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What changed in STAR GROUP, L.P.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of STAR GROUP, L.P.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+230 added−232 removedSource: 10-K (2024-12-04) vs 10-K (2023-12-06)

Top changes in STAR GROUP, L.P.'s 2024 10-K

230 paragraphs added · 232 removed · 206 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+3 added−2 removed76 unchanged
Biggest changeEach such location operates in its own competitive environment. Customer Attrition We measure net customer attrition 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.
Biggest changeCompetition Most of our operating locations compete with numerous distributors, primarily on the basis of price, reliability of service and response to customer needs. Each such location operates in its own competitive environment. Customer Attrition We measure net customer attrition for our full service residential and commercial home heating oil and propane customers.
In May 2019, New York City (location of 3% of our residential home heating oil and propane customers) enacted Local Law 97 as a part of the Climate Mobilization Act aimed at reducing GHG emissions by 80% from commercial and residential buildings by 2050.
In May 2019, New York City (location of approximately 3% of our residential home heating oil and propane customers) enacted Local Law 97 as a part of the Climate Mobilization Act aimed at reducing GHG emissions by 80% from commercial and residential buildings by 2050.
These regulations cover the transportation of hazardous materials and are administered by the United States Department of Transportation or similar state agencies. Several of our oil terminals are governed under the United States Coast Guard operations Oversite, Federal OPA 90 FRP programs and Federal Spill Prevention Control and Countermeasure programs.
These regulations cover the transportation of hazardous materials and are administered by the United States Department of Transportation or similar state agencies. Several of our oil terminals are governed by the United States Coast Guard operations Oversite, Federal OPA 90 FRP programs and Federal Spill Prevention Control and Countermeasure programs.
Limited Partners Common Units 99.1% General Partner (Kestrel Heat) General Partner Units 0.9% Public Unitholders - Common Units 88.5% Officers and Directors - Common Units 11.5% Star is organized as follows: • Our general partner is Kestrel Heat, LLC, a Delaware limited liability company (“Kestrel Heat” or the “general partner”).
Limited Partners Common Units 99.1% General Partner (Kestrel Heat) General Partner Units 0.9% Public Unitholders - Common Units 88.1% Officers and Directors - Common Units 11.9% Star is organized as follows: • Our general partner is Kestrel Heat, LLC, a Delaware limited liability company (“Kestrel Heat” or the “general partner”).
Please note that any Internet addresses provided in this Annual Report on Form 10-K are for informational purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such Internet addresses is intended or deemed to be incorporated by reference herein. Legal Structure The following chart summarizes our structure as of September 30, 2023.
Please note that any Internet addresses provided in this Annual Report on Form 10-K are for informational purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such Internet addresses is intended or deemed to be incorporated by reference herein. Legal Structure The following chart summarizes our structure as of September 30, 2024.
As a result, we believe distributors such as ourselves generally seek to maintain their per gallon margins by passing wholesale price increases through to customers, thus insulating their margins from the volatility in wholesale prices. However, distributors may be unable or unwilling to pass the entire product cost increases through to customers.
As a result, we believe distributors such as ourselves generally seek to maintain their per gallon margins by passing wholesale price increases or decreases through to customers, thus insulating their margins from the volatility in wholesale prices. However, distributors may be unable or unwilling to pass the entire product cost changes through to customers.
We offer a balanced payment plan to residential customers in which a customer’s estimated annual oil purchases and service contract fees are paid for in a series of equal monthly payments. Approximately 32% of our residential home heating oil customers have selected this billing option. We offer several pricing alternatives to our residential home heating oil customers.
We offer a balanced payment plan to residential customers in which a customer’s estimated annual oil purchases and service contract fees are paid for in a series of equal monthly payments. Approximately 31% of our residential home heating oil customers have selected this billing option. We offer several pricing alternatives to our residential home heating oil customers.
We have incurred and continue to incur costs to address soil and groundwater contamination at some of our locations, including legacy contamination at properties that we have acquired. A number of our properties are what is currently undergoing remediation, in some instances funded by prior owners or operators contractually obligated to do so.
We have incurred and continue to incur costs to address soil and groundwater contamination at some of our locations, including legacy contamination at properties that we have acquired. A number of our properties are currently undergoing remediation, in some instances funded by prior owners or operators contractually obligated to do so.
In March 2021, the State of Massachusetts (location of 5% of our residential home heating oil and propane customers) signed into law “An Act Creating A Next-Generation Roadmap for Massachusetts Climate Policy” (the “2021 Climate Law”) that establishes a 2030 limit of at least a 50% reduction in GHG emissions below the 1990 GHG emissions baseline and requires the Secretary of Energy and Environmental Affairs to set interim emissions limits and sector-specific sublimits every five years.
In March 2021, the State of Massachusetts (location of approximately 4% of our residential home heating oil and propane customers) signed into law “An Act Creating A Next-Generation Roadmap for Massachusetts Climate Policy” (the “2021 Climate Law”) that establishes a 2030 limit of at least a 50% reduction in GHG emissions below the 1990 GHG emissions baseline and requires the Secretary of Energy and Environmental Affairs to set interim emissions limits and sector-specific sublimits every five years.
The timing of when the various states within our operating footprint will adopt energy rebate programs in order to distribute homeowner rebates remains uncertain. 10 Numerous states and municipalities have also adopted laws and policies on climate change and emission reduction targets.
The timing of when the other states within our operating footprint will adopt energy rebate programs in order to distribute homeowner rebates remains uncertain. 10 Numerous states and municipalities have also adopted laws and policies on climate change and emission reduction targets.
We believe we are the largest retail distributor of home heating oil in the United States, based upon sales volume with a market share in excess of 5.5%. We also sell gasoline and diesel fuel to approximately 26,600 customers.
We believe we are the largest retail distributor of home heating oil in the United States, based upon sales volume with a market share in excess of 5.5%. We also sell gasoline and diesel fuel to approximately 26,800 customers.
We believe this is especially true in the propane business. In these cases, significant decreases in per gallon margins may result. The timing of cost pass-throughs can also significantly affect margins. (See Customers and Pricing for a discussion on our offerings). Business Strategy Our business strategy is to increase Adjusted EBITDA (See Item 7.
We believe this is especially true in the propane business. In these cases, significant decreases in per gallon margins may result when prices rise. The timing of cost pass-throughs can also significantly affect margins. (See Customers and Pricing for a discussion on our offerings). Business Strategy Our business strategy is to increase Adjusted EBITDA (See Item 7.
Currently, 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. and Wells Fargo Bank, N.A.
Currently, 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., Mieco LLC and Wells Fargo Bank, N.A.
Approximately 94% of our full service residential and commercial home heating oil customers automatically receive deliveries based on prevailing weather conditions. In addition, approximately 32% of our residential customers take advantage of our “smart pay” budget payment plan under which their estimated annual oil and propane deliveries and service billings are paid for in a series of equal monthly installments.
Approximately 95% of our full service residential and commercial home heating oil customers automatically receive deliveries based on prevailing weather conditions. In addition, approximately 31% of our residential customers take advantage of our “smart pay” budget payment plan under which their estimated annual oil and propane deliveries and service billings are paid for in a series of equal monthly installments.
Approximately 94% of our full service residential and commercial home heating oil customers have their deliveries scheduled automatically and 6% of our home heating oil customer base call from time to time to schedule a delivery. Automatic deliveries are scheduled based on each customer’s historical consumption pattern and prevailing weather conditions. Our practice is to bill customers promptly after delivery.
Approximately 95% of our full service residential and commercial home heating oil customers have their deliveries scheduled automatically and 5% of our home heating oil customer base call from time to time to schedule a delivery. Automatic deliveries are scheduled based on each customer’s historical consumption pattern and prevailing weather conditions. Our practice is to bill customers promptly after delivery.
We have entered into New York Mercantile Exchange ("NYMEX") or Platts American Gulf Coast based physical supply contracts for approximately 76% of our expected home heating oil and propane requirements for our full service residential and commercial customers for the fiscal 2024 heating season.
We have entered into New York Mercantile Exchange ("NYMEX"), Platts American Gulf Coast or Mont Belvieu based physical supply contracts for approximately 76% of our expected home heating oil and propane requirements for our full service residential and commercial customers for the fiscal 2025 heating season.
The CLCPA gives the New York Department of Energy Conservation until January 1, 2024 to promulgate regulations to ensure that the State of New York meets the CLCPA’s GHG emission limits as outlined in the Scoping Plan.
However, the CLCPA gave the New York Department of Energy Conservation until January 1, 2024, to promulgate regulations to ensure that the State of New York meets the CLCPA’s GHG emission limits as outlined in the Scoping Plan.
For example, on July 18, 2019, the State of New York (location of 43% of our residential home heating oil and propane customers) passed the Climate Leadership and Community Protection Act (“CLCPA”).
For example, on July 18, 2019, the State of New York (location of approximately 44% of our residential home heating oil and propane customers) passed the Climate Leadership and Community Protection Act (“CLCPA”).
As of November 30, 2023, we had outstanding 35.6 million common partner units (NYSE: “SGU”) representing a 99.1% limited partner interest in Star, and 0.3 million general partner units, representing a 0.9% general partner interest in Star. 3 The following chart depicts the ownership of Star as of November 30, 2023: Star Group, L.P.
As of November 30, 2024, we had outstanding 34.6 million common partner units (NYSE: “SGU”) representing a 99.1% limited partner interest in Star, and 0.3 million general partner units, representing a 0.9% general partner interest in Star. 3 The following chart depicts the ownership of Star as of November 30, 2024: Star Group, L.P.
Due to the seasonal nature of our business and depending on the demands of the 2024 heating season, we anticipate that we will augment our current staffing levels during the heating season from among the 279 employees on temporary leave of absence as of September 30, 2023.
Due to the seasonal nature of our business and depending on the demands of the 2025 heating season, we anticipate that we will augment our current staffing levels during the heating season from among the 295 employees on temporary leave of absence as of September 30, 2024.
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, 2019, through 2023, on a quarterly basis, is illustrated in the following chart (price per gallon): Fiscal 2023 (a) Fiscal 2022 Fiscal 2021 Fiscal 2020 Fiscal 2019 Quarter Ended Low High Low High Low High Low High Low High December 31 $ 2.78 $ 4.55 $ 2.06 $ 2.59 $ 1.08 $ 1.51 $ 1.86 $ 2.05 $ 1.66 $ 2.44 March 31 2.61 3.55 2.36 4.44 1.46 1.97 0.95 2.06 1.70 2.04 June 30 2.23 2.73 3.27 5.14 1.77 2.16 0.61 1.22 1.78 2.12 September 30 2.38 3.48 3.13 4.01 1.91 2.34 1.08 1.28 1.75 2.08 (a) On November 30, 2023, the NYMEX ultra low sulfur diesel contract closed at $2.83 per gallon.
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, 2020, through 2024, on a quarterly basis, is illustrated in the following chart (price per gallon): Fiscal 2024 (a) Fiscal 2023 Fiscal 2022 Fiscal 2021 Fiscal 2020 Quarter Ended Low High Low High Low High Low High Low High December 31 $ 2.51 $ 3.22 $ 2.78 $ 4.55 $ 2.06 $ 2.59 $ 1.08 $ 1.51 $ 1.86 $ 2.05 March 31 2.53 2.96 2.61 3.55 2.36 4.44 1.46 1.97 0.95 2.06 June 30 2.29 2.77 2.23 2.73 3.27 5.14 1.77 2.16 0.61 1.22 September 30 2.06 2.63 2.38 3.48 3.13 4.01 1.91 2.34 1.08 1.28 (a) On November 30, 2024, the NYMEX ultra low sulfur diesel contract closed at $2.19 per gallon.
For the fiscal year 2024 heating season, approximately 76% of the Company’s contracted home heating oil volume with suppliers has a biofuel component. We also have entered into NYMEX or Platts American Gulf Coast based physical supply contracts for approximately 43% of our expected diesel and gasoline requirements for fiscal 2024.
For the fiscal year 2025 heating season, approximately 74% of the Company’s contracted home heating oil volume with suppliers has a biofuel component. We also have entered into NYMEX or Platts American Gulf Coast based physical supply contracts for approximately 46% of our expected diesel and gasoline requirements for fiscal 2025.
Percentage of Residential Home Heating Oil Customers September 30, Pricing Programs 2023 2022 2021 2020 2019 Variable 55.6 % 57.0 % 55.0 % 54.4 % 53.9 % Ceiling 37.8 % 37.6 % 39.0 % 38.5 % 39.1 % Fixed 6.6 % 5.4 % 6.0 % 7.1 % 7.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Sales to residential customers ordinarily generate higher per gallon margins than sales to commercial customers.
Percentage of Residential Home Heating Oil Customers September 30, Pricing Programs 2024 2023 2022 2021 2020 Variable 53.2 % 55.6 % 57.0 % 55.0 % 54.4 % Ceiling 36.3 % 37.8 % 37.6 % 39.0 % 38.5 % Fixed 10.5 % 6.6 % 5.4 % 6.0 % 7.1 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Sales to residential customers ordinarily generate higher per gallon margins than sales to commercial customers.
During fiscal 2023, the Company acquired one propane and two heating oil businesses for approximately $19.8 million (using $19.8 million in cash). The gross purchase price was allocated $10.4 million to intangible assets, $8.0 million to goodwill, $2.3 million to fixed assets and reduced by $0.9 million of negative working capital.
The gross purchase price was allocated $40.4 million to intangible assets, $13.7 million to goodwill, $4.9 million to fixed assets and reduced by $9.6 million of negative working capital. 9 During fiscal 2023, the Company acquired one propane and two heating oil businesses for approximately $19.8 million in cash.
GHG emissions by at least 50% by 2030. These environmental goals earned a prominent place in the Biden administration’s $1.2 trillion infrastructure bill, which was signed into law on November 15, 2021.
In April 2021, President Biden announced the administration’s plan to reduce the U.S. GHG emissions by at least 50% by 2030. These environmental goals earned a prominent place in the Biden administration’s $1.2 trillion infrastructure bill, which was signed into law on November 15, 2021.
During fiscal 2023, total sales were comprised of approximately 62% from home heating oil and propane, 23% from other petroleum products, the majority of which is diesel and gasoline, and 15% from the installation and repair of heating and air conditioning equipment and ancillary services.
