Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal year and fourth quarter ended July 31, 2019.

For the fiscal year, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $64.2 million, or $0.65 per common unit, compared to prior year period net loss of $254.6 million, or $2.59 per common unit. For the quarter, the net loss attributable to Ferrellgas Partners, L.P. was $71.0 million, or $0.72 per common unit, compared to the prior year's fourth quarter net loss of $215.7 million, or $2.20 per common unit.

Adjusted EBITDA, a non-GAAP measure, was $230.0 million compared to $241.9 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) Fiscal 2019 Fiscal 2018
Propane Operations and Corporate Support $230.0 $227.7
Results from Assets Sold in 2018 - $14.2
Consolidated Adjusted EBITDA $230.0 $241.9

The Company’s propane operations reported that total gallons sold of 904.8 million were 3 percent higher than prior year. Margin cents per gallon were 1.8¢, or 2.4 percent, higher than the prior year despite increased competitive pressures in the tank exchange business. The Company continues its aggressive approach to gaining market share.  This strategic focus resulted in over 25,000 new customers, or approximately 4 percent, more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 3 percent from prior year to over 55,000 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $21.7 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 25,000 new customers and 1,800 new tank exchange locations. 

For the fourth quarter ended July 31, 2019, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $71.0 million, or $0.72 per common unit, reflecting the usual fourth quarter seasonal net loss, compared to prior year period net loss of $215.7 million, or $2.20 per common unit, which included non-cash losses stemming from strategic asset sales.  Adjusted EBITDA for the fourth quarter was $4.0 million compared to $8.2 million in the prior year on propane volumes that were 2.9 percent higher than the prior year period. This decrease stemmed from higher legal fees and settlements related to non-core businesses.

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 October 15, 2019. 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, 2019, 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 July 31, 2019 July 31, 2018
     
Current Assets:    
Cash and cash equivalents $11,054  $119,311 
Accounts and notes receivable, net (including $160,145 and $120,079 of accounts    
receivable pledged as collateral at July 31, 2019 and July 31, 2018, respectively)  107,596   126,054 
Inventories  80,454   83,694 
Prepaid expenses and other current assets  42,275   34,862 
  Total Current Assets  241,379   363,921 
     
Property, plant and equipment, net  596,723   557,723 
Goodwill, net  247,195   246,098 
Intangible assets, net  108,557   120,951 
Other assets, net  69,105   74,588 
  Total Assets $1,262,959  $1,363,281 
     
     
LIABILITIES AND PARTNERS' DEFICIT    
     
Current Liabilities:    
Accounts payable $33,364  $46,820 
Short-term borrowings  43,000   32,800 
Collateralized note payable  62,000   58,000 
Current portion of long-term debt (a)  631,756   2,402 
Other current liabilities  138,237   139,623 
  Total Current Liabilities  908,357   279,645 
     
Long-term debt  1,457,004   2,078,637 
Other liabilities  36,536   39,476 
Contingencies and commitments    
     
Partners Deficit:     
Common unitholders (97,152,665 units outstanding at July 31, 2019 and July 31, 2018)  (1,046,245)  (978,503)
General partner unitholder (989,926 units outstanding at July 31, 2019 and July 31, 2018) (70,476)  (69,792)
Accumulated other comprehensive income (loss)  (14,512)  20,510 
  Total Ferrellgas Partners, L.P. Partners' Deficit  (1,131,233)  (1,027,785)
 Noncontrolling interest  (7,705)  (6,692)
  Total Partners' Deficit  (1,138,938)  (1,034,477)
  Total Liabilities and Partners' Deficit $1,262,959  $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  Twelve months ended
  July 31 July 31
  2019 2018 2019 2018
Revenues:        
Propane and other gas liquids sales $264,224  $296,677  $1,608,858  $1,642,976 
Midstream operations  -   21,688   -   282,319 
Other  14,857   29,156   75,534   147,847 
  Total revenues  279,081   347,521   1,684,392   2,073,142 
         
Cost of sales:        
Propane and other gas liquids sales  136,460   170,562   902,516   973,414 
Midstream operations  -   25,849   -   255,559 
Other  2,617   14,315   11,406   68,654 
         
Gross profit   140,004   136,795   770,470   775,515 
         
Operating expense  117,327   120,991   468,868   471,748 
Depreciation and amortization expense  19,632   25,230   78,846   101,795 
General and administrative expense  17,957   14,668   59,994   54,401 
Equipment lease expense  8,476   7,444   33,073   28,272 
Non-cash employee stock ownership plan compensation charge  1,005   3,128   5,693   13,859 
Asset impairments  -   -   -   10,005 
Loss on asset sales and disposals  2,565   140,985   10,968   187,399 
         
