FGP - Ferrellgas Partners L.P. Reports Fiscal First Quarter 2019 Results

December, 06 2018 07:00 AM Ferrellgas Partners L.P.

Total Retail propane sales volume for the quarter increased approximately nine percent leading to a 15 percent increase in gross margin dollars over the prior year
Retail customer growth of approximately 24,500, or four percent over prior year
Tank Exchange sale locations now exceed 53,800, up 12 percent compared to prior year.
Three accretive acquisitions of Blue Rhino independent distributors completed to date this fiscal year.

LIBERTY, Mo., Dec. 06, 2018 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal first quarter ended October 31, 2018.

For the quarter, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $57.0 million, or $.58 per common unit, compared to prior year period net loss of $47.9 million, or $.49 per common unit.

Adjusted EBITDA, a non-GAAP measure, was $17.8 million compared to $26.2 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)}
Q1 2019

Q1 2018
Propane Operations and Corporate Support
$17.8

$19.0
Results from Assets Sold in 2018
-

$7.2
Consolidated Adjusted EBITDA
$17.8

$26.2

On a trailing twelve month basis, adjusted EBITDA from on going propane operations and corporate support as of October 31, 2018 is $226.5 million compared to $227.7 million as of July 31, 2018.

The Company’s propane operations reported that total gallons sold increased 5.9 million gallons, or three percent, over prior year. Margins were over two 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 approximately 24,500 new customers, or approximately four percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 12 percent from prior year to over 53,800 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $4.4 million. The Company’s ongoing commitment to investing in the business led to higher operating expenses during the quarter which were largely the result of new locations established to be in closer proximity to current and potential customers as the company looks to continue increasing market share and customer density. As a result of this investment and the growth in sales volumes, operating, general and administractive expenses in our Propane segment were $6.1 million higher than the prior year.

Liquidity of $250.1 million at October 31, 2018 resulted from $186.9 million of available borrowing capacity on the Company’s secured credit facility and $63.2 million of cash.

“We are extremely pleased with the quarterly results as our strategy to invest in the growth of the business is paying dividends even faster than anticipated,” said James E. Ferrell, Interim Chief Executive Officer and President of Ferrellgas. “We are committed to growing market share organically and through acquisition. As expected, operating expenses would exceed growth in gross margin dollars leading into the quarter, however, we were able recover those investments almost completely with an extremely strong month of October. We have momentum leading into the winter heating season with a stronger customer base, larger footprint and committed employee owners.”

As previously announced, the Company indefinitely suspended its quarterly cash distribution resulting from a failure to meet the required fixed charge coverage ratio within the senior unsecured notes due 2020.

In addition to solidifying the Company’s liquidity with the fourth quarter 2018 closing of the $575 million secured credit facility and extension of its accounts receivable securitization facility and cash from 2018 announced asset sales, the Company is in the process of engaging a financial advisor to assist in evaluating all available options to address its leverage.

“Our Company is focused on growth.” said Ferrell. “We have the liquidity to continue executing on this strategy and I expect that we will resolve our leverage situation in the near future to position our Company for continued success.”

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

William Ruisinger, Interim Chief Financial Officer — billruisinger@ferrellgas.com 816-792-7914




FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)

























ASSETS

October 31, 2018

July 31, 2018





Current Assets:




Cash and cash equivalents

$
63,188


$
119,311

Accounts and notes receivable, net (including $137,560 and $120,079 of accounts




receivable pledged as collateral at October 31, 2018 and July 31, 2018, respectively)


136,189



126,054

Inventories


106,560



83,694

Prepaid expenses and other current assets


34,003



34,862

Total Current Assets


339,940



363,921






Property, plant and equipment, net


566,078



557,723

Goodwill, net


247,478



246,098

Intangible assets, net


117,452



120,951

Other assets, net


72,842



74,588

Total Assets

$
1,343,790


$
1,363,281











LIABILITIES AND PARTNERS' DEFICIT









Current Liabilities:




Accounts payable

$
59,664


$
46,820

Short-term borrowings


-



32,800

Collateralized note payable


90,000



58,000

Other current liabilities


185,968



142,025

Total Current Liabilities


335,632



279,645






Long-term debt (a)


2,081,243



2,078,637

Other liabilities


38,654



39,476

Contingencies and commitments









Partners' Deficit:




Common unitholders (97,152,665 units outstanding at October 31, 2018 and July 31, 2018)


(1,041,971
)


(978,503
)
General partner unitholder (989,926 units outstanding at October 31, 2018 and July 31, 2018)


(70,433
)


(69,792
)
Accumulated other comprehensive income


8,050



20,510

Total Ferrellgas Partners, L.P. Partners' Deficit


(1,104,354
)


(1,027,785
)
Noncontrolling interest


(7,385
)


(6,692
)
Total Partners' Deficit


(1,111,739
)


(1,034,477
)
Total Liabilities and Partners' Deficit

$
1,343,790


$
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


October 31


October 31


2018


2017


2018

2017
Revenues:










Propane and other gas liquids sales

$
334,966


$
302,758


$
1,675,184


$
1,378,771

Midstream operations

-


120,760


161,559


479,419

Other

17,343


31,137


134,053


147,200

Total revenues

352,309


454,655


1,970,796


2,005,390












Cost of sales:










Propane and other gas liquids sales

204,136


179,515


998,035


754,458

Midstream operations

-


108,125


147,434


442,922

Other

3,047


13,702


57,999


69,223












Gross profit

145,126


153,313


767,328


738,787












Operating expense

110,331


110,462


471,617


437,221

Depreciation and amortization expense

18,992


25,732


95,055


102,881

General and administrative expense

14,179


13,164


55,416


47,662

Equipment lease expense

7,863


6,741


29,394


28,516

Non-cash employee stock ownership plan compensation charge

2,748


3,962


12,645


15,296

Non-cash stock-based compensation charge (a)

-


-


-


1,417

Asset impairments

-


-


10,005


-

Loss on asset sales and disposals

4,504


895


191,008


8,929












Operating income (loss)

(13,491
)

(7,643
)


(97,812
)

96,865












Interest expense

(43,878
)

(40,807
)


(171,538
)


(157,864
)
Other income, net

19


511


436



1,477












Loss before income tax benefit

(57,350
)

(47,939
)


(268,914
)


(59,522
)











Income tax expense (benefit)

158


377



(2,897
)


(176
)











Net loss

(57,508
)

(48,316
)


(266,017
)


(59,346
)











Net loss attributable to noncontrolling interest (b)

(493
)

(401
)


(2,336
)


(297
)











Net loss attributable to Ferrellgas Partners, L.P.

(57,015
)

(47,915
)


(263,681
)


(59,049
)











Less: General partner's interest in net loss

(570
)

(479
)


(2,637
)


(590
)











Common unitholders' interest in net loss

$
(56,445
)

$
(47,436
)

$
(261,044
)

$
(58,459
)











Loss Per Common Unit










Basic and diluted net loss per common unitholders' interest

$
(0.58
)

$
(0.49
)

$
(2.69
)

$
(0.60
)











Weighted average common units outstanding - basic

97,152.7


97,152.7



97,152.7


97,443.7

Supplemental Data and Reconciliation of Non-GAAP Items:















Three months ended

Twelve months ended


October 31

October 31


2018


2017


2018


2017



























Net loss attributable to Ferrellgas Partners, L.P.

$
(57,015
)

$
(47,915
)

$
(263,681
)

$
(59,049
)
Income tax expense (benefit)

158


377


(2,897
)

(176
)
Interest expense

43,878


40,807


171,538


157,864

Depreciation and amortization expense

18,992


25,732


95,055


102,881

EBITDA

6,013


19,001


15


201,520

Non-cash employee stock ownership plan compensation charge

2,748


3,962


12,645


15,296

Non-cash stock based compensation charge (a)

-


-


-


1,417

Asset impairments

-


-


10,005


-

Loss on asset sales and disposals

4,504


895


191,008


8,929

Other income, net

(19
)

(511
)

(436
)

(1,477
)
Severance expense $358 included in operating expense for both the three and twelve months ended periods ending October 31, 2017. Also includes $1,305 and $1,795 included in general and administrative expense for the three and twelve months ended October 31, 2017, respectively.

-


1,663


-


2,153

Legal fees and settlements

3,564


-


9,629


-

Multi-employer pension plan withdrawal settlement

1,524


-


1,524


-

Exit costs associated with contracts - Midstream dispositions




-


11,804




Unrealized (non-cash) loss (gain) on changes in fair value of derivatives $(314) and $1,839 included in cost of sales for the twelve months ended October 31, 2018 and 2017, respectively. Also includes in cost of sales $1,607 for the three months ended October 31, 2017. Also includes $(2,120) included in operating expense for the twelve months ended October 31, 2017.

-


1,607


(314
)

(281
)
Net loss attributable to noncontrolling interest (b)

(493
)

(401
)

(2,336
)

(297
)
Adjusted EBITDA (c)

17,841


26,216


233,544


227,260

Net cash interest expense (d)

(40,899
)

(38,057
)

(163,734
)

(148,027
)
Maintenance capital expenditures (e)

(5,385
)

(8,704
)

(24,298
)

(22,317
)
Cash refund from (paid for) taxes

(2
)

(6
)

295


(315
)
Proceeds from certain asset sales

1,061


1,208


9,056


7,440

Distributable cash flow attributable to equity investors (f)

(27,384
)

(19,343
)

54,863


64,041

Distributable cash flow attributable to general partner and non-controlling interest

(548
)

(387
)

1,097


1,281

Distributable cash flow attributable to common unitholders (g)

(26,836
)

(18,956
)

53,766


62,760

Less: Distributions paid to common unitholders

9,715


9,715


38,861


38,860

Distributable cash flow excess/(shortage)

$
(36,551
)

$
(28,671
)

$
14,905


$
23,900














Propane gallons sales












Retail - Sales to End Users

129,667


119,294


647,341


572,978

Wholesale - Sales to Resellers

48,960


53,429


235,741


227,690

Total propane gallons sales

178,627


172,723


883,082


800,668



























(a) Non-cash stock-based compensation charges consist of the following:



Three months ended

Twelve months ended


October 31

October 31



2018


2017


2018


2017
Operating expense

$
-

$
-

$
-

$
567
General and administrative expense


-


-


-


850
Total

$
-

$
-

$
-

$
1,417

(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 disposals, other income, net, severance expense, legal fees and settlements, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, unrealized (non-cash) loss (gain) 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 refund from (paid for) 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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