During fiscal 2024, total sales were comprised of approximately 61% from home heating oil and propane, 21% from other petroleum products, the majority of which is diesel and gasoline, and 18% from the installation and repair of heating and air conditioning equipment and ancillary services.
(“PH&P”) is an indirect, wholly owned subsidiary of Star. PH&P is the borrower and Star is the guarantor of the sixth amended and restated credit agreement’s $165 million five-year senior secured term loan and the $400 million ($550 million during the heating season of December through April of each year) revolving credit facility, both due July 6, 2027.
(“PH&P”) is an indirect, wholly owned subsidiary of Star. PH&P is the borrower and Star is the guarantor of the seventh amended and restated credit agreement’s $210 million five-year senior secured term loan and the $400 million ($475 million during the heating season of December through April of each year) revolving credit facility, both due September 27, 2029.
The gross purchase price was allocated $7.3 million to intangible assets, $3.1 million to goodwill, $5.6 million to fixed assets and reduced by $0.4 million of negative working capital. 9 During fiscal 2021, the Company acquired two propane and three heating oil businesses for approximately $42.5 million (using $40.7 million in cash and assuming $1.8 million of liabilities).
The gross purchase price was allocated $10.4 million to intangible assets, $8.0 million to goodwill, $2.3 million to fixed assets and reduced by $0.9 million of negative working capital. During fiscal 2022, the Company acquired five heating oil businesses for approximately $15.6 million (using $13.1 million in cash and assuming $2.5 million of liabilities).
As of September 30, 2023 we had contracts with approximately 124 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.
Suppliers and Supply Arrangements We purchase our products for delivery in either barge, pipeline or truckload quantities. As of September 30, 2024 we 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.
As this legal challenge to the Fossil Fuel Ban is in the very early stages, it is uncertain what impact, if any, it will have on the Company’s operations in the State of New York.
As this legal challenge is ongoing, it remains uncertain what impact, if any, it will have on the Company’s operations in the State of New York.
As of September 30, 2023, we sold home heating oil and propane to approximately 402,200 full service residential and commercial customers and 52,400 customers on a delivery only basis. Approximately 252,700 of these customers, or 56%, are located in the New York, New Jersey, and Connecticut.
As of September 30, 2024, we 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 the New York, New Jersey, and Connecticut.
(During fiscal 2023, we sold 259.2 million gallons of home heating oil and propane and 139.0 million gallons of motor fuel and other petroleum products.) 7 Our full service home heating oil customer base is comprised of 97% residential customers and 3% commercial customers.
(During fiscal 2024, we sold 253.4 million gallons of home heating oil and propane and 129.1 million gallons of motor fuel and other petroleum products.) 7 Our full service home heating oil customer base is comprised of 96% residential customers and 4% commercial customers.
Seasonality Our fiscal year ends on September 30. All references to quarters and years respectively in this document are to fiscal quarters and years unless otherwise noted.
All references to quarters and years respectively in this document are to fiscal quarters and years unless otherwise noted.
To combat the cause of global warming domestically, President Biden identified climate change as one of his administration’s top priorities and pledged to seek measures that would pave the path for the U.S. to achieve net zero GHG emissions by 2050. In April 2021, President Biden announced the administration’s plan to reduce the U.S.
Our heating oil and propane products are widely considered to be fossil fuels that produce GHG emissions. To combat the cause of global warming domestically, President Biden identified climate change as one of his administration’s top priorities and pledged to seek measures that would pave the path for the U.S. to achieve net zero GHG emissions by 2050.
The purpose of the pilot program is to allow the DOER to study the implementation of fossil fuel bans in municipalities and evaluate future best practices on decarbonization.
The purpose of the pilot program is to allow the DOER to study the implementation of fossil fuel bans in municipalities and evaluate future best practices on decarbonization. As of January 2024, seven municipalities have been approved to begin enforcing the new zoning requirements.
In addition, we also repair and install natural gas heating systems. 6 Pursue environmental sustainability opportunities We are committed to pursuing initiatives that reduce greenhouse gas emissions across our product offerings, by offering biodiesel blended products (a renewable, biodegradable fuel manufactured from vegetable oils, animal fats, or recycled restaurant grease) and by offering energy efficient heating and air conditioning equipment to our customers .
In addition, we also repair and install natural gas heating systems. 6 Pursue environmental sustainability opportunities We are committed to pursuing initiatives that reduce greenhouse gas emissions across our product offerings, by offering biodiesel blended products and by offering energy efficient heating and air conditioning equipment to our customers . Seasonality Our fiscal year ends on September 30.
The proposed regulations released by MassDEP in May 2023 could require, among other things, heating energy suppliers to demonstrate the conversion of approximately 3% of their customers to electric heat each year.
The proposed regulations released by MassDEP in May 2023 could require, among other things, heating energy suppliers to demonstrate the conversion of approximately 3% of their customers to electric heat each year. Such proposed regulations, if adopted, could dramatically negatively impact the Company’s Massachusetts operations and impose onerous reporting requirements on the Company.
In particular, our dedication to providing superior customer service depends significantly on employee satisfaction and retention. We strive to create a productive and collaborative work environment for our employees. Our human capital measures and objectives focus on safety of our employees, employee benefits, and employee development and training. The safety of our employees and customers is paramount.
We strive to create a productive and collaborative work environment for our employees. Our human capital measures and objectives focus on safety of our employees, employee benefits, and employee development and training. The safety of our employees and customers is paramount. We strive to ensure that all employees feel safe in their respective work environment.
States must apply for rebate funding with the U.S. Department of Energy and adopt and administer energy rebate programs within their respective states before homeowners can apply and receive tax rebates under the program.
States must apply for rebate funding with the U.S. Department of Energy and adopt and administer energy rebate programs within their respective states before homeowners can apply and receive tax rebates under the program. As of October 2024, two (2) states within our operating footprint -- New York and Rhode Island – have launched programs to distribute homeowner rebates.
For fiscal 2024, approximately 26% of our physical supply contracts are with Shell Trading and Shell Oil Products US. All of our supply contracts provide for minimum quantities and in most cases do not establish in advance the price of home heating oil or propane.
Our supply contracts typically have terms of 6 to 12 months. For fiscal 2025, approximately 24% of our physical supply contracts are with Motiva Enterprises LLC. All of our supply contracts provide for minimum quantities and in most cases do not establish in advance the price of home heating oil or propane.
Gross customer losses are the result of a number of factors, including price competition, move outs, credit losses and conversions to natural gas and electrified heating systems. (See Item 7.
Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date. Gross customer losses are the result of a number of factors, including price competition, move outs, credit losses and conversions to natural gas and electrified heating systems. (See Item 7.
However, additional customers that are obtained through marketing efforts at newly acquired businesses are included in these calculations from the point of closing going forward. Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date.
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 at newly acquired businesses are included in these calculations from the point of closing going forward.
There is increasing attention in the United States and worldwide concerning the issue of climate change and the effect of greenhouse gas (“GHG”) emissions, in particular, from the combustion of carbon-based fossil fuels. Our heating oil and propane products are widely considered to be fossil fuels that produce GHG emissions.
We believe that our relations with both our union and non-union employees are generally satisfactory. Government Regulations Regulations in Response to Climate Change . There is increasing attention in the United States and worldwide concerning the issue of climate change and the effect of greenhouse gas (“GHG”) emissions, in particular, from the combustion of carbon-based fossil fuels.
During fiscal 2023, Shell Trading and Shell Oil Products US provided approximately 18% of our petroleum purchases and Motiva Enterprises LLC provided 14% of our petroleum product purchases. During fiscal 2022, Global Companies LLC and Motiva Enterprises LLC provided approximately 17% and 14% of our petroleum product purchases, respectively. Our supply contracts typically have terms of 6 to 12 months.
During fiscal 2024, Shell Trading and Shell Oil Products US provided approximately 16% of our petroleum purchases and Motiva Enterprises LLC provided 15% of our petroleum product purchases. During fiscal 2023, Shell Trading and Shell Oil Products US provided approximately 18% of our petroleum purchases and Motiva Enterprises LLC provided 14% of our petroleum product purchases, respectively.
Such proposed regulations, if adopted, could dramatically negatively impact the Company’s Massachusetts operations and impose onerous reporting requirements on the Company. 11 On August 11, 2022, the State of Massachusetts signed into law “An Act Driving Clean Energy and Offshore Wind” (the “2022 Climate Law”).
The proposed regulations are in the comment period. 11 On August 11, 2022, the State of Massachusetts signed into law “An Act Driving Clean Energy and Offshore Wind” (the “2022 Climate Law”).
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. Competition Most of our operating locations compete with numerous distributors, primarily on the basis of price, reliability of service and response to customer needs.
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. Our operating and financial plans are based upon the published weather data for the last ten years.
We strive to ensure that all employees feel safe in their respective work environment. Since March 2020, a portion of our office personnel have worked remotely. We believe that our employees have adapted well and continue to be flexible to the changing working conditions.
Since March 2020, a portion of our office personnel have worked remotely. We believe that our employees have adapted well and continue to be flexible to the changing working conditions. To attract talent and meet the needs of our employees, we offer benefits packages for full-time employees. We offer a health and welfare and retirement program to all eligible employees.
However, we ultimately expect those gains and losses to be offset by the cost of product when purchased.
However, we ultimately expect those gains and losses to be offset by the cost of product when purchased. 8 Depending on the risk being hedged, realized gains and losses are recorded in cost of product, cost of installations and services, or delivery and branch expenses.
To attract talent and meet the needs of our employees, we offer benefits packages for full-time employees. We offer a health and welfare and retirement program to all eligible employees. We also provide our employees with resources for professional development including technical training, feedback and performance reviews from supervisors, and management training.
We also provide our employees with resources for professional development including technical training, feedback and performance reviews from supervisors, and management training.
Pricing plans chosen by propane customers are almost exclusively variable in nature where selling prices will float with the propane market and other commercial factors. The motor fuel and other petroleum products customer group includes commercial and industrial customers of unbranded diesel, gasoline, kerosene and related distillate products.
Sales to residential customers ordinarily generate higher per gallon margins than sales to commercial customers. Pricing plans chosen by propane customers are almost exclusively variable in nature where selling prices will float with the propane market and other commercial factors.
We sell products to these customers through contracts of various terms or through a competitive bidding process.
The motor fuel and other petroleum products customer group includes commercial and industrial customers of unbranded diesel, gasoline, kerosene and related distillate products. We sell products to these customers through contracts of various terms or through a competitive bidding process.
The gross purchase price was allocated $37.3 million to goodwill and intangible assets, $6.2 million to fixed assets and reduced by $1.0 million of negative working capital. Employees and Human Capital Management We consider our employees a key factor to Star’s success and we are focused on attracting and retaining the best employees at all levels of our business.
The gross purchase price was allocated $7.3 million to intangible assets, $3.1 million to goodwill, $5.6 million to fixed assets and reduced by $0.4 million of negative working capital.
As of September 30, 2023, we had 3,052 employees, of whom 822 were office, clerical and customer service personnel; 831 were equipment technicians; 504 were fuel delivery drivers and mechanics; 579 were management and 316 were employed in sales. Of these employees 1,354 (44%) are represented by 62 different collective bargaining agreements with local chapters of labor unions.
As of September 30, 2024, we had 3,039 employees, of whom 909 were office, clerical and customer service personnel; 834 were equipment technicians; 474 were fuel delivery drivers and mechanics; 540 were management and 282 were employed in sales.
During fiscal 2022, the Company acquired five heating oil businesses for approximately $15.6 million (using $13.1 million in cash and assuming $2.5 million of liabilities).
During fiscal 2024, the Company acquired one propane and four heating oil businesses for approximately $49.4 million in cash.
We understand that the Code Council has begun the process of integrating the Fossil Fuel Ban into the Energy Code and the Building Code.
We understand that New York Building Code Council is set to integrate the Fossil Fuel Ban into its 2025 Building Code update.
Removed
Depending on the risk being hedged, realized gains and losses are recorded in cost of product, cost of installations and services, or delivery and branch expenses. 8 Suppliers and Supply Arrangements We purchase our products for delivery in either barge, pipeline or truckload quantities.
Added
Employees and Human Capital Management We consider our employees a key factor to Star’s success and we are focused on attracting and retaining the best employees at all levels of our business. In particular, our dedication to providing superior customer service depends significantly on employee satisfaction and retention.
Removed
There are 19 collective bargaining agreements up for renewal in fiscal 2024, covering approximately 289 employees (9%). We believe that our relations with both our union and non-union employees are generally satisfactory. Government Regulations Regulations in Response to Climate Change .
Added
As of September 30, 2024, considering seasonal and employees that are on leave, we had 1,362 (39%) employees that are represented by 62 different collective bargaining agreements with local chapters of labor unions. There are 20 collective bargaining agreements up for renewal in fiscal 2025, covering approximately 419 employees (12%).
Added
The State of New York has not yet adopted regulations to implement the CLCPA’s GHG emissions despite the January 1, 2024 deadline for doing so.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

65 edited+6 added−5 removed94 unchanged
Biggest changeThe products that we sell are transported in either barge, pipeline or in truckload quantities to third-party terminals where we have contracts to temporarily store our products. Any significant interruption in the service of these third-party terminals, the common carrier pipelines used or the barge companies that we hire to move product would adversely affect our ability to obtain product.
Biggest changeIf service at our third-party terminals, the common carrier pipelines used or the barge companies we hire to move product is interrupted, our operations would be adversely affected. The products that we sell are transported in either barge, pipeline or in truckload quantities to third-party terminals where we have contracts to temporarily store our products.
Increases in in wholesale product prices may also slow our customer collections as customers are more likely to delay the payment of their bills, leading to higher accounts receivable.
Increases in wholesale product prices may also slow our customer collections as customers are more likely to delay the payment of their bills, leading to higher accounts receivable.
When the wholesale price of home heating oil declines significantly after a customer enters into a price protection arrangement, some customers attempt to renegotiate their arrangement in order to enter into a lower cost pricing plan with us or terminate their arrangement and switch to a competitor, which may which may adversely impact our gross profit and operating results. 13 If, due to supply constraints or shortages, we cannot purchase sufficient quantities of products to meet our customer’s needs, our business and operations will be adversely affected.
