(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At ~~July~~April 30, ~~2019,~~2020, the registrant had ~~49,280,628~~45,197,331 Common Units outstanding.

June 30,

September 30,

2019

2018

(in thousands)

(unaudited)

ASSETS

Current assets

Cash and cash equivalents

$
5,717

$
14,531

Receivables, net of allowance of $11,244 and $8,002, respectively

167,292

132,668

Inventories

57,478

56,377

Fair asset value of derivative instruments

-

17,710

Prepaid expenses and other current assets

35,610

35,451

Total current assets

266,097

256,737

Property and equipment, net

97,468

87,618

Goodwill

247,341

228,436

Intangibles, net

110,322

98,444

Restricted cash

250

250

Captive insurance collateral (1)

57,841

45,419

Deferred charges and other assets, net

17,625

13,067

Total assets

$
796,944

$
729,971

LIABILITIES AND PARTNERS’ CAPITAL

Current liabilities

Accounts payable

$
28,254

$
35,796

Revolving credit facility borrowings

70,500

1,500

Fair liability value of derivative instruments

2,418

-

Current maturities of long-term debt

10,000

7,500

Accrued expenses and other current liabilities

145,558

116,436

Unearned service contract revenue

60,560

60,700

Customer credit balances

38,229

61,256

Total current liabilities

355,519

283,188

Long-term debt

84,399

91,780

Deferred tax liabilities, net

14,069

21,206

Other long-term liabilities

25,382

24,012

Partners’ capital

Common unitholders

335,958

329,129

General partner

(1,522
)

(1,303
)
Accumulated other comprehensive loss, net of taxes

(16,861
)

(18,041
)
Total partners’ capital

317,575

309,785

Total liabilities and partners’ capital

$
796,944

$
729,971

~~(1)~~

~~See Note 2 – Summary of Significant Accounting Policies – Captive Insurance Collateral.~~

	March 31,			September 30,
	2020			2019
(in thousands)	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	10,301		$	4,899
Receivables, net of allowance of $9,017 and $8,378, respectively		187,091			120,245
Inventories		52,826			64,788
Prepaid expenses and other current assets		43,319			36,898
Total current assets		293,537			226,830
Property and equipment, net		95,204			98,239
Operating lease right-of-use assets		103,672			—
Goodwill		244,574			244,574
Intangibles, net		98,245			107,688
Restricted cash		250			250
Captive insurance collateral		65,776			58,490
Deferred charges and other assets, net		17,823			16,635
Total assets	$	919,081		$	752,706
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities
Accounts payable	$	23,898		$	33,973
Revolving credit facility borrowings		24,043			24,000
Fair liability value of derivative instruments		14,017			8,262
Current maturities of long-term debt		13,000			9,000
Current portion of operating lease liabilities		19,567			—
Accrued expenses and other current liabilities		158,989			120,839
Unearned service contract revenue		65,176			61,213
Customer credit balances		36,202			68,270
Total current liabilities		354,892			325,557
Long-term debt		116,188			120,447
Long-term operating lease liabilities		89,373			—
Deferred tax liabilities, net		20,229			20,116
Other long-term liabilities		22,444			25,746
Partners’ capital
Common unitholders		334,968			279,709
General partner		(1,792	)		(1,968	)
Accumulated other comprehensive loss, net of taxes		(17,221	)		(16,901	)
Total partners’ capital		315,955			260,840
Total liabilities and partners’ capital	$	919,081		$	752,706

	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended March 31,						Six Months Ended March 31,
(in thousands, except per unit data - unaudited)	2019			2018			2019			2018			2020			2019			2020			2019
Sales:
Product	$	210,657		$	256,447		$	1,306,764		$	1,246,143		$	481,275		$	637,400		$	913,963		$	1,096,107
Installations and services		72,719			70,907			211,221			202,076			61,788			62,182			138,045			138,502
Total sales		283,376			327,354			1,517,985			1,448,219			543,063			699,582			1,052,008			1,234,609
Cost and expenses:
Cost of product		155,055			186,207			876,920			832,280			285,350			415,639			573,023			721,865
Cost of installations and services		62,130			61,770			201,841			195,984			61,273			65,394			134,942			139,711
(Increase) decrease in the fair value of derivative instruments		1,630			(7,515	)		19,268			(7,306	)		11,670			(13,401	)		5,253			17,638
Delivery and branch expenses		82,669			83,312			296,026			281,121			85,463			110,684			182,189			213,357
Depreciation and amortization expenses		8,225			7,941			23,828			23,385			9,089			7,858			18,139			15,603
General and administrative expenses		5,472			5,894			23,136			18,766			5,422			9,849			11,928			17,664
Finance charge income		(1,872	)		(1,438	)		(4,166	)		(3,733	)		(1,321	)		(1,443	)		(2,034	)		(2,294	)
Operating income (loss)		(29,933	)		(8,817	)		81,132			107,722
Operating income														86,117			105,002			128,568			111,065
Interest expense, net		(2,967	)		(2,186	)		(8,677	)		(6,656	)		(2,756	)		(3,194	)		(5,435	)		(5,710	)
Amortization of debt issuance costs		(253	)		(418	)		(756	)		(1,034	)		(253	)		(244	)		(488	)		(503	)
Income (loss) before income taxes		(33,153	)		(11,421	)		71,699			100,032
Income tax expense (benefit)		(10,055	)		(3,416	)		20,157			23,077
Net income (loss)	$	(23,098	)	$	(8,005	)	$	51,542		$	76,955
General Partner’s interest in net income (loss)		(150	)		(49	)		319			445
Limited Partners’ interest in net income (loss)	$	(22,948	)	$	(7,956	)	$	51,223		$	76,510
Income before income taxes														83,108			101,564			122,645			104,852
Income tax expense														24,700			29,239			36,482			30,212
Net income													$	58,408		$	72,325		$	86,163		$	74,640
General Partner’s interest in net income														409			454			601			469
Limited Partners’ interest in net income													$	57,999		$	71,871		$	85,562		$	74,171

Basic and diluted income (loss) per Limited Partner Unit (1):	$	(0.46	)	$	(0.15	)	$	0.86		$	1.18
Basic and diluted income per Limited Partner Unit (1):													$	1.03		$	1.15		$	1.52		$	1.19
Weighted average number of Limited Partner units outstanding:
Basic and Diluted		49,943			53,938			51,431			55,157			46,244			51,427			46,760			52,174

	Three Months Ended June 30,						Nine Months Ended June 30,						Three Months Ended March 31,						Six Months Ended March 31,
(in thousands - unaudited)	2019			2018			2019			2018			2020			2019			2020			2019
Net income (loss)	$	(23,098	)	$	(8,005	)	$	51,542		$	76,955
Net income													$	58,408		$	72,325		$	86,163		$	74,640
Other comprehensive income:
Unrealized gain on pension plan obligation (1)		455			448			1,366			1,344			455			457			910			911
Tax effect of unrealized gain on pension plan obligation		(124	)		(120	)		(373	)		(422	)		(133	)		(125	)		(258	)		(249	)
Unrealized gain (loss) on captive insurance collateral		666			(220	)		1,960			(1,151	)
Tax effect of unrealized gain (loss) on captive insurance collateral		(140	)		46			(416	)		242
Unrealized gain on captive insurance collateral														107			905			43			1,294
Tax effect of unrealized gain on captive insurance collateral														(15	)		(194	)		(7	)		(276	)
Unrealized loss on interest rate hedges		(733	)		—			(1,845	)		—			(1,716	)		(367	)		(1,382	)		(1,112	)
Tax effect of unrealized loss on interest rate hedges		196			—			488			—			460			95			374			292
Total other comprehensive income		320			154			1,180			13
Total comprehensive income (loss)	$	(22,778	)	$	(7,851	)	$	52,722		$	76,968
Total other comprehensive income (loss)														(842	)		771			(320	)		860
Total comprehensive income													$	57,566		$	73,096		$	85,843		$	75,500

	Three Months Ended June 30, 2019																	Three Months Ended March 31, 2020
	Number of Units											Accum. Other			Total			Number of Units											Accum. Other			Total
(in thousands - unaudited)	Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital			Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital
Balance as of March 31, 2019		50,302			326	$	373,748		$	(1,146	)	$	(17,181	)	$	355,421
Net loss		—			—		(22,948	)		(150	)		—			(23,098	)
Balance as of December 31, 2019																			46,404			326	$	289,268		$	(1,991	)	$	(16,379	)	$	270,898
Net income																			—			—		57,999			409			—			58,408
Unrealized gain on pension plan obligation		—			—		—			—			455			455			—			—		—			—			455			455
Tax effect of unrealized gain on pension plan obligation		—			—		—			—			(124	)		(124	)		—			—		—			—			(133	)		(133	)
Unrealized gain on captive insurance collateral		—			—		—			—			666			666			—			—		—			—			107			107
Tax effect of unrealized gain on captive insurance collateral		—			—		—			—			(140	)		(140	)		—			—		—			—			(15	)		(15	)
Unrealized loss on interest rate hedges		—			—		—			—			(733	)		(733	)		—			—		—			—			(1,716	)		(1,716	)
Tax effect of unrealized loss on interest rate hedges		—			—		—			—			196			196			—			—		—			—			460			460
Distributions		—			—		(6,265	)		(226	)		—			(6,491	)		—			—		(5,788	)		(210	)		—			(5,998	)
Retirement of units (1)		(885	)		—		(8,577	)		—			—			(8,577	)		(782	)		—		(6,511	)		—			—			(6,511	)
Balance as of June 30, 2019 (unaudited)		49,417			326	$	335,958		$	(1,522	)	$	(16,861	)	$	317,575
Balance as of March 31, 2020 (unaudited)																			45,622			326	$	334,968		$	(1,792	)	$	(17,221	)	$	315,955


	Three Months Ended June 30, 2018																	Three Months Ended March 31, 2019
	Number of Units											Accum. Other			Total			Number of Units											Accum. Other			Total
(in thousands - unaudited)	Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital			Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital
Balance as of March 31, 2018		54,607			326	$	385,909		$	(743	)	$	(18,906	)	$	366,260
Net loss		—			—		(7,956	)		(49	)		—			(8,005	)
Balance as of December 31, 2018																			52,489			326	$	328,633		$	(1,416	)	$	(17,952	)	$	309,265
Net income																			—			—		71,871			454			—			72,325
Unrealized gain on pension plan obligation		—			—		—			—			448			448			—			—		—			—			457			457
Tax effect of unrealized gain on pension plan obligation		—			—		—			—			(120	)		(120	)
Unrealized loss on captive insurance collateral		—			—		—			—		��	(220	)		(220	)
Tax effect of unrealized loss on captive insurance collateral		—			—		—			—			46			46
Tax effect of unrealized gain on pension plan																			—			—		—			—			(125	)		(125	)
Unrealized gain on captive insurance collateral																			—			—		—			—			905			905
Tax effect of unrealized gain on captive insurance collateral																			—			—		—			—			(194	)		(194	)
Unrealized loss on interest rate hedges																			—			—		—			—			(367	)		(367	)
Tax effect of unrealized loss on interest rate hedges																			—			—		—			—			95			95
Distributions		—			—		(6,344	)		(191	)		—			(6,535	)		—			—		(6,120	)		(184	)		—			(6,304	)
Retirement of units (1)		(1,089	)		—		(10,515	)		—			—			(10,515	)		(2,187	)		—		(20,636	)		—			—			(20,636	)
Balance as of June 30, 2018 (unaudited)		53,518			326	$	361,094		$	(983	)	$	(18,752	)	$	341,359

Balance as of March 31, 2019 (unaudited)																			50,302			326	$	373,748		$	(1,146	)	$	(17,181	)	$	355,421

	Nine Months Ended June 30, 2019																	Six Months Ended March 31, 2020
	Number of Units											Accum. Other			Total			Number of Units											Accum. Other			Total
(in thousands - unaudited)	Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital			Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital
Balance as of September 30, 2018		53,088			326	$	329,129		$	(1,303	)	$	(18,041	)	$	309,785
Impact of adoption of ASU No. 2014-09		—			—		9,164			60			—			9,224
Balance as of September 30, 2019																			47,685			326	$	279,709		$	(1,968	)	$	(16,901	)	$	260,840
Net income		—			—		51,223			319			-			51,542			—			—		85,562			601			—			86,163
Unrealized gain on pension plan obligation		—			—		—			—			1,366			1,366			—			—		—			—			910			910
Tax effect of unrealized gain on pension plan obligation		—			—		—			—			(373	)		(373	)		—			—		—			—			(258	)		(258	)
Unrealized gain on captive insurance collateral		—			—		—			—			1,960			1,960			—			—		—			—			43			43
Tax effect of unrealized gain on captive insurance collateral		—			—		—			—			(416	)		(416	)		—			—		—			—			(7	)		(7	)
Unrealized loss on interest rate hedges		—			—		—			—			(1,845	)		(1,845	)		—			—		—			—			(1,382	)		(1,382	)
Tax effect of unrealized loss on interest rate hedges		—			—		—			—			488			488			—			—		—			—			374			374
Distributions		—			—		(18,610	)		(598	)		—			(19,208	)		—			—		(11,728	)		(425	)		—			(12,153	)
Retirement of units (1)		(3,671	)		—		(34,948	)		—			—			(34,948	)		(2,063	)		—		(18,575	)		—			—			(18,575	)
Balance as of June 30, 2019 (unaudited)		49,417			326	$	335,958		$	(1,522	)	$	(16,861	)	$	317,575
Balance as of March 31, 2020 (unaudited)																			45,622			326	$	334,968		$	(1,792	)	$	(17,221	)	$	315,955


	Nine Months Ended June 30, 2018																	Six Months Ended March 31, 2019
	Number of Units											Accum. Other			Total			Number of Units											Accum. Other			Total
(in thousands - unaudited)	Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital			Common			General Partner		Common			General Partner			Comprehensive Income (Loss)			Partners’ Capital
Balance as of September 30, 2017		55,888			326	$	325,762		$	(929	)	$	(18,765	)	$	306,068
Balance as of September 30, 2018																			53,088			326	$	329,129		$	(1,303	)	$	(18,041	)	$	309,785
Impact of adoption of ASU No. 2014-09																			—			—		9,164			60			—			9,224
Net income		—			—		76,510			445			—			76,955			—			—		74,171			469			—			74,640
Unrealized gain on pension plan obligation		—			—		—			—			1,344			1,344			—			—		—			—			911			911
Tax effect of unrealized gain on pension plan obligation		—			—		—			—			(422	)		(422	)
Unrealized loss on captive insurance collateral		—			—		—			—			(1,151	)		(1,151	)
Tax effect of unrealized loss on captive insurance collateral		—			—		—			—			242			242
Tax effect of unrealized gain on pension plan																			—			—		—			—			(249	)		(249	)
Unrealized gain on captive insurance collateral																			—			—		—			—			1,294			1,294
Tax effect of unrealized gain on captive insurance collateral																			—			—		—			—			(276	)		(276	)
Unrealized loss on interest rate hedges																			—			—		—			—			(1,112	)		(1,112	)
Tax effect of unrealized loss on interest rate hedges																			—			—		—			—			292			292
Distributions		—			—		(18,640	)		(499	)		—			(19,139	)		—			—		(12,345	)		(372	)		—			(12,717	)
Retirement of units (1)		(2,370	)		—		(22,538	)		—			—			(22,538	)		(2,786	)		—		(26,371	)		—			—			(26,371	)
Balance as of June 30, 2018 (unaudited)		53,518			326	$	361,094		$	(983	)	$	(18,752	)	$	341,359
Balance as of March 31, 2019 (unaudited)																			50,302			326	$	373,748		$	(1,146	)	$	(17,181	)	$	355,421

	Nine Months Ended June 30,						Six Months Ended March 31,
(in thousands - unaudited)	2019			2018			2020			2019
Cash flows provided by (used in) operating activities:
Net income	$	51,542		$	76,955		$	86,163		$	74,640
Adjustment to reconcile net income to net cash provided by (used in) operating activities:
(Increase) decrease in fair value of derivative instruments		19,268			(7,306	)		5,253			17,638
Depreciation and amortization		24,584			24,419			18,627			16,106
Provision for losses on accounts receivable		8,500			5,687			3,203			4,968
Change in deferred taxes		(11,206	)		29,641			222			(9,335	)
Change in weather hedge contract receivable/payable								(10,053	)		2,110
Changes in operating assets and liabilities:
Increase in receivables		(34,793	)		(86,504	)		(69,562	)		(159,249	)
Decrease in inventories		1,958			12,390
(Increase) decrease in other assets		9,156			(2,938	)
Increase (decrease) in accounts payable		(7,570	)		5,078
Decrease (increase) in inventories								12,008			(3,741	)
Decrease in other assets								4,812			12,778
Decrease in accounts payable								(8,910	)		(2,364	)
Decrease in customer credit balances		(26,177	)		(36,503	)		(32,462	)		(38,476	)
Increase in other current and long-term liabilities		27,060			9,100			41,574			42,564
Net cash provided by operating activities		62,322			30,019
Net cash provided by (used in) operating activities								50,875			(42,361	)
Cash flows provided by (used in) investing activities:
Capital expenditures		(8,235	)		(8,682	)		(5,684	)		(6,814	)
Proceeds from sales of fixed assets		1,040			325			201			746
Purchase of investments (1)		(10,576	)		(34,840	)
Purchase of investments								(7,218	)		(7,571	)
Acquisitions		(62,807	)		(21,262	)		(496	)		(13,671	)
Net cash used in investing activities		(80,578	)		(64,459	)		(13,197	)		(27,310	)
Cash flows provided by (used in) financing activities:
Revolving credit facility borrowings		139,331			160,104			90,202			139,331
Revolving credit facility repayments		(70,331	)		(118,604	)		(127,659	)		(25,831	)
Loan issuance								130,000			—
Term loan repayments		(5,000	)		(7,500	)		(92,500	)		(2,500	)
Distributions		(19,208	)		(19,139	)		(12,153	)		(12,717	)
Unit repurchases		(34,948	)		(22,538	)		(18,575	)		(26,371	)
Customer retainage payments		(357	)		(918	)		(300	)		(357	)
Payments of debt issue costs		(45	)		-			(1,291	)		(43	)
Net cash provided by (used in) financing activities		9,442			(8,595	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(8,814	)		(43,035	)
Net cash (used in) provided by financing activities								(32,276	)		71,512
Net increase in cash, cash equivalents, and restricted cash								5,402			1,841
Cash, cash equivalents, and restricted cash at beginning of period		14,781			52,708			5,149			14,781
Cash, cash equivalents, and restricted cash at end of period	$	5,967		$	9,673		$	10,551		$	16,622

Star Group, L.P. (“Star,” the “Company,” “we,” “us,” or “our”) is a full service provider specializing in the sale of home heating and air conditioning products and services to residential and commercial home heating oil and propane customers. The Company has ~~one~~1 reportable segment for accounting purposes. We also sell diesel fuel, gasoline and home heating oil on a delivery only basis, and in certain of our marketing areas, we provide plumbing services primarily to our home heating oil and propane customer base. We believe we are the nation’s largest retail distributor of home heating oil based upon sales volume. Including our propane locations, we serve customers in the more northern and eastern states within the Northeast, Central and Southeast U.S. regions.

The Consolidated Financial Statements include the accounts of Star and its subsidiaries. All material intercompany items and transactions have been eliminated in consolidation.

The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair statement of financial condition and results for the interim periods. Due to the seasonal nature of the Company’s business, the results of operations and cash flows for the ~~nine-month~~six-month period ended ~~June 30, 2019~~March 31, 2020 are not necessarily indicative of the results to be expected for the full year.

These interim financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (the “SEC”) and should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2018.~~2019.

Comprehensive income ~~(loss)~~ is comprised of Net income ~~(loss)~~ and Other comprehensive income (loss). Other comprehensive income (loss) consists of the unrealized gain on amortization on the Company’s pension plan obligation for its two frozen defined benefit pension plans, unrealized gain ~~(loss)~~ on available-for-sale investments, unrealized ~~gain (loss)~~loss on interest rate hedge and the corresponding tax effects.

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. At ~~June 30, 2019,~~March 31, 2020, the ~~$6.0~~$10.6 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of ~~$5.7~~$10.3 million of cash and cash equivalents and $0.3 million of restricted cash. At September 30, ~~2018,~~2019, the ~~$14.8~~$5.1 million of cash, cash equivalents, and restricted cash on the Condensed Consolidated Statements of Cash Flows is composed of ~~$14.5~~$4.9 million of cash and cash equivalents and $0.3 million of restricted cash. Restricted cash represents deposits held by our captive insurance company that are required by state insurance regulations to remain in the captive insurance company as cash.

