Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its first quarter ended October 31, 2019.

For the quarter, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $45.3 million, or $0.46 per common unit, compared to prior year period net loss of $57.0 million, or $0.58 per common unit.  Adjusted EBITDA, a non-GAAP measure, for the quarter was $25.1 million compared to $17.8 million in the prior year’s first quarter, a 41 percent increase.

The Company’s propane operations reported that total gallons sold for the quarter were 179.9 million, up from 178.6 million gallons in the prior year. Margin cents per gallon were 4.2¢, or 5.7 percent higher than the prior year despite increased competitive pressures in the tank exchange business. The Company continues its aggressive operating strategies in gaining market share.  This strategic focus resulted in over 18,000 new customers, or approximately 3 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 4 percent from prior year to over 55,900 locations. Continued commitment to operating expense control during this growth period resulted in a $14.1 million in Operating Income despite a mere $4.2 million increase, or 3.8 percent, in operating expenses during the quarter.

The Company also successfully completed two accretive retail acquisitions in Colorado and New York during the quarter. 

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 June of 2020.  Additionally, Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to address our upcoming debt maturities.  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 has suspended 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.

ContactsInvestor Relations – InvestorRelations@ferrellgas.com

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
     
ASSETS October 31, 2019 July 31, 2019
     
Current Assets:    
Cash and cash equivalents $29,805  $11,054 
Accounts and notes receivable, net (including $118,164 and $106,145 of accounts    
receivable pledged as collateral at October 31, 2019 and July 31, 2019, respectively)  123,841   107,596 
Inventories  84,995   80,454 
Prepaid expenses and other current assets  50,582   42,275 
Total Current Assets  289,223   241,379 
     
Property, plant and equipment, net  598,887   596,723 
Goodwill, net  247,195   247,195 
Intangible assets, net  108,493   108,557 
Operating lease right-of-use asset  124,047   - 
Other assets, net  75,443   69,105 
Total Assets $1,443,288  $1,262,959 
     
     
LIABILITIES AND PARTNERS' DEFICIT    
     
Current Liabilities:    
Accounts payable $44,421  $33,364 
Short-term borrowings  80,000   43,000 
Collateralized note payable  73,000   62,000 
Current portion of long-term debt (a)  358,080   631,756 
Current operating lease liabilities  33,832   - 
Other current liabilities  187,731   138,237 
Total Current Liabilities  777,064   908,357 
     
Long-term debt  1,731,920   1,457,004 
Operating lease liabilities  88,773   - 
Other liabilities  36,915   36,536 
Contingencies and commitments    
     
Partners Deficit:     
Common unitholders (97,152,665 units outstanding at October 31, 2019 and July 31, 2019)  (1,091,704)  (1,046,245)
General partner unitholder (989,926 units outstanding at October 31, 2019 and July 31, 2019)  (70,935)  (70,476)
Accumulated other comprehensive loss  (20,598)  (14,512)
Total Ferrellgas Partners, L.P. Partners' Deficit  (1,183,237)  (1,131,233)
Noncontrolling interest  (8,147)  (7,705)
Total Partners' Deficit  (1,191,384)  (1,138,938)
Total Liabilities and Partners' Deficit $1,443,288  $1,262,959 
     
(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
  October 31 October 31
   2019   2018   2019   2018 
Revenues:        
Propane and other gas liquids sales $273,385  $334,966  $1,547,277  $1,675,184 
Midstream operations    -   -   161,559 
Other  19,829   17,343   78,020   134,053 
Total revenues  293,214   352,309   1,625,297   1,970,796 
         
Cost of sales:        
Propane and other gas liquids sales  134,028   204,136   832,408   998,035 
Midstream operations    0   0   147,434 
Other  3,681   3,047   12,040   57,999 
         