When the wholesale price of home heating oil declines significantly after a customer enters into a price protection arrangement, some customers attempt to renegotiate their arrangement in order to enter into a lower cost pricing plan with us or terminate their arrangement and switch to a competitor, which may adversely impact our gross profit and operating results. 13 If, due to supply constraints or shortages, we cannot purchase sufficient quantities of products to meet our customer’s needs, our business and operations will be adversely affected.
If we were unable to repay those amounts, the lenders could initiate a bankruptcy proceeding or liquidation proceeding or proceed against the collateral, if any. If the lenders of our indebtedness or other financial obligations accelerate the repayment of borrowings or other amounts owed, we may not have sufficient assets to repay our indebtedness or other financial obligations.
If the lenders of our indebtedness or other financial obligations accelerate the repayment of borrowings or other amounts owed, we may not have sufficient assets to repay our indebtedness or other financial obligations. If we were unable to repay those amounts, the lenders could initiate a bankruptcy proceeding or liquidation proceeding or proceed against the collateral, if any.
The nature of these conflicts is ongoing and includes the following considerations: • The general partner’s affiliates are not prohibited from engaging in other business or activities, including direct competition with us. 20 • The general partner determines the amount and timing of asset purchases and sales, capital expenditures, distributions to unitholders, unit repurchases, and our capital structure, each of which can impact the amount of cash, if any, available for distribution to unitholders, and available to pay principal and interest on debt and the amount of incentive distributions payable in respect of the general partner units. • The general partner decides whether to retain its counsel or engage separate counsel to perform services for us. • Unitholders are deemed to have consented to some actions and conflicts of interest under the Partnership Agreement that might otherwise be deemed a breach of fiduciary or other duties under applicable state law. • Under the Partnership Agreement, the general partner is allowed to take into account the interests of parties in addition to the Company in resolving conflicts of interest, thereby limiting its fiduciary duty to the unitholders. • The general partner determines whether to issue additional units or other of our securities. • The general partner is not restricted from causing us to pay the general partner or its affiliates for any services rendered on terms that are fair and reasonable to us or entering into additional contractual arrangements with any of these entities on our behalf.
The nature of these conflicts is ongoing and includes the following considerations: • The general partner’s affiliates are not prohibited from engaging in other business or activities, including direct competition with us. • The general partner determines the amount and timing of asset purchases and sales, capital expenditures, distributions to unitholders, unit repurchases, and our capital structure, each of which can impact the amount of cash, if any, available for distribution to unitholders, and available to pay principal and interest on debt and the amount of incentive distributions payable in respect of the general partner units. • The general partner decides whether to retain its counsel or engage separate counsel to perform services for us. • Unitholders are deemed to have consented to some actions and conflicts of interest under the Partnership Agreement that might otherwise be deemed a breach of fiduciary or other duties under applicable state law. • Under the Partnership Agreement, the general partner is allowed to take into account the interests of parties in addition to the Company in resolving conflicts of interest, thereby limiting its fiduciary duty to the unitholders. • The general partner determines whether to issue additional units or other of our securities. • The general partner is not restricted from causing us to pay the general partner or its affiliates for any services rendered on terms that are fair and reasonable to us or entering into additional contractual arrangements with any of these entities on our behalf.
Uncertainty about economic conditions poses a risk as our customers may reduce or postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for our products and services and could lead to increased conservation, as we have seen certain of our customers seek lower cost providers.
Uncertainty about economic conditions poses a risk as our customers may reduce or postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material 23 negative effect on the demand for our products and services and could lead to increased conservation, as we have seen certain of our customers seek lower cost providers.
Warmer than normal temperatures in one or more regions in which we 16 operate can significantly decrease the total volume we sell and the gross profit realized and, consequently, our results of operations. To partially mitigate the adverse effect of warm weather on cash flows, we have used weather hedge contracts for a number of years.
Warmer than normal temperatures in one or more regions in which we operate can significantly decrease the total volume we sell and the gross profit realized and, consequently, our results of operations. To partially mitigate the adverse effect of warm weather on cash flows, we have used weather hedge contracts for a number of years.
Accordingly, we could be assessed our share of unfunded liabilities should we terminate participation in these plans, or should there be a mass withdrawal from these plans, or if the plans become insolvent or otherwise terminate. Risks Related to Ownership of Our Common Units Conflicts of interest have arisen and could arise in the future.
Accordingly, we could be assessed our share of unfunded liabilities should we terminate participation in these plans, or should there be a mass withdrawal from these plans, or if the plans become insolvent or otherwise terminate. 20 Risks Related to Ownership of Our Common Units Conflicts of interest have arisen and could arise in the future.
There can be no assurance that our weather hedge contracts, if any, will fully or substantially offset the adverse effects of warmer weather on our business and operating results or that colder weather will result in enough profit to offset our hedging costs. Our operating results are subject to seasonal fluctuations.
There can be no assurance that our weather hedge contracts, 17 if any, will fully or substantially offset the adverse effects of warmer weather on our business and operating results or that colder weather will result in enough profit to offset our hedging costs. Our operating results are subject to seasonal fluctuations.
Ineffective internal controls over financial reporting could cause our unitholders to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common units. Our unitholder rights plan may discourage potential acquirers of the Company .
Ineffective internal controls over financial reporting could cause our unitholders to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common units. 21 Our unitholder rights plan may discourage potential acquirers of the Company .
Since weather conditions may adversely affect the demand for home heating oil and propane, our business, operating results and financial condition are vulnerable to warm winters.” To the extent that changes in climate impact weather patterns, our markets could experience severe weather.
Since weather conditions may adversely affect the demand for home heating oil and propane, our business, operating results and financial condition are vulnerable to warm winters. To the extent that changes in climate impact weather patterns, our markets could experience severe weather.
We purchase derivatives, futures and swaps of diesel fuel primarily from members of our lending group and Cargill in order to mitigate exposure to market risk associated with our inventory and the purchase of home heating oil for price-protected customers.
We purchase derivatives, futures contracts and swaps of diesel fuel primarily from members of our lending group and Cargill in order to mitigate exposure to market risk associated with our inventory and the purchase of home heating oil for price-protected customers.
Depending on the timing and amount of our use of cash, this could significantly reduce the cash available to us in subsequent periods to make payments on borrowings under our Credit Agreement. Restrictive covenants in our Credit Agreement may reduce our operating flexibility.
Depending on the 22 timing and amount of our use of cash, this could significantly reduce the cash available to us in subsequent periods to make payments on borrowings under our credit agreement. Restrictive covenants in our credit agreement may reduce our operating flexibility.
Our substantial indebtedness and other financial obligations could: • impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, unit repurchases, paying distributions or general partnership purposes; • have a material adverse effect on us if we fail to comply with financial and affirmative and restrictive covenants in our debt agreements and an event of default occurs that is not cured or waived; • expose us to interest rate risk because certain of our borrowings are at variable rates of interest; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and If we are unable to meet our debt service obligations and other financial obligations, we could be forced to restructure or refinance our indebtedness and other financial transactions, seek additional equity capital or sell our assets.
Our substantial indebtedness and other financial obligations could: • impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, unit repurchases, paying distributions or general partnership purposes; • have a material adverse effect on us if we fail to comply with financial and affirmative and restrictive covenants in our debt agreements and an event of default occurs that is not cured or waived; • expose us to interest rate risk because a significant portion of our borrowings are at variable rates of interest; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and If we are unable to meet our debt service obligations and other financial obligations, we could be forced to restructure or refinance our indebtedness and other financial transactions, seek additional equity capital or sell our assets.
Fiscal Year Ended September 30, 2023 2022 2021 2020 2019 Customer losses to natural gas conversion and electricity (1.6 )% (1.5 )% (1.1 )% (1.1 )% (1.4 )% In addition to our direct customer losses to natural gas and electricity competition, any conversion to natural gas or electricity by a heating oil consumer in our geographic footprint reduces the pool of available customers from which we can gain new heating oil customers, and could have a material adverse effect on our business, operating results and financial condition.
Fiscal Year Ended September 30, 2024 2023 2022 2021 2020 Customer losses to natural gas conversion and electricity (1.4 )% (1.6 )% (1.5 )% (1.1 )% (1.1 )% In addition to our direct customer losses to natural gas and electricity competition, any conversion to natural gas or electricity by a heating oil consumer in our geographic footprint reduces the pool of available customers from which we can gain new heating oil customers, and could have a material adverse effect on our business, operating results and financial condition.
In addition, we may be required to incur additional costs to mitigate, remediate and protect against damage caused by cyber-attacks, security breaches or other such disruptions in the future.
In addition, we may be required to incur additional costs to mitigate, remediate and protect against 19 damage caused by cyber-attacks, security breaches or other such disruptions in the future.
The hedge period runs from November 1, through March 31, of a fiscal year taken as a whole. Although we have entered into weather hedges for fiscal 2024 and in prior years' periods, there can be no assurance that weather hedge contracts on historical terms and prices will continue to be available past fiscal 2024.
The hedge period runs from November 1, through March 31, of a fiscal year taken as a whole. Although we have entered into weather hedges for fiscal 2025 and in prior years' periods, there can be no assurance that weather hedge contracts on historical terms and prices will continue to be available past fiscal 2025.
Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date.
Customer attrition percentage 15 calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis from the closing date.
When the customer makes a purchase commitment for the next period, we currently purchase option contracts, swaps and futures contracts for diesel fuel covering a substantial majority of the heating oil that we expect to sell to these price-protected customers. The price of heating oil is closely linked to the price of diesel fuel.
When the customer makes a purchase commitment for the next period, we concurrently purchase option contracts, swaps and futures contracts for diesel fuel covering a substantial majority of the heating oil that we expect to sell to these price-protected customers. The price of heating oil is closely linked to the price of diesel fuel.
However, there can be no assurance that the ultimate settlement of these claims will not differ materially from the assumptions used to calculate the liabilities or that the insurance we maintain will be adequate to protect us from all material expenses related to potential future claims.
However, there can be no assurance that the ultimate settlement of these claims will not differ materially from the assumptions used to calculate the reserves or that the insurance we maintain will be adequate to protect us from all material expenses related to potential future claims.
If one of our insurance carriers were to fail, our liquidity, results of operations and financial condition could be materially adversely impacted, as we would have to fund any catastrophic loss. If our weather hedge counterparty were to fail, we would lose the protection of our weather hedge contract.
If one of our insurance carriers were to fail, our liquidity, results of operations and financial condition could be materially adversely impacted, as we would have to fund any catastrophic loss. If our weather hedge counterparties were to fail, we would lose the protection of our weather hedge contract.
In addition, backwardated energy markets, which exist when the current market price of wholesale product is higher than the futures price, have caused and may in the future cause suppliers to reduce physical inventories.
Further, backwardated energy markets, which exist when the current market price of wholesale product is higher than the futures price, have caused and may in the future cause suppliers to reduce physical inventories.
Our general partner will determine the future use of our cash resources and has broad discretion in determining such uses and in establishing reserves for such uses, which may include but are not limited to, complying with the terms of any of our agreements or obligations providing for distributions of cash to our unitholders in accordance with the requirements of our Partnership Agreement, providing for future capital expenditures and other payments deemed by our general partner to be necessary or advisable, including to make acquisitions, and repurchasing common units.
Our general partner will determine the future use of our cash resources and has broad discretion in determining such uses and in establishing reserves for such uses, which may include but are not limited to, providing for distributions of cash to our unitholders in accordance with the requirements of our Partnership Agreement, providing for future capital expenditures and other payments deemed by our general partner to be necessary or advisable, including to make acquisitions, and repurchasing common units.
(See the sixth amended and restated credit agreement and Note 13 of the Notes to the Consolidated Financial Statements—Long-Term Debt and Bank Facility Borrowings). If we fail to maintain an effective system of internal controls, then we may not be able to accurately report our financial results or prevent fraud.
(See the credit agreement at Note 13 of the Notes to the Consolidated Financial Statements—Long-Term Debt and Bank Facility Borrowings). If we fail to maintain an effective system of internal controls, then we may not be able to accurately report our financial results or prevent fraud.
Subject to the limitations on restricted payments that are contained in our Credit Agreement, we are not required to accumulate cash for the purpose of meeting our future obligations to our lenders. As a result, we may be required to refinance the final payment of our term loan, which is expected to be $82.6 million.
Subject to the limitations on restricted payments that are contained in our credit agreement, we are not required to accumulate cash for the purpose of meeting our future obligations to our lenders. As a result, we may be required to refinance the final payment of our term loan, which is expected to be $110.3 million.
Risks Related to Customer Attrition, Competition, and Demand for Our Products Our operating results will be adversely affected if we continue to experience significant net customer attrition in our home heating oil and propane customer base. The following table depicts our gross customer gains, losses and net attrition from fiscal year 2019 to fiscal year 2023.
Risks Related to Customer Attrition, Competition, and Demand for Our Products Our operating results will be adversely affected if we continue to experience significant net customer attrition in our home heating oil and propane customer base. The following table depicts our gross customer gains, losses and net attrition from fiscal year 2020 to fiscal year 2024.
A substantial portion of our workforce is unionized, and we may face labor actions that could disrupt our operations or lead to higher labor costs and adversely affect our business. As of September 30, 2023, approximately 44% of our employees were covered under 62 different collective bargaining agreements.
A substantial portion of our workforce is unionized, and we may face labor actions that could disrupt our operations or lead to higher labor costs and adversely affect our business. As of September 30, 2024, approximately 39% of our employees were covered under 62 different collective bargaining agreements.
Fiscal Year Ended September 30, 2023 2022 2021 2020 2019 Gross customer gains 12.0 % 11.9 % 10.7 % 12.2 % 12.9 % Gross customer losses 15.6 % 15.6 % 14.6 % 15.6 % 18.3 % Net attrition (3.6 %) (3.7 %) (3.9 %) (3.4 %) (5.4 %) The gain of a new customer does not fully compensate for the loss of an existing customer because of the expenses incurred during the first year to add a new customer.
Fiscal Year Ended September 30, 2024 2023 2022 2021 2020 Gross customer gains 9.8 % 12.0 % 11.9 % 10.7 % 12.2 % Gross customer losses 14.0 % 15.6 % 15.6 % 14.6 % 15.6 % Net attrition (4.2 %) (3.6 %) (3.7 %) (3.9 %) (3.4 %) The gain of a new customer does not fully compensate for the loss of an existing customer because of the expenses incurred during the first year to add a new customer.
