Star Group, L.P. (‘Star’) distributes and provides services of home heating oil and propane to residential and commercial customers.
As of September 30, 2024, the company sold home heating oil and propane to approximately 404,600 full-service residential and commercial customers, and 61,700 customers on a delivery-only basis. Approximately 266,000 of these customers, or 57%, are located in New York, New Jersey, and Connecticut. The company also sells gasoline and diesel fuel to approximately 26...
Star Group, L.P. (‘Star’) distributes and provides services of home heating oil and propane to residential and commercial customers.
As of September 30, 2024, the company sold home heating oil and propane to approximately 404,600 full-service residential and commercial customers, and 61,700 customers on a delivery-only basis. Approximately 266,000 of these customers, or 57%, are located in New York, New Jersey, and Connecticut. The company also sells gasoline and diesel fuel to approximately 26,800 customers. It installs, maintains, and repairs heating and air conditioning equipment, and to a lesser extent, provides these services outside of the company’s heating oil and propane customer base, including 20,800 service contracts for natural gas and other heating systems.
The company provides home heating equipment repair service and natural gas service 24 hours a day, 7 days a week, 52 weeks a year. These services are an integral part of its business.
The company conducts its business through an operating subsidiary, Petro Holdings, Inc., utilizing multiple local brand names, such as Petro Home Services, Meenan, and Griffith Energy Services, Inc.
The company also offers several pricing alternatives to its residential home heating oil customers, including a variable price (market-based) option and a price-protected option, the latter of which either sets the maximum price, or a fixed price that a customer will pay. Approximately 95% of the company’s full-service residential and commercial home heating oil customers automatically receive deliveries based on prevailing weather conditions.
The company has heating oil and/or propane customers in the following states: Connecticut, Delaware, Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, and the District of Columbia.
The company provides services to its customers in the United States in twelve states and the District of Columbia, ranging from Massachusetts to Maryland, from 41 principal operating locations and 82 depots, 53 of which are owned, and 70 of which are leased. As of September 30, 2024, the company had a fleet of approximately 1,134 truck and transport vehicles, the majority of which were owned, 1,195 service vehicles, and 384 support vehicles, the majority of which were leased.
Strategy
The key elements of the company’s strategy are to pursue select acquisitions, deliver superior customer service, provide complementary service offerings, and pursue environmental sustainability opportunities.
Seasonality
The seasonal nature of the company’s business results in the sale of approximately 30% of its volume of home heating oil and propane in the first fiscal quarter, and 50% of its volume in the second fiscal quarter of each fiscal year (year ended September 30, 2024), the peak heating season. Approximately 25% of the company’s volume of motor fuel and other petroleum products is sold in each of the four fiscal quarters. The company generally realizes net income in its first and second fiscal quarters, and net losses during its third and fourth fiscal quarters. In addition, sales volume typically fluctuates from year to year in response to variations in weather, wholesale energy prices, and other factors.
Customers
The number of home heating oil customers comprises 78% of the company’s product customer base, with propane customers comprising another 17%, and motor fuel and other petroleum product customers making up the remaining 5%. During fiscal 2024, the company sold 253.4 million gallons of home heating oil and propane, and 129.1 million gallons of motor fuel and other petroleum products.
The company’s full-service home heating oil customer base consists of 96% residential customers and 4% commercial customers. Approximately 95% of the company’s full-service residential and commercial home heating oil customers have their deliveries scheduled automatically, and 5% of its home heating oil customer base calls from time to time to schedule a delivery.
The company offers several pricing alternatives to its residential home heating oil customers. Sales to residential customers ordinarily generate higher per-gallon margins than sales to commercial customers.
The propane customer base has a similar profile to heating oil residential and commercial customers. Sales to residential customers ordinarily generate higher per-gallon margins than sales to commercial customers.
The motor fuel and other petroleum products customer group includes commercial and industrial customers of unbranded diesel, gasoline, kerosene, and related distillate products. The company sells products to these customers through contracts of various terms, or through a competitive bidding process.
Suppliers and Supply Arrangements
As of September 30, 2024, the company had contracts with approximately 136 third-party terminal sites for the right to temporarily store petroleum products at their facilities. Home heating oil and propane purchases are made under supply contracts or on the spot market. The company has entered into New York Mercantile Exchange (‘NYMEX’), Platts American Gulf Coast, or Mont Belvieu-based physical supply contracts for approximately 76% of the company’s expected home heating oil and propane requirements for its full-service residential and commercial customers for the fiscal 2025 heating season. For the fiscal year 2025 heating season, approximately 74% of the company’s contracted home heating oil volume with suppliers has a biofuel component. The company also has entered into NYMEX or Platts American Gulf Coast-based physical supply contracts for approximately 46% of its expected diesel and gasoline requirements for fiscal 2025.
During fiscal 2024, Shell Trading and Shell Oil Products US provided approximately 16% of the company’s petroleum purchases, and Motiva Enterprises LLC provided 15% of its petroleum product purchases. The company’s supply contracts typically have terms of 6 to 12 months. For fiscal 2025, approximately 24% of its physical supply contracts are with Motiva Enterprises LLC.
Acquisitions
During fiscal 2024, the company acquired one propane and four heating oil businesses.
Government Regulations
The company is also subject to various federal, state, and local environmental, health, and safety laws and regulations. Generally, these laws impose limitations on the discharge or emission of pollutants, and establish standards for the handling of solid and hazardous wastes. These laws include the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act (‘CERCLA’), the Clean Air Act, the Occupational Safety and Health Act, the Emergency Planning and Community Right to Know Act, the Clean Water Act, the Oil Pollution Act, and comparable state statutes.
Transportation of the company’s products by truck is subject to regulations promulgated under the Federal Motor Carrier Safety Act. These regulations cover the transportation of hazardous materials and are administered by the United States Department of Transportation, or similar state agencies. Several of the company’s oil terminals are governed by the United States Coast Guard operations oversight, Federal OPA 90 FRP programs, and Federal Spill Prevention Control and Countermeasure programs. All of the company’s propane bulk terminals are governed under Homeland Security Chemical Facility Anti-Terrorism Standards programs.
History
The company was founded in 1995. It was incorporated in Delaware in 1995. The company was formerly known as Star Gas Partners, L.P. and changed its name to Star Group, L.P. in 2017.