×

Ferrellgas Partners, L.P. Reports Results for Second Quarter Fiscal 2017

OVERLAND PARK, Kan., March 09, 2017 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today announced financial results for its second fiscal quarter ended January 31, 2017. The Company reported net earnings attributable to Ferrellgas Partners, L.P. of $38.1 million, compared to net earnings of $57.1 million for the same period in 2016.

Adjusted EBITDA was $105.0 million, compared to $138.3 million in the prior year period primarily due to decreased contributions from the midstream crude oil logistics segment. Propane gallons sold were up 7% to 267.7 million gallons, compared to 250.2 million gallons in the prior year period. Operating income generated by the propane and related equipment sales segment was $95.3 million, compared to $97.8 million in the prior year period.

“Weather for the second fiscal quarter was 4% colder than last year but a stunning 14% warmer than normal,” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our efforts to increase market share resulted in gallons increasing approximately 7%, but resulted in overall margins lower than the prior year period, due to customer mix and location.”

Mr. Ferrell continued, “The leadership changes we announced earlier this year are going to reap significant benefits. Dan Giannini at Bridger and Geoff Berger at Blue Rhino are going to drive growth and improved results. In addition, Randy Schott, a 28-year veteran of Ferrellgas and Sr. Vice President in charge of our large Retail propane business has also instilled a growth mindset in his people. Morale in the company could not be higher.”

At the end of the second fiscal quarter, the Company’s leverage ratio was 5.81x, which was lower than the limit allowed under its secured credit facility and accounts receivable securitization facility, as amended in September 2016.

Mr. Ferrell added, “We were pleased to be able to upsize the Company’s recent note issuance to $175 million. Our goal is to return to a leverage ratio of 4.5x or a level we deem appropriate for our business.”

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 28, 2016. 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. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative of those terms or other variations of them or comparable terminology. Forward-looking statements, include, but are not limited to: Ferrellgas’ debt reduction plans, Ferrellgas’ leverage ratio reduction plans, statements regarding future unitholder returns, growth and improved results, plans to increase the utilization of certain assets, the anticipated impact of Ferrellgas’ actions on its balance sheet and liquidity position, and the anticipated impact of Ferrellgas’ leadership changes. While Ferrellgas believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: risks related to Ferrellgas’ ability to generate sufficient cash flow to pay distributions, to make payments on its debt obligations and to execute its business plan; Ferrellgas’ ability to access funds on acceptable terms, if at all, because of the terms and conditions governing its indebtedness or otherwise; local, regional and national economic conditions and the impact they may have on Ferrellgas and its customers; the effect of weather conditions on the demand for propane; the prices of wholesale propane, motor fuel and crude oil; disruptions to the supply of propane; the termination or non-renewal of certain arrangements or agreements; adverse changes in our relationships with our national propane customers; significant delays in the collection of, or uncollectibility of, accounts or notes receivable; the financial condition of Ferrellgas’ customers; and the failure of any customer to perform its contractual obligations. 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, 2016, the Form 10-Q of these entities for the fiscal quarter ended January 31, 2017, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Except as required by law, Ferrellgas undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.


FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2017 AND 2016
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2017 2016 2017 2016 2017 2016
Revenues:
Propane and other gas liquids sales $437,375 $376,856 $679,774 $622,157 $1,259,985 $1,323,945
Midstream operations 96,787 188,333 204,831 382,003 448,066 474,123
Other 45,088 84,049 74,187 116,224 169,724 237,378
Total revenues 579,250 649,238 958,792 1,120,384 1,877,775 2,035,446
Cost of sales:
Propane and other gas liquids sales 235,029 174,829 354,241 296,580 622,094 678,298
Midstream operations 87,024 148,443 181,666 302,047 350,853 374,450
Other 20,657 55,774 32,403 70,222 88,418 150,956
Gross profit 236,540 270,192 390,482 451,535 816,410 831,742
Operating expense 112,509 116,463 217,501 231,444 443,967 453,696
Depreciation and amortization expense 25,607 37,367 51,809 74,346 127,976 125,673
General and administrative expense 11,429 12,062 23,911 24,302 48,188 59,284
Equipment lease expense 7,416 7,278 14,765 14,310 29,288 27,256
Non-cash employee stock ownership plan compensation charge 2,945 3,141 6,699 8,397 25,897 24,948
Non-cash stock-based compensation charge (a) 1,417 (2,456) 3,298 5,666 6,956 15,218
Asset impairments - - - 29,316 628,802 29,316
Loss on asset sales and disposal 45 2,524 6,468 17,441 19,862 22,165
Operating income (loss) 75,172 93,813 66,031 46,313 (514,526) 74,186
Interest expense (36,819) (34,730) (72,247) (68,518) (141,666) (120,627)
Other income (expense), net 763 (298) 1,271 (420) 1,801 (143)
Earnings (loss) before income taxes 39,116 58,785 (4,945) (22,625) (654,391) (46,584)
Income tax expense (benefit) 588 1,030 (2) 186 (224) (660)
Net earnings (loss) 38,528 57,755 (4,943) (22,811) (654,167) (45,924)
Net earnings (loss) attributable to noncontrolling interest (b) 430 628 32 (145) (6,443) (295)
Net earnings (loss) attributable to Ferrellgas Partners, L.P. 38,098 57,127 (4,975) (22,666) (647,724) (45,629)
Less: General partner's interest in net earnings (loss) 381 571 (50) (227) (6,477) (456)
Common unitholders' interest in net earnings (loss) $37,717 $56,556 $(4,925) $(22,439) $(641,247) $(45,173)
Earnings (loss) Per Unit
Basic and diluted net earnings (loss) per common unitholders' interest $0.39 $0.58 $(0.05) $(0.23) $(6.57) $(0.48)
Weighted average common units outstanding 97,152.7 98,334.4 97,305.1 99,355.6 97,652.0 93,169.4
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2017 2016 2017 2016 2017 2016
Net earnings (loss) attributable to Ferrellgas Partners, L.P. $38,098 $57,127 $(4,975) $(22,666) $(647,724) $(45,629)
Income tax expense (benefit) 588 1,030 (2) 186 (224) (660)
Interest expense 36,819 34,730 72,247 68,518 141,666 120,627
Depreciation and amortization expense 25,607 37,367 51,809 74,346 127,976 125,673
EBITDA 101,112 130,254 119,079 120,384 (378,306) 200,011
Non-cash employee stock ownership plan compensation charge 2,945 3,141 6,699 8,397 25,897 24,948
Non-cash stock based compensation charge (a) 1,417 (2,456) 3,298 5,666 6,956 15,218
Asset impairments - - - 29,316 628,802 29,316
Loss on asset sales and disposal 45 2,524 6,468 17,441 19,862 22,165
Other (income) expense, net (763) 298 (1,271) 420 (1,801) 143
Change in fair value of contingent consideration (included in operating expense) - - - (100) - (100)
Severance costs $414 and $938 included in operating costs for the six and twelve months ended period January 31, 2017 and $490, $1,545 and $1,618 included in general and administrative costs for the three, six and twelve months ended January 31, 2017. Also includes $805 in operating costs for the six and twelve months ended January 31, 2016 and $51 in general and administrative costs for the six and twelve months ended January 31, 2016.
490 - 1,959 856 2,556 856
Litigation accrual and related legal fees associated with a class action lawsuit (included in general and administrative expense) - - - - - 83
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(1,134), $(3,011) and $(6,160) included in operating expense for the three, six and twelve months ended January 31, 2017 and $3,696, $4,734 and $7,146 for the three, six and twelve months ended January 31, 2016. Also includes $488, $796 and $174 included in midstream operations cost of sales for the three, six and twelve months ended January 31, 2017, respectively and $174 for each of the three, six and twelve months ended January 31, 2016. (646) 3,870 (2,215) 4,908 (5,986) 7,320
Acquisition and transition expenses (included in general and administrative expense) - 70 - 85 14 16,458
Net earnings (loss) attributable to noncontrolling interest (b) 430 628 32 (145) (6,443) (295)
Adjusted EBITDA (c) 105,030 138,329 134,049 187,228 291,551 316,123
Net cash interest expense (d) (34,712) (33,905) (68,330) (66,407) (134,783) (116,380)
Maintenance capital expenditures (e) (3,754) (3,214) (7,076) (9,429) (14,784) (19,329)
Cash paid for taxes (25) (5) (26) (5) (798) (451)
Proceeds from asset sales 2,313 1,863 4,033 2,876 7,180 6,052
Distributable cash flow to equity investors (f) 68,852 103,068 62,650 114,263 148,366 186,015
Distributable cash flow attributable to general partner and non-controlling interest 1,377 2,061 1,253 2,285 2,968 3,720
Distributable cash flow attributable to common unitholders 67,475 101,007 61,397 111,978 145,398 182,295
Less: Distributions paid to common unitholders 9,715 50,223 59,506 101,666 159,959 184,384
Distributable cash flow excess/(shortage) $57,760 $50,784 $1,891 $10,312 $(14,561) $(2,089)
Propane gallons sales
Retail - Sales to End Users 201,580 189,460 312,768 300,433 565,106 569,071
Wholesale - Sales to Resellers 66,152 60,781 118,142 111,347 232,916 238,167
Total propane gallons sales 267,732 250,241 430,910 411,780 798,022 807,238
Midstream operations barrels
Salt water volume processed 4,002 4,222 7,705 8,956 15,292 17,272
Crude oil hauled 13,005 24,345 24,269 48,609 55,071 59,056
Crude oil sold 1,326 1,593 3,118 3,103 6,875 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
2017 2016 2017 2016 2017 2016
Operating expense $567 $(466) $661 $752 1,177 $2,315
General and administrative expense 850 (1,990) 2,637 4,914 5,779 12,903
Total $1,417 $(2,456) $3,298 $5,666 $6,956 $15,218
(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 disposal, other (income) expense, net, change in fair value of contingent consideration, severance costs, litigation accrual, and related legal fees associated with a class action lawsuit, unrealized (non-cash) losses (gains) on changes in fair value of derivatives, acquisition and transition expenses 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, maintenance capital expenditures, cash paid for taxes, and proceeds from 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.



FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS January 31, 2017 July 31, 2016
Current Assets:
Cash and cash equivalents $ 14,710 $ 4,965
Accounts and notes receivable, net (including $181,851 and $106,464 of
accounts receivable pledged as collateral at January 31, 2017 and
July 31, 2016, respectively) 223,978 149,583
Inventories 114,862 90,594
Prepaid expenses and other current assets 37,729 39,973
Total Current Assets 391,279 285,115
Property, plant and equipment, net 747,045 774,680
Goodwill, net 256,103 256,103
Intangible assets, net 264,165 280,185
Other assets, net 87,028 87,223
Total Assets $ 1,745,620 $ 1,683,306
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable $ 108,271 $ 67,928
Short-term borrowings 65,599 101,291
Collateralized note payable 133,000 64,000
Other current liabilities 134,945 128,958
Total Current Liabilities 441,815 362,177
Long-term debt (a) 1,966,909 1,941,335
Other liabilities 33,428 31,574
Contingencies and commitments
Partners' Capital (Deficit):
Common unitholders (97,152,665 and 98,002,665 units outstanding at
January 31, 2017 and July 31, 2016) (641,239) (570,754)
General partner unitholder (989,926 and 989,926 units outstanding at
January 31, 2017 and July 31, 2016) (66,387) (65,835)
Accumulated other comprehensive income (loss) 14,430 (10,468)
Total Ferrellgas Partners, L.P. Partners' Deficit (693,196) (647,057)
Noncontrolling Interest (3,336) (4,723)
Total Partners' Deficit (696,532) (651,780)
Total Liabilities and Partners' Deficit $ 1,745,620 $ 1,683,306
(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.

Contacts Jack Herrold, Investor Relations – jackherrold@ferrellgas.com, 913-661-1851 Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833

Source:Ferrellgas Partners, L.P.