

 

 

(1.0

%)

 

 

12.9

%

 

 

18.3

%

 

 

(5.4

%)

 

 

13.0

%

 

 

16.2

%

 

 

(3.2

%)

 

For the six months ended March 31, 2020, the Company lost 4,800 accounts (net), or 1.0% of its home heating oil and propane customer base, compared to 8,900 accounts lost (net), or 2.0% of its home heating oil and propane customer base, during the six months ended March 31, 2019. Gross customer gains were 2,300 less than the prior year’s comparable period, and gross customer losses were 6,400 accounts less.

During the six months ended March 31, 2020, we estimate that we lost 0.7% of our home heating oil and propane accounts to natural gas conversions versus 0.8% for the six months ended March 31, 2019 and 0.6% six months ended March 31, 2018.  Losses to natural gas in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates.

Acquisitions

The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons.  During the six months ended March 31, 2020, the Company acquired a heating oil dealer.  During fiscal 2019 the Company completed three acquisitions. The following tables detail the Company’s acquisition activity and the associated volume sold during the 12-month period prior to the date of acquisition.

 

26

(in thousands of gallons)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2020 Acquisitions

 

Acquisition Number

 

Month of Acquisition

 

Home Heating Oil and Propane

 

 

Other Petroleum Products

 

 

Total

 

1

 

October

 

 

1,085

 

 

 

—

 

 

 

1,085

 

 

 

 

 

 

1,085

 

 

 

—

 

 

 

1,085

 

 

(in thousands of gallons)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal 2019 Acquisitions

 

Acquisition Number

 

Month of Acquisition

 

Home Heating Oil and Propane

 

 

Other Petroleum Products

 

 

Total

 

1

 

November

 

 

130

 

 

 

—

 

 

 

130

 

2

 

January (a)

 

 

—

 

 

 

—

 

 

 

—

 

3

 

May

 

 

13,200

 

 

 

6,772

 

 

 

19,972

 

 

 

 

 

 

13,330

 

 

 

6,772

 

 

 

20,102

 

 

 

(a)

The business acquired in January 2019 did not sell any petroleum products. This acquisition was of a subcontractor, which had revenue of approximately $11 million during the 12 month period prior to the date of acquisition, and Star accounted for approximately 60% of its revenue (any such revenue is eliminated in consolidation, but the Company benefits from lower costs related to such revenue). 

Seasonality

The Company’s fiscal year ends on September 30. All references to quarters and years, respectively, in this document are to the fiscal quarters and fiscal years unless otherwise noted. The seasonal nature of our business has resulted, on average, during the last five years, in the sale of approximately 30% of the volume of home heating oil and propane in the first fiscal quarter and 50% of the volume in the second fiscal quarter, the peak heating season. Approximately 25% of the volume of motor fuel and other petroleum products is sold in each of the four fiscal quarters.  We generally realize net income during the quarters ending December and March and net losses during the quarters ending June and September. In addition, sales volume typically fluctuates from year to year in response to variations in weather, wholesale energy prices and other factors.

Degree Day

A “degree day” is an industry measurement of temperature designed to evaluate energy demand and consumption. Degree days are based on how far the average daily temperature departs from 65°F. Each degree of temperature above 65°F is counted as one cooling degree day, and each degree of temperature below 65°F is counted as one heating degree day. Degree days are accumulated each day over the course of a year and can be compared to a monthly or a long-term (multi-year) average to see if a month or a year was warmer or cooler than usual. Degree days are officially observed by the National Weather Service.

Every ten years, the National Oceanic and Atmospheric Administration (“NOAA”) computes and publishes average meteorological quantities, including the average temperature for the last 30 years by geographical location, and the corresponding degree days. The latest and most widely used data covers the years from 1981 to 2010. Our calculations of “normal” weather are based on these published 30 year averages for heating degree days, weighted by volume for the locations where we have existing operations.

Consolidated Results of Operations

The following is a discussion of the consolidated results of operations of the Company and its subsidiaries and should be read in conjunction with the historical financial and operating data and Notes thereto included elsewhere in this Quarterly Report.

27

Three Months Ended March 31, 2020

Compared to the Three Months Ended March 31, 2019

Volume

For the three months ended March 31, 2020, retail volume of home heating oil and propane sold decreased by 37.1 million gallons, or 21.4%, to 136.2 million gallons, compared to 173.3 million gallons for the three months ended March 31, 2019. For those locations where we had existing operations during both periods, which we sometimes refer to as the “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the three months ended March 31, 2020 were 18.2% warmer than the three months ended March 31, 2019. Temperatures during the three months ended March 31, 2020 were 21.2% warmer than normal, as reported by NOAA. For the twelve months ended March 31, 2020, net customer attrition for the base business was 4.6%. The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.” An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below: 

 

(in millions of gallons)

 

Heating Oil

and Propane

 

Volume - Three months ended March 31, 2019

 

 

173.3

 

Acquisitions

 

 

5.5

 

Impact of warmer temperatures

 

 

(30.5

)

Net customer attrition

 

 

(8.6

)

Other

 

 

(3.5

)

Change

 

 

(37.1

)

Volume - Three months ended March 31, 2020

 

 

136.2

 

The following chart sets forth the percentage by volume of total home heating oil sold to residential variable-price customers, residential price-protected customers and commercial/industrial/other customers for the three months ended March 31, 2020, compared to the three months ended March 31, 2019:

 

 

 

Three Months Ended

 

Customers

 

March 31,

2020

 

 

March 31,

2019

 

Residential Variable

 

 

42.0

%

 

 

41.1

%

Residential Price-Protected (Ceiling and Fixed Price)

 

 

45.5

%

 

 

46.7

%

Commercial/Industrial

 

 

12.5

%

 

 

12.2

%

Total

 

 

100.0

%

 

 

100.0

%

 

Volume of other petroleum products sold decreased by 2.4 million gallons, or 6.1%, to 36.6 million gallons for the three months ended March 31, 2020, compared to 39.0 million gallons for the three months ended March 31, 2019 attributable to lower wholesale revenue due to the 18.2% warmer weather and lower sales of motor fuels.

Product Sales

For the three months ended March 31, 2020, product sales decreased by $156.1 million, or 24.5%, to $481.3 million, compared to $637.4 million for the three months ended March 31, 2019 due to the impact of lower volume sold and reduced selling prices.  The decline in selling prices was largely attributable to a decrease in product cost.

Installations and Services

For the three months ended March 31, 2020, installation and service revenue decreased by $0.4 million, or 0.6%, to $61.8 million, compared to $62.2 million for the three months ended March 31, 2019 as the additional revenue provided from acquisitions of $2.9 million was reduced by lower revenues in the base business of $3.3 million.  In the base business, service sales and installation sales declined due to net customer attrition and the impact of 18.2% warmer weather which negatively impacted billable service revenue and reduced the need for the installation of new equipment.

28

Cost of Product

For the three months ended March 31, 2020, cost of product decreased $130.3 million, or 31.4%, to $285.4 million, compared to $415.6 million for the three months ended March 31, 2019, largely due to a decrease in total volume sold of 18.6%, and a $0.3067 per gallon, or 15.7%, decrease in wholesale product cost.

Gross Profit — Product

The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction. On that basis, home heating oil and propane margins for the three months ended March 31, 2020 increased by $0.1406 per gallon, or 11.5%, to $1.3619 per gallon, from $1.2213 per gallon during the three months ended March 31, 2019. The market conditions experienced during the three months ended March 31, 2020, which resulted in lower product costs, created an opportunity for margin expansion and contributed to an increase in home heating oil and propane margins versus the prior year’s comparable quarter.  In addition, the Company utilizes weighted average costing for computing cost of goods sold which contributed to an increase in product gross profit for the three months ended March 31, 2020 of $6.9 million. It is anticipated that product gross profit will be reduced by a similar amount over future periods as the impact of recent price changes are incorporated into the weighted average costing calculations. Going forward, we cannot assume that the per gallon margins realized during the three months ended March 31, 2020 are sustainable for future periods.

Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.

 

 

 

Three Months Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

Home Heating Oil and Propane

 

Amount

(in millions)

 

 

Per

Gallon

 

 

Amount

(in millions)

 

 

Per

Gallon

 

Volume

 

 

136.2

 

 

 

 

 

 

 

173.3

 

 

 

 

 

Sales

 

$

413.5

 

 

$

3.0358

 

 

$

554.4

 

 

$

3.1989

 

Cost

 

$

228.0

 

 

$

1.6739

 

 

$

342.7

 

 

$

1.9776

 

Gross Profit

 

$

185.5

 

 

$

1.3619

 

 

$

211.7

 

 

$

1.2213

 

 

Motor Fuel and Other Petroleum Products

 

Amount

(in millions)

 

 

Per

Gallon

 

 

Amount

(in millions)

 

 

Per

Gallon

 

Volume

 

 

36.6

 

 

 

 

 

 

 

39.0

 

 

 

 

 

Sales

 

$

67.8

 

 

$

1.8534

 

 

$

83.0

 

 

$

2.1311

 

Cost

 

$

57.4

 

 

$

1.5683

 

 

$

72.9

 

 

$

1.8717

 

Gross Profit

 

$

10.4

 

 

$

0.2851

 

 

$

10.1

 

 

$

0.2594

 

 

Total Product

 

Amount

(in millions)

 

 

 

 

Amount

(in millions)

 

 

 

Sales

 

$

481.3

 

 

 

 

$

637.4

 

 

 

Cost

 

$

285.4

 

 

 

 

$

415.6

 

 

 

Gross Profit

 

$

195.9

 

 

 

 

$

221.8

 

 

 

 

For the three months ended March 31, 2020, total product gross profit was $195.9 million, which was $25.9 million, or 11.7% less than the three months ended March 31, 2019, as a decrease in home heating oil and propane volume ($45.3 million) was somewhat offset by an increase in home heating oil and propane margins ($19.1 million) and a slight increase in gross profit from other petroleum products ($0.3 million).

Cost of Installations and Services

Total installation costs for the three months ended March 31, 2020 decreased slightly to $17.6 million, or 0.4%, compared to $17.7 million of installation costs for the three months ended March 31, 2019. Installation costs as a percentage of installation sales were 87.2% for the three months ended March 31, 2020 and 86.6% for the three months ended March 31, 2019.

29

Service expense decreased by $4.0 million, or 8.5%, to $43.7 million for the three months ended March 31, 2020, representing 105.0% of service sales, versus $47.7 million, or 114.2% of service sales, for the three months ended March 31, 2019.  We realized a combined gross profit from service and installation of $0.5 million for the three months ended March 31, 2020 compared to a loss of $3.2 million for the three months ended March 31, 2019 or an improvement of $3.7 million.  Acquisitions positively impacted the comparison by $0.5 million and in the base business, service and installation gross profit improved by $3.2 million due to warmer temperatures of 18.2%, which reduced the demand for service, and certain measures undertaken by the company to improve its operating efficiency.  Management views the service and installation department on a combined basis because many overhead functions cannot be separated or precisely allocated to either service or installation billings.

(Increase) Decrease in the Fair Value of Derivative Instruments

During the three months ended March 31, 2020, the change in the fair value of derivative instruments resulted in an $11.7 million charge due to a decrease in the market value for unexpired hedges (a $15.2 million charge) partially offset by a $3.5 million credit due to the expiration of certain hedged positions.

During the three months ended March 31, 2019, the change in the fair value of derivative instruments resulted in a $13.4 million credit due to an increase in the market value for unexpired hedges (a $5.5 million credit), and a $7.9 million credit due to the expiration of certain hedged positions.

Delivery and Branch Expenses

For the three months ended March 31, 2020, delivery and branch expenses decreased $25.2 million, or 22.8%, to $85.5 million, compared to $110.7 million for the three months ended March 31, 2019, as additional costs from acquisitions of $3.7 million were more than offset by a $28.9 million, or 26.0%, decrease in expenses within the base business.  The decline in the base business was attributable to a $7.2 million, or 18.5%, reduction in direct delivery costs due to lower volume, a $0.9 million decrease in expenses related to the Company’s concierge level of service program (which was greatly curtailed in January 2019), and other reductions in operating costs totaling $7.6 million, or 6.9%, as we continue to improve Star’s operating efficiency. Operating expenses were also reduced by $13.1 million due to the impact of our weather hedging program.  As of December 31, 2019, as previously disclosed in our quarterly report on Form 10-Q for the quarter ended December 31, 2019, we expected to pay $3.0 million under our weather hedge program based on prevailing conditions as of that point in time; however, the weather for the weather hedge period comprised of the three months ended March 31, 2020 were ultimately warmer than the hedge strikes resulting in a reversal of the $3.0 million charge previously accrued and the recording of an incremental benefit and receivable in the amount of $10.1 million. This $10.1 million was received in April 2020.

Depreciation and Amortization Expenses

For the three months ended March 31, 2020, depreciation and amortization expense increased $1.2 million, or 15.7% to $9.1 million, compared to $7.9 million for the three months ended March 31, 2019, largely due to acquisitions.

General and Administrative Expenses

For the three months ended March 31, 2020, general and administrative expenses decreased by $4.4 million or 44.9%, to $5.4 million, from $9.8 million for the three months ended March 31, 2019, primarily due to lower legal and professional fees of $2.6 million, a $1.5 million charge related to the discontinued use of a tank monitoring system that occurred during the three months ended March 31, 2019 (that did not recur in the current fiscal year), and other savings of $0.3 million.

Finance Charge Income

For the three months ended March 31, 2020, finance charge income decreased to $1.3 million from $1.4 million for the three months ended March 31, 2019, primarily due to lower customer late payment charges.

Interest Expense, Net

For the three months ended March 31, 2020, net interest expense decreased by $0.4 million, or 13.7%, to $2.8 million compared to $3.2 million for the three months ended March 31, 2019, primarily due to decrease in average borrowings of $9.4 million from $213.4 million during the three months ended March 31, 2019 to $204.0 million during the three months ended March 31, 2020 and a decrease in the weighted average interest rate from 4.9% during the three months ended March 31, 2019 to 4.7% during the three months ended March 31, 2020.  To hedge against rising interest rates, the Company utilizes interest rate swaps.  At March 31, 2020 $66.5 million, or 51%, of our long term debt was fixed.

30

Amortization of Debt Issuance Costs

For the three months ended March 31, 2020, amortization of debt issuance cost was $0.3 million, essentially unchanged from the three months ended March 31, 2019.

Income Tax Expense

For the three months ended March 31, 2020, the Company’s income tax expense decreased by $4.5 million to $24.7 million, from $29.2 million for the three months ended March 31, 2019, due to a decrease in income before income taxes of $18.5 million primarily due to a $25.1 million non-cash unfavorable change in the fair market value of derivative instruments.

Net Income

For the three months ended March 31, 2020, net income decreased $13.9 million to $58.4 million primarily due to an unfavorable change in the fair value of derivative instruments of $25.1 million partially offset by an increase in Adjusted EBITDA of $7.4 million, described below, and a decrease in income tax expense of $4.5 million.

Adjusted EBITDA

For the three months ended March 31, 2020, Adjusted EBITDA increased by $7.4 million, or 7.5%, to $106.9 million. Acquisitions provided $4.9 million of Adjusted EBITDA and Adjusted EBITDA in the base business increased by $2.5 million as the impact of lower volume sold (due to 18.2% warmer weather and net customer attrition) was largely offset by higher per gallon home heating oil and propane margins, lower operating expenses in the base business of $20.0 million, a favorable change in the amount due under the Company’s weather hedge of $13.1 million and an improvement in the net service and installation profitability of $3.2 million.  As discussed above, product gross profit was favorably impacted by $6.9 million due to the Company’s product costing method, and the Company anticipates that product gross profit will be reduced by a similar amount over future periods.

EBITDA and Adjusted EBITDA should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations), but provide additional information for evaluating our ability to make the Minimum Quarterly Distribution. EBITDA and Adjusted EBITDA are calculated as follows:

 

 

 

Three Months

Ended March 31,

 

(in thousands)

 

2020

 

 

2019

 

Net income

 

$

58,408

 

 

$

72,325

 

Plus:

 

 

 

 

 

 

 

 

Income tax expense

 

 

24,700

 

 

 

29,239

 

Amortization of debt issuance costs

 

 

253

 

 

 

244

 

Interest expense, net

 

 

2,756

 

 

 

3,194

 

Depreciation and amortization

 

 

9,089

 

 

 

7,858

 

EBITDA (a)

 

 

95,206

 

 

 

112,860

 

(Increase) / decrease in the fair value of derivative

   instruments

 

 

11,670

 

 

 

(13,401

)

Adjusted EBITDA (a)

 

 

106,876

 

 

 

99,459

 

Add / (subtract)

 

 

 

 

 

 

 

 

Income tax expense

 

 

(24,700

)

 

 

(29,239

)

Interest expense, net

 

 

(2,756

)

 

 

(3,194

)

Provision for losses on accounts receivable

 

 

2,193

 

 

 

3,439

 

Decrease (increase) in accounts receivables

 

 

16,183

 

 

 

(63,506

)

Decrease in inventories

 

 

27,435

 

 

 

16,446

 

Decrease in customer credit balances

 

 

(16,564

)

 

 

(24,356

)

Change in deferred taxes

 

 

(1,114

)

 

 

(8,719

)

Change in other operating assets and liabilities

 

 

(5,087

)

 

 

30,200

 

Net cash provided by operating activities

 

$

102,466

 

 

$

20,530

 

Net cash used in investing activities

 

$

(5,534

)

 

$

(19,198

)

Net cash used in financing activities

 

$

(101,173

)

 

$

(8,749

)

31

 

(a)

EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization) and Adjusted EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization, (increase) decrease in the fair value of derivatives, net other income, multiemployer pension plan withdrawal charge, gain or loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges) are non-GAAP financial measures that are used as supplemental financial measures by management and external users of our financial statements, such as investors, commercial banks and research analysts, to assess:

 

•

our compliance with certain financial covenants included in our debt agreements;

 

•

our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;

 

•

our operating performance and return on invested capital compared to those of other companies in the retail distribution of refined petroleum products, without regard to financing methods and capital structure;

 

•

our ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and

 

•

the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations as analytical tools and so should not be viewed in isolation but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are:

 

•

EBITDA and Adjusted EBITDA do not reflect our cash used for capital expenditures.

 

•

Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacements;

 

•

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital requirements;

 

•

EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on our indebtedness; and EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.

32

Six Months Ended March 31, 2020

Compared to the Six Months Ended March 31, 2019

Volume

For the six months ended March 31, 2020, the retail volume of home heating oil and propane sold decreased by 43.3 million gallons, or 15.1%, to 243.3 million gallons, compared to 286.6 million gallons for the six months ended March 31, 2019. For those locations where we had existing operations during both periods, which we sometimes refer to as the “base business” (i.e., excluding acquisitions), temperatures (measured on a heating degree day basis) for the six months ended March 31, 2020 were 11.6% warmer than the six months ended March 31, 2019 and 13.8% warmer than normal, as reported by NOAA. For the twelve months ended March 31, 2020, net customer attrition for the base business was 4.6%.  The impact of fuel conservation, along with any period-to-period differences in delivery scheduling, the timing of accounts added or lost during the fiscal years, equipment efficiency, and other volume variances not otherwise described, are included in the chart below under the heading “Other.”  An analysis of the change in the retail volume of home heating oil and propane, which is based on management’s estimates, sampling, and other mathematical calculations and certain assumptions, is found below: 

(in millions of gallons)

 

Heating Oil

and Propane

 

Volume - Six months ended March 31, 2019

 

 

286.6

 

Acquisitions

 

 

9.8

 

Impact of warmer temperatures

 

 

(32.0

)

Net customer attrition

 

 

(15.3

)

Other

 

 

(5.8

)

Change

 

 

(43.3

)

Volume - Six months ended March 31, 2020

 

 

243.3

 

The following chart sets forth the percentage by volume of total home heating oil sold to residential variable-price customers, residential price-protected customers and commercial/industrial/other customers for the six months ended March 31, 2020 compared to the six months ended March 31, 2019:

 

 

 

Six Months Ended

 

Customers

 

March 31,

2020

 

 

March 31,

2019

 

Residential Variable

 

 

42.1

%

 

 

41.2

%

Residential Price-Protected (Ceiling and Fixed Price)

 

 

45.6

%

 

 

46.3

%

Commercial/Industrial

 

 

12.3

%

 

 

12.5

%

Total

 

 

100.0

%

 

 

100.0

%

Volume of other petroleum products sold decreased by 2.9 million gallons, or 3.6%, to 78.0 million gallons for the six months ended March 31, 2020, compared to 80.9 million gallons for the six months ended March 31, 2019 attributable to lower wholesale sales due to the 11.6% warmer weather and lower sales of motor fuels.

