STAMFORD, Conn. – The nation’s largest retail distributor of home heating oil, Star Gas Partners L.P. (NYSE: SGU), posted a net loss of $8.01 million for its fiscal first quarter, compared with year-ago net income of $25.10 million, on total sales that fell 11.25 percent to $402.85 million.
Diluted earnings per “limited partner unit” amounted to a loss of 11 cents compared with the previous quarter’s net loss of $1.21 per unit (READ MORE) and the year-ago period’s gain of 33 cents per unit. Star Gas cited a $54.6 million one-time non-cash charge reflecting a decline in the fair value of certain derivatives.
“Our winter heating season got off to a respectable start, as we benefited from colder-than-normal temperatures during the fiscal 2009 first quarter and into January 2009,” CEO Daniel P. Donovan noted in the after-market report. “We applaud all of our employees in the field and in the office that continue to focus on providing superior customer service during this winter’s return to more-normal temperatures.”
In the quarter ended Dec. 31, temperatures in the energy partnership’s coverage area were 8.3 percent colder than in the fiscal 2008 first quarter and 3.3 percent colder than normal, National Oceanic and Atmospheric Administration (NOAA) data show.
But the number of gallons of home heating oil Star Gas sold during the quarter fell 3.18 percent year over year as the impact of colder temperatures was more than offset by sales volume “lost through conservation or net customer attrition,” including the elimination of low-margin and unprofitable commercial accounts, Star Gas said. The price per gallon sold also declined, in response to lower wholesale costs.
Still, Donovan said, “we are happy to report that we will be paying a distribution of 6.75 cents per unit,” on all units, both common and general partner. The distribution – declared on Jan. 23, for the fiscal first quarter that ended Dec. 31 – is payable Feb. 13 to holders of record as of Feb. 5.
Such payments had been suspended in recent quarters, as the company struggled to reduce operating costs. “Margin management is crucial,” Donovan had noted in August, “since a large portion of our operating costs – necessary to profitably serve our customers – are of a fixed nature. … We have been focusing our off-season efforts on seeking and making sound acquisitions; planning and executing marketing and operating strategies to maximize profitable growth; effectively managing customer communications and requests for the coming heating season; and continuing to improve the various services we offer.” (READ MORE)
Star Gas Partners L.P. (NYSE: SGU), the nation’s largest retail distributor of home heating oil, delivers oil and related services to customers in Rhode Island, Connecticut, Maryland, Massachusetts, New York, Pennsylvania, Virginia and Washington, D.C. Additional information is available at www.star-gas.com.
