Ferrellgas Partners, L.P. Reports Results for Second Quarter Fiscal 2016

OVERLAND PARK, Kan., March 10, 2016 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) today announced Adjusted EBITDA of $138.3 million for the second quarter of fiscal 2016 ended January 31, 2016, an increase from $136.9 million in the prior year period.

President and Chief Executive Officer Stephen L. Wambold commented, “Despite this being one of the warmest winters on record, our ongoing midstream diversification efforts allowed us to deliver a year-over-year increase in Adjusted EBITDA. Bridger continues to exceed our expectations and we are carefully controlling costs to help offset the challenging operating environment for our Propane and related equipment sales segment.”

Mr. Wambold continued, “Looking ahead to the second half of our fiscal year, we will maintain focus on operations and strategic execution. Additionally, we will continue to consider value-enhancing organic and external growth initiatives to mitigate the impact of continued warm weather and capitalize on opportunities created by low crude oil prices. We have ample financial flexibility to drive growth without accessing the capital markets, and we are confident that we have the pieces in place to create significant value for all Ferrellgas unitholders.”

Continued strong expense controls in the Propane and related equipment sales segment helped offset the impact of elevated temperatures, which were 19% warmer than normal and 16% warmer than the prior year period.

Adjusted EBITDA from the Midstream - Crude Oil Logistics segment was $28.7 million during the second fiscal quarter, which exceeded management’s expectations. These results reflect the strength of Bridger’s customer relationships amid sustained volatility in commodity pricing, and management’s ability to carefully control expenses and drive efficiencies.

Operating expense for the second fiscal quarter increased to $116.5 million from $107.1 million in the prior year period, due to incremental operating expenses from Bridger and non-cash items related to the changes in fair value of fuel derivatives and contingent consideration in the current year and prior year, respectively.

Interest expense totaled $34.7 million for the second fiscal quarter, compared to $24.4 million a year ago, largely due to $500 million of notes issued in connection with the Bridger acquisition in June 2015.

Net earnings for the quarter was $57.8 million, or $0.58 per common unit, compared to net earnings of $86.4 million, or $1.02 per common unit, in the prior year quarter. The decrease in net earnings is due in part to the increase in interest expense discussed above and warm weather, as well as depreciation and amortization expenses related primarily to the Bridger transaction.

Ferrellgas also today announced that, due to sustained warmer temperatures and the current commodity price environment, it is revising its previously announced estimates for full-year fiscal 2016 Adjusted EBITDA to a range of $360 million to $375 million. Based on the midpoint of the Company’s fiscal 2016 estimates for Adjusted EBITDA, Ferrellgas expects its DCF coverage ratio to increase to above 1.0 by the end of the fiscal year.

