Star Group, L.P. (SGU): Business Model Canvas [Dec-2025 Updated]

You're looking at a major player in home energy, and honestly, understanding how Star Group, L.P. (SGU) manages commodity swings while aggressively growing through acquisition is key to valuing it right. This isn't just about dropping off fuel; their model blends being the largest U.S. retail home heating oil distributor with a sticky, full-service HVAC business, which helped them post a $1.77 Billion Trailing Twelve Month revenue and net income of $102.2 million through the first nine months of FY2025. So, if you want to see exactly how they balance volatile wholesale costs against reliable service fees and M&A fuel, dive into the full nine-block canvas below.

Star Group, L.P. (SGU) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Star Group, L.P. (SGU) relies on to fuel its growth and operations as of late 2025. These partnerships are critical, especially given the company's aggressive acquisition strategy.

Local/regional home energy distributors for M&A targets are a primary focus for expanding footprint and volume. Star Group, L.P. completed $126.5 million of acquisition transactions year-to-date as of the Q2 2025 earnings call. This M&A activity directly translates to volume growth; for instance, recent acquisitions added 26.8 million gallons to the home heating oil and propane volume in the fiscal 2025 second quarter alone. One specific acquisition closed on January 10, 2025, for approximately $68 million before working capital adjustments. This single deal represented about 17.3% of the company's market capitalization at the time of announcement.

The impact of these distributor partnerships on operational metrics is clear:

• Acquisitions contributed an increase of $4.0 million to Adjusted EBITDA for the first quarter of fiscal 2025.
• Acquisitions added 2.3 million gallons to the home heating oil and propane volume sold in the fiscal 2025 first quarter.
• The service and installation business, often integrated via acquisition, contributed an increase in Adjusted EBITDA of $4.1 million for the first six months of fiscal 2025.

Financial institutions for acquisition funding are essential partners to execute this growth strategy. The $126.5 million in completed transactions YTD is directly supported by these relationships, which are also used to manage compliance with financial covenants included in debt agreements.

The company's core operational partnerships involve securing supply and servicing customers. Here is a breakdown of the key partnership categories and associated financial context where available:

Star Group, L.P. also relies on relationships with its customer base, which saw a 22.9% increase in home heating oil and propane volume sold in Q2 2025, reaching 143.9 million gallons. This volume growth is a direct result of successful operations supported by these key external partners.

Star Group, L.P. (SGU) - Canvas Business Model: Key Activities

You're looking at the core engine of Star Group, L.P. as of late 2025. These activities are what drive the unit value, so let's look at the hard numbers showing how they performed across the fiscal year.

Retail distribution of home heating oil and propane

This is the bread and butter, moving product to customers. The volume story for the first nine months of fiscal 2025 shows significant growth from prior efforts, even if the most recent quarter saw a dip due to weather.

For the nine months ended June 30, 2025, the volume of home heating oil and propane sold reached 262.6 million gallons, which is an increase of 27.7 million gallons, or 11.8 percent, year-over-year. Total revenue for this nine-month period was $1.5 billion, representing a modest rise of less than 1.0 percent compared to the prior year, as higher volumes offset lower selling prices.

However, the third quarter (three months ended June 30, 2025) saw volumes fall by 3.8 percent to 36.2 million gallons, with total revenue at $305.6 million. This quarterly drop was partly due to selling prices declining by $0.3525 per gallon, or 14.3 percent, year-over-year.

Here's a snapshot of the product movement across the first three quarters of fiscal 2025:

Strategic Mergers and Acquisitions (M&A) to grow volume

Star Group, L.P. is actively using M&A to expand its footprint, which shows up in the financial results as higher depreciation and amortization and net interest expense, but also as positive Adjusted EBITDA contributions.

The company completed 1 acquisition in calendar year 2025, specifically Allensoilandpropane in January 2025. This January deal was for approximately $68 million before working capital adjustments. Overall, Star Group has made a total of 4 acquisitions. Since February 1, 2024, the company completed $126.5 million of transactions through the second quarter of fiscal 2025.