Gross profit   155,505   145,126   780,849   767,328 
         
Operating expense - personnel, vehicle, plant & other  114,543   110,331   473,080   471,617 
Depreciation and amortization expense  19,219   18,992   79,073   95,055 
General and administrative expense  9,695   14,179   55,510   55,416 
Operating expense - equipment lease expense  8,388   7,863   33,598   29,394 
Non-cash employee stock ownership plan compensation charge  795   2,748   3,740   12,645 
Asset impairments    -   -   10,005 
Loss on asset sales and disposals  2,235   4,504   8,699   191,008 
         
Operating income (loss)  630   (13,491)  127,149   (97,812)
         
Interest expense  (45,697)  (43,878)  (179,438)  (171,538)
Other income (expense), net  (132)  19   218   436 
         
Loss before income tax benefit  (45,199)  (57,350)  (52,071)  (268,914)
         
Income tax expense (benefit)  518   158   683   (2,897)
         
Net loss  (45,717)  (57,508)  (52,754)  (266,017)
         
Net loss attributable to noncontrolling interest (b)  (373)  (493)  (178)  (2,336)
         
Net loss attributable to Ferrellgas Partners, L.P.  (45,344)  (57,015)  (52,576)  (263,681)
         
Less: General partner's interest in net loss  (453)  (570)  (525)  (2,637)
         
Common unitholders' interest in net loss $(44,891) $(56,445) $(52,051) $(261,044)
         
Loss Per Common Unit        
Basic and diluted net earnings loss per common unitholders' interest $(0.46) $(0.58) $(0.54) $(2.69)
         
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
  October 31 October 31
   2019   2018   2019   2018 
         
         
Net loss attributable to Ferrellgas Partners, L.P. $(45,344) $(57,015) $(52,576) $(263,681)
Income tax expense (benefit)  518   158   683   (2,897)
Interest expense  45,697   43,878   179,438   171,538 
Depreciation and amortization expense  19,219   18,992   79,073   95,055 
EBITDA  20,090   6,013   206,618   15 
Non-cash employee stock ownership plan compensation charge  795   2,748   3,740   12,645 
Asset impairments  -   -   -   10,005 
Loss on asset sales and disposal  2,235   4,504   8,699   191,008 
Other income (expense), net  132   (19)  (218)  (436)
Severance expense includes $690  in operating expense and $910 in general and administrative expense        
for the twelve months ended period ending October 31, 2018.  -   -   1,600   - 
Legal fees and settlements related to non-core businesses  2,043   3,564   16,843   9,629 
Multi-employer pension plan withdrawal settlement  -   1,524   -   1,524 
Exit costs associated with contracts - Midstream dispositions  -   -   -   11,804 
Unrealized (non-cash) gains on changes in fair value of derivatives $(314) included in        
midstream operations cost of sales for the twelve months ended October 31, 2018.  -   -   -   (314)
Lease accounting standard adjustment  170     170   
Net loss attributable to noncontrolling interest (b)  (373)  (493)  (178)  (2,336)
Adjusted EBITDA (c)  25,092   17,841   237,274   233,544 
Net cash interest expense (d)  (42,583)  (40,899)  (166,474)  (163,734)
Maintenance capital expenditures (e)  (6,467)  (5,385)  (47,856)  (24,298)
Cash refund from (paid for) taxes  -   (2)  (139)  295 
Proceeds from certain asset sales  835   1,061   4,023   9,056 
Distributable cash flow attributable to equity investors (f)  (23,123)  (27,384)  26,828   54,863 
Distributable cash flow attributable to general partner and non-controlling interest  (462)  (548)  537   1,097 
Distributable cash flow attributable to common unitholders (g)  (22,661)  (26,836)  26,291   53,766 
Less: Distributions paid to common unitholders  -   9,715   -   38,861 
Distributable cash flow excess/(shortage) $(22,661) $(36,551) $26,291  $14,905 
         
Propane gallons sales        
Retail - Sales to End Users  129,901   129,667   672,500   647,341 
Wholesale - Sales to Resellers  50,039   48,960   233,645   235,741 
Total propane gallons sales  179,940   178,627   906,145   883,082 
         
                 
(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 disposals, 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) gains  
on changes in fair value  of derivatives, lease accounting standard adjustment 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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