Operating income (loss)  (26,958)  (175,651)  113,028   (91,964)
         
Interest expense  (44,688)  (44,612)  (177,619)  (168,467)
Other income (expense), net  13   (494)  369   928 
         
Loss before income tax benefit  (71,633)  (220,757)  (64,222)  (259,503)
         
Income tax expense (benefit)  39   (2,960)  323   (2,678)
         
Net loss  (71,672)  (217,797)  (64,545)  (256,825)
         
Net loss attributable to noncontrolling interest (b)  (635)  (2,113)  (298)  (2,244)
         
Net loss attributable to Ferrellgas Partners, L.P.  (71,037)  (215,684)  (64,247)  (254,581)
         
Less: General partner's interest in net loss  (710)  (2,157)  (642)  (2,546)
         
Common unitholders' interest in net loss $(70,327) $(213,527) $(63,605) $(252,035)
         
Loss Per Common Unit        
Basic and diluted net earnings loss per common unitholders' interest $(0.72) $(2.20) $(0.65) $(2.59)
         
Weighted average common units outstanding - basic  97,152.7   97,152.7   97,152.7   97,152.7 
         
         
Supplemental Data and Reconciliation of Non-GAAP Items:
         
  Three months ended  Twelve months ended
  July 31 July 31
  2019 2018 2019 2018
         
         
Net loss attributable to Ferrellgas Partners, L.P. $(71,037) $(215,684) $(64,247) $(254,581)
Income tax expense (benefit)  39   (2,960)  323   (2,678)
Interest expense  44,688   44,612   177,619   168,467 
Depreciation and amortization expense  19,632   25,230   78,846   101,795 
EBITDA  (6,678)  (148,802)  192,541   13,003 
Non-cash employee stock ownership plan compensation charge  1,005   3,128   5,693   13,859 
Asset impairments  -   -   -   10,005 
Loss on asset sales and disposal  2,565   140,985   10,968   187,399 
Other income (expense), net  (13)  494   (369)  (928)
Severance costs $690 included in operating costs for the twelve months ended period July 31, 2019        
and $910 included in general and administrative costs for the twelve months ended July 31, 2019.        
Also includes $358 in operating costs for the twelve months ended period July 31, 2018        
and $1,305 included in general and administrative costs for the twelve months ended July 31, 2018.  -   -   1,600   1,663 
Legal fees and settlements related to non-core businesses  7,721   2,658   18,364   6,065 
Multi-employer pension plan withdrawal settlement  -   -   1,524   - 
Exit costs associated with contracts - Midstream dispositions  -   11,804   -   11,804 
Unrealized (non-cash) losses on changes in fair value of derivatives $1,293 included in        
midstream operations cost of sales for the twelve months ended July 31, 2018.  -   -   -   1,293 
Net loss attributable to noncontrolling interest (b)  (635)  (2,113)  (298)  (2,244)
Adjusted EBITDA (c)  3,965   8,154   230,023   241,919 
Net cash interest expense (d)  (41,465)  (45,228)  (164,790)  (160,892)
Maintenance capital expenditures (e)  (1,736)  (8,532)  (46,774)  (27,617)
Cash refund from (paid for) taxes  (120)  (167)  (141)  291 
Proceeds from certain asset sales  1,833   4,848   4,249   9,203 
Distributable cash flow attributable to equity investors (f)  (37,523)  (40,925)  22,567   62,904 
Distributable cash flow attributable to general partner and non-controlling interest  (751)  (819)  451   1,258 
Distributable cash flow attributable to common unitholders (g)  (36,772)  (40,106)  22,116   61,646 
Less: Distributions paid to common unitholders  -   9,715   9,715   38,861 
Distributable cash flow excess/(shortage) $(36,772) $(49,821) $12,401  $22,785 
         
Propane gallons sales        
Retail - Sales to End Users  99,114   93,420   672,266   636,968 
Wholesale - Sales to Resellers  53,310   54,718   232,566   240,210 
Total propane gallons sales  152,424   148,138   904,832   877,178 
         
         

(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, asset impairments, loss on asset sales and disposal, other income (expense), net, severance expense, legal fees and settlements related to non-core businesses, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, unrealized (non-cash) loss on changes in fair value of derivatives, 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 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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