The impact is clear in the year-to-date figures for the nine months ended June 30, 2025:

• Acquisitions provided $17.7 million of the total year-to-date Adjusted EBITDA increase.
• In the first quarter of fiscal 2025, acquisitions contributed $4.0 million to the Adjusted EBITDA increase.
• The propane assets acquired are described as being "slightly less seasonal," which supports resiliency during non-heating periods.

Comprehensive HVAC installation, maintenance, and repair

The service and installation segment is a key area for margin improvement, helping offset volatility in product sales. You see this reflected in the profitability metrics.

For the first quarter of fiscal 2025 (ended December 31, 2024), service and installation revenue increased. More recently, for the third quarter ended June 30, 2025, the service and installation gross profit improved by approximately $0.6 million year-over-year. Management emphasized that operational initiatives in this area took hold, contributing meaningfully year-to-date as of the nine-month mark.

Commodity price risk management using derivative instruments

Managing commodity exposure through derivatives is a major activity, showing up as significant, sometimes volatile, non-cash adjustments to net income. The weather hedge component is a specific, tracked part of this risk management.

For the three months ended June 30, 2025 (Q3 FY2025), there was a favorable change in the fair value of derivative instruments of $1.6 million. This contrasts with the second quarter (ended March 31, 2025), which saw an unfavorable change of $5.7 million. The first quarter (ended December 31, 2024) recorded a large favorable change of $24.3 million.

Regarding the specific weather hedge contracts:

• For the hedge period ending March 31, 2025, the company recorded an expense of $3.1 million.
• This represented a $10.6 million headwind to the year-to-date Adjusted EBITDA (nine months ended June 30, 2025).
• The prior year period ending March 31, 2024, resulted in a credit of $6.5 million under the weather hedge contract.
• As of the Q3 2025 report, FY2026 weather hedges of approximately $15 million are in place.

Managing a large, localized delivery and service fleet

The operational scale required to manage the delivery and service fleet directly impacts the general and administrative costs. While a specific fleet size isn't provided, the expense structure reflects this activity.

In the third quarter of fiscal 2025, delivery, branch, and G&A expenses increased by $4.3 million year-over-year. This increase was driven by acquisition-related costs of $5.8 million, but the base business actually showed a reduction of $1.5 million in these overhead categories.

Star Group, L.P. (SGU) - Canvas Business Model: Key Resources

You're looking at the core assets Star Group, L.P. (SGU) relies on to run its business as of late 2025. These aren't just line items; they are the physical and financial engines driving their market position.

Extensive distribution network across Northeast/Mid-Atlantic U.S.

• Star Group, L.P. is the nation's largest retail distributor of home heating oil based upon sales volume.
• The operational footprint covers the more northern and eastern states within the Northeast and Mid-Atlantic U.S. regions.
• The company conducts its business through an operating subsidiary, Petro Holdings.

Customer base of over 405,000 residential and commercial accounts

• Star Group serves more than 405,000 residential and commercial customers in the U.S..
• Volume for home heating oil and propane sold in the fiscal 2025 second quarter reached 143.9 million gallons.
• For the nine-month period ending in Q3 Fiscal 2025, total volume rose to 262.6 million gallons.

Proprietary fuel storage and delivery fleet assets

While specific fleet size and storage capacity numbers aren't explicitly detailed in the latest public releases, the scale of operations implies significant proprietary assets. The volume handled-for instance, 143.9 million gallons sold in Q2 FY2025-necessitates a substantial, owned or controlled logistics infrastructure across the service area.

Skilled service technicians and local branch personnel

Star Group, L.P. sells and services heating and air conditioning equipment to its home heating oil and propane customers. The company emphasizes ongoing efforts to improve the service and installation business, which contributed an increase in Adjusted EBITDA of $4.1 million in the first nine months of fiscal 2025. The decentralized network relies on these local branch personnel for daily operations.