Product Sales

For the six months ended March 31, 2020, product sales decreased $0.2 billion, or 16.6%, to $0.9 billion, compared to $1.1 billion for the six months ended March 31, 2019, reflecting a decrease in wholesale product cost of $0.1809 per gallon, or 9.2%, and a decrease in total volume sold of 12.6%.

Installations and Services

For the six months ended March 31, 2020, installations and services revenue decreased $0.5 million, or 0.3%, to $138.0 million, compared to $138.5 million for the six months ended March 31, 2019 as the additional revenue provided from acquisitions of $8.5 million was reduced by lower revenues in the base business of $9.0 million.  In the base business, service and installation sales declined due to net customer attrition and the impact of 11.6% warmer weather which reduced billable service revenue and the need for the installation of new equipment.

33

Cost of Product

For the six months ended March 31, 2020, cost of product decreased $148.8 million, or 20.6%, to $573.0 million, compared to $721.9 million for the six months ended March 31, 2019, due largely to a decrease in total volume sold of 12.6%, and a $0.1809 per gallon, or 9.2%, decrease in wholesale product cost.

Gross Profit — Product

The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction. On that basis, home heating oil and propane margins for the six months ended March 31, 2020 increased by $0.0823 per gallon, or 6.7%, to $1.3155 per gallon, from $1.2332 per gallon during the six months ended March 31, 2019.  In addition, the Company utilizes weighted average costing for computing cost of goods sold which contributed to an increase in product gross profit for the six months ended March 31, 2020 of $6.9 million. It is anticipated that product gross profit will be reduced by a similar amount over future periods as the impact of recent price changes are incorporated into the weighted average costing calculations.  Going forward, we cannot assume that the per gallon margins realized during the six months ended March 31, 2020 are sustainable for future periods.

Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.

 

 

 

Six Months Ended

 

 

 

March 31, 2020

 

 

March 31, 2019

 

Home Heating Oil and Propane

 

Amount

(in millions)

 

 

Per

Gallon

 

 

Amount

(in millions)

 

 

Per

Gallon

 

Volume

 

 

243.3

 

 

 

 

 

 

 

286.6

 

 

 

 

 

Sales

 

$

756.8

 

 

$

3.1102

 

 

$

918.6

 

 

$

3.2046

 

Cost

 

$

436.7

 

 

$

1.7947

 

 

$

565.1

 

 

$

1.9714

 

Gross Profit

 

$

320.1

 

 

$

1.3155

 

 

$

353.5

 

 

$

1.2332

 

 

Motor Fuel and Other Petroleum Products

 

Amount

(in millions)

 

 

Per

Gallon

 

 

Amount

(in millions)

 

 

Per

Gallon

 

Volume

 

 

78.0

 

 

 

 

 

 

 

80.9

 

 

 

 

 

Sales

 

$

157.2

 

 

$

2.0143

 

 

$

177.5

 

 

$

2.1946

 

Cost

 

$

136.3

 

 

$

1.7471

 

 

$

156.8

 

 

$

1.9382

 

Gross Profit

 

$

20.9

 

 

$

0.2672

 

 

$

20.7

 

 

$

0.2564

 

 

Total Product

 

Amount

(in millions)

 

 

 

 

Amount

(in millions)

 

 

 

Sales

 

$

914.0

 

 

 

 

$

1,096.1

 

 

 

Cost

 

$

573.0

 

 

 

 

$

721.9

 

 

 

Gross Profit

 

$

341.0

 

 

 

 

$

374.2

 

 

 

For the six months ended March 31, 2020, total product gross profit was $341.0 million, which was $33.2 million, or 8.9% less than the six months ended March 31, 2019, as a decrease in home heating oil and propane volume sold ($53.4 million) was slightly offset by higher margins ($20.0 million) and an increase in gross profit from other petroleum products ($0.2 million).

Cost of Installations and Services

Total installation costs for the six months ended March 31, 2020 decreased slightly to $42.4 million, compared to $42.5 million in installation costs for the six months ended March 31, 2019.  Installation costs as a percentage of installation sales were 83.5% for the six months ended March 31, 2020 and 84.4% for the six months ended March 31, 2019.

Service expense decreased by $4.6 million, or 4.8%, to $92.6 million for the six months ended March 31, 2020, representing 106.0% of service sales, versus $97.2 million, or 110.3% of service sales, for the six months ended March 31, 2019.  We realized a combined gross profit from service and installation of $3.1 million for the six months ended March 31, 2020 compared to a gross loss of $1.2 million for the six months ended March 31, 2019, an improvement of $4.3 million in profitability.  Acquisitions positively impacted the comparison by $1.4 million and in the base business, service gross profit improved by $2.9 million due to warmer temperatures of 11.6% which reduced the demand for service, and certain measures undertaken by the company to improve operating

34

efficiency.  Management views the service and installation department on a combined basis because many overhead functions cannot be separated or precisely allocated to either service or installation billings.

(Increase) Decrease in the Fair Value of Derivative Instruments

During the six months ended March 31, 2020, the change in the fair value of derivative instruments resulted in a $5.3 million charge due to a decrease in the market value for unexpired hedges (a $14.0 million charge) partially offset by an $8.7 million credit due to the expiration of certain hedged positions.

During the six months ended March 31, 2019, the change in the fair value of derivative instruments resulted in a $17.6 million charge due to a decrease in the market value for unexpired hedges (a $5.3 million charge), and a $12.3 million charge due to the expiration of certain hedged positions.

Delivery and Branch Expenses

For the six months ended March 31, 2020, delivery and branch expenses decreased $31.2 million, or 14.6%, to $182.2 million, compared to $213.4 million for the six months ended March 31, 2019 as additional costs from acquisitions of $7.6 million were more than offset by a $38.8 million, or 18.2%, decrease in expenses within the base business.  The decline in the base business was attributable to a $10.0 million, or 14.4%, reduction in direct delivery costs due to lower volume, a $3.5 million decrease in expenses related to the Company’s concierge level of service program (which was greatly curtailed in January 2019), and other reductions in operating costs totaling $13.1 million, or 6.1%, as we continue to improve Star’s operating efficiency. Operating expenses were reduced by $12.2 million due to the impact of our weather hedging program.  As of March 31, 2019 we recorded a charge of $2.1 million versus a benefit and receivable of $10.1 million as of March 31, 2020.  The $10.1 million was received in April 2020.

Depreciation and Amortization Expenses

For the six months ended March 31, 2020, depreciation and amortization expense increased $2.5 million, or 16.3%, to $18.1 million, compared to $15.6 million for the six months ended March 31, 2019 largely due to acquisitions.

General and Administrative Expenses

For the six months ended March 31, 2020, general and administrative expenses decreased by $5.8 million, or 32.5%, to $11.9 million from $17.7 million for the six months ended March 31, 2019, primarily due to lower legal and professional expenses of $3.6 million, a $1.5 million charge related to the discontinued use of a tank monitoring system that occurred during the six months ended March 31, 2019 (and did not recur in the current fiscal year), and other savings of $0.7 million.

Finance Charge Income

For the six months ended March 31, 2020, finance charge income decreased to $2.0 million from $2.3 million for the six month ended March 31, 2019, primarily due to lower customer late payment charges.

Interest Expense, Net

For the six months ended March 31, 2020, net interest expense decreased by $0.3 million, or 4.8%, to $5.4 million compared to $5.7 million for the six months ended March 31, 2019. The change year-over-year reflects an increase in average borrowings of $16.9 million from $177.1 million during the six months ended March 31, 2019 to $194.0 million during the six months ended March 31, 2020, offset by a decrease in the weighted average interest rate from 5.2% during the six months ended March 31, 2019 to 4.9% during the six months ended March 31, 2020. The increase in average borrowings of $16.9 million was largely used to fund acquisitions. To hedge against rising interest rates, the Company utilizes interest rate swaps.  At March 31, 2020, $66.5 million, or 51%, of our long term debt was fixed.  Interest income increased by $0.3 million primarily due to higher cash deposited into our captive insurance company.

Amortization of Debt Issuance Costs

For the six months ended March 31, 2020, amortization of debt issuance costs was $0.5 million, essentially unchanged from the six months ended March 31, 2019.

35

Income Tax Expense

For the six months ended March 31, 2020, the Company’s income tax expense increased by $6.3 million to $36.5 million, from $30.2 million for the six months ended March 31, 2019 due primarily to an increase in income before income taxes of $17.8 million that was primarily due to a $12.4 million non-cash favorable change in the fair market value of derivative instruments.

Net Income

For the six months ended March 31, 2020, net income increased $11.5 million, or 15.4%, to $86.2 million due primarily to a favorable change in the fair value of derivative instruments of $12.4 million and a $7.7 million increase in Adjusted EBITDA, described below, that was partially offset by a $6.3 million increase in income tax expense.

Adjusted EBITDA

For the six months ended March 31, 2020, Adjusted EBITDA increased by $7.7 million, or 5.3%, to $152.0 million. Acquisitions provided $8.0 million of Adjusted EBITDA and Adjusted EBITDA in the base business decreased by $0.3 million as the impact of lower volume sold (due to 11.6% warmer weather and net customer attrition) was largely offset by higher per gallon home heating oil and propane margins, lower operating expenses in the base business of $32.1 million, a favorable change in the amount due under the Company’s weather hedge of $12.2 million and an improvement in the net service and installation profitability of $2.9 million.  As discussed above, product gross profit was favorably impacted by $6.9 million due to the Company’s product costing method, and the Company anticipates that product gross profit will be reduced by a similar amount over future periods.

EBITDA and Adjusted EBITDA should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations), but provide additional information for evaluating our ability to make the Minimum Quarterly Distribution. EBITDA and Adjusted EBITDA are calculated as follows:

 

 

 

Six Months

Ended March 31,

 

(in thousands)

 

2020

 

 

2019

 

Net income

 

$

86,163

 

 

$

74,640

 

Plus:

 

 

 

 

 

 

 

 

Income tax expense

 

 

36,482

 

 

 

30,212

 

Amortization of debt issuance costs

 

 

488

 

 

 

503

 

Interest expense, net

 

 

5,435

 

 

 

5,710

 

Depreciation and amortization

 

 

18,139

 

 

 

15,603

 

EBITDA (a)

 

 

146,707

 

 

 

126,668

 

(Increase) / decrease in the fair value of derivative instruments

 

 

5,253

 

 

 

17,638

 

Adjusted EBITDA (a)

 

 

151,960

 

 

 

144,306

 

Add / (subtract)

 

 

 

 

 

 

 

 

Income tax expense

 

 

(36,482

)

 

 

(30,212

)

Interest expense, net

 

 

(5,435

)

 

 

(5,710

)

Provision for losses on accounts receivable

 

 

3,203

 

 

 

4,968

 

Increase in accounts receivables

 

 

(69,562

)

 

 

(159,249

)

Decrease (increase) in inventories

 

 

12,008

 

 

 

(3,741

)

Decrease in customer credit balances

 

 

(32,462

)

 

 

(38,476

)

Change in deferred taxes

 

 

222

 

 

 

(9,335

)

Change in other operating assets and liabilities

 

 

27,423

 

 

 

55,088

 

Net cash provided by (used in) operating activities

 

$

50,875

 

 

$

(42,361

)

Net cash used in investing activities

 

$

(13,197

)

 

$

(27,310

)

Net cash (used in) provided by financing activities

 

$

(32,276

)

 

$

71,512

 

36

(a)

EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization) and Adjusted EBITDA (Earnings from continuing operations before net interest expense, income taxes, depreciation and amortization, (increase) decrease in the fair value of derivatives, net other income, multiemployer pension plan withdrawal charge, gain or loss on debt redemption, goodwill impairment, and other non-cash and non-operating charges) are non-GAAP financial measures that are used as supplemental financial measures by management and external users of our financial statements, such as investors, commercial banks and research analysts, to assess:

 

•

our compliance with certain financial covenants included in our debt agreements;

 

•

our financial performance without regard to financing methods, capital structure, income taxes or historical cost basis;

 

•

our operating performance and return on invested capital compared to those of other companies in the retail distribution of refined petroleum products, without regard to financing methods and capital structure;

 

•

our ability to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and

 

•

the viability of acquisitions and capital expenditure projects and the overall rates of return of alternative investment opportunities.

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations as analytical tools and so should not be viewed in isolation but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are:

 

•

EBITDA and Adjusted EBITDA do not reflect our cash used for capital expenditures.

 

•

Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized often will have to be replaced and EBITDA and Adjusted EBITDA do not reflect the cash requirements for such replacements;

 

•

EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital requirements;

 

•

EBITDA and Adjusted EBITDA do not reflect the cash necessary to make payments of interest or principal on our indebtedness; and

 

•

EBITDA and Adjusted EBITDA do not reflect the cash required to pay taxes.

DISCUSSION OF CASH FLOWS

We use the indirect method to prepare our Consolidated Statements of Cash Flows. Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income for those items that impact net income but do not result in actual cash receipts or payment during the period.

Operating Activities

Due to the seasonal nature of our business, cash is generally used in operations during the winter (our first and second fiscal quarters) as we require additional working capital to support the high volume of sales during this period, and cash is generally provided by operating activities during the spring and summer (our third and fourth fiscal quarters) when customer payments exceed the cost of deliveries.

During the six months ended March 31, 2020, cash provided by operating activities increased $93.2 million to $50.9 million, compared to $42.4 million of cash used in operating activities during the six months ended March 31, 2019.  The increase was driven by a $95.7 million favorable change in accounts receivable (including customer credit balances) due to improved collections and lower sales volume at lower selling prices, a $15.7 million favorable change in inventory due primarily to fewer gallons of liquid product on hand as of March 31, 2020 at lower cost as compared to March 31, 2019, which were partially offset by a $6.5 million unfavorable change in accounts payable due primarily to the timing of inventory purchases, a $6.2 million increase in income taxes paid, a $2.7 million reduction in cash flows from operations, $1.8 million lower escheatment payments to state authorities, and $1.0 million of other changes in working capital.

Investing Activities

Our capital expenditures for the six months ended March 31, 2020 totaled $5.7 million, as we invested in computer hardware and software ($1.4 million), refurbished certain physical plants ($1.4 million), expanded our propane operations ($1.0 million) and made additions to our fleet and other equipment ($1.9 million).

During the six months ended March 31, 2020, we deposited $6.4 million into an irrevocable trust to secure certain liabilities for our captive insurance company and another $0.8 million of earnings were reinvested into the irrevocable trust. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet.  We believe that investments into the irrevocable trust will lower our letter of credit fees, increase interest income on invested cash balances, and provide us with certain tax advantages attributable to a captive insurance company.

37

During the six months ended March 31, 2020, the Company acquired the customer list and the assets of a heating oil dealer for an aggregate purchase price of approximately $0.5 million.

Our capital expenditures for the six months ended March 31, 2019 totaled $6.8 million, as we invested in computer hardware and software ($3.0 million), refurbished certain physical plants ($0.8 million), expanded our propane operations ($1.9 million) and made additions to our fleet and other equipment ($1.1 million).

During the six months ended March 31, 2019, we deposited $6.8 million into an irrevocable trust to secure certain liabilities for our captive insurance company and another $0.8 million of earnings were reinvested into the irrevocable trust.

During the six months ended March 31, 2019 the Company acquired a propane dealer and the assets of one of its subcontractors for an aggregate purchase price of approximately $13.7 million.  The gross purchase price was allocated $11.2 million to intangible assets, $2.7 million to fixed assets, and reduced by $0.2 million for working capital credits.

Financing Activities

During the six months ended March 31, 2020, we refinanced our five-year term loan and the revolving credit facility with the execution of the fifth amended and restated revolving credit facility agreement.  The $130 million of proceeds from the new term loan were used to repay the $90.0 million outstanding balance of the term loan, $39.0 million of the revolving credit facility borrowings under the old credit facility, and $1.0 million of debt issuance costs.  We also paid an additional $0.3 million of debt issuance costs, borrowed an additional net balance of $1.5 million under our revolving credit facility, repaid $2.5 million of our term loan, repurchased 2.1 million Common Units for $18.6 million in connection with our unit repurchase plan, and paid distributions of $11.8 million to our Common Unit holders and $0.4 million to our General Partner unit holders (including $0.4 million of incentive distributions as provided in our Partnership Agreement).

During the six months ended March 31, 2019 we paid distributions of $12.3 million to our Common Unit holders and $0.4 million to our General Partner unit holders (including $0.3 million of incentive distributions as provided in our Partnership Agreement). We borrowed $139.3 million under our revolving credit facility and subsequently repaid $25.8 million. We also repaid $2.5 million of our term loan and repurchased 2.8 million common units for $26.4 million in connection with our unit repurchase plan.

FINANCING AND SOURCES OF LIQUIDITY

Liquidity and Capital Resources Comparatives

Our primary uses of liquidity are to provide funds for our working capital, capital expenditures, distributions on our units, acquisitions and unit repurchases. Our ability to provide funds for such uses depends on our future performance, which will be subject to prevailing economic, financial, and business conditions, especially in light of the impact of COVID-19, weather, the ability to pass on the full impact of high product costs to customers, the effects of high net customer attrition, conservation and other factors. Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities, cash on hand as of March 31, 2020 ($10.3 million) or a combination thereof. To the extent future capital requirements exceed cash on hand plus cash flows from operating activities, we anticipate that working capital will be financed by our revolving credit facility, as discussed below, and reduced from subsequent seasonal reductions in inventory and accounts receivable. As of March 31, 2020, we had accounts receivable of $187.1 million of which $149.4 million is due from residential customers and $37.7 million is due from commercial customers. Our ability to borrow from our bank group is based in part on the aging of these accounts receivable. If these balances do not meet the eligibility tests as found in our fifth amended and restated credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced.  As of March 31, 2020, we had $24.0 million in borrowings under our revolving credit facility, $130 million under our term loan and $4.4 million in letters of credit outstanding. We are also analyzing whether to participate in certain Federal Reserve-backed loan programs adopted in the wake of the coronavirus pandemic that are available to companies our size.

Under the terms of our credit agreement, we must maintain at all times Availability (borrowing base less amounts borrowed and letters of credit issued) of 15% of the maximum facility size and a fixed charge coverage ratio of not less than 1.15. We must also maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30th or September 30th, and no more than 4.5 as of December 31st or March 31st. As of March 31, 2020, Availability, as defined in the credit agreement, was $210.4 million, and we were in compliance with the fixed charge coverage ratio and senior secured leverage ratio.  

Maintenance capital expenditures for the remainder of fiscal 2020 are estimated to be approximately $4.0 million to $5.5 million, excluding the capital requirements for leased fleet. In addition, we plan to invest approximately $0.5 million to $1.0 million in our propane operations. Distributions for the balance of fiscal 2020, at the current quarterly level of $0.1325 per unit, would result in an aggregate of approximately $12.0 million to Common Unit holders, $0.5 million to the General Partner (including $0.5 million of incentive distribution as provided for in our Partnership Agreement) and $0.5 million to management pursuant to the management incentive compensation plan which provides for certain members of management to receive incentive distributions that would otherwise be payable to the General Partner. Under the terms of our credit facility, our term loan is repayable in quarterly

38

payments of $3.25 million (the first of which was made on April 1, 2020) and, depending on our fiscal 2020 results, we may be required to make an additional payment (See Note 11 - Long-Term Debt and Bank Facility Borrowings). In addition, subject to any additional liquidity issues or concerns resulting from the current COVID-19 pandemic, we intend to continue to repurchase Common Units pursuant to our unit repurchase plan, as amended from time to time, and seek attractive acquisition opportunities within the Availability constraints of our revolving credit facility and funding resources.

Contractual Obligations and Off-Balance Sheet Arrangements

There has been no material change to Contractual Obligations and Off-Balance Sheet Arrangements since our September 30, 2019 Form 10-K disclosure and therefore, the table has not been included in this Form 10-Q.

Recent Accounting Pronouncements

Refer to Note 2 – Summary of Significant Accounting Policies for discussion regarding the impact of accounting standards that were recently adopted and issued but not yet effective, on our consolidated financial statements.

39

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate risk primarily through our bank credit facilities. We utilize these borrowings to meet our working capital needs.

At March 31, 2020, we had outstanding borrowings totaling $154.0 million, which are subject to variable interest rates under our credit agreement. In the event that interest rates associated with this facility were to increase 100 basis points, the after tax impact on annual future cash flows would be a decrease of $1.1 million.

We regularly use derivative financial instruments to manage our exposure to market risk related to changes in the current and future market price of home heating oil and vehicle fuels. The value of market sensitive derivative instruments is subject to change as a result of movements in market prices. Sensitivity analysis is a technique used to evaluate the impact of hypothetical market value changes. Based on a hypothetical ten percent increase in the cost of product at March 31, 2020, the potential impact on our hedging activity would be to increase the fair market value of these outstanding derivatives by $0.4 million to a fair market value of $(13.8) million; and conversely a hypothetical ten percent decrease in the cost of product would decrease the fair market value of these outstanding derivatives by less than $0.1 million to a fair market value of $(14.2) million.