(See the sixth amended and restated credit agreement and Note 13 of the Notes to the Consolidated Financial Statements—Long-Term Debt and Bank Facility Borrowings). Our debt is often substantially higher during the heating season as we access our revolving credit facilities to finance accounts receivable and inventory balances.
(See the credit agreement at Note 13 of the Notes to the Consolidated Financial Statements—Long-Term Debt and Bank Facility Borrowings). Our debt is often substantially higher during the heating season as we access our revolving credit facilities to finance accounts receivable and inventory balances.
During periods when supplies are constrained, we have paid and may continue to pay significant premiums over the wholesale product cost to ensure prompt delivery of spot purchases. In certain cases, these premium payments cannot be passed on to our customers, thereby reducing our profit margins. Our hedging strategy may adversely affect our liquidity.
During periods when supplies are constrained, we have paid and may continue to pay significant premiums over the wholesale product cost to ensure prompt delivery of spot purchases. In certain cases, these premium payments cannot be passed on to our customers, thereby reducing our profit margins.
Any future cyber-attacks or incidents may have a material adverse effect on our business, operations or financial results. Cyber-attacks are increasing in their frequency, levels of persistence, and sophistication and intensity.
Any future cyber-attacks or incidents may have a material adverse effect on our business, operations or financial results. It is our view that cyber-attacks are increasing in their frequency, levels of persistence, and sophistication and intensity.
As we self-insure workers’ compensation, automobile general liability and medical claims up to pre-established limits, we establish liabilities based upon expectations as to what our ultimate liability will be for claims based on our historical factors. We evaluate on an annual basis the potential for changes in loss estimates with the support of qualified actuaries.
As we self-insure workers’ compensation, automobile, general liability and medical claims up to pre-established limits, we establish reserves based upon expectations as to what our ultimate liability will be for claims based on our historical factors. Periodically, we evaluate on the potential for changes in loss estimates with the support of qualified actuaries.
We may experience increased costs due to stricter pollution control requirements or liabilities resulting from noncompliance with operating or other regulatory permits. New regulations, such as those relating to underground storage, transportation, and delivery of the products that we sell, might adversely impact operations or make them more costly.
Such laws and regulations have become increasingly stringent over time. We may experience increased costs due to stricter pollution control requirements or liabilities resulting from noncompliance with operating or other regulatory permits. New regulations, such as those relating to underground storage, 18 transportation, and delivery of the products that we sell, might adversely impact operations or make them more costly.
Our ability to meet those financial ratios and conditions can be affected by events beyond our control, such as weather conditions and general economic conditions.
Our ability to meet those financial ratios and conditions can be affected by events beyond our control, such as weather conditions and general economic conditions. Accordingly, we may be unable to meet those ratios and conditions.
General Risk Factors Recessionary Economic Conditions and rapid inflation could adversely affect our results of operations and financial condition.
Recessionary economic conditions and rapid inflation could adversely affect our results of operations and financial condition.
At this time, while we cannot predict whether, when, which, or in what form climate change legislation provisions and GHG emission restrictions may be enacted and what the impact of any such legislation or standards 17 may have on our business, financial conditions or operations in the future, these measures could have a negative impact on our business over time or in the future.
At this time, we cannot predict whether, when, which, or in what form climate change legislation provisions and GHG emission restrictions may be enacted and what the impact of any such legislation or standards may have on our business, financial conditions or operations in the future.
In addition, recessionary economic conditions could negatively impact the spending and financial viability of our customers. As a result, we could experience an increase in bad debts from financially distressed customers, which would have a negative effect on our liquidity, results of operations and financial condition .
In addition, recessionary economic conditions could negatively impact the spending and financial viability of our customers. As a result, we could experience an increase in bad debts from financially distressed customers, which would have a negative effect on our liquidity, results of operations and financial condition . ITEM 1B. UNRESOLVE D STAFF COMMENTS Not applicable.
Accordingly, we may be unable to meet those ratios and conditions. 22 Any breach of any of these covenants, failure to meet any of these ratios or conditions, or occurrence of a change of control would result in a default under the terms of the Credit Agreement and cause the amounts borrowed to become immediately due and payable.
Any breach of any of these covenants, failure to meet any of these ratios or conditions, or occurrence of a change of control would result in a default under the terms of the credit agreement and cause the amounts borrowed to become immediately due and payable.
For example, our borrowings under the revolver peaked at $125.6 million during the fiscal 2023 heating season.
For example, our borrowings under the revolver peaked at $79.6 million during the fiscal 2024 heating season.
Energy efficiency and new technology may reduce the demand for our products and adversely affect our operating results. Increased conservation and technological advances, including installation of improved insulation and the development of more efficient furnaces and other heating devices, such as electric heat pumps, have adversely affected the demand for our products by retail customers.
Increased conservation and technological advances, including installation of improved insulation and the development of more efficient furnaces and other heating devices, such as electric heat pumps, have adversely affected the demand for our products by retail customers.
Our business is subject to substantial competition. Most of our operating locations compete with numerous distributors, primarily on the basis of price, reliability of service and responsiveness to customer service needs.
Our business is subject to substantial competition. Most of our operating locations compete with numerous distributors, primarily on the basis of price, reliability of service and responsiveness to customer service needs. Each operating location operates in its own competitive environment.
At September 30, 2023, we had outstanding under our sixth amended and restated revolving credit facility agreement a $148.5 million term loan, $0.2 million under the revolver portion of the agreement, $3.2 million of letters of credit, $0.1 million hedge positions were secured under the credit agreement and our availability was $202.1 million.
At September 30, 2024, we had outstanding under our seventh amended and restated revolving credit facility agreement a $210.0 million term loan, less than $0.1 million under the revolver portion of the agreement, $5.2 million of letters of credit, $14.2 million hedge positions were secured under the credit agreement and our availability was $166.5 million.
Each operating location operates in its own competitive environment. 15 We compete with distributors offering a broad range of services and prices, from full-service distributors, such as ourselves, to those offering delivery only. As do many companies in our business, we provide home heating equipment repair service on a 24-hour-a-day, seven-day-a-week, 52 weeks a year basis.
We compete with distributors offering a broad range of services and prices, from full-service distributors, such as ourselves, to those offering delivery only. As do many companies in our business, we provide home heating equipment repair service on a 24-hour-a-day, seven-day-a-week, 52 weeks a year basis. We believe that this tends to build customer loyalty.
Constraints in physical product supplies have been caused by numerous factors, including imbalances in supply and demand of liquid product, exacerbated by geopolitical forces, such as the wars in the Ukraine and in the Middle East.
In addition, constraints in physical product supplies could be caused by s, imbalances in supply and demand of liquid product, exacerbated by geopolitical forces, such as the wars in the Ukraine and in the Middle East.
Adverse operating and financial results may limit our access to capital and adversely affect our ability to make acquisitions. Our acquisition activities could result in operational difficulties, unrecoverable costs and other negative consequences, any of which may adversely impact our financial condition and results of operations.
Our acquisition activities could result in operational difficulties, unrecoverable costs and other negative consequences, any of which may adversely impact our financial condition and results of operations.
Our results of operations and financial condition may be adversely affected by environmental regulations, and regulatory costs. Our business is subject to a wide range of federal, state and local laws and regulations related to environmental and other matters. Such laws and regulations have become increasingly stringent over time.
These measures could have a negative impact on our business over time or in the future. Our results of operations and financial condition may be adversely affected by environmental regulations, and regulatory costs. Our business is subject to a wide range of federal, state and local laws and regulations related to environmental and other matters.
We have paid and may continue to pay significantly higher insurance premiums to maintain cyber insurance coverage, and even if we are able to maintain cyber insurance coverage, it may not be sufficient in amounts and scope to cover all harm sustained by the Company in any future cyber-attack or other data security incident. 19 Risks Related to Our Workforce Our inability to identify, hire and retain qualified individuals for our workforce could slow our growth and adversely impact our ability to operate our business.
We have paid and may continue to pay significantly higher insurance premiums to maintain cyber insurance coverage, and even if we are able to maintain cyber insurance coverage, it may not be sufficient in amounts and scope to cover all harm sustained by the Company in any future cyber-attack or other data security incident.
Instability in the financial markets as a result of terrorism could also affect our ability to raise capital. Terrorist activity could likely lead to increased volatility in the prices of our products. ITEM 1B. UNRESOLVE D STAFF COMMENTS Not applicable.
Instability in the financial markets as a result of terrorism could also affect our ability to raise capital. Terrorist activity could likely lead to increased volatility in the prices of our products. Our hedging strategy may adversely affect our liquidity.
A significant portion of our home heating oil volume is sold to price-protected customers (ceiling and fixed), and our gross margins could be adversely affected if we are not able to effectively hedge against fluctuations in the volume and cost of product sold to these customers.
Mark-to-market exposure with our bank group reduces our borrowing base and as such can reduce the amount available to us under our credit agreement. 14 A significant portion of our home heating oil volume is sold to price-protected customers (ceiling and fixed), and our gross margins could be adversely affected if we are not able to effectively hedge against fluctuations in the volume and cost of product sold to these customers.
A disruption within our supply chain network due to unforeseen events beyond our control could adversely affect our ability to deliver our products and services in a timely manner, cause an increase in wholesale prices and a decrease in supply, lost sales, customer attrition, increased supply chain costs, or damage to our reputation.
Constraints in physical product supplies could adversely affect our ability to deliver our products and services in a timely manner, cause an increase in wholesale prices and a decrease in supply, lost sales, customer attrition, increased supply chain costs, or damage to our reputation, and could negatively impact our financial performance or financial condition.
Future conservation measures or technological advances in heating, conservation, energy generation or other devices might reduce demand and adversely affect our operating results. 23 The risk of global terrorism, political unrest and war may adversely affect the economy and the price and availability of the products that we sell and have a material adverse effect on our business, financial condition and results of operations.
The risk of global terrorism, political unrest and war may adversely affect the economy and the price and availability of the products that we sell and have a material adverse effect on our business, financial condition and results of operations.
These provisions, either alone or in combination with each other, give our general partner a substantial ability to influence the outcome of a proposed acquisition of the Company.
These provisions, either alone or in combination with each other, give our general partner a substantial ability to influence the outcome of a proposed acquisition of the Company. These provisions would apply even if an acquisition or other significant corporate transaction was considered beneficial by some of our unitholders.
Losses to natural gas in our footprint for the home heating oil industry could be greater or less than our estimates.
The following table depicts our estimated customer losses to natural gas and electricity conversions for the last five fiscal years. Losses to natural gas and electricity in our footprint for the home heating oil industry could be greater or less than our estimates.
Changes to existing tax laws or the enactment of future reform legislation could have a material impact on our financial condition, results of operations and ability to pay distributions to our unitholders. 18 Risks Related to Information Technology and Cybersecurity We depend on the use of information technology systems that have been and may in the future be a target of cyber-attacks.
Changes to existing tax laws or the enactment of future reform legislation could have a material impact on our financial condition, results of operations and ability to pay distributions to our unitholders.
Accordingly, our ability to maintain or grow our customer base will depend on our ability to make acquisitions on economically acceptable terms. We cannot assure that we will be able to identify attractive acquisition candidates in the future or that we will be able to acquire businesses on economically acceptable terms.
We cannot assure that we will be able to identify attractive acquisition candidates in the future or that we will be able to acquire businesses on economically acceptable terms. Adverse operating and financial results may limit our access to capital and adversely affect our ability to make acquisitions.
These provisions would apply even if an acquisition or other significant corporate transaction was considered beneficial by some of our unitholders. 21 Risks Related to Our Indebtedness Our substantial debt and other financial obligations could impair our financial condition and our ability to obtain additional financing and have a material adverse effect on us if we fail to meet our financial and other obligations.
Risks Related to Our Indebtedness Our substantial debt and other financial obligations could impair our financial condition and our ability to obtain additional financing and have a material adverse effect on us if we fail to meet our financial and other obligations.
We also compete for retail customers with suppliers of alternative energy products, principally natural gas, propane (in the case of our home heating oil operations) and electricity. If we are unable to compete effectively, we may lose existing customers and/or fail to acquire new customers, which would have a material adverse effect on our business, operating results and financial condition.
If we are unable to compete effectively, we may lose existing customers and/or fail to acquire new customers, which would have a material adverse effect on our business, operating results and financial condition. Energy efficiency and new technology may reduce the demand for our products and adversely affect our operating results.
In certain areas in our operating footprint, state and local legislatures are mandating the replacement of heating systems using fossil fuels, such as heating oil and propane, with systems using electricity in new building construction. As such, our industry is declining.
In certain areas in our operating footprint, state and local legislatures are mandating using electricity in new building construction, thus displacing heating systems using fossil fuels, such as heating oil and propane. As such, our industry is declining. Accordingly, our ability to maintain or grow our customer base will depend on our ability to make acquisitions on economically acceptable terms.
For additional information about environmental and other regulations we are subject to, see Item 1 “Business-Governmental Regulations.” We are subject to operating and litigation risks that could adversely affect our operating results whether or not covered by insurance.
General Risk Factors We are subject to operating and litigation risks that could adversely affect our operating results whether or not covered by insurance.
Changes in tax laws or regulations may have a material adverse effect on our business, cash flow, financial condition or results of operations. New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance.
New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
We rely on multiple information technology systems and networks that are maintained internally and by third-party vendors, and their failure or breach could significantly impede operations.
Risks Related to Information Technology and Cybersecurity We depend on the use of information technology systems that have been and may in the future be a target of cyber-attacks. We rely on multiple information technology systems and networks that are maintained internally and by third-party vendors, and failure or breach of these systems could significantly impede operations.
We believe that this tends to build customer loyalty. In some instances, homeowners have formed buying cooperatives that seek to purchase home heating oil from distributors at a price lower than individual customers are otherwise able to obtain.
In some instances, homeowners have formed buying cooperatives that seek to purchase home heating oil from distributors at a price lower than individual customers are otherwise able to obtain. We also compete for retail customers with suppliers of alternative energy products, principally natural gas, propane (in the case of our home heating oil operations) and electricity.
We can provide no assurance, however, that these steps will detect and/or prevent all violations of such risk management policies and procedures, particularly if deception or other intentional misconduct is involved. 14 We rely on the continued solvency of our wholesale product suppliers and derivatives, insurance and weather hedge counterparties.
