Ferrellgas Partners, L.P. Reports Results for SECOND Quarter Fiscal 2018

  • Net Loss of $1.8 million, or $0.02 per common unit, compared to net earnings of $38.1 million, or $0.39 per common unit in the prior year period.
    • Net of non-cash charges, net earnings of $47.3 million, $0.49 per common unit is a 26 percent increase over the prior year period.
  • Adjusted EBITDA of $120.6 million, up 15 percent over the prior year period.
  • Retail volume growth of approximately 17 percent over the prior year period.
  • Tank Exchange volume growth of approximately 15 percent over the prior year period.
  • Completed two sales of non-core assets during the quarter.
  • Credit covenant calculations strengthening.
  • 8,700 new customers, growth of more than 1 percent over the prior year.
  • Midstream operations stabilized, focused on growth.

LIBERTY, Mo., March 08, 2018 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its second fiscal quarter ended January 31, 2018. The Company reported a net loss attributable to Ferrellgas Partners, L.P. of $1.8 million, or $0.02 per common unit, which includes non-cash charges of approximately $49 million largely associated with its de-leveraging efforts. This is compared to net earnings attributable to Ferrellgas Partners, L.P. of $38.1 million, or $0.39 per common unit, for the prior year period.

The Company reported that total gallons sold in the second quarter increased 42.3 million gallons over the same period in the prior year, with slightly lower margins as it aggressively competes for and wins new customers. Total gallon growth of 16 percent over the same period in the prior year helped the company report adjusted EBITDA of $120.6 million, compared to $105.0 million in the prior year period, a 15 percent increase.

At the end of this second quarter of the Company’s fiscal year, its leverage ratio was 6.96x, down from 7.57x at the end of the first quarter reflecting successful efforts to de-lever, as well as increased adjusted EBITDA. This level was lower than the 7.75x limit allowed under its secured credit facility and accounts receivable securitization facilities, as amended in April 2017. Based on the Company’s current forecast, the leverage ratio is expected to continue to strengthen and decrease throughout the fiscal year.

“Our company has momentum and the future continues to look bright on all fronts,” continued Mr. Ferrell. “We’ve closed on a number of accretive, bolt-on acquisitions that complement our strategic footprint and plan to stay aggressive in pursuit of well-run businesses that fit our model. We are expanding the number and capacity of our Blue Rhino-owned production facilities in order to reduce freight costs and streamline production – initiatives that are increasingly important as we added more than 3,000 new Blue Rhino selling locations since the prior year period. Our Midstream operations have stabilized and are now keenly focused on growth with recent expectations of more drilling activity in basins where we operate. We have also executed on sales of non-core assets that has streamlined our business, reduced our debt and positively enhanced our key credit metrics.”

“These initiatives are the product of a leaner, more agile organization with a flatter management structure,” Ferrell added. “I like our seasoned management team. We are working together better than ever to grow the business and serve our customers. All of our employees are focused and working hard. Morale is high. We are well positioned for fiscal 2018 and building a foundation for the long-term success of our Company.”

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, 2017. 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, 2017, the Form 10-Q of these entities for the fiscal quarter ended January 31, 2018 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts
Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833
Bill Ruisinger, Investor Relations – billruisinger@ferrellgas.com, 816-792-7914

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS January 31, 2018 July 31, 2017
Current Assets:
Cash and cash equivalents $14,173 $5,760
Accounts and notes receivable, net (including $235,150 and $109,407 of accounts receivable pledged as collateral at January 31, 2018 and July 31, 2017, respectively) 255,978 165,084
Inventories 110,092 92,552
Assets held for sale 52,200 -
Prepaid expenses and other current assets 41,400 33,388
Total Current Assets 473,843 296,784
Property, plant and equipment, net 646,327 731,923
Goodwill, net 246,098 256,103
Intangible assets, net 243,079 251,102
Other assets, net 77,712 74,057
Total Assets $1,687,059 $1,609,969
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable $82,072 $85,561
Short-term borrowings 261,200 59,781
Collateralized note payable 166,000 69,000
Other current liabilities 140,510 126,224
Total Current Liabilities 649,782 340,566
Long-term debt (a) 1,811,617 1,995,795
Other liabilities 35,422 31,118
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at January 31, 2018 and July 31, 2017) (762,046) (701,188)
General partner unitholder (989,926 units outstanding at January 31, 2018 and July 31, 2017) (67,604) (66,991)
Accumulated other comprehensive income 24,332 14,601
Total Ferrellgas Partners, L.P. Partners' Deficit (805,318) (753,578)
Noncontrolling Interest (4,444) (3,932)
Total Partners' Deficit (809,762) (757,510)
Total Liabilities and Partners' Deficit $1,687,059 $1,609,969
(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 Six months ended Twelve months ended
January 31 January 31 January 31
2018 2017 2018 2017 2018 2017
Revenues:
Propane and other gas liquids sales $592,239 $437,375 $894,997 $679,774 $1,533,635 $1,259,985
Midstream operations 117,276 96,787 238,036 204,831 499,908 448,066
Other 45,641 45,088 76,778 74,187 147,753 169,724
Total revenues 755,156 579,250 1,209,811 958,792 2,181,296 1,877,775
Cost of sales:
Propane and other gas liquids sales 362,918 235,029 542,433 354,241 882,347 622,094
Midstream operations 107,067 87,024 215,192 181,666 462,965 350,853
Other 20,787 20,657 34,489 32,403 69,353 88,418
Gross profit 264,384 236,540 417,697 390,482 766,631 816,410
Operating expense 123,716 112,509 234,178 217,501 448,428 443,967
Depreciation and amortization expense 25,485 25,607 51,217 51,809 102,759 127,976
General and administrative expense 14,891 11,429 28,055 23,911 51,124 48,188
Equipment lease expense 6,954 7,416 13,695 14,765 28,054 29,288
Non-cash employee stock ownership plan compensation charge 4,031 2,945 7,993 6,699 16,382 25,897
Non-cash stock-based compensation charge (a) - 1,417 - 3,298 0 6,956
Asset impairments 10,005 - 10,005 - 10,005 628,802
Loss on asset sales and disposal 39,249 45 40,144 6,468 48,133 19,862
Operating income (loss) 40,053 75,172 32,410 66,031 61,746 (514,526)
Interest expense (42,673) (36,819) (83,480) (72,247) (163,718) (141,666)
Other income, net 684 763 1,195 1,271 1,398 1,801
Earnings (loss) before income taxes (1,936) 39,116 (49,875) (4,945) (100,574) (654,391)
Income tax expense (benefit) (162) 588 215 (2) (926