The captive insurance collateral is held by our captive insurance company in an irrevocable trust as collateral for certain workers’ compensation and automobile liability claims. The collateral is required by a third party insurance carrier that insures per claim amounts above a set deductible. If we did not deposit cash into the trust, the third party carrier would require that we issue an equal amount of letters of credit, which would reduce our availability under the fifth amended and restated credit agreement. Due to the expected timing of claim payments, the nature of the collateral agreement with the carrier, and our captive insurance company’s source of other operating cash, the collateral is not expected to be used to pay obligations within the next twelve months.

At ~~June 30, 2019,~~March 31, 2020, captive insurance collateral is comprised of ~~$57.3~~$60.2 million of Level 1 debt securities measured at fair value and ~~$0.5~~$5.6 million of mutual funds measured at net asset value. At September 30, ~~2018,~~2019, the balance was comprised of ~~$44.8~~$58.0 million of Level 1 debt securities measured at fair value and ~~$0.6~~$0.5 million of mutual funds measured at net asset value. Unrealized gains and losses, net of related income taxes, are reported as accumulated other comprehensive gain (loss), except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net income and are included in Interest expense, net, at which time the average cost basis of these securities are adjusted to fair value.

To partially mitigate the adverse effect of warm weather on cash flows, the Company has used weather hedge contracts for a number of years. Weather hedge contracts are recorded in accordance with the intrinsic value method defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-45-15 Derivatives and Hedging, Weather Derivatives (EITF 99-2). The premium paid is included in the caption “Prepaid expenses and other current assets” in the accompanying balance sheets and amortized over the life of the contract, with the intrinsic value method applied at each interim period.

The Company entered into weather hedge contracts for fiscal years ~~2018,~~ 2019, 2020 and 2021. Under these contracts, we are entitled to receive a payment if the total number of degree days within the hedge period is less than the prior ten year average. The “Payment Thresholds,” or strikes, are set at various levels. In addition, we will be obligated to make a payment capped at $5.0 million if degree days exceed the Payment Threshold which approximates the prior ten year average. The hedge period runs from November 1 through March 31, taken as a whole, for each respective fiscal year. For fiscal ~~2019,~~ 2020 and 2021 the maximum that the Company can receive annually is $12.5 million and the maximum that the Company would be obligated to pay annually is $5.0 million. As of ~~June 30,~~March 31, 2020, the Company reduced delivery and branch expense and recorded a receivable under these contracts of $10.1 million, and received the amount in full in April 2020. As of March 31, 2019, the Company ~~recorded a charge of $2.1 million under this contract that~~ increased delivery and branch ~~expenses. As of June 30, 2018, the Company~~expense and recorded a ~~charge~~payable under these contracts of ~~$1.9 million under its contract. The Company paid~~ $2.1 million, and ~~$1.9 million~~paid the amount in full in April ~~2019 and 2018, respectively.~~2019.

New England Teamsters and Trucking Industry Pension Fund (“the NETTI Fund”) Liability

As of ~~June 30, 2019,~~March 31, 2020, we had $0.2 million and ~~$17.0~~$16.8 million balances included in the captions “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, on our Condensed Consolidated Balance Sheet representing the remaining balance of the NETTI Fund withdrawal liability. Based on the borrowing rates currently available to the Company for long-term financing of a similar maturity, the fair value of the NETTI Fund withdrawal liability as of ~~June~~March 31, 2020 and September 30, 2019 was ~~$20.4 million.~~$29.4 million and $21.1 million, respectively. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of this liability.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB has also issued several updates to ASU No. 2014-09. The Company adopted ASU No. 2014-09 effective October 1, 2018 by using the modified retrospective method and recognized the cumulative effect of initially applying ASU No. 2014-09 as an adjustment to the opening balance of Partners’ Capital at October 1, 2018. The historical periods have not been adjusted and continue to be reported under ASC No. 605, Revenue Recognition. We have applied the guidance in ASU No. 2014-09 retrospectively to all contracts and have elected not to account for significant financing components if the period between revenue recognition and when the customer pays for product, service, or equipment installation will be one year or less. ~~See further detail on the impact of the adoption~~

~~on our condensed consolidated balance sheet and statement of operations as of and for the three and nine months ended June 30, 2019 at Note 3 – Revenue Recognition.~~

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flow (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update addresses the issues of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. The Company adopted ASU No. 2016-15 effective October 1, 2018. The adoption of ASU No. 2016-15 did not have an impact on the Company’s consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted ASU No. 2017-01 effective October 1, 2018. The adoption of ASU No. 2017-01 did not have an impact on the Company’s consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, ~~Leases.~~Leases (“ASC Topic 842”). The update requires all leases with a term greater than twelve months to be recognized on the balance sheet by ~~calculating~~recording (1) a lease liability that represents a lessee’s obligation to make lease payments arising from a lease, measured at the ~~discounted~~ present value of ~~such leases~~the remaining lease payments; and ~~accounting for them through~~(2) a right-of-use (“ROU”) asset ~~and~~that represents the lessee’s right to use a specified asset for the lease term, measured in an ~~offsetting~~amount equal to the lease liability ~~and~~adjusted for accrued lease payments. The standard also requires the disclosure of key information pertaining to leasing arrangements. ~~This new guidance is effective for our annual reporting period beginning in~~

As of October 1, 2019, the ~~first quarter of fiscal 2020, with early adoption permitted. The~~ Company ~~does not intend to early adopt. The Company is continuing to evaluate the effect that ASU No. 2016-02 could have on its consolidated financial statements and related disclosures and plans to adopt~~ adopted ASC Topic 842 using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11. As a result, the Company was not required to adjust its comparative period financial information for ~~leases that exist in~~effects of the ~~period of adoption and recognize~~standard or make the ~~cumulative effect of initially applying ASU No. 2016-02 as an adjustment to the opening balance of Partners’ Capital at October 1, 2019. As of~~new required lease disclosures for periods before the date of adoption ~~the~~(i.e. October 1, 2019). The Company ~~expects~~has elected to ~~elect~~adopt the package of transition practical expedients ~~that permit the Company to forego reassessing the Company’s prior conclusions about (i)~~and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, ~~identification, (ii)~~(2) lease classification ~~and (iii)~~for existing or expired leases or (3) the accounting for initial direct ~~costs. The Company~~costs that were previously capitalized. We also ~~plans to elect~~elected a practical expedient to not separate non-lease components from the lease ~~components.~~ components and excluded short term leases from the calculation of right of use asset and operating lease liability. For certain leases relating to vehicles and equipment we elected to apply portfolio approach guidance and accounted for leases with similar characteristics as a single lease. The ~~new guidance will materially change how we account~~Company did not elect the practical expedient to use hindsight for ~~operating~~ leases ~~for office space, trucks and other equipment. Upon~~existing at the adoption ~~we expect~~date.

The adoption of ASC Topic 842 had a material impact to ~~recognize discounted~~the Company’s Condensed Consolidated Balance Sheet, but did not impact the Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Partners’ Capital. The most significant changes to the Condensed Consolidated Balance Sheet relate to the recognition of the following as of October 1, 2019: “Operating lease right-of-use assets and offsetting lease liabilities related to our operating leases of office space, trucks and other equipment. As of June 30, 2019, the undiscounted future minimum lease payments through 2033 for such operating leases are approximately $125.5 million, butassets” in the amount of ~~leasing activity expected between June 30, 2019,~~$104.7 million, “Current portion of operating lease liabilities” in the amount of $20.1 million and “Long-term operating lease liabilities” in the ~~date~~amount of $89.9 million. The adoption ~~as well as~~of ASC Topic 842 also had no impact on operating, investing, or financing cash flows in the ~~impact~~Condensed Consolidated Statement of ~~market conditions on discount rates is unknown. For these reasons we are unable to estimate~~Cash Flows. However, ASC Topic has significantly affected the ~~discounted right-of-use assets and lease liabilities~~Company’s disclosures about noncash investing activities. Additionally, the Company’s lease-related disclosures have significantly increased as of and for the ~~date~~six months ended March 31, 2020 as compared to prior years. See Note 13 – Leases for further details on the adoption of ASC Topic 842.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The Company adopted the ASU effective March 12, 2020. The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. The Company has $66.5 million of interest rate swap agreements at March 31, 2020 that are benchmarked against LIBOR, which the Company has designated as cash flow hedging derivatives. This guidance includes practical expedients for contract modifications due to reference rate reform. The Company has elected to adopt the practical expedient that the Company may change the contractual terms of the interest rate swap agreements that is expected to be affected by reference rate reform and not be required to de-designate the hedging relationship. The adoption. did not have an impact on the Company’s consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. The update broadens the information that an entity should consider in developing expected credit loss estimates, eliminates the probable initial recognition threshold, and allows for the immediate recognition of the full amount of expected credit losses. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal ~~2021, with early adoption permitted in the first quarter of fiscal 2020.~~2021. The Company is evaluating the effect that ASU No. 2016-13 will have on its consolidated financial statements and related ~~disclosures, but has not yet determined the timing of adoption.~~disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 230): Simplifying the Test for Goodwill Impairment. The update simplifies how an entity is required to test goodwill for impairment. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not exceed the total amount of goodwill allocated to the reporting unit. This new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company has not determined the timing of adoption, but does not expect ASU 2017-04 to have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2021, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-14 will have on its consolidated financial statements and related disclosures, ~~but~~and has not determined the timing of adoption.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements

for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance is effective for our annual reporting period beginning in the first quarter of fiscal 2022, with early adoption permitted. The Company is evaluating the effect that ASU No. 2018-15 will have on its consolidated financial statements and related disclosures, ~~but~~and has not determined the timing of adoption.

Effective October 1, 2018 we adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The adoption was not material to the financial statements presented. In accordance with the new revenue standard requirements, our Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheet were impacted due to: i) the deferment of commissions provided to Company employees that were previously expensed as incurred, ii) the deferment of certain ~~upfront credits~~ provided to customers upon entering into a new annual product or service contract as contra-revenue that were previously expensed as incurred and recorded as delivery and branch expense, and iii) the allocation of transaction price of the combination of certain contracts that were previously accounted for as separate contracts that impacts the classification of revenue and timing of revenue recognition. The impact of adoption on our Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations, as of and for the three and nine months ended June 30, 2019 was as follows (in thousands):

For the Three Months Ended June 30, 2019

For the Nine Months Ended June 30, 2019

Statement of Operations
As Reported

Balances without Adoption of ASC 606

Effect of
Change
Higher/(Lower)

As Reported

Balances without Adoption of ASC 606

Effect of
Change
Higher/(Lower)

Sales:

      Product
$
210,657

$
212,249

$
(1,592
)

$
1,306,764

$
1,317,809

$
(11,045
)
      Installations and services

72,719

70,975

1,744

211,221

206,244

4,977

           Total Sales

283,376

283,224

152

1,517,985

1,524,053

(6,068
)
Cost and Expenses:

      Delivery and branch expenses

82,669

82,432

237

296,026

298,804

(2,778
)
      Operating income (loss)

(29,933
)

(29,848
)

(85
)

81,132

84,422

(3,290
)
      Income (loss) before income taxes

(33,153
)

(33,068
)

(85
)

71,699

74,989

(3,290
)
Income tax expense (benefit)

(10,055
)

(10,053
)

(2
)

20,157

21,082

(925
)
     Net income (loss)
$
(23,098
)

$
(23,015
)

$
(83
)

$
51,542

$
53,907

$
(2,365
)
          General Partner's interest in net income (loss)

(150
)

(149
)

(1
)

319

334

(15
)
Limited Partner's interest in net income (loss)
$
(22,948
)

$
(22,866
)

$
(82
)

$
51,223

$
53,573

$
(2,350
)

Basic and diluted income (loss) per Limited Partner Unit
$
(0.46
)

$
(0.46
)

$
-

$
0.86

$
0.90

$
(0.04
)

The following disaggregates our revenue by major sources for the three and ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 and ~~June 30, 2018:~~March 31, 2019:

Petroleum product revenues consist of home heating oil and propane as well as diesel fuel and gasoline. Revenues from petroleum products are recognized at the time of delivery to the customer when control is passed from the Company to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring control of the petroleum products. Approximately 94% of our full service residential and commercial home heating oil customers automatically receive deliveries based on prevailing weather conditions. We offer several pricing alternatives to our residential home heating oil customers, including a variable price (market based) option and a price-protected option, the latter of which either sets the maximum price or a fixed price that a customer will pay.

Equipment maintenance service contracts primarily cover heating, air conditioning, and natural gas equipment. We generally do not sell equipment maintenance service contracts to heating oil customers that do not take delivery of product from us. The service contract period of our equipment maintenance service contracts is generally one year or less. Revenues from equipment maintenance service contracts are recognized into income over the terms of the respective service contracts, on a straight-line basis. Our obligation to perform service is consistent through the duration of the contracts, and the straight-line basis of recognition is a faithful depiction of the transfer of our services. To the extent that the Company anticipates that future costs for fulfilling its contractual obligations under its equipment service contracts will exceed the amount of deferred revenue currently attributable to these contracts, the Company recognizes a loss in current period earnings equal to the amount that anticipated future costs exceed related deferred revenues.

Revenue from billable call services (repairs, maintenance and other services including plumbing) and equipment installations (heating, air conditioning, and natural gas equipment) are recognized at the time that the work is performed.

~~Our standard payment terms are generally 30 days. Sales reported for product, installations and services exclude taxes assessed by various governmental authorities.~~

We have elected to recognize incremental costs of obtaining a contract, other than new residential product and equipment maintenance service contracts, as an expense when incurred when the amortization period of the asset that we otherwise would have recognized is one year or less. We recognize an asset for incremental commission expenses paid to sales personnel in conjunction with obtaining new residential customer product and equipment maintenance service contracts. We defer these costs only when we have determined the commissions are, in fact, incremental and would not have been incurred absent the customer contract. Costs to obtain a contract are amortized and recorded ratably as delivery and branch expenses over the period representing the transfer of goods or services to which the assets relate. Costs to obtain new residential product and equipment maintenance service contracts are amortized as expense over the estimated customer relationship period of approximately five years. Deferred contract costs are classified as current or non-current within “Prepaid expenses and other current assets” and “Deferred charges and other assets, net,” respectively. At ~~June~~March 31, 2020 the amount of deferred contract costs included in “Prepaid expenses and other current assets” and “Deferred charges and other assets, net” was $3.5 million and $6.3 million, respectively. At September 30, 2019 the amount of deferred contract costs included in “Prepaid expenses and other current assets” and “Deferred charges and other assets, net” was ~~$3.5~~$3.4 million and ~~$6.1~~$5.9 million, respectively. ~~We recognize an impairment charge to~~During the extent the carrying amount of a deferred cost exceeds the remaining amount of consideration we expect to receive in exchange for the petroleum products and services related to the cost, less the expected costs related directly to providing those petroleum products and services that have not yet been recognized as expenses. There have been no impairment charges recognized for the ninesix months ended ~~June 30, 2019.~~

~~Significant Judgments – Allocation~~March 31, 2020 and 2019 we recognized expense of ~~Transaction Price to Separate Performance Obligations~~

~~Our contracts~~$1.9 million each period associated with ~~customers often include distinct performance obligations to transfer products~~the amortization of deferred contract costs within “Delivery and ~~perform equipment maintenance services to a customer that are accounted for separately. Judgment is required to determine~~branch expenses” in the ~~stand-alone selling price for each distinct performance obligation for the purpose~~Condensed Consolidated Statement of allocating the transaction price to separate performance obligations. We determine the stand-alone selling price using information that may include market conditions and other observable inputs and typically have more than one stand-alone selling price for petroleum products and equipment maintenance services due to the stratification of those products and services by geography and customer characteristics.Operations.

The Company has contract liabilities for advanced payments received from customers for future oil deliveries (primarily amounts received from customers on “smart pay” budget payment plans in advance of oil deliveries) and obligations to service customers with equipment maintenance service contracts. Approximately 34% of our residential customers take advantage of our “smart pay” budget payment plan under which their estimated annual oil and propane deliveries and service contract billings are paid for in a series of equal monthly installments. Our “smart pay” budget payment plans are annual and generally begin outside of the heating season. We generally have received advanced amounts from customers on “smart pay” budget payment plans prior to the heating season, which are reduced as oil deliveries are made. For customers that are not on “smart pay” budget payment plans, we generally receive the full contract amount for equipment service contracts with customers at the outset of the contracts. Contract liabilities are recognized straight-line over the service contract period, generally ~~one-year~~one year or less. As of ~~June 30, 2019~~March 31, 2020 and September 30, ~~2018~~2019 the Company had contract liabilities of ~~$94.3~~$97.2 million and ~~$118.6~~$127.0 million, respectively. During the ~~nine~~six months ended ~~June~~March 31, 2020 the Company recognized $95.7 million of revenue that was included in the September 30, 2019 contract liability balance.During the six months ended March 31, 2019 the Company recognized ~~$104.6~~$90.3 million of revenue that was included in the September 30, 2018 contract liability balance.

In July 2012, the Board adopted a plan to repurchase certain of the Company’s Common Units that was amended in fiscal 2018 (the “Repurchase Plan”). ~~Under~~Through the beginning of February 2020, the Company had repurchased approximately 11.8 million Common Units under the Repurchase ~~Plan, as amended,~~Plan. In February 2020, the Board authorized an increase of the ~~repurchase~~number of ~~10.9 million~~ Common Units ~~of which, 8.4 million were~~that remained available for the Company to repurchase to a total of 1.1 million, of which 1.0 million were available for repurchase in open market transactions and ~~2.5~~0.1 million were available for repurchase in privately-negotiated transactions. ~~As of~~During the ~~end of the third~~second fiscal quarter of ~~2019,~~2020, the Company repurchased approximately ~~8.0~~0.8 million Common Units in open market transactions under the Repurchase Plan and ~~1.2~~repurchased 0.4 million Common Units in ~~privately-negotiated transactions under the Repurchase Plan.~~April 2020. There is no guarantee of the exact number of units that will be purchased under the ~~program~~Repurchase Plan and the Company may discontinue purchases at any time. The ~~program~~Repurchase Plan does not have a time limit. The Board may also approve additional purchases of units from time to time in private transactions. The Company’s repurchase activities take into account SEC safe harbor rules and guidance for issuer repurchases. All of the Common Units purchased in the ~~repurchase program~~Repurchase Plan will be retired.

Under the Company’s ~~fourth~~fifth amended and restated credit agreement dated ~~July 2, 2018,~~December 4, 2019, in order to repurchase Common Units we must maintain Availability (as defined in the ~~fourth~~fifth amended and restated credit agreement) of $45 million, 15.0% of the facility size of $300 million (assuming the non-seasonal aggregate commitment is outstanding) on a historical pro forma and forward-looking basis, and a fixed charge coverage ratio of not less than 1.15 measured as of the date of repurchase. The Company was in compliance with this covenant as of ~~June 30, 2019.~~March 31, 2020.

