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Ferrellgas Partners, L.P. Reports Results for Third Quarter Fiscal 2017

OVERLAND PARK, Kan., June 09, 2017 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today announced financial results for its third fiscal quarter ended April 30, 2017. The Company reported net earnings attributable to Ferrellgas Partners, L.P. of $6.5 million, compared to net earnings of $18.7 million for the same period in 2016.

/EIN News/ -- Adjusted EBITDA was $76.8 million compared to $108.0 million in the prior year period primarily due to decreased contributions from the midstream operations segment.

“Weather for the third fiscal quarter was 2.7% warmer than last year, but more importantly 19.5% warmer than normal,” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our retail gallons were consistent with those of the prior year on a weather adjusted basis, but overall margins were lower than the prior year period due to customer mix.”

Mr. Ferrell continued, “Further, we continue to move forward with plans to drive growth and improve results at Blue Rhino and are analyzing ways to become more operationally efficient.”

Propane gallons sold were 212.2 million gallons, compared to 223.4 million gallons in the prior year quarter. Operating income generated by the propane operations and related equipment sales segment was $67.1 million, compared to $78.7 million in the prior year period.

During the third fiscal quarter the Company executed an amendment to its secured credit facility to address leverage and interest coverage ratios and to right size the facility. Mr. Ferrell added, “We were pleased to be able to adjust our leverage ratio to 7.75x and our interest coverage ratio to 1.75x through the quarter ending April 2018 and to right size the facility from $700 million to $575 million. With this amendment behind us we can concentrate our efforts on reducing our debt with the goal of returning to a leverage ratio of 4.5x or lower.” At the end of the third fiscal quarter, the Company’s leverage ratio was 6.45x, which was significantly lower than the 7.75x limit allowed under its secured credit facility and accounts receivable securitization facility, both as amended in April 2017.

About Ferrellgas
Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., and subsidiaries, serves propane customers in all 50 states, the District of Columbia, and Puerto Rico, and provides midstream services to major energy companies in the United States. Ferrellgas employees indirectly own 22.8 million common units of the partnership, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed a Form 10-K with the Securities and Exchange Commission on September 28, 2016. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership online at www.ferrellgas.com

Forward Looking Statements
Statements in this release concerning expectations for the future are forward-looking statements. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative of those terms or other variations of them or comparable terminology. Forward-looking statements, include, but are not limited to: Ferrellgas’ debt reduction plans, Ferrellgas’ leverage ratio reduction plans, statements regarding future unitholder returns, growth and improved results, plans to increase the utilization of certain assets, the anticipated impact of Ferrellgas’ actions on its balance sheet and liquidity position, and the anticipated impact of Ferrellgas’ leadership changes. While Ferrellgas believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: risks related to Ferrellgas’ ability to generate sufficient cash flow to pay distributions, to make payments on its debt obligations and to execute its business plan; Ferrellgas’ ability to access funds on acceptable terms, if at all, because of the terms and conditions governing its indebtedness or otherwise; local, regional and national economic conditions and the impact they may have on Ferrellgas and its customers; the effect of weather conditions on the demand for propane; the prices of wholesale propane, motor fuel and crude oil; disruptions to the supply of propane; the termination or non-renewal of certain arrangements or agreements; adverse changes in our relationships with our national propane customers; significant delays in the collection of, or uncollectibility of, accounts or notes receivable; the financial condition of Ferrellgas’ customers; and the failure of any customer to perform its contractual obligations. A variety of known and unknown risks, uncertainties and other factors could cause results, performance and expectations to differ materially from anticipated results, performance and expectations. These risks, uncertainties and other factors are discussed in the Form 10-K of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2016, the Form 10-Q of these entities for the fiscal quarter ended April 30, 2017, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Except as required by law, Ferrellgas undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise. 

