STAR GAS PARTNERS, L.P. REPORTS 2004 FISCAL FIRST QUARTER RESULTS DECLARES FIRST QUARTER DISTRIBUTION
STAR GAS PARTNERS, L.P. REPORTS 2004 FISCAL FIRST QUARTER RESULTS DECLARES FIRST QUARTER DISTRIBUTION
January 29, 2004
For the three months ended December 31, 2003, Star's sales increased 12.7% to a record $434 million, from $385 million in the first quarter of fiscal 2003. This was due to both higher energy prices and increased volume as the Partnership's acquisition program more than offset weather that was 10% warmer than the relatively cold first quarter in fiscal 2003.
Operating income for the three months ended December 31, 2003 increased 8.4% to $31.9 million, from $29.4 million for the comparable period in fiscal 2003, despite the first quarter's warmer weather. This was primarily due to: a) the contribution from 12 acquisitions with annual volume of 113 million gallons completed since October 1, 2002; b) heating oil and propane gross profit margins increasing 1.5 cents per gallon; and, c) improved operating expenses and revenues from related products and services resulting from the heating oil division's Business Process Improvement Program. These increases were partially offset by the impact of warm weather.
Net income for the three months ended December 31, 2003 increased 20.4% to $19.3 million, from $16.0 million in the comparable period last year. This was primarily due to the operating income increase referred to above, as well as the adoption in Fiscal 2003 of SFAS No. 142 relating to accounting for goodwill and other intangibles which reduced last year's first quarter net income by $3.9 million, offset during this year's fiscal quarter by an increase in interest expense of $2.5 million. Diluted net income per limited partner unit increased to $0.56, from $0.49 per unit in the comparable period in fiscal 2003. Diluted income per limited partner unit before the impact of SFAS No. 142 was $0.61 for the quarter ended December 31, 2002.
EBITDA for the fiscal 2004 first quarter increased by 21% to $46.4 million, from $38.4 million in the comparable period last year. This EBITDA increase was primarily attributable to the improvement in Star's operating performance and acquisitions, which more than offset the warmer temperatures. The quarter-to-quarter comparison was also impacted by the adoption of SFAS No. 142, which reduced EBITDA by $3.9 million in the fiscal 2003 first quarter.
Star also announced the acquisition of two propane companies with 2,400 customer accounts between them and an aggregate annual volume of 1.0 million gallons.
In commenting on Star's fiscal 2004 first quarter performance, Chairman Irik P. Sevin stated: "We are extremely pleased with this quarter's results as operating income increased approximately 8% despite weather that was 10% warmer than last year and 4% warmer than normal, as reported by the National Oceanic and Atmospheric Administration. This performance resulted primarily from the following three factors: First, the Partnership successfully continues its active but disciplined acquisition program. In fiscal 2003, the Partnership acquired ten companies representing an aggregate of 112 million gallons. Since most of this volume was acquired subsequent to last year's winter heating season, these acquisitions are having a positive effect on fiscal 2004 results, as compared to fiscal 2003. Second, Star was able to continue the expansion, in both the propane and home heating oil segments' per gallon gross profit margins, despite historically high energy prices. Third, for over five years, we have been developing and implementing the heating oil division's Business Process Improvement Program, which was designed to capitalize on that operation's size advantage within the highly fragmented home heating oil industry. While the full benefits of that program have yet to be realized, we are pleased that the Partnership began to achieve some tangible benefits in the first quarter of 2004."
Mr. Sevin added: "We are also pleased that Star was able to improve its liquidity, most recently through the sale of $35 million of long-term notes in January 2004. This offering was executed at approximately 2.25% below the yield on Star's last public note issuance, indicating the public debt markets' favorable view of the Partnership's performance. The proceeds of the offering will be used to repay $18.3 million in note amortizations for fiscal 2004 and amounts borrowed under Star's $100 million bank term loan facilities. As a result of the offering, Star will have approximately $35.0 million outstanding under those facilities leaving $65.0 million available for future uses."
Star Gas Partners, L.P., is a leading distributor of home heating oil, propane and deregulated natural gas and electricity. The Partnership is the nation's largest retail distributor of home heating oil and the nation's seventh largest retail propane distributor. Star, through its wholly owned subsidiary Total Gas & Electric, also sells natural gas and electricity in the Northeast, Mid-Atlantic and Florida.
This news announcement contains certain forward-looking information that is subject to certain risks and uncertainties as indicated from time to time in the Partnership's 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. Included risks and uncertainties are the effects of the weather on the Partnership's financial results, competitive and propane and heating oil pricing pressures and other factors impacting the propane, home heating oil, natural gas and electricity distribution industries.