(in thousands, except per unit amounts)

Period

Total Number of
Units Purchased

Average Price
Paid per Unit (a)

Total Number of
Units Purchased as Part of Publicly Announced Plans or Programs

Maximum Number
of Units that May
Yet Be Purchased

Fiscal year 2012 to 2018 total

7,937

$
7.11

5,493

5,359

First quarter fiscal year 2019 total

599

$
9.57

599

4,760

Second quarter fiscal year 2019 total (b)

2,187

$
9.44

2,187

2,573

April 2019

222

$
9.67

222

2,351

May 2019

552

$
9.67

552

1,799

June 2019

111

$
9.78

111

1,688

Third quarter fiscal year 2019 total

885

$
9.68

885

1,688

July 1, 2019 through July 30, 2019

136

$
9.76

136

1,552

(c)

(in thousands, except per unit amounts)
Period	Total Number of Units Purchased		Average Price Paid per Unit (a)		Total Number of Units Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Units that May Yet Be Purchased
Fiscal year 2012 to 2019 total		13,340	$	8.08		10,896		956

First quarter fiscal year 2020 total		1,281	$	9.42		650		306	(b)

January 2020		160	$	9.48		160		146
February 2020		122	$	9.15		122		1,024	(c)
March 2020		500	$	7.76		500		524
Second quarter fiscal year 2020 total		782	$	8.33		782		524

April 2020		424	$	7.71		424		100	(d)

The Company considers all of its captive insurance collateral to be available-for-sale investments. Investments at ~~June~~March 31, 2020 consist of the following (in thousands):

	Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Fair Value
Cash and Receivables	$	509	$	—	$	—		$	509	$	509	$	—	$	—		$	509
U.S. Government Sponsored Agencies		27,593		185		(4	)		27,774		29,055		198		(3	)		29,250
Corporate Debt Securities		24,904		536		—			25,440		23,831		773		—			24,604
Foreign Bonds and Notes		4,079		39		—			4,118		4,066		61		—			4,127
Total	$	57,085	$	760	$	(4	)	$	57,841	$	57,461	$	1,032	$	(3	)	$	58,490

~~Investments at September 30, 2018 consist of the following (in thousands):~~13

Maturities of investments were as follows at ~~June 30, 2019~~March 31, 2020 (in thousands):

	Net Carrying Amount		Net Carrying Amount
Due within one year	$	8,027	$	14,402
Due after one year through five years		35,554		42,552
Due after five years through ten years		14,260		8,822
Total	$	57,841	$	65,776

The Company uses derivative instruments such as futures, options and swap agreements in order to mitigate exposure to market risk associated with the purchase of home heating oil for price-protected customers, physical inventory on hand, inventory in transit, priced purchase commitments and internal fuel usage. FASB ASC 815-10-05 Derivatives and Hedging, established accounting and reporting standards requiring that derivative instruments be recorded at fair value and included in the consolidated balance sheet as assets or liabilities, along with qualitative disclosures regarding the derivative activity. The Company has elected not to designate its commodity derivative instruments as hedging derivatives, but rather as economic hedges whose change in fair value is recognized in its statement of operations in the caption “(Increase) decrease in the fair value of derivative instruments.” Depending on the risk being economically hedged, realized gains and losses are recorded in cost of product, cost of installations and services, or delivery and branch expenses.

As of ~~June 30,~~March 31, 2020, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: 8.9 million gallons of swap contracts, 5.3 million gallons of call options, 4.0 million gallons of put options, and 52.8 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of March 31, 2020, held 32.6 million gallons of long future contracts, and 52.1 million gallons of short future contracts that settle in future months. To hedge its internal fuel usage and other activities for fiscal 2020, the Company, as of March 31, 2020, held 7.3 million gallons of call options and swap contracts and 0.2 million gallons of short swap contracts that settle in future months.

As of March 31, 2019, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: ~~6.9~~7.2 million gallons of swap contracts, ~~3.6~~2.2 million gallons of call options, ~~3.1~~3.4 million gallons of put options, and ~~58.6~~54.9 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of ~~June 30,~~March 31, 2019, ~~had 1.3 million gallons of long swap contracts, 55.4~~held 33.1 million gallons of long future contracts, and 71.5 million gallons of short future contracts that settle in future months. To hedge its internal fuel usage and other activities for fiscal 2019, the Company, as of June 30, 2019, had 7.8 million gallons of swap contracts and 0.7 million gallons of short swap contracts that settle in future months.

As of June 30, 2018, to hedge a substantial majority of the purchase price associated with heating oil gallons anticipated to be sold to its price-protected customers, the Company held the following derivative instruments that settle in future months to match anticipated sales: 8.4 million gallons of swap contracts, 3.2 million gallons of call options, 3.8 million gallons of put options, and 60.4 million net gallons of synthetic call options. To hedge the inter-month differentials for its price-protected customers, its physical inventory on hand and inventory in transit, the Company, as of June 30, 2018, had 0.4 million gallons of long swap contracts, 53.6 million gallons of long future contracts, and 64.250.8 million gallons of short future contracts that settle in future months. To hedge its internal fuel usage and other related activities for fiscal ~~2018,~~2019, the Company, as of ~~June 30, 2018, had 3.1~~March 31, 2019, held 1.8 million gallons of swap contracts and 0.8 million gallons of short swap contracts that settle in future months.

~~In August 2018,~~As of March 31, 2020, the Company ~~entered into~~has interest rate swap agreements in order to mitigate exposure to market risk associated with variable rate interest on ~~$50.0~~$66.5 million, or ~~50%~~51%, of its long term debt. The Company has designated its interest rate swap agreements as cash flow hedging derivatives. To the extent these derivative instruments are effective and the accounting standard’s documentation requirements have been met, changes in fair value are recognized in other comprehensive income until the underlying hedged item is recognized in earnings. As of ~~June 30, 2019,~~March 31, 2020 the fair value of the swap contracts was ~~$(1.8 million).~~$(3.3) million. As of September 30, ~~2018,~~2019, the notional value of the swap contracts was $45.0 million and the fair value of the swap contracts was ~~$39 thousand.~~$(2.0) million. We utilized Level 2 inputs in the fair value hierarchy of valuation techniques to determine the fair value of the swap contracts.

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., ~~Regions Financial Corporation,~~ Toronto-Dominion Bank and Wells Fargo Bank, N.A. The Company assesses counterparty credit risk and considers it to be low. We maintain master netting arrangements that allow for the non-conditional offsetting of amounts receivable and payable with counterparties to help manage our risks and record derivative positions on a net basis. The Company generally does not receive cash collateral from its counterparties and does not restrict the use of cash collateral it maintains at counterparties. At ~~June 30, 2019,~~March 31, 2020, the aggregate cash posted as collateral in the normal course of business at counterparties was $1.8 million and recorded in “Prepaid expense and other current assets.” Positions with counterparties who are also parties to our credit agreement are collateralized under that facility. As of ~~June 30, 2019, $3.4~~March 31, 2020, $18.6 million of hedge positions and payable amounts were secured under the credit facility.

FASB ASC 820-10 Fair Value Measurements and Disclosures, established a three-tier fair value hierarchy, which classified the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The Company’s Level 1 derivative assets and liabilities represent the fair value of commodity contracts

used in its hedging activities that are identical and traded in active markets. The Company’s Level 2 derivative assets and liabilities represent the fair value of commodity and interest rate contracts used in its hedging activities that are valued using either directly or indirectly observable inputs, whose nature, risk and class are similar. No significant transfers of assets or liabilities have been made into and out of the Level 1 or Level 2 tiers. All derivative instruments were non-trading positions and were either a Level 1 or Level 2 instrument. The Company had no Level 3 derivative instruments. The fair market value of our Level 1 and Level 2 derivative assets and liabilities are calculated by our counter-parties and are independently validated by the Company. The Company’s calculations are, for Level 1 derivative assets and liabilities, based on the published New York Mercantile Exchange (“NYMEX”) market prices for the commodity contracts open at the end of the period. For Level 2 derivative assets and liabilities the calculations performed by the

Company are based on a combination of the NYMEX published market prices and other inputs, including such factors as present value, volatility and duration.

The Company had no assets or liabilities that are measured at fair value on a nonrecurring basis subsequent to their initial recognition. The Company’s financial assets and liabilities measured at fair value on a recurring basis are listed on the following table.

(In thousands)					Fair Value Measurements at Reporting Date Using:										Fair Value Measurements at Reporting Date Using:
Derivatives Not Designated as Hedging Instruments					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs								Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs
Under FASB ASC 815-10	Balance Sheet Location	Total			Level 1		Level 2				Balance Sheet Location	Total			Level 1		Level 2
Asset Derivatives at June 30, 2019
Asset Derivatives at March 31, 2020										Asset Derivatives at March 31, 2020
Commodity contracts	Fair liability value of derivative instruments	$	10,299		$	—	$	10,299			Fair liability value of derivative instruments	$	35,497		$	—	$	35,497
Commodity contracts	Long-term derivative assets included in in the deferred charges and other assets, net and other long-term liabilities, net balances		1,069			—		1,069			Long-term derivative liabilities included in the deferred charges and other assets, net and other long-term liabilities, net balances		1,673			—		1,673
Commodity contract assets at June 30, 2019		$	11,368		$	—	$	11,368
Liability Derivatives at June 30, 2019
Commodity contract assets at March 31, 2020										Commodity contract assets at March 31, 2020		$	37,170		$	—	$	37,170
Liability Derivatives at March 31, 2020										Liability Derivatives at March 31, 2020
Commodity contracts	Fair liability value of derivative instruments	$	(12,717	)	$	—	$	(12,717	)		Fair liability value of derivative instruments	$	(49,514	)	$	—	$	(49,514	)
Commodity contracts	Long-term derivative liabilities included in in the deferred charges and other assets, net and other long-term liabilities, net balances		(1,106	)		—		(1,106	)		Long-term derivative liabilities included in the deferred charges and other assets, net and other long-term liabilities, net balances		(1,867	)		—		(1,867	)
Commodity contract liabilities at June 30, 2019		$	(13,823	)	$	—	$	(13,823	)
Asset Derivatives at September 30, 2018
Commodity contract liabilities at March 31, 2020										Commodity contract liabilities at March 31, 2020		$	(51,381	)	$	—	$	(51,381	)
Asset Derivatives at September 30, 2019										Asset Derivatives at September 30, 2019
Commodity contracts	Fair asset value of derivative instruments	$	17,710		$	—	$	17,710			Fair liability value of derivative instruments	$	13,824		$	—	$	13,824
Commodity contracts	Long-term derivative assets included in the deferred charges and other assets, net balance		906			—		906			Long-term derivative assets included in the deferred charges and other assets, net balance and other long term liabilities, net		1,466			—		1,466
Commodity contract assets September 30, 2018		$	18,616		$	—	$	18,616
Liability Derivatives at September 30, 2018
Commodity contract assets September 30, 2019										Commodity contract assets September 30, 2019		$	15,290		$	—	$	15,290
Liability Derivatives at September 30, 2019										Liability Derivatives at September 30, 2019
Commodity contracts	Fair liability and fair asset value of derivative instruments	$	—		$	—	$	—			Fair liability value of derivative instruments	$	(22,086	)	$	—	$	(22,086	)
Commodity contracts	Long-term derivative liabilities included in the deferred charges and other assets, net balance		(103	)		—		(103	)		Long-term derivative liabilities included in the deferred charges and other assets, net balance and other long term liabilities, net		(1,719	)		—		(1,719	)
Commodity contract liabilities September 30, 2018		$	(103	)	$	—	$	(103	)
Commodity contract liabilities September 30, 2019										Commodity contract liabilities September 30, 2019		$	(23,805	)	$	—	$	(23,805	)

The Company’s derivative assets (liabilities) offset by counterparty and subject to an enforceable master netting arrangement are listed on the following table.

(In thousands)

Gross Amounts Not Offset in the
Statement of Financial Position

Offsetting of Financial Assets (Liabilities)
   and Derivative Assets (Liabilities)

Gross
Assets
Recognized

Gross
Liabilities
Offset in the
Statement
of Financial
Position

Net Assets
(Liabilities)
Presented in the
Statement
of Financial
Position

Financial
Instruments

Cash
Collateral
Received

Net
Amount

Fair asset value of derivative instruments

$
—

$
—

$
—

$
—

$
—

$
—

Long-term derivative assets included in
   deferred charges and other assets, net

112

(92
)

20

—

—

20

Fair liability value of derivative instruments

10,299

(12,717
)

(2,418
)

—

—

(2,418
)
Long-term derivative liabilities included in
   other long-term liabilities, net

957

(1,014
)

(57
)

—

—

(57
)
Total at June 30, 2019

$
11,368

$
(13,823
)

$
(2,455
)

$
—

$
—

$
(2,455
)
Fair asset value of derivative instruments

$
17,710

$
—

$
17,710

$
—

$
—

$
17,710

Long-term derivative assets included in
   other long-term assets, net

906

(103
)

803

—

—

803

Fair liability value of derivative instruments

—

—

—

—

—

—

Long-term derivative liabilities included in
   other long-term liabilities, net

—

—

—

—

—

—

Total at September 30, 2018

$
18,616

$
(103
)

$
18,513

$
—

$
—

$
18,513

(In thousands)									Gross Amounts Not Offset in the Statement of Financial Position
Offsetting of Financial Assets (Liabilities) and Derivative Assets (Liabilities)	Gross Assets Recognized		Gross Liabilities Offset in the Statement of Financial Position			Net Assets (Liabilities) Presented in the Statement of Financial Position			Financial Instruments		Cash Collateral Received		Net Amount
Long-term derivative assets included in deferred charges and other assets, net	$	615	$	(559	)	$	56		$	—	$	—	$	56
Fair liability value of derivative instruments		35,497		(49,514	)		(14,017	)		—		—		(14,017	)
Long-term derivative liabilities included in other long-term liabilities, net		1,058		(1,308	)		(250	)		—		—		(250	)
Total at March 31, 2020	$	37,170	$	(51,381	)	$	(14,211	)	$	—	$	—	$	(14,211	)
Long-term derivative assets included in other long-term assets, net	$	16	$	(16	)	$	—		$	—	$	—	$	—
Fair liability value of derivative instruments		13,824		(22,086	)		(8,262	)		—		—		(8,262	)
Long-term derivative liabilities included in other long-term liabilities, net		1,450		(1,703	)		(253	)		—		—		(253	)
Total at September 30, 2019	$	15,290	$	(23,805	)	$	(8,515	)	$	—	$	—	$	(8,515	)

(In thousands)
The Effect of Derivative Instruments on the Statement of Operations	The Effect of Derivative Instruments on the Statement of Operations												The Effect of Derivative Instruments on the Statement of Operations
			Amount of (Gain) or Loss Recognized					Amount of (Gain) or Loss Recognized							Amount of (Gain) or Loss Recognized						Amount of (Gain) or Loss Recognized
Derivatives Not Designated as Hedging Instruments Under FASB ASC 815-10		Location of (Gain) or Loss Recognized in Income on Derivative	Three Months Ended June 30, 2019		Three Months Ended June 30, 2018			Nine Months Ended June 30, 2019		Nine Months Ended June 30, 2018				Location of (Gain) or Loss Recognized in Income on Derivative	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019			Six Months Ended March 31, 2020		Six Months Ended March 31, 2019
Commodity contracts		Cost of product (a)	$	558	$	914		$	8,751	$	(8,463	)		Cost of product (a)	$	(3,700	)	$	14,345		$	2,349	$	8,193
Commodity contracts		Cost of installations and service (a)	$	79	$	(102	)	$	729	$	(673	)		Cost of installations and service (a)	$	233		$	403		$	224	$	650
Commodity contracts		Delivery and branch expenses (a)	$	75	$	(61	)	$	512	$	(1,335	)		Delivery and branch expenses (a)	$	626		$	271		$	597	$	437
Commodity contracts		(Increase) / decrease in the fair value of derivative instruments (b)	$	1,630	$	(7,515	)	$	19,268	$	(7,306	)		(Increase) / decrease in the fair value of derivative instruments (b)	$	11,670		$	(13,401	)	$	5,253	$	17,638

The Company’s product inventories are stated at the lower of cost and net realizable value computed on the weighted average cost method. All other inventories, representing parts and equipment are stated at the lower of cost and net realizable value using the FIFO method. The components of inventory were as follows (in thousands):

	June 30, 2019		September 30, 2018		March 31, 2020		September 30, 2019
Product	$	34,323	$	34,618	$	31,823	$	43,536
Parts and equipment		23,155		21,759		21,003		21,252
Total inventory	$	57,478	$	56,377	$	52,826	$	64,788

Property and equipment are stated at cost. Depreciation is computed over the estimated useful lives of the depreciable assets using the straight-line method (in thousands):

	June 30, 2019		September 30, 2018		March 31, 2020		September 30, 2019
Property and equipment	$	226,969	$	210,581	$	234,014	$	230,690
Less: accumulated depreciation		129,501		122,963		138,810		132,451
Property and equipment, net	$	97,468	$	87,618	$	95,204	$	98,239

During ~~the first nine months of~~ fiscal year ~~2019,~~2020, the Company acquired ~~two liquid product dealers~~the customer list and the assets of ~~one of its subcontractors~~a heating oil dealer for an aggregate purchase price of approximately $~~62.8~~$0.5 million.The estimated working capital associated with the May 2019 acquisition is subject to a final post closing adjustment, and as of June 30, 2019 the intangibles and goodwill have been provisionally determined. The Company will record any material adjustments to the initial estimates based on new information obtained that would have existed as of the date of the acquisition. Any adjustment that arises from information obtained that did not exist as of the date of the acquisition will be recorded in the period the adjustment arises. The following table summarizes the preliminary fair values and purchase price allocations in aggregate of the assets acquired and liabilities assumed related to the fiscal 2019 acquisitions as of the respective acquisition dates.

The total acquisition expenses of $1.2 million related to these acquisitions are included in the Condensed Consolidated Statement of Operations under “General and administrative expenses” for the nine months ended June 30, 2019. All of the $18.9 million of goodwill relating to the acquisitions is expected to be deductible for income tax purposes.

The acquired companies’ operating results are included in the Company’s consolidated financial statements starting on the respective acquisition dates. Customer lists, other intangibles and trade names are amortized on a straight-line basis over ten to twenty years.

Included in our Condensed Consolidated Statement of Operations from the respective acquisition dates through June 30, 2019, are sales and net earnings before income taxes of $7.1 million and $0.1 million, respectively.

The following table provides unaudited pro forma results of operations as if the fiscal 2019 acquisitions had occurred on October 1, 2017, the beginning of fiscal year 2018. The unaudited pro forma results were prepared using current and prior year financial information, reflecting certain adjustments related to the acquisition, such as the elimination of directly attributable acquisition expenses and changes to depreciation and amortization expenses. These pro forma adjustments do not include any potential synergies related to combining the businesses. Accordingly, such pro forma operating results were prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the acquisitions been made as of October 1, 2017 or of results that may occur in the future.

~~A summary of changes in the Company’s goodwill is as follows (in thousands):~~

The gross carrying amount and accumulated amortization of intangible assets subject to amortization are as follows (in thousands):

	June 30, 2019						September 30, 2018						March 31, 2020						September 30, 2019
	Gross						Gross						Gross						Gross
	Carrying		Accum.				Carrying		Accum.				Carrying		Accum.				Carrying		Accum.
	Amount		Amortization		Net		Amount		Amortization		Net		Amount		Amortization		Net		Amount		Amortization		Net
Customer lists	$	381,890	$	292,522	$	89,368	$	358,776	$	279,990	$	78,786	$	383,388	$	306,657	$	76,731	$	382,373	$	297,221	$	85,152
Trade names and other intangibles		35,577		14,623		20,954		32,739		13,081		19,658		37,853		16,339		21,514		37,739		15,203		22,536
Total	$	417,467	$	307,145	$	110,322	$	391,515	$	293,071	$	98,444	$	421,241	$	322,996	$	98,245	$	420,112	$	312,424	$	107,688

Amortization expense for intangible assets was ~~$14.1~~$10.6 million for the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$14.5~~$9.3 million for the ~~nine~~six months ended ~~June 30, 2018.~~March 31, 2019.

	June 30,				September 30,				March 31,				September 30,
	2019				2018				2020				2019
	Carrying Amount		Fair Value (a)		Carrying Amount		Fair Value (a)		Carrying Amount		Fair Value (a)		Carrying Amount		Fair Value (a)
Revolving Credit Facility Borrowings	$	70,500	$	70,500	$	1,500	$	1,500	$	24,043	$	24,043	$	61,500	$	61,500
Senior Secured Term Loan (b)		94,399		95,000		99,280		100,000		129,188		130,000		91,947		92,500
Total debt	$	164,899	$	165,500	$	100,780	$	101,500	$	153,231	$	154,043	$	153,447	$	154,000
Total short-term portion of debt	$	80,500	$	80,500	$	9,000	$	9,000	$	37,043	$	37,043	$	33,000	$	33,000
Total long-term portion of debt	$	84,399	$	85,000	$	91,780	$	92,500	$	116,188	$	117,000	$	120,447	$	121,000

On ~~July 2, 2018,~~December 4, 2019, the Company refinanced its five-year term loan and the revolving credit facility with the execution of the ~~fourth~~fifth amended and restated revolving credit facility agreement with a bank syndicate currently comprised of eleven participants, which enables the Company to borrow up to$300 million ($450 million during the heating season of December through April of each year) on a revolving credit facility for working capital purposes (subject to certain borrowing base limitations and coverage ratios), provides for a ~~$100~~$130 million five-year senior secured term loan (the “Term Loan”), allows for the issuance of up to $25 million in letters of credit, and has a maturity date of ~~July 2, 2023.~~December 4, 2024.

The Company can increase the revolving credit facility size by $200 million without the consent of the bank group. However, the bank group is not obligated to fund the $200 million increase. If the bank group elects not to fund the increase, the Company can add additional lenders to the group, with the consent of the Agent (as defined in the credit agreement), which shall not be unreasonably withheld. Obligations under the ~~fourth~~fifth amended and restated credit facility are guaranteed by the Company and its subsidiaries and are secured by liens on substantially all of the Company’s assets, including accounts receivable, inventory, general intangibles, real property, fixtures and equipment.

