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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, 2021

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, 2021, the registrant had 40,199,232 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, 2021 (unaudited) and September 30, 2020

 

3

Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended March 31, 2021 and March 31, 2020

 

4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and six months ended March 31, 2021 and March 31, 2020

 

5

Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and six months ended March 31, 2021 and March 31, 2020

 

6-7

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended March 31, 2021 and March 31, 2020

 

8

Notes to Condensed Consolidated Financial Statements (unaudited)

 

9-20

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

 

21-37

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

 

38

Item 4 - Controls and Procedures

 

38

Part II Other Information:

 

39

Item 1 - Legal Proceedings

 

39

Item 1A - Risk Factors

 

39

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

 

39

Item 6 - Exhibits

 

40

Signatures

 

41

 

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,

 

 

 

2021

 

 

2020

 

(in thousands)

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,883

 

 

$

56,911

 

Receivables, net of allowance of $5,797 and $6,121, respectively

 

 

187,457

 

 

 

83,594

 

Inventories

 

 

59,139

 

 

 

50,256

 

Fair asset value of derivative instruments

 

 

11,416

 

 

 

 

Prepaid expenses and other current assets

 

 

40,821

 

 

 

29,554

 

Assets held for sale

 

 

 

 

 

6,030

 

Total current assets

 

 

307,716

 

 

 

226,345

 

Property and equipment, net

 

 

97,929

 

 

 

93,495

 

Operating lease right-of-use assets

 

 

96,310

 

 

 

99,776

 

Goodwill

 

 

253,199

 

 

 

240,327

 

Intangibles, net

 

 

102,479

 

 

 

90,293

 

Restricted cash

 

 

250

 

 

 

250

 

Captive insurance collateral

 

 

69,653

 

 

 

69,787

 

Deferred charges and other assets, net

 

 

18,726

 

 

 

18,343

 

Total assets

 

$

946,262

 

 

$

838,616

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

35,341

 

 

$

30,827

 

Liabilities held for sale

 

 

 

 

 

1,265

 

Revolving credit facility borrowings

 

 

35,000

 

 

 

 

Fair liability value of derivative instruments

 

 

 

 

 

11,437

 

Current maturities of long-term debt

 

 

13,000

 

 

 

13,000

 

Current portion of operating lease liabilities

 

 

18,588

 

 

 

19,139

 

Accrued expenses and other current liabilities

 

 

159,880

 

 

 

127,286

 

Unearned service contract revenue

 

 

63,929

 

 

 

58,430

 

Customer credit balances

 

 

40,257

 

 

 

83,471

 

Total current liabilities

 

 

365,995

 

 

 

344,855

 

Long-term debt

 

 

103,408

 

 

 

109,805

 

Long-term operating lease liabilities

 

 

83,444

 

 

 

85,908

 

Deferred tax liabilities, net

 

 

30,074

 

 

 

17,227

 

Other long-term liabilities

 

 

26,065

 

 

 

25,001

 

Partners’ capital

 

 

 

 

 

 

 

 

Common unitholders

 

 

353,793

 

 

 

273,283

 

General partner

 

 

(1,991

)

 

 

(2,506

)

Accumulated other comprehensive loss, net of taxes

 

 

(14,526

)

 

 

(14,957

)

Total partners’ capital

 

 

337,276

 

 

 

255,820

 

Total liabilities and partners’ capital

 

$

946,262

 

 

$

838,616

 

 

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)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

539,371

 

 

$

481,275

 

 

$

839,703

 

 

$

913,963

 

Installations and services

 

 

64,744

 

 

 

61,788

 

 

 

137,732

 

 

 

138,045

 

Total sales

 

 

604,115

 

 

 

543,063

 

 

 

977,435

 

 

 

1,052,008

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

313,552

 

 

 

285,350

 

 

 

485,699

 

 

 

573,023

 

Cost of installations and services

 

 

64,361

 

 

 

61,273

 

 

 

133,664

 

 

 

134,942

 

(Increase) decrease in the fair value of derivative instruments

 

 

(8,224

)

 

 

11,670

 

 

 

(25,619

)

 

 

5,253

 

Delivery and branch expenses

 

 

100,942

 

 

 

85,463

 

 

 

181,629

 

 

 

182,189

 

Depreciation and amortization expenses

 

 

8,268

 

 

 

9,089

 

 

 

16,225

 

 

 

18,139

 

General and administrative expenses

 

 

6,320

 

 

 

5,422

 

 

 

12,561

 

 

 

11,928

 

Finance charge income

 

 

(799

)

 

 

(1,321

)

 

 

(1,205

)

 

 

(2,034

)

Operating income

 

 

119,695

 

 

 

86,117

 

 

 

174,481

 

 

 

128,568

 

Interest expense, net

 