We monitor processes and procedures to reduce the risk of unauthorized trading and to maintain substantial balance between purchases and sales or future delivery obligations. We can provide no assurance, however, that these steps will detect and/or prevent all violations of such risk management policies and procedures, particularly if deception or other intentional misconduct is involved.
Our operating results will be adversely affected if we experience significant net customer attrition from conversions to alternative energy products, principally natural gas or electricity. The following table depicts our estimated customer losses to natural gas conversions for the last five fiscal years.
Future conservation measures or technological advances in heating, conservation, energy generation or other devices might reduce demand and adversely affect our operating results. 16 Our operating results will be adversely affected if we experience significant net customer attrition from conversions to alternative energy products, principally natural gas or electricity.
Disruptions to our supply chain due to any of the factors listed above could negatively impact our financial performance or financial condition. If service at our third-party terminals, the common carrier pipelines used or the barge companies we hire to move product is interrupted, our operations would be adversely affected.
Any significant interruption in the service of these third-party terminals, the common carrier pipelines used or the barge companies that we hire to move product would adversely affect our ability to obtain product.
Removed
Mark-to-market exposure with our bank group reduces our borrowing base and as such can reduce the amount available to us under our Credit Agreement.
Added
Constraints have been and could be caused by numerous factors including disruption within our supply chain network due to unforeseen events beyond our control.
Removed
We monitor processes and procedures to reduce the risk of unauthorized trading and to maintain substantial balance between purchases and sales or future delivery obligations.
Added
We rely on the continued solvency of our wholesale product suppliers and derivatives, insurance and weather hedge counterparties.
Removed
Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us.
Added
A substantial majority of the Company’s price-protected customers have agreements with us that are subject to annual renewal in the period between April and November of each fiscal year.
Removed
Disruptions in our supply chain and other factors affecting the delivery of our products and services could adversely impact our business.
Added
If a significant number of these customers elect not to renew their price-protected agreements with us and do not continue as our customers under a variable price-plan, this will adversely impact our net customer attrition and, consequently, the Company’s near term profitability, liquidity and cash flow.
Removed
As discussed above under “Risk Factors - Increases in wholesale product costs may have adverse effects on our business, financial condition, results of operations, or liquidity," we believe that the war in Ukraine and other geopolitical forces have caused a sustained period of high wholesale product costs, which has impacted our profit margins and operating results.
Added
For additional information about environmental and other regulations we are subject to, see Item 1 “Business-Governmental Regulations.” Changes in tax laws or regulations may have a material adverse effect on our business, cash flow, financial condition or results of operations.
Added
For more information on management's risk management, strategy, governance and impacts from cybersecurity incidents, see “Item 1C. Cybersecurity.” Risks Related to Our Workforce Our inability to identify, hire and retain qualified individuals for our workforce could slow our growth and adversely impact our ability to operate our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of September 30, 2023, we had a fleet of approximately 1,118 truck and transport vehicles, the majority of which were owned, 1,189 service and 389 support vehicles, the majority of which were leased. Our obligations under our Credit Agreement are secured by liens and mortgages on substantially all of the Company’s and subsidiaries’ real and personal property.
Biggest changeAs of September 30, 2024, we had a fleet of approximately 1,134 truck and transport vehicles, the majority of which were owned, 1,195 service and 384 support vehicles, the majority of which were leased. Our obligations under our credit agreement are secured by liens and mortgages on substantially all of the Company’s and subsidiaries’ real and personal property.
ITEM 2. PR O PERTIES We currently provide services to our customers in the United States in twelve states and the District of Columbia, ranging from Massachusetts to Maryland from 40 principal operating locations and 78 depots, 55 of which are owned and 63 of which are leased.
ITEM 2. PR O PERTIES We currently provide services to our 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCE EDINGS—LITIGATION We are involved from time to time in litigation incidental to the conduct of our business, but we are not currently a party to any material lawsuit or proceeding. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 24 PART II
Biggest changeITEM 3. LEGAL PROCE EDINGS—LITIGATION We are involved from time to time in litigation incidental to the conduct of our business, but we are not currently a party to any material lawsuit or proceeding. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 25 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn order to pay any distributions to unitholders or repurchase Common Units, the Company must maintain Availability (as defined in the Credit Agreement) of $60 million, 15% of the facility size of $400 million (assuming the non-seasonal aggregate commitment is in effect), on a historical pro forma and forward-looking basis, and a fixed charge coverage ratio of not less than 1.0 through February 27, 2024 and 1.15 thereafter measured as of the date of repurchase or distribution.
Biggest changeIn order to pay any distributions to unitholders or repurchase Common Units, the Company must maintain Availability (as defined in the credit agreement) not less than the greater of 15% of the Line Cap (lesser of the revolving credit facility borrowings and the borrowing base) and $40 million, on a historical pro forma and forward-looking basis, and a fixed charge coverage ratio of not less than 1.15 after giving pro forma effect to such distributions as if such distributions were paid on the first day of the relevant period.
As a result, $5.8 million was paid to the Common Unit holders, $0.3 million to the general partner unit holders (including $0.3 million of incentive distribution as provided in our Partnership Agreement) and $0.3 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. 25 Common Unit Repurchase Plans and Retirement Note 5 to the Consolidated Financial Statements concerning the Company’s repurchase of Common Units during the fiscal year ended September 30, 2023 is incorporated into this Item 5 by reference.
As a result, $6.0 million was paid to the Common Unit holders, $0.4 million to the general partner unit holders (including $0.3 million of incentive distribution as provided in our Partnership Agreement) and $0.3 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. 26 Common Unit Repurchase Plans and Retirement Note 5 to the Consolidated Financial Statements concerning the Company’s repurchase of Common Units during the fiscal year ended September 30, 2024 is incorporated into this Item 5 by reference.
SGU – Common Unit Price Range Distributions Declared High Low per Unit Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year Year Quarter Ended 2023 2022 2023 2022 2023 2022 December 31, $ 12.20 $ 11.35 $ 8.10 $ 9.85 $ 0.1525 $ 0.1425 March 31, $ 13.33 $ 11.28 $ 10.98 $ 9.75 $ 0.1525 $ 0.1425 June 30, $ 15.22 $ 11.67 $ 12.34 $ 9.08 $ 0.1625 $ 0.1525 September 30, $ 14.00 $ 10.15 $ 11.31 $ 8.00 $ 0.1625 $ 0.1525 As of November 30, 2023, there were approximately 189 holders of record of common units.
SGU – Common Unit Price Range Distributions Declared High Low per Unit Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Year Year Year Year Year Year Quarter Ended 2024 2023 2024 2023 2024 2023 December 31, $ 14.76 $ 12.20 $ 11.06 $ 8.10 $ 0.1625 $ 0.1525 March 31, $ 12.34 $ 13.33 $ 9.91 $ 10.98 $ 0.1625 $ 0.1525 June 30, $ 11.85 $ 15.22 $ 9.64 $ 12.34 $ 0.1725 $ 0.1625 September 30, $ 12.64 $ 14.00 $ 10.11 $ 11.31 $ 0.1725 $ 0.1625 As of November 30, 2024, there were approximately 185 holders of record of common units.
On October 10, 2023, we declared a quarterly distribution of $0.1625 per unit, or $0.65 per unit on an annualized basis, on all Common Units with respect to the fourth quarter of fiscal 2023, paid on October 30, 2023, to holders of record on October 20, 2023.
On October 17, 2024, we declared a quarterly distribution of $0.1725 per unit, or $0.69 per unit on an annualized basis, on all Common Units with respect to the fourth quarter of fiscal 2024, paid on November 6, 2024, to holders of record on October 28, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

76 edited+15 added−19 removed33 unchanged
Biggest changeEBITDA and Adjusted EBITDA are calculated as follows: Twelve Months Ended September 30, (in thousands) 2023 2022 Net income $ 31,945 $ 35,288 Plus: Income tax expense 13,984 13,738 Amortization of debt issuance cost 1,084 955 Interest expense, net 15,532 10,472 Depreciation and amortization 32,350 32,598 EBITDA (a) 94,895 93,051 (Increase) / decrease in the fair value of derivative instruments 1,977 17,286 Adjusted EBITDA (a) 96,872 110,337 Add / (subtract) Income tax expense (13,984 ) (13,738 ) Interest expense, net (15,532 ) (10,472 ) Provision for losses on accounts receivable 9,761 5,411 Decrease (increase) in receivables 15,566 (43,463 ) Decrease (increase) in inventories 26,994 (21,105 ) Increase in customer credit balances 17,585 5,804 Change in deferred taxes (501 ) (3,181 ) Change in other operating assets and liabilities (13,103 ) 4,314 Net cash provided by operating activities $ 123,658 $ 33,907 Net cash used in investing activities $ (28,197 ) $ (32,626 ) Net cash (used in) provided by financing activities $ (64,890 ) $ 8,572 35 (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, other income (loss), net, 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.
Biggest changeEBITDA 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 the Company’s ability to make the Minimum Quarterly Distribution. 36 EBITDA and Adjusted EBITDA are calculated as follows: Twelve Months Ended September 30, (in thousands) 2024 2023 Net income $ 35,223 $ 31,945 Plus: Income tax expense 13,331 13,984 Amortization of debt issuance cost 988 1,084 Interest expense, net 11,560 15,532 Depreciation and amortization 31,494 32,350 EBITDA (a) 92,596 94,895 (Increase) / decrease in the fair value of derivative instruments 19,018 1,977 Adjusted EBITDA (a) 111,614 96,872 Add / (subtract) Income tax expense (13,331 ) (13,984 ) Interest expense, net (11,560 ) (15,532 ) Provision for losses on accounts receivable 8,042 9,761 Decrease in receivables 11,271 15,566 Decrease in inventories 18,475 26,994 (Decrease) increase in customer credit balances (15,546 ) 17,585 Change in deferred taxes (3,989 ) (501 ) Change in other operating assets and liabilities 6,002 (13,103 ) Net cash provided by operating activities $ 110,978 $ 123,658 Net cash used in investing activities $ (61,185 ) $ (28,197 ) Net cash provided by (used in) financing activities $ 22,351 $ (64,890 ) (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, other income (loss), net, 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.
Gross customer gains were 300 lower than the prior year’s comparable period, and gross customer losses were 1,100 accounts lower primarily due to reduction in the number of customer relocations.
Gross customer gains were 300 accounts lower than the prior year’s comparable period, and gross customer losses were 1,100 accounts lower primarily due to reduction in the number of customer relocations.
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.
Some of the limitations of EBITDA and Adjusted EBITDA are: • EBITDA and Adjusted EBITDA do not reflect our cash used for capital expenditures; 37 • 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.
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.
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 bonus depreciation available for fixed assets purchased. However, this table does not include any forecast of future annual capital purchases.
(Increase) Decrease in the Fair Value of Derivative Instruments During fiscal 2023, the change in the fair value of derivative instruments resulted in a $2.0 million charge as an increase in the market value for unexpired hedges (a $3.9 million credit) was more than offset by a $5.9 million charge due to the expiration of certain hedged positions.
During fiscal 2023, the change in the fair value of derivative instruments resulted in a $2.0 million charge as an increase in the market value for unexpired hedges (a $3.9 million credit) was more than offset by a $5.9 million charge due to the expiration of certain hedged positions.
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.
Regarding our interest rate hedges, 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 of operations.
As mentioned, 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 commodity derivative instruments are recognized in our statement of operations.
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. 28 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.
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. 29 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.
The amount of depreciation and amortization that we deduct for book (i.e., financial reporting) purposes will differ from the amount 27 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.
The amount of 28 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.
(See Note 16 - Leases) (c) Represents non-cancelable commitments as of September 30, 2023 for operations such as customer related invoice and statement processing, voice and data phone/computer services, real estate taxes on leased property and our undiscounted future payment obligations to the New England Teamsters and Trucking Industry Pension Fund.
(See Note 16 - Leases) 40 (c) Represents non-cancelable commitments as of September 30, 2024 for operations such as customer related invoice and statement processing, voice and data phone/computer services, real estate taxes on leased property and our undiscounted future payment obligations to the New England Teamsters and Trucking Industry Pension Fund.
Investing Activities Our capital expenditures for fiscal 2023 totaled $9.0 million, as we invested in our fleet and other equipment ($5.5 million), refurbished certain physical plants ($1.4 million), expanded our propane operations ($1.0 million) and invested in computer hardware and software ($1.1 million).
Our capital expenditures for fiscal 2023 totaled $9.0 million, as we invested in our fleet and other equipment ($5.5 million), refurbished certain physical plants ($1.4 million), expanded our propane operations ($1.0 million) and invested in computer hardware and software ($1.1 million).
Fiscal Year Ended September 30, 2022 Compared to Fiscal Year Ended September 30, 2021 See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within the Form 10-K for the fiscal year ended September 30, 2022 for the fiscal 2022 to fiscal 2021 comparative discussion.
Fiscal Year Ended September 30, 2023 Compared to Fiscal Year Ended September 30, 2022 See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within the Form 10-K for the fiscal year ended September 30, 2023 for the fiscal 2023 to fiscal 2022 comparative discussion.
During fiscal 2023, we estimate that we lost (1.6%) of our home heating oil and propane accounts to natural gas and electricity conversions versus (1.5%) for fiscal 2022 and (1.1%) for fiscal 2021. Losses to natural gas and electricity in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates.
During fiscal 2024, we estimate that we lost (1.4%) of our home heating oil and propane accounts to natural gas and electricity conversions versus (1.6%) for fiscal 2023 and (1.5%) for fiscal 2022. Losses to natural gas and electricity in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates.
The ultimate resolution of these claims could differ materially from the assumptions used to calculate the self-insurance liabilities, which could have a material adverse effect on results of operations. 40
The ultimate resolution of these claims could differ materially from the assumptions used to calculate the self-insurance liabilities, which could have a material adverse effect on results of operations. 41
These risks and uncertainties include, but are not limited to, those set forth in this Report under the headings “Risk Factors,” “Business Strategy” and “Management’s Discussion and Analysis.” Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this Report.
These risks and uncertainties include, but are not limited to, those set forth in this Report under the headings “Risk Factors,” “Business Strategy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation.” Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this Report.