All amounts outstanding under the ~~fourth~~fifth amended and restated revolving credit facility become due and payable on the facility termination date of ~~July 2, 2023.~~December 4, 2024. The Term Loan is repayable in quarterly payments of ~~$2.5~~$3.25 million, ~~with~~ the first ~~payment~~of which was made on ~~January 2, 2019,~~April 1, 2020, plus an annual payment equal to 25% of the annual Excess Cash Flow as defined in the credit agreement (an amount not to exceed ~~$15~~$12 million annually), less certain voluntary prepayments made during the year, with final payment at maturity.

The interest rate on the ~~fourth~~fifth amended and restated revolving credit facility and the Term Loan is based on a margin over LIBOR or a base rate. At ~~June 30, 2019,~~March 31, 2020, the effective interest rate on the Term Loan was approximately ~~5.9%~~5.5% and the effective interest rate on revolving credit facility borrowings was approximately ~~4.5%~~4.0%. At September 30, ~~2018,~~2019, the effective interest rate on the term loan and revolving credit facility borrowings was approximately ~~5.2%~~5.9% and ~~3.8%~~4.6%, respectively.

The ~~Commitment Fee~~commitment fee on the unused portion of the revolving credit facility is 0.30% from December through April, and 0.20% from May through November.

The ~~fourth~~fifth amended and restated credit agreement requires the Company to meet certain financial covenants, including a ~~fixed charge coverage ratio~~Fixed Charge Coverage Ratio (as defined in the credit agreement) of not less than 1.1 as long as the Term Loan is outstanding or revolving credit facility availability is less than 12.5% of the facility size. In addition, as long as the Term Loan is outstanding, a senior secured leverage ratio cannot be more than 3.0 as calculated as of the quarters ending June or September, and no more than 4.5 as calculated as of the quarters ending December or March.

Certain restrictions are also imposed by the credit agreement, including restrictions on the Company’s ability to incur additional indebtedness, to pay distributions to unitholders, to pay certain inter-company dividends or distributions, repurchase units, make investments, grant liens, sell assets, make acquisitions and engage in certain other activities.

At ~~June 30, 2019, $95.0~~March 31, 2020, $130.0 million of the Term Loan was outstanding, ~~$70.5~~$24.0 million was outstanding under the revolving credit facility, ~~$3.4~~$18.6 million of hedge positions were secured under the credit agreement, and ~~$7.0~~$4.4 million of letters of credit were issued and outstanding. At September 30, ~~2018, $100.0~~2019, $92.5 million of the Term Loan was outstanding, ~~$1.5~~$61.5 million was outstanding under the revolving credit facility, no$7.7 million of hedge positions were secured under the credit agreement, and ~~$7.1~~$4.6 million of letters of credit were issued and outstanding.

At ~~June 30, 2019,~~March 31, 2020, availability was ~~$147.4~~$210.4 million, and the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio. At September 30, ~~2018,~~2019, availability was ~~$189.0~~$126.1 million, and the Company was in compliance with the fixed charge coverage ratio and the senior secured leverage ratio.

The accompanying financial statements are reported on a fiscal year, however, the Company and its corporate subsidiaries file Federal and State income tax returns on a calendar year.

The current and deferred income tax expense (benefit) for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020, and March 31, 2019 ~~and 2018~~ are as follows:

The effective income tax rate increased from 23.1% for the nine months ended June 30, 2018 to 28.1% for the nine months ended June 30, 2019 due primarily to a provisional $11.2 million discrete tax benefit recorded as of June 30, 2018 that was not recorded as of June 30, 2019. The discrete tax benefit resulted from the re-measurement of deferred tax liabilities as of December 31, 2017 due to the reduction of the Federal corporate income tax rate from 35% to 21% effective January 1, 2018 per the Tax Cuts and Jobs Act enacted in December 2017. The Company’s net deferred tax liabilities will be realized at a lower statutory tax rate than when originally recorded. Excluding the impact of the discrete tax benefit, our ~~effective income tax rate decreased from 34.3% for the nine months ended June 30, 2018 to 28.1% for the nine months ended June 30, 2019 primarily due to the lower enacted Federal statutory tax rate.~~

At ~~June 30, 2019,~~March 31, 2020, we did ~~not~~0t have unrecognized income tax benefits.

Our continuing practice is to recognize interest and penalties related to income tax matters as a component of income tax expense. We file U.S. Federal income tax returns and various state and local returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. For our Federal income tax returns we have four tax years subject to examination. In our major state tax jurisdictions of New York, Connecticut and Pennsylvania, we have four years that are subject to examination. In the state tax jurisdiction of New Jersey we have five tax years that are subject to examination. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, based on our assessment of many factors, including past experience and interpretation of tax law, we believe that our provision for income taxes reflect the most probable outcome. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

The Company has entered into certain operating leases for office space, vehicles and other equipment with lease terms between one to twenty years, expiring between 2020 and 2039. Some of the Company’s real estate property lease agreements have options to extend the leases for up to five years.

The Company determines if an arrangement is a lease at inception. Lease liabilities are measured at the lease commencement date in an amount equal to the present value of the minimum lease payments over the lease term. Right-of-use (“ROU”) assets are recognized based on the amount of the lease liability adjusted for any lease payments made to the lessor at or before the commencement date, minus any lease incentives received, plus any initial direct costs incurred. Renewal options are included in the calculation of the ROU asset and lease liability when it is determined that they are reasonably certain of exercise.

Certain of our lease arrangements contain non-lease components such as common area maintenance. We have elected to account for the lease component and its associated non-lease components as a single lease component. Leases with an initial term of 12 months or less are not recognized on our balance sheet. The Company has leases that have variable payments, including lease payments where lease payment increases are based on the percentage change in the Consumer Price Index. For such leases payment at the lease commencement date is used to measure the ROU assets and operating lease liabilities. Changes in the index and other variable payments are expensed as incurred. The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in our operating leases is not readily determinable. The basis for an incremental borrowing rate was our Term Loan, market-based yield curves and comparable debt securities.

A summary of total lease costs and other information for the three and six months ended March 31, 2020 is as follows:

As of March 31, 2020, our operating leases had a weighted average remaining lease term of 7.4 years and a weighted average discount rate of 4.9%. Maturities of operating lease liabilities as of March 31, 2020 are as follows:

Maturities of operating lease liabilities presented undiscounted under ASC Topic 840 as prescribed by ASC Topic 842 as of September 30, 2019 are as follows:

	Nine Months Ended				Six Months Ended
Cash paid during the period for:	June 30,				March 31,
(in thousands)	2019		2018		2020		2019
Income taxes, net	$	3,046	$	889	$	9,992	$	3,748
Interest	$	9,709	$	6,958	$	6,543	$	5,770

is was otherwise substantially similar or identical to the prior complaint. On November 13, 2018, Petro moved to dismiss the fraudulent inducement and unjust enrichment claims in the second amended complaint. On January 31, 2019, the court granted the motion and dismissed the fraudulent inducement and unjust enrichment claims with prejudice. On February 22, 2019, counsel for Petro and the Plaintiff participated in a mediation which, after arms-length negotiations, resulted in a memorandum of understanding to settle the litigation, subject to the completion of confirmatory discovery, negotiation of a final settlement agreement and court approval. In an order dated March 27, 2019, the district court stayed all discovery deadlines in light of the pending settlement. On ~~May 6,~~October 4, 2019, upon consent of all parties, Judge Roslynn R. Mauskopf assigned the ~~Plaintiff filed an Unopposed Motion~~action to Magistrate Judge Steve I. Locke for ~~Preliminary Approval~~final disposition. On March 26, 2020, the court granted final approval of ~~Class Action Settlement which remains pending before~~ the ~~court.~~class action settlement, certified the class for settlement purposes only and dismissed the action with prejudice. On March 26, 2020, the court also granted Plaintiff’s unopposed motion for fees, expenses and named plaintiff service award. The ~~anticipated~~ settlement is not an admission of liability or breach to any customers by Petro and the Company continues to believe the allegations lack merit. If the settlement is not ~~approved or finalized~~completed for any reason, the Company will continue to vigorously defend the action; in that case, we cannot assess the potential outcome or materiality of this matter.

The Company’s operations are subject to the operating hazards and risks normally incidental to handling, storing and transporting and otherwise providing for use by consumers hazardous liquids such as home heating oil and propane. In the ordinary course of business, the Company is a defendant in various legal proceedings and litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. We do not believe these matters, when considered individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

The Company maintains insurance policies with insurers in amounts and with coverages and deductibles we believe are reasonable and prudent. However, the Company cannot assure that this insurance will be adequate to protect it from all material expenses related to current and potential future claims, legal proceedings and litigation, including the above mentioned action, as certain types of claims may be excluded from our insurance coverage. If we incur substantial liability and the damages are not covered by insurance, or are in excess of policy limits, or if we incur liability at a time when we are not able to obtain liability insurance, then our business, results of operations and financial condition could be materially adversely affected.

Income per limited partner unit is computed in accordance with FASB ASC 260-10-05 Earnings Per Share, Master Limited Partnerships (EITF 03-06), by dividing the limited partners’ interest in net income by the weighted average number of limited partner units outstanding. The pro forma nature of the allocation required by this standard provides that in any accounting period where the Company’s aggregate net income exceeds its aggregate distribution for such period, the Company is required to present net income per limited partner unit as if all of the earnings for the periods were distributed, regardless of whether those earnings would actually be distributed during a particular period from an economic or practical perspective. This allocation does not impact the Company’s overall net income or other financial results. However, for periods in which the Company’s aggregate net income exceeds its aggregate distributions for such period, it will have the impact of reducing the earnings per limited partner unit, as the calculation according to this standard result in a theoretical increased allocation of undistributed earnings to the ~~general partner.~~General Partner. In accounting periods where aggregate net income does not exceed aggregate distributions for such period, this standard does not have any impact on the Company’s net income per limited partner unit calculation. A separate and independent calculation for each quarter and year-to-date period is performed, in which the Company’s contractual participation rights are taken into account.

The following presents the net income allocation and per unit data using this method for the periods presented:

	Three Months Ended						Nine Months Ended				Three Months Ended				Six Months Ended
Basic and Diluted Earnings Per Limited Partner:	June 30,						June 30,				March 31,				March 31,
(in thousands, except per unit data)	2019			2018			2019		2018		2020		2019		2020		2019
Net income (loss)	$	(23,098	)	$	(8,005	)	$	51,542	$	76,955
Less General Partner’s interest in net income (loss)		(150	)		(49	)		319		445
Net income (loss) available to limited partners		(22,948	)		(7,956	)		51,223		76,510
Net income											$	58,408	$	72,325	$	86,163	$	74,640
Less General Partner’s interest in net income												409		454		601		469
Net income available to limited partners												57,999		71,871		85,562		74,171
Less dilutive impact of theoretical distribution of earnings under FASB ASC 260-10-45-60		-			-			6,740		11,610		10,283		12,934		14,631		12,294
Limited Partner’s interest in net income (loss) under FASB ASC 260-10-45-60	$	(22,948	)	$	(7,956	)	$	44,483	$	64,900
Limited Partner’s interest in net income under FASB ASC 260-10-45-60											$	47,716	$	58,937	$	70,931	$	61,877
Per unit data:
Basic and diluted net income (loss) available to limited partners	$	(0.46	)	$	(0.15	)	$	1.00	$	1.39
Basic and diluted net income available to limited partners											$	1.25	$	1.40	$	1.83	$	1.42
Less dilutive impact of theoretical distribution of earnings under FASB ASC 260-10-45-60		-			-			0.14	$	0.21		0.22		0.25		0.31	$	0.23
Limited Partner’s interest in net income (loss) under FASB ASC 260-10-45-60	$	(0.46	)	$	(0.15	)	$	0.86	$	1.18
Limited Partner’s interest in net income under FASB ASC 260-10-45-60											$	1.03	$	1.15	$	1.52	$	1.19
Weighted average number of Limited Partner units outstanding		49,943			53,938			51,431		55,157		46,244		51,427		46,760		52,174

In ~~July 2019,~~April 2020, we declared a quarterly distribution of ~~$0.125~~$0.1325 per unit, or ~~$0.50~~$0.53 per unit on an annualized basis, on all Common Units with respect to the ~~third~~second quarter of fiscal ~~2019,~~2020, payable on ~~August 6, 2019,~~May 12, 2020, to holders of record on ~~July 29, 2019.~~May 4, 2020. The amount of distributions in excess of the minimum quarterly distribution of $0.0675 are distributed in accordance with our Partnership Agreement, subject to the management incentive compensation plan. As a result, ~~$6.2~~$6.0 million will be paid to the Common Unit holders, $0.2 million to the General Partner unit holders (including $0.2 million of incentive distribution as provided in our Partnership Agreement) and $0.2 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.

In April 2020, in accordance with the Repurchase Plan, ~~from July 1, 2019 to July 30, 2019~~ the Company repurchased and retired ~~0.1~~0.4 million Common Units at an average price paid of $~~9.76~~7.71 per unit.

We have seen a reduction in certain sales activity in the month of April 2020 when compared to that in April 2019, primarily due to the decrease in economic activity and travel resulting from the current pandemic of the novel coronavirus, or COVID-19.

The volume of Motor Fuel and Other Petroleum Products for April 2020 (which is primarily motor fuels used for both on and off road purposes) is down approximately 35% compared to the volume sold in April 2019. Service revenues are down approximately 10% in April 2020 when compared to April 2019, as in some locations the company has restricted its service to only emergency services, or customers are electing to defer non-emergency services until a later date. Installation revenues are also down approximately 40% in April 2020 when compared to April 2019 as, again, many customers are deferring non-emergency installations.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on our customers and suppliers and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

This Quarterly Report on Form 10-Q (this “Report”) includes “forward-looking statements” which represent our expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the severity and duration of the novel coronavirus, or COVID-19, pandemic, the pandemic’s impact on the U.S. and global economies, the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic, the effect of weather conditions on our financial performance, the price and supply of the products that we sell, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, our ability to obtain new customers and retain existing customers, our ability to make strategic acquisitions, the impact of litigation, our ability to contract for our current and future supply needs, natural gas conversions, future union relations and the outcome of current and future union negotiations, the impact of current and future governmental regulations, including climate change, environmental, health, and safety regulations, the ability to attract and retain employees, customer credit worthiness, counterparty credit worthiness, marketing plans, potential cyber-attacks, general economic conditions and new technology. All statements other than statements of historical facts included in this Report including, without limitation, the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein, are forward-looking statements. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “seek,” “estimate,” and similar expressions are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct and actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, those set forth in this Report under the headings “Risk Factors” and ~~“Business Strategy.~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Fiscal 2019 Form 10-K under Part I Item 1A “Risk Factors.” Important factors that could cause actual results to differ materially from our expectations (“Cautionary Statements”) are disclosed in this ~~Report.~~Report and in our Fiscal 2019 Form 10-K. Currently, one of the most significant factors, however, is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company and its customers and counterparties and the global economy and financial markets. The extent to which COVID-19 impacts us and our customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. All subsequent written and oral forward-looking statements attributable to ~~Star~~the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. Unless otherwise required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Report.

In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”). On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures. The United States has declared a national emergency concerning the outbreak, which has adversely impacted global activity and contributed to significant declines and volatility in financial markets. There have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including quarantines, and “stay-at-home” orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. Our business is concentrated in the Northeast and Mid-Atlantic sections of the United States. These areas have been significantly impacted by the virus.

To date we have been designated by state and local governmental officials in the markets we serve as providing essential services during the COVID-19 pandemic. We are closely monitoring all official pronouncements and executive orders concerning our status as an essential business. To date, we have not experienced any significant supply chain issues impacting our ability to deliver products and provide services to our customers. We believe the various initiatives we have implemented in response to the COVID-19 pandemic, such as certain staff working remotely, have not significantly impacted our ability to serve our customers. We are still making fuel deliveries and providing emergency services to all areas in which we operate. The 2019-2020 peak heating season coincides with our first and second fiscal quarters, which historically represent approximately 80% of our annual volume of home heating oil and propane sold.

As a result of the COVID-19 pandemic, and in order to protect the safety and health of our workforce and our customers, we have expanded certain employee benefit programs and will incur additional operating costs such as sanitizing our facilities and providing IT infrastructure to allow many office, clerical, sales and customer service employees to work from home. At this time, we cannot estimate the cost of these undertakings. In certain areas, we have ceased making non-emergency service calls that would have been performed in the third quarter of fiscal 2020. These service calls may be deferred to subsequent periods and may increase our future service costs. In addition, we believe that some of our customers are deferring non-emergency services, including the installation of new equipment, which has caused a significant decline in April 2020 in equipment installation sales and reactive service

calls and may continue to reduce future service and installation income. We are experiencing a significant decline in motor fuel sales due to a significant reduction in economic activity and travel in the states in which we operate. During fiscal 2019 Motor Fuel and Other Petroleum Products represented 32.6% of our Total Product Volume, 25.0% of our Total Product Sales and 9.1%, of our Total Product Gross Profit, and historically we sell more volumes of motor fuels than heating oil and propane in the second half of the fiscal year. Accordingly, our financial results may suffer accordingly if these trends continue.

As of March 31, 2020, we had accounts receivable of $187.1 million, of which $149.4 million is due from residential customers and $37.7 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. If such past due balances that do not meet the eligibility tests as found in our fifth amended and restated credit agreement increase from historic levels, our future ability to borrow would be reduced.

The Company intends to take advantage of certain tax and legislative actions which will permit the Company to defer its April 2020 Federal income tax payment to July 2020 and to defer certain payroll tax withholdings relating to calendar 2020 to calendar 2021 and 2022. We are also looking into loans available under various Federal stimulus packages, but at the present time our eligibility and need for such loans is uncertain.

We believe COVID-19’s impact on our business, operating results, cash flows (including the collection of accounts receivable) and/or financial condition primarily will be driven by the severity and duration of the pandemic, the pandemic’s impact on the U.S. and global economies, the price of petroleum products, and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Those primary drivers are beyond our knowledge and control and, as a result, at this time we cannot reasonably estimate the adverse impact COVID-19 will have on our business, operating results, cash flows and/or financial condition going forward.

Our liquidity is adversely impacted in times of increasing wholesale product costs, as we must use more cash to fund our hedging requirements as well as the increased levels of accounts receivable and inventory. This may result in higher interest expense as a result of increased working capital borrowing to finance higher receivables and/or inventory balances. We may also incur higher bad debt expense and credit card processing costs as a result of higher selling prices as well as higher vehicle fuel costs due to the increase in energy costs. ~~Our~~In addition, our liquidity can ~~also~~ be adversely impacted by sudden and sharp decreases in wholesale product costs, due to the increased margin requirements for futures contracts and collateral requirements for options and swaps that we use to manage market risks.

Volatility, which is reflected in the wholesale price of liquid products, including home heating oil, propane and motor fuels, has a larger impact on our business when prices ~~rise, as consumer~~rise. Consumers are price ~~sensitivity~~sensitive to heating ~~costs~~cost increases, ~~often leading~~which can lead to increased gross customer losses. As a commodity, the price of home heating oil is generally impacted by many factors, including economic and geopolitical ~~forces. The price of home heating oil~~forces, and, most recently, the COVID-19 pandemic, and is closely linked to the price ~~refiners pay for crude oil, which is the principal cost component~~ of ~~home heating oil.~~diesel fuel. The volatility in the wholesale cost of ~~home heating oil,~~diesel fuel as measured by the New York Mercantile Exchange (“NYMEX”), for the fiscal years ending September 30, ~~2015,~~2016, through ~~2019,~~2020, on a quarterly basis, is illustrated in the following chart (price per gallon):

	Fiscal 2019				Fiscal 2018				Fiscal 2017				Fiscal 2016				Fiscal 2015				Fiscal 2020 (a)				Fiscal 2019				Fiscal 2018				Fiscal 2017				Fiscal 2016
Quarter Ended	Low		High		Low		High		Low		High		Low		High		Low		High		Low		High		Low		High		Low		High		Low		High		Low		High
December 31	$	1.66	$	2.44	$	1.74	$	2.08	$	1.39	$	1.70	$	1.08	$	1.61	$	1.85	$	2.66	$	1.86	$	2.05	$	1.66	$	2.44	$	1.74	$	2.08	$	1.39	$	1.70	$	1.08	$	1.61
March 31		1.70		2.04		1.84		2.14		1.49		1.70		0.87		1.26		1.62		2.30		0.95		2.06		1.70		2.04		1.84		2.14		1.49		1.70		0.87		1.26
June 30		1.78		2.12		1.96		2.29		1.37		1.65		1.08		1.57		1.68		2.02		—		—		1.78		2.12		1.96		2.29		1.37		1.65		1.08		1.57
September 30^(a)		—		—		2.05		2.35		1.45		1.86		1.26		1.53		1.38		1.84		—		—		1.75		2.08		2.05		2.35		1.45		1.86		1.26		1.53

~~New Federal Income Tax Legislation~~Execution of Fifth Amended and Restated Revolving Asset-based Credit Agreement

On December ~~22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law. The Tax Reform Act contains several key tax provisions that impact~~4, 2019, the Company ~~including~~refinanced its credit facility and entered into the ~~reduction~~fifth amended and restated revolving credit facility agreement with a bank syndicate of eleven participants, which enables the ~~corporate Federal income tax rate~~Company to ~~21% from 35% effective January 1, 2018. In addition, between September 28, 2017~~borrow up to $300 million ($450 million during the heating season of December through April of each year) on a revolving line of credit for working capital purposes (subject to certain borrowing base limitations and ~~December 31, 2022, the Tax Reform Act~~coverage ratios), provides for a $130 million five-year senior secured term loan, allows for the ~~full depreciation,~~issuance of up to $25 million in letters of credit, and extends the ~~year acquired, for certain fixed assets purchased in that year (also known~~maturity date of the previous agreement to December 4, 2024. Proceeds from the new term loan were used to repay the $90.0 million outstanding balance of the term loan and $40.0 million of the revolving credit facility borrowings under the old credit facility. Availability as ~~100% bonus depreciation).~~a result of the new credit agreement increased $40.0 million.

