FGP Ferrellgas Partners LP

Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its second fiscal quarter ended January 31, 2018. The Company reported a net loss attributable to Ferrellgas Partners, L.P. of $1.8 million, or $0.02 per common unit, which includes non-cash charges of approximately $49 million largely associated with its de-leveraging efforts. This is compared to net earnings attributable to Ferrellgas Partners, L.P. of $38.1 million, or $0.39 per common unit, for the prior year period.

The Company reported that total gallons sold in the second quarter increased 42.3 million gallons over the same period in the prior year, with slightly lower margins as it aggressively competes for and wins new customers. Total gallon growth of 16 percent over the same period in the prior year helped the company report adjusted EBITDA of $120.6 million, compared to $105.0 million in the prior year period, a 15 percent increase.

At the end of this second quarter of the Company’s fiscal year, its leverage ratio was 6.96x, down from 7.57x at the end of the first quarter reflecting successful efforts to de-lever, as well as increased adjusted EBITDA. This level was lower than the 7.75x limit allowed under its secured credit facility and accounts receivable securitization facilities, as amended in April 2017. Based on the Company’s current forecast, the leverage ratio is expected to continue to strengthen and decrease throughout the fiscal year.

“Our company has momentum and the future continues to look bright on all fronts,” continued Mr. Ferrell. “We’ve closed on a number of accretive, bolt-on acquisitions that complement our strategic footprint and plan to stay aggressive in pursuit of well-run businesses that fit our model. We are expanding the number and capacity of our Blue Rhino-owned production facilities in order to reduce freight costs and streamline production – initiatives that are increasingly important as we added more than 3,000 new Blue Rhino selling locations since the prior year period. Our Midstream operations have stabilized and are now keenly focused on growth with recent expectations of more drilling activity in basins where we operate.  We have also executed on sales of non-core assets that has streamlined our business, reduced our debt and positively enhanced our key credit metrics.”

“These initiatives are the product of a leaner, more agile organization with a flatter management structure,” Ferrell added. “I like our seasoned management team.  We are working together better than ever to grow the business and serve our customers.  All of our employees are focused and working hard.  Morale is high. We are well positioned for fiscal 2018 and building a foundation for the long-term success of our Company.”

About FerrellgasFerrellgas 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, 2017. 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. 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 include those 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, 2017, the Form 10-Q of these entities for the fiscal quarter ended January 31, 2018 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

ContactsJim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833Bill Ruisinger, Investor Relations – billruisinger@ferrellgas.com, 816-792-7914

