FGP Ferrellgas Partners LP

Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its third fiscal quarter ended April 30, 2018. The Company reported net earnings attributable to Ferrellgas Partners, L.P. of $10.9 million, or $0.11 per common unit, compared to prior year period net earnings of $6.5 million, or $0.07 per common unit. Adjusted EBITDA increased to $86.9 million, compared to $76.8 million in the prior year period, a 13.0 percent increase.

The Company’s propane operations reported that total gallons sold in the third quarter increased 34.1 million gallons, or 16.1 percent, over prior year. Margins were slightly lower as the Company aggressively competes for and wins new customers. This strategic focus resulted in approximately 11,500 new customers, or approximately 1.7 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased 9.5 percent from the start of the fiscal year. Overall, the increase in gross margin from sales volume growth was partially offset by slightly lower margins per gallon and higher operating expenses which were largely the result of increased sales and marketing activity. However, on a per gallon basis operating expenses were 1.7 cents lower than prior year reflecting in part benefits from higher operating efficiency, sales volumes and customer density.

The Company’s midstream business has stabilized and is positioning itself for potential growth opportunities stemming from activity associated with recent increases in the price of oil. Stronger results for the quarter compared to prior year reflect primarily the successful exit earlier this year from low-margin barge operations. Results for the quarter also reflect completion of the sale of the Bridger Energy and Bridger Rail businesses for approximately $60.0 million.  These sales also reduced outstanding letters of credit by approximately $80.0 million.

The Company has solidified its liquidity and working capital access requirements with the recent announcements of the closing of two credit facilities:

• A $575.0 million secured credit facility was completed on May 4, 2018. This facility included a $275.0 million term loan and a $300.0 million cash revolver. Proceeds from the term loan were used to pay off the Company’s previous credit facility and resulted in approximately $75.0 million of additional cash on the balance sheet. The revolver has no outstanding balance and supports approximately $100.0 million of letters of credit that were issued to replace those outstanding under the old facility.
• The Company also amended its accounts receivable securitization facility on May 14, 2018, resulting in a three-year extension of the facility as well as increasing the size of the facility from $225.0 million to $250.0 million.

In addition, the Company continues to evaluate various options related to its outstanding unsecured bonds due June 2020. This may include refinancing, or an exchange transaction for some or all of its bonds due June 2020.

“Our Company continues to build momentum and this quarter’s results are another example of how our strategy is working,” said James E. Ferrell, Interim Chief Executive Officer and President of Ferrellgas. “We are focused on customer growth and density, and we are seeing results in both. We are committed to winning new business, and as we enter the summer grilling season we’ll benefit from the rapid expansion in the number of Blue Rhino tank exchange sale locations, up nearly 9.5 percent from the start of this fiscal year.”

The Company continues its strategic focus on key operating initiatives to reduce costs and grow EBITDA.  Of significance are two new tank exchange production plants expected to come on line in fiscal fourth quarter. “These plants move us closer to our customers, lower our operating expenses per tank, lower costs and mileage on our vehicle fleet, and add capacity to the system to position us to service the growth we are seeing in this business,” added Ferrell. “We have also executed on sales of non-core assets that have streamlined our business, reduced our debt, and positively enhanced our key credit metrics. Our liquidity and access to working capital is significant with recent announcements of our credit facility extensions. We now have a multi-year runway to continue to focus on growing our business and delivering the world class service our customers deserve.”

“Our management team is strong and experienced. I am excited about the recent announcement of our promotion of Trent Hampton to Chief Operating Officer. He has long tenure with the Company, understands all aspects of our business and is working well with our distribution, supply, and administrative teams throughout the Company,” said Ferrell. “We are working together better than ever to grow the business and serve our customers. We are well positioned for a strong finish to fiscal 2018 and we are building a foundation for the long-term success of our Company.”

