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Ferrellgas Partners Reports Third Quarter Results; Reaffirms Guidance for Fiscal 2015 Adjusted EBITDA

OVERLAND PARK, Kan., June 9, 2015 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) announced today Adjusted EBITDA of $96.3 million for fiscal 2015's third quarter ended April 30, down 4% from the $99.8 million in the prior year quarter reflecting temperatures that were 6% warmer than prior year quarter. Distributable Cash Flow (DCF) to equity investors in the quarter was $70.0 million producing DCF coverage of 1.12x for the trailing twelve month period.

Propane margin cents per gallon benefited from wholesale commodity prices that were 54% lower than the prior year. Operating expense of $106.9 million was down more than 6% from the year-ago level driven primarily by the company's ability to flex down our variable delivery costs, including personnel and fuel cost, which more than offset additional operating expenses associated with our midstream acquisition in May of 2014. Strong margin cents per gallon and lower operating expenses helped minimize the effect of warmer temperatures in the more highly concentrated geographic areas we serve.

"We are pleased with our third quarter results given the challenges presented by the warmer weather" said President and Chief Executive Officer Stephen L. Wambold. "Strong propane margins, operational flexibility, and a continued focus on expense discipline in our retail operations are continuing to offset the effect of the warmer temperatures, and as such we are comfortable reaffirming our full-year adjusted EBITDA guidance of $300 million to $320 million."

Ferrellgas recently announced the acquisition of Bridger Logistics, LLC for $837.5 million. The Bridger transaction, scheduled to close in our fourth quarter 2015, is expected to be immediately accretive to DCF, supportive of distribution growth, and pushes the company to its near-term diversification goal. In addition to that achievement, Ferrellgas remains dedicated to the aggressive pursuit of accretive, complementary acquisitions in both the traditional propane space and midstream.

"We've made smart business decisions over the last few years and put ourselves in position to move boldly and decisively on the acquisition front," Wambold said. "Our acquisition pipeline is strong and keeps getting stronger, and we remain committed to exploring a wide range of opportunities that fit our model and our culture."

For the first nine months ended April 30 of fiscal 2015, Adjusted EBITDA improved to $267.6 million, up from $262.6 million posted in the first nine months of the prior fiscal year. Similar to our quarterly results, strong margin cents per gallon and operating expense declines offset temperatures that were 8% warmer than the fiscal 2014 period. Net earnings were $89.4 million or $1.06 per unit for the first nine months of fiscal 2015.

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 common units of the partnership, or 25.5% of the outstanding units, 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 filing free of charge and obtain more information about the partnership online at www.ferrellgas.com.

