Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal third quarter ended April 30, 2019.

For the quarter, the Company reported a net earnings attributable to Ferrellgas Partners, L.P. of $20.5 million, or $.21 per common unit, compared to prior year period net loss of $10.9 million, or $.11 per common unit.

Adjusted EBITDA, a non-GAAP measure, was $88.6 million compared to $86.9 million in the prior year. The following table represents the contribution to adjusted EBITDA from ongoing propane operations as well as from assets that were sold during 2018.

(in millions)Q3 2019 Q3 2018
Propane Operations and Corporate Support$88.6 $84.6
Results from Assets Sold in 2018- $2.3
Consolidated Adjusted EBITDA$88.6 $86.9

On a trailing twelve month basis, adjusted EBITDA from ongoing propane operations and corporate support as of April 30, 2019 is $234.2 million compared to $229.4 million as of January 31, 2019.

The Company’s propane operations reported that total gallons sold of 264.1 million were 7% higher than prior year. Margin cents per gallon were 1.7¢, or 2.2 percent higher than the prior year despite increased competitive pressure in the tank exchange business. The Company continues its aggressive approach to gaining market share.  This strategic focus resulted in nearly 26,000 new customers, or approximately 4 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 6 percent from prior year to over 54,300 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $18.3 million.  The Company’s ongoing commitment to investing in the business led to higher operating expenses during the quarter which were largely associated with serving nearly 26,000 new customers and 3,000 new tank exchange locations.  As a result of this investment and the growth in sales volumes, operating, general and administrative expenses in our Propane segment were $9.3 million higher than the prior year.

Liquidity of $292.3 million at April 30, 2019 resulted from $246.9 million of available borrowing capacity on the Company’s secured credit facility and accounts receivable securitization facility as well as $45.4 million of cash.

As previously announced, the Company indefinitely suspended its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in the senior unsecured notes due 2020.  Additionally, as the Company continues to evaluate options to address leverage, the Company does not intend to comment further on its progress in this regard or on potential options until further disclosure is appropriate or required by law.  For that reason, and in view of the information the Company otherwise makes available in earnings releases and quarterly and annual reports, the Company is suspending the practice of holding conference calls with investors, analysts and other interested parties in connection with periodic reporting of financial results for completed periods.

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. 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 27, 2018. 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, 2018, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

Investor Relations – InvestorRelations@ferrellgas.com

 
FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
     
     
     
     
     
ASSETS April 30, 2019 July 31, 2018
     
Current Assets:    
Cash and cash equivalents $45,434  $119,311 
Accounts and notes receivable, net (including $160,959 and $120,079 of accounts    
receivable pledged as collateral at April 30, 2019 and July 31, 2018, respectively)  157,229   126,054 
Inventories  78,449   83,694 
Prepaid expenses and other current assets  25,489   34,862 
Total Current Assets  306,601   363,921 
     
Property, plant and equipment, net  603,923   557,723 
Goodwill, net  247,508   246,098 
Intangible assets, net  109,634   120,951 
Other assets, net  62,326   74,588 
Total Assets $1,329,992  $1,363,281 
     
     
LIABILITIES AND PARTNERS' DEFICIT    
     
Current Liabilities:    
Accounts payable $41,408  $46,820 
Short-term borrowings  -   32,800 
Collateralized note payable  62,000   58,000 
Other current liabilities  160,507   142,025 
Total Current Liabilities  263,915   279,645 
     
Long-term debt (a)  2,084,506   2,078,637 
Other liabilities  35,879   39,476 
Contingencies and commitments    
     
Partners Deficit:     
Common unitholders (97,152,665 units outstanding at April 30, 2019 and July 31, 2018)  (976,902)  (978,503)
General partner unitholder (989,926 units outstanding at April 30, 2019 and July 31, 2018)  (69,776)  (69,792)
Accumulated other comprehensive income (loss)  (846)  20,510 
Total Ferrellgas Partners, L.P. Partners' Deficit  (1,047,524)  (1,027,785)
Noncontrolling interest  (6,784)  (6,692)
Total Partners' Deficit  (1,054,308)  (1,034,477)
Total Liabilities and Partners' Deficit $1,329,992  $1,363,281 
     
     
     
(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
 2019 2018 2019 2018 2019 2018
Revenues:           
Propane and other gas liquids sales$459,556  $451,302  $1,344,634  $1,346,299  $1,641,311  $1,615,500 
Midstream operations -   22,595   -   260,631   21,688   395,827 
Other 20,069   41,913   60,677   118,691   89,833   147,670 
Total revenues 479,625   515,810   1,405,311   1,725,621   1,752,832   2,158,997 
            
Cost of sales:           
Propane and other gas liquids sales 250,389   260,419   766,056   802,852   936,618   945,279 
Midstream operations -   14,518   -   229,710   25,849   358,716 
Other 2,320   19,850   8,789   54,339   23,104   68,393 
            