~~During~~Consistent with the ~~nine months ended June 30, 2018,~~fourth amended and restated revolving credit facility, under the ~~Company recorded an $11.2~~Company’s fifth amended and restated credit agreement, in order to repurchase Common Units we must maintain availability of $45 million, ~~discrete income tax benefit for~~equivalent to 15.0% of the ~~re-measurement~~facility size of ~~deferred tax assets~~$300 million (assuming the non-seasonal aggregate commitment is outstanding) on a historical pro forma and ~~liabilities due to~~forward-looking basis, and a fixed charge coverage ratio of not less than 1.15 measured as of the change in the Federal corporate income tax rate on which the deferred taxes are based. Excluding the $11.2 million benefit recorded to income tax expense, our combined Federal, state, and local effective income tax rate was reduced to 28.1% for the nine months ended June 30, 2019 from 34.3% at June 30, 2018. date of repurchase.

The amount of cash flow ~~that we generate~~generated in any given year depends upon a variety of factors including the amount of cash income taxes ~~that we are~~ required, ~~to pay,~~ which will increase as ~~tax~~ depreciation and amortization decreases. The amount of 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. 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.

(In thousands) Fiscal Year	Book		Tax		Book		Tax
2019	$	33,674	$	39,636
2020		32,839		25,930	$	32,045	$	28,628
2021		27,778		21,145		26,651		21,644
2022		23,167		19,441		23,064		19,598
2023		20,182		17,651		19,778		17,812
2024		16,021		16,616		15,944		16,771
2025						13,047		16,279

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. Actual weather conditions may vary substantially from year to year, significantly affecting ~~our~~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.

Under these contracts, we are entitled to a payment if the total number of degree days within the hedge period is less than the ~~ten year~~ten-year average. The “Payment Thresholds,” or strikes, are set at various levels. Conversely, we are obligated to make a payment capped at $5.0 million if degree days exceed the ~~ten year~~ten-year average. The hedge period runs from November 1 through March 31, taken as a whole, for each respective fiscal year. For ~~fiscal~~the six months ended March 31, 2020 we recorded a $10.1 million benefit and for the six months ended March 31, 2019 ~~and 2018,~~ we recorded a charge of $2.1 million and $1.9 million, respectively, for amounts paid under our weather hedge contracts, reflecting colder weather than the ten year average. For fiscal 2020 and 2021 the maximum that the Company can receive annually is $12.5 million and the maximum that the Company would be obligated to pay annually is $5.0 million.

We believe home heating oil and propane margins should be evaluated on a cents per gallon basis (before the effects of increases or decreases in the fair value of derivative instruments), as we believe that ~~realized~~such per gallon margins ~~should not include~~are best at showing profit trends in the underlying business, without the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction.

A significant portion of our home heating oil volume is sold to individual customers under an arrangement pre-establishing a ceiling price or fixed price for home heating oil over a ~~fixed~~set period of time, generally twelve to twenty-four months (“price-protected” customers). When these price-protected customers agree to purchase home heating oil from us for the next heating season, we purchase option contracts, swaps and futures contracts for a substantial majority of the heating oil that we expect to sell to these customers. The amount of home heating oil volume that we hedge per price-protected customer is based upon the estimated fuel consumption per average customer per month. In the event that the actual usage exceeds the amount of the hedged volume on a monthly basis, we may be required to obtain additional volume at unfavorable costs. 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.

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. 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. Therefore, we experience volatility in earnings as outstanding derivative instruments are marked to market and non-cash gains and losses are recorded prior to the sale of the commodity to the customer. The volatility in any given period related to unrealized non-cash gains or losses on derivative instruments can be significant to our overall results. However, we ultimately expect those gains and losses to be offset by the cost of product when purchased.

Effective October 1, 2018 we adopted the requirements of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). In accordance with the new revenue standard requirements, our Condensed Consolidated Statement of Operations and the balance sheet were impacted due to a portion of our sales being accounted for as service revenue that were previously accounted for as product revenue, a decrease in revenue as a result of the deferment of certain customer credits that were previously accounted for as delivery and branch expenses and expensed as incurred, and a decrease in delivery and branch expenses for the deferment of commissions provided to Company employees that were previously expensed as incurred. Refer to Note 3- Revenue Recognition to the Condensed Consolidated Financial Statements for the impact of the adoption of the revenue recognition accounting standard on our Condensed Consolidated ~~Statement of Operations and balance sheet, as of and for the three and nine months ended June 30, 2019.~~

We measure net customer attrition on an ongoing basis 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. However, additional customers that are obtained through marketing efforts or lost at newly acquired businesses are included in these calculations. Customer attrition percentage calculations include customers added through acquisitions in the denominators of the calculations on a weighted average basis. Gross customer losses are the result of a number of factors, including price competition, move-outs, credit losses, conversions to natural gas and service disruptions. When a customer moves out of an existing home, we count the “move out” as a loss, and if we are successful in signing up the new homeowner, the “move in” is treated as a gain. The economic impact of COVID-19 could increase future attrition due to higher losses from credit related issues.

	Fiscal Year Ended																					Fiscal Year Ended
	2019							2018							2017							2020							2019							2018
					Net							Net							Net							Net							Net							Net
	Gross Customer				Gains /			Gross Customer				Gains /			Gross Customer				Gains /			Gross Customer				Gains /			Gross Customer				Gains /			Gross Customer				Gains /
	Gains		Losses		(Attrition)			Gains		Losses		(Attrition)			Gains		Losses		(Attrition)			Gains		Losses		(Attrition)			Gains		Losses		(Attrition)			Gains		Losses		(Attrition)
First Quarter		26,200		25,400		800			24,700		19,900		4,800			24,300		19,100		5,200			23,900		23,100		800			26,200		25,400		800			24,700		19,900		4,800
Second Quarter		12,600		22,300		(9,700	)		14,100		18,900		(4,800	)		13,200		16,400		(3,200	)		12,600		18,200		(5,600	)		12,600		22,300		(9,700	)		14,100		18,900		(4,800	)
Third Quarter		7,100		15,900		(8,800	)		7,900		16,200		(8,300	)		8,000		12,700		(4,700	)		—		—		—			7,100		15,900		(8,800	)		7,900		16,200		(8,300	)
Fourth Quarter		—		—		—			13,100		19,400		(6,300	)		12,400		16,500		(4,100	)		—		—		—			13,200		20,600		(7,400	)		13,100		19,400		(6,300	)
Total		45,900		63,600		(17,700	)		59,800		74,400		(14,600	)		57,900		64,700		(6,800	)		36,500		41,300		(4,800	)		59,100		84,200		(25,100	)		59,800		74,400		(14,600	)

Customer gains (attrition) as a percentage of home heating oil and propane customer base

	Fiscal Year Ended																											Fiscal Year Ended
	2019									2018									2017									2020									2019									2018
							Net									Net									Net									Net									Net									Net
	Gross Customer						Gains /			Gross Customer						Gains /			Gross Customer						Gains /			Gross Customer						Gains /			Gross Customer						Gains /			Gross Customer						Gains /
	Gains			Losses			(Attrition)			Gains			Losses			(Attrition)			Gains			Losses			(Attrition)			Gains			Losses			(Attrition)			Gains			Losses			(Attrition)			Gains			Losses			(Attrition)
First Quarter		5.8	%		5.6	%		0.2	%		5.4	%		4.3	%		1.1	%		5.6	%		4.4	%		1.2	%		5.3	%		5.1	%		0.2	%		5.8	%		5.6	%		0.2	%		5.4	%		4.3	%		1.1	%
Second Quarter		2.8	%		5.0	%		(2.2	%)		3.0	%		4.1	%		(1.1	%)		3.0	%		3.7	%		(0.7	%)		2.8	%		4.0	%		(1.2	%)		2.8	%		5.0	%		(2.2	%)		3.0	%		4.1	%		(1.1	%)
Third Quarter		1.6	%		3.5	%		(1.9	%)		1.7	%		3.5	%		(1.8	%)		1.8	%		2.9	%		(1.1	%)		—			—			—			1.6	%		3.5	%		(1.9	%)		1.7	%		3.5	%		(1.8	%)
Fourth Quarter		—			—			—			2.9	%		4.3	%		(1.4	%)		2.7	%		3.6	%		(0.9	%)		—			—			—			2.7	%		4.2	%		(1.5	%)		2.9	%		4.3	%		(1.4	%)
Total		10.2	%		14.1	%		(3.9	%)		13.0	%		16.2	%		(3.2	%)		13.1	%		14.6	%		(1.5	%)		8.1	%		9.1	%		(1.0	%)		12.9	%		18.3	%		(5.4	%)		13.0	%		16.2	%		(3.2	%)

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, the Company lost ~~17,700~~4,800 accounts (net), or ~~3.9~~%,1.0% of ~~our~~its home heating oil and propane customer base, compared to ~~8,300~~8,900 accounts lost (net), or ~~1.8%,~~2.0% of ~~our~~its home heating oil and propane customer base, during the ~~nine~~six months ended ~~June 30, 2018. Our gross~~March 31, 2019. Gross customer gains were ~~800~~2,300 less than the prior year’s comparable period, ~~but our~~and gross customer losses were ~~8,600~~6,400 accounts ~~higher. Gross customer losses exceeded the prior year primarily due to our decision not to renew certain low margin accounts, credit issues, and the price of home heating oil and propane.~~

For the nine months ended June 30, 2018, the Company lost 8,300 accounts (net), or 1.8% of our home heating oil and propane customer base, compared to 2,700 accounts lost net, or 0.6%, of our home heating oil and propane customer base, during the nine months ended June 30, 2017. Our net customer attrition was 5,600 accounts worse as our gross customer gains were 1,200 accounts higher than the prior year’s comparable period and our gross customer losses were 6,800 accounts higher. Gross customer losses exceeded the prior year primarily as a result of an increase in customer losses due to the price of home heating oil and propane, credit issues, and service disruptions. The wholesale cost of home heating oil and propane increased by 20.4% per gallon year-over-year, putting additional price pressure on retaining our customer base and attracting new customers. Higher prices also drove up customer account balances resulting in higher credit-related losses. In addition, the extremely cold temperatures and hazardous road conditions, due to winter storms at the end of December 2017 and early January 2018, stressed our ability to service our customers at times, resulting in higher delivery and service losses. The majority of the increase in gross customer losses occurred during the third quarter of fiscal 2018, after the heating season when it is easier for a customer to leave us.less.

During the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, we estimate that we lost ~~1.1%~~0.7% of our home heating oil and propane accounts to natural gas conversions versus ~~1.0%~~0.8% for the ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 and ~~0.9% for the nine~~0.6% six months ended ~~June 30, 2017.~~March 31, 2018. Losses to natural gas in our footprint for the heating oil and propane industry could be greater or less than the Company’s estimates. ~~Conversions to natural gas may continue as it remains less expensive than home heating oil on an equivalent BTU basis.~~

The timing of acquisitions and the types of products sold by ~~the~~ acquired companies ~~will~~ impact year-over-year comparisons. During the six months ended March 31, 2020, the Company acquired a heating oil dealer. During fiscal 2019 the Company ~~acquired two liquid product dealers, and in January 2019 we purchased the assets~~ of one of our subcontractors. The subcontractor acquisition had revenues of approximately $11 million for the 12 month period prior to date of acquisition and Star accounted for approximately 60% of its revenue ~~(any such revenue will be eliminated in consolidation, but the Company will benefit from lower costs related to such revenue). During fiscal 2018 the Company~~ completed ~~six~~three acquisitions. The following tables detail the Company’s acquisition activity and the ~~volumes~~associated volume sold ~~by the acquired company~~ during the 12-month period prior to the date of acquisition.

(in thousands of gallons)
Fiscal 2019 Acquisitions
Fiscal 2020 Acquisitions								Fiscal 2020 Acquisitions
Acquisition Number	Month of Acquisition	Home Heating Oil and Propane		Other Petroleum Products		Total			Month of Acquisition	Home Heating Oil and Propane		Other Petroleum Products		Total
1	November		130		-		130		October		1,085		—		1,085
2	January (a)		-		-		-
3	May		13,200		6,772		19,972
			13,330		6,772		20,102				1,085		—		1,085

The ~~following matters should be considered in analyzing our financial results. Our~~Company’s fiscal year ends on September 30. All references to quarters and years, respectively, in this document are to the fiscal quarters and fiscal years unless otherwise noted. The seasonal nature of our business has resulted, on average, during the last five years, in the sale of approximately 30% of ~~our~~the volume of home heating oil and propane in the first fiscal quarter and 50% of ~~our~~the volume in the second fiscal quarter, the peak heating season. Approximately 25% of the volume of motor fuel and other petroleum products is sold in each of the four fiscal quarters. We generally realize net income ~~in both of these~~during the quarters ending December and March and net losses during the quarters ending June and September. In addition, sales volume typically fluctuates from year to year in response to variations in weather, wholesale energy prices and other factors.

A “degree day” is an industry measurement of temperature designed to evaluate energy demand and consumption. Degree days are based on how far the average daily temperature departs from 65°F. Each degree of temperature above 65°F is counted as one cooling degree day, and each degree of temperature below 65°F is counted as one heating degree day. Degree days are accumulated each day over the course of a year and can be compared to a monthly or a long-term (multi-year) average to see if a month or a year was warmer or cooler than usual. Degree days are officially observed by the National Weather Service.

Every ten years, the National Oceanic and Atmospheric Administration (“NOAA”) computes and publishes average meteorological quantities, including the average temperature for the last 30 years by geographical location, and the corresponding degree days. The latest and most widely used data covers the years from 1981 to 2010. 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.

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 Quarterly Report.

For the three months ended ~~June 30, 2019,~~March 31, 2020, retail volume of home heating oil and propane sold decreased by ~~17.6~~37.1 million gallons, or ~~32.2%~~21.4%, to ~~36.9~~136.2 million gallons, compared to ~~54.5~~173.3 million gallons for the three months ended ~~June 30, 2018.~~March 31, 2019. 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 the three months ended ~~June 30, 2019~~March 31, 2020 were ~~21.5%~~18.2% warmer than the three months ended ~~June 30, 2018 and 20.6%~~March 31, 2019. Temperatures during the three months ended March 31, 2020 were 21.2% warmer than normal, as reported by NOAA. The volume delivered during the third fiscal quarter is largely impacted by heating degree days accumulated during April. While the third quarter of fiscal 2019 was 21.5% warmer than the prior year, April 2019 was over 35% warmer than April 2018. In addition, April 2018 was over 20% colder than normal. For the twelve months ended ~~June 30, 2019,~~March 31, 2020, net customer attrition for the base business was ~~5.3%~~4.6%. 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:

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 the three months ended ~~June 30, 2019~~March 31, 2020, compared to the three months ended ~~June 30, 2018:~~March 31, 2019:

	Three Months Ended						Three Months Ended
Customers	June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019
Residential Variable		38.0	%		41.5	%		42.0	%		41.1	%
Residential Price-Protected (Ceiling and Fixed Price)		48.4	%		46.9	%		45.5	%		46.7	%
Commercial/Industrial		13.6	%		11.6	%		12.5	%		12.2	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

Volume of other petroleum products sold ~~increased~~decreased by ~~6.3~~2.4 million gallons, or ~~17.4%~~6.1%, to ~~42.3~~36.6 million gallons for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~36.0~~39.0 million gallons for the three months ended ~~June 30, 2018, largely~~March 31, 2019 attributable to lower wholesale revenue due to ~~acquisitions~~.the 18.2% warmer weather and lower sales of motor fuels.

For the three months ended ~~June 30, 2019,~~March 31, 2020, product sales decreased ~~$45.7~~by $156.1 million, or ~~17.9%~~24.5%, to ~~$210.7~~$481.3 million, compared to ~~$256.4~~$637.4 million for the three months ended ~~June 30, 2018 as~~March 31, 2019 due to the impact of lower volume ~~sales of home heating oil~~sold and ~~propane at slightly higher~~reduced selling prices. The decline in selling prices was reduced by an increase in volume sales of other petroleum products at lower selling prices. The adoption of ASU No. 2014-09 lowered home heating oil and propane product sales by $1.6 million and reduced home heating oil and propane average selling prices by $0.0431 per gallon duelargely attributable to a portion of these sales being previously accounted for as service revenue ($1.2 million) and accounting for certain upfront credits given to customers previously accounted for as delivery and branch expenses ($0.4 million).decrease in product cost.

For the three months ended ~~June 30, 2019,~~March 31, 2020, installation and service revenue ~~increased $1.8~~decreased by $0.4 million, or ~~2.6%~~0.6%, to ~~$72.7~~$61.8 million, compared to ~~$70.9~~$62.2 million for the three months ended ~~June 30, 2018,~~March 31, 2019 as ~~increases due to~~the additional revenue provided from acquisitions ~~($3.0 million) and the adoption~~ of ~~ASU No. 2014-09 ($1.7 million), were partially offset by a~~ $2.9 million ~~reduction~~was reduced by lower revenues in the base business of $3.3 million. In the base business, service sales and installation sales declined due to net customer attrition and the impact of 18.2% warmer weather which ~~$0.9 million was related to~~negatively impacted billable service revenue and reduced the ~~sale in September 2018~~need for the installation of ~~the Company’s security business.~~new equipment.

For the three months ended ~~June 30, 2019,~~March 31, 2020, cost of product decreased ~~$31.2~~$130.3 million, or ~~16.7%~~31.4%, to ~~$155.1~~$285.4 million, compared to ~~$186.2~~$415.6 million for the three months ended ~~June 30, 2018,~~March 31, 2019, largely due ~~largely~~ to a decrease in total volume sold of ~~12.5%~~18.6%, and a ~~$0.0994~~$0.3067 per gallon, or ~~4.8%~~15.7%, decrease in wholesale product cost.

The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction. On that basis, home heating oil and propane margins for the three months ended ~~June 30, 2019~~March 31, 2020 increased by ~~$0.1021~~$0.1406 per gallon, or ~~9.2%~~11.5%, to ~~$1.2171~~$1.3619 per gallon, from ~~$1.1150~~$1.2213 per gallon during the three months ended ~~June 30, 2018.~~ March 31, 2019. The market conditions experienced during the three months ended March 31, 2020, which resulted in lower product costs, created an opportunity for margin expansion and contributed to an increase in home heating oil and propane margins versus the prior year’s comparable quarter. In addition, the Company utilizes weighted average costing for computing cost of goods sold which contributed to an increase in product gross profit for the three months ended March 31, 2020 of $6.9 million. It is anticipated that product gross profit will be reduced by a similar amount over future periods asthe impact of recent price changes are incorporated into the weighted average costing calculations. Going forward, we cannot assume that the per gallon margins realized during the three months ~~ending June 30, 2019~~ended March 31, 2020 are sustainable for future periods.

Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.