Item 4.

Controls and Procedures

a) Evaluation of disclosure controls and procedures

The General Partner’s chief executive officer and chief financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of March 31, 2020. Based on that evaluation, such chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2020 at the reasonable level of assurance. For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Act”) (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

b) Change in internal control over financial reporting

No changes in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

c) Other

The General Partner and the Company believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a Company have been detected. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and the chief executive officer and chief financial officer of the General Partner have concluded, as of March 31, 2020, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.

 

40

PART II OTHER INFORMATION

Item 1.

On April 18, 2017, a civil action was filed in the United States District Court for the Eastern District of New York, entitled M. Norman Donnenfeld v. Petro, Inc., Civil Action Number 2:17-cv-2310-JFB-SIL, against Petro, Inc. By amended complaint filed on August 15, 2017, the Plaintiff alleged he did not receive expected contractual benefits under his protected price plan contract when oil prices fell and asserted various claims for relief including breach of contract, violation of the New York General Business Law and fraudulent inducement. The Plaintiff also sought to have a class certified of similarly situated Petro customers who entered into protected price plan contracts and were denied the same contractual benefits.  The Plaintiff sought compensatory, punitive and other damages in unspecified amounts.  On September 15, 2017, Petro filed a motion to dismiss the amended complaint as time-barred and for failure to state a cause of action.  On September 12, 2018, the district court granted in part and denied in part Petro's motion to dismiss.  The district court dismissed the Plaintiff's claims for breach of the covenant of good faith and fair dealing and fraudulent inducement, but declined to dismiss the Plaintiff's remaining claims.  The district court granted the Plaintiff leave to amend to attempt to replead his fraudulent inducement claim.  On October 10, 2018, the Plaintiff filed a second amended complaint.  The second amended complaint attempted to replead a fraudulent inducement claim and was otherwise substantially similar or identical to the prior complaint.  On November 13, 2018, Petro moved to dismiss the fraudulent inducement and unjust enrichment claims in the second amended complaint.  On January 31, 2019, the court granted the motion and dismissed the fraudulent inducement and unjust enrichment claims with prejudice.  On February 22, 2019, counsel for Petro and the Plaintiff participated in a mediation which, after arms-length negotiations, resulted in a memorandum of understanding to settle the litigation, subject to the completion of confirmatory discovery, negotiation of a final settlement agreement and court approval.  In an order dated March 27, 2019, the district court stayed all discovery deadlines in light of the pending settlement.  On October 4, 2019, upon consent of all parties, Judge Roslynn R. Mauskopf assigned the action to Magistrate Judge Steve I. Locke for final disposition.  On March 26, 2020, the court granted final approval of the class action settlement, certified the class for settlement purposes only and dismissed the action with prejudice.  On March 26, 2020, the court also granted Plaintiff’s unopposed motion for fees, expenses and named plaintiff service award.  The settlement is not an admission of liability or breach to any customers by Petro and the Company continues to believe the allegations lack merit.  If the settlement is not completed for any reason, the Company will continue to vigorously defend the action; in that case, we cannot assess the potential outcome or materiality of this matter.

Item 1A.

Risk Factors

The following risk factor is in addition to our risk factors included in Part I Item 1A. “Risk Factors” in our Fiscal 2019 Form 10-K that could affect our business, financial condition and results of operations In addition to the other information set forth in this Report, investors should carefully review and consider the information regarding certain factors, which could materially affect our business, results of operations, financial condition and cash flows set forth in Part I Item 1A. “Risk Factors” in our Fiscal 2019 Form 10-K. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

 

Our business, results of operations, financial condition and cash flows may be adversely affected by global public health pandemics, including COVID-19, an infectious disease caused by the novel coronavirus, and their related impact on the economy and financial markets.

A global public health pandemic, including COVID-19, poses the risk that we or our employees, vendors, or customers may be prevented from conducting business activities for an indefinite period of time, including shutdowns that may be requested or mandated by governmental authorities, restrictions on travel to or from locations where we obtain product, provide services or where our customers are located. While as of the date hereof, we have been deemed an essential business by state and local governmental officials and are therefore permitted to continue operations during the COVID-19 pandemic, our continued status as an essential business in all or certain of our markets could change by subsequent order and is beyond our control  If workers at one or more of our offices or the offices of our suppliers become ill or are quarantined and in either or both events are therefore unable to work, our operations could be subject to disruption. Further, our customers’ financial condition may be adversely impacted as a result of the impacts of COVID-19, or another global public health pandemic, and efforts taken to prevent its spread, which could result in reduced demand or impact their ability to pay for our products and services. The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. We cannot assure you that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings,

41

renewals or refinancings.  The extent, if any, to which the COVID-19 pandemic will impact our business remains uncertain, however, there could be a material adverse impact on our business, financial condition, results of operations, or cash flows.

The potential effects of COVID-19 also could impact many of our risk factors, included in Part 1, Item A of our Fiscal 2019 Form 10-K, including, but not limited to our profitability, laws and regulations affecting our business, fluctuations in the financial markets and hedging, the availability of future borrowings, the costs of current and future borrowings, valuation of our pension assets and obligations, and credit risks of our customers and counterparties. However, given the evolving health, economic, social, and governmental environments, the potential impact that COVID-19 could have on our risk factors that are further described in our Fiscal 2019 Form 10-K remain uncertain.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Note 4 to the Condensed Consolidated Financial Statements concerning the Company’s repurchase of Common Units during the six months ended March 31, 2020 is incorporated into this Item 2 by reference.

 

42

Item 6.

Exhibits

(a)

Exhibits Included Within:

 

 

 

 

31.1

Certification of Chief Executive Officer, Star Group, L.P., pursuant to Rule 13a-14(a)/15d-14(a).

 

 

31.2

Certification of Chief Financial Officer, Star Group, L.P., pursuant to Rule 13a-14(a)/15d-14(a).

 

 

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

101

The following materials from the Star Group, L.P. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Partners’ Capital, (v) the Condensed Consolidated Statements of Cash Flows and (vi) related notes.

 

 

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

 

 

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

 

 

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

 

 

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

 

43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized:

 

 

 

Star Group, L.P.

(Registrant)

 

 

By:

Kestrel Heat LLC AS GENERAL PARTNER

 

Signature

 

Title

 

Date

 

 

 

 

 

/s/ Richard F. Ambury

Richard F. Ambury

 

Executive Vice President, Chief Financial Officer,

Treasurer and Secretary Kestrel Heat LLC

(Principal Financial Officer)

 

May 4, 2020

 

 

 

 

 

Signature

 

Title

 

Date

 

 

 

 

 

/s/ Cory A. Czekanski

Cory A. Czekanski

 

Vice President – Controller Kestrel Heat LLC

(Principal Accounting Officer)

 

May 4, 2020

 

44

 sgu-ex311_6.htm

Exhibit 31.1

CERTIFICATIONS

I, Jeffrey M. Woosnam, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Star Group, L.P. (“Registrant”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information and;

 

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: May 4, 2020

 

/s/ Jeffrey M. Woosnam

Jeffrey M. Woosnam

President and Chief Executive Officer

Star Group, L.P.

 

sgu-ex312_7.htm

Exhibit 31.2

CERTIFICATIONS

I, Richard F. Ambury, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Star Group, L.P. (“Registrant”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(c)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information and;

 

(d)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: May 4, 2020

 

/s/ Richard F. Ambury

Richard F. Ambury

Chief Financial Officer

Star Group, L.P.

 

sgu-ex321_8.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Star Group, L.P. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey M. Woosnam, President and Chief Executive Officer of the Company, certify to my knowledge pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, following due inquiry, I believe that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Star Group, L.P. and will be retained by Star Group, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

STAR GROUP, L.P.

 

 

 

 

 

 

 

By:

 

KESTREL HEAT, LLC (General Partner)

Date: May 4, 2020

 

 

 

 

 

 

By:

 

/s/ Jeffrey M. Woosnam

 

 

 

 

Jeffrey M. Woosnam

 

 

 

 

President and Chief Executive Officer

 

 

 

 

Star Group, L.P.

 

sgu-ex322_9.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Star Group, L.P. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard F. Ambury, Chief Financial Officer of the Company, certify to my knowledge pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, following due inquiry, I believe that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Star Group, L.P. and will be retained by Star Group, L.P. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

STAR GROUP, L.P.

 

 

 

 

 

 

 

By:

 

KESTREL HEAT, LLC (General Partner)

 

 

 

 

 

 

 

 

 

/s/ Richard F. Ambury

Date: May 4, 2020

 

By:

 

Richard F. Ambury

 

 

 

 

Chief Financial Officer

 

 

 

 

Star Group, L.P.

 

 

v3.20.1
Income Taxes (Tables)
 6 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Current and Deferred Income Tax Expense (Benefit)

The current and deferred income tax expense (benefit) for the three and six months ended March 31, 2020, and March 31, 2019 are as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Income before income taxes

 

$

83,108

 

 

$

101,564

 

 

$

122,645

 

 

$

104,852

 

Current income tax expense

 

 

25,814

 

 

 

37,958

 

 

 

36,260

 

 

 

39,547

 

Deferred income tax expense (benefit)

 

 

(1,114

)

 

 

(8,719

)

 

 

222

 

 

 

(9,335

)

Total income tax expense

 

$

24,700

 

 

$

29,239

 

 

$

36,482

 

 

$

30,212

 
v3.20.1
Inventories (Tables)
 6 Months Ended
Mar. 31, 2020
Inventory Disclosure [Abstract]  
Components of Inventory The components of inventory were as follows (in thousands):

 

 

 

March 31,

2020

 

 

September 30,

2019

 

Product

 

$

31,823

 

 

$

43,536

 

Parts and equipment

 

 

21,003

 

 

 

21,252

 

Total inventory

 

$

52,826

 

 

$

64,788

 

 
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Sales:        
Total sales $ 543,063 $ 699,582 $ 1,052,008 $ 1,234,609
Cost and expenses:        
(Increase) decrease in the fair value of derivative instruments [1] 11,670 (13,401) 5,253 17,638
Delivery and branch expenses 85,463 110,684 182,189 213,357
Depreciation and amortization expenses 9,089 7,858 18,139 15,603
General and administrative expenses 5,422 9,849 11,928 17,664
Finance charge income (1,321) (1,443) (2,034) (2,294)
Operating income 86,117 105,002 128,568 111,065
Interest expense, net (2,756) (3,194) (5,435) (5,710)
Amortization of debt issuance costs (253) (244) (488) (503)
Income before income taxes 83,108 101,564 122,645 104,852
Income tax expense 24,700 29,239 36,482 30,212
Net income 58,408 72,325 86,163 74,640
General Partner’s interest in net income 409 454 601 469
Limited Partners’ interest in net income $ 57,999 $ 71,871 $ 85,562 $ 74,171
Basic and diluted income per Limited Partner Unit: [2] $ 1.03 $ 1.15 $ 1.52 $ 1.19
Weighted average number of Limited Partner units outstanding:        
Basic and Diluted 46,244 51,427 46,760 52,174
Product        
Sales:        
Total sales $ 481,275 $ 637,400 $ 913,963 $ 1,096,107
Installations and services        
Sales:        
Total sales 61,788 62,182 138,045 138,502
Cost of product        
Cost and expenses:        
Cost and expenses 285,350 415,639 573,023 721,865
Cost of installations and services        
Cost and expenses:        
Cost and expenses $ 61,273 $ 65,394 $ 134,942 $ 139,711
[1] Represents the change in value of unrealized open positions and expired options.
[2] See Note 16 - Earnings Per Limited Partner Unit.
v3.20.1
Organization - Additional Information (Detail)
shares in Thousands
 6 Months Ended
Dec. 04, 2019
USD ($)
Mar. 31, 2020
Segment
Customer
Contract
shares
Dec. 31, 2019
shares
Sep. 30, 2019
shares
Mar. 31, 2019
shares
Dec. 31, 2018
shares
Sep. 30, 2018
shares
Jul. 02, 2018
USD ($)
Limited Partners' Capital Account [Line Items]                
Number of reportable segments | Segment   1            
Fifth Amendment                
Limited Partners' Capital Account [Line Items]                
Non Seasonal maximum borrowing capacity under revolving credit facility | $ $ 300,000,000             $ 300,000,000
Maximum borrowing capacity (heating season December to April) under revolving credit facility | $ $ 450,000,000              
Due date of debt Dec. 04, 2024              
Fifth Amendment | Term Loan                
Limited Partners' Capital Account [Line Items]                
Outstanding term loan | $ $ 130,000,000              
Senior secured term loan maturity period 5 years              
Petro Holdings, Inc                
Limited Partners' Capital Account [Line Items]                
Ownership interest of Star Acquisitions Inc.   100.00%            
Number of residential and commercial home heating oil and propane customers served | Customer   448,000            
Number of customers to whom only home heating oil, gasoline and diesel were sells on a delivery only basis | Customer   63,000            
Number of service contracts for natural gas and other heating systems | Contract   18,000            
Number of customers to whom sell gasoline and diesel fuel | Customer   26,000            
Star Group L.P.                
Limited Partners' Capital Account [Line Items]                
Percentage of limited partner interest   99.30%            
Percentage of general partner interest   0.70%            
Star Acquisitions, Inc                
Limited Partners' Capital Account [Line Items]                
Ownership interest of partnership   100.00%            
Petroleum Heat and Power Co., Inc.                
Limited Partners' Capital Account [Line Items]                
Ownership interest of partnership   100.00%            
Common Stock                
Limited Partners' Capital Account [Line Items]                
Number of outstanding units | shares   45,622 46,404 47,685 50,302 52,489 53,088  
General Partner                
Limited Partners' Capital Account [Line Items]                
Number of outstanding units | shares   326 326 326 326 326 326  
v3.20.1
Organization
 6 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Organization

1) Organization

Star Group, L.P. (“Star,” the “Company,” “we,” “us,” or “our”) is a full service provider specializing in the sale of home heating and air conditioning products and services to residential and commercial home heating oil and propane customers. The Company has one reportable segment for accounting purposes.  We also sell diesel fuel, gasoline and home heating oil on a delivery only basis, and in certain of our marketing areas, we provide plumbing services primarily to our home heating oil and propane customer base. We believe we are the nation’s largest retail distributor of home heating oil based upon sales volume. Including our propane locations, we serve customers in the more northern and eastern states within the Northeast, Central and Southeast U.S. regions.

The Company is organized as follows:

 

•

Star is a limited partnership, which at March 31, 2020, had outstanding 45.6 million Common Units (NYSE: “SGU”), representing a 99.3% limited partner interest in Star, and 0.3 million general partner units, representing a 0.7% general partner interest in Star. Our general partner is Kestrel Heat, LLC, a Delaware limited liability company (“Kestrel Heat” or the “general partner”). The Board of Directors of Kestrel Heat (the “Board”) is appointed by its sole member, Kestrel Energy Partners, LLC, a Delaware limited liability company (“Kestrel”).  Since November 1, 2017, Star elected to be treated as a corporation for Federal income tax purposes, so both Star and its subsidiaries (that were already taxable entities) are now subject to Federal and state corporate income taxes. As a result of this election, the Company issued its last Schedule K-1’s for the 2017 calendar year, and now issues Forms 1099-DIV to unitholders.

 

•

Star owns 100% of Star Acquisitions, Inc. (“SA”), a Minnesota corporation that owns 100% of Petro Holdings, Inc. (“Petro”). Star’s operations are conducted through Petro and its subsidiaries. Petro is primarily a Northeast, Central and Southeast U.S. region retail distributor of home heating oil and propane that at March 31, 2020 served approximately 448,000 full service residential and commercial home heating oil and propane customers and 63,000 customers on a delivery only basis. We also sell gasoline and diesel fuel to approximately 26,000 customers. We install, maintain, and repair heating and air conditioning equipment and to a lesser extent provide these services outside our heating oil and propane customer base including approximately 18,000 service contracts for natural gas and other heating systems.

 

•

Petroleum Heat and Power Co., Inc. (“PH&P”) is a 100% owned subsidiary of Star. PH&P is the borrower and Star is the guarantor of the fifth amended and restated credit agreement’s $130 million five-year senior secured term loan and the $300 million ($450 million during the heating season of December through April of each year) revolving credit facility, both due December 4, 2024. (See Note 11—Long-Term Debt and Bank Facility Borrowings)
v3.20.1
Derivatives and Hedging-Disclosures and Fair Value Measurements
 6 Months Ended
Mar. 31, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging-Disclosures and Fair Value Measurements

6) Derivatives and Hedging—Disclosures and Fair Value Measurements

The Company uses derivative instruments such as futures, options and swap agreements in order to mitigate exposure to market risk associated with the purchase of home heating oil for price-protected customers, physical inventory on hand, inventory in transit, priced purchase commitments and internal fuel usage. FASB ASC 815-10-05 Derivatives and Hedging, established accounting and reporting standards requiring that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities, along with qualitative disclosures regarding the derivative activity. The Company has elected not to designate its commodity derivative instruments as hedging derivatives, but rather as economic hedges whose change in fair value is recognized in its statement of operations in the caption “(Increase) decrease in the fair value of derivative instruments.” Depending on the risk being economically hedged, realized gains and losses are recorded in cost of product, cost of installations and services, or delivery and branch expenses.

As of March 31, 2020, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: 8.9 million gallons of swap contracts, 5.3 million gallons of call options, 4.0 million gallons of put options, and 52.8 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of March 31, 2020, held 32.6 million gallons of long future contracts, and 52.1 million gallons of short future contracts that settle in future months.  To hedge its internal fuel usage and other activities for fiscal 2020, the Company, as of March 31, 2020, held 7.3 million gallons of call options and swap contracts and 0.2 million gallons of short swap contracts that settle in future months.

As of March 31, 2019, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: 7.2 million gallons of swap contracts, 2.2 million gallons of call options, 3.4 million gallons of put options, and 54.9 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of March 31, 2019, held 33.1 million gallons of long future contracts, and 50.8 million gallons of short future contracts that settle in future months. To hedge its internal fuel usage and other related activities for fiscal 2019, the Company, as of March 31, 2019, held 1.8 million gallons of swap contracts and 0.8 million gallons of short swap contracts that settle in future months.

As of March 31, 2020, the Company has interest rate swap agreements in order to mitigate exposure to market risk associated with variable rate interest on $66.5 million, or 51%, of its long term debt.  The Company has designated its interest rate swap agreements as cash flow hedging derivatives.  To the extent these derivative instruments are effective and the accounting standard’s documentation requirements have been met, changes in fair value are recognized in other comprehensive income until the underlying hedged item is recognized in earnings.  As of March 31, 2020 the fair value of the swap contracts was $(3.3) million. As of September 30, 2019, the notional value of the swap contracts was $45.0 million and the fair value of the swap contracts was $(2.0) million. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of the swap contracts.

The Company’s derivative instruments are with the following counterparties: Bank of America, N.A., Bank of Montreal, Cargill, Inc., Citibank, N.A., JPMorgan Chase Bank, N.A., Key Bank, N.A., Toronto-Dominion Bank and Wells Fargo Bank, N.A. The Company assesses counterparty credit risk and considers it to be low. We maintain master netting arrangements that allow for the non-conditional offsetting of amounts receivable and payable with counterparties to help manage our risks and record derivative positions on a net basis. The Company generally does not receive cash collateral from its counterparties and does not restrict the use of cash collateral it maintains at counterparties. At March 31, 2020, the aggregate cash posted as collateral in the normal course of business at counterparties was $1.8 million and recorded in “Prepaid expense and other current assets.” Positions with counterparties who are also parties to our credit agreement are collateralized under that facility. As of March 31, 2020, $18.6 million of hedge positions and payable amounts were secured under the credit facility.

FASB ASC 820-10 Fair Value Measurements and Disclosures, established a three-tier fair value hierarchy, which classified the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s Level 1 derivative assets and liabilities represent the fair value of commodity contracts

used in its hedging activities that are identical and traded in active markets. The Company’s Level 2 derivative assets and liabilities represent the fair value of commodity and interest rate contracts used in its hedging activities that are valued using either directly or indirectly observable inputs, whose nature, risk and class are similar. No significant transfers of assets or liabilities have been made into and out of the Level 1 or Level 2 tiers. All derivative instruments were non-trading positions and were either a Level 1 or Level 2 instrument. The Company had no Level 3 derivative instruments. The fair market value of our Level 1 and Level 2 derivative assets and liabilities are calculated by our counter-parties and are independently validated by the Company. The Company’s calculations are, for Level 1 derivative assets and liabilities, based on the published New York Mercantile Exchange (“NYMEX”) market prices for the commodity contracts open at the end of the period. For Level 2 derivative assets and liabilities the calculations performed by the Company are based on a combination of the NYMEX published market prices and other inputs, including such factors as present value, volatility and duration.