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, and provides midstream services to major energy companies in the United States. 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 29, 2015. 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, 2015, in the Form 10-Q of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the quarters ended October 31, 2015 and January 31, 2016 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 BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS January 31, 2016 July 31, 2015
Current Assets:
Cash and cash equivalents $11,754 $7,652
Accounts and notes receivable, net (including $190,063 and 123,791 of
accounts receivable pledged as collateral at January 31, 2016
and July 31, 2015, respectively) 264,382 196,918
Inventories 92,488 96,754
Prepaid expenses and other current assets 57,134 64,285
Total Current Assets 425,758 365,609
Property, plant and equipment, net 966,995 965,217
Goodwill 445,659 478,747
Intangible assets, net 564,964 580,043
Other assets, net 74,985 74,440
Assets held for sale 3,120 -
Total Assets $2,481,481 $2,464,056
Loss on disposal of assets and other
Current Liabilities:
Accounts payable $136,100 $83,974
Short-term borrowings 86,200 75,319
Collateralized note payable 119,000 70,000
Other current liabilities 150,934 180,687
Total Current Liabilities 492,234 409,980
Long-term debt (a) 1,894,790 1,804,392
Other liabilities 40,335 41,975
Contingencies and commitments
Partners' Capital:
Common unitholders (98,002,665 and 100,376,789 units outstanding at
January 31, 2016 and July 31, 2015) 143,655 299,730
General partner unitholder (989,926 and 1,013,907 units outstanding at
January 31, 2016 and July 31, 2015) (58,619) (57,042)
Accumulated other comprehensive loss (33,317) (38,934)
Total Ferrellgas Partners, L.P. Partners' Capital 51,719 203,754
Noncontrolling Interest 2,403 3,955
Total Partners' Capital 54,122 207,709
Total Liabilities and Partners' Capital $2,481,481 $2,464,056
(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.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2016 AND 2015
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2016 2015 2016 2015 2016 2015
Revenues:
Propane and other gas liquids sales $376,856 $ 560,867 $ 622,157 $ 955,228 $1,323,945 $ 1,930,902
Midstream operations 188,333 7,153 382,003 15,069 474,123 22,504
Other 84,049 97,953 116,224 139,031 237,378 277,069
Total revenues 649,238 665,973 1,120,384 1,109,328 2,035,446 2,230,475
Cost of product sold:
Propane and other gas liquids sales 174,829 330,692 296,580 595,506 678,298 1,241,634
Midstream operations 148,443 2,219 302,047 4,187 374,450 6,157
Other 55,774 68,071 70,222 89,963 150,956 184,090
Gross profit 270,192 264,991 451,535 419,672 831,742 798,594
Operating expense 116,463 107,147 231,444 210,030 453,696 436,514
Depreciation and amortization expense 37,367 23,943 74,346 47,252 125,673 90,596
General and administrative expense 12,062 10,621 24,302 21,449 59,284 44,556
Equipment lease expense 7,278 5,795 14,310 11,327 27,256 20,732
Non-cash employee stock ownership plan compensation charge 3,141 3,788 8,397 8,162 24,948 23,272
Non-cash stock-based compensation charge (a) (2,456) 318 5,666 16,430 15,218 30,588
Goodwill impairment charge - - 29,316 - 29,316 -
Loss on disposal of assets and other 2,524 1,414 17,441 2,375 22,165 7,167
Operating income 93,813 111,965 46,313 102,647 74,186 145,169
Interest expense (34,730) (24,375) (68,518) (48,287) (120,627) (90,606)
Other expense, net (298) (178) (420) (627) (143) (1,379)
Earnings (loss) before income taxes 58,785 87,412 (22,625) 53,733 (46,584) 53,184
Income tax expense (benefit) 1,030 1,041 186 531 (660) 2,333
Net earnings (loss) 57,755 86,371 (22,811) 53,202 (45,924) 50,851
Net earnings (loss) attributable to noncontrolling interest (b) 628 913 (145) 619 (295) 678
Net earnings (loss) attributable to Ferrellgas Partners, L.P. 57,127 85,458 (22,666) 52,583 (45,629) 50,173
Less: General partner's interest in net earnings (loss) 571 11,955 (227) 526 (456) 502
Common unitholders' interest in net earnings (loss) $ 56,556 $ 73,503 $ (22,439) $ 52,057 $ (45,173) $ 49,671
Earnings (loss) Per Unit
Basic and diluted net earnings (loss) per common unitholders' interest $ 0.58 $ 0.89 $ (0.23) $ 0.63 $ (0.48) $ 0.61
Dilutive effect of two-class method (b) - 0.13 - - - -
Adjusted net earnings (loss) per unit available to common unitholders $ 0.58 $ 1.02 $ (0.23) $ 0.63 $ (0.48) $ 0.61
Weighted average common units outstanding 98,334.4 82,716.9 99,355.6 82,448.3 93,169.4 81,337.7
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2016 2015 2016 2015 2016 2015
Net earnings (loss) attributable to Ferrellgas Partners, L.P. $ 57,127 $ 85,458 $ (22,666) $ 52,583 $ (45,629) $ 50,173