	Three Months Ended								Three Months Ended
	June 30, 2019				June 30, 2018				March 31, 2020				March 31, 2019
Home Heating Oil and Propane	Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon
Volume		36.9				54.5				136.2				173.3
Sales	$	116.0	$	3.1421	$	169.6	$	3.1130	$	413.5	$	3.0358	$	554.4	$	3.1989
Cost	$	71.1	$	1.9250	$	108.9	$	1.9980	$	228.0	$	1.6739	$	342.7	$	1.9776
Gross Profit	$	44.9	$	1.2171	$	60.7	$	1.1150	$	185.5	$	1.3619	$	211.7	$	1.2213

Other Petroleum Products	Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon
Motor Fuel and Other Petroleum Products									Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon
Volume		42.3				36.0				36.6				39.0
Sales	$	94.7	$	2.2395	$	86.8	$	2.4112	$	67.8	$	1.8534	$	83.0	$	2.1311
Cost	$	84.0	$	1.9870	$	77.3	$	2.1476	$	57.4	$	1.5683	$	72.9	$	1.8717
Gross Profit	$	10.7	$	0.2525	$	9.5	$	0.2636	$	10.4	$	0.2851	$	10.1	$	0.2594

Total Product	Amount (in millions)		Amount (in millions)		Amount (in millions)		Amount (in millions)
Sales	$	210.7	$	256.4	$	481.3	$	637.4
Cost	$	155.1	$	186.2	$	285.4	$	415.6
Gross Profit	$	55.6	$	70.2	$	195.9	$	221.8

For the three months ended ~~June 30, 2019,~~March 31, 2020, total product gross profit was ~~$55.6~~$195.9 million, which was ~~$14.6~~$25.9 million, or ~~20.8%~~11.7% less than the three months ended ~~June 30, 2018,~~March 31, 2019, as a decrease in home heating oil and propane volume ($~~19.6~~45.3 million) was ~~partially~~somewhat offset by an increase in home heating oil and propane margins ($~~3.8~~19.1 million) and ana slight increase in gross profit from other petroleum products ($~~1.2~~0.3 million). ~~The increase in product gross profit from other petroleum products was largely due to acquisitions.~~

Total installation costs for the three months ended ~~June 30, 2019~~March 31, 2020 decreased ~~by $1.4~~slightly to $17.6 million, or ~~6.8% to $19.7 million,~~0.4%, compared to ~~$21.1~~$17.7 million inof installation costs for the three months ended ~~June 30, 2018, as a decline of $1.6 million in the base business due to lower sales was reduced by additional installation costs associated with acquisitions.~~March 31, 2019. Installation costs as a percentage of installation sales were ~~80.9%~~87.2% for the three months ended ~~June 30, 2019~~March 31, 2020 and ~~83.0%~~86.6% for the three months ended June 30, 2018. The gross profit percentage on installation sales increased from 17.0% for the three months ended June 30, 2018 to 19.1% for the three months ended June 30, 2019 due to the January 2019 acquisition of one of our subcontractors.March 31, 2019.

Service expense ~~increased~~decreased by ~~$1.8~~$4.0 million, or ~~4.4%~~8.5%, to ~~$42.4~~$43.7 million for the three months ended ~~June 30, 2019,~~March 31, 2020, representing ~~87.7%~~105.0% of service sales, versus ~~$40.7~~$47.7 million, or ~~89.4%~~114.2% of service sales, for the three months ended June 30, 2018. This increase was due to acquisition related service expenses of $1.3 million, and a $1.3 million, or 3.2% increase in the base business primarily due to an increased focus in the quarter on performing customer heating system checks. This was partially offset by $0.8 million of reduced expenses related to the sale of the Company’s security business in September 2018.March 31, 2019. We realized a combined gross profit from service and installation of ~~$10.6~~$0.5 million for the three months ended ~~June 30, 2019~~March 31, 2020 compared to ~~$9.1~~a loss of $3.2 million for the three months ended ~~June 30, 2018.~~ ~~Also, as a result~~March 31, 2019 or an improvement of $3.7 million. Acquisitions positively impacted the ~~adoption~~comparison by $0.5 million and in the base business, service and installation gross profit improved by $3.2 million due to warmer temperatures of ~~ASU No. 2014-09,~~18.2%, which reduced the demand for service, ~~revenue increased~~and certain measures undertaken by $~~1.7~~ ~~million related~~the company to ~~a portion of our sales being accounted for as service revenue that were previously accounted for as product revenue.~~improve its operating efficiency. Management views the service and installation department on a combined basis because many overhead functions cannot be separated or precisely allocated to either service or installation billings.

During the three months ended ~~June 30,~~March 31, 2020, the change in the fair value of derivative instruments resulted in an $11.7 million charge due to a decrease in the market value for unexpired hedges (a $15.2 million charge) partially offset by a $3.5 million credit due to the expiration of certain hedged positions.

During the three months ended March 31, 2019, the change in the fair value of derivative instruments resulted in a ~~$1.6 million charge due to a decrease in the market value for unexpired hedges ($2.3 million), and partially offset by a $0.7 million credit due to the expiration of certain hedged positions~~.

~~During the three months ended June 30, 2018, the change in the fair value of derivative instruments resulted in a $7.5~~$13.4 million credit due to an increase in the market value for unexpired hedges ~~($6.9 million)~~(a $5.5 million credit), and a ~~$0.6~~$7.9 million credit due to the expiration of certain hedged positions.

For the three months ended ~~June 30, 2019,~~March 31, 2020, delivery and branch expenses decreased ~~$0.6~~$25.2 million, or ~~0.8%~~22.8%, to ~~$82.7~~$85.5 million, compared to ~~$83.3~~$110.7 million for the three months ended ~~June 30, 2018,~~March 31, 2019, as ~~the~~ additional costs from acquisitions of ~~$2.9~~$3.7 million ~~was~~were more than offset by a $~~3.5~~$28.9 million, or ~~4.2%~~26.0%, decrease in expenses inwithin the base business. The ~~decrease~~decline in the base business was attributable to a ~~$2.1~~$7.2 million, or ~~9.9%~~18.5%, ~~decrease~~reduction in direct delivery costs due to lower volume, a ~~$1.5~~$0.9 million decrease in expenses related to ~~our~~the Company’s concierge level of service program (which was greatly curtailed in January 2019), and ~~a $1.2~~other reductions in operating costs totaling $7.6 million, ~~decrease in other~~or 6.9%, as we continue to improve Star’s operating efficiency. Operating expenses ~~primarily~~were also reduced by $13.1 million due to ~~insurance claims~~. ~~Partially offsetting~~ the ~~decrease~~impact of our weather hedging program. As of December 31, 2019, as previously disclosed in our quarterly report on Form 10-Q for the quarter ended December 31, 2019, we expected to pay $3.0 million under our weather hedge program based on prevailing conditions as of that point in time; however, the weather for the weather hedge period comprised of the three months ended March 31, 2020 were ultimately warmer than the hedge strikes resulting in a reversal of the $3.0 million charge previously accrued and the recording of an incremental benefit and receivable in the ~~base business expenses~~amount of $10.1 million. This $10.1 million was ~~a $1.3 million increase~~received in ~~bad debt and payment processing related costs.~~April 2020.

For the three months ended ~~June 30, 2019,~~March 31, 2020, depreciation and amortization expense increased ~~$0.3~~$1.2 million, or ~~3.6%~~15.7% to ~~$8.2~~$9.1 million, compared to $7.9 million for the three months ended ~~June 30, 2018~~March 31, 2019, largely due to acquisitions.

For the three months ended ~~June 30, 2019,~~March 31, 2020, general and administrative expenses decreased by ~~$0.4~~$4.4 million or 44.9%, to ~~$5.5~~$5.4 million, from ~~$5.9~~$9.8 million for the three months ended ~~June 30, 2018,~~March 31, 2019, primarily due to ~~reduced profit sharing. The Company accrues approximately 6%~~lower legal and professional fees of ~~Adjusted EBITDA, as defined~~$2.6 million, a $1.5 million charge related to the discontinued use of a tank monitoring system that occurred during the three months ended March 31, 2019 (that did not recur in the ~~Company’s profit sharing plan, for distribution to its employees,~~current fiscal year), and ~~this amount is payable when the Company achieves Adjusted EBITDA~~other savings of ~~at least 70% of the amount budgeted. The dollar amount of the profit sharing pool is subject to increases and decreases in line with increases and decreases in Adjusted EBITDA.~~$0.3 million.

For the three months ended ~~June 30, 2019,~~March 31, 2020, finance charge income ~~increased~~decreased to $1.3 million from $1.4 million ~~at June 30, 2018 to $1.9 million at June 30,~~for the three months ended March 31, 2019, primarily due to ~~income from increased~~lower customer late ~~customer~~ payment charges.

For the three months ended ~~June 30, 2019,~~March 31, 2020, net interest expense ~~increased~~decreased by ~~$0.8~~$0.4 million, or ~~35.8%~~13.7%, to ~~$3.0~~$2.8 million compared to ~~$2.2~~$3.2 million for the three months ended ~~June 30, 2018. Interest expense rose by $1.0 million~~March 31, 2019, primarily due to ~~an increase~~decrease in average borrowings of ~~$52.6~~ $9.4 million from ~~$141.9~~ $213.4 million during the three months ended ~~June 30, 2018~~March 31, 2019 to ~~$194.5~~ $204.0 million during the three months ended ~~June 30, 2019~~March 31, 2020 and ~~an increase~~a decrease in the weighted average interest rate from ~~4.7%~~4.9% during the three months ended ~~June 30, 2018~~March 31, 2019 to ~~5.3%~~4.7% during the three months ended ~~June 30, 2019. The increase in average borrowings of $52.6 million was largely used to fund acquisitions.~~March 31, 2020. To hedge against rising interest rates, the Company ~~entered into an~~utilizes interest rate ~~swap in July 2018 to fix the interest rate for $50.0~~swaps. At March 31, 2020 $66.5 million, or ~~50%~~51%, of our long term ~~debt.~~ debt was fixed.

For the three months ended ~~June 30, 2019,~~March 31, 2020, amortization of debt issuance ~~costs~~cost was $0.3 million, essentially unchanged from the three months ended March 31, 2019.

For the three months ended March 31, 2020, the Company’s income tax expense decreased by ~~$0.1~~$4.5 million ~~or 39.7%,~~ to ~~$0.3~~$24.7 million, ~~compared to $0.4~~from $29.2 million for the three months ended ~~June 30, 2018 due to~~ ~~lower debt issuance costs associated with the fourth amended and restated credit agreement as compared to the third amended and restated credit agreement~~.

~~For the three months ended June 30,~~March 31, 2019, ~~the Company’s income tax benefit increased by $6.6 million to $10.1 million, from $3.4 million for the three months ended June 30, 2018, primarily~~ due to a decrease in income before income taxes of ~~$21.7 million.~~ $18.5 million primarily due to a $25.1 million non-cash unfavorable change in the fair market value of derivative instruments.

For the three months ended ~~June 30, 2019,~~March 31, 2020, net ~~loss increased $15.1~~income decreased $13.9 million ~~or 188.6%,~~ to ~~$23.1~~$58.4 million primarily due to an unfavorable change in the fair value of derivative instruments of $~~9.1~~$25.1 million ~~and~~partially offset by an increase in ~~the~~ Adjusted EBITDA ~~loss~~ of ~~$11.7~~$7.4 million, described below, ~~partially offset by the favorable change~~and a decrease in income tax ~~benefit~~expense of ~~$6.6 million due to the decrease in income before income tax.~~$4.5 million.

For the three months ended ~~June 30, 2019,~~March 31, 2020, Adjusted EBITDA ~~loss~~ increased by ~~$11.7~~$7.4 million, or ~~139.3%~~7.5%, to ~~$20.1~~$106.9 million. Acquisitions provided ~~$0.9~~$4.9 million of Adjusted EBITDA ~~loss,~~ and Adjusted EBITDA in the base business ~~Adjusted EBITDA loss~~ increased by ~~$12.6 million. The~~$2.5 million as the impact of lower volume sold ~~in the base business more than~~(due to 18.2% warmer weather and net customer attrition) was largely offset by higher per gallon home heating oil and propane margins, ~~and~~ lower ~~total~~ operating expenses in the base ~~business.~~

business of $20.0 million, a favorable change in the amount due under the Company’s weather hedge of $13.1 million and an improvement in the net service and installation profitability of $3.2 million. As discussed above, product gross profit was favorably impacted by $6.9 million due to the Company’s product costing method, and the Company anticipates that product gross profit will be reduced by a similar amount over future periods.

EBITDA ~~loss~~ and Adjusted EBITDA ~~loss~~ 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 our ability to make the Minimum Quarterly Distribution. EBITDA ~~loss~~ and Adjusted EBITDA ~~loss~~ are calculated as follows:

	Three Months Ended June 30,						Three Months Ended March 31,
(in thousands)	2019			2018			2020			2019
Net loss	$	(23,098	)	$	(8,005	)
Net income							$	58,408		$	72,325
Plus:
Income tax benefit		(10,055	)		(3,416	)
Amortization of debt issuance cost		253			418
Income tax expense								24,700			29,239
Amortization of debt issuance costs								253			244
Interest expense, net		2,967			2,186			2,756			3,194
Depreciation and amortization		8,225			7,941			9,089			7,858
EBITDA loss (a)		(21,708	)		(876	)
EBITDA (a)								95,206			112,860
(Increase) / decrease in the fair value of derivative instruments		1,630			(7,515	)		11,670			(13,401	)
Adjusted EBITDA loss (a)		(20,078	)		(8,391	)
Adjusted EBITDA (a)								106,876			99,459
Add / (subtract)
Income tax benefit		10,055			3,416
Income tax expense								(24,700	)		(29,239	)
Interest expense, net		(2,967	)		(2,186	)		(2,756	)		(3,194	)
Provision for losses on accounts receivable		3,532			2,222			2,193			3,439
Decrease in accounts receivables		124,456			84,026
Decrease (increase) in accounts receivables								16,183			(63,506	)
Decrease in inventories		5,699			12,498			27,435			16,446
Increase in customer credit balances		12,299			5,681
Decrease in customer credit balances								(16,564	)		(24,356	)
Change in deferred taxes		(1,871	)		2,387			(1,114	)		(8,719	)
Change in other operating assets and liabilities		(26,442	)		(9,359	)		(5,087	)		30,200
Net cash provided by operating activities	$	104,683		$	90,294		$	102,466		$	20,530
Net cash used in investing activities	$	(53,268	)	$	(23,242	)	$	(5,534	)	$	(19,198	)
Net cash (used in) provided by financing activities	$	(62,070	)	$	(93,058	)
Net cash used in financing activities							$	(101,173	)	$	(8,749	)

The method of calculating Adjusted EBITDA may not be consistent with that of other companies, and EBITDA and Adjusted EBITDA both have limitations as analytical tools and so should not be viewed in isolation ~~and should be viewed~~but in conjunction with measurements that are computed in accordance with GAAP. Some of the limitations of EBITDA and Adjusted EBITDA are:

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, the retail volume of home heating oil and propane sold decreased by ~~14.4~~43.3 million gallons, or ~~4.3%~~15.1%, to ~~323.6~~243.3 million gallons, compared to ~~338.0~~286.6 million gallons for the ~~nine~~six months ended ~~June 30, 2018.~~March 31, 2019. 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 the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 were ~~0.8% colder~~11.6% warmer than the ~~nine~~six months ended ~~June 30, 2018 but 3.9%~~March 31, 2019 and 13.8% warmer than normal, as reported by NOAA. For the twelve months ended ~~June 30, 2019,~~March 31, 2020, net customer attrition for the base business was ~~5.3%~~4.6%. 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:

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 the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 compared to the ~~nine~~six months ended ~~June 30, 2018:~~March 31, 2019:

	Nine Months Ended						Six Months Ended
Customers	June 30, 2019			June 30, 2018			March 31, 2020			March 31, 2019
Residential Variable		40.9	%		42.5	%		42.1	%		41.2	%
Residential Price-Protected (Ceiling and Fixed Price)		46.5	%		45.3	%		45.6	%		46.3	%
Commercial/Industrial		12.6	%		12.2	%		12.3	%		12.5	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

Volume of other petroleum products sold ~~increased~~decreased by ~~26.4~~2.9 million gallons, or ~~27.3%~~3.6%, to ~~123.2~~78.0 million gallons for the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, compared to ~~96.8~~80.9 million gallons for the ~~nine~~ six months ended ~~June 30, 2018, largely~~March 31, 2019 attributable to lower wholesale sales due to ~~acquisitions~~the 11.6% warmer weather and lower sales of motor fuels.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, product sales ~~increased $60.6 million,~~decreased $0.2 billion, or ~~4.9%~~16.6%, to ~~$1.30~~$0.9 billion, compared to ~~$1.25~~$1.1 billion for the ~~nine~~six months ended ~~June 30, 2018, due to an increase~~March 31, 2019, reflecting a decrease in ~~volume sales~~wholesale product cost of other petroleum products at lower selling prices and to a lesser extent, the impact of lower volume sales of home heating oil and propane at higher selling prices. The adoption of ASU No. 2014-09 lowered home heating oil and propane product sales by $11.0 million and reduced home heating oil and propane average selling prices by $0.0341$0.1809 per gallon, ~~due to~~or 9.2%, and a ~~portion~~decrease in total volume sold of these sales being previously accounted for as service revenue ($6.7 million) and accounting for certain upfront credits given to customers previously accounted for as delivery and branch expenses ($4.3 million)12.6%.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, installations and services revenue ~~increased $9.1~~decreased $0.5 million, or ~~4.5%~~0.3%, to ~~$211.2~~$138.0 million, compared to ~~$202.1~~$138.5 million for the ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019 as ~~increases relating to~~the additional revenue provided from acquisitions ~~($6.5 million), the adoption~~ of ~~ASU No. 2014-09 ($5.0 million), and a small increase in revenue~~$8.5 million was reduced by lower revenues in the base business ~~($0.2 million) were partially offset by a $2.6 million reduction in revenues~~of $9.0 million. In the base business, service and installation sales declined due to net customer attrition and the ~~sale~~impact of 11.6% warmer weather which reduced billable service revenue and the ~~Company’s security business in September 2018.~~need for the installation of new equipment.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, cost of product ~~increased $44.6~~decreased $148.8 million, or ~~5.4%~~20.6%, to ~~$876.9~~$573.0 million, compared to ~~$832.3~~$721.9 million for the ~~nine~~six months ended ~~June 30, 2018,~~March 31, 2019, due largely to ~~an increase~~a decrease in total volume sold of ~~2.8%~~12.6%, and a ~~$0.0487~~$0.1809 per gallon, or ~~2.5%~~9.2%, ~~increase~~decrease in wholesale product cost.

The table below calculates our per gallon margins and reconciles product gross profit for home heating oil and propane and other petroleum products. We believe the change in home heating oil and propane margins should be evaluated before the effects of increases or decreases in the fair value of derivative instruments, as we believe that realized per gallon margins should not include the impact of non-cash changes in the market value of hedges before the settlement of the underlying transaction. On that basis, home heating oil and propane margins for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 increased by ~~$0.0837~~$0.0823 per gallon, or ~~7.3%~~6.7%, to ~~$1.2314~~$1.3155 per gallon, from ~~$1.1477~~$1.2332 per gallon during the ~~nine~~six months ended ~~June 30, 2018.~~ March 31, 2019. In addition, the Company utilizes weighted average costing for computing cost of goods sold which contributed to an increase in product gross profit for the six months ended March 31, 2020 of $6.9 million. It is anticipated that product gross profit will be reduced by a similar amount over future periods asthe impact of recent price changes are incorporated into the weighted average costing calculations. Going forward, we cannot assume that the per gallon margins realized during the ~~nine~~six months ~~ending June 30, 2019~~ended March 31, 2020 are sustainable for future periods.

Product sales and cost of product include home heating oil, propane, other petroleum products and liquidated damages billings.

