Ferrellgas Partners Posts Record Second Quarter Adjusted EBITDA, in Spite of Warmer-Than-Normal Temperatures; Reaffirms Guidance for Fiscal 2015 Adjusted EBITDA

OVERLAND PARK, Kan., March 11, 2015 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) today reported strong results for fiscal 2015's second quarter ended January 31, 2015, despite temperatures being 9% warmer than a year ago and 4% warmer than normal.

For the second year in a row, the company posted record-setting adjusted EBITDA in its second quarter, with this year's figure reaching $136.9 million. Distributable cash flow (DCF) to equity investors in the quarter was $110.3 million, producing DCF coverage of 1.16 x. During the last 12 months, the partnership generated $27 million of excess cash flow to fund organic and acquisitive growth. Net earnings for the second quarter climbed 41% to $86.4 million, or $1.02 per common unit, from $61.1 million, or $0.76 per common unit primarily due to a loss of $20.9 million for extinguishment of debt in the prior year period that was not repeated.

"We're quite pleased with our second-quarter results," commented President and Chief Executive Officer Steve Wambold. "Improved propane margins and lower expenses in our retail operations more than offset the negative effects of Mother Nature and the effect lower commodity costs had on our midstream operations. We're seeing the strategic initiatives we've undertaken over the last three years targeting operational discipline and flexibility having their desired effect in our propane operations. We were also buoyed by Blue Rhino's continued positive momentum."

Further, the partnership reiterated its full-year adjusted EBITDA guidance of $300 million to $320 million. Driven by widespread cold temperatures in February and early March and ongoing cost discipline, Ferrellgas posted strong February results. "We're off to a strong start to our third quarter," continued Wambold, "and we are optimistic about an extended heating season and its impact on demand."

While retail propane sales, adversely affected by warmer weather, declined to 216 million gallons from 247 million gallons the year before, margins significantly improved as the cost of propane decreased dramatically from prior year.

Blue Rhino's performance exceeded expectations in the second quarter with record volume, up 3% over year-ago levels, and solid same-store gains registered across convenience, drug, grocery and hardware stores.

Operating expense of $107.1 million was down more than 8% from the year-ago level, benefiting from both the lower cost of fuel and the operational ability to flex our expenses down in warmer periods. General and administrative expense declined 12% to $10.6 million. Interest expense was up 10% to $24.4 million, primarily attributable to merger and acquisition activity.

"The acquisition environment remains attractive," Wambold said. "and our pipeline has grown significantly in recent weeks. We remain committed to achieving our diversification strategy through accretive, complementary acquisitions, and we are aggressively but deliberately pursuing some excellent opportunities that fit our model."

For the first half of fiscal 2015, Adjusted EBITDA improved 5% to $171.3 million. Operating expense declined 4% to $210 million, while general and administrative expense decreased 6% to $21.5 million. Net earnings climbed to $53.2 million, or $0.63 per unit, from $36.1 million, or $0.45 per unit, the year before.

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, and provides midstream services to major energy companies in the United States. Ferrellgas employees indirectly own 22.8 million, or 27.5% of the outstanding 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 29, 2014. Investors can request a hard copy of this filling free of charge and obtain more information about the partnership online at www.ferrellgas.com.