Income tax expense (benefit) 1,030 1,041 186 531 (660) 2,333
Interest expense 34,730 24,375 68,518 48,287 120,627 90,606
Depreciation and amortization expense 37,367 23,943 74,346 47,252 125,673 90,596
EBITDA 130,254 134,817 120,384 148,653 200,011 233,708
Non-cash employee stock ownership plan compensation charge 3,141 3,788 8,397 8,162 24,948 23,272
Non-cash stock based compensation charge (a) (2,456) 318 5,666 16,430 15,218 30,588
Goodwill impairment charge - - 29,316 - 29,316 -
Loss on disposal of assets and other 2,524 1,414 17,441 2,375 22,165 7,167
Other expense, net 298 178 420 627 143 1,379
Change in fair value of contingent consideration (included in operating expense) - (4,500) (100) (6,300) (100) (1,300)
Severance costs ($805 included in operating costs and $51 included in general and administrative costs) - - 856 - 856 -
Litigation accrual and related legal fees associated with a
class action lawsuit (included in general and administrative expense) - - - 723 83 1,147
Unrealized (non-cash) losses on changes in fair value of derivatives 3,870 - 4,908 - 7,320 -
Acquisition and transition expenses (included in general and administrative expense) 70 - 85 - 16,458 -
Net earnings (loss) attributable to noncontrolling interest (b) 628 913 (145) 619 (295) 678
Adjusted EBITDA (c) 138,329 136,928 187,228 171,289 316,123 296,639
Net cash interest expense (d) (33,905) (23,287) (66,407) (46,177) (116,380) (88,297)
Maintenance capital expenditures (e) (3,214) (4,624) (9,429) (9,712) (19,329) (18,802)
Cash paid for taxes (5) (6) (5) (266) (451) (904)
Proceeds from asset sales 1,863 1,312 2,876 2,729 6,052 4,771
Distributable cash flow to equity investors (f) 103,068 110,323 114,263 117,863 186,015 193,407
Distributable cash flow attributable to general partner and non-controlling interest 2,061 2,206 2,285 2,357 3,720 3,868
Distributable cash flow attributable to common unitholders 101,007 108,117 111,978 115,506 182,295 189,539
Less: Distributions paid to common unitholders 50,223 41,359 101,666 82,715 184,384 162,922
Distributable cash flow excess/(shortage) $ 50,784 $ 66,758 $ 10,312 $ 32,791 $ (2,089) $ 26,617
Propane gallons sales
Retail - Sales to End Users 189,460 215,996 300,433 340,143 569,071 619,320
Wholesale - Sales to Resellers 60,781 81,310 111,347 143,245 238,167 276,756
Total propane gallons sales 250,241 297,306 411,780 483,388 807,238 896,076
Salt water volume - Midstream operations (barrels processed) 4,222 4,722 8,956 8,719 17,272 11,219
Crude oil hauled - Midstream operations (barrels) 24,345 48,609 59,056
Crude oil sold - Midstream operations (barrels) 1,593 3,103 3,599
(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
2016 2015 2016 2015 2016 2015
Operating expense $ (466) $ 67 $ 752 $ 3,612 $ 2,315 $ 6,610
General and administrative expense (1,990) 251 4,914 12,818 12,903 23,978
Total $ (2,456) $ 318 $ 5,666 $ 16,430 $ 15,218 $ 30,588
(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 (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, goodwill impairment charge, loss on disposal of assets, other expense, net, change in fair value of contingent consideration, litigation accrual and related legal fees associated with a class action lawsuit, unrealized (non-cash) losses on changes in fair value of derivatives, acquisition and transition expenses and net earnings (loss) attributable to noncontrolling interest. Management believes the presentation of this measure on changes in fair value of derivatives, acquisition and transition expenses and net earnings (loss) attributable to noncontrolling interest. Management believes the presentation of this measure on changes in fair value of derivatives, acquisition and transition expenses 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) 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, 2016.
Forecast
Fiscal Year
Ending
July 31,
2016
Net earnings attributable to Ferrellgas Partners, L.P. (estimate) (g) (12,500)
Interest expense (estimate) 135,000
Income tax expense (estimate) 1,000
Depreciation and amortization expense (estimate) 150,000
Non-cash employee stock ownership plan compensation charge (estimate) 26,000
Non-cash stock based compensation charge (estimate) 18,000
Loss on disposal of assets (estimate) 19,900
Change in fair value of contingent consideration (included in operating expense) (100)
Severance costs 900
Goodwill impairment charge 29,300
Adjusted EBITDA (h) 367,500
(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 2016.

Contacts Jack Herrold, Investor Relations – jackherrold@ferrellgas.com or (913) 661-1851 Jim Saladin, Media Relations – jimsaladin@ferrellgas.com or (913) 661-1833 Scott Brockelmeyer, Media Relations – scottbrockelmeyer@ferrellgas.com or (913) 661-1830

Source:Ferrellgas Partners, L.P.