	Nine Months Ended								Six Months Ended
	June 30, 2019				June 30, 2018				March 31, 2020				March 31, 2019
Home Heating Oil and Propane	Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon
Volume		323.6				338.0				243.3				286.6
Sales	$	1,034.6	$	3.1975	$	1,025.9	$	3.0350	$	756.8	$	3.1102	$	918.6	$	3.2046
Cost	$	636.1	$	1.9661	$	637.9	$	1.8873	$	436.7	$	1.7947	$	565.1	$	1.9714
Gross Profit	$	398.5	$	1.2314	$	388.0	$	1.1477	$	320.1	$	1.3155	$	353.5	$	1.2332

Other Petroleum Products	Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon
Motor Fuel and Other Petroleum Products									Amount (in millions)		Per Gallon		Amount (in millions)		Per Gallon
Volume		123.2				96.8				78.0				80.9
Sales	$	272.2	$	2.2100	$	220.3	$	2.2765	$	157.2	$	2.0143	$	177.5	$	2.1946
Cost	$	240.8	$	1.9549	$	194.4	$	2.0086	$	136.3	$	1.7471	$	156.8	$	1.9382
Gross Profit	$	31.4	$	0.2551	$	25.9	$	0.2679	$	20.9	$	0.2672	$	20.7	$	0.2564

Total Product	Amount (in millions)		Amount (in millions)		Amount (in millions)		Amount (in millions)
Sales	$	1,306.8	$	1,246.2	$	914.0	$	1,096.1
Cost	$	876.9	$	832.3	$	573.0	$	721.9
Gross Profit	$	429.9	$	413.9	$	341.0	$	374.2

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, total product gross profit was ~~$429.9~~$341.0 million, which was ~~$16.0~~$33.2 million, or ~~3.9% greater~~8.9% less than the ~~nine~~six months ended ~~June 30, 2018, due to higher~~March 31, 2019, as a decrease in home heating oil and propane ~~margins~~volume sold ($~~27.1~~53.4 million) ~~that were partially~~was slightly offset by ~~a decrease in volume~~higher margins ($~~16.6~~20.0 million), and an increase in gross profit from other petroleum products ($~~5.5~~0.2 million). ~~The increase in product gross profit from other petroleum products was largely due to acquisitions.~~

Total installation costs for the ~~nine~~six months ended ~~June 30, 2019 increased by $1.4 million, or 2.2%~~March 31, 2020 decreased slightly to ~~$62.2~~$42.4 million, compared to ~~$60.8~~$42.5 million in installation costs for the ~~nine~~six months ended ~~June 30, 2018, due to higher sales in the base business, and to a lesser extent, acquisitions.~~March 31, 2019. Installation costs as a percentage of installation sales were 83.5% for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 and 84.4% for the ~~nine~~six months ended ~~June 30, 2018 were 83.2% and 83.9% respectively.~~March 31, 2019.

Service expense ~~increased~~decreased by ~~$4.5~~$4.6 million, or ~~3.3%~~4.8%, to ~~$139.7~~$92.6 million for the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, representing ~~102.3%~~106.0% of service sales, versus ~~$135.2~~$97.2 million, or ~~104.3%~~110.3% of service sales, for the ~~nine~~six months ended ~~June 30, 2018. This increase was due to acquisition related service expenses of $3.8~~ million and a $3.2 million, or 0.5%, increase in the base business partially due to an increased focus on performing customer heating system checks. This was partially offset by $2.5 million of reduced expenses related to the sale of the Company’s security business in September 2018.March 31, 2019. We realized a combined gross profit from service and installation of ~~$9.4~~$3.1 million for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 compared to a ~~combined~~ gross ~~profit~~loss of ~~$6.1~~$1.2 million for the ~~nine~~six months ended ~~June 30, 2018.~~ ~~Also, as a result~~March 31, 2019, an improvement of $4.3 million in profitability. Acquisitions positively impacted the ~~adoption~~comparison by $1.4 million and in the base business, service gross profit improved by $2.9 million due to warmer temperatures of ~~ASU No. 2014-09,~~11.6% which reduced the demand for service, ~~revenue increased~~and certain measures undertaken by $~~5.0~~ ~~million primarily related~~the company to ~~accounting for certain customer consideration as service revenue that was previously accounted for as product revenue.~~ improve operating

efficiency. Management views the service and installation department on a combined basis because many overhead functions cannot be separated or precisely allocated to either service or installation billings.

During the ~~nine~~six months ended ~~June 30,~~March 31, 2020, the change in the fair value of derivative instruments resulted in a $5.3 million charge due to a decrease in the market value for unexpired hedges (a $14.0 million charge) partially offset by an $8.7 million credit due to the expiration of certain hedged positions.

During the six months ended March 31, 2019, the change in the fair value of derivative instruments resulted in a $~~19.3~~$17.6 million charge due to a decrease in the market value for unexpired hedges $~~5.4~~(a $5.3 million charge), and a $~~13.9~~ ~~million charge due to the expiration of certain hedged positions~~.

During the nine months ended June 30, 2018, the change in the fair value of derivative instruments resulted in a $7.3 million credit due to an increase in the market value for unexpired hedges ($11.1 million), partially offset by a $3.8$12.3 million charge due to the expiration of certain hedged positions.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, delivery and branch expenses ~~increased $14.9~~decreased $31.2 million, or ~~5.3%~~14.6%, to ~~$296.0~~$182.2 million, compared to ~~$281.1~~$213.4 million for the ~~nine~~six months ended ~~June 30, 2018, due to~~March 31, 2019 as additional costs from acquisitions of $~~11.6~~ $7.6 million ~~and~~were more than offset by a $~~3.3~~$38.8 million, or ~~1.2~~%18.2%, ~~increase~~decrease in ~~operating~~ expenses inwithin the base business. The ~~increase~~decline in the base business ~~includes $2.6~~was attributable to a $10.0 million, or 14.4%, reduction in ~~increased bad debt and payment processing related~~direct delivery costs $~~2.2~~due to lower volume, a $3.5 million ~~of increased vehicle related fuel and leasing and repair costs, $1.7~~ ~~million of costs~~decrease in expenses related to ~~our~~the Company’s concierge level of service program (which was greatly curtailed ~~this past January)~~in January 2019), and ~~$1.6~~other reductions in operating costs totaling $13.1 million, or 6.1%, as we continue to improve Star’s operating efficiency. Operating expenses were reduced by $12.2 million due to the impact of ~~normal salary,~~our weather hedging program. As of March 31, 2019 we recorded a charge of $2.1 million versus a benefit and ~~other expense changes. These increases~~receivable of $10.1 million as of March 31, 2020. The $10.1 million was received in ~~the base business expenses were partially reduced by a $2.2~~ ~~million decline in insurance claims expense. Delivery and branch expenses also decreased $2.6~~ ~~million (with a corresponding decrease to revenue) for certain customer credits as a result of the adoption of ASU No. 2014-09~~.April 2020.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, depreciation and amortization expense increased ~~$0.4~~$2.5 million, or ~~1.9%~~16.3%, to ~~$23.8~~$18.1 million, compared to ~~$23.4~~$15.6 million for the ~~nine~~six months ended ~~June 30, 2018~~March 31, 2019 largely due to acquisitions.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, general and administrative expenses ~~increased~~decreased by ~~$4.4~~$5.8 million, or ~~23.3%~~32.5%, to ~~$23.1~~$11.9 million from ~~$18.8~~$17.7 million for the ~~nine~~six months ended ~~June 30, 2018,~~ March 31, 2019, primarily due to ~~higher~~lower legal and professional expenses of $~~3.0~~ $3.6 million, a $~~1.5~~$1.5 million charge related to the discontinued use of a tank monitoring system ~~and a $0.6~~ ~~million increase in acquisition expenses~~ that ~~was partially offset by a $0.7~~ ~~million~~ ~~reduction in profit sharing. The Company accrues approximately 6% of Adjusted EBITDA, as defined~~occurred during the six months ended March 31, 2019 (and did not recur in the ~~Company’s profit sharing plan, for distribution to its employees,~~current fiscal year), and ~~this amount is payable when the Company achieves Adjusted EBITDA~~other savings of ~~at least 70% of the amount budgeted. The dollar amount of the profit sharing pool is subject to increases and decreases in line with increases and decreases in Adjusted EBITDA.~~$0.7 million.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, finance charge income ~~increased by $0.5~~decreased to $2.0 million ~~or 11.6%, to $4.2 million compared to $3.7~~from $2.3 million for the ~~nine months~~six month ended ~~June 30, 2018,~~March 31, 2019, primarily due to ~~income from increased~~lower customer late ~~customer~~ payment charges.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, net interest expense ~~increased~~decreased by ~~$2.0~~$0.3 million, or ~~30.4%~~4.8%, to ~~$8.7~~$5.4 million compared to ~~$6.7~~$5.7 million for the ~~nine~~six months ended ~~June 30, 2018. Interest expense rose by $2.6 million primarily due to~~March 31, 2019. The change year-over-year reflects an increase in average borrowings of ~~$34.7~~ $16.9 million from ~~$148.2~~ $177.1 million during the ~~nine~~ six months ended ~~June 30, 2018~~March 31, 2019 to ~~$182.9~~ $194.0million during the ~~nine~~six months ended ~~June 30, 2019 and an increase~~March 31, 2020, offset by a decrease in the weighted average interest rate from ~~4.2%~~5.2% during the ~~nine~~ six months ended ~~June 30, 2018~~March 31, 2019 to ~~5.2%~~4.9% during the ~~nine~~six months ended ~~June 30, 2019.~~March 31, 2020. The increase in average borrowings of ~~$34.7~~ $16.9 million was largely used to fund acquisitions. To hedge against rising interest rates, the Company ~~entered into an~~utilizes interest rate ~~swap in July 2018 to fix the interest~~

~~rate for $50.0~~swaps. At March 31, 2020, $66.5 million, or ~~50%~~51%, of our long term ~~debt.~~debt was fixed. Interest income increased by ~~$0.6~~$0.3 million primarily due to higher cash deposited into our captive insurance ~~company and an increase in the return on these investments.~~company.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, amortization of debt issuance costs ~~decreased by $0.3~~was $0.5 million, ~~or 26.9%, to $0.8 million compared to $1.0 million for~~essentially unchanged from the ~~nine~~six months ended ~~June 30, 2018~~ ~~due to lower debt issuance costs associated with the fourth amended and restated credit agreement as compared to the third amended and restated credit agreement.~~March 31, 2019.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, the Company’s income tax expense ~~decreased~~increased by ~~$2.9~~$6.3 million to ~~$20.2~~$36.5 million, from ~~$23.1~~$30.2 million for the ~~nine~~six months ended ~~June 30, 2018. Income tax expense decreased $14.1~~March 31, 2019 due primarily to an increase in income before income taxes of $17.8 million ~~due to lower income versus the prior year’s comparative quarter. The decrease~~that was ~~partially offset by an $11.2~~ million discrete income tax benefit recorded as of June 30, 2018 to reflect the impact of the Tax Reform Act signed into law in December 2017 that did not recur in fiscal 2019. The tax reform reduced the Federal statutory income tax rate for corporations from 35% to 21% effective January 1, 2018 and, therefore, the Company’s net deferred tax liability would be realized at a lower statutory tax rate than originally recorded, resulting in a tax benefit to the Company. The Company’s combined ~~Federal, state, and local~~ ~~effective tax rate increased from 23.1% for the nine months ended June 30, 2018 to 28.1% for the nine months ended June 30, 2019. Excluding the impact of the discrete tax benefit, our combined~~ ~~Federal, state, and local~~ ~~effective income tax rate decreased to 28.1% for~~ ~~the~~ ~~nine months ended June 30, 2019 from 34.3% for~~ ~~the~~ ~~nine months ended June 30, 2018,~~ primarily due to a $12.4 million non-cash favorable change in the ~~lower enacted Federal statutory income tax rate.~~fair market value of derivative instruments.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, net income ~~decreased $25.4~~increased $11.5 million, or ~~33.0%~~15.4%, to ~~$51.5~~$86.2 million due primarily to ~~an unfavorable~~ a favorable change in the fair value of derivative instruments of $~~26.6~~$12.4 million and ana $7.7 million increase in ~~net interest expense of $2.0 million~~Adjusted EBITDA, described below, that was partially offset by ~~lower~~a $6.3 million increase in income tax ~~expense and the increase in Adjusted EBITDA of $0.4 million, described below.~~expense.

For the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, Adjusted EBITDA increased by ~~$0.4~~$7.7 million, or ~~0.3%~~5.3%, to ~~$124.2~~$152.0 million. Acquisitions provided ~~$5.4~~$8.0 million of Adjusted EBITDA ~~while,~~and Adjusted EBITDA in the base business ~~Adjusted EBITDA~~ decreased by ~~$5.0 million. The~~$0.3 million as the impact of lower volume sold (due to 11.6% warmer weather and net customer attrition) was largely offset by higher per gallon home heating oil and propane margins, lower operating expenses in the base business ~~more than offset~~of $32.1 million, a decline in home heating oil and propane volume of 4.3% and increase in total operating expenses, improving year-over-year Adjusted EBITDA by $4.5 million prior to the following items: i) $3.3 million due to the implementation of the aforementioned revenue recognition accounting standard (the majority of which is expected to be reversed by the end of fiscal 2019); ii) $3.0 million of higher legal and professional expenses; iii) a charge of $1.5 million related to the discontinued use of a tank monitoring system; iv) a $1.5 million increase in the net Adjusted EBITDA loss associated with the Company’s concierge program, which was greatly curtailed this past January; and v) $0.2 million of expense related to an increasefavorable change in the amount due under ~~our~~the Company’s weather hedge ~~contracts (as previously discussed).~~of $12.2 million and an improvement in the net service and installation profitability of $2.9 million. As discussed above, product gross profit was favorably impacted by $6.9 million due to the Company’s product costing method, and the Company anticipates that product gross profit will be reduced by a similar amount over future periods.

EBITDA 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 our ability to make the Minimum Quarterly Distribution. EBITDA and Adjusted EBITDA are calculated as follows:

	Nine Months Ended June 30,						Six Months Ended March 31,
(in thousands)	2019			2018			2020			2019
Net income	$	51,542		$	76,955		$	86,163		$	74,640
Plus:
Income tax expense		20,157			23,077			36,482			30,212
Amortization of debt issuance cost		756			1,034
Amortization of debt issuance costs								488			503
Interest expense, net		8,677			6,656			5,435			5,710
Depreciation and amortization		23,828			23,385			18,139			15,603
EBITDA (a)		104,960			131,107			146,707			126,668
(Increase) / decrease in the fair value of derivative instruments		19,268			(7,306	)		5,253			17,638
Adjusted EBITDA (a)		124,228			123,801			151,960			144,306
Add / (subtract)
Income tax expense		(20,157	)		(23,077	)		(36,482	)		(30,212	)
Interest expense, net		(8,677	)		(6,656	)		(5,435	)		(5,710	)
Provision for losses on accounts receivable		8,500			5,687			3,203			4,968
Increase in accounts receivables		(34,793	)		(86,504	)		(69,562	)		(159,249	)
Decrease in inventories		1,958			12,390
Decrease (increase) in inventories								12,008			(3,741	)
Decrease in customer credit balances		(26,177	)		(36,503	)		(32,462	)		(38,476	)
Change in deferred taxes		(11,206	)		29,641			222			(9,335	)
Change in other operating assets and liabilities		28,646			11,240			27,423			55,088
Net cash provided by operating activities	$	62,322		$	30,019
Net cash provided by (used in) operating activities							$	50,875		$	(42,361	)
Net cash used in investing activities	$	(80,578	)	$	(64,459	)	$	(13,197	)	$	(27,310	)
Net cash provided by (used in) financing activities	$	9,442		$	(8,595	)
Net cash (used in) provided by financing activities							$	(32,276	)	$	71,512

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.

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 fiscal quarters) when customer payments exceed the cost of deliveries.

During the ~~nine~~six months ended ~~June 30, 2019,~~March 31, 2020, cash provided by operating activities increased ~~$32.3~~$93.2 million to ~~$62.3~~$50.9 million, compared to ~~$30.0~~$42.4 million of cash used in operating activities during the ~~nine~~six months ended ~~June 30, 2018. This reflects~~March 31, 2019. The increase was driven by a ~~$1.2~~$95.7 million ~~increase~~favorable change in ~~cash generated from operations prior to consideration of income tax, $62.0 million of higher net collections of~~ accounts ~~receivables~~receivable (including customer credit balances), due to improved collections and lower sales volume at lower selling prices, a $15.7 million favorable change in inventory due primarily to fewer gallons of liquid product on hand as of March 31, 2020 at lower cost as compared to March 31, 2019, which ~~was~~were partially offset by a ~~$12.6~~$6.5 million unfavorable change in accounts payable due primarily to the timing of inventory purchases, a ~~$10.4 million unfavorable change in inventory, a $3.1 million increase in insurance related claim payments, a $2.2~~$6.2 million increase in income taxes paid, ~~and~~ a ~~$1.9~~$2.7 million ~~increase~~reduction in ~~escheat~~cash flows from operations, $1.8 million lower escheatment payments to state ~~authorities. The remaining $0.7 million of the change is related to other changes in working capital.~~

During the nine months ended June 30, 2018, cash provided by operating activities increased $6.8 million to $30.0 million, compared to $23.2 million of cash provided by operating activities during the nine months ended June 30, 2017. The increase was driven by a $15.5 million increase in cash generated from operations prior to consideration of income tax, an $8.5 million favorable change in accounts payable due primarily to the timing of inventory purchases, an $8.6 million favorable change in inventory due to 5.8 million more gallons of liquid product purchases for the upcoming heating season at the beginning of fiscal 2018 as compared to fiscal 2017, a $7.0 million favorable change in insurance related liabilities due to timing, a $3.2 million decrease in taxes paid,authorities, and ~~$0.7~~$1.0 million of other changes in working capital, which was partially offset by an unfavorable change in accounts receivable of $36.7 million (including customer credit balances). The impact of colder weather in late March and April 2018, and an increase in per gallon product costs drove an increase in accounts receivable.capital.

Our capital expenditures for the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 totaled ~~$8.2~~$5.7 million, as we invested in computer hardware and software ($~~3.5~~1.4 million), refurbished certain physical plants ($~~1.0~~1.4 million), expanded our propane operations ($~~2.1~~ 1.0 million) and made additions to our fleet and other equipment ($~~1.6~~1.9 million).

During the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020, we deposited ~~$9.5~~ $6.4 million into an irrevocable trust to secure certain liabilities for our captive insurance company and another ~~$1.1~~ $0.8 million of earnings were reinvested into the irrevocable trust. The cash deposited into the trust is shown on our balance sheet as captive insurance collateral and, correspondingly, reduced cash on our balance sheet. 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 the ~~nine~~six months ended ~~June 30,~~March 31, 2020, the Company acquired the customer list and the assets of a heating oil dealer for an aggregate purchase price of approximately $0.5 million.

Our capital expenditures for the six months ended March 31, 2019 totaled $6.8 million, as we invested in computer hardware and software ($3.0 million), refurbished certain physical plants ($0.8 million), expanded our propane operations ($1.9 million) and made additions to our fleet and other equipment ($1.1 million).

During the six months ended March 31, 2019, we deposited $6.8 million into an irrevocable trust to secure certain liabilities for our captive insurance company and another $0.8 million of earnings were reinvested into the irrevocable trust.

During the six months ended March 31, 2019 the Company acquired ~~two liquid product dealers~~a propane dealer and the assets of one of its subcontractors for an aggregate purchase price of approximately ~~$62.8~~$13.7 million. The gross purchase price was allocated ~~$44.9~~$11.2 million to intangible assets, ~~$13.1~~$2.7 million to fixed assets, ~~$0.1 million to other long-term assets~~ and ~~$4.7~~reduced by $0.2 million for working ~~capital.~~

~~Our~~ capital expenditures for the nine months ended June 30, 2018 totaled $8.7 million, as we invested in computer hardware and software ($1.7 million), refurbished certain physical plants ($1.3 million), expanded our propane operations ($2.1 million) and made additions to our fleet and other equipment ($3.6 million). We completed four acquisitions for approximately $22.8 million; $21.3 million in cash and $1.5 million of deferred liabilities.

In October 2017, we deposited $34.2 million of cash into an irrevocable trust to secure certain liabilities for our captive insurance company and, as a result, $36.6 million of letters of credit were cancelled that previously had secured these liabilities. Subsequently, $0.6 million of earnings have been reinvested into the irrevocable trust. The cash deposited into the trust is shown on our balance sheet as Captive Insurance Collateral and, correspondingly, reduced cash on our balance sheet. We believe that the investment 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.credits.

During the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020, werefinanced our five-year term loan and the revolving credit facility with the execution of the fifth amended and restated revolving credit facility agreement. The $130 million of proceeds from the new term loan were used to repay the $90.0 million outstanding balance of the term loan, $39.0 million of the revolving credit facility borrowings under the old credit facility, and $1.0 million of debt issuance costs. We also paid an additional $0.3 million of debt issuance costs, borrowed an additional net balance of $1.5 million under our revolving credit facility, repaid $2.5 million of our term loan, repurchased 2.1 million Common Units for $18.6 million in connection with our unit repurchase plan, and paid distributions of ~~$18.6~~$11.8 million to our Common Unit holders and ~~$0.6 million to our General Partner unit holders (including $0.5 million of incentive distributions as provided in our Partnership~~

Agreement). We borrowed $139.3 million under our revolving credit facility and subsequently repaid $70.3 million. We also repaid $5.0 million of our tem loan and repurchased 3.7 million common units for $34.9 million in connection with our unit repurchase plan.