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: Heating Oil (in millions of gallons) and Propane Volume - Fiscal 2022 296.1 Net customer attrition (12.1 ) Impact of warmer temperatures (20.7 ) Acquisitions 3.5 Sale of certain assets (2.0 ) Other (5.6 ) Change (36.9 ) Volume - Fiscal 2023 259.2 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 fiscal 2023 compared to fiscal 2022: Twelve Months Ended Customers September 30, 2023 September 30, 2022 Residential Variable 42.1 % 44.0 % Residential Price-Protected (Ceiling and Fixed Price) 44.9 % 43.3 % Commercial/Industrial/Other 13.0 % 12.7 % Total 100.0 % 100.0 % Volume of motor fuel and other petroleum products sold decreased by 11.1 million gallons, or 7.4%, to 139.0 million gallons for fiscal 2023, compared to 150.1 million gallons for fiscal 2022.
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: Heating Oil (in millions of gallons) and Propane Volume - Fiscal 2023 259.2 Net customer attrition (12.1 ) Impact of warmer temperatures — Acquisitions 5.3 Sale of certain assets (0.1 ) Other 1.1 Change (5.8 ) Volume - Fiscal 2024 253.4 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 fiscal 2024 compared to fiscal 2023: Twelve Months Ended Customers September 30, 2024 September 30, 2023 Residential Variable 41.9 % 42.1 % Residential Price-Protected (Ceiling and Fixed Price) 44.2 % 44.9 % Commercial/Industrial/Other 13.9 % 13.0 % Total 100.0 % 100.0 % Volume of motor fuel and other petroleum products sold decreased by 9.9 million gallons, or 7.1%, to 129.1 million gallons for fiscal 2024, compared to 139.0 million gallons for fiscal 2023.
We establish and periodically evaluate self-insurance liabilities based upon expectations as to what our ultimate liability may be for outstanding claims using developmental factors based upon historical claim experience, including frequency, severity, demographic factors and other actuarial assumptions, supplemented with the support of a qualified third-party actuary. As of September 30, 2023, we had approximately $77.5 million of self-insurance liabilities.
We establish and periodically evaluate self-insurance liabilities based upon expectations as to what our ultimate liability may be for outstanding claims using developmental factors based upon historical claim experience, including frequency, severity, demographic factors and other actuarial assumptions, supplemented with the support of a qualified third-party actuary. As of September 30, 2024, we had approximately $76.7 million of self-insurance liabilities.
Customer gains and losses of home heating oil and propane customers Fiscal Year Ended 2023 2022 2021 Net Net Net Gross Customer Gains / Gross Customer Gains / Gross Customer Gains / Gains Losses (Attrition) Gains Losses (Attrition) Gains Losses (Attrition) First Quarter 26,500 19,500 7,000 19,800 18,500 1,300 19,100 19,900 (800 ) Second Quarter 9,300 18,100 (8,800 ) 12,700 17,300 (4,600 ) 12,600 17,800 (5,200 ) Third Quarter 5,300 12,600 (7,300 ) 6,400 14,300 (7,900 ) 6,700 12,300 (5,600 ) Fourth Quarter 8,900 14,600 (5,700 ) 11,400 15,800 (4,400 ) 9,500 14,900 (5,400 ) Total 50,000 64,800 (14,800 ) 50,300 65,900 (15,600 ) 47,900 64,900 (17,000 ) Customer gains (attrition) as a percentage of home heating oil and propane customer base Fiscal Year Ended 2023 2022 2021 Gross Customer Net Gross Customer Net Gross Customer Net Gains Losses Gains / (Attrition) Gains Losses Gains / (Attrition) Gains Losses Gains / (Attrition) First Quarter 6.4 % 4.7 % 1.7 % 4.7 % 4.4 % 0.3 % 4.4 % 4.6 % (0.2 )% Second Quarter 2.2 % 4.3 % (2.1 )% 3.0 % 4.1 % (1.1 )% 2.9 % 4.1 % (1.2 )% Third Quarter 1.3 % 3.1 % (1.8 )% 1.5 % 3.4 % (1.9 )% 1.3 % 2.6 % (1.3 )% Fourth Quarter 2.1 % 3.5 % (1.4 )% 2.7 % 3.7 % (1.0 )% 2.1 % 3.3 % (1.2 )% Total 12.0 % 15.6 % (3.6 )% 11.9 % 15.6 % (3.7 )% 10.7 % 14.6 % (3.9 )% 29 For fiscal 2023, the Company lost 14,800 accounts (net), or 3.6%, of its home heating oil and propane customer base, compared to 15,600 accounts lost (net), or 3.7%, of its home heating oil and propane customer base, during fiscal 2022.
Customer gains and losses of home heating oil and propane customers Fiscal Year Ended 2024 2023 2022 Net Net Net Gross Customer Gains / Gross Customer Gains / Gross Customer Gains / Gains Losses (Attrition) Gains Losses (Attrition) Gains Losses (Attrition) First Quarter 17,100 17,800 (700 ) 26,500 19,500 7,000 19,800 18,500 1,300 Second Quarter 9,300 14,400 (5,100 ) 9,300 18,100 (8,800 ) 12,700 17,300 (4,600 ) Third Quarter 4,700 11,000 (6,300 ) 5,300 12,600 (7,300 ) 6,400 14,300 (7,900 ) Fourth Quarter 7,900 12,400 (4,500 ) 8,900 14,600 (5,700 ) 11,400 15,800 (4,400 ) Total 39,000 55,600 (16,600 ) 50,000 64,800 (14,800 ) 50,300 65,900 (15,600 ) Customer gains (attrition) as a percentage of home heating oil and propane customer base Fiscal Year Ended 2024 2023 2022 Gross Customer Net Gross Customer Net Gross Customer Net Gains Losses Gains / (Attrition) Gains Losses Gains / (Attrition) Gains Losses Gains / (Attrition) First Quarter 4.3 % 4.5 % (0.2 )% 6.4 % 4.7 % 1.7 % 4.7 % 4.4 % 0.3 % Second Quarter 2.3 % 3.6 % (1.3 )% 2.2 % 4.3 % (2.1 )% 3.0 % 4.1 % (1.1 )% Third Quarter 1.2 % 2.8 % (1.6 )% 1.3 % 3.1 % (1.8 )% 1.5 % 3.4 % (1.9 )% Fourth Quarter 2.0 % 3.1 % (1.1 )% 2.1 % 3.5 % (1.4 )% 2.7 % 3.7 % (1.0 )% Total 9.8 % 14.0 % (4.2 )% 12.0 % 15.6 % (3.6 )% 11.9 % 15.6 % (3.7 )% 30 For fiscal 2024, the Company lost 16,600 accounts (net), or 4.2%, of its home heating oil and propane customer base, compared to 14,800 accounts lost (net), or 3.6%, of its home heating oil and propane customer base, during fiscal 2023.
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, 2019, through 2023, on a quarterly basis, is illustrated in the following chart (price per gallon): Fiscal 2023 (a) Fiscal 2022 Fiscal 2021 Fiscal 2020 Fiscal 2019 Quarter Ended Low High Low High Low High Low High Low High December 31 $ 2.78 $ 4.55 $ 2.06 $ 2.59 $ 1.08 $ 1.51 $ 1.86 $ 2.05 $ 1.66 $ 2.44 March 31 2.61 3.55 2.36 4.44 1.46 1.97 0.95 2.06 1.70 2.04 June 30 2.23 2.73 3.27 5.14 1.77 2.16 0.61 1.22 1.78 2.12 September 30 2.38 3.48 3.13 4.01 1.91 2.34 1.08 1.28 1.75 2.08 a) On November 30, 2023, the NYMEX ultra low sulfur diesel contract closed at $2.83 per gallon.
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, 2020, through 2024, on a quarterly basis, is illustrated in the following chart (price per gallon): Fiscal 2024 (a) Fiscal 2023 Fiscal 2022 Fiscal 2021 Fiscal 2020 Quarter Ended Low High Low High Low High Low High Low High December 31 $ 2.51 $ 3.22 $ 2.78 $ 4.55 $ 2.06 $ 2.59 $ 1.08 $ 1.51 $ 1.86 $ 2.05 March 31 2.53 2.96 2.61 3.55 2.36 4.44 1.46 1.97 0.95 2.06 June 30 2.29 2.77 2.23 2.73 3.27 5.14 1.77 2.16 0.61 1.22 September 30 2.06 2.63 2.38 3.48 3.13 4.01 1.91 2.34 1.08 1.28 a) On November 30, 2024, the NYMEX ultra low sulfur diesel contract closed at $2.19 per gallon.
If these balances do not meet the eligibility tests as found in our sixth amended and restated credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced.
If these balances do not meet the eligibility tests as defined in our credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced.
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. During fiscal 2023, the Company acquired one propane and two heating oil businesses for approximately $19.8 million (using $19.8 million in cash).
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. During fiscal 2024, the Company acquired one propane and four heating oil businesses for approximately $49.4 million in cash.
Distributions for fiscal 2024, at the current quarterly level of $0.1625 per unit, would result in aggregate payments of approximately $23.1 million to Common Unit 38 holders, $1.3 million to our General Partner (including $1.2 million of incentive distribution as provided for in our Partnership Agreement) and $1.2 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.
Distributions for fiscal 2025, at the current quarterly level of $0.1725 per unit, would result in aggregate payments of approximately $23.9 million to Common Unit holders, $1.5 million to our General Partner (including $1.4 million of incentive distribution as provided for in our Partnership Agreement) and $1.4 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.
We are also required to maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30th or September 30th, and no more than 5.5 as of December 31st or March 31st.
We are also required to maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30 th or September 30 th , and no more than 5.5 as of December 31 st or March 31 st .
Gross Profit—Product The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products.
Product volumes and wholesale product cost include heating oil, propane, motor fuels and other petroleum products. Gross Profit—Product The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and motor fuel and other petroleum products.
Amortization of Debt Issuance Costs For fiscal 2023, amortization of debt issuance costs increased to $1.1 million from $1.0 million for fiscal 2022. 34 Income Tax Expense For fiscal 2023, the Company’s income tax expense increased by $0.3 million to $14.0 million, from $13.7 million for fiscal 2022.
Amortization of Debt Issuance Costs For fiscal 2024, amortization of debt issuance costs decreased to $1.0 million from $1.1 million for fiscal 2023. Income Tax Expense For fiscal 2024, the Company’s income tax expense decreased by $0.7 million to $13.3 million, from $14.0 million for fiscal 2023.
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.
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. The Company entered into weather hedge contracts for fiscal years 2023 and 2024.
Under the terms of our sixth amended and restated revolving credit facility agreement, our term loan is repayable in quarterly payments of $4.1 million. We are also required to make an additional term loan repayments due to Excess Cash Flow of approximately $4.0 million in fiscal 2024 (see Note 13 - Long-Term Debt and Bank Facility Borrowings).
Under the terms of our seventh amended and restated revolving credit facility agreement, our term loan is repayable in quarterly payments of $5.3 million. We are not required to make an additional term loan repayments due to Excess Cash Flow in fiscal 2024 (see Note 13 - Long-Term Debt and Bank Facility Borrowings).
Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities, cash on hand as of September 30, 2023 ($45.2 million) or a combination thereof. We believe that these cash sources will also be sufficient to satisfy our capital requirements in the longer-term.
Funding for capital requirements, at least in the near term, are expected to be funded by cash flows from operating activities, cash on hand as of September 30, 2024 ($117.3 million) or a combination thereof. We believe that these cash sources will also be sufficient to satisfy our capital requirements in the longer-term.
In addition, we plan to invest approximately $2.2 million in our propane operations.
In addition, we plan to invest approximately $1.7 million in our propane operations.
Depreciation and Amortization Expenses For fiscal 2023, depreciation and amortization expense decreased $0.2 million, or 0.8%, to $32.4 million, compared to $32.6 million for fiscal 2022, primarily due to lower amortization expense related to intangible assets that fully amortized in the prior fiscal year.
Depreciation and Amortization Expenses For fiscal 2024, depreciation and amortization expense decreased $0.9 million, or 2.6%, to $31.5 million, compared to $32.4 million for fiscal 2023, primarily due to intangible assets that fully amortized in the prior fiscal year.
As of September 30, 2023, we had $0.2 million borrowings under our revolving credit facility, $148.5 million outstanding under our term loan, $3.2 million in letters of credit outstanding and $0.1 million hedge positions were secured under the credit agreement.
As of September 30, 2024, we had less than $0.1 million borrowings under our revolving credit facility, $210.0 million outstanding under our term loan, $5.2 million in letters of credit outstanding and $14.2 million hedge positions were secured under the credit agreement.
As of September 30, 2023, Availability, as defined in the sixth amended and restated revolving credit facility agreement, was $202.1 million and we were in compliance with the financial covenants. Maintenance capital expenditures for fiscal 2024 are estimated to be approximately $11.5 million, excluding the capital requirements for leased fleet which we currently estimate to be $11.7 million.
As of September 30 2024 Availability as defined in the seventh amended and restated revolving credit facility agreement was $166.5 million and we were in compliance with the financial covenants. Maintenance capital expenditures for fiscal 2025 are estimated to be approximately $12.8 million, excluding the capital requirements for leased fleet which we currently estimate to be $13.3 million.
On that basis, home heating oil and propane margins for fiscal 2023 increased by $0.1561 per gallon, or 11.2%, to $1.5496 per gallon, from $1.3935 per gallon during fiscal 2022. We cannot assume that the per gallon margins realized during fiscal 2023 are sustainable for future periods.
On that basis, home heating oil and propane margins for fiscal 2024 increased by $0.1304 per gallon, or 8.4%, to $1.6800 per gallon, from $1.5496 per gallon during fiscal 2023. We cannot assume that the per gallon margins realized during fiscal 2024 are sustainable for future periods.
Cost of Installations and Services Total installation costs for fiscal 2023 decreased by $3.6 million or 3.6%, to $95.2 million, compared to $98.8 million of installation costs for fiscal 2022, primarily due to lower installation revenues. Installation costs as a percentage of installation sales were 83.0% for fiscal 2023 and 81.6% for fiscal 2022.
Cost of Installations and Services Total installation costs for fiscal 2024 increased by $5.7 million or 6.0%, to $100.9 million, compared to $95.2 million of installation costs for fiscal 2023, primarily due to higher installation revenues of $8.8 million. Installation costs as a percentage of installation sales were 81.7% for fiscal 2024 and 83.0% for fiscal 2023.
During fiscal 2022, the Company acquired five heating oil businesses for approximately $15.6 million. 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.