This press release contains certain forward-looking statements that management believes to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management's control. You should read the Partnership's Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are adverse weather conditions, cost volatility and availability of propane, increased customer conservation measures, the capacity to transport propane to our market areas, and the impact of pending and future legal proceedings, political, economic and regulatory conditions in the U.S. and abroad. The Partnership undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2015 AND 2014
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2015 2014 2015 2014 2015 2014
Revenues:
Propane and other gas liquids sales $ 560,867 $ 789,446 $ 955,228 $ 1,171,669 $ 1,930,902 $ 1,992,581
Other 105,106 80,237 154,100 113,044 299,573 245,825
Total revenues 665,973 869,683 1,109,328 1,284,713 2,230,475 2,238,406
Cost of product sold:
Propane and other gas liquids sales 330,692 551,506 595,506 810,260 1,241,634 1,312,628
Other 70,290 48,709 94,150 62,055 190,247 149,877
Gross profit 264,991 269,468 419,672 412,398 798,594 775,901
Operating expense (including $(4,500), $(6,300) and $(1,300) of change in fair value of contingent consideration for the three, six and twelve month period ended January 31, 2015) 107,147 116,743 210,030 219,709 436,514 427,735
Depreciation and amortization expense 23,943 20,643 47,252 40,858 90,596 82,576
General and administrative expense 10,621 12,095 21,449 22,876 44,556 45,939
Equipment lease expense 5,795 4,274 11,327 8,340 20,732 16,573
Non-cash employee stock ownership plan compensation charge 3,788 3,636 8,162 6,679 23,272 12,599
Non-cash stock-based compensation charge (a) 318 5,919 16,430 10,350 30,588 17,683
Loss on disposal of assets 1,414 1,337 2,375 1,694 7,167 9,724
Operating income 111,965 104,821 102,647 101,892 145,169 163,072
Interest expense (24,375) (22,090) (48,287) (44,183) (90,606) (88,274)
Loss on extinguishment of debt -- (20,901) -- (21,202) -- (21,202)
Other income (expense), net (178) 57 (627) 273 (1,379) 506
Earnings before income taxes 87,412 61,887 53,733 36,780 53,184 54,102
Income tax expense 1,041 764 531 714 2,333 1,916
Net earnings 86,371 61,123 53,202 36,066 50,851 52,186
Net earnings attributable to noncontrolling interest (b) 913 659 619 445 678 688
Net earnings attributable to Ferrellgas Partners, L.P. 85,458 60,464 52,583 35,621 50,173 51,498
Less: General partner's interest in net earnings 11,955 3,663 526 356 502 515
Common unitholders' interest in net earnings $ 73,503 $ 56,801 $ 52,057 $ 35,265 $ 49,671 $ 50,983
Earnings Per Unit
Basic and diluted net earnings per common unitholders' interest $ 0.89 $ 0.72 $ 0.63 $ 0.45 $ 0.61 $ 0.64
Dilutive effect of two-class method (c) 0.13 0.04 -- -- -- --
Adjusted net earnings per unit available to common unitholders $ 1.02 $ 0.76 $ 0.63 $ 0.45 $ 0.61 $ 0.64
Weighted average common units outstanding 82,716.9 79,129.4 82,448.3 79,102.6 81,337.7 79,083.1
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2015 2014 2015 2014 2015 2014
Net earnings attributable to Ferrellgas Partners, L.P. $ 85,458 $ 60,464 $ 52,583 $ 35,621 $ 50,173 $ 51,498
Income tax expense 1,041 764 531 714 2,333 1,916
Interest expense 24,375 22,090 48,287 44,183 90,606 88,274
Depreciation and amortization expense 23,943 20,643 47,252 40,858 90,596 82,576
EBITDA 134,817 103,961 148,653 121,376 233,708 224,264
Loss on extinguishment of debt -- 20,901 -- 21,202 -- 21,202
Non-cash employee stock ownership plan compensation charge 3,788 3,636 8,162 6,679 23,272 12,599
Non-cash stock based compensation charge (a) 318 5,919 16,430 10,350 30,588 17,683
Loss on disposal of assets 1,414 1,337 2,375 1,694 7,167 9,724
Other income (expense), net 178 (57) 627 (273) 1,379 (506)
Change in fair value of contingent consideration (4,500) -- (6,300) -- (1,300) --
Litigation accrual and related legal fees associated with a class action lawsuit -- -- 723 1,325 1,147 1,668
Net earnings attributable to noncontrolling interest (b) 913 659 619 445 678 688
Adjusted EBITDA (d) 136,928 136,356 171,289 162,798 296,639 287,322
Net cash interest expense (e) (23,287) (20,980) (46,177) (41,566) (88,297) (82,863)
Maintenance capital expenditures (f) (4,624) (4,446) (9,712) (8,583) (18,802) (16,123)
Cash paid for taxes (6) (178) (266) (178) (904) (683)
Proceeds from asset sales 1,312 1,165 2,729 2,482 4,771 6,299
Distributable cash flow to equity investors (g) 110,323 111,917 117,863 114,953 193,407 193,952
Distributable cash flow attributable to general partner and non-controlling interest 2,206 2,238 2,357 2,299 3,868 3,879