Financial capital for M&A and unit holder distributions

The ability to grow through acquisition and maintain shareholder returns is supported by the balance sheet and recent capital deployment. Here's a look at the relevant financial figures as of late 2025 reporting periods:

The current annual distribution yield is reported as nearly a 10-year high of 6.3%.

Star Group, L.P. (SGU) - Canvas Business Model: Value Propositions

You're looking at the core promises Star Group, L.P. makes to its customers, which are directly tied to their financial performance as a leading energy distributor and services provider.

Full-service, reliable home energy and equipment maintenance

Star Group, L.P. provides more than just fuel delivery; they install, maintain, and repair the heating and air conditioning equipment for their residential and commercial customers. This service component is a key part of their operational stability, generating a combined service/installation gross profit that rose approximately $0.6 million year-over-year for the third quarter of fiscal 2025. For the first nine months of fiscal 2025, the service and installation segment contributed meaningfully to the overall results as operational initiatives took hold.

The company serves customers across the Northeast and Mid-Atlantic U.S. regions. Their dual-revenue stream-product sales and service fees-is a defining characteristic of their value proposition.

Price protection plans to mitigate fuel cost volatility

To help customers manage the swings in energy costs, Star Group, L.P. uses derivative instruments, which are essentially price protection plans. The impact of these hedges shows up directly in the financials. For the first six months of fiscal 2025 (ending March 31, 2025), the company recorded an expense under its weather hedge contracts of $3.1 million. This contrasts with the prior-year period, which saw a benefit of $7.5 million under the weather hedge. For the full fiscal year 2026, Star Group has weather hedges in place totaling approximately $15 million.

Largest retail distributor of home heating oil in the U.S.

Star Group, L.P. believes it is the nation's largest retail distributor of home heating oil based upon sales volume. The volume of home heating oil and propane sold is a critical metric reflecting their market scale. For the first nine months of fiscal 2025 (ending June 30, 2025), the total volume of home heating oil and propane sold increased by 11.8 percent, reaching 262.6 million gallons. This volume growth, combined with higher per-gallon margins, drove an increase in Adjusted EBITDA of $28.2 million for the same nine-month period.

Here are the volume and revenue snapshots from the first three quarters of fiscal 2025:

Commitment to cleaner fuels like Bioheat® fuel

Star Group, L.P. is providing customers with Bioheat® fuel, which is a blend of renewable biodiesel and ultra-low sulfur heating oil, as part of an environmental pledge to mitigate climate change and reach net-zero carbon emissions by 2050.

Localized, high-touch customer service model

The company supports its market position through a full-service approach, which includes selling and servicing heating and air conditioning equipment. This localized service is reinforced by strategic growth, having completed $126.5 million in acquisitions since February 1, 2024, to enhance their market presence. The company also supports shareholder returns, having raised its annual dividend by $0.05 to $0.74 per unit.

• The company serves more than 500,000 residential and commercial customers.
• The vision is to be the premier provider of energy services by delivering outstanding quality, value, and service.
• Net income for the first nine months of fiscal 2025 surged to $102.2 million.

Star Group, L.P. (SGU) - Canvas Business Model: Customer Relationships

You're looking at how Star Group, L.P. (SGU) keeps its customer base engaged, which is crucial for a business highly sensitive to weather conditions. Their approach blends traditional local service with a focus on recurring revenue streams.

Full-service contracts for predictable maintenance revenue are a core part of the Star Group, L.P. strategy. The company describes itself as a full service provider, installing, maintaining, and repairing the heating and air conditioning equipment for its customers. This service component helps stabilize revenue against the volatility of product sales. For the first nine months of fiscal 2025, the gross profit from service and installation increased by $4.8 million year-to-date. Of that increase, $2.1 million was due to initiatives in the base business. For the fiscal 2025 first quarter (three months ended December 31, 2024), unearned service contract revenue stood at $79,568 (in thousands).

