Chris Witty; Investor Relations; Star Group LP
Jeffrey Woosnam; President, Chief Executive Officer, Director of Kestrel Heat, LLC; Star Group LP
Richard Ambury; Chief Financial Officer, Executive Vice President, Treasurer, Secretary of Kestrel Heat, LLC; Star Group LP
Tim Mullen; Analyst; Laurelton Management
Michael Prouting; Analyst; 10K Capital LLC
Operator
(Operator Instructions). I would now like to turn the conference over to Chris Witty, Investor Relations advisor. Please go ahead.
Chris Witty
Thank you and good morning with me on the call. Today are Jeff Woosnam, President and Chief Executive Officer and Richard F. Ambury, Chief Financial Officer. I would now like to provide a brief safe harbor statement. This commerce call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company's actual performance to be materially different from the performance indicated or implied by such statements.
All statements other than statements of historical facts included in this conference call are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable.
It can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the company's expectations are disclosed in this conference call. The company's annual report on form 10-K for the fiscal year ended September 30th 2024.
And the company's other filings with the SEC all subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the risk factors and other cautionary statements contained in the company's disclosures. Unless otherwise required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise after the date of this conference call, I'd now like to turn the call over to Jeff Woosnam.
Jeffrey Woosnam
Thanks Chris and good morning, everyone. The first quarter was a busy one for star due to our acquisition related activities combined with slightly colder temperatures, temperatures were 4.1% colder than the prior year quarter and adjusted EBITDA rose $3 million year over year. Despite our increased workload from a busy quarter, I'm pleased with our overall ability to control expenses as well as our ongoing improvement in the performance and contribution of our service and installation business, increased productivity and efficiency within our base business has been a specific area of focus for our operating team. So, it's quite encouraging to see our work having a positive and meaningful impact on the bottom-line results.
Looking ahead, we are benefiting from colder temperatures thus far in the second quarter. And in fact, January finished 20% colder than last year and 7% colder than normal. Through this period, our employees have been working tirelessly to serve our customers and keep up, keep pace with the added demand.
I'm always delighted to see how well our entire team steps up when it matters the most and I could not be more proud of their efforts.
As previously reported, we completed a sizable strategic acquisition after the quarter ended this further strengthens our propane presence within the company's existing operating footprint. And we're excited to welcome our new employees as well as a quality, well regarded brand to the Star group family.
We'll have to see how the remainder of the heating season progresses, but we remain 100% committed to providing our customers with the outstanding reliability and service they've come to expect. And at the same time, we will continue to focus on operational efficiency and controlling costs. I believe we are well positioned for the remainder of fiscal 2025.
With that, I'll turn the call over to Rich to provide additional comments on the quarter's financial results Rich.
Richard Ambury
Thanks Jeff and good morning, everyone for the quarter. Our home heating oil and propane volume rose by 2 million gallons or 3% to approximately 82 million gallons as the additional volume provided from acquisitions and somewhat colder temperatures was slightly offset by the impact of net customer attrition and other factors. Temperatures for the three months ending December 31st, 2024, were 4% colder than the prior year and 10.5% warmer than normal.
Our product gross profit increased by 5.6 million or 4% to approximately 151 million due to an increase in per gallon margins and higher home heating oil and propane volume sold. We realized that combined gross profit from service and installation of 6.9 million for the three months ending December 31st, 2024, compared to gross profit of 4.4 million in the prior year with a $2.5 million increase due in part to recent acquisitions as well as improvements in the base business branch delivery and G&A expenses increased by 5 million in the first quarter of fiscal 2025. Largely due to recent acquisitions expenses in the base business were largely unchanged.
During the first quarter of fiscal 2025 we recorded a $5 million noncash credit related to the change in fair value of our derivative instruments. By comparison. In the first quarter of fiscal 2024 we recorded a $19 million noncash charge, net income did increase by $20 million in the quarter to $33 million as the favorable noncash change in the fair value of derivative instruments of $24 million and an increase in adjusted EBITDA of 3 million was only partially offset by higher income taxes of $8 million adjusted EBITDA increased by 3 million to $52 million as a $4 million increase in adjusted EBITDA from recent acquisitions and an increase in per gallon margins in the base business. More than offset the impact of 3.8-million-gallon decrease in home heating oil and propane volume sold in the base business. And with that, I'll turn the conversation and call back to Jeff.
Jeffrey Woosnam
Thanks. Thanks, rich at this time. We're pleased to address any questions you may have Wyatt. Please open the phone lines for questions.
Operator
(Operator Instructions) Tim Mullen with Laurelton Management. Please go ahead.