Gross profit  226,916   221,023   630,466   638,720   767,261   786,609 
            
Operating expense 119,991   116,579   351,541   350,757   472,532   460,234 
Depreciation and amortization expense 20,617   25,348   59,214   76,565   84,444   102,370 
General and administrative expense 11,516   11,678   42,037   39,733   56,705   52,824 
Equipment lease expense 8,319   7,133   24,597   20,828   32,041   27,917 
Non-cash employee stock ownership plan compensation charge (4)  2,738   4,688   10,731   7,816   14,423 
Asset impairments -   -   -   10,005   -   10,005 
Loss on asset sales and disposals 1,683   6,270   8,403   46,414   149,388   52,010 
            
Operating income (loss) 64,794   51,277   139,986   83,687   (35,665)  66,826 
            
Interest expense (44,162)  (40,375)  (132,931)  (123,855)  (177,543)  (164,233)
Other income (expense), net 251   227   356   1,422   (138)  1,463 
            
Earnings (loss) before income tax benefit 20,883   11,129   7,411   (38,746)  (213,346)  (95,944)
            
Income tax expense (benefit) 123   67   284   282   (2,676)  (667)
            
Net earnings (loss) 20,760   11,062   7,127   (39,028)  (210,670)  (95,277)
            
Net earnings (loss) attributable to noncontrolling interest (b) 299   201   337   (131)  (1,776)  (612)
            
Net earnings (loss) attributable to Ferrellgas Partners, L.P. 20,461   10,861   6,790   (38,897)  (208,894)  (94,665)
            
Less: General partner's interest in net earnings (loss) 205   109   68   (389)  (2,089)  (947)
            
Common unitholders' interest in net earnings (loss)$20,256  $10,752  $6,722  $(38,508) $(206,805) $(93,718)
            
Earnings (loss) Per Common Unit           
Basic and diluted net earnings (loss) per common unitholders' interest$0.21  $0.11  $0.07  $(0.40) $(2.13) $(0.96)
          
Weighted average common units outstanding - basic 97,152.7   97,152.7   97,152.7   97,152.7   97,152.7   97,152.7 
            
          
Supplemental Data and Reconciliation of Non-GAAP Items:
            
 Three months ended  Nine months ended  Twelve months ended 
 April 30 April 30 April 30
 2019 2018 2019 2018 2019 2018
            
            
Net earnings (loss) attributable to Ferrellgas Partners, L.P.$20,461  $10,861  $6,790  $(38,897) $(208,894) $(94,665)
Income tax expense (benefit) 123   67   284   282   (2,676)  (667)
Interest expense 44,162   40,375   132,931   123,855   177,543   164,233 
Depreciation and amortization expense 20,617   25,348   59,214   76,565   84,444   102,370 
EBITDA 85,363   76,651   199,219   161,805   50,417   171,271 
Non-cash employee stock ownership plan compensation charge (4)  2,738   4,688   10,731   7,816   14,423 
Asset impairments -   -   -   10,005   -   10,005 
Loss on asset sales and disposal 1,683   6,270   8,403   46,414   149,388   52,010 
Other income (expense), net (251)  (227)  (356)  (1,422)  138   (1,463)
Severance costs $690 included in operating costs for the nine and twelve months ended period April 30, 2019 and $910 included in general and administrative costs for the nine and twelve months ended April 30, 2019. Also includes $358 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. -   -   1,600   1,663   1,600   1,663 
Legal fees and settlements 1,471   1,289   10,643   3,407   13,301   3,407 
Multi-employer pension plan withdrawal settlement -   -   1,524   -   1,524   - 
Exit costs associated with contracts - Midstream dispositions -   -   -   -   11,804   - 
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. 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. -   -   -   1,293   -   2,285 
Net earnings (loss) attributable to noncontrolling interest (b) 299   201   337   (131)  (1,776)  (612)
Adjusted EBITDA (c) 88,561   86,922   226,058   233,765   234,212   252,989 
Net cash interest expense (d) (40,747)  (37,873)  (123,325)  (115,664)  (168,553)  (153,782)
Maintenance capital expenditures (e) (13,506)  (5,741)  (45,038)  (19,085)  (53,570)  (25,502)
Cash refund from (paid for) taxes (23)  470   (21)  458   (188)  176 
Proceeds from certain asset sales 456   148   2,416   4,355   7,264   8,144 
Distributable cash flow attributable to equity investors (f) 34,741   43,926   60,090   103,829   19,165   82,025 
Distributable cash flow attributable to general partner and non-controlling interest 695   879   1,202   2,077   383   1,641 
Distributable cash flow attributable to common unitholders (g) 34,046   43,047   58,888   101,752   18,782   80,384 
Less: Distributions paid to common unitholders -   9,715   9,715   29,146   19,430   38,861 
Distributable cash flow excess/(shortage)$34,046  $33,332  $49,173  $72,606  $(648) $41,523 
            
Propane gallons sales           
Retail - Sales to End Users 204,441   189,183   573,152   543,548   666,572   635,326 
Wholesale - Sales to Resellers 59,641   57,121   179,256   185,492   233,974   241,710 
Total propane gallons sales 264,082   246,304   752,408   729,040   900,546   877,036 
            

(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, asset impairments, loss on asset sales and disposal, other income (expense), net, severance costs, legal fees and settlements, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, 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 certain 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.
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