The local branch presence fosters long-term customer loyalty by serving customers across the Northeast and Mid-Atlantic regions. Star Group, L.P. serves more than 405,000 residential and commercial customers. This local footprint supports their position as the nation's largest retail distributor of home heating oil based on sales volume.

For commercial customers, the model relies on deep engagement, though specific numbers on dedicated account managers for commercial customers aren't publicly detailed in the latest reports. The company does emphasize its full-service approach for both residential and commercial accounts.

The commitment to shareholders is evident in the high distribution yield of $0.74 per unit for investors. The Board raised the quarterly distribution to $0.185 per unit, which annualizes to $0.74. This represents a nearly 10-year high distribution yield of 6.3% as of September 2025, with a trailing payout ratio of 45%.

Regarding technology, there is an indication of exploration into selective use of AI in customer service interfaces. During the fiscal 2025 third quarter earnings call, an analyst specifically inquired about applications for AI, mentioning customer service as an obvious area. No concrete data on deployment or results for AI in customer service was provided in the available materials.

Here are the key financial metrics related to shareholder returns and service revenue:

The customer base relies on Star Group, L.P. for more than just fuel delivery. The company also sells and services heating and air conditioning equipment to its home heating oil and propane customers. The total customer count is more than 405,000.

The focus on service revenue growth is a clear operational priority, as shown by the year-to-date increase in gross profit:

• Total Service & Installation Gross Profit Increase (9M FY2025): $4.8 million
• Attributable to Acquisitions: $2.7 million
• Attributable to Base Business Initiatives: $2.1 million

The company's vision is to be the premier provider of energy services, which directly ties into these customer-facing elements. Finance: draft 13-week cash view by Friday.

Star Group, L.P. (SGU) - Canvas Business Model: Channels

You're looking at how Star Group, L.P. gets its energy products and services-heating oil, propane, and HVAC work-to its customer base. The channels are a mix of physical presence and digital tools, which is typical for a business this rooted in regional distribution.

Branded fleet of delivery trucks and service vehicles is the backbone here. While the exact count of the fleet isn't public in the latest filings, this physical network is what moves the product. The scale of their operation is suggested by the volumes they move. For instance, in the fiscal 2025 second quarter (ended March 31, 2025), the volume of home heating oil and propane sold hit 143.9 million gallons. This requires a substantial, dedicated logistics operation across their service areas in the Northeast and Mid-Atlantic U.S. regions.

The network of local service branches and call centers supports that fleet and handles the service/installation side of the business. This physical footprint is how they manage the roughly 404,600 full-service residential and commercial home heating oil and propane customers they served as of September 30, 2024. The service and installation gross profit is a key focus area, improving by about $0.6 million year-over-year in Q3 fiscal 2025. This local presence also supports the 61,700 customers they served on a delivery-only basis as of that same date.

For direct-to-consumer sales and service teams, the channel is integrated into the service/installation offering. Star Group, L.P. sells and services heating and air conditioning equipment directly to its core heating oil and propane customers, and to a lesser extent, to customers outside that base. The company also sells gasoline and diesel fuel to approximately 26,800 customers, which is another direct sales channel.

The move toward online portals for account management and ordering is definitely happening, though specific adoption rates aren't public. What we do know is that management emphasized continued progress in technology deployment. Specifically, for the third quarter of fiscal 2025, the company noted that AI was deployed in customer interfaces for selective use. This suggests a digital channel is being actively developed to streamline customer interactions beyond the traditional phone call.

For targeted marketing within existing operating footprint, the strategy seems focused on customer retention and growth through acquisitions. The company's growth is often driven by adding to its existing base, with $126.5 million of acquisition transactions completed as of the second quarter of fiscal 2025. Marketing efforts support both retaining the existing base, which saw net customer attrition that was "roughly flat" year-over-year in Q3 2025, and integrating new customers from these purchases.