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, 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 April 30, 2018 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833 Bill 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		April 30, 2018				July 31, 2017
Current Assets:
Cash and cash equivalents		$	9,499			$	5,760
Accounts and notes receivable, net (including $182,486 and $109,407 of accounts receivable pledged as collateral at April 30, 2018 and July 31, 2017, respectively)			202,727				165,084
Inventories			85,062				92,552
Prepaid expenses and other current assets			44,090				33,388
Total Current Assets			341,378				296,784
Property, plant and equipment, net			637,688				731,923
Goodwill, net			246,098				256,103
Intangible assets, net			235,318				251,102
Other assets, net			72,094				74,057
Total Assets		$	1,532,576			$	1,609,969
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable		$	52,472			$	85,561
Short-term borrowings			-				59,781
Collateralized note payable			104,000				69,000
Other current liabilities			158,875				126,224
Total Current Liabilities			315,347				340,566
Long-term debt (a)			1,995,608				1,995,795
Other liabilities			34,225				31,118
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at  April 30, 2018 and July 31, 2017)			(758,325	)			(701,188	)
General partner unitholder (989,926 units outstanding at April 30, 2018 and July 31, 2017)			(67,568	)			(66,991	)
Accumulated other comprehensive income			17,672				14,601
Total Ferrellgas Partners, L.P. Partners' Deficit			(808,221	)			(753,578	)
Noncontrolling interest			(4,383	)			(3,932	)
Total Partners' Deficit			(812,604	)			(757,510	)
Total Liabilities and Partners' Deficit		$	1,532,576			$	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								Nine months ended								Twelve months ended
		April 30								April 30								April 30
		2018				2017				2018				2017				2018				2017
Revenues:
Propane and other gas liquids sales		$	451,302			$	369,437			$	1,346,299			$	1,049,211			$	1,615,500			$	1,290,493
Midstream operations			22,595				126,676				260,631				331,507				395,827				469,318
Other			41,913				41,996				118,691				116,183				147,670				146,601
Total revenues			515,810				538,109				1,725,621				1,496,901				2,158,997				1,906,412
Cost of sales:
Propane and other gas liquids sales			260,419				197,487				802,852				551,728				945,279				667,320
Midstream operations			14,518				118,767				229,710				300,433				358,716				397,768
Other			19,850				20,810				54,339				53,213				68,393				68,025
Gross profit			221,023				201,045				638,720				591,527				786,609				773,299
Operating expense			116,579				104,773				350,757				322,274				460,234				433,600
Depreciation and amortization expense			25,348				25,737				76,565				77,546				102,370				115,361
General and administrative expense			11,678				9,978				39,733				33,889				52,824				45,812
Equipment lease expense			7,133				7,270				20,828				22,035				27,917				29,314
Non-cash employee stock ownership plan compensation charge			2,738				4,697				10,731				11,396				14,423				20,616
Non-cash stock-based compensation charge (a)			-				-				-				3,298				-				5,865
Asset impairments			-				-				10,005				-				10,005				628,802
Loss on asset sales and disposal			6,270				2,393				46,414				8,861				52,010				16,476
Operating income (loss)			57,547				48,590				83,687				112,228				66,826				(522,547	)
Interest expense			(40,375	)			(39,860	)			(123,855	)			(112,107	)			(164,233	)			(147,155	)
Other income, net			227				162				1,422				1,433				1,463				1,632
Earnings (loss) before income taxes			17,399				8,892				(38,746	)			1,554				(95,944	)			(668,070	)
Income tax expense (benefit)			67				(192	)			282				(194	)			(667	)			(1,676	)
Net earnings (loss)			17,332				9,084				(39,028	)			1,748				(95,277	)			(666,394	)
Net earnings (loss) attributable to noncontrolling interest (b)			201				155				(131	)			187				(612	)			(6,521	)
Net earnings (loss) attributable to Ferrellgas Partners, L.P.			17,131				8,929				(38,897	)			1,561				(94,665	)			(659,873	)
Less: General partner's interest in net earnings (loss)			109				66				(389	)			16				(947	)			(6,599	)
Common unitholders' interest in net earnings (loss)		$	17,022			$	8,863			$	(38,508	)		$	1,545			$	(93,718	)		$	(653,274	)
Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest		$	0.18			$	0.09			$	(0.40	)		$	0.02			$	(0.96	)		$	(6.70	)
Weighted average common units outstanding - basic			97,152.7				97,152.7				97,152.7				97,255.4				97,152.7				97,443.7