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS		January 31, 2018				July 31, 2017
Current Assets:
Cash and cash equivalents		$	14,173			$	5,760
Accounts and notes receivable, net (including $235,150 and $109,407 of accounts receivable pledged as collateral at January 31, 2018 and July 31, 2017, respectively)			255,978				165,084
Inventories			110,092				92,552
Assets held for sale			52,200				-
Prepaid expenses and other current assets			41,400				33,388
Total Current Assets			473,843				296,784
Property, plant and equipment, net			646,327				731,923
Goodwill, net			246,098				256,103
Intangible assets, net			243,079				251,102
Other assets, net			77,712				74,057
Total Assets		$	1,687,059			$	1,609,969
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable		$	82,072			$	85,561
Short-term borrowings			261,200				59,781
Collateralized note payable			166,000				69,000
Other current liabilities			140,510				126,224
Total Current Liabilities			649,782				340,566
Long-term debt (a)			1,811,617				1,995,795
Other liabilities			35,422				31,118
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at  January 31, 2018 and July 31, 2017)			(762,046	)			(701,188	)
General partner unitholder (989,926 units outstanding at January 31, 2018 and July 31, 2017)			(67,604	)			(66,991	)
Accumulated other comprehensive income			24,332				14,601
Total Ferrellgas Partners, L.P. Partners' Deficit			(805,318	)			(753,578	)
Noncontrolling Interest			(4,444	)			(3,932	)
Total Partners' Deficit			(809,762	)			(757,510	)
Total Liabilities and Partners' Deficit		$	1,687,059			$	1,609,969
(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.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
		Three months ended								Six months ended								Twelve months ended
		January 31								January 31								January 31
			2018				2017				2018				2017				2018				2017
Revenues:
Propane and other gas liquids sales		$	592,239			$	437,375			$	894,997			$	679,774			$	1,533,635			$	1,259,985
Midstream operations			117,276				96,787				238,036				204,831				499,908				448,066
Other			45,641				45,088				76,778				74,187				147,753				169,724
Total revenues			755,156				579,250				1,209,811				958,792				2,181,296				1,877,775
Cost of sales:
Propane and other gas liquids sales			362,918				235,029				542,433				354,241				882,347				622,094
Midstream operations			107,067				87,024				215,192				181,666				462,965				350,853
Other			20,787				20,657				34,489				32,403				69,353				88,418
Gross profit			264,384				236,540				417,697				390,482				766,631				816,410
Operating expense			123,716				112,509				234,178				217,501				448,428				443,967
Depreciation and amortization expense			25,485				25,607				51,217				51,809				102,759				127,976
General and administrative expense			14,891				11,429				28,055				23,911				51,124				48,188
Equipment lease expense			6,954				7,416				13,695				14,765				28,054				29,288
Non-cash employee stock ownership plan compensation charge			4,031				2,945				7,993				6,699				16,382				25,897
Non-cash stock-based compensation charge (a)			-				1,417				-				3,298				0				6,956
Asset impairments			10,005				-				10,005				-				10,005				628,802
Loss on asset sales and disposal			39,249				45				40,144				6,468				48,133				19,862
Operating income (loss)			40,053				75,172				32,410				66,031				61,746				(514,526	)
Interest expense			(42,673	)			(36,819	)			(83,480	)			(72,247	)			(163,718	)			(141,666	)
Other income, net			684				763				1,195				1,271				1,398				1,801
Earnings (loss) before income taxes			(1,936	)			39,116				(49,875	)			(4,945	)			(100,574	)			(654,391	)
Income tax expense (benefit)			(162	)			588				215				(2	)			(926	)			(224	)
Net earnings (loss)			(1,774	)			38,528				(50,090	)			(4,943	)			(99,648	)			(654,167	)
Net earnings (loss) attributable to noncontrolling interest (b)			69				430				(332	)			32				(658	)			(6,443	)
Net earnings (loss) attributable to Ferrellgas Partners, L.P.			(1,843	)			38,098				(49,758	)			(4,975	)			(98,990	)			(647,724	)
Less: General partner's interest in net earnings (loss)			(19	)			381				(498	)			(50	)			(990	)			(6,477	)
Common unitholders' interest in net earnings (loss)		$	(1,824	)		$	37,717			$	(49,260	)		$	(4,925	)		$	(98,000	)		$	(641,247	)
Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest		$	(0.02	)		$	0.39			$	(0.51	)		$	(0.05	)		$	(1.01	)		$	(6.57	)
Weighted average common units outstanding - basic			97,152.7				97,152.7				97,152.7				97,305.1				97,152.7				97,652.0
Supplemental Data and Reconciliation of Non-GAAP Items:
		Three months ended								Six months ended								Twelve months ended
		January 31								January 31								January 31