Here's a look at some key operational metrics that illustrate the scale these channels manage, using data closest to late 2025:

The service component is definitely a distinct channel that runs parallel to the fuel delivery. You see this in how they report service and installation gross profit separately. The company's overall revenue for the trailing twelve months (TTM) as of December 2025 was $1.77 Billion USD.

The physical infrastructure supports the core product delivery, which is highly dependent on weather. For example, the Q1 fiscal 2025 volumes were driven by temperatures 4.1 percent colder than the prior year period. The channels must be flexible enough to handle these swings.

• The company operates under several core brands including Petro Home Services, SMO Energy, and Griffith Energy Services.
• The distribution network serves customers primarily in the Northeast and Mid-Atlantic U.S. regions.
• The company employed 3,039 individuals as of September 30, 2024, supporting these channel operations.
• The annual distribution per unit was raised to $0.74 per unit in fiscal 2025, showing a commitment to shareholder returns supported by channel performance.

Star Group, L.P. (SGU) - Canvas Business Model: Customer Segments

You're looking at the distinct groups Star Group, L.P. (SGU) serves, which is key to understanding their revenue engine. This isn't just about selling fuel; it's about managing a complex service and delivery network across specific US regions.

Residential homeowners in the Northeast and Mid-Atlantic U.S.

This group forms the core of the full-service offering, relying on Star Group, L.P. for consistent heating oil and propane supply, plus essential equipment maintenance.

• Geographic focus includes states like New York, New Jersey, Pennsylvania, and others in the Northeast and Mid-Atlantic U.S..
• As of September 30, 2024, the company served approximately 404,600 full-service residential and commercial home heating oil and propane customers.
• The New York City metropolitan area represented about 46% of customers as of September 30, 2020.

Small to mid-sized commercial businesses requiring heating fuel

Commercial entities require reliable bulk supply, often bundled with delivery-only options for other petroleum products like diesel and gasoline.

• The full-service customer count of 404,600 includes these commercial accounts.
• The company also sells diesel and gasoline to approximately 26,800 customers.
• Home heating oil and propane volume for the first six months of fiscal 2025 reached 226.3 million gallons.

Customers seeking full-service HVAC and energy solutions

This segment values the ancillary services that drive stickiness and higher margin contribution beyond simple fuel delivery. The service business is a clear growth driver.

• Service and installation gross profit for the fiscal 2025 first quarter was $6.9 million, up from $4.4 million in the prior year.
• For the fiscal 2025 third quarter, sales in the installations and services segment rose 8.2% compared to the prior-year period.
• The company also provides plumbing services in certain marketing areas, primarily to its existing heating oil and propane customer base.

Income-focused investors (Limited Partners)

These are the equity holders of Star Group, L.P., who are interested in the partnership's distributions and overall financial health. They are the ultimate owners of the common units.

Here's a look at the market context for these income-focused investors as of late 2025:

The structure shows that common units represent a 99.2% limited partner interest, with 41.5 million units outstanding as of November 30, 2020.

Star Group, L.P. (SGU) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive Star Group, L.P.'s operations as of late 2025. For a distributor like Star Group, L.P., the cost of the product itself is the single biggest driver, followed closely by getting that product to the customer.

Wholesale product costs are highly variable, tied directly to commodity markets. For the fiscal 2025 first quarter (three months ended December 31, 2024), the wholesale product cost saw a significant decline of $0.4969 per gallon, which translates to an 18.4 percent drop compared to the prior-year period. By the second quarter of fiscal 2025 (three months ended March 31, 2025), the decline in wholesale product cost was $0.2887 per gallon, or 10.9 percent year-over-year. This fluctuation directly impacts selling prices, even as volumes increase.

For Labor costs for drivers and service technicians and Operating expenses for fleet maintenance and distribution, the public reporting lumps these into broader categories, making precise isolation difficult. However, we can see the underlying trend in the base business expenses. For the third quarter of fiscal 2025, expenses in the base business-excluding the impact of acquisitions and weather hedging-rose by just $2.2 million, representing a 0.7 percent increase. This suggests that while labor and fleet costs are a major component of the overall Delivery, branch and G&A expenses, the core, non-acquisition, non-hedging operational cost inflation was relatively modest at that point in the year.