Tim Mullen
Hi, thanks very much. I have two quick questions. One is just curious to hear your views in terms of what's driving the increase in the service and installation, business. I don't know if it was maybe a focus for some of the recent acquisitions, or maybe it's a function of kind of colder weather and that we're requiring more service, you know, services to be completed. And then the second question is just in terms of customer credit didn't seem like there was any dramatic changes in terms of, provisions and write offs, but just curious, anecdotally, if you've seen any weakening in terms of, people's ability to pay and pay on time. Thanks.
Jeffrey Woosnam
Yeah, Tim in regards to service and installation, the improvement in the results. Certainly, there's a component of that rather significant component that's related to recent acquisitions. And that's helped to improve the results overall, but we have also undertaken an initiative internally on our base business to really focus on improving performance, notably productivity, which our employees have really bought into, and we've seen some progress and gain some traction there. And then just also look to every opportunity really to sell more products and services to our existing customers. And that's been a program that has been recently launched that has so far going well for us. So, we're optimistic about that and we'll have to see how it goes, but certainly we're pleased with the results overall.
Richard Ambury
Now with regard to credit. We, yeah, there has been some in the general economy you keep hearing about, weakness and, and credit. I can't say that that that doesn't exist but, you know, to a certain extent, our customers did get a bit of a relief if you will in the quarter. As of course, the product is down and, and selling prices, generally are down this year versus last year because of the lower cost of product, we did sell, a little bit more because it was a bit colder and we had some acquisitions but you know, sales are down even though we die is up because of the lower underlying cost of product.
But you know, we'll have to see after you know how this all settles up at the end of the heating season frankly.
Tim Mullen
Sure. Alright, thanks very much.
Operator
(Operator Instructions) Michael Prouting with 10-K capital. Please go ahead.
Michael Prouting
Morning guys. Congratulations on just terrific execution across the board. Just a couple of questions. So as far as capital allocation is concerned, congratulations on the recent spate of acquisitions. I'm just wondering what your thinking is at this point in terms of your in terms of both, additional further acquisitions, your ability to execute on those and also capital allocation in terms of dividends and share buybacks. Thanks.
Jeffrey Woosnam
So Michael, I would say in terms of capital allocation, we typically wait, when we talk about the distribution, we typically wait until after the heating season to make, any decisions on changes or increase to the to the distribution.
We just want to have a better sense of how the year is progressing. You know, we know we want to, we need to make what we would consider to be replacement acquisitions to replace any business that has, been lost. And then, it really basically boils down to unit repurchases and growth acquisitions and those are decisions we make you know, or make it on a regular basis just in terms of the economics and the return as well as just the timing because as you're aware, some of the most ideal acquisitions and sizable deals aren't always available, they kind of tend to come in chunks. So, it's timing and things that we talk about all the time in terms of what's the best investment for the company.
Michael Prouting
Okay. Terrific. So it doesn't sound like then and obviously, this is a, as I'm sure Rich is wanting to remind us, obviously, it is a decision for the board of directors, but it doesn't sound like the recent acquisitions you've made should prevent further modest increases in the distribution going forward.
Jeffrey Woosnam
Yeah, I would say you're trying to put words in my mouth, but the port will make that decision and, at the next time we get together, which I believe is in April. But we'll have to see Michael.
Michael Prouting
Okay, terrific. Thanks. And, just finally, Jeff, any observations on customer churn, you know, either as a function of the current heating season or acquisitions you've made or just, I guess anything new on the customer care in front. Thanks.
Jeffrey Woosnam
Yeah, I, I'd say reflecting on the first quarter, you know, our customer losses remained in check and in fact, on a percentage basis and a gross basis, we probably had one of our better quarters in a number of years from a loss standpoint.
The gains have been, the new customer editions have continued to be sluggish. I think to some degree that's a reflection of, while the temperatures were slightly cooler than, last year, the prior quarter, last year, but they're still 10% warmer than normal and there was relative price stability in that period.
So, there wasn't as much movement in the marketplace as there was, let's just say in fiscal 2023 in the first quarter that we observed. So those things kind of all combined, for fewer games. In the first quarter, I am pleased to report, and we'll just have to see how the rest of the quarter progresses. But we're off to, you know, a pretty, we've got off to a pretty cold January and it looks like we've got a pretty stable forecast for February and thus far in January, it seems like our new customer additions have, have rebounded a bit, but we'll see how the quarter progresses.
Michael Prouting
Okay, great. Thanks for the updates.
Operator
(Operator Instructions) Jeff Wasman for any closing remarks.
Jeffrey Woosnam
Well, thank you for taking the time to join us today. Your ongoing interest in Star Group. We look forward to sharing our 2025 fiscal second quarter results in May. Thanks everybody.