			2018				2017				2018				2017				2018				2017
Net earnings (loss) attributable to Ferrellgas Partners, L.P.		$	(1,843	)		$	38,098			$	(49,758	)		$	(4,975	)		$	(98,990	)		$	(647,724	)
Income tax expense (benefit)			(162	)			588				215				(2	)			(926	)			(224	)
Interest expense			42,673				36,819				83,480				72,247				163,718				141,666
Depreciation and amortization expense			25,485				25,607				51,217				51,809				102,759				127,976
EBITDA			66,153				101,112				85,154				119,079				166,561				(378,306	)
Non-cash employee stock ownership plan compensation charge			4,031				2,945				7,993				6,699				16,382				25,897
Non-cash stock based compensation charge (a)			-				1,417				-				3,298				0				6,956
Asset impairments			10,005				-				10,005				-				10,005				628,802
Loss on asset sales and disposal			39,249				45				40,144				6,468				48,133				19,862
Other income, net			(684	)			(763	)			(1,195	)			(1,271	)			(1,398	)			(1,801	)
Severance costs $358 included in operating costs for the six and twelve months ended period January 31, 2018 and $1,305 included in general and administrative costs for the six and twelve months ended January 31, 2018. Also includes $414 and $938 in operating costs for the six and twelve months ended January 31, 2017 and $490, $1,545 and $1,618 included in general and administrative costs for the three, six and twelve months ended January 31, 2017.			-				490				1,663				1,959				1,663				2,556
Professional fees related to a lawsuit			2,118				-				2,118				-				2,118				0
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(986) included in operating expense for the twelve months ended January 31, 2018 and $(1,134), $(3,011) and $(6,160) for the three, six and twelve months ended January 31, 2017. Also includes $(314), $1,293 and $1,037 included in midstream operations cost of sales for the three, six and twelve months ended January 31, 2018, respectively and $488, $796 and $174 for the three, six and twelve months ended January 31, 2017.			(314	)			(646	)			1,293				(2,215	)			51				(5,986	)
Acquisition and transition expenses (included in general and administrative expense)			-				-				-				-				-				14
Net earnings (loss) attributable to noncontrolling interest (b)			69				430				(332	)			32				(658	)			(6,443	)
Adjusted EBITDA (c)			120,627				105,030				146,843				134,049				242,857				291,551
Net cash interest expense (d)			(39,734	)			(34,712	)			(77,791	)			(68,330	)			(153,049	)			(134,783	)
Maintenance capital expenditures (e)			(4,640	)			(3,754	)			(13,344	)			(7,076	)			(23,203	)			(14,784	)
Cash paid for taxes			(6	)			(25	)			(12	)			(26	)			(296	)			(798	)
Proceeds from asset sales			2,999				2,313				4,207				4,033				8,126				7,180
Distributable cash flow attributable to equity investors (f)			79,246				68,852				59,903				62,650				74,435				148,366
Distributable cash flow attributable to general partner and non-controlling interest			1,585				1,377				1,198				1,253				1,489				2,968
Distributable cash flow attributable to common unitholders			77,661				67,475				58,705				61,397				72,946				145,398
Less: Distributions paid to common unitholders			9,716				9,715				19,431				59,506				38,861				159,959
Distributable cash flow excess/(shortage)		$	67,945			$	57,760			$	39,274			$	1,891			$	34,085			$	(14,561	)
Propane gallons sales
Retail - Sales to End Users			235,071				201,580				354,365				312,768				606,469				565,106
Wholesale - Sales to Resellers			74,942				66,152				128,371				118,142				236,480				232,916
Total propane gallons sales			310,013				267,732				482,736				430,910				842,949				798,022
Midstream operations barrels
Salt water volume processed			4,851				4,002				9,791				7,705				38,191				15,292
Crude oil hauled			11,065				13,005				23,215				24,269				48,195				55,071
Crude oil sold			1,556				1,326				3,385				3,118				7,737				6,875
(a)  Non-cash stock-based compensation charges consist of the following:
		Three months ended								Six months ended								Twelve months ended
		January 31								January 31								January 31
			2018				2017				2018				2017				2018				2017
Operating expense		$	-			$	567			$	-			$	661			$	-			$	1,177
General and administrative expense			-				850				-				2,637				-				5,779
Total		$	-			$	1,417			$	-			$	3,298			$	-			$	6,956
(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 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, net, severance expense, unrealized (non-cash) losses (gains) on changes in fair value  of derivatives, acquisition and transition expenses and net 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 expense, 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 interest. 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 .