The Company had no assets or liabilities that are measured at fair value on a nonrecurring basis subsequent to their initial recognition. The Company’s financial assets and liabilities measured at fair value on a recurring basis are listed on the following table.

 

(In thousands)

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using:

 

Derivatives Not Designated

   as Hedging Instruments

 

 

 

 

 

 

 

Quoted Prices in

Active Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

Under FASB ASC 815-10

 

Balance Sheet Location

 

Total

 

 

Level 1

 

 

Level 2

 

Asset Derivatives at March 31, 2020

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

35,497

 

 

$

—

 

 

$

35,497

 

Commodity contracts

 

Long-term derivative liabilities included in the deferred charges and other assets, net and other long-term liabilities, net balances

 

 

1,673

 

 

 

—

 

 

 

1,673

 

Commodity contract assets at March 31, 2020

 

$

37,170

 

 

$

—

 

 

$

37,170

 

Liability Derivatives at March 31, 2020

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

(49,514

)

 

$

—

 

 

$

(49,514

)

Commodity contracts

 

Long-term derivative liabilities  included in the deferred charges and other assets, net and other long-term liabilities, net balances

 

 

(1,867

)

 

 

—

 

 

 

(1,867

)

Commodity contract liabilities at March 31, 2020

 

$

(51,381

)

 

$

—

 

 

$

(51,381

)

Asset Derivatives at September 30, 2019

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

13,824

 

 

$

—

 

 

$

13,824

 

Commodity contracts

 

Long-term derivative assets included in the deferred charges and other assets, net balance and other long term liabilities, net

 

 

1,466

 

 

 

—

 

 

 

1,466

 

Commodity contract assets September 30, 2019

 

$

15,290

 

 

$

—

 

 

$

15,290

 

Liability Derivatives at September 30, 2019

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

(22,086

)

 

$

—

 

 

$

(22,086

)

Commodity contracts

 

Long-term derivative liabilities included in the deferred charges and other assets, net balance and other long term liabilities, net

 

 

(1,719

)

 

 

—

 

 

 

(1,719

)

Commodity contract liabilities September 30, 2019

 

$

(23,805

)

 

$

—

 

 

$

(23,805

)

 

The Company’s derivative assets (liabilities) offset by counterparty and subject to an enforceable master netting arrangement are listed on the following table.

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Statement of Financial Position

 

Offsetting of Financial Assets (Liabilities)

   and Derivative Assets (Liabilities)

 

Gross

Assets

Recognized

 

 

Gross

Liabilities

Offset in the

Statement

of Financial

Position

 

 

Net Assets

(Liabilities)

Presented in the

Statement

of Financial

Position

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amount

 

Long-term derivative assets included in deferred charges and other assets, net

 

$

615

 

 

$

(559

)

 

$

56

 

 

$

—

 

 

$

—

 

 

$

56

 

Fair liability value of derivative instruments

 

 

35,497

 

 

 

(49,514

)

 

 

(14,017

)

 

 

—

 

 

 

—

 

 

 

(14,017

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,058

 

 

 

(1,308

)

 

 

(250

)

 

 

—

 

 

 

—

 

 

 

(250

)

Total at March 31, 2020

 

$

37,170

 

 

$

(51,381

)

 

$

(14,211

)

 

$

—

 

 

$

—

 

 

$

(14,211

)

Long-term derivative assets included in other long-term assets, net

 

$

16

 

 

$

(16

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Fair liability value of derivative instruments

 

 

13,824

 

 

 

(22,086

)

 

 

(8,262

)

 

 

—

 

 

 

—

 

 

 

(8,262

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,450

 

 

 

(1,703

)

 

 

(253

)

 

 

—

 

 

 

—

 

 

 

(253

)

Total at September 30, 2019

 

$

15,290

 

 

$

(23,805

)

 

$

(8,515

)

 

$

—

 

 

$

—

 

 

$

(8,515

)

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Effect of Derivative Instruments on the Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of (Gain) or Loss Recognized

 

 

Amount of (Gain) or Loss Recognized

 

Derivatives Not Designated as Hedging Instruments Under FASB ASC 815-10

 

Location of (Gain) or Loss

Recognized in Income on Derivative

 

Three Months Ended March 31,

2020

 

 

Three Months Ended March 31,

2019

 

 

Six Months Ended March 31,

2020

 

 

Six Months Ended March 31,

2019

 

Commodity contracts

 

Cost of product (a)

 

$

(3,700

)

 

$

14,345

 

 

$

2,349

 

 

$

8,193

 

Commodity contracts

 

Cost of installations and service (a)

 

$

233

 

 

$

403

 

 

$

224

 

 

$

650

 

Commodity contracts

 

Delivery and branch expenses (a)

 

$

626

 

 

$

271

 

 

$

597

 

 

$

437

 

Commodity contracts

 

(Increase) / decrease in the fair

value of derivative instruments (b)

 

$

11,670

 

 

$

(13,401

)

 

$

5,253

 

 

$

17,638

 

 

(a)

Represents realized closed positions and includes the cost of options as they expire.

(b)

Represents the change in value of unrealized open positions and expired options.

v3.20.1
Intangibles, net
 6 Months Ended
Mar. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangibles, net

10) Intangibles, net

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows (in thousands):

 

 

 

March 31, 2020

 

 

September 30, 2019

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accum.

 

 

 

 

 

 

Carrying

 

 

Accum.

 

 

 

 

 

 

 

Amount

 

 

Amortization

 

 

Net

 

 

Amount

 

 

Amortization

 

 

Net

 

Customer lists

 

$

383,388

 

 

$

306,657

 

 

$

76,731

 

 

$

382,373

 

 

$

297,221

 

 

$

85,152

 

Trade names and other intangibles

 

 

37,853

 

 

 

16,339

 

 

 

21,514

 

 

 

37,739

 

 

 

15,203

 

 

 

22,536

 

Total

 

$

421,241

 

 

$

322,996

 

 

$

98,245

 

 

$

420,112

 

 

$

312,424

 

 

$

107,688

 

 

Amortization expense for intangible assets was $10.6 million for the six months ended March 31, 2020, compared to $9.3 million for the six months ended March 31, 2019.

v3.20.1
Income Taxes - Current and Deferred Income Tax Expense (Benefit) (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Deferred Income Tax Assets And Liabilities        
Income before income taxes $ 83,108 $ 101,564 $ 122,645 $ 104,852
Current income tax expense 25,814 37,958 36,260 39,547
Deferred income tax expense (benefit) (1,114) (8,719) 222 (9,335)
Total income tax expense $ 24,700 $ 29,239 $ 36,482 $ 30,212
v3.20.1
Inventories - Components of Inventory (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Inventory Disclosure [Abstract]    
Product $ 31,823 $ 43,536
Parts and equipment 21,003 21,252
Total inventory $ 52,826 $ 64,788
v3.20.1
Intangibles, net - Additional Information (Detail) - USD ($)
$ in Millions
 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Goodwill And Intangible Assets Disclosure [Abstract]    
Amortization expense for intangible assets $ 10.6 $ 9.3
v3.20.1
Leases - Schedule of Maturities of Operating Lease Liabilities (Detail)
$ in Thousands
Mar. 31, 2020
USD ($)
Leases [Abstract]  
Remaining six months of fiscal year 2020 $ 12,589
2021 22,733
2022 18,669
2023 15,347
2024 13,194
Thereafter 49,172
Total undiscounted lease payments 131,704
Less imputed interest (22,764)
Total lease liabilities $ 108,940
v3.20.1
Subsequent Events - Additional Information (Detail) - Subsequent Event
$ / shares in Units, shares in Millions, $ in Millions
 1 Months Ended
Apr. 30, 2020
USD ($)
$ / shares
shares
Motor Fuel and Other Petroleum Products | Impact of COVID-19  
Subsequent Event [Line Items]  
Percentage of decrease in sales volume 35.00%
Service Revenues | Impact of COVID-19  
Subsequent Event [Line Items]  
Percentage of decrease in sales revenue 10.00%
Installation Revenues | Impact of COVID-19  
Subsequent Event [Line Items]  
Percentage of decrease in sales revenue 40.00%
Plan III Common Units Repurchase Program  
Subsequent Event [Line Items]  
Company's common units repurchased and retired | shares 0.4
Average price paid per unit | $ / shares $ 7.71
Dividend Declared  
Subsequent Event [Line Items]  
Distribution declared | $ / shares 0.1325
Partners capital projected distribution amount on annualized basis | $ / shares 0.53
Minimum dividend distribution per unit | $ / shares $ 0.0675
Amount to paid to common unit holders | $ $ 6.0
Amount to paid to the General Partner | $ 0.2
Incentive distribution to the General Partner | $ 0.2
Incentive distributions to management | $ $ 0.2
Dividend payable date May 12, 2020
Dividend record date May 04, 2020
v3.20.1
Common Unit Repurchase and Retirement - Company's Repurchase Activities (Parenthetical) (Detail) - shares
shares in Millions
 3 Months Ended
Dec. 31, 2019
Apr. 30, 2020
Feb. 29, 2020
Jan. 31, 2020
Capital Unit [Line Items]        
Company's common units authorized for repurchase     1.1 0.1
Private Transaction        
Capital Unit [Line Items]        
Company's common units repurchased 0.6      
Common Stock Available for Repurchase Under Privately Negotiated Transactions        
Capital Unit [Line Items]        
Company's common units authorized for repurchase   0.1 0.1  
v3.20.1
Revenue Recognition - Summary of Disaggregation of Revenue by Major Sources (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Disaggregation Of Revenue [Line Items]        
Total sales $ 543,063 $ 699,582 $ 1,052,008 $ 1,234,609
Home heating oil and propane        
Disaggregation Of Revenue [Line Items]        
Total sales 413,466 554,364 756,812 918,566
Other petroleum products        
Disaggregation Of Revenue [Line Items]        
Total sales 67,809 83,036 157,151 177,541
Petroleum products        
Disaggregation Of Revenue [Line Items]        
Total sales 481,275 637,400 913,963 1,096,107
Equipment installations        
Disaggregation Of Revenue [Line Items]        
Total sales 20,158 20,384 50,723 50,367
Equipment maintenance service contracts        
Disaggregation Of Revenue [Line Items]        
Total sales 27,764 26,678 55,672 54,997
Billable call services        
Disaggregation Of Revenue [Line Items]        
Total sales 13,866 15,120 31,650 33,138
Installations and services        
Disaggregation Of Revenue [Line Items]        
Total sales $ 61,788 $ 62,182 $ 138,045 $ 138,502
v3.20.1
Derivatives and Hedging-Disclosures and Fair Value Measurements - Company's Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10 - Commodity Contract - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Assets, commodity contracts $ 37,170 $ 15,290
Derivative Liabilities, commodity contracts (51,381) (23,805)
Fair liability and fair asset value of derivative instruments    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Assets, commodity contracts 35,497 13,824
Derivative Liabilities, commodity contracts (49,514) (22,086)
Deferred charges and other assets, net and other long-term liabilities, net balances    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Assets, commodity contracts 1,673 1,466
Derivative Liabilities, commodity contracts (1,867) (1,719)
Significant Other Observable Inputs Level 2    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Assets, commodity contracts 37,170 15,290
Derivative Liabilities, commodity contracts (51,381) (23,805)
Significant Other Observable Inputs Level 2 | Fair liability and fair asset value of derivative instruments    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Assets, commodity contracts 35,497 13,824
Derivative Liabilities, commodity contracts (49,514) (22,086)
Significant Other Observable Inputs Level 2 | Deferred charges and other assets, net and other long-term liabilities, net balances    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Assets, commodity contracts 1,673 1,466
Derivative Liabilities, commodity contracts $ (1,867) $ (1,719)
v3.20.1
Derivatives and Hedging-Disclosures and Fair Value Measurements (Tables)
 6 Months Ended
Mar. 31, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Company's Financial Assets and Liabilities Measured at Fair Value on Recurring Basis The Company’s financial assets and liabilities measured at fair value on a recurring basis are listed on the following table.

(In thousands)

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using:

 

Derivatives Not Designated

   as Hedging Instruments

 

 

 

 

 

 

 

Quoted Prices in

Active Markets for

Identical Assets

 

 

Significant Other

Observable Inputs

 

Under FASB ASC 815-10

 

Balance Sheet Location

 

Total

 

 

Level 1

 

 

Level 2

 

Asset Derivatives at March 31, 2020

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

35,497

 

 

$

—

 

 

$

35,497

 

Commodity contracts

 

Long-term derivative liabilities included in the deferred charges and other assets, net and other long-term liabilities, net balances

 

 

1,673

 

 

 

—

 

 

 

1,673

 

Commodity contract assets at March 31, 2020

 

$

37,170

 

 

$

—

 

 

$

37,170

 

Liability Derivatives at March 31, 2020

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

(49,514

)

 

$

—

 

 

$

(49,514

)

Commodity contracts

 

Long-term derivative liabilities  included in the deferred charges and other assets, net and other long-term liabilities, net balances

 

 

(1,867

)

 

 

—

 

 

 

(1,867

)

Commodity contract liabilities at March 31, 2020

 

$

(51,381

)

 

$

—

 

 

$

(51,381

)

Asset Derivatives at September 30, 2019

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

13,824

 

 

$

—

 

 

$

13,824

 

Commodity contracts

 

Long-term derivative assets included in the deferred charges and other assets, net balance and other long term liabilities, net

 

 

1,466

 

 

 

—

 

 

 

1,466

 

Commodity contract assets September 30, 2019

 

$

15,290

 

 

$

—

 

 

$

15,290

 

Liability Derivatives at September 30, 2019

 

Commodity contracts

 

Fair liability value of derivative instruments

 

$

(22,086

)

 

$

—

 

 

$

(22,086

)

Commodity contracts

 

Long-term derivative liabilities included in the deferred charges and other assets, net balance and other long term liabilities, net

 

 

(1,719

)

 

 

—

 

 

 

(1,719

)

Commodity contract liabilities September 30, 2019

 

$

(23,805

)

 

$

—

 

 

$

(23,805

)

 
Company's Derivatives Assets (Liabilities) Offset by Counterparty

The Company’s derivative assets (liabilities) offset by counterparty and subject to an enforceable master netting arrangement are listed on the following table.

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Statement of Financial Position

 

Offsetting of Financial Assets (Liabilities)

   and Derivative Assets (Liabilities)

 

Gross

Assets

Recognized

 

 

Gross

Liabilities

Offset in the

Statement

of Financial

Position

 

 

Net Assets

(Liabilities)

Presented in the

Statement

of Financial

Position

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amount

 

Long-term derivative assets included in deferred charges and other assets, net

 

$

615

 

 

$

(559

)

 

$

56

 

 

$

—

 

 

$

—

 

 

$

56

 

Fair liability value of derivative instruments

 

 

35,497

 

 

 

(49,514

)

 

 

(14,017

)

 

 

—

 

 

 

—

 

 

 

(14,017

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,058

 

 

 

(1,308

)

 

 

(250

)

 

 

—

 

 

 

—

 

 

 

(250

)

Total at March 31, 2020

 

$

37,170

 

 

$

(51,381

)

 

$

(14,211

)

 

$

—

 

 

$

—

 

 

$

(14,211

)

Long-term derivative assets included in other long-term assets, net

 

$

16

 

 

$

(16

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Fair liability value of derivative instruments

 

 

13,824

 

 

 

(22,086

)

 

 

(8,262

)

 

 

—

 

 

 

—

 

 

 

(8,262

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,450

 

 

 

(1,703

)

 

 

(253

)

 

 

—

 

 

 

—

 

 

 

(253

)

Total at September 30, 2019

 

$

15,290

 

 

$

(23,805

)

 

$

(8,515

)

 

$

—

 

 

$

—

 

 

$

(8,515

)
Company's Derivatives Assets (Liabilities) Offset by Counterparty

The Company’s derivative assets (liabilities) offset by counterparty and subject to an enforceable master netting arrangement are listed on the following table.

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts Not Offset in the

Statement of Financial Position

 

Offsetting of Financial Assets (Liabilities)

   and Derivative Assets (Liabilities)

 

Gross

Assets

Recognized

 

 

Gross

Liabilities

Offset in the

Statement

of Financial

Position

 

 

Net Assets

(Liabilities)

Presented in the

Statement

of Financial

Position

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amount

 

Long-term derivative assets included in deferred charges and other assets, net

 

$

615

 

 

$

(559

)

 

$

56

 

 

$

—

 

 

$

—

 

 

$

56

 

Fair liability value of derivative instruments

 

 

35,497

 

 

 

(49,514

)

 

 

(14,017

)

 

 

—

 

 

 

—

 

 

 

(14,017

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,058

 

 

 

(1,308

)

 

 

(250

)

 

 

—

 

 

 

—

 

 

 

(250

)

Total at March 31, 2020

 

$

37,170

 

 

$

(51,381

)

 

$

(14,211

)

 

$

—

 

 

$

—

 

 

$

(14,211

)

Long-term derivative assets included in other long-term assets, net

 

$

16

 

 

$

(16

)

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

Fair liability value of derivative instruments

 

 

13,824

 

 

 

(22,086

)

 

 

(8,262

)

 

 

—

 

 

 

—

 

 

 

(8,262

)

Long-term derivative liabilities included in other long-term liabilities, net

 

 

1,450

 

 

 

(1,703

)

 

 

(253

)

 

 

—

 

 

 

—

 

 

 

(253

)

Total at September 30, 2019

 

$

15,290

 

 

$

(23,805

)

 

$

(8,515

)

 

$

—

 

 

$

—

 

 

$

(8,515

)
Company's Effect on Derivative Instruments on the Statement of Operations

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Effect of Derivative Instruments on the Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of (Gain) or Loss Recognized

 

 

Amount of (Gain) or Loss Recognized

 

Derivatives Not Designated as Hedging Instruments Under FASB ASC 815-10

 

Location of (Gain) or Loss

Recognized in Income on Derivative

 

Three Months Ended March 31,

2020

 

 

Three Months Ended March 31,

2019

 

 

Six Months Ended March 31,

2020

 

 

Six Months Ended March 31,

2019

 

Commodity contracts

 

Cost of product (a)

 

$

(3,700

)

 

$

14,345

 

 

$

2,349

 

 

$

8,193

 

Commodity contracts

 

Cost of installations and service (a)

 

$

233

 

 

$

403

 

 

$

224

 

 

$

650

 

Commodity contracts

 

Delivery and branch expenses (a)

 

$

626

 

 

$

271

 

 

$

597

 

 

$

437

 

Commodity contracts

 

(Increase) / decrease in the fair

value of derivative instruments (b)

 

$

11,670

 

 

$

(13,401

)

 

$

5,253

 

 

$

17,638

 

 

(a)

Represents realized closed positions and includes the cost of options as they expire.

(b)

Represents the change in value of unrealized open positions and expired options.

v3.20.1
Supplemental Disclosure of Cash Flow Information
 6 Months Ended
Mar. 31, 2020
Supplemental Cash Flow Elements [Abstract]  
Supplemental Disclosure of Cash Flow Information

14) Supplemental Disclosure of Cash Flow Information

 

 

 

Six Months Ended

 

Cash paid during the period for:

 

March 31,

 

(in thousands)

 

2020

 

 

2019

 

Income taxes, net

 

$

9,992

 

 

$

3,748

 

Interest

 

$

6,543

 

 

$

5,770

 

 
v3.20.1
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Basis of Presentation

 

Basis of Presentation

The Consolidated Financial Statements include the accounts of Star and its subsidiaries. All material intercompany items and transactions have been eliminated in consolidation.

The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair statement of financial condition and results for the interim periods. Due to the seasonal nature of the Company’s business, the results of operations and cash flows for the six-month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

These interim financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2019.

Comprehensive Income

Comprehensive Income

Comprehensive income is comprised of Net income and Other comprehensive income (loss). Other comprehensive income (loss) consists of the unrealized gain on amortization on the Company’s pension plan obligation for its two frozen defined benefit pension plans, unrealized gain on available-for-sale investments, unrealized loss on interest rate hedge and the corresponding tax effects.
Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. At March 31, 2020, the $10.6 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of $10.3 million of cash and cash equivalents and $0.3 million of restricted cash. At September 30, 2019, the $5.1 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of $4.9 million of cash and cash equivalents and $0.3 million of restricted cash. Restricted cash represents deposits held by our captive insurance company that are required by state insurance regulations to remain in the captive insurance company as cash.