 

(2,136

)

 

 

(2,756

)

 

 

(3,987

)

 

 

(5,435

)

Amortization of debt issuance costs

 

 

(243

)

 

 

(253

)

 

 

(490

)

 

 

(488

)

Income before income taxes

 

 

117,316

 

 

 

83,108

 

 

 

170,004

 

 

 

122,645

 

Income tax expense

 

 

32,152

 

 

 

24,700

 

 

 

46,980

 

 

 

36,482

 

Net income

 

$

85,164

 

 

$

58,408

 

 

$

123,024

 

 

$

86,163

 

General Partner’s interest in net income

 

 

681

 

 

 

409

 

 

 

977

 

 

 

601

 

Limited Partners’ interest in net income

 

$

84,483

 

 

$

57,999

 

 

$

122,047

 

 

$

85,562

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

1.71

 

 

$

1.03

 

 

$

2.43

 

 

$

1.52

 

Weighted average number of Limited Partner units outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

40,382

 

 

 

46,244

 

 

 

41,324

 

 

 

46,760

 

 

(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)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

85,164

 

 

$

58,408

 

 

$

123,024

 

 

$

86,163

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on pension plan obligation

 

 

235

 

 

 

455

 

 

 

470

 

 

 

910

 

Tax effect of unrealized gain on pension plan obligation

 

 

(64

)

 

 

(133

)

 

 

(128

)

 

 

(258

)

Unrealized gain (loss) on captive insurance collateral

 

 

(526

)

 

 

107

 

 

 

(866

)

 

 

43

 

Tax effect of unrealized gain (loss) on captive insurance collateral

 

 

110

 

 

 

(15

)

 

 

182

 

 

 

(7

)

Unrealized gain (loss) on interest rate hedges

 

 

719

 

 

 

(1,716

)

 

 

1,051

 

 

 

(1,382

)

Tax effect of unrealized gain (loss) on interest rate hedges

 

 

(190

)

 

 

460

 

 

 

(278

)

 

 

374

 

Total other comprehensive income (loss)

 

 

284

 

 

 

(842

)

 

 

431

 

 

 

(320

)

Total comprehensive income

 

$

85,448

 

 

$

57,566

 

 

$

123,455

 

 

$

85,843

 

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, 2021

 

 

 

Number of Units

 

 

 

 

 

 

 

 

 

 

Accum. Other

 

 

Total

 

(in thousands - unaudited)

 

Common

 

 

General

Partner

 

 

Common

 

 

General

Partner

 

 

Comprehensive

Income (Loss)

 

 

Partners’

Capital

 

Balance as of December 31, 2020

 

 

40,737

 

 

 

326

 

 

$

279,873

 

 

$

(2,447

)

 

$

(14,810

)

 

$

262,616

 

Net income

 

 

 

 

 

 

 

 

84,483

 

 

 

681

 

 

 

 

 

 

85,164

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

235

 

 

 

235

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(64

)

 

 

(64

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(526

)

 

 

(526

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

110

 

 

 

110

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

719

 

 

 

719

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(190

)

 

 

(190

)

Distributions

 

 

 

 

 

 

 

 

(5,369

)

 

 

(225

)

 

 

 

 

 

(5,594

)

Retirement of units

 

 

(538

)

 

 

 

 

 

(5,194

)

 

 

 

 

 

 

 

 

(5,194

)

Balance as of March 31, 2021 (unaudited)

 

 

40,199

 

 

 

326

 

 

$

353,793

 

 

$

(1,991

)

 

$

(14,526

)

 

$

337,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 30, 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

 

 

(782

)

 

 

 

 

 

(6,511

)

 

 

 

 

 

 

 

 

(6,511

)

Balance as of March 31, 2020 (unaudited)

 

 

45,622

 

 

 

326

 

 

$

334,968

 

 

$

(1,792

)

 

$

(17,221

)

 

$

315,955

 

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, 2021

 

 

 

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, 2020

 

 

43,328

 

 

 

326

 

 

$

273,283

 

 

$

(2,506

)

 

$

(14,957

)

 

$

255,820

 

Net income

 

 

 

 

 

 

 

 

122,047

 

 

 

977

 

 

 

 

 

 

123,024

 

Unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

470

 

 

 

470

 

Tax effect of unrealized gain on pension plan obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(128

)

 

 

(128

)

Unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(866

)

 

 

(866

)

Tax effect of unrealized loss on captive insurance collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

182

 

 

 

182

 

Unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,051

 

 

 

1,051

 

Tax effect of unrealized gain on interest rate hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(278

)

 

 

(278

)

Distributions

 

 

 

 

 

 

 

 

(11,071

)

 

 

(462

)

 

 

 

 

 

(11,533

)

Retirement of units

 

 

(3,129

)