FGP - Ferrellgas Partners L.P. Reports First Quarter Fiscal 2020 Results

December, 06 2019 08:00 AM Ferrellgas Partners L.P.

Gross Profit increased by $10.4 million, or 7.2 percent, compared to the prior year period as a result of a 3 percent increase in retail customers and a 4 percent increase in tank exchange selling locations combined with a 4.2¢ increase in margin cpg.
Propane sales volume for the quarter increased 1.3 million gallons despite weather that was 4 percent warmer than the prior year as a result of the growth in customer count.
Successfully completed two accretive retail acquisitions during the quarter.

OVERLAND PARK, Kan., Dec. 06, 2019 (GLOBE NEWSWIRE) -- 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.

Contacts
Investor 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 .

Company Name:	Ferrellgas Partners L.P.
Stock Symbol:	FGP
Market:	NYSE

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