The overall Delivery, branch and G&A expenses saw substantial increases due to external factors. In the second quarter of fiscal 2025, these expenses rose by $27 million year-over-year, with $10.6 million of that increase specifically attributed to the weather hedging program. In the third quarter of fiscal 2025, the year-over-year rise was $31.5 million, again with $10.6 million tied to the weather hedge.

M&A integration and transaction costs are visible through both the purchase price and the associated operating expense increases. Star Group, L.P. completed an acquisition in January 2025 for approximately $68 million before working capital adjustments. Since February 1, 2024, the company has completed transactions totaling $126.5 million. Furthermore, acquisition-related expenses hit the P&L; for instance, in the third quarter of fiscal 2025, acquisitions accounted for an increase in Delivery, branch and G&A expenses of $18.7 million year-over-year, and acquisition-related financing costs were $1 million higher than the prior year period.

Finally, the Weather hedge costs are a significant, managed expense. Management announced they have already set approximately $15 million of weather hedges for fiscal year 2026. Looking at fiscal 2025 performance, the second quarter recorded an expense of $3.1 million under the hedge contracts due to colder-than-expected weather, which compared to a $6.5 million credit in the prior-year second quarter. For the first nine months of fiscal 2025, the company recorded a $10.6 million increase in expense relating to the weather hedge contracts compared to the same period in fiscal 2024.

Here's a look at the key financial figures impacting the Cost Structure for the reported periods in fiscal 2025:

The Delivery, branch and G&A expenses, which contain labor and distribution overhead, showed a YoY increase of $27 million in Q2 FY2025 and $31.5 million in Q3 FY2025.

• Acquisitions added $7 million to expenses in Q2 FY2025.
• Acquisitions added $18.7 million to Delivery, branch and G&A expenses in Q3 FY2025 YoY.

Finance: draft 13-week cash view by Friday.

Star Group, L.P. (SGU) - Canvas Business Model: Revenue Streams

You're looking at how Star Group, L.P. actually brings in the money, which is key for understanding its stability, especially with commodity price swings. The revenue streams are pretty straightforward for a company this size, built on both physical product sales and ongoing service contracts.

The top-line number for Star Group, L.P. as of late 2025 shows a Total Trailing Twelve Month (TTM) revenue of $1.77 Billion USD. This is the total sales figure before you subtract any costs, so it gives you the scale of their operations.

The core of the business is the distribution of energy products, but the service side is also a meaningful contributor to the overall revenue mix. Here's a breakdown of the key revenue components, using recent figures to illustrate the relative size of each stream:

The physical product sales-home heating oil, propane, gasoline, and diesel-are naturally the largest component, but you can see the service and installation fees provide a more stable, recurring element to the revenue base. That service revenue was a significant part of the business, with maintenance contracts alone bringing in tens of millions.

When we look at profitability, the Net income for the first nine months of FY2025 was $102.2 million. That's the bottom line after all operating costs, taxes, and interest are accounted for. It's important to remember that this figure is heavily influenced by how the company manages its commodity risk through hedging.

Speaking of risk management, Star Group, L.P. uses derivative instruments to manage exposure to price volatility in heating oil and propane. These instruments can result in gains or losses that impact reported earnings. For the first nine months of FY2025, the company recorded a favorable change in the fair value of derivative instruments of $20.2 million. This hedging benefit helped boost the net income figure you see above. Still, these gains can be volatile, as seen in the Q2 results where there was an unfavorable change.

You should keep an eye on these specific revenue drivers:

• Home heating oil and propane sales volume.
• The margin captured on product sales versus the wholesale cost.
• The growth rate of service and installation revenue streams.
• The impact, positive or negative, from derivative hedging activities.

Finance: draft 13-week cash view by Friday.