Supplemental Data and Reconciliation of Non-GAAP Items:
		Three months ended								Nine months ended								Twelve months ended
		April 30								April 30								April 30
			2018				2017				2018				2017				2018				2017
Net earnings (loss) attributable to Ferrellgas Partners, L.P.		$	17,131			$	8,929			$	(38,897	)		$	1,561			$	(94,665	)		$	(659,873	)
Income tax expense (benefit)			67				(192	)			282				(194	)			(667	)			(1,676	)
Interest expense			40,375				39,860				123,855				112,107				164,233				147,155
Depreciation and amortization expense			25,348				25,737				76,565				77,546				102,370				115,361
EBITDA			82,921				74,334				161,805				191,020				171,271				(399,033	)
Non-cash employee stock ownership plan compensation charge			2,738				4,697				10,731				11,396				14,423				20,616
Non-cash stock based compensation charge (a)			-				-				-				3,298				-				5,865
Asset impairments			-				-				10,005				-				10,005				628,802
Loss on asset sales and disposal			-				0				46,414				8,861				52,010				16,476
Other income, net			(227	)			(162	)			(1,422	)			(1,433	)			(1,463	)			(1,632	)
Severance costs $358 included in operating costs for the nine and twelve months ended period April 30, 2018 and $1,305 included in general and administrative costs for the nine and twelve months ended April 30, 2018. Also includes $414 and $542 in operating costs for the nine and twelve months ended April 30, 2017 and $1,545 included in general and administrative costs for the nine and twelve months ended April 30, 2017.			-				-				1,663				1,959				1,663				2,087
Professional fees			1,289				-				3,407				-				3,407				-
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(759) included in operating expense for the twelve months ended April 30, 2018 and $(227), $(3,238) and $(3,245) for the three, nine and twelve months ended April 30, 2017. Also includes $1,293 and $3,044 included in midstream operations cost of sales for the nine and twelve months ended April 30, 2018, respectively and $(2,007), $(1,211) and $(3,060) for the three, nine and twelve months ended April 30, 2017.			-				(2,234	)			1,293				(4,449	)			2,285				(6,305	)
Net earnings (loss) attributable to noncontrolling interest (b)			201				155				(131	)			187				(612	)			(6,521	)
Adjusted EBITDA (c)			86,922				76,790				233,765				210,839				252,989				260,355
Net cash interest expense (d)			(37,873	)			(37,140	)			(115,664	)			(105,470	)			(153,782	)			(139,074	)
Maintenance capital expenditures (e)			(5,741	)			(3,442	)			(19,085	)			(10,518	)			(25,502	)			(14,067	)
Cash paid for taxes			470				(2	)			458				(28	)			176				(373	)
Proceeds from asset sales			148				130				4,355				4,163				8,144				4,214
Distributable cash flow attributable to equity investors (f)			43,926				36,336				103,829				98,986				82,025				111,055
Distributable cash flow attributable to general partner and non-controlling interest			879				727				2,077				1,980				1,641				2,222
Distributable cash flow attributable to common unitholders			43,047				35,609				101,752				97,006				80,384				108,833
Less: Distributions paid to common unitholders			9,715				9,715				29,146				69,221				38,861				119,407
Distributable cash flow excess/(shortage)		$	33,332			$	25,894			$	72,606			$	27,785			$	41,523			$	(10,574	)
Propane gallons sales
Retail - Sales to End Users			189,183				160,326				543,548				473,094				635,326				560,719
Wholesale - Sales to Resellers			57,121				51,891				185,492				170,033				241,710				226,162
Total propane gallons sales			246,304				212,217				729,040				643,127				877,036				786,881
Midstream operations barrels
Salt water volume processed			4,761				4,635				14,552				12,340				19,727				15,903
Crude oil hauled			11,640				12,280				34,855				36,549				47,555				51,136
Crude oil sold			27				2,110				3,412				5,228				5,654				7,119
(a)  Non-cash stock-based compensation charges consist of the following:
		Three months ended								Nine months ended								Twelve months ended
		April 30								April 30								April 30
			2018				2017				2018				2017				2018				2017
Operating expense		$	-			$	-			$	-			$	661			$	-			$	1,046
General and administrative expense			-				-				-				2,637				-				4,819
Total		$	-			$	-			$	-			$	3,298			$	-			$	5,865
(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,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 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 .