During fiscal 2023, the Company acquired two heating oil businesses and one propane business for approximately $19.8 million. 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.
Acquisitions The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons. Subsequent to September 30, 2023 the Company acquired two heating oil businesses for approximately $2.5 million. During fiscal 2023, the Company acquired two heating oil businesses and one propane business for approximately $19.8 million.
Acquisitions The timing of acquisitions and the types of products sold by acquired companies impact year-over-year comparisons. Subsequent to September 30, 2024 the Company acquired a heating oil business for approximately $0.7 million. During fiscal 2024, the Company acquired one propane and four heating oil businesses for approximately $49.4 million.
The increase was partially offset by a $25.9 million unfavorable change in accounts payable due to the pricing and timing of inventory purchases, an $11.7 million decrease in cash flows from operations, $5.2 million more in payroll taxes paid in the first fiscal quarter of 2023 versus the first fiscal quarter of 2022 as the result of deferring payment of certain payroll tax withholdings in first quarter of fiscal 2021 to the first fiscal quarter of fiscal 2023, and $2.8 million of other net changes in working capital.
The increase was partially offset by a $25.9 million unfavorable change in accounts payable due to the pricing and timing of inventory purchases, an $11.7 million decrease in cash flows from operations, $5.2 million more in payroll taxes paid in the first fiscal quarter of 2023 versus the first fiscal quarter of 2022 as the result of deferring payment of certain payroll tax withholdings in first quarter of fiscal 2021 to the first fiscal quarter of fiscal 2023, and $2.8 million of other net changes in working capital. 38 Investing Activities Our capital expenditures for fiscal 2024 totaled $10.7 million, as we invested in our fleet and other equipment ($6.1 million), refurbished certain physical plants ($2.1 million), expanded our propane operations ($1.2 million) and invested in computer hardware and software ($1.3 million).
The gross purchase price was allocated $10.4 million to intangible assets, $8.0 million to goodwill, $2.3 million to fixed assets, and reduced by $0.9 million in negative working capital.
The gross purchase price was allocated $40.4 million to intangible assets, $13.7 million to goodwill, $4.9 million to fixed assets, and reduced by $9.6 million in negative working capital.
During fiscal 2023, we deposited $1.6 million, and invested another $0.9 million, into an irrevocable trust to secure certain liabilities for our captive insurance company. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet.
During fiscal 2024, $1.7 million of earnings were reinvested into an irrevocable trust to secure certain liabilities for our captive insurance company. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet.
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. 36 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 quarters) when customer payments exceed the cost of deliveries.
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 quarters) when customer payments exceed the cost of deliveries.
The Company evaluates its policies and estimates on an on-going basis. A change in any of these critical accounting policies and estimates could have a material effect on the results of operations. The Company’s Consolidated Financial Statements may differ based upon different estimates and assumptions.
A change in any of these critical accounting policies and estimates could have a material effect on the results of operations. The Company’s Consolidated Financial Statements may differ based upon different estimates and assumptions. The Company’s critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.
A large proportion of our service expenses are incurred under fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues.
In addition, a large proportion of our service expenses are incurred under fixed-fee prepaid service contract arrangements, therefore trends in service expenses may not directly correlate to trends in the related revenues especially given the warmer than normal weather conditions in fiscal 2024 and fiscal 2023.
As of September 30, 2023, we had accounts receivable of $114.1 million of which $69.4 million is due from residential customers and $44.7 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.
As of September 30, 2024, 39 we had accounts receivable of $95.0 million of which $63.5 million is due from residential customers and $31.5 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.
During fiscal 2022, we deposited $1.0 million, and invested another $0.8 million, into an irrevocable trust to secure certain liabilities for our captive insurance company. 37 During fiscal 2022, the Company acquired five heating oil businesses for approximately $15.6 million (using $13.1 million in cash and assuming $2.5 million of liabilities).
During fiscal 2023, we deposited $1.6 million, and invested another $0.9 million, into an irrevocable trust to secure certain liabilities for our captive insurance company. During fiscal 2023, the Company acquired one propane and two heating oil businesses for approximately $19.8 million in cash.
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 Annual Report. 31 Fiscal Year Ended September 30, 2023 Compared to Fiscal Year Ended September 30, 2022 Volume For fiscal 2023, the retail volume of home heating oil and propane sold decreased by 36.9 million gallons, or 12.5%, to 259.2 million gallons, compared to 296.1 million gallons for fiscal 2022.
The following table details sales generated from the assets sold: (in thousands) Year Ended September 30, 2022 Volume: Home heating oil and propane 2,147 Motor fuel and other petroleum products 27 Sales: Petroleum products $ 9,355 Installations and services 1,323 Total Sales $ 10,678 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 Annual Report. 32 Fiscal Year Ended September 30, 2024 Compared to Fiscal Year Ended September 30, 2023 Volume For fiscal 2024, the retail volume of home heating oil and propane sold decreased by 5.8 million gallons, or 2.2%, to 253.4 million gallons, compared to 259.2 million gallons for fiscal 2023.
(in thousands of gallons) Fiscal 2024 Acquisitions Acquisition Number Month of Acquisition Home Heating Oil and Propane Motor Fuel and Other Petroleum Products Total 1 November 1,210 222 1,432 2 November 885 369 1,254 2,095 591 2,686 (in thousands of gallons) Fiscal 2023 Acquisitions Acquisition Number Month of Acquisition Home Heating Oil and Propane Motor Fuel and Other Petroleum Products Total 1 October 556 403 959 2 November 494 — 494 3 August 1,447 — 1,447 2,497 403 2,900 (in thousands of gallons) Fiscal 2022 Acquisitions Acquisition Number Month of Acquisition Home Heating Oil and Propane Motor Fuel and Other Petroleum Products Total 1 October 437 48 485 2 December 741 — 741 3 December 1,768 — 1,768 4 March 1,225 446 1,671 5 April 3,678 166 3,844 7,849 660 8,509 30 Sale of Certain Assets In October 2022 we sold certain assets, which included a customer list of approximately 6,500 customers, for $2.7 million (including a deferred purchase price of $0.5 million).
(in thousands of gallons) Fiscal 2025 Acquisitions Acquisition Number Month of Acquisition Home Heating Oil and Propane Motor Fuel and Other Petroleum Products Total 1 October 709 1,126 1,835 709 1,126 1,835 (in thousands of gallons) Fiscal 2024 Acquisitions Acquisition Number Month of Acquisition Home Heating Oil and Propane Motor Fuel and Other Petroleum Products Total 1 November 1,210 222 1,432 2 November 885 369 1,254 3 February 1,473 1,097 2,570 4 February 1,936 — 1,936 5 September 17,752 — 17,752 23,256 1,688 24,944 (in thousands of gallons) Fiscal 2023 Acquisitions Acquisition Number Month of Acquisition Home Heating Oil and Propane Motor Fuel and Other Petroleum Products Total 1 October 556 403 959 2 November 494 — 494 3 August 1,447 — 1,447 2,497 403 2,900 31 Sale of Certain Assets In October 2022 we sold certain assets, which included a customer list of approximately 6,500 customers, for $2.7 million (including a deferred purchase price of $0.5 million).
Net Income For fiscal 2023, net income decreased $3.4 million, or 9.5%, to $31.9 million, primarily due a $13.5 million decrease in Adjusted EBITDA and a $5.0 million increase in interest expense, that was partially offset by a $15.3 million favorable change in the fair value of derivative instruments.
Net Income For fiscal 2024, net income increased $3.3 million, or 10.3%, to $35.2 million, primarily due to a $14.7 million increase in Adjusted EBITDA, a $3.9 million decrease in interest expense, a $0.9 million decrease in depreciation and amortization expenses and a decrease in income tax expense of $0.7 million that was partially offset by a $17.0 million unfavorable change in the fair value of derivative instruments.
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 fiscal 2023 were the third warmest in the last 123 years in the New York City metropolitan area.
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 fiscal 2024 were less than 0.1% warmer than fiscal 2023 and 15.1% warmer than normal, as reported by NOAA.
Twelve Months Ended September 30, 2023 September 30, 2022 Home Heating Oil and Propane Amount (in millions) Per Gallon Amount (in millions) Per Gallon Volume 259.2 296.1 Sales $ 1,202.2 $ 4.6384 $ 1,170.6 $ 3.9539 Cost $ 800.6 $ 3.0888 $ 758.0 $ 2.5604 Gross Profit $ 401.6 $ 1.5496 $ 412.6 $ 1.3935 Motor Fuel and Other Petroleum Products Amount (in millions) Per Gallon Amount (in millions) Per Gallon Volume 139.0 150.1 Sales $ 448.5 $ 3.2266 $ 527.7 $ 3.5156 Cost $ 403.6 $ 2.9034 $ 481.6 $ 3.2083 Gross Profit $ 44.9 $ 0.3232 $ 46.1 $ 0.3073 Total Product Amount (in millions) Amount (in millions) Sales $ 1,650.7 $ 1,698.3 Cost $ 1,204.2 $ 1,239.6 Gross Profit $ 446.5 $ 458.7 For fiscal 2023, total product gross profit was $446.5 million, which was $12.2 million, or 2.6%, lower than fiscal 2022, as a decrease in home heating oil and propane volume sold ($51.4 million) and a decrease in gross profit from other petroleum products ($1.2 million) was partially offset by the impact of an increase in home heating oil and propane margins ($40.4 million).
Twelve Months Ended September 30, 2024 September 30, 2023 Home Heating Oil and Propane Amount (in millions) Per Gallon Amount (in millions) Per Gallon Volume 253.4 259.2 Sales $ 1,082.0 $ 4.2695 $ 1,202.2 $ 4.6384 Cost $ 656.2 $ 2.5895 $ 800.6 $ 3.0888 Gross Profit $ 425.8 $ 1.6800 $ 401.6 $ 1.5496 Motor Fuel and Other Petroleum Products Amount (in millions) Per Gallon Amount (in millions) Per Gallon Volume 129.1 139.0 Sales $ 366.8 $ 2.8406 $ 448.5 $ 3.2266 Cost $ 324.6 $ 2.5136 $ 403.6 $ 2.9034 Gross Profit $ 42.2 $ 0.3270 $ 44.9 $ 0.3232 Total Product Amount (in millions) Amount (in millions) Sales $ 1,448.8 $ 1,650.7 Cost $ 980.8 $ 1,204.2 Gross Profit $ 468.0 $ 446.5 For fiscal 2024, total product gross profit was $468.0 million, which was $21.5 million, or 4.8%, higher than fiscal 2023, due to an increase in home heating oil and propane margins ($33.2 million) that was partially offset by a decrease in home heating oil and propane volume sold ($9.0 million) and decrease in gross profit from other petroleum products ($2.7 million).
We also paid an additional $2.5 million of debt issuance costs, repaid an additional net balance of $119.4 million under our revolving credit facility, repaid an additional $14.6 million of our term loan, repurchased 3.0 million Common Units for $30.8 million in connection with our unit repurchase plan, and paid distributions of $22.1 million to our Common Unit holders and $1.1 million to our General Partner unit holders (including $1.0 million of incentive distributions as provided in our Partnership Agreement).
We also repurchased approximately 1.0 million Common Units for $11.1 million in connection with our unit repurchase plan, and paid distributions of $23.6 million to our Common Unit holders and $1.4 million to our General Partner unit holders (including $1.3 million of incentive distributions as provided in our Partnership Agreement).
Estimated Depreciation and Amortization Expense (in thousands) Fiscal Year Book Tax 2023 $ 33,434 $ 32,739 2024 28,251 25,263 2025 23,566 22,261 2026 19,182 21,406 2027 17,122 19,534 2028 13,494 18,247 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.
Estimated Depreciation and Amortization Expense (in thousands) Fiscal Year Book Tax 2024 $ 32,461 $ 32,544 2025 29,591 27,645 2026 24,141 25,236 2027 22,029 23,307 2028 18,808 22,309 2029 16,681 19,393 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.
The Company’s critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors. Our significant accounting policies are discussed in Note 2 of the Notes to the Consolidated Financial Statements.
Our significant accounting policies are discussed in Note 2 of the Notes to the Consolidated Financial Statements.
The gross purchase price was allocated $7.3 million to intangible assets, $3.1 million to goodwill, $5.6 million to fixed assets, and reduced by $0.4 million in negative working capital. Financing Activities During fiscal 2023, we repaid $16.5 million of our term loan, borrowed $125.6 million under our revolving credit facility and subsequently repaid $145.6 million.
The gross purchase price was allocated $10.4 million to intangible assets, $8.0 million to goodwill, $2.3 million to fixed assets, and reduced by $0.9 million in negative working capital. Financing Activities During fiscal 2024, we refinanced our five-year term loan and the revolving credit facility with the execution of the seventh amended and restated revolving credit facility agreement.
For fiscal 2022, the Company lost 15,600 accounts (net), or 3.7%, of its home heating oil and propane customer base, compared to 17,000 accounts lost (net), or 3.9%, of its home heating oil and propane customer base, during fiscal 2021.
Gross customer losses were 9,200 accounts lower primarily due to reduction in the number of customer relocations and other factors. For fiscal 2023, the Company lost 14,800 accounts (net), or 3.6%, of its home heating oil and propane customer base, compared to 15,600 accounts lost (net), or 3.7%, of its home heating oil and propane customer base, during fiscal 2022.
As a result for the fiscal 2023 and 2022, the Company reduced delivery and branch expenses for the gains realized under those contracts of $12.5 million and $1.1 million, respectively. The amounts were received in full in April 2023 and April 2022, respectively.
The temperatures experienced during the hedge period through March 31, 2024 and March 31, 2023 were warmer than the strikes in the weather hedge contracts. As a result for fiscal 2024 and 2023, the Company reduced delivery and branch expenses for the gains realized under those contracts of $7.5 million and $12.5 million, respectively.
During fiscal 2022, the change in the fair value of derivative instruments resulted in a $17.3 million charge as an increase in the market value for unexpired hedges (a $4.9 million credit) was more than offset by a $22.2 million charge due to the expiration of certain hedged positions.
(Increase) Decrease in the Fair Value of Derivative Instruments During fiscal 2024, the change in the fair value of derivative instruments resulted in a $19.0 million charge due to a decrease in the market value for unexpired hedges (a $14.6 million charge) and a $4.4 million charge due to the expiration of certain hedged positions.