~~During the nine months ended June 30, 2018 we paid distributions of $18.6 million to our Common Unit holders and $0.5~~$0.4 million to our General Partner unit holders (including $0.4 million of incentive distributions as provided in our Partnership Agreement).

During the six months ended March 31, 2019 we paid distributions of $12.3 million to our Common Unit holders and $0.4 million to our General Partner unit holders (including $0.3 million of incentive distributions as provided in our Partnership Agreement). We borrowed ~~$160.1~~$139.3 million under our revolving credit ~~to finance our working capital~~facility and subsequently repaid ~~$118.6~~$25.8 million. We also repaid ~~$7.5~~$2.5 million of our term ~~loan. In addition, we~~loan and repurchased ~~2.4~~2.8 million common units for ~~$22.5~~$26.4 million in connection with our unit repurchase plan.

Our primary uses of liquidity are to provide funds for our working capital, capital expenditures, distributions on our units, acquisitions and unit repurchases. Our ability to provide funds for such uses depends on our future performance, which will be subject to prevailing economic, financial, and business ~~and~~conditions, especially in light of the impact of COVID-19, weather, ~~conditions,~~ the ability to pass on the full impact of high product costs to customers, the effects of high net customer attrition, conservation and other factors. Capital requirements, at least in the near term, are expected to be provided by cash flows from operating activities, cash on hand as of ~~June 30, 2019~~March 31, 2020 ($~~5.7~~10.3 million) or a combination thereof. To the extent future capital requirements exceed cash on hand plus cash flows from operating activities, we anticipate that working capital will be financed by our revolving credit facility, as discussed below, and reduced from subsequent seasonal reductions in inventory and accounts receivable. As of ~~June 30, 2019,~~March 31, 2020, we had ~~$70.5~~ accounts receivable of $187.1 million of which $149.4 million is due from residential customers and $37.7 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. If these balances do not meet the eligibility tests as found in our fifth amended and restated credit agreement, our ability to borrow will be reduced and our anticipated cash flow from operating activities will also be reduced. As of March 31, 2020, we had $24.0 million in borrowings under our revolving credit facility, ~~$95.0~~$130 million under our term loan and ~~$7.0~~$4.4 million in letters of credit outstanding. We are also analyzing whether to participate in certain Federal Reserve-backed loan programs adopted in the wake of the coronavirus pandemic that are available to companies our size.

Under the terms of our credit agreement, we must maintain at all times Availability (borrowing base less amounts borrowed and letters of credit issued) of 15% of the maximum facility size and a fixed charge coverage ratio of not less than 1.15. We must also maintain a senior secured leverage ratio that cannot be more than 3.0 as of June 30^th30th or September 30^th,30th, and no more than 4.5 as of December 31^st31st or March 31^st.31st. As of ~~June 30, 2019,~~March 31, 2020, Availability, as defined in the credit agreement, was ~~$147.4~~$210.4 million, and we were in compliance with the fixed charge coverage ratio and senior secured leverage ratio.

Maintenance capital expenditures for the remainder of fiscal ~~2019~~2020 are estimated to be approximately ~~$1.5~~$4.0 million to ~~$2.0~~$5.5 million, excluding the capital requirements for leased fleet. In addition, we plan to invest approximately $0.5 million to $1.0 million in our propane operations. Distributions for the balance of fiscal ~~2019,~~2020, at the current quarterly level of ~~$0.1250~~$0.1325 per unit, would result in an aggregate of approximately ~~$6.2~~$12.0 million to Common Unit holders, ~~$0.2~~$0.5 million to ~~our~~the General Partner (including ~~$0.2~~$0.5 million of incentive distribution as provided for in our Partnership Agreement) and ~~$0.2~~$0.5 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. Under the terms of our credit facility, our term loan is repayable in quarterly

payments of ~~$2.5~~$3.25 million (the first of which was made on April 1, 2020) and, depending on our fiscal ~~2019~~2020 results, we may be required to make an additional payment ~~(see~~(See Note 11 - Long-Term Debt and Bank Facility Borrowings). In addition, subject to any additional liquidity issues or concerns resulting from the current COVID-19 pandemic, we intend to continue to repurchase Common Units pursuant to our unit repurchase plan, as amended from time to time, and seek attractive acquisition opportunities within the Availability constraints of our revolving credit facility and funding resources.

There has been no material change to Contractual Obligations and Off-Balance Sheet Arrangements since our September 30, ~~2018~~2019 Form 10-K disclosure and therefore, the table has not been included in this Form 10-Q.

~~The following new accounting standards were recently adopted by the Company, and are more fully described in~~Refer to Note 2 ~~-Summary of Significant Accounting Policies~~ – ~~Recently Adopted Accounting Pronouncements, of the consolidated financial statements:~~

~~The following new accounting standards are currently being evaluated by the Company, and are more fully described in Note 2 -~~ Summary of Significant Accounting Policies ~~– Recently Issued Accounting Pronouncements,~~for discussion regarding the impact of ~~the~~accounting standards that were recently adopted and issued but not yet effective, on our consolidated financial ~~statements:~~ statements.

We are exposed to interest rate risk primarily through our bank credit facilities. We utilize these borrowings to meet our working capital needs.

At ~~June 30, 2019,~~March 31, 2020, we had outstanding borrowings totaling $~~165.5~~154.0 million, which are subject to variable interest rates under our credit agreement. 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 $~~1.2~~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 and vehicle fuels. The value of market sensitive derivative instruments is subject to change as a result of movements in market prices. Sensitivity analysis is a technique used to evaluate the impact of hypothetical market value changes. Based on a hypothetical ten percent increase in the cost of product at ~~June 30, 2019,~~March 31, 2020, the potential impact on our hedging activity would be to increase the fair market value of these outstanding derivatives by $~~7.1~~$0.4 million to a fair market value of $~~4.7~~$(13.8) million; and conversely a hypothetical ten percent decrease in the cost of product would decrease the fair market value of these outstanding derivatives by $~~4.8~~less than $0.1 million to a fair market value of $(~~7.2)~~$(14.2) million.

The General Partner’s chief executive officer and chief financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of ~~June 30, 2019.~~March 31, 2020. Based on that evaluation, such chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of ~~June 30, 2019~~March 31, 2020 at the reasonable level of assurance. For purposes of Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Act”) (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

No changes in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

The General Partner and the Company believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a Company have been detected. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and the chief executive officer and chief financial officer of ~~our general partner~~the General Partner have concluded, as of ~~June 30, 2019,~~March 31, 2020, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.

On April 18, 2017, a civil action was filed in the United States District Court for the Eastern District of New York, entitled M. Norman Donnenfeld v. Petro, Inc., Civil Action Number 2:17-cv-2310-JFB-SIL, against Petro, Inc. By amended complaint filed on August 15, 2017, the Plaintiff alleged he did not receive expected contractual benefits under his protected price plan contract when oil prices fell and ~~asserts~~asserted various claims for relief including breach of contract, violation of the New York General Business Law and fraudulent inducement. The Plaintiff also ~~seeks~~sought to have a class certified of similarly situated Petro customers who entered into protected price plan contracts and were denied the same contractual benefits. ~~No class has yet been certified in this action.~~ The Plaintiff ~~seeks~~sought compensatory, punitive and other damages in unspecified amounts. On September 15, 2017, Petro filed a motion to dismiss the amended complaint as time-barred and for failure to state a cause of action. On September 12, 2018, the district court granted in part and denied in part Petro's motion to dismiss. The district court dismissed the Plaintiff's claims for breach of the covenant of good faith and fair dealing and fraudulent inducement, but declined to dismiss the Plaintiff's remaining claims. The district court granted the Plaintiff leave to amend to attempt to replead his fraudulent inducement claim. On October 10, 2018, the Plaintiff filed a second amended complaint. The second amended complaint attempted to replead a fraudulent inducement claim and iswas otherwise substantially similar or identical to the prior complaint. On November 13, 2018, Petro moved to dismiss the fraudulent inducement and unjust enrichment claims in the second amended complaint. On January 31, 2019, the court granted the motion and dismissed the fraudulent inducement and unjust enrichment claims with prejudice. On February 22, 2019, counsel for Petro and the Plaintiff participated in a mediation which, after arms-length negotiations, resulted in a memorandum of understanding to settle the litigation, subject to the completion of confirmatory discovery, negotiation of a final settlement agreement and court approval. In an order dated March 27, 2019, the district court stayed all discovery deadlines in light of the pending settlement. On ~~May 6,~~October 4, 2019, upon consent of all parties, Judge Roslynn R. Mauskopf assigned the ~~Plaintiff filed an Unopposed Motion~~action to Magistrate Judge Steve I. Locke for ~~Preliminary Approval~~final disposition. On March 26, 2020, the court granted final approval of ~~Class Action Settlement which remains pending before~~ the ~~court.~~class action settlement, certified the class for settlement purposes only and dismissed the action with prejudice. On March 26, 2020, the court also granted Plaintiff’s unopposed motion for fees, expenses and named plaintiff service award. The ~~anticipated~~ settlement is not an admission of liability or breach to any customers by Petro and the Company continues to believe the allegations lack merit. If the settlement is not ~~approved or finalized~~completed for any reason, the Company will continue to vigorously defend the action; in that case, we cannot assess the potential outcome or materiality of this ~~matter~~. matter.

The following risk factor is in addition to our risk factors included in Part I Item 1A. “Risk Factors” in our Fiscal 2019 Form 10-K that could affect our business, financial condition and results of operations In addition to the other information set forth in this Report, investors should carefully review and consider the information regarding certain factors, which could materially affect our business, results of operations, financial condition and cash flows set forth in Part I Item 1A. “Risk Factors” in our Fiscal ~~2018~~2019 Form 10-K. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Our business, results of operations, financial condition and cash flows may be adversely affected by global public health pandemics, including COVID-19, an infectious disease caused by the novel coronavirus, and their related impact on the economy and financial markets.

A global public health pandemic, including COVID-19, poses the risk that we or our employees, vendors, or customers may be prevented from conducting business activities for an indefinite period of time, including shutdowns that may be requested or mandated by governmental authorities, restrictions on travel to or from locations where we obtain product, provide services or where our customers are located. While as of the date hereof, we have been deemed an essential business by state and local governmental officials and are therefore permitted to continue operations during the COVID-19 pandemic, our continued status as an essential business in all or certain of our markets could change by subsequent order and is beyond our control If workers at one or more of our offices or the offices of our suppliers become ill or are quarantined and in either or both events are therefore unable to work, our operations could be subject to disruption. Further, our customers’ financial condition may be adversely impacted as a result of the impacts of COVID-19, or another global public health pandemic, and efforts taken to prevent its spread, which could result in reduced demand or impact their ability to pay for our products and services. The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. We cannot assure you that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings,

renewals or refinancings. The extent, if any, to which the COVID-19 pandemic will impact our business remains uncertain, however, there could be a material adverse impact on our business, financial condition, results of operations, or cash flows.

The potential effects of COVID-19 also could impact many of our risk factors, included in Part 1, Item A of our Fiscal 2019 Form 10-K, including, but not limited to our profitability, laws and regulations affecting our business, fluctuations in the financial markets and hedging, the availability of future borrowings, the costs of current and future borrowings, valuation of our pension assets and obligations, and credit risks of our customers and counterparties. However, given the evolving health, economic, social, and governmental environments, the potential impact that COVID-19 could have on our risk factors that are further described in our Fiscal 2019 Form 10-K remain uncertain.

Note 4 to the Condensed Consolidated Financial Statements concerning the Company’s repurchase of Common Units during the ~~nine~~six months ended ~~June 30, 2019~~March 31, 2020 is incorporated into this Item 2 by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized:

Delaware	06-1437793
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9 West Broad Street Stamford, Connecticut	06902
(Address of principal executive office)

		Page
Part I Financial Information
Item 1 - Condensed Consolidated Financial Statements		3
Condensed Consolidated Balance Sheets as of ~~June 30, 2019~~March 31, 2020 (unaudited) and September 30, ~~2018~~2019		3
Condensed Consolidated Statements of Operations (unaudited) for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		4
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		5
Condensed Consolidated Statement of Partners’ Capital (unaudited) for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		6-7
Condensed Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~June 30,~~March 31, 2020 and March 31, 2019 ~~and June 30, 2018~~		8
Notes to Condensed Consolidated Financial Statements (unaudited)		~~9-24~~9-22
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~25-42~~23-39
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		4340
Item 4 - Controls and Procedures		4340
Part II Other Information:		4441
Item 1 - Legal Proceedings		4441
Item 1A - Risk Factors		4441-42
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 6 - Exhibits		43
Signatures		44
~~Item 6 - Exhibits~~		45
~~Signatures~~		46

	Three Months Ended March 31,				Six Months Ended March 31,
(in thousands)	2020		2019		2020		2019
Petroleum Products:
Home heating oil and propane	$	413,466	$	554,364	$	756,812	$	918,566
Other petroleum products		67,809		83,036		157,151		177,541
Total petroleum products		481,275		637,400		913,963		1,096,107
Installations and Services:
Equipment installations		20,158		20,384		50,723		50,367
Equipment maintenance service contracts		27,764		26,678		55,672		54,997
Billable call services		13,866		15,120		31,650		33,138
Total installations and services		61,788		62,182		138,045		138,502
Total Sales	$	543,063	$	699,582	$	1,052,008	$	1,234,609

	Three Months Ended June 30,				Nine Months Ended June 30,
(in thousands)	2019		2018		2019		2018
Petroleum Products:
Home heating oil and propane	$	115,988	$	169,605	$	1,034,554	$	1,025,855
Other petroleum products		94,669		86,842		272,210		220,288
Total petroleum products		210,657		256,447		1,306,764		1,246,143
Installations and Services:
Equipment installations		24,344		25,472		74,711		72,513
Equipment maintenance service contracts		32,279		30,184		87,276		81,085
Billable call services		16,096		15,251		49,234		48,478
Total installations and services		72,719		70,907		211,221		202,076
Total Sales	$	283,376	$	327,354	$	1,517,985	$	1,448,219

	Three Months Ended		Six Months Ended
	March 31,		March 31,
(in thousands)	2020		2020
Lease cost:
Operating lease cost	$	6,333	$	12,932
Short-term lease cost		240		432
Variable lease cost		1,129		2,139
Total lease cost	$	7,702	$	15,503

Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	6,244	$	12,625
Right-of-use assets obtained in exchange for new operating lease liabilities	$	5,426	$	9,436

Large accelerated filer	☐	Accelerated filer	☒

Non- accelerated filer	☐	Smaller reporting company	☐

	For the Three Months Ended June 30, 2019									For the Nine Months Ended June 30, 2019
Statement of Operations	As Reported			Balances without Adoption of ASC 606			Effect of Change Higher/(Lower)			As Reported		Balances without Adoption of ASC 606		Effect of Change Higher/(Lower)
Sales:
Product	$	210,657		$	212,249		$	(1,592	)	$	1,306,764	$	1,317,809	$	(11,045	)
Installations and services		72,719			70,975			1,744			211,221		206,244		4,977
Total Sales		283,376			283,224			152			1,517,985		1,524,053		(6,068	)
Cost and Expenses:
Delivery and branch expenses		82,669			82,432			237			296,026		298,804		(2,778	)
Operating income (loss)		(29,933	)		(29,848	)		(85	)		81,132		84,422		(3,290	)
Income (loss) before income taxes		(33,153	)		(33,068	)		(85	)		71,699		74,989		(3,290	)
Income tax expense (benefit)		(10,055	)		(10,053	)		(2	)		20,157		21,082		(925	)
Net income (loss)	$	(23,098	)	$	(23,015	)	$	(83	)	$	51,542	$	53,907	$	(2,365	)
General Partner's interest in net income (loss)		(150	)		(149	)		(1	)		319		334		(15	)
Limited Partner's interest in net income (loss)	$	(22,948	)	$	(22,866	)	$	(82	)	$	51,223	$	53,573	$	(2,350	)

Basic and diluted income (loss) per Limited Partner Unit	$	(0.46	)	$	(0.46	)	$	-		$	0.86	$	0.90	$	(0.04	)

	June 30, 2019
Balance Sheet	As Reported			Balances without Adoption of ASC 606			Effect of Change Higher/(Lower)
Assets
Prepaid expenses and other current assets	$	35,610		$	31,265		$	4,345
Deferred charges and other assets, net	$	17,625		$	11,536		$	6,089
Liabilities
Accrued expenses and other current liabilities	$	145,558		$	146,483		$	(925	)
Unearned service contract revenue	$	60,560		$	59,828		$	732
Deferred tax liabilities, net	$	14,069		$	10,301		$	3,768
Partners' capital
Common unitholders	$	335,958		$	329,144		$	6,814
General partner	$	(1,522	)	$	(1,567	)	$	45

(in thousands)	As of Acquisition Date
Receivables	$	8,008
Inventories		3,059
Prepaid expenses and other current assets		89
Property and equipment, net		13,097
Intangibles		25,952
Accrued expenses and other current liabilities		(365	)
Unearned service contract revenue		(2,763	)
Customer credit balances		(3,150	)
Other long-term liabilities		(25	)
Total net identifiable assets acquired	$	43,902

Total consideration	$	62,807
Less: Total net identifiable assets acquired		43,902
Goodwill	$	18,905

Balance as of September 30, 2018	$	228,436
Fiscal year 2019 business combinations		18,905
Balance as of June 30, 2019	$	247,341

(in thousands of gallons)
Fiscal 2018 Acquisitions
Acquisition Number	Month of Acquisition	Home Heating Oil and Propane		Other Petroleum Products		Total
1	November		53		75		128
2	November		164		6		170
3	April		7,775		6,567		14,342
4	May		1,573		35,617		37,190
5	August		1,136		135		1,271
6	September		1,730		180		1,910
			12,431		42,580		55,011

(in millions of gallons)	Heating Oil and Propane
Volume - Three months ended ~~June 30, 2018~~March 31, 2019		~~54.5~~173.3
Acquisitions		~~0.8~~5.5
Impact of warmer temperatures		(~~11.9~~30.5	)
Net customer attrition		(~~2.6~~8.6	)
Other		(~~3.9~~3.5	)
Change		(~~17.6~~37.1	)
Volume - Three months ended ~~June 30, 2019~~March 31, 2020		~~36.9~~136.2

(in millions of gallons)	Heating Oil and Propane
Volume - ~~Nine~~Six months ended ~~June 30, 2018~~March 31, 2019		~~338.0~~286.6
Acquisitions		~~10.2~~9.8
Impact of ~~colder~~warmer temperatures		~~2.2~~(32.0	)
Net customer attrition		(~~21.1~~15.3	)
Other		(~~5.7~~5.8	)
Change		(~~14.4~~43.3	)
Volume - ~~Nine~~Six months ended ~~June 30, 2019~~March 31, 2020		~~323.6~~243.3



~~10.20~~	~~Letter Agreement, dated as of June 19, 2019, between the Company and Jeffrey M. Woosnam regarding employment~~ ~~(Incorporated by reference to an exhibit to Registrant’s Current Report on Form 8-K dated June 21, 2019).~~
~~10.21~~	~~Second Amendment to the Fourth Amended and Restated Credit Agreement, dated as of June 17, 2019.~~
31.1	Certification of Chief Executive Officer, Star Group, L.P., pursuant to Rule 13a-14(a)/15d-14(a).

31.2	Certification of Chief Financial Officer, Star Group, L.P., pursuant to Rule 13a-14(a)/15d-14(a).

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	The following materials from the Star Group, L.P. Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2019,~~March 31, 2020, formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Partners’ Capital, (v) the Condensed Consolidated Statements of Cash Flows and (vi) related notes.

~~101.INS~~	~~XBRL Instance Document.~~

101.SCH	Inline XBRL Taxonomy Extension Schema Document.

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)



Star Group, L.P.
(Registrant)

By:	Kestrel Heat LLC AS GENERAL PARTNER


Signature	Title	Date

/s/ Richard F. Ambury Richard F. Ambury	Executive Vice President, Chief Financial Officer, Treasurer and Secretary Kestrel Heat LLC (Principal Financial Officer)	~~July 31, 2019~~May 4, 2020

Signature	Title	Date

/s/ Cory A. Czekanski Cory A. Czekanski	Vice President – Controller Kestrel Heat LLC (Principal Accounting Officer)	~~July 31, 2019~~May 4, 2020