Captive Insurance Collateral

Captive Insurance Collateral

The captive insurance collateral is held by our captive insurance company in an irrevocable trust as collateral for certain workers’ compensation and automobile liability claims.  The collateral is required by a third party insurance carrier that insures per claim amounts above a set deductible. If we did not deposit cash into the trust, the third party carrier would require that we issue an equal amount of letters of credit, which would reduce our availability under the fifth amended and restated credit agreement.  Due to the expected timing of claim payments, the nature of the collateral agreement with the carrier, and our captive insurance company’s source of other operating cash, the collateral is not expected to be used to pay obligations within the next twelve months.

At March 31, 2020, captive insurance collateral is comprised of $60.2 million of Level 1 debt securities measured at fair value and $5.6 million of mutual funds measured at net asset value.  At September 30, 2019, the balance was comprised of $58.0 million of Level 1 debt securities measured at fair value and $0.5 million of mutual funds measured at net asset value. Unrealized gains and losses, net of related income taxes, are reported as accumulated other comprehensive gain (loss), except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net income and are included in Interest expense, net, at which time the average cost basis of these securities are adjusted to fair value.
Weather Hedge Contract

Weather Hedge Contract

To partially mitigate the adverse effect of warm weather on cash flows, the Company has used weather hedge contracts for a number of years. Weather hedge contracts are recorded in accordance with the intrinsic value method defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-45-15 Derivatives and Hedging, Weather Derivatives (EITF 99-2). The premium paid is included in the caption “Prepaid expenses and other current assets” in the accompanying balance sheets and amortized over the life of the contract, with the intrinsic value method applied at each interim period.

The Company entered into weather hedge contracts for fiscal years 2019, 2020 and 2021.  Under these contracts, we are entitled to receive a payment if the total number of degree days within the hedge period is less than the prior ten year average. The “Payment Thresholds,” or strikes, are set at various levels. In addition, we will be obligated to make a payment capped at $5.0 million if degree days exceed the Payment Threshold which approximates the prior ten year average. The hedge period runs from November 1 through March 31, taken as a whole, for each respective fiscal year.  For fiscal 2020 and 2021 the maximum that the Company can receive annually is $12.5 million and the maximum that the Company would be obligated to pay annually is $5.0 million.  As of March 31, 2020, the Company reduced delivery and branch expense and recorded a receivable under these contracts of $10.1 million, and received the amount in full in April 2020.  As of March 31, 2019, the Company increased delivery and branch expense and recorded a payable under these contracts of $2.1 million, and paid the amount in full in April 2019.
New England Teamsters and Trucking Industry Pension Fund ("the NETTI Fund") Liability

New England Teamsters and Trucking Industry Pension Fund (“the NETTI Fund”) Liability

As of March 31, 2020, we had $0.2 million and $16.8 million balances included in the captions “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, on our Condensed Consolidated Balance Sheet representing the remaining balance of the NETTI Fund withdrawal liability. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal liability as of March 31, 2020 and September 30, 2019 was $29.4 million and $21.1 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.
Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC Topic 842”).  The update requires all leases with a term greater than twelve months to be recognized on the balance sheet by recording (1) a lease liability that represents a lessee’s obligation to make lease payments arising from a lease, measured at the present value of the remaining lease payments; and (2) a right-of-use (“ROU”) asset that represents the lessee’s right to use a specified asset for the lease term, measured in an amount equal to the lease liability adjusted for accrued lease payments.  The standard also requires the disclosure of key information pertaining to leasing arrangements.  

As of October 1, 2019, the Company adopted ASC Topic 842 using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11.  As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. October 1, 2019).  The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.  We also elected a practical expedient to not separate non-lease components from the lease components and excluded short term leases from the calculation of right of use asset and operating lease liability.  For certain leases relating to vehicles and equipment we elected to apply portfolio approach guidance and accounted for leases with similar characteristics as a single lease. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date.

The adoption of ASC Topic 842 had a material impact to the Company’s Condensed Consolidated Balance Sheet, but did not impact the Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Partners’ Capital. The most significant changes to the Condensed Consolidated Balance Sheet relate to the recognition of the following as of October 1, 2019:  “Operating lease right-of-use assets” in the amount of $104.7 million, “Current portion of operating lease liabilities” in the amount of $20.1 million and “Long-term operating lease liabilities” in the amount of $89.9 million. The adoption of ASC Topic 842 also had no impact on operating, investing, or financing cash flows in the Condensed Consolidated Statement of Cash Flows. However, ASC Topic has significantly affected the Company’s disclosures about noncash investing activities. Additionally, the Company’s lease-related disclosures have significantly increased as of and for the six months ended March 31, 2020 as compared to prior years. See Note 13 – Leases for further details on the adoption of ASC Topic 842.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The Company adopted the ASU effective March 12, 2020.  The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. The Company has $66.5 million of interest rate swap agreements at March 31, 2020 that are benchmarked against LIBOR, which the Company has designated as cash flow hedging derivatives.  This guidance includes practical expedients for contract modifications due to reference rate reform. The Company has elected to adopt the practical expedient that the Company may change the contractual terms of the interest rate swap agreements that is expected to be affected by reference rate reform and not be required to de-designate the hedging relationship.  The adoption did not have an impact on the Company’s consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The update broadens the information that an entity should consider in developing expected credit loss estimates, eliminates the probable initial recognition threshold, and allows for the immediate recognition of the full amount of expected credit losses. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021. The Company is evaluating the effect that ASU No. 2016-13 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 230): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not exceed the total amount of goodwill allocated to the reporting unit. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company has not determined the timing of adoption, but does not expect ASU 2017-04 to have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-14 will have on its consolidated financial statements and related disclosures, and has not determined the timing of adoption.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2022, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-15 will have on its consolidated financial statements and related disclosures, and has not determined the timing of adoption.
v3.20.1
Leases - Summary of Total Lease Costs and Other Information (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2020
Lease cost:    
Operating lease cost $ 6,333 $ 12,932
Short-term lease cost 240 432
Variable lease cost 1,129 2,139
Total lease cost 7,702 15,503
Cash paid for amounts included in the measurement of lease liabilities    
Operating cash flows from operating leases 6,244 12,625
Right-of-use assets obtained in exchange for new operating lease liabilities $ 5,426 $ 9,436
v3.20.1
Earnings Per Limited Partner Unit - Net Income Allocation and Per Unit Data (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Basic and Diluted Earnings Per Limited Partner:        
Net income $ 58,408 $ 72,325 $ 86,163 $ 74,640
Less General Partner’s interest in net income 409 454 601 469
Net income available to limited partners 57,999 71,871 85,562 74,171
Less dilutive impact of theoretical distribution of earnings under FASB ASC 260-10-45-60 10,283 12,934 14,631 12,294
Limited Partner’s interest in net income under FASB ASC 260-10-45-60 $ 47,716 $ 58,937 $ 70,931 $ 61,877
Per unit data:        
Basic and diluted net income available to limited partners $ 1.25 $ 1.40 $ 1.83 $ 1.42
Less dilutive impact of theoretical distribution of earnings under FASB ASC 260-10-45-60 0.22 0.25 0.31 0.23
Limited Partner’s interest in net income under FASB ASC 260-10-45-60 [1] $ 1.03 $ 1.15 $ 1.52 $ 1.19
Weighted average number of Limited Partner units outstanding 46,244 51,427 46,760 52,174
[1] See Note 16 - Earnings Per Limited Partner Unit.
v3.20.1
Derivatives and Hedging-Disclosures and Fair Value Measurements - Offsetting of Financial Assets (Liabilities) and Derivative Assets (Liabilities) (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]    
Net Assets (Liabilities) Presented in the Statement of Financial Position $ (14,017) $ (8,262)
Subject to an enforceable master netting arrangement    
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]    
Gross Assets Recognized 37,170 15,290
Gross Liabilities Offset in the Statement of Financial Position (51,381) (23,805)
Net Assets (Liabilities) Presented in the Statement of Financial Position (14,211) (8,515)
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments   0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received   0
Gross Amounts Not Offset in the Statement of Financial Position, Net Amount (14,211) (8,515)
Subject to an enforceable master netting arrangement | Deferred charges and other assets, net    
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]    
Gross Assets Recognized 615  
Gross Liabilities Offset in the Statement of Financial Position (559)  
Net Assets (Liabilities) Presented in the Statement of Financial Position 56  
Gross Amounts Not Offset in the Statement of Financial Position, Net Amount 56  
Subject to an enforceable master netting arrangement | Other long-term assets, net    
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]    
Gross Assets Recognized   16
Gross Liabilities Offset in the Statement of Financial Position   (16)
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments   0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received   0
Subject to an enforceable master netting arrangement | Fair liability and fair asset value of derivative instruments    
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]    
Gross Assets Recognized 35,497 13,824
Gross Liabilities Offset in the Statement of Financial Position (49,514) (22,086)
Net Assets (Liabilities) Presented in the Statement of Financial Position (14,017) (8,262)
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments   0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received   0
Gross Amounts Not Offset in the Statement of Financial Position, Net Amount (14,017) (8,262)
Subject to an enforceable master netting arrangement | Other long-term liabilities    
Fair Values Of Financial Assets And Liabilities Including Derivative Financial Instruments [Line Items]    
Gross Assets Recognized 1,058 1,450
Gross Liabilities Offset in the Statement of Financial Position (1,308) (1,703)
Net Assets (Liabilities) Presented in the Statement of Financial Position (250) (253)
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments   0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received   0
Gross Amounts Not Offset in the Statement of Financial Position, Net Amount $ (250) $ (253)
v3.20.1
Captive Insurance Collateral - Schedule of Captive Insurance Collateral to be Available-for-sale Investments (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Schedule Of Available For Sale Securities [Line Items]    
Amortized Cost $ 64,704 $ 57,461
Gross Unrealized Gain 1,073 1,032
Gross Unrealized (Loss) (1) (3)
Fair Value 65,776 58,490
Cash and Receivables    
Schedule Of Available For Sale Securities [Line Items]    
Amortized Cost 5,639 509
Fair Value 5,639 509
U.S. Government Sponsored Agencies    
Schedule Of Available For Sale Securities [Line Items]    
Amortized Cost 33,320 29,055
Gross Unrealized Gain 310 198
Gross Unrealized (Loss) (1) (3)
Fair Value 33,629 29,250
Corporate Debt Securities    
Schedule Of Available For Sale Securities [Line Items]    
Amortized Cost 22,735 23,831
Gross Unrealized Gain 724 773
Fair Value 23,459 24,604
Foreign Bonds and Notes    
Schedule Of Available For Sale Securities [Line Items]    
Amortized Cost 3,010 4,066
Gross Unrealized Gain 39 61
Fair Value $ 3,049 $ 4,127
v3.20.1
Revenue Recognition - Additional Information (Detail) - USD ($)
$ in Millions
 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Sep. 30, 2019
Revenue Recognition [Line Items]      
Contract costs, amortization period 5 years    
Contract liabilities $ 97.2   $ 127.0
Contract with customer liability, revenue recognized $ 95.7 $ 90.3  
Maximum      
Revenue Recognition [Line Items]      
Contract liabilities recognition service contract period 1 year    
Delivery and Branch Expenses      
Revenue Recognition [Line Items]      
Amortization of deferred contract costs $ 1.9 $ 1.9  
Prepaid Expense and Other Current Assets      
Revenue Recognition [Line Items]      
Deferred contract costs,current 3.5   3.4
Deferred Charges and Other Assets, Net      
Revenue Recognition [Line Items]      
Deferred contract costs,non current $ 6.3   $ 5.9
v3.20.1
Leases
 6 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Leases

13) Leases

The Company has entered into certain operating leases for office space, vehicles and other equipment with lease terms between one to twenty years, expiring between 2020 and 2039. Some of the Company’s real estate property lease agreements have options to extend the leases for up to five years.

The Company determines if an arrangement is a lease at inception.  Lease liabilities are measured at the lease commencement date in an amount equal to the present value of the minimum lease payments over the lease term.  Right-of-use (“ROU”) assets are recognized based on the amount of the lease liability adjusted for any lease payments made to the lessor at or before the commencement date, minus any lease incentives received, plus any initial direct costs incurred.  Renewal options are included in the calculation of the ROU asset and lease liability when it is determined that they are reasonably certain of exercise.

 

Certain of our lease arrangements contain non-lease components such as common area maintenance.  We have elected to account for the lease component and its associated non-lease components as a single lease component.  Leases with an initial term of 12 months or less are not recognized on our balance sheet. The Company has leases that have variable payments, including lease payments where lease payment increases are based on the percentage change in the Consumer Price Index. For such leases payment at the lease commencement date is used to measure the ROU assets and operating lease liabilities. Changes in the index and other variable payments are expensed as incurred.  The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in our operating leases is not readily determinable. The basis for an incremental borrowing rate was our Term Loan, market-based yield curves and comparable debt securities.

 

 

A summary of total lease costs and other information for the three and six months ended March 31, 2020 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2020

 

 

2020

 

Lease cost:

 

 

 

 

 

 

 

 

Operating lease cost

 

$

6,333

 

 

$

12,932

 

Short-term lease cost

 

 

240

 

 

 

432

 

Variable lease cost

 

 

1,129

 

 

 

2,139

 

Total lease cost

 

$

7,702

 

 

$

15,503

 

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

     Operating cash flows from operating leases

 

$

6,244

 

 

$

12,625

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

5,426

 

 

$

9,436

 

 

As of March 31, 2020, our operating leases had a weighted average remaining lease term of 7.4 years and a weighted average discount rate of 4.9%. Maturities of operating lease liabilities as of March 31, 2020 are as follows:

 

 

 

March 31,

 

(in thousands)

 

2020

 

      Remaining six months of fiscal year 2020

 

$

12,589

 

2021

 

 

22,733

 

2022

 

 

18,669

 

2023

 

 

15,347

 

2024

 

 

13,194

 

Thereafter

 

 

49,172

 

Total undiscounted lease payments

 

 

131,704

 

Less imputed interest

 

 

(22,764

)

Total lease liabilities

 

$

108,940

 

 

Maturities of operating lease liabilities presented undiscounted under ASC Topic 840 as prescribed by ASC Topic 842 as of September 30, 2019 are as follows:

 

 

September 30,

 

(in thousands)

 

2019

 

      2020

 

$

24,082

 

2021

 

 

20,875

 

2022

 

 

16,687

 

2023

 

 

13,344

 

2023

 

 

11,114

 

Thereafter

 

 

43,506

 

Total future minimum lease payments

 

$

129,608

 

 
v3.20.1
Subsequent Events
 6 Months Ended
Mar. 31, 2020
Subsequent Events [Abstract]  
Subsequent Events

17) Subsequent Events

Quarterly Distribution Declared

In April 2020, we declared a quarterly distribution of $0.1325 per unit, or $0.53 per unit on an annualized basis, on all Common Units with respect to the second quarter of fiscal 2020, payable on May 12, 2020, to holders of record on May 4, 2020. The amount of distributions in excess of the minimum quarterly distribution of $0.0675 are distributed in accordance with our Partnership Agreement, subject to the management incentive compensation plan. As a result, $6.0 million will be paid to the Common Unit holders, $0.2 million to the General Partner unit holders (including $0.2 million of incentive distribution as provided in our Partnership Agreement) and $0.2 million to management pursuant to the management incentive compensation plan which provides for certain members of management to receive incentive distributions that would otherwise be payable to the General Partner.

Common Units Repurchased and Retired

In April 2020, in accordance with the Repurchase Plan, the Company repurchased and retired 0.4 million Common Units at an average price paid of $7.71 per unit.

Impact of COVID-19

We have seen a reduction in certain sales activity in the month of April 2020 when compared to that in April 2019, primarily due to the decrease in economic activity and travel resulting from the current pandemic of the novel coronavirus, or COVID-19.

The volume of Motor Fuel and Other Petroleum Products for April 2020 (which is primarily motor fuels used for both on and off road purposes) is down approximately 35% compared to the volume sold in April 2019.  Service revenues are down approximately 10% in April 2020 when compared to April 2019, as in some locations the company has restricted its service to only emergency services, or customers are electing to defer non-emergency services until a later date.  Installation revenues are also down approximately 40% in April 2020 when compared to April 2019 as, again, many customers are deferring non-emergency installations.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

v3.20.1
Captive Insurance Collateral (Tables)
 6 Months Ended
Mar. 31, 2020
Investments Debt And Equity Securities [Abstract]  
Schedule of Captive Insurance Collateral to be Available-for-sale Investments

The Company considers all of its captive insurance collateral to be available-for-sale investments. Investments at March 31, 2020 consist of the following (in thousands):

 

 

 

Amortized Cost

 

 

Gross Unrealized Gain

 

 

Gross Unrealized (Loss)

 

 

Fair Value

 

Cash and Receivables

 

$

5,639

 

 

$

—

 

 

$

—

 

 

$

5,639

 

U.S. Government Sponsored Agencies

 

 

33,320

 

 

 

310

 

 

 

(1

)

 

 

33,629

 

Corporate Debt Securities

 

 

22,735

 

 

 

724

 

 

 

—

 

 

 

23,459

 

Foreign Bonds and Notes

 

 

3,010

 

 

 

39

 

 

 

—

 

 

 

3,049

 

Total

 

$

64,704

 

 

$

1,073

 

 

$

(1

)

 

$

65,776

 

Investments at September 30, 2019 consist of the following (in thousands):

 

 

 

Amortized Cost

 

 

Gross Unrealized Gain

 

 

Gross Unrealized (Loss)

 

 

Fair Value

 

Cash and Receivables

 

$

509

 

 

$

—

 

 

$

—

 

 

$

509

 

U.S. Government Sponsored Agencies

 

 

29,055

 

 

 

198

 

 

 

(3

)

 

 

29,250

 

Corporate Debt Securities

 

 

23,831

 

 

 

773

 

 

 

—

 

 

 

24,604

 

Foreign Bonds and Notes

 

 

4,066

 

 

 

61

 

 

 

—

 

 

 

4,127

 

Total

 

$

57,461

 

 

$

1,032

 

 

$

(3

)

 

$

58,490

 
Schedule of Maturities of Investments

Maturities of investments were as follows at March 31, 2020 (in thousands):

 

 

 

Net Carrying Amount

 

Due within one year

 

$

14,402

 

Due after one year through five years

 

 

42,552

 

Due after five years through ten years

 

 

8,822

 

Total

 

$

65,776

 
v3.20.1
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)
 1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
Apr. 30, 2020
Apr. 30, 2019
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Sep. 30, 2021
Sep. 30, 2020
Oct. 01, 2019
Sep. 30, 2019
Sep. 30, 2018
Schedule Of Significant Accounting Policies [Line Items]                      
Cash, cash equivalents, and restricted cash     $ 10,551,000 $ 16,622,000 $ 10,551,000 $ 16,622,000       $ 5,149,000 $ 14,781,000
Cash and cash equivalents     10,301,000   10,301,000         4,899,000  
Restricted cash     250,000   250,000         250,000  
Captive insurance collateral, debt securities     65,776,000   65,776,000         58,490,000  
Additional payment obligated to pay if degree days exceed ten year average     5,000,000.0   5,000,000.0            
Payments and receivables of derivative hedging contract         (10,053,000) $ 2,110,000          
Accrued expenses and other current liabilities     158,989,000   158,989,000         120,839,000  
Other long-term liabilities     22,444,000   22,444,000         25,746,000  
Operating lease right-of-use assets     103,672,000   103,672,000            
Current portion of operating lease liabilities     19,567,000   19,567,000            
Long-term operating lease liabilities     89,373,000   89,373,000            
Interest rate swap                      
Schedule Of Significant Accounting Policies [Line Items]                      
Notional Value     66,500,000   66,500,000         45,000,000.0  
ASC Topic 842                      
Schedule Of Significant Accounting Policies [Line Items]                      
Operating lease right-of-use assets                 $ 104,700,000    
Current portion of operating lease liabilities                 20,100,000    
Long-term operating lease liabilities                 $ 89,900,000    
New England Teamsters & Trucking Industry Pension Fund                      
Schedule Of Significant Accounting Policies [Line Items]                      
Accrued expenses and other current liabilities     200,000   200,000            
Other long-term liabilities     16,800,000   16,800,000            
Subsidiaries of Swiss Re                      
Schedule Of Significant Accounting Policies [Line Items]                      
Payments and receivables of derivative hedging contract   $ 2,100,000                  
Subsidiaries of Swiss Re | Subsequent Event                      
Schedule Of Significant Accounting Policies [Line Items]                      
Payments and receivables of derivative hedging contract $ (10,100,000)                    
Delivery and branch expenses | Financial Products Corporation                      
Schedule Of Significant Accounting Policies [Line Items]                      
Change on weather hedge contract     (10,100,000) $ 2,100,000              
Scenario Forecast                      
Schedule Of Significant Accounting Policies [Line Items]                      
Derivative maximum payout             $ 5,000,000.0 $ 5,000,000.0      
Significant Other Observable Inputs Level 2 | New England Teamsters & Trucking Industry Pension Fund                      
Schedule Of Significant Accounting Policies [Line Items]                      
Multiemployer plan discounted withdrawal liability     29,400,000   29,400,000         21,100,000  
Captive Insurance Collateral | Level 1                      
Schedule Of Significant Accounting Policies [Line Items]                      
Captive insurance collateral, debt securities     60,200,000   60,200,000         58,000,000.0  
Captive Insurance Collateral | Mutual Funds                      
Schedule Of Significant Accounting Policies [Line Items]                      
Captive insurance collateral, net asset value     $ 5,600,000   $ 5,600,000         $ 500,000  
Maximum                      
Schedule Of Significant Accounting Policies [Line Items]                      
Cash equivalents, highly liquid investments maturity     3 months                
Maximum | Scenario Forecast                      
Schedule Of Significant Accounting Policies [Line Items]                      
Derivative maximum receivable             $ 12,500,000 $ 12,500,000      
v3.20.1
Summary of Significant Accounting Policies
 6 Months Ended
Mar. 31, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2) Summary of Significant Accounting Policies

 

Basis of Presentation

The Consolidated Financial Statements include the accounts of Star and its subsidiaries. All material intercompany items and transactions have been eliminated in consolidation.