 
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
    Three months ended    Nine months ended    Twelve months ended 
    April 30   April 30   April 30
      2017       2016       2017       2016       2017       2016  
Revenues:                        
Propane and other gas liquids sales   $ 369,437     $ 338,929     $ 1,049,211     $ 961,086     $ 1,290,493     $ 1,217,207  
Midstream operations     126,676       105,424       331,507       487,427       469,318       574,254  
Other     41,996       65,119       116,183       181,343       146,601       220,906  
  Total revenues     538,109       509,472       1,496,901       1,629,856       1,906,412       2,012,367  
                         
Cost of sales:                        
Propane and other gas liquids sales     197,487       152,261       551,728       448,841       667,320       576,875  
Midstream operations     118,767       71,852       300,433       373,899       397,768       444,425  
Other     20,810       41,203       53,213       111,425       68,025       134,450  
                         
Gross profit      201,045       244,156       591,527       695,691       773,299       856,617  
                         
Operating expense     104,773       115,140       322,274       346,584       433,600       461,953  
Depreciation and amortization expense     25,737       38,352       77,546       112,698       115,361       140,701  
General and administrative expense     9,978       12,354       33,889       36,656       45,812       63,386  
Equipment lease expense     7,270       7,244       22,035       21,554       29,314       28,153  
Non-cash employee stock ownership plan compensation charge     4,697       9,978       11,396       18,375       20,616       26,360  
Non-cash stock-based compensation charge (a)     -       1,091       3,298       6,757       5,865       13,038  
Asset impairments     -       -       -       29,316       628,802       29,316  
Loss on asset sales and disposal     2,393       5,779       8,861       23,220       16,476       25,741  
                         
Operating income (loss)     46,197       54,218       112,228       100,531       (522,547 )     67,969  
                         
Interest expense     (39,860 )     (34,371 )     (112,107 )     (102,889 )     (147,155 )     (131,488 )
Other income (expense), net     162       331       1,433       (89 )     1,632       (24 )
                         
Earnings (loss) before income taxes     6,499       20,178       1,554       (2,447 )     (668,070 )     (63,543 )
                         
Income tax expense (benefit)     (192 )     1,260       (194 )     1,446       (1,676 )     (317 )
                         
Net earnings (loss)     6,691       18,918       1,748       (3,893 )     (666,394 )     (63,226 )
                         
Net earnings (loss) attributable to noncontrolling interest (b)     155       233       187       88       (6,521 )     (470 )
                         
Net earnings (loss) attributable to Ferrellgas Partners, L.P.     6,536       18,685       1,561       (3,981 )     (659,873 )     (62,756 )
                         
Less: General partner's interest in net earnings (loss)     66       187       16       (40 )     (6,599 )     (628 )
                         
Common unitholders' interest in net earnings (loss)   $ 6,470     $ 18,498     $ 1,545     $ (3,941 )   $ (653,274 )   $ (62,128 )
                         
Earnings (loss) Per Common Unit                        
Basic and diluted net loss per common unitholders' interest   $ 0.07     $ 0.19     $ 0.02     $ (0.04 )   $ (6.70 )   $ (0.64 )
                         
Weighted average common units outstanding - basic     97,152.7       98,002.7       97,255.4       98,911.2       97,443.7       96,899.5  
                         
                         
Supplemental Data and Reconciliation of Non-GAAP Items:        
                         
    Three months ended    Nine months ended    Twelve months ended 
    April 30   April 30   April 30
      2017       2016       2017       2016       2017       2016  
                         
