Net Income Climbs 41%; Adjusted EBITDA Up 18%
OVERLAND PARK, Kan., June 7 /PRNewswire-FirstCall/ -- Ferrellgas Partners, L.P. (NYSE:FGP), one of the nation's largest propane distributors, today reported record earnings for its fiscal third quarter ended April 30, 2007.
Net earnings for the quarter rose 41% to a record $43.7 million from $30.9 million in the prior fiscal year's quarter, while Adjusted EBITDA increased 18% to a record $95.1 million from $80.8 million in that same prior year period. This earnings performance reflects the positive impact of higher propane sales volumes and continued strong margin performance during the quarter.
Propane sales volumes rose 6% for the quarter to 244 million gallons from 231 million gallons sold a year ago. This increase in demand correlated to nationwide temperatures that were 6% cooler than in the same period last year, yet remained 1% warmer than normal.
"We are pleased to be able to share these record third quarter results with our investors," said Steve Wambold, President and Chief Operating Officer. "As we continue to improve both operationally and financially, we anticipate that this strong performance will continue into our fourth-quarter and positively impact our full year results. We remain confident in our full- year Adjusted EBITDA guidance of $235 million to $245 million." As of April 30, 2007, the partnership's trailing 12-month Adjusted EBITDA was a record $235.2 million, a nearly 9% improvement over its record fiscal 2006 Adjusted EBITDA of $215.9 million.
Third-quarter revenues rose 19% in the quarter to $624.2 million from $526.0 million and gross profit grew to a record $210.5 million from $194.3 million achieved in the prior-year quarter. Operating and general and administrative expenses were $97.4 million and $11.8 million, respectively, compared to $95.1 million and $12.3 million a year ago. Equipment lease expense increased slightly to $6.7 million in the quarter from $6.5 million in the prior fiscal year's quarter.
"We believe that we have built a solid foundation for continued earnings growth, both through our investments in technology and people," commented James Ferrell, Chairman and Chief Executive Officer. "We will continue to look for ways to improve our financial results with our objective to improve our distributable cash flow in the near future." For the first nine-months of fiscal 2007, both Adjusted EBITDA and gross profit were a record $226.3 million and $565.0 million, respectively. Revenues grew to $1.7 billion from $1.6 billion in the prior nine-month period, while propane sales volumes remained unchanged at 682 million gallons. Operating and general and administrative expenses were $287.2 million and $32.9 million, respectively, compared to $281.9 million and $34.8 million a year ago. Interest and depreciation and amortization expenses for the nine- month period were $66.2 million and $65.9 million, respectively, and equipment lease expense for the same period was $19.8 million. Net earnings for the period totaled $73.4 million, a 16% increase compared to $63.2 million achieved in the same period last year.
Ferrellgas Partners, L.P., through its operating partnership. Ferrellgas, L.P., serves more than one million customers in all 50 states, the District of Columbia and Puerto Rico. Ferrellgas employees indirectly own more than 20 million common units of the partnership through an employee stock ownership plan. More information about the company can be found online at http://www.ferrellgas.com/.
Statements in this release concerning expectations for the future are forward-looking statements. 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 end July 31, 2006, and other documents filed from time to time by these entities with the Securities and Exchange Commission.
Contact: Ryan VanWinkle, Investor Relations, +1-913-661-1528, or Scott Brockelmeyer, Media Relations, +1-913-661-1830.
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited) ASSETS April 30, 2007 July 31, 2006 Current Assets:
Cash and cash equivalents $23,830 $16,525
Accounts and notes receivable, net 146,171 116,369
Inventories 98,684 154,613
Prepaid expenses and other current
assets 18,828 15,334
Total Current Assets 287,513 302,841 Property, plant and equipment, net 729,490 740,101
Goodwill 249,325 246,050
Intangible assets, net 251,216 248,546
Other assets, net 18,443 11,962
Total Assets $1,535,987 $1,549,500
LIABILITIES AND PARTNERS' CAPITAL Current Liabilities:
Accounts payable $64,250 $82,212
Short term borrowings 33,006 52,647
Other current liabilities (a) 102,326 140,738
Total Current Liabilities 199,582 275,597 Long-term debt (a) 1,003,811 983,545
Other liabilities 20,585 19,178
Contingencies and commitments - -
Minority interest 5,870 5,435 Partners' Capital:
Common unitholders (62,952,174 and
60,885,784 units outstanding at
April 2007 and July 2006, respectively) 356,077 321,194
General partner unitholder (635,881
and 615,008 units outstanding at
April 2007 and July 2006, respectively) (56,477) (56,829)
Accumulated other comprehensive income 6,539 1,380
Total Partners' Capital 306,139 265,745
Total Liabilities and Partners'
Capital $1,535,987 $1,549,500 (a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $268 million of
8 3/4% notes which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P. FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2007 AND 2006
(in thousands, except per unit data)
(unaudited) 3 mos ended April 30, 9 mos ended April 30,
2007 2006 2007 2006
Revenues:
Propane and other gas
liquids sales $531,816 $466,832 $1,458,732 $1,400,631
Other 92,346 59,194 204,616 163,561
Total revenues 624,162 526,026 1,663,348 1,564,192 Cost of product sold:
Propane and other gas
liquids sales 341,593 288,364 956,288 919,626
Other 72,118 43,319 142,039 101,788 Gross profit 210,451 194,343 565,021 542,778 Operating expense 97,369 95,085 287,224 281,894
Depreciation and amortization
expense 22,245 21,138 65,936 63,864
General and administrative
expense 11,829 12,326 32,877 34,793
Equipment lease expense 6,675 6,506 19,773 20,723
Employee stock ownership plan
compensation charge 2,721 2,597 8,301 7,521
Loss on disposal of assets and
other 3,097 2,881 9,592 5,518 Operating income 66,515 53,810 141,318 128,465 Interest expense (21,534) (20,778) (66,243) (62,893)
Interest income 981 557 2,871 1,465 Earnings before income taxes
and minority interest 45,962 33,589 77,946 67,037 Income tax expense 1,752 2,271 3,634 2,971
Minority interest (a) 507 377 933 829 Net earnings 43,703 30,941 73,379 63,237 Net earnings available to
general partner 1,860 309 734 632 Net earnings available to
common unitholders $41,843 $30,632 $72,645 $62,605 Earnings Per Unit
Basic earnings per common unit
available to common unitholders $0.66 $0.51 $1.16 $1.04
Dilutive effect of EITF 03-6 (b) 0.03 - - -
Adjusted net earnings per unit
available to common unitholders $0.69 $0.51 $1.16 $1.04 Weighted average common units
outstanding 62,950.4 60,483.8 62,688.2 60,346.3
Supplemental Data and Reconciliation of Non-GAAP Items: 3 mos ended April 30, 9 mos ended April 30,
2007 2006 2007 2006
Propane gallons 244,407 231,186 681,567 681,885 Net earnings $43,703 $30,941 $73,379 $63,237
Income tax expense 1,752 2,271 3,634 2,971
Interest expense 21,534 20,778 66,243 62,893
Depreciation and amortization
expense 22,245 21,138 65,936 63,864
Interest income (981) (557) (2,871) (1,465)
EBITDA 88,253 74,571 206,321 191,500
Employee stock ownership plan
compensation charge 2,721 2,597 8,301 7,521
Unit and stock-based compensation
charge (c) 499 346 1,165 1,581
Loss on disposal of assets and
other 3,097 2,881 9,592 5,518
Minority interest 507 377 933 829
Adjusted EBITDA (d) 95,077 80,772 226,312 206,949
Net cash interest expense (e) (22,451) (21,536) (66,723) (64,337)
Maintenance capital
expenditures (f) (4,026) (3,399) (13,745) (9,458)
Cash paid for taxes (1,112) (534) (2,877) (609)
Distributable cash flow to equity
investors (g) $67,488 $55,303 $142,967 $132,545
(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(b) Emerging Issues Task Force ("EITF") 03-6 "Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share," requires the calculation of net earnings per limited partner unit for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings for the period had to be distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of earnings to the limited partners. Although the dilutive effect of EITF 03-6 on basic net earnings per common unit was $0.03 for the three months ended April 30, 2007, due to the seasonality of the propane business, the dilution effect of EITF 03-6 on net earnings per limited partner unit will typically only impact the three months ending January 31. EITF 03-6 did not have a dilutive effect on the three months ended April 30, 2006 or the nine months ended April 30, 3007 and 2006.
(c) Statement of Financial Accounting Standards ("SFAS") No. 123( R), "Share-Based Payment" requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. Share-based payment transactions resulted in a non-cash compensation charge of $0.2 million and $0.1 million to operating expense, for the three months ended April 30, 2007 and 2006, respectively, and $0.3 million and $0.4 million to operating expense for the nine months ended April 30, 2007 and 2006, respectively. A non-cash compensation charge of $0.3 million and $0.2 million was recorded to general and administrative expense for the three months ended April 30, 2007 and 2006, respectively, and $0.9 million and $1.2 million for the nine months ended April 30, 2007 and 2006, respectively.
(d) Management considers Adjusted EBITDA to be a chief measurement of the partnership's overall economic performance and return on invested capital. Adjusted EBITDA is calculated as earnings before interest, income taxes, depreciation and amortization, employee stock ownership plan compensation charge, unit and stock-based compensation charge, loss on disposal of assets and other, minority interest, and other non-cash and non-operating charges. 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 are unusual or non-recurring, and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, management believes this measure is consistent with the manner in which the partnership's lenders and investors measure its overall performance and liquidity, including its ability to pay quarterly equity distributions, services its long-term debt and other fixed obligations and to fund its capital expenditures and working capital requirements. 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.
(e) Net cash interest expense is the sum of interest expense less non- cash interest expense and interest income. This amount also includes interest expense related to the accounts receivable securitization facility.
(f) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
(g) Management considers Distributable cash flow to equity investors a meaningful non-GAAP measure of the partnership's ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow, as management defines it, may not be comparable to distributable cash flow or similarly titled measures used by other corporations and partnerships. DATASOURCE: Ferrellgas Partners, L.P.
CONTACT: Ryan VanWinkle, Investor Relations, +1-913-661-1528, or Scott Brockelmeyer, Media Relations, +1-913-661-1830 Web site: http://www.ferrellgas.com/
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