Distributable cash flow attributable to common unitholders 108,117 109,679 115,506 112,654 189,539 190,073
Less: Distributions paid to common unitholders 41,359 39,573 82,715 79,109 162,922 158,179
Distributable cash flow excess/(shortage) $ 66,758 $ 70,106 $ 32,791 $ 33,545 $ 26,617 $ 31,894
Propane gallons sales
Retail - Sales to End Users 215,996 246,929 340,143 372,181 619,320 663,425
Wholesale - Sales to Resellers 81,310 95,922 143,245 161,701 276,756 293,865
Total propane gallons sales 297,306 342,851 483,388 533,882 896,076 957,290
Midstream operations (barrels processed) 4,722 -- 8,719 11,219 --
(a) Non-cash stock-based compensation charges consist of the following:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2015 2014 2015 2014 2015 2014
Operating expense $ 67 $ 1,539 $ 3,612 $ 2,337 $ 6,610 $ 3,424
General and administrative expense 251 4,380 12,818 8,013 23,978 14,259
Total $ 318 $ 5,919 $ 16,430 $ 10,350 $ 30,588 $ 17,683
(b) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(c) FASB guidance regarding participating securities and the two-class method requires the calculation of net earnings per common unitholders' interest for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings or loss for the period had been distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of the earnings to the limited partners. Due to the seasonality of the propane business, the dilution effect of the guidance on the two-class method typically impacts only the three months ending January 31. This guidance did not result in a dilutive effect for the six and twelve months ended January 31, 2015 and 2014.
(d) Adjusted EBITDA is calculated as net earnings attributable to Ferrellgas Partners, L.P., income tax expense, interest expense, depreciation and amortization expense, loss on extinguishment of debt, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration, litigation accrual and related legal fees associated with a class action lawsuit and net earnings 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.
(e) Net cash interest expense is the sum of interest expense less non-cash interest expense and other income (expense), net. This amount includes interest expense related to the accounts receivable securitization facility.
(f) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
(g) Management considers distributable cash flow to equity investors a meaningful non-GAAP measure of the partnership's ability to declare and pay quarterly distributions to equity investors. Distributable cash flow to equity investors, as management defines it, may not be comparable to distributable cash flow to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow 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.
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS January 31, 2015 July 31, 2014
Current Assets:
Cash and cash equivalents $ 12,356 $ 8,289
Accounts and notes receivable, net (including $256,112 and $159,003 of accounts receivable pledged as collateral at January 31, 2015 and July 31, 2014, respectively) 273,645 178,602
Inventories 132,273 145,969
Prepaid expenses and other current assets 66,615 32,071
Total Current Assets 484,889 364,931
Property, plant and equipment, net 611,008 611,787
Goodwill 285,617 273,210
Intangible assets, net 308,132 276,171
Other assets, net 57,391 46,171
Total Assets $ 1,747,037 $ 1,572,270
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable $ 101,191 $ 69,360
Short-term borrowings 67,431 69,519
Collateralized note payable 175,000 91,000
Other current liabilities 147,627 125,161
Total Current Liabilities 491,249 355,040
Long-term debt (a) 1,343,463 1,292,214
Other liabilities 40,360 36,662
Contingencies and commitments
Partners' Deficit:
Common unitholders (82,717,620 and 81,228,237 units outstanding at January 31, 2015 and July 31, 2014, respectively) (22,412) (57,893)
General partner unitholder (835,532 and 820,487 units outstanding at January 31, 2015 and July 31, 2014, respectively) (60,295) (60,654)
Accumulated other comprehensive income (loss) (45,883) 6,181
Total Ferrellgas Partners, L.P. Partners' Deficit (128,590) (112,366)
Noncontrolling Interest 555 720
Total Partners' Deficit (128,035) (111,646)
Total Liabilities and Partners' Deficit $ 1,747,037 $ 1,572,270
(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $182 million of 8.625% notes which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P.

CONTACT: Jack Herrold, Investor Relations jackherrold@ferrellgas.com or (913) 661-1851 Scott Brockelmeyer, Media Relations scottbrockelmeyer@ferrelllgas.com or (913) 661-1830 Jim Saladin, Media Relations jimsaladin@ferrellgas.com or (913) 661-1833Source:Ferrellgas Partners, L.P.