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 are 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, 2014 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, NINE AND TWELVE MONTHS ENDED APRIL 30, 2015 AND 2014
(in thousands, except per unit data)
(unaudited)
Three months ended Nine months ended Twelve months ended
April 30 April 30 April 30
2015 2014 2015 2014 2015 2014
Revenues:
Propane and other gas liquids sales $ 445,667 $ 625,117 $ 1,400,895 $ 1,796,786 $ 1,751,452 $ 2,109,290
Other 86,884 97,000 240,984 210,044 289,457 248,213
Total revenues 532,551 722,117 1,641,879 2,006,830 2,040,909 2,357,503
Cost of product sold:
Propane and other gas liquids sales 253,684 422,256 849,190 1,232,516 1,073,062 1,421,677
Other 59,586 69,388 153,736 131,443 180,445 152,551
Gross profit 219,281 230,473 638,953 642,871 787,402 783,275
Operating expense 106,883 113,923 316,913 333,632 429,474 434,470
Depreciation and amortization expense 23,324 20,913 70,576 61,771 93,007 82,593
General and administrative expense 8,252 12,194 29,701 35,070 40,614 44,701
Equipment lease expense 6,347 4,638 17,674 12,978 22,441 17,113
Non-cash employee stock ownership plan compensation charge 8,566 3,710 16,728 10,389 28,128 13,485
Non-cash stock-based compensation charge (a) 3,271 5,832 19,701 16,182 28,027 21,293
Loss on disposal of assets 2,203 1,732 4,578 3,426 7,638 8,119
Operating income 60,435 67,531 163,082 169,423 138,073 161,501
Interest expense (23,510) (20,189) (71,797) (64,372) (93,927) (86,379)
Loss on extinguishment of debt -- -- -- (21,202) -- (21,202)
Other income (expense), net 212 225 (415) 498 (1,392) 546
Earnings before income taxes 37,137 47,567 90,870 84,347 42,754 54,466
Income tax expense 917 1,677 1,448 2,391 1,573 1,570
Net earnings 36,220 45,890 89,422 81,956 41,181 52,896
Net earnings attributable to noncontrolling interest (b) 408 505 1,027 950 581 694
Net earnings attributable to Ferrellgas Partners, L.P. 35,812 45,385 88,395 81,006 40,600 52,202
Less: General partner's interest in net earnings 358 454 884 810 406 522
Common unitholders' interest in net earnings $ 35,454 $ 44,931 $ 87,511 $ 80,196 $ 40,194 $ 51,680
Earnings Per Unit
Basic and diluted net earnings per common unitholders' interest $ 0.43 $ 0.57 $ 1.06 $ 1.01 $ 0.49 $ 0.65
Weighted average common units outstanding 82,717.6 79,177.8 82,536.1 79,127.1 82,200.8 79,113.2
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Nine months ended Twelve months ended
April 30 April 30 April 30
2015 2014 2015 2014 2015 2014
Net earnings attributable to Ferrellgas Partners, L.P. $ 35,812 $ 45,385 $ 88,395 $ 81,006 $ 40,600 $ 52,202
Income tax expense 917 1,677 1,448 2,391 1,573 1,570
Interest expense 23,510 20,189 71,797 64,372 93,927 86,379
Depreciation and amortization expense 23,324 20,913 70,576 61,771 93,007 82,593
EBITDA 83,563 88,164 232,216 209,540 229,107 222,744
Loss on extinguishment of debt -- -- -- 21,202 -- 21,202
Non-cash employee stock ownership plan compensation charge 8,566 3,710 16,728 10,389 28,128 13,485
Non-cash stock based compensation charge (a) 3,271 5,832 19,701 16,182 28,027 21,293
Loss on disposal of assets 2,203 1,732 4,578 3,426 7,638 8,119
Other income (expense), net (212) (225) 415 (498) 1,392 (546)
Change in fair value of contingent consideration (included in operating expense) -- -- (6,300) -- (1,300) --
Litigation accrual and related legal fees associated with a class action lawsuit (included in operating expense) 83 97 806 1,422 1,133 1,652
Unrealized (non-cash) gain on changes in fair value of derivatives not designated as hedging instruments (1,609) -- (1,609) -- (1,609) --
Net earnings attributable to noncontrolling interest (b) 408 505 1,027 950 581 694
Adjusted EBITDA (c) 96,273 99,815 267,562 262,613 293,097 288,643
Net cash interest expense (d) (22,422) (19,941) (68,599) (61,507) (90,778) (82,173)
Maintenance capital expenditures (e) (5,151) (4,762) (14,863) (13,345) (19,191) (17,419)
Cash paid for taxes (67) (225) (333) (403) (746) (865)
Proceeds from asset sales 1,331 785 4,060 3,267 5,317 5,234
Distributable cash flow to equity investors (f) 69,964 75,672 187,827 190,625 187,699 193,420
Distributable cash flow attributable to general partner and non-controlling interest 1,400 1,514 3,757 3,813 3,754 3,868
Distributable cash flow attributable to common unitholders 68,564 74,158 184,070 186,812 183,945 189,552