                         
Net earnings (loss) attributable to Ferrellgas Partners, L.P.   $ 6,536     $ 18,685     $ 1,561     $ (3,981 )   $ (659,873 )   $ (62,756 )
Income tax expense (benefit)     (192 )     1,260       (194 )     1,446       (1,676 )     (317 )
Interest expense     39,860       34,371       112,107       102,889       147,155       131,488  
Depreciation and amortization expense     25,737       38,352       77,546       112,698       115,361       140,701  
EBITDA     71,941       92,668       191,020       213,052       (399,033 )     209,116  
Non-cash employee stock ownership plan compensation charge     4,697       9,978       11,396       18,375       20,616       26,360  
Non-cash stock-based compensation charge (a)     -       1,091       3,298       6,757       5,865       13,038  
Asset impairments     -       -       -       29,316       628,802       29,316  
Loss on asset sales and disposal     2,393       5,779       8,861       23,220       16,476       25,741  
Other (income) expense, net     (162 )     (331 )     (1,433 )     89       (1,632 )     24  
Change in fair value of contingent consideration (included in operating expense)     -       -       -       (100 )     -       (100 )
Severance expense $414 and $542 included in operating expense for the nine and twelve months ended  period April 30, 2017 and $1,545 included in general and administrative expense for both the nine and  twelve months ended April 30, 2017. Also includes $396, $1,201 and $1,201 in operating expense for the  three, nine and twelve months ended April 30, 2016 and $73, $124 and $124 in general and administrative  expense for the three, nine and twelve months ended April 31, 2016.     -       469       1,959       1,325       2,087       1,325  
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments $(227), $(3,238) and $(3,245) included in operating expense for the three, nine and twelve  months ended April 30, 2017 and $(3,142), $1,592 and $5,613 for the three, nine and twelve months  ended April 30, 2016. Also includes $(2,007), $(1,211) and $(3,060) included in cost of sales for the three,  nine and twelve months ended April 30, 2017, respectively, and $1,227, $1,401 and  $1,401 for each of  the three, nine and twelve months ended April 30, 2016.     (2,234 )     (1,915 )     (4,449 )     2,993       (6,305 )     7,014  
Acquisition and transition expenses (included in general and administrative expense)     -       14       -       99       -       16,472  
Net earnings (loss) attributable to noncontrolling interest (b)     155       233       187       88       (6,521 )     (470 )
Adjusted EBITDA (c)     76,790       107,986       210,839       295,214       260,355       327,836  
Net cash interest expense (d)     (37,140 )     (32,849 )     (105,470 )     (99,256 )     (139,074 )     (126,807 )
Maintenance capital expenditures (e)     (3,442 )     (4,159 )     (10,518 )     (13,588 )     (14,067 )     (18,337 )
Cash paid for taxes     (2 )     (427 )     (28 )     (432 )     (373 )     (811 )
Proceeds from asset sales     130       3,096       4,163       5,972       4,214       7,817  
Distributable cash flow attributable to equity investors (f)     36,336       73,647       98,986       187,910       111,055       189,698  
Distributable cash flow attributable to general partner and non-controlling interest     727       1,473       1,980       3,758       2,222       3,793  
Distributable cash flow attributable to common unitholders     35,609       72,174       97,006       184,152       108,833       185,905  
Less: Distributions paid to common unitholders     9,715       50,267       69,221       151,933       119,407       193,292  
Distributable cash flow excess/(shortage)   $ 25,894     $ 21,907     $ 27,785     $ 32,219     $ (10,574 )   $ (7,387 )
                         
Propane gallons sales                        
Retail - Sales to End Users     160,326       164,713       473,094       465,146       560,719       555,201  
Wholesale - Sales to Resellers     51,891       58,645       170,033       169,992       226,162       228,989  
Total propane gallons sales     212,217       223,358       643,127       635,138       786,881       784,190  
                         
Midstream operations barrels                        
Salt water volume processed     4,635       4,024       12,340       12,980       15,903       16,781  
Crude oil hauled     12,280       16,215       36,549       64,824       51,136       75,271  
Crude oil sold     2,110       1,810       5,228       4,969       7,119       5,496  
                         
(a)  Non-cash stock-based compensation charges consist of the following:                        
                         
