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

June, 10 2019 07:00 AM Ferrellgas Partners L.P.

Total Retail propane sales volume for the quarter increased approximately 8 percent leading to almost 7 percent increase in gross margin dollars over the prior year on weather that was approximately 1 percent colder than the prior year
Retail customer growth of nearly 26,000, or 4 percent over prior year
Tank Exchange sale locations now exceed 54,300, up 600 locations from last quarter and 6 percent compared to prior year.

LIBERTY, Mo., June 10, 2019 (GLOBE NEWSWIRE) -- 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.

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

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