Recent Accounting Pronouncements Refer to Note 2 – Summary of Significant Accounting Policies for discussion regarding the impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements. 39 Critical Accounting Policy and Critical Accounting Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to establish accounting policies and make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the Consolidated Financial Statements.
Critical Accounting Policy and Critical Accounting Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to establish accounting policies and make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the Consolidated Financial Statements. The Company evaluates its policies and estimates on an on-going basis.
Product Sales For fiscal 2023, product sales decreased $47.6 million, or 2.8%, to $1,650.7 million, compared to $1,698.3 million in fiscal 2022, due to a decrease in total volume sold of 10.8% that was partially offset by a $0.2457 per gallon, or 8.8% increase in wholesale product cost.
Product Sales For fiscal 2024, product sales decreased $201.9 million, or 12.2%, to $1,448.8 million, compared to $1,650.7 million in fiscal 2023, due to a decrease in average selling prices and a decrease in total volume sold of 3.9%. Selling prices decreased largely due to a decrease in wholesale product cost of $0.4602 per gallon, or 15.2%.
Gross profit from installations decreased by $2.7 million due in part to reduced installation sales primarily as a result of the warmer temperatures. Service expense decreased by $1.2 million, or 0.7%, to $182.7 million for fiscal 2023, representing 97.5% of service sales, versus $183.9 million, or 98.2% of service sales, for fiscal 2022.
Gross profit from installations increased by $3.0 million due to an increase in sales dollars and an improvement in the gross profit margin realized on installation sales. Service expense decreased by $0.2 million, or 0.1%, to $182.5 million for fiscal 2024, representing 94.2% of service sales, versus $182.7 million, or 97.5% of service sales, for fiscal 2023.
The increase was driven primarily by permanent tax differences and other items which increased the effective income tax rate from 28.0% for fiscal 2022 to 30.4% for fiscal 2023 that was partially offset by a $3.1 million decline in income before income taxes.
The decrease was driven by a decrease in the effective income tax rate from 30.4% for fiscal 2023 to 27.5% for fiscal 2024 due primarily to a reduction in state taxes and a decrease in valuation allowance that was partially offset by a $2.6 million increase in income before income taxes.
Adjusted EBITDA For fiscal 2023, Adjusted EBITDA decreased by $13.5 million, or 12.2%, to $96.9 million compared to fiscal 2022, as a decrease in home heating oil and propane volume of 36.9 million gallons more than offset an increase in per gallon margins and an $11.4 million higher benefit recorded from the Company’s weather hedge.
Adjusted EBITDA For fiscal 2024, Adjusted EBITDA increased by $14.7 million, or 15.2%, to $111.6 million compared to fiscal 2023, as an increase in home heating oil and propane per gallon margins, an increase in service and installation profitability and the additional Adjusted EBITDA from acquisitions more than offset a reduction in home heating oil and propane volume sold in the base business and a decrease in the weather hedge benefit of $5.0 million year-over-year.
For fiscal 2022 and 2023 we entered into weather hedging contracts under which we were entitled to an annual payment capped at $12.5 million if degree days were less than the Payment Threshold and we were obligated to make an annual payment capped at $5.0 million if degree days exceed the Payment Threshold.
For the contracts applicable to fiscal 2023, we were additionally obligated to make an annual payment capped at $5.0 million if degree days exceeded the Payment Threshold. This obligation does not exist under the contract applicable to fiscal year 2024.
The year-over-year change was driven by an increase in the weighted average interest rate from 3.7% for fiscal 2022 to 6.5% for 2023. To hedge against rising interest rates, the Company utilizes interest rate swaps. At September 30, 2023, approximately 37% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases.
To hedge against rising interest 35 rates, the Company utilizes interest rate swaps. At September 30, 2024, approximately 25% of borrowings under Star's variable-rate long term debt were not subject to interest rate increases as a result of interest rate swaps.
Contractual Obligations and Off-Balance Sheet Arrangements We have no special purpose entities or off balance sheet debt. Long-term contractual obligations, except for our long-term debt and New England Teamsters and Trucking Industry Pension Fund withdrawal obligations and operating leases liabilities, are not recorded in our consolidated balance sheet.
Long-term contractual obligations, except for our long-term debt and New England Teamsters and Trucking Industry Pension Fund withdrawal obligations and operating leases liabilities, are not recorded in our consolidated balance sheet. Non-cancelable purchase obligations are obligations we incur during the normal course of business, based on projected needs. The Company had no capital lease obligations as of September 30, 2024.
General and Administrative Expenses For fiscal 2023, general and administrative expenses increased $0.9 million, or 3.6%, to $25.8 million, compared to $24.9 million for fiscal 2022, due to a $1.6 million increase in the Company's frozen pension expense and $0.6 million of increases in salaries and benefits expenses that were partially offset by a $0.8 million decrease in profit sharing expense and $0.5 million of other net expense decreases.
General and Administrative Expenses For fiscal 2024, general and administrative expenses increased $2.6 million, or 10.2%, to $28.4 million, compared to $25.8 million for fiscal 2023, due to a $0.9 million increase in profit sharing expense, a $0.9 million increase in salaries and benefits expenses and a $0.8 million reduction in the gain on the sale of fixed assets.
Gross profit from service increased $1.3 million. 33 We realized a combined gross profit from services and installations of $24.2 million for fiscal 2023 compared to a combined gross profit of $25.6 million for fiscal 2022, a $1.4 million decrease in profitability.
In both fiscal 2024 and 2023, the demand for service was less than expected due to the warmer than normal weather conditions. We realized a combined gross profit from services and installations of $33.9 million for fiscal 2024 compared to a combined gross profit of $24.2 million for fiscal 2023, a $9.7 million increase in profitability.
Delivery and Branch Expenses For fiscal 2023, delivery and branch expenses increased $0.1 million to $353.6 million, compared to $353.5 million for fiscal 2022, due to a $9.3 million, or 2.7%, increase in expense within the base business and additional costs from acquisitions of $2.2 million, that was partially offset by an $11.4 million higher benefit recorded from the Company’s weather hedge.
Delivery and Branch Expenses For fiscal 2024, delivery and branch expenses increased $12.8 million to $366.4 million, compared to $353.6 million for fiscal 2023. During fiscal 2024, the company recorded a benefit under the weather hedge of $7.5 million compared to a benefit of $12.5 million during fiscal 2023 that accounts for a $5.0 million increase in expense.
The $165 million of proceeds from the new term loan were used to repay the $95.9 million outstanding balance of the term loan and $69.1 million of the $200.2 million of revolving credit facility borrowings under the old credit facility.
This amendment extended our bank facility to September 2029. The $210 million of proceeds from the new term loan were used to repay the $132.1 million outstanding balance of the term loan under the prior credit facility.
The increase in base business expenses was driven by a $4.5 million increase in bad debts and credit card fees, a $2.6 million increase in insurance claims expense, a $2.0 million increase in vehicle fuel expenses due to higher diesel and gasoline costs, and $0.2 million of other net expense increases.
In the base business, a $6.0 million increase in insurance claim costs and premiums and $0.9 million of other net expense increases was partially offset by a $5.5 million, or 5.1% decrease in delivery expenses driven by the 4.2% decline in home heating oil and propane volume sold in the base business.
Installations and Services Sales For fiscal 2023, installation and service sales decreased $6.2 million, or 2.0%, to $302.1 million, compared to $308.3 million for fiscal 2022, as a decrease in installation sales of $6.3 million primarily as a result of the warmer temperatures was partially offset by an increase in service revenue of $0.1 million. 32 Cost of Product For fiscal 2023, cost of product decreased $35.4 million, or 2.9%, to $1,204.2 million, compared to $1,239.6 million for fiscal 2022, due to a decrease in total volume sold of 10.8% that was partially offset by a $0.2457 per gallon, or 8.8%, increase in wholesale product.
The increase was partially driven by $5.2 million of sales generated from recent acquisitions, and the remainder was driven by a concerted effort to expand these offerings to our customers as well as annual price increases. 33 Cost of Product For fiscal 2024, cost of product decreased $223.4 million, or 18.5%, to $980.8 million, compared to $1,204.2 million for fiscal 2023, due to a decrease in wholesale product cost of $0.4602 per gallon, or 15.2% and a decrease in total volume sold of 3.9%.
These cash flow changes were partially offset by a $5.1 million favorable change in accounts payable due to the pricing and timing of inventory purchases, $3.9 million less payroll tax payments ($7.8 million of fiscal 2020 payroll taxes deferred to fiscal 2021, partially offset by $3.9 million more in payroll taxes in the first fiscal quarter of 2022 versus the first fiscal quarter of 2021 as the result of deferring payment of certain payroll tax withholdings in first quarter of fiscal 2021 to the first quarter of fiscal 2023), and $2.1 million of other changes in working capital.
The decrease was driven by a decrease in collection of trade receivables on a comparable basis (including accounts receivable and customer credit balance accounts) of $37.4 million that was partially offset by a $14.2 million increase in cash flows from operations, $5.2 million less payroll taxes paid in the first fiscal quarter of 2024 versus the first fiscal quarter of 2023 as the result of deferring payment of certain payroll tax withholdings in first quarter of fiscal 2021 to the first fiscal quarter of fiscal 2023, a $2.1 million decrease in cash required to purchase product inventory and $3.2 million of other net changes in working capital.
Under the terms of the sixth amended and restated credit agreement, we are required to maintain at all times a fixed charge coverage ratio of not less than 1.0 through February 27, 2024 and 1.15 thereafter if Availability (borrowing base less amounts borrowed and letters of credit issued) is less than 12.5% of the maximum facility size.
Under the terms of the credit agreement, if we permit Availability (as defined in the credit agreement) to be less than the greater of (a) 12.5% of the Line Cap (lesser of the revolving credit facility borrowings and the borrowing base) and (b) $35.0 million, we must maintain a fixed charge coverage ratio of 1.10.
The table below summarizes the payment schedule of our contractual obligations at September 30, 2023 (in thousands): Payments Due by Fiscal Year Total 2024 2025 and 2026 2027 and 2028 Thereafter Debt obligations (a) $ 148,740 $ 20,740 $ 33,000 $ 95,000 $ — Operating lease obligations (b) 113,170 23,271 42,040 27,051 20,808 Purchase obligations and other (c) 61,463 13,839 13,040 5,581 29,003 Interest obligations (d) 31,133 16,078 11,850 3,205 — $ 354,506 $ 73,928 $ 99,930 $ 130,837 $ 49,811 (a) Reflects payments due of debt existing as of September 30, 2023, considering the terms of our sixth amended and restated credit agreement.
The table below summarizes the payment schedule of our contractual obligations at September 30, 2024 (in thousands): Payments Due by Fiscal Year Total 2025 2026 and 2027 2028 and 2029 Thereafter Debt obligations (a) $ 210,005 $ 21,005 $ 42,000 $ 147,000 $ — Operating lease obligations (b) 113,399 25,240 43,459 26,894 17,806 Purchase obligations and other (c) 57,274 12,418 10,594 6,074 28,188 Interest obligations (d) 48,470 13,074 26,294 9,102 — $ 429,148 $ 71,737 $ 122,347 $ 189,070 $ 45,994 (a) Reflects payments due of debt existing as of September 30, 2024, considering the terms of our credit agreement.
Finance Charge Income For fiscal 2023, finance charge income increased by $1.0 million, or 22.4%, to $5.5 million compared to $4.5 million for fiscal 2022, primarily due to higher customer late payment charges. Interest Expense, Net For fiscal 2023, net interest expense increased by $5.0 million, or 48.3%, to $15.5 million compared to $10.5 million for fiscal 2022.
Finance Charge Income For fiscal 2024, finance charge income decreased by $0.9 million, or 17.0%, to $4.6 million compared to $5.5 million for fiscal 2023, due to less late customer payment charges on reduced aged receivables that was partially driven by the reduction in sales.
(d) Reflects interest obligations on our term loan due July 2027 and the unused commitment fee on the revolving credit facility.
(d) Reflects interest obligations on our term loan due September 2029 and the unused commitment fee on the revolving credit facility. Recent Accounting Pronouncements Refer to Note 2 – Summary of Significant Accounting Policies for discussion regarding the impact of accounting standards that were recently issued but not yet effective, on our consolidated financial statements.
DISCUSSION OF CASH FLOWS We use the indirect method to prepare our Consolidated Statements of Cash Flows.
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.
Removed
Under these contracts, we are entitled to a payment if the total number of degree days within the hedge period is less than the applicable “Payment Thresholds,” or strikes.
Added
The hedge period runs from November 1 through March 31, taken as a whole. The “Payment Thresholds,” or strikes, are set at various levels and are referenced against degree days for the prior ten year average. Under these contracts the maximum amount the Company can receive is $12.5 million annually.
Removed
The hedge period ran from November 1 through March 31, taken as a whole, for each respective fiscal year. The temperatures experienced during the hedge period through March 31, 2023 and March 31, 2022 were warmer than the Payment Thresholds in our weather hedge contracts.
Added
The amounts were received in full in April 2024 and April 2023, respectively. For fiscal 2025, the Company entered into weather hedge contracts with the similar hedge period described above.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased on a hypothetical ten percent increase in the cost of product at September 30, 2023, the potential impact on our hedging activity would be to increase the fair market value of these outstanding derivatives by $17.3 million to a fair market value of $27.9 million; and conversely a hypothetical ten percent decrease in the cost of product would decrease the fair market value of these outstanding derivatives by $14.1 million to a fair market value of $(3.5) million.
Biggest changeBased on a hypothetical ten percent increase in the cost of product at September 30, 2024, the potential impact on our hedging activity would be to increase the fair market value of these outstanding derivatives by $7.1 million from $(14.1) million to a fair market value of $(7.0) million; and conversely a hypothetical ten percent decrease in the cost of product would decrease the fair market value of these outstanding derivatives by $5.0 million to a fair market value of $(19.1) million.
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 $0.6 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.
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.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE 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 September 30, 2023, we had outstanding borrowings totaling $148.7 million, of which $93.2 million are subject to variable interest rates under our credit agreement.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We are exposed to interest rate risk primarily through our credit agreement. We utilize these borrowings to meet our working capital needs. At September 30, 2024, we had outstanding borrowings totaling $210.0 million, of which $158.0 million are subject to variable interest rates under our credit agreement.

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