    Three months ended   Six months ended   Twelve months ended
    April 30   April 30   April 30
      2017       2016       2017       2016       2017       2016  
Operating expense   $ -     $ 131     $ 661     $ 883     $ 1,046     $ 1,825  
General and administrative expense     -       960       2,637       5,874       4,819       11,213  
Total   $ -     $ 1,091     $ 3,298     $ 6,757     $ 5,865     $ 13,038  
                         
                         
(b)  Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(c)  Adjusted EBITDA is calculated as net earnings (loss) attributable to Ferrellgas Partners, L.P., less the sum of the following: income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, asset impairments, loss on asset sales and disposal, other (income) expense, net, change in fair value of contingent consideration, severance costs, unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments, acquisition and transition expenses and net earnings (loss) attributable to noncontrolling interest.  Management believes the presentation of this measure is relevant and useful, because it allows investors to view the partnership's performance in a manner similar to the method management uses, adjusted for items management believes makes it easier to compare its results with other companies that have different financing and capital structures. This method of calculating Adjusted EBITDA may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP.
(d)  Net cash interest expense is the sum of interest expense less non-cash interest expense and other expense, net. This amount includes interest expense related to the accounts receivable securitization facility.
(e)  Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
(f)  Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest, maintenance capital expenditures and cash paid for taxes plus proceeds from asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to distributable cash flow attributable to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP.
(g)  Distributable cash flow attributable to common unitholders is calculated as Distributable cash flow attributable to equity investors minus distributable cash flow attributable to general partner and noncontrolling interests. Management considers distributable cash flow attributable to common unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow attributable to common unitholders, as management defines it, may not be comparable to distributable cash flow attributable to common unitholders or similarly titled measurements used by other corporations and partnerships. Items added to our calculation of distributable cash flow attributable to common unit holders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to common unitholders  may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP .


   
FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(in thousands, except unit data)  
(unaudited)  
           
           
           
           
           
ASSETS   April 30, 2017   July 31, 2016  
           
Current Assets:          
Cash and cash equivalents   $ 9,506     $ 4,965    
Accounts and notes receivable, net (including $143,337 and $106,464 of          
accounts receivable pledged as collateral at April 30, 2017 and          
July 31, 2016, respectively)     208,529       149,583    
Inventories     92,757       90,594    
Prepaid expenses and other current assets     30,563       39,973    
Total Current Assets     341,355       285,115    
           
Property, plant and equipment, net     743,508       774,680    
Goodwill, net     256,103       256,103    
Intangible assets, net     259,286       280,185    
Other assets, net     79,017       87,223    
Total Assets   $ 1,679,269     $ 1,683,306    
           
           
LIABILITIES AND PARTNERS' DEFICIT          
           
Current Liabilities:          
Accounts payable   $ 86,646     $ 67,928    
Short-term borrowings     38,389       101,291    
Collateralized note payable     91,000       64,000    
Other current liabilities     151,473       128,958    
  Total Current Liabilities     367,508       362,177    
           
Long-term debt (a)     1,984,218       1,941,335    
Other liabilities     31,029       31,574    
Contingencies and commitments          
           
Partners Deficit:           
Common unitholders (97,152,665 and 98,002,665 units outstanding at          
April 30, 2017 and July 31, 2016)     (639,881 )     (570,754 )  
General partner unitholder (989,926 and 989,926 units outstanding at          
April 30, 2017 and July 31, 2016)     (66,372 )     (65,835 )  
Accumulated other comprehensive income (loss)     6,086       (10,468 )  
Total Ferrellgas Partners, L.P. Partners' Deficit     (700,167 )     (647,057 )  
Noncontrolling Interest     (3,319 )     (4,723 )  
Total Partners' Deficit     (703,486 )     (651,780 )  
Total Liabilities and Partners' Deficit   $ 1,679,269     $ 1,683,306    
           
           
           
(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $357 million of 8.625% notes  which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P.  
           
Contacts
                    
                    Jack Herrold, Investor Relations – jackherrold@ferrellgas.com, 913-661-1851
                    
                    Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833

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