The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair statement of financial condition and results for the interim periods. Due to the seasonal nature of the Company’s business, the results of operations and cash flows for the six-month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

These interim financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2019.

Comprehensive Income

Comprehensive income is comprised of Net income and Other comprehensive income (loss). Other comprehensive income (loss) consists of the unrealized gain on amortization on the Company’s pension plan obligation for its two frozen defined benefit pension plans, unrealized gain on available-for-sale investments, unrealized loss on interest rate hedge and the corresponding tax effects.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. At March 31, 2020, the $10.6 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of $10.3 million of cash and cash equivalents and $0.3 million of restricted cash. At September 30, 2019, the $5.1 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of $4.9 million of cash and cash equivalents and $0.3 million of restricted cash. Restricted cash represents deposits held by our captive insurance company that are required by state insurance regulations to remain in the captive insurance company as cash.

Captive Insurance Collateral

The captive insurance collateral is held by our captive insurance company in an irrevocable trust as collateral for certain workers’ compensation and automobile liability claims.  The collateral is required by a third party insurance carrier that insures per claim amounts above a set deductible. If we did not deposit cash into the trust, the third party carrier would require that we issue an equal amount of letters of credit, which would reduce our availability under the fifth amended and restated credit agreement.  Due to the expected timing of claim payments, the nature of the collateral agreement with the carrier, and our captive insurance company’s source of other operating cash, the collateral is not expected to be used to pay obligations within the next twelve months.

At March 31, 2020, captive insurance collateral is comprised of $60.2 million of Level 1 debt securities measured at fair value and $5.6 million of mutual funds measured at net asset value.  At September 30, 2019, the balance was comprised of $58.0 million of Level 1 debt securities measured at fair value and $0.5 million of mutual funds measured at net asset value. Unrealized gains and losses, net of related income taxes, are reported as accumulated other comprehensive gain (loss), except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net income and are included in Interest expense, net, at which time the average cost basis of these securities are adjusted to fair value.

Weather Hedge Contract

To partially mitigate the adverse effect of warm weather on cash flows, the Company has used weather hedge contracts for a number of years. Weather hedge contracts are recorded in accordance with the intrinsic value method defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-45-15 Derivatives and Hedging, Weather Derivatives (EITF 99-2). The premium paid is included in the caption “Prepaid expenses and other current assets” in the accompanying balance sheets and amortized over the life of the contract, with the intrinsic value method applied at each interim period.

The Company entered into weather hedge contracts for fiscal years 2019, 2020 and 2021.  Under these contracts, we are entitled to receive a payment if the total number of degree days within the hedge period is less than the prior ten year average. The “Payment Thresholds,” or strikes, are set at various levels. In addition, we will be obligated to make a payment capped at $5.0 million if degree days exceed the Payment Threshold which approximates the prior ten year average. The hedge period runs from November 1 through March 31, taken as a whole, for each respective fiscal year.  For fiscal 2020 and 2021 the maximum that the Company can receive annually is $12.5 million and the maximum that the Company would be obligated to pay annually is $5.0 million.  As of March 31, 2020, the Company reduced delivery and branch expense and recorded a receivable under these contracts of $10.1 million, and received the amount in full in April 2020.  As of March 31, 2019, the Company increased delivery and branch expense and recorded a payable under these contracts of $2.1 million, and paid the amount in full in April 2019.

New England Teamsters and Trucking Industry Pension Fund (“the NETTI Fund”) Liability

As of March 31, 2020, we had $0.2 million and $16.8 million balances included in the captions “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, on our Condensed Consolidated Balance Sheet representing the remaining balance of the NETTI Fund withdrawal liability. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal liability as of March 31, 2020 and September 30, 2019 was $29.4 million and $21.1 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC Topic 842”).  The update requires all leases with a term greater than twelve months to be recognized on the balance sheet by recording (1) a lease liability that represents a lessee’s obligation to make lease payments arising from a lease, measured at the present value of the remaining lease payments; and (2) a right-of-use (“ROU”) asset that represents the lessee’s right to use a specified asset for the lease term, measured in an amount equal to the lease liability adjusted for accrued lease payments.  The standard also requires the disclosure of key information pertaining to leasing arrangements.  

As of October 1, 2019, the Company adopted ASC Topic 842 using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11.  As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. October 1, 2019).  The Company has elected to adopt the package of transition practical expedients and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.  We also elected a practical expedient to not separate non-lease components from the lease components and excluded short term leases from the calculation of right of use asset and operating lease liability.  For certain leases relating to vehicles and equipment we elected to apply portfolio approach guidance and accounted for leases with similar characteristics as a single lease. The Company did not elect the practical expedient to use hindsight for leases existing at the adoption date.

The adoption of ASC Topic 842 had a material impact to the Company’s Condensed Consolidated Balance Sheet, but did not impact the Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Partners’ Capital. The most significant changes to the Condensed Consolidated Balance Sheet relate to the recognition of the following as of October 1, 2019:  “Operating lease right-of-use assets” in the amount of $104.7 million, “Current portion of operating lease liabilities” in the amount of $20.1 million and “Long-term operating lease liabilities” in the amount of $89.9 million. The adoption of ASC Topic 842 also had no impact on operating, investing, or financing cash flows in the Condensed Consolidated Statement of Cash Flows. However, ASC Topic has significantly affected the Company’s disclosures about noncash investing activities. Additionally, the Company’s lease-related disclosures have significantly increased as of and for the six months ended March 31, 2020 as compared to prior years. See Note 13 – Leases for further details on the adoption of ASC Topic 842.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The Company adopted the ASU effective March 12, 2020.  The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. The Company has $66.5 million of interest rate swap agreements at March 31, 2020 that are benchmarked against LIBOR, which the Company has designated as cash flow hedging derivatives.  This guidance includes practical expedients for contract modifications due to reference rate reform. The Company has elected to adopt the practical expedient that the Company may change the contractual terms of the interest rate swap agreements that is expected to be affected by reference rate reform and not be required to de-designate the hedging relationship.  The adoption did not have an impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The update broadens the information that an entity should consider in developing expected credit loss estimates, eliminates the probable initial recognition threshold, and allows for the immediate recognition of the full amount of expected credit losses. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021. The Company is evaluating the effect that ASU No. 2016-13 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 230): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not exceed the total amount of goodwill allocated to the reporting unit. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company has not determined the timing of adoption, but does not expect ASU 2017-04 to have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-14 will have on its consolidated financial statements and related disclosures, and has not determined the timing of adoption.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2022, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-15 will have on its consolidated financial statements and related disclosures, and has not determined the timing of adoption.
v3.20.1
Leases (Tables)
 6 Months Ended
Mar. 31, 2020
Leases [Abstract]  
Summary of Total Lease Costs and Other Information

 

A summary of total lease costs and other information for the three and six months ended March 31, 2020 is as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2020

 

 

2020

 

Lease cost:

 

 

 

 

 

 

 

 

Operating lease cost

 

$

6,333

 

 

$

12,932

 

Short-term lease cost

 

 

240

 

 

 

432

 

Variable lease cost

 

 

1,129

 

 

 

2,139

 

Total lease cost

 

$

7,702

 

 

$

15,503

 

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

     Operating cash flows from operating leases

 

$

6,244

 

 

$

12,625

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

5,426

 

 

$

9,436

 

 
Schedule of Maturities of Operating Lease Liabilities Maturities of operating lease liabilities as of March 31, 2020 are as follows:

 

 

 

March 31,

 

(in thousands)

 

2020

 

      Remaining six months of fiscal year 2020

 

$

12,589

 

2021

 

 

22,733

 

2022

 

 

18,669

 

2023

 

 

15,347

 

2024

 

 

13,194

 

Thereafter

 

 

49,172

 

Total undiscounted lease payments

 

 

131,704

 

Less imputed interest

 

 

(22,764

)

Total lease liabilities

 

$

108,940

 

 
Schedule of Maturities of Operating Lease Liabilities Presented Undiscounted Under ASC Topic 840

Maturities of operating lease liabilities presented undiscounted under ASC Topic 840 as prescribed by ASC Topic 842 as of September 30, 2019 are as follows:

 

 

September 30,

 

(in thousands)

 

2019

 

      2020

 

$

24,082

 

2021

 

 

20,875

 

2022

 

 

16,687

 

2023

 

 

13,344

 

2023

 

 

11,114

 

Thereafter

 

 

43,506

 

Total future minimum lease payments

 

$

129,608

 

 
v3.20.1
Document and Entity Information - shares
 6 Months Ended
Mar. 31, 2020
Apr. 30, 2020
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2020  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Trading Symbol SGU  
Title of 12(b) Security Common Unit  
Security Exchange Name NYSE  
Entity Registrant Name STAR GROUP, L.P.  
Entity Central Index Key 0001002590  
Entity Tax Identification Number 06-1437793  
Current Fiscal Year End Date --09-30  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Incorporation, State or Country Code DE  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 001-14129  
Entity Filer Category Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   45,197,331
Entity Address, Address Line One 9 West Broad Street  
Entity Address, City or Town Stamford  
Entity Address, State or Province CT  
Entity Address, Postal Zip Code 06902  
City Area Code (203)  
Local Phone Number 328-7310  
v3.20.1
Property and Equipment (Tables)
 6 Months Ended
Mar. 31, 2020
Property Plant And Equipment [Abstract]  
Property and Equipment

Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the depreciable assets using the straight-line method (in thousands):

 

 

 

March 31,

2020

 

 

September 30,

2019

 

Property and equipment

 

$

234,014

 

 

$

230,690

 

Less: accumulated depreciation

 

 

138,810

 

 

 

132,451

 

Property and equipment, net

 

$

95,204

 

 

$

98,239

 
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Statement Of Income And Comprehensive Income [Abstract]        
Net income $ 58,408 $ 72,325 $ 86,163 $ 74,640
Other comprehensive income:        
Unrealized gain on pension plan obligation [1] 455 457 910 911
Tax effect of unrealized gain on pension plan obligation (133) (125) (258) (249)
Unrealized gain on captive insurance collateral 107 905 43 1,294
Tax effect of unrealized gain on captive insurance collateral (15) (194) (7) (276)
Unrealized loss on interest rate hedges (1,716) (367) (1,382) (1,112)
Tax effect of unrealized loss on interest rate hedges 460 95 374 292
Total other comprehensive income (loss) (842) 771 (320) 860
Total comprehensive income $ 57,566 $ 73,096 $ 85,843 $ 75,500
[1] This item is included in the computation of net periodic pension cost.
v3.20.1
Captive Insurance Collateral
 6 Months Ended
Mar. 31, 2020
Investments Debt And Equity Securities [Abstract]  
Captive Insurance Collateral

5) Captive Insurance Collateral

The Company considers all of its captive insurance collateral to be available-for-sale investments. Investments at March 31, 2020 consist of the following (in thousands):

 

 

 

Amortized Cost

 

 

Gross Unrealized Gain

 

 

Gross Unrealized (Loss)

 

 

Fair Value

 

Cash and Receivables

 

$

5,639

 

 

$

—

 

 

$

—

 

 

$

5,639

 

U.S. Government Sponsored Agencies

 

 

33,320

 

 

 

310

 

 

 

(1

)

 

 

33,629

 

Corporate Debt Securities

 

 

22,735

 

 

 

724

 

 

 

—

 

 

 

23,459

 

Foreign Bonds and Notes

 

 

3,010

 

 

 

39

 

 

 

—

 

 

 

3,049

 

Total

 

$

64,704

 

 

$

1,073

 

 

$

(1

)

 

$

65,776

 

 

Investments at September 30, 2019 consist of the following (in thousands):

 

 

 

Amortized Cost

 

 

Gross Unrealized Gain

 

 

Gross Unrealized (Loss)

 

 

Fair Value

 

Cash and Receivables

 

$

509

 

 

$

—

 

 

$

—

 

 

$

509

 

U.S. Government Sponsored Agencies

 

 

29,055

 

 

 

198

 

 

 

(3

)

 

 

29,250

 

Corporate Debt Securities

 

 

23,831

 

 

 

773

 

 

 

—

 

 

 

24,604

 

Foreign Bonds and Notes

 

 

4,066

 

 

 

61

 

 

 

—

 

 

 

4,127

 

Total

 

$

57,461

 

 

$

1,032

 

 

$

(3

)

 

$

58,490

 

 

Maturities of investments were as follows at March 31, 2020 (in thousands):

 

 

 

Net Carrying Amount

 

Due within one year

 

$

14,402

 

Due after one year through five years

 

 

42,552

 

Due after five years through ten years

 

 

8,822

 

Total

 

$

65,776

 

 

 
v3.20.1
Business Combinations
 6 Months Ended
Mar. 31, 2020
Business Combinations [Abstract]  
Business Combinations

9) Business Combinations

During fiscal year 2020, the Company acquired the customer list and the assets of a heating oil dealer for an aggregate purchase price of approximately $0.5 million.
v3.20.1
Derivatives and Hedging-Disclosures and Fair Value Measurements - Effect of Derivative Instruments on Statement of Operations (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Mar. 31, 2020
Mar. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]        
Amount of (Gain) or Loss Unrealized, commodity contracts [1] $ 11,670 $ (13,401) $ 5,253 $ 17,638
Fair Value, Measurements, Recurring | Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10 | Commodity Contract | Cost of product        
Derivative Instruments, Gain (Loss) [Line Items]        
Amount of (Gain) or Loss Recognized, commodity contracts [2] (3,700) 14,345 2,349 8,193
Fair Value, Measurements, Recurring | Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10 | Commodity Contract | Cost of installations and service        
Derivative Instruments, Gain (Loss) [Line Items]        
Amount of (Gain) or Loss Recognized, commodity contracts [2] 233 403 224 650
Fair Value, Measurements, Recurring | Derivatives Not Designated as Hedging Instruments under FASB ASC 815-10 | Commodity Contract | Delivery and branch expenses        
Derivative Instruments, Gain (Loss) [Line Items]        
Amount of (Gain) or Loss Recognized, commodity contracts [2] $ 626 $ 271 $ 597 $ 437
[1] Represents the change in value of unrealized open positions and expired options.
[2] Represents realized closed positions and includes the cost of options as they expire.
v3.20.1
Intangibles, net - Intangible Assets Subject to Amortization (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Finite Lived Intangible Assets [Line Items]    
Gross Carrying Amount $ 421,241 $ 420,112
Accum. Amortization 322,996 312,424
Net 98,245 107,688
Customer Lists    
Finite Lived Intangible Assets [Line Items]    
Gross Carrying Amount 383,388 382,373
Accum. Amortization 306,657 297,221
Net 76,731 85,152
Trade Names And Other Intangibles    
Finite Lived Intangible Assets [Line Items]    
Gross Carrying Amount 37,853 37,739
Accum. Amortization 16,339 15,203
Net $ 21,514 $ 22,536
v3.20.1
Long-Term Debt and Bank Facility Borrowings - Additional Information (Detail) - USD ($)
Dec. 04, 2019
Mar. 31, 2020
Sep. 30, 2019
Jul. 02, 2018
Debt Instrument [Line Items]        
Hedging positions and payable amounts secured under credit facility   $ 18,600,000 $ 7,700,000  
Letters of credit issued and outstanding   4,400,000 4,600,000  
Long-term debt, fair value [1]   154,043,000 154,000,000  
Revolving credit facility outstanding   24,043,000 24,000,000  
Availability under credit agreement   $ 210,400,000 $ 126,100,000  
Term Loan        
Debt Instrument [Line Items]        
Debt instrument, effective interest rate   5.50% 5.90%  
Long-term debt, fair value [1],[2]   $ 130,000,000 $ 92,500,000  
Revolving Credit Facility        
Debt Instrument [Line Items]        
Debt instrument, effective interest rate   4.00% 4.60%  
Revolving credit facility outstanding   $ 24,000,000.0 $ 61,500,000  
Fifth Amendment        
Debt Instrument [Line Items]        
Non Seasonal maximum borrowing capacity under revolving credit facility $ 300,000,000     $ 300,000,000
Maximum borrowing capacity (heating season December to April) under revolving credit facility 450,000,000      
Issuance of line of credit for working capital purposes $ 25,000,000      
Senior secured term loan maturity date Dec. 04, 2024      
Facility size that can be increased without consulting bank group $ 200,000,000      
Term loan annual payment percentage 25.00%      
Commitment fee on the unused portion of the facility from December through April 0.30%      
Commitment fee on the unused portion of the facility from May through November 0.20%      
Minimum fixed charge coverage ratio 1.10%      
Availability percentage to maximum facility size 12.50%      
Fifth Amendment | Maximum        
Debt Instrument [Line Items]        
Senior secured leverage ratio during quarters ending June or September 300.00%      
Senior secured leverage ratio during quarters ending December or March 450.00%      
Fifth Amendment | Quarterly        
Debt Instrument [Line Items]        
Term loan periodic payment $ 3,250,000      
Fifth Amendment | Annually | Maximum        
Debt Instrument [Line Items]        
Term loan periodic payment 12,000,000      
Fifth Amendment | Term Loan        
Debt Instrument [Line Items]        
Outstanding term loan $ 130,000,000      
Senior secured term loan maturity period 5 years      
[1] The face amount of the Company’s variable rate long-term debt approximates fair value.
[2] Carrying amounts are net of unamortized debt issuance costs of $0.8 million as of March 31, 2020 and $0.6 million as of September 30, 2019.
v3.20.1
Derivatives and Hedging-Disclosures and Fair Value Measurements - Additional Information (Detail)
gal in Millions, $ in Millions
 6 Months Ended
Mar. 31, 2020
USD ($)
gal
Mar. 31, 2019
gal
Sep. 30, 2019
USD ($)
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Hedging positions and payable amounts secured under credit facility | $ $ 18.6   $ 7.7
Prepaid expense and other current assets      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Aggregated cash posted as collateral in normal course of business | $ 1.8    
Interest rate swap      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Notional Value | $ $ 66.5   45.0
Percentage of market risk exposure of long term debt 51.00%    
Fair Value | $ $ (3.3)   $ (2.0)
Call Option      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 5.3 2.2  
Call Option | Synthetic calls      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 52.8 54.9  
Put Option      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 4.0 3.4  
Swap Contracts Bought      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 8.9 7.2  
Swap Contracts Bought | Short      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume   0.8  
Future Contracts | Long      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 32.6 33.1  
Future Contracts | Short      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 52.1 50.8  
Hedge its Internal Fuel Usage and Other Related Activities Short Swap Contracts Bought      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 0.2    
Hedge its Internal Fuel Usage and Other Related Activities Call Options and Swap Contracts Bought      
Derivative Instruments and Hedging Activities Disclosures [Line Items]      
Derivative activity volume 7.3 1.8  
v3.20.1
Common Unit Repurchase and Retirement - Company's Repurchase Activities (Detail) - $ / shares
shares in Thousands
 1 Months Ended 3 Months Ended 84 Months Ended 91 Months Ended
Apr. 30, 2020
Mar. 31, 2020
Feb. 29, 2020
Jan. 31, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jan. 31, 2020
Repurchase Plan                
Capital Unit [Line Items]                
Total Number of Units Purchased   500 122 160 782 1,281 13,340 11,800
Average Price Paid per Unit [1]   $ 7.76 $ 9.15 $ 9.48 $ 8.33 $ 9.42 $ 8.08  
Maximum Number of Units that May Yet Be Purchased   524 1,024 [2] 146 524 306 [3] 956 146
Publicly Announced Plans or Programs As Part of Repurchase Plan                
Capital Unit [Line Items]                
Total Number of Units Purchased   500 122 160 782 650 10,896  
Subsequent Event | Repurchase Plan                
Capital Unit [Line Items]                
Total Number of Units Purchased 424              
Average Price Paid per Unit [1] $ 7.71              
Maximum Number of Units that May Yet Be Purchased [4] 100              
Subsequent Event | Publicly Announced Plans or Programs As Part of Repurchase Plan                
Capital Unit [Line Items]                
Total Number of Units Purchased 424              
[1] Amount includes repurchase costs.
[2] In February 2020, the Board authorized an increase in the number of Common Units available for repurchase from 0.1 million to 1.1 million.
[3] First quarter of fiscal year 2020 Common Units repurchased include 0.6 million Common Units acquired in a private transaction.
[4] The remaining 0.1 million units under the Repurchase Plan are available for repurchase in privately-negotiated transactions.
v3.20.1
Income Taxes - Additional Information (Detail)
 6 Months Ended
Mar. 31, 2020
USD ($)
Income Tax Disclosure [Line Items]  
Unrecognized income tax benefits $ 0
Federal  
Income Tax Disclosure [Abstract]  
Number of years for examination 4 years
New York  
Income Tax Disclosure [Abstract]  
Number of years for examination 4 years
Connecticut  
Income Tax Disclosure [Abstract]  
Number of years for examination 4 years
Pennsylvania  
Income Tax Disclosure [Abstract]  
Number of years for examination 4 years
New Jersey  
Income Tax Disclosure [Abstract]  
Number of years for examination 5 years
v3.20.1
Leases - Schedule of Maturities of Operating Lease Liabilities Presented Undiscounted Under ASC Topic 840 (Detail)
$ in Thousands
Sep. 30, 2019
USD ($)
Leases [Abstract]  
2020 $ 24,082
2021 20,875
2022 16,687
2023 13,344
2023 11,114
Thereafter 43,506
Total future minimum lease payments $ 129,608
v3.20.1
Commitments and Contingencies
 6 Months Ended
Mar. 31, 2020
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