Less: Distributions paid to common unitholders 41,359 39,593 124,074 118,702 164,688 158,237
Distributable cash flow excess/(shortage) $ 27,205 $ 34,565 $ 59,996 $ 68,110 $ 19,257 $ 31,315
Propane gallons sales
Retail - Sales to End Users 178,583 185,961 518,726 558,142 611,942 653,377
Wholesale - Sales to Resellers 67,823 71,963 211,068 233,664 272,616 294,715
Total propane gallons sales 246,406 257,924 729,794 791,806 884,558 948,092
Midstream operations (barrels processed) 4,515 -- 13,234 15,734 --
(a) Non-cash stock-based compensation charges consist of the following:
Three months ended Nine months ended Twelve months ended
April 30 April 30 April 30
2015 2014 2015 2014 2015 2014
Operating expense $ 621 $ 1,166 $ 4,233 $ 3,503 $ 6,065 $ 4,168
General and administrative expense 2,650 4,666 15,468 12,679 21,962 17,125
Total $ 3,271 $ 5,832 $ 19,701 $ 16,182 $ 28,027 $ 21,293
(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 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, unrealized (non-cash) gain on changes in fair value of derivatives not designated as hedging instruments 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.
(d) 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.
(e) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
(f) 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.
The following table includes a reconciliation of forecasted net earnings attributable to Ferrellgas Partners, L.P. to forecasted Adjusted EBITDA for the fiscal year ending July 31, 2015.
Forecast
Fiscal Year
Ending
July 31,
2015
Net earnings attributable to Ferrellgas Partners, L.P. (estimate) (g) $ 70,500
Interest expense (estimate) 95,000
Income tax expense (estimate) 1,500
Depreciation and amortization expense (estimate) 93,000
Non-cash employee stock ownership plan compensation charge (estimate) 25,000
Non-cash stock based compensation charge (estimate) 24,000
Loss on disposal of assets (estimate) 6,400
Change in fair value of contingent consideration (included in operating expense) (estimate) (6,300)
Litigation accrual and related legal fees associated with a class action lawsuit (estimate) 900
Adjusted EBITDA (h) $ 310,000
(g) Represents estimated net earnings attributable to Ferrellgas Partners, L.P. after adjusting for change in fair value of gains and losses on commodity and interest rate derivative instruments not associated with current-period transactions. It is impracticable to determine actual gains and losses on these instruments not associated with current-period transactions that will be reported in GAAP net income as such gains and losses will depend upon future changes in commodity prices and interest rates which cannot be forecasted.
(h) Represents the midpoint of Adjusted EBITDA guidance range for fiscal 2015.
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS April 30, 2015 July 31, 2014
Current Assets:
Cash and cash equivalents $ 7,409 $ 8,289
Accounts and notes receivable, net (including $182,305 and $159,003 of accounts receivable pledged as collateral at April 30, 2015 and July 31, 2014, respectively) 189,569 178,602
Inventories 98,636 145,969
Prepaid expenses and other current assets 45,406 32,071
Total Current Assets 341,020 364,931
Property, plant and equipment, net 614,287 611,787
Goodwill 285,436 273,210
Intangible assets, net 300,663 276,171
Other assets, net 51,451 46,171
Total Assets $ 1,592,857 $ 1,572,270
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable $ 54,164 $ 69,360
Short-term borrowings -- 69,519
Collateralized note payable 117,000 91,000
Other current liabilities 146,198 125,161
Total Current Liabilities 317,362 355,040
Long-term debt (a) 1,344,392 1,292,214
Other liabilities 34,458 36,662
Contingencies and commitments
Partners' Deficit:
Common unitholders (82,717,620 and 81,228,237 units outstanding at April 30, 2015 and July 31, 2014, respectively) (16,717) (57,893)
General partner unitholder (835,532 and 820,487 units outstanding at April 30, 2015 and July 31, 2014, respectively) (60,238) (60,654)
Accumulated other comprehensive income (loss) (27,247) 6,181
Total Ferrellgas Partners, L.P. Partners' Deficit (104,202) (112,366)
Noncontrolling Interest 847 720
Total Partners' Deficit (103,355) (111,646)
Total Liabilities and Partners' Deficit $ 1,592,857 $ 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.