15) Commitments and Contingencies

 

On April 18, 2017, a civil action was filed in the United States District Court for the Eastern District of New York, entitled M. Norman Donnenfeld v. Petro, Inc., Civil Action Number 2:17-cv-2310-JFB-SIL, against Petro, Inc. By amended complaint filed on August 15, 2017, the Plaintiff alleged he did not receive expected contractual benefits under his protected price plan contract when oil prices fell and asserted various claims for relief including breach of contract, violation of the New York General Business Law and fraudulent inducement. The Plaintiff also sought to have a class certified of similarly situated Petro customers who entered into protected price plan contracts and were denied the same contractual benefits.  The Plaintiff sought compensatory, punitive and other damages in unspecified amounts.  On September 15, 2017, Petro filed a motion to dismiss the amended complaint as time-barred and for failure to state a cause of action.  On September 12, 2018, the district court granted in part and denied in part Petro's motion to dismiss.  The district court dismissed the Plaintiff's claims for breach of the covenant of good faith and fair dealing and fraudulent inducement, but declined to dismiss the Plaintiff's remaining claims.  The district court granted the Plaintiff leave to amend to attempt to replead his fraudulent inducement claim.  On October 10, 2018, the Plaintiff filed a second amended complaint.  The second amended complaint attempted to replead a fraudulent inducement claim and was otherwise substantially similar or identical to the prior complaint.  On November 13, 2018, Petro moved to dismiss the fraudulent inducement and unjust enrichment claims in the second amended complaint.  On January 31, 2019, the court granted the motion and dismissed the fraudulent inducement and unjust enrichment claims with prejudice.  On February 22, 2019, counsel for Petro and the Plaintiff participated in a mediation which, after arms-length negotiations, resulted in a memorandum of understanding to settle the litigation, subject to the completion of confirmatory discovery, negotiation of a final settlement agreement and court approval.  In an order dated March 27, 2019, the district court stayed all discovery deadlines in light of the pending settlement.  On October 4, 2019, upon consent of all parties, Judge Roslynn R. Mauskopf assigned the action to Magistrate Judge Steve I. Locke for final disposition.  On March 26, 2020, the court granted final approval of the class action settlement, certified the class for settlement purposes only and dismissed the action with prejudice.  On March 26, 2020, the court also granted Plaintiff’s unopposed motion for fees, expenses and named plaintiff service award.  The settlement is not an admission of liability or breach to any customers by Petro and the Company continues to believe the allegations lack merit.  If the settlement is not completed for any reason, the Company will continue to vigorously defend the action; in that case, we cannot assess the potential outcome or materiality of this matter.  

The Company’s operations are subject to the operating hazards and risks normally incidental to handling, storing and transporting and otherwise providing for use by consumers hazardous liquids such as home heating oil and propane. In the ordinary course of business, the Company is a defendant in various legal proceedings and litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. We do not believe these matters, when considered individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

The Company maintains insurance policies with insurers in amounts and with coverages and deductibles we believe are reasonable and prudent. However, the Company cannot assure that this insurance will be adequate to protect it from all material expenses related to current and potential future claims, legal proceedings and litigation, including the above mentioned action, as certain types of claims may be excluded from our insurance coverage. If we incur substantial liability and the damages are not covered by insurance, or are in excess of policy limits, or if we incur liability at a time when we are not able to obtain liability insurance, then our business, results of operations and financial condition could be materially adversely affected.

v3.20.1
Revenue Recognition (Tables)
 6 Months Ended
Mar. 31, 2020
Revenue From Contract With Customer [Abstract]  
Summary of Disaggregation of Revenue by Major Sources

The following disaggregates our revenue by major sources for the three and six months ended March 31, 2020 and March 31, 2019:

 

Three Months

Ended March 31,

 

 

Six Months

Ended March 31,

 

(in thousands)

2020

 

 

2019

 

 

2020

 

 

2019

 

Petroleum Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home heating oil and propane

$

413,466

 

 

$

554,364

 

 

$

756,812

 

 

$

918,566

 

Other petroleum products

 

67,809

 

 

 

83,036

 

 

 

157,151

 

 

 

177,541

 

   Total petroleum products

 

481,275

 

 

 

637,400

 

 

 

913,963

 

 

 

1,096,107

 

Installations and Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment installations

 

20,158

 

 

 

20,384

 

 

 

50,723

 

 

 

50,367

 

Equipment maintenance service contracts

 

27,764

 

 

 

26,678

 

 

 

55,672

 

 

 

54,997

 

Billable call services

 

13,866

 

 

 

15,120

 

 

 

31,650

 

 

 

33,138

 

   Total installations and services

 

61,788

 

 

 

62,182

 

 

 

138,045

 

 

 

138,502

 

   Total Sales

$

543,063

 

 

$

699,582

 

 

$

1,052,008

 

 

$

1,234,609

 
v3.20.1
Long-Term Debt and Bank Facility Borrowings
 6 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Long-Term Debt and Bank Facility Borrowings

11) Long-Term Debt and Bank Facility Borrowings

The Company’s debt is as follows (in thousands):

 

 

March 31,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

 

Carrying

Amount

 

 

Fair Value (a)

 

 

Carrying

Amount

 

 

Fair Value (a)

 

Revolving Credit Facility Borrowings

 

$

24,043

 

 

$

24,043

 

 

$

61,500

 

 

$

61,500

 

Senior Secured Term Loan (b)

 

 

129,188

 

 

 

130,000

 

 

 

91,947

 

 

 

92,500

 

Total debt

 

$

153,231

 

 

$

154,043

 

 

$

153,447

 

 

$

154,000

 

Total short-term portion of debt

 

$

37,043

 

 

$

37,043

 

 

$

33,000

 

 

$

33,000

 

Total long-term portion of debt

 

$

116,188

 

 

$

117,000

 

 

$

120,447

 

 

$

121,000

 

 

(a)

The face amount of the Company’s variable rate long-term debt approximates fair value.

(b)

Carrying amounts are net of unamortized debt issuance costs of $0.8 million as of March 31, 2020 and $0.6 million as of September 30, 2019.

 

On December 4, 2019, the Company refinanced its five-year term loan and the revolving credit facility with the execution of the fifth amended and restated revolving credit facility agreement with a bank syndicate currently comprised of eleven participants, which enables the Company to borrow up to $300 million ($450 million during the heating season of December through April of each year) on a revolving credit facility for working capital purposes (subject to certain borrowing base limitations and coverage ratios), provides for a $130 million five-year senior secured term loan (the “Term Loan”), allows for the issuance of up to $25 million in letters of credit, and has a maturity date of December 4, 2024.

The Company can increase the revolving credit facility size by $200 million without the consent of the bank group. However, the bank group is not obligated to fund the $200 million increase. If the bank group elects not to fund the increase, the Company can add additional lenders to the group, with the consent of the Agent (as defined in the credit agreement), which shall not be unreasonably withheld. Obligations under the fifth amended and restated credit facility are guaranteed by the Company and its subsidiaries and are secured by liens on substantially all of the Company’s assets, including accounts receivable, inventory, general intangibles, real property, fixtures and equipment.

All amounts outstanding under the fifth amended and restated revolving credit facility become due and payable on the facility termination date of December 4, 2024. The Term Loan is repayable in quarterly payments of $3.25 million, the first of which was made on April 1, 2020, plus an annual payment equal to 25% of the annual Excess Cash Flow as defined in the credit agreement (an amount not to exceed $12 million annually), less certain voluntary prepayments made during the year, with final payment at maturity.

The interest rate on the fifth amended and restated revolving credit facility and the Term Loan is based on a margin over LIBOR or a base rate. At March 31, 2020, the effective interest rate on the Term Loan was approximately 5.5% and the effective interest rate on revolving credit facility borrowings was approximately 4.0%. At September 30, 2019, the effective interest rate on the term loan and revolving credit facility borrowings was approximately 5.9% and 4.6%, respectively.

The commitment fee on the unused portion of the revolving credit facility is 0.30% from December through April, and 0.20% from May through November.

The fifth amended and restated credit agreement requires the Company to meet certain financial covenants, including a Fixed Charge Coverage Ratio (as defined in the credit agreement) of not less than 1.1 as long as the Term Loan is outstanding or revolving credit facility availability is less than 12.5% of the facility size. In addition, as long as the Term Loan is outstanding, a senior secured leverage ratio cannot be more than 3.0 as calculated as of the quarters ending June or September, and no more than 4.5 as calculated as of the quarters ending December or March.

Certain restrictions are also imposed by the credit agreement, including restrictions on the Company’s ability to incur additional indebtedness, to pay distributions to unitholders, to pay certain inter-company dividends or distributions, repurchase units, make investments, grant liens, sell assets, make acquisitions and engage in certain other activities.

At March 31, 2020, $130.0 million of the Term Loan was outstanding, $24.0 million was outstanding under the revolving credit facility, $18.6 million of hedge positions were secured under the credit agreement, and $4.4 million of letters of credit were issued and outstanding. At September 30, 2019, $92.5 million of the Term Loan was outstanding, $61.5 million was outstanding under the revolving credit facility, $7.7 million of hedge positions were secured under the credit agreement, and $4.6 million of letters of credit were issued and outstanding.

At March 31, 2020, availability was $210.4 million, and the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio. At September 30, 2019, availability was $126.1 million, and the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio.

v3.20.1
Revenue Recognition
 6 Months Ended
Mar. 31, 2020
Revenue From Contract With Customer [Abstract]  
Revenue Recognition

3) Revenue Recognition

The following disaggregates our revenue by major sources for the three and six months ended March 31, 2020 and March 31, 2019:

 

Three Months

Ended March 31,

 

 

Six Months

Ended March 31,

 

(in thousands)

2020

 

 

2019

 

 

2020

 

 

2019

 

Petroleum Products:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home heating oil and propane

$

413,466

 

 

$

554,364

 

 

$

756,812

 

 

$

918,566

 

Other petroleum products

 

67,809

 

 

 

83,036

 

 

 

157,151

 

 

 

177,541

 

   Total petroleum products

 

481,275

 

 

 

637,400

 

 

 

913,963

 

 

 

1,096,107

 

Installations and Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment installations

 

20,158

 

 

 

20,384

 

 

 

50,723

 

 

 

50,367

 

Equipment maintenance service contracts

 

27,764

 

 

 

26,678

 

 

 

55,672

 

 

 

54,997

 

Billable call services

 

13,866

 

 

 

15,120

 

 

 

31,650

 

 

 

33,138

 

   Total installations and services

 

61,788

 

 

 

62,182

 

 

 

138,045

 

 

 

138,502

 

   Total Sales

$

543,063

 

 

$

699,582

 

 

$

1,052,008

 

 

$

1,234,609

 

 

Deferred Contract Costs 

We recognize an asset for incremental commission expenses paid to sales personnel in conjunction with obtaining new residential customer product and equipment maintenance service contracts. We defer these costs only when we have determined the commissions are, in fact, incremental and would not have been incurred absent the customer contract. Costs to obtain a contract are amortized and recorded ratably as delivery and branch expenses over the period representing the transfer of goods or services to which the assets relate.  Costs to obtain new residential product and equipment maintenance service contracts are amortized as expense over the estimated customer relationship period of approximately five years.  Deferred contract costs are classified as current or non-current within “Prepaid expenses and other current assets” and “Deferred charges and other assets, net,” respectively.  At March 31, 2020 the amount of deferred contract costs included in “Prepaid expenses and other current assets” and “Deferred charges and other assets, net” was $3.5 million and $6.3 million, respectively.  At September 30, 2019 the amount of deferred contract costs included in “Prepaid expenses and other current assets” and “Deferred charges and other assets, net” was $3.4 million and $5.9 million, respectively.  During the six months ended March 31, 2020 and 2019 we recognized expense of $1.9 million each period associated with the amortization of deferred contract costs within “Delivery and branch expenses” in the Condensed Consolidated Statement of Operations. 

 

Contract Liability Balances

The Company has contract liabilities for advanced payments received from customers for future oil deliveries (primarily amounts received from customers on “smart pay” budget payment plans in advance of oil deliveries) and obligations to service customers with equipment maintenance service contracts.  Contract liabilities are recognized straight-line over the service contract period, generally one year or less.  As of March 31, 2020 and September 30, 2019 the Company had contract liabilities of $97.2 million and $127.0 million, respectively.  During the six months ended March 31, 2020 the Company recognized $95.7 million of revenue that was included in the September 30, 2019 contract liability balance.  During the six months ended March 31, 2019 the Company recognized $90.3 million of revenue that was included in the September 30, 2018 contract liability balance.
v3.20.1
Inventories
 6 Months Ended
Mar. 31, 2020
Inventory Disclosure [Abstract]  
Inventories

7) Inventories

The Company’s product inventories are stated at the lower of cost and net realizable value computed on the weighted average cost method. All other inventories, representing parts and equipment are stated at the lower of cost and net realizable value using the FIFO method. The components of inventory were as follows (in thousands):

 

 

 

March 31,

2020

 

 

September 30,

2019

 

Product

 

$

31,823

 

 

$

43,536

 

Parts and equipment

 

 

21,003

 

 

 

21,252

 

Total inventory

 

$

52,826

 

 

$

64,788

 

 
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Statement Of Financial Position [Abstract]    
Receivables, allowance $ 9,017 $ 8,378
v3.20.1
Earnings Per Limited Partner Unit (Tables)
 6 Months Ended
Mar. 31, 2020
Earnings Per Share [Abstract]  
Net Income Allocation and Per Unit Data

The following presents the net income allocation and per unit data using this method for the periods presented:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

Basic and Diluted Earnings Per Limited Partner:

 

March 31,

 

 

March 31,

 

(in thousands, except per unit data)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

58,408

 

 

$

72,325

 

 

$

86,163

 

 

$

74,640

 

Less General Partner’s interest in net income

 

 

409

 

 

 

454

 

 

 

601

 

 

 

469

 

Net income available to limited partners

 

 

57,999

 

 

 

71,871

 

 

 

85,562

 

 

 

74,171

 

Less dilutive impact of theoretical distribution of earnings

   under FASB ASC 260-10-45-60

 

 

10,283

 

 

 

12,934

 

 

 

14,631

 

 

 

12,294

 

Limited Partner’s interest in net income under FASB ASC 260-10-45-60

 

$

47,716

 

 

$

58,937

 

 

$

70,931

 

 

$

61,877

 

Per unit data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income available to limited partners

 

$

1.25

 

 

$

1.40

 

 

$

1.83

 

 

$

1.42

 

Less dilutive impact of theoretical distribution of earnings

   under FASB ASC 260-10-45-60

 

 

0.22

 

 

 

0.25

 

 

 

0.31

 

 

$

0.23

 

Limited Partner’s interest in net income under FASB ASC

   260-10-45-60

 

$

1.03

 

 

$

1.15

 

 

$

1.52

 

 

$

1.19

 

Weighted average number of Limited Partner units outstanding

 

 

46,244

 

 

 

51,427

 

 

 

46,760

 

 

 

52,174

 
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Cash flows provided by (used in) operating activities:    
Net income $ 86,163 $ 74,640
Adjustment to reconcile net income to net cash provided by (used in) operating activities:    
(Increase) decrease in the fair value of derivative instruments [1] 5,253 17,638
Depreciation and amortization 18,627 16,106
Provision for losses on accounts receivable 3,203 4,968
Change in deferred taxes 222 (9,335)
Change in weather hedge contract receivable/payable (10,053) 2,110
Changes in operating assets and liabilities:    
Increase in receivables (69,562) (159,249)
Decrease (increase) in inventories 12,008 (3,741)
Decrease in other assets 4,812 12,778
Decrease in accounts payable (8,910) (2,364)
Decrease in customer credit balances (32,462) (38,476)
Increase in other current and long-term liabilities 41,574 42,564
Net cash provided by (used in) operating activities 50,875 (42,361)
Cash flows provided by (used in) investing activities:    
Capital expenditures (5,684) (6,814)
Proceeds from sales of fixed assets 201 746
Purchase of investments (7,218) (7,571)
Acquisitions (496) (13,671)
Net cash used in investing activities (13,197) (27,310)
Cash flows provided by (used in) financing activities:    
Revolving credit facility borrowings 90,202 139,331
Revolving credit facility repayments (127,659) (25,831)
Loan issuance 130,000  
Term loan repayments (92,500) (2,500)
Distributions (12,153) (12,717)
Unit repurchases (18,575) (26,371)
Customer retainage payments (300) (357)
Payments of debt issue costs (1,291) (43)
Net cash (used in) provided by financing activities (32,276) 71,512
Net increase in cash, cash equivalents, and restricted cash 5,402 1,841
Cash, cash equivalents, and restricted cash at beginning of period 5,149 14,781
Cash, cash equivalents, and restricted cash at end of period $ 10,551 $ 16,622
[1] Represents the change in value of unrealized open positions and expired options.
v3.20.1
Long-Term Debt and Bank Facility Borrowings (Tables)
 6 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Company's Debt

The Company’s debt is as follows (in thousands):

 

 

March 31,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

 

Carrying

Amount

 

 

Fair Value (a)

 

 

Carrying

Amount

 

 

Fair Value (a)

 

Revolving Credit Facility Borrowings

 

$

24,043

 

 

$

24,043

 

 

$

61,500

 

 

$

61,500

 

Senior Secured Term Loan (b)

 

 

129,188

 

 

 

130,000

 

 

 

91,947

 

 

 

92,500

 

Total debt

 

$

153,231

 

 

$

154,043

 

 

$

153,447

 

 

$

154,000

 

Total short-term portion of debt

 

$

37,043

 

 

$

37,043

 

 

$

33,000

 

 

$

33,000

 

Total long-term portion of debt

 

$

116,188

 

 

$

117,000

 

 

$

120,447

 

 

$

121,000

 

 

(a)

The face amount of the Company’s variable rate long-term debt approximates fair value.

(b)

Carrying amounts are net of unamortized debt issuance costs of $0.8 million as of March 31, 2020 and $0.6 million as of September 30, 2019.

v3.20.1
Property and Equipment - Component of Property and Equipment (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Property Plant And Equipment [Abstract]    
Property and equipment $ 234,014 $ 230,690
Less: accumulated depreciation 138,810 132,451
Property and equipment, net $ 95,204 $ 98,239
v3.20.1
Long-Term Debt and Bank Facility Borrowings - Company's Debt (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Debt Instrument [Line Items]    
Long-term debt, carrying Amount $ 153,231 $ 153,447
Current maturities of long-term debt, carrying Amount 37,043 33,000
Long-term debt 116,188 120,447
Long-term debt, fair value [1] 154,043 154,000
Current maturities of long-term debt, fair value [1] 37,043 33,000
Long-term portion of debt, fair value [1] 117,000 121,000
Revolving Credit Facility    
Debt Instrument [Line Items]    
Credit facility borrowings, carrying Amount 24,043 61,500
Credit facility borrowings, fair value [1] 24,043 61,500
Term Loan    
Debt Instrument [Line Items]    
Long-term debt, carrying Amount [2] 129,188 91,947
Long-term debt, fair value [1],[2] $ 130,000 $ 92,500
[1] The face amount of the Company’s variable rate long-term debt approximates fair value.
[2] Carrying amounts are net of unamortized debt issuance costs of $0.8 million as of March 31, 2020 and $0.6 million as of September 30, 2019.
v3.20.1
Common Unit Repurchase and Retirement
 6 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Common Unit Repurchase and Retirement

4) Common Unit Repurchase and Retirement

In July 2012, the Board adopted a plan to repurchase certain of the Company’s Common Units that was amended in fiscal 2018 (the “Repurchase Plan”).  Through the beginning of February 2020, the Company had repurchased approximately 11.8 million Common Units under the Repurchase Plan.  In February 2020, the Board authorized an increase of the number of Common Units that remained available for the Company to repurchase to a total of 1.1 million, of which 1.0 million were available for repurchase in open market transactions and 0.1 million were available for repurchase in privately-negotiated transactions.  During the second fiscal quarter of 2020, the Company repurchased approximately 0.8 million Common Units in open market transactions under the Repurchase Plan and repurchased 0.4 million Common Units in April 2020.  There is no guarantee of the exact number of units that will be purchased under the Repurchase Plan and the Company may discontinue purchases at any time. The Repurchase Plan does not have a time limit. The Board may also approve additional purchases of units from time to time in private transactions. The Company’s repurchase activities take into account SEC safe harbor rules and guidance for issuer repurchases. All of the Common Units purchased in the Repurchase Plan will be retired.

Under the Company’s fifth amended and restated credit agreement dated December 4, 2019, in order to repurchase Common Units we must maintain Availability (as defined in the fifth amended and restated credit agreement) of $45 million, 15.0% of the facility size of $300 million (assuming the non-seasonal aggregate commitment is outstanding) on a historical pro forma and forward-looking basis, and a fixed charge coverage ratio of not less than 1.15 measured as of the date of repurchase.  The Company was in compliance with this covenant as of March 31, 2020.

The following table shows repurchases under the Repurchase Plan.

 

(in thousands, except per unit amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period

 

Total Number of

Units Purchased

 

 

Average Price

Paid per Unit (a)

 

 

Total Number of

Units Purchased as Part of Publicly Announced Plans or Programs

 

 

Maximum Number

of Units that May

Yet Be Purchased

 

 

Fiscal year 2012 to 2019 total

 

 

13,340

 

 

$

8.08

 

 

 

10,896

 

 

 

956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First quarter fiscal year 2020 total

 

 

1,281

 

 

$

9.42

 

 

 

650

 

 

 

306

 

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 2020

 

 

160

 

 

$

9.48

 

 

 

160

 

 

 

146

 

 

February 2020

 

 

122

 

 

$

9.15

 

 

 

122

 

 

 

1,024

 

(c)

March 2020

 

 

500

 

 

$

7.76

 

 

 

500

 

 

 

524

 

 

Second quarter fiscal year 2020 total

 

 

782

 

 

$

8.33

 

 

 

782

 

 

 

524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 2020

 

 

424

 

 

$

7.71

 

 

 

424

 

 

 

100

 

(d)

 

(a)

Amount includes repurchase costs.

(b)

First quarter of fiscal year 2020 Common Units repurchased include 0.6 million Common Units acquired in a private transaction.

(c)

In February 2020, the Board authorized an increase in the number of Common Units available for repurchase from 0.1 million to 1.1 million.

(d)

The remaining 0.1 million units under the Repurchase Plan are available for repurchase in privately-negotiated transactions.
v3.20.1
Property and Equipment
 6 Months Ended
Mar. 31, 2020
Property Plant And Equipment [Abstract]  
Property and Equipment

8) Property and Equipment

Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the depreciable assets using the straight-line method (in thousands):

 

 

 

March 31,

2020

 

 

September 30,

2019

 

Property and equipment

 

$

234,014

 

 

$

230,690

 

Less: accumulated depreciation

 

 

138,810

 

 

 

132,451

 

Property and equipment, net

 

$

95,204

 

 

$

98,239

 
v3.20.1
Income Taxes
 6 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

12) Income Taxes  

 The accompanying financial statements are reported on a fiscal year, however, the Company and its corporate subsidiaries file Federal and State income tax returns on a calendar year.

The current and deferred income tax expense (benefit) for the three and six months ended March 31, 2020, and March 31, 2019 are as follows:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Income before income taxes

 

$

83,108

 

 

$

101,564

 

 

$

122,645

 

 

$

104,852

 

Current income tax expense

 

 

25,814

 

 

 

37,958

 

 

 

36,260

 

 

 

39,547

 

Deferred income tax expense (benefit)

 

 

(1,114

)

 

 

(8,719

)

 

 

222

 

 

 

(9,335

)

Total income tax expense

 

$

24,700

 

 

$

29,239

 

 

$

36,482

 

 

$

30,212

 

 

At March 31, 2020, we did not have unrecognized income tax benefits.

Our continuing practice is to recognize interest and penalties related to income tax matters as a component of income tax expense. We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut and Pennsylvania, we have four years that are subject to examination. In the state tax jurisdiction of New Jersey we have five tax years that are subject to examination. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, based on our assessment of many factors, including past experience and interpretation of tax law, we believe that our provision for income taxes reflect the most probable outcome. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Current assets    
Cash and cash equivalents $ 10,301 $ 4,899
Receivables, net of allowance of $9,017 and $8,378, respectively 187,091 120,245
Inventories 52,826 64,788
Prepaid expenses and other current assets 43,319 36,898
Total current assets 293,537 226,830
Property and equipment, net 95,204 98,239
Operating lease right-of-use assets 103,672  
Goodwill 244,574 244,574
Intangibles, net 98,245 107,688
Restricted cash 250 250
Captive insurance collateral 65,776 58,490
Deferred charges and other assets, net 17,823 16,635
Total assets 919,081 752,706
Current liabilities    
Accounts payable 23,898 33,973
Revolving credit facility borrowings 24,043 24,000
Fair liability value of derivative instruments 14,017 8,262
Current maturities of long-term debt 13,000 9,000
Current portion of operating lease liabilities 19,567  
Accrued expenses and other current liabilities 158,989 120,839
Unearned service contract revenue 65,176 61,213
Customer credit balances 36,202 68,270
Total current liabilities 354,892 325,557
Long-term debt 116,188 120,447
Long-term operating lease liabilities 89,373  
Deferred tax liabilities, net 20,229 20,116
Other long-term liabilities 22,444 25,746
Partners’ capital    
Common unitholders 334,968 279,709
General partner (1,792) (1,968)
Accumulated other comprehensive loss, net of taxes (17,221) (16,901)
Total partners’ capital 315,955 260,840
Total liabilities and partners’ capital $ 919,081 $ 752,706
v3.20.1
Supplemental Disclosure of Cash Flow Information (Tables)
 6 Months Ended
Mar. 31, 2020
Supplemental Cash Flow Elements [Abstract]  
Schedule of Supplemental Disclosure of Cash Flow Information

 

 

 

Six Months Ended

 

Cash paid during the period for:

 

March 31,

 

(in thousands)

 

2020

 

 

2019

 

Income taxes, net

 

$

9,992

 

 

$

3,748

 

Interest

 

$

6,543

 

 

$

5,770

 

 
v3.20.1
CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL - USD ($)
shares in Thousands, $ in Thousands
Total
General Partner
Common Stock
Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Sep. 30, 2018 $ 309,785 $ (1,303) $ 329,129 $ (18,041)
Beginning Balance, unit at Sep. 30, 2018   326 53,088  
Impact from adoption of ASU No. 2014-09 9,224 $ 60 $ 9,164  
Net income 74,640 469 74,171  
Unrealized gain on pension plan obligation 911 [1]     911
Tax effect of unrealized gain on pension plan obligation (249)     (249)
Unrealized gain on captive insurance collateral 1,294     1,294
Tax effect of unrealized gain on captive insurance collateral (276)     (276)
Unrealized loss on interest rate hedges (1,112)     (1,112)
Tax effect of unrealized loss on interest rate hedges 292     292
Distributions (12,717) (372) (12,345)  
Retirement of units [2] (26,371)   $ (26,371)  
Retirement of units, shares [2]     (2,786)  
Ending Balance at Mar. 31, 2019 355,421 $ (1,146) $ 373,748 (17,181)
Ending Balance, Unit at Mar. 31, 2019   326 50,302  
Beginning Balance at Dec. 31, 2018 309,265 $ (1,416) $ 328,633 (17,952)
Beginning Balance, unit at Dec. 31, 2018   326 52,489  
Net income 72,325 $ 454 $ 71,871  
Unrealized gain on pension plan obligation 457 [1]     457
Tax effect of unrealized gain on pension plan obligation (125)     (125)
Unrealized gain on captive insurance collateral 905     905
Tax effect of unrealized gain on captive insurance collateral (194)     (194)
Unrealized loss on interest rate hedges (367)     (367)
Tax effect of unrealized loss on interest rate hedges 95     95
Distributions (6,304) (184) (6,120)  
Retirement of units [2] (20,636)   $ (20,636)  
Retirement of units, shares [2]     (2,187)  
Ending Balance at Mar. 31, 2019 355,421 $ (1,146) $ 373,748 (17,181)
Ending Balance, Unit at Mar. 31, 2019   326 50,302  
Beginning Balance at Sep. 30, 2019 260,840 $ (1,968) $ 279,709 (16,901)
Beginning Balance, unit at Sep. 30, 2019   326 47,685  
Ending Balance at Dec. 31, 2019 270,898 $ (1,991) $ 289,268 (16,379)
Ending Balance, Unit at Dec. 31, 2019   326 46,404  
Beginning Balance at Sep. 30, 2019 260,840 $ (1,968) $ 279,709 (16,901)
Beginning Balance, unit at Sep. 30, 2019   326 47,685  
Net income 86,163 $ 601 $ 85,562  
Unrealized gain on pension plan obligation 910 [1]     910
Tax effect of unrealized gain on pension plan obligation (258)     (258)
Unrealized gain on captive insurance collateral 43     43
Tax effect of unrealized gain on captive insurance collateral (7)     (7)
Unrealized loss on interest rate hedges (1,382)     (1,382)
Tax effect of unrealized loss on interest rate hedges 374     374
Distributions (12,153) (425) (11,728)  
Retirement of units [2] (18,575)   $ (18,575)  
Retirement of units, shares [2]     (2,063)  
Ending Balance at Mar. 31, 2020 315,955 $ (1,792) $ 334,968 (17,221)
Ending Balance, Unit at Mar. 31, 2020   326 45,622  
Beginning Balance at Dec. 31, 2019 270,898 $ (1,991) $ 289,268 (16,379)
Beginning Balance, unit at Dec. 31, 2019   326 46,404  
Net income 58,408 $ 409 $ 57,999  
Unrealized gain on pension plan obligation 455 [1]     455
Tax effect of unrealized gain on pension plan obligation (133)     (133)
Unrealized gain on captive insurance collateral 107     107
Tax effect of unrealized gain on captive insurance collateral (15)     (15)
Unrealized loss on interest rate hedges (1,716)     (1,716)
Tax effect of unrealized loss on interest rate hedges 460     460
Distributions (5,998) (210) (5,788)  
Retirement of units [2] (6,511)   $ (6,511)  
Retirement of units, shares [2]     (782)  
Ending Balance at Mar. 31, 2020 $ 315,955 $ (1,792) $ 334,968 $ (17,221)
Ending Balance, Unit at Mar. 31, 2020   326 45,622  
[1] This item is included in the computation of net periodic pension cost.
[2] See Note 4 – Common Unit Repurchase and Retirement.
v3.20.1
Intangibles, net (Tables)
 6 Months Ended
Mar. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Intangible Assets Subject to Amortization

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows (in thousands):

 

 

 

March 31, 2020

 

 

September 30, 2019

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accum.

 

 

 

 

 

 

Carrying

 

 

Accum.

 

 

 

 

 

 

 

Amount

 

 

Amortization

 

 

Net

 

 

Amount

 

 

Amortization

 

 

Net

 

Customer lists

 

$

383,388

 

 

$

306,657

 

 

$

76,731

 

 

$

382,373

 

 

$

297,221

 

 

$

85,152

 

Trade names and other intangibles

 

 

37,853

 

 

 

16,339

 

 

 

21,514

 

 

 

37,739

 

 

 

15,203

 

 

 

22,536

 

Total

 

$

421,241

 

 

$

322,996

 

 

$

98,245

 

 

$

420,112

 

 

$

312,424

 

 

$

107,688

 
v3.20.1
Business Combinations - Additional Information (Detail)
$ in Millions
 6 Months Ended
Mar. 31, 2020
USD ($)
Acquired Business  
Business Acquisition [Line Items]  
Aggregate purchase price partnership acquired $ 0.5
v3.20.1
Long-Term Debt and Bank Facility Borrowings - Company's Debt (Parenthetical) (Detail) - USD ($)
$ in Millions
Mar. 31, 2020
Sep. 30, 2019
Term Loan    
Debt Instrument [Line Items]    
Unamortized debt issuance costs $ 0.8 $ 0.6
v3.20.1
Captive Insurance Collateral - Schedule of Maturities of Investments (Detail) - USD ($)
$ in Thousands
Mar. 31, 2020
Sep. 30, 2019
Investments Debt And Equity Securities [Abstract]    
Due within one year $ 14,402  
Due after one year through five years 42,552  
Due after five years through ten years 8,822  
Total $ 65,776 $ 58,490
v3.20.1
Common Unit Repurchase and Retirement - Additional Information (Detail) - USD ($)
shares in Thousands
 1 Months Ended 3 Months Ended 84 Months Ended 91 Months Ended
Jul. 02, 2018
Apr. 30, 2020
Mar. 31, 2020
Feb. 29, 2020
Jan. 31, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jan. 31, 2020
Dec. 04, 2019
Capital Unit [Line Items]                    
Company's common units authorized for repurchase       1,100 100       100  
Fifth Amendment                    
Capital Unit [Line Items]                    
Availability required to repurchase common units $ 45,000,000                  
Percentage of the maximum facility size on a historical proforma and forward-looking basis 15.00%                  
Non Seasonal maximum borrowing capacity under revolving credit facility $ 300,000,000                 $ 300,000,000
Minimum fixed charge coverage ratio for distributions to unit holders or to repurchase common units 115.00%                  
Repurchase Plan                    
Capital Unit [Line Items]                    
Company's common units repurchased and retired     500 122 160 782 1,281 13,340 11,800  
Repurchase Plan | Subsequent Event                    
Capital Unit [Line Items]                    
Company's common units repurchased and retired   424                
Common Stock Available for Repurchase Under Privately Negotiated Transactions                    
Capital Unit [Line Items]                    
Company's common units authorized for repurchase   100   100            
Common Stock Available for Repurchase Under Open Market Transactions                    
Capital Unit [Line Items]                    
Company's common units authorized for repurchase       1,000            
Common Stock Repurchase Under Open Market Transactions                    
Capital Unit [Line Items]                    
Company's common units repurchased and retired           800        
v3.20.1
Leases - Additional Information (Detail)
 6 Months Ended
Mar. 31, 2020
Lessee Lease Description [Line Items]  
Weighted-average remaining lease term - operating leases 7 years 4 months 24 days
Weighted-average discount rate - operating leases 4.90%
Minimum  
Lessee Lease Description [Line Items]  
Operating lease expiration year 2020
Operating lease, term of contract 1 year
Maximum  
Lessee Lease Description [Line Items]  
Operating lease expiration year 2039
Operating lease, term of contract 20 years
Operating lease, option to extend, term 5 years
v3.20.1
Supplemental Disclosure of Cash Flow Information - Schedule of Supplemental Disclosure of Cash Flow Information (Detail) - USD ($)
$ in Thousands
 6 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Cash paid during the period for:    
Income taxes, net $ 9,992 $ 3,748
Interest $ 6,543 $ 5,770
v3.20.1
Earnings Per Limited Partner Unit
 6 Months Ended
Mar. 31, 2020
Earnings Per Share [Abstract]  
Earnings Per Limited Partner Unit

16) Earnings Per Limited Partner Unit

Income per limited partner unit is computed in accordance with FASB ASC 260-10-05 Earnings Per Share, Master Limited Partnerships (EITF 03-06), by dividing the limited partners’ interest in net income by the weighted average number of limited partner units outstanding. The pro forma nature of the allocation required by this standard provides that in any accounting period where the Company’s aggregate net income exceeds its aggregate distribution for such period, the Company is required to present net income per limited partner unit as if all of the earnings for the periods were distributed, regardless of whether those earnings would actually be distributed during a particular period from an economic or practical perspective. This allocation does not impact the Company’s overall net income or other financial results. However, for periods in which the Company’s aggregate net income exceeds its aggregate distributions for such period, it will have the impact of reducing the earnings per limited partner unit, as the calculation according to this standard result in a theoretical increased allocation of undistributed earnings to the General Partner. In accounting periods where aggregate net income does not exceed aggregate distributions for such period, this standard does not have any impact on the Company’s net income per limited partner unit calculation. A separate and independent calculation for each quarter and year-to-date period is performed, in which the Company’s contractual participation rights are taken into account.

The following presents the net income allocation and per unit data using this method for the periods presented:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

Basic and Diluted Earnings Per Limited Partner:

 

March 31,

 

 

March 31,

 

(in thousands, except per unit data)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income

 

$

58,408

 

 

$

72,325

 

 

$

86,163

 

 

$

74,640

 

Less General Partner’s interest in net income

 

 

409

 

 

 

454

 

 

 

601

 

 

 

469

 

Net income available to limited partners

 

 

57,999

 

 

 

71,871

 

 

 

85,562

 

 

 

74,171

 

Less dilutive impact of theoretical distribution of earnings

   under FASB ASC 260-10-45-60

 

 

10,283

 

 

 

12,934

 

 

 

14,631

 

 

 

12,294

 

Limited Partner’s interest in net income under FASB ASC 260-10-45-60

 

$

47,716

 

 

$

58,937

 

 

$

70,931

 

 

$

61,877

 

Per unit data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income available to limited partners

 

$

1.25

 

 

$

1.40

 

 

$

1.83

 

 

$

1.42

 

Less dilutive impact of theoretical distribution of earnings

   under FASB ASC 260-10-45-60

 

 

0.22

 

 

 

0.25

 

 

 

0.31

 

 

$

0.23

 

Limited Partner’s interest in net income under FASB ASC

   260-10-45-60

 

$

1.03

 

 

$

1.15

 

 

$

1.52

 

 

$

1.19

 

Weighted average number of Limited Partner units outstanding

 

 

46,244

 

 

 

51,427

 

 

 

46,760

 

 

 

52,174

 
v3.20.1
Common Unit Repurchase and Retirement (Tables)
 6 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Company's Repurchase Activities

The following table shows repurchases under the Repurchase Plan.

 

(in thousands, except per unit amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period

 

Total Number of

Units Purchased

 

 

Average Price

Paid per Unit (a)

 

 

Total Number of

Units Purchased as Part of Publicly Announced Plans or Programs

 

 

Maximum Number

of Units that May

Yet Be Purchased

 

 

Fiscal year 2012 to 2019 total

 

 

13,340

 

 

$

8.08

 

 

 

10,896

 

 

 

956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First quarter fiscal year 2020 total

 

 

1,281

 

 

$

9.42

 

 

 

650

 

 

 

306

 

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 2020

 

 

160

 

 

$

9.48

 

 

 

160

 

 

 

146

 

 

February 2020

 

 

122

 

 

$

9.15

 

 

 

122

 

 

 

1,024

 

(c)

March 2020

 

 

500

 

 

$

7.76

 

 

 

500

 

 

 

524

 

 

Second quarter fiscal year 2020 total

 

 

782

 

 

$

8.33

 

 

 

782

 

 

 

524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 2020

 

 

424

 

 

$

7.71

 

 

 

424

 

 

 

100

 

(d)

 

(a)

Amount includes repurchase costs.

(b)

First quarter of fiscal year 2020 Common Units repurchased include 0.6 million Common Units acquired in a private transaction.

(c)

In February 2020, the Board authorized an increase in the number of Common Units available for repurchase from 0.1 million to 1.1 million.

(d)

The remaining 0.1 million units under the Repurchase Plan are available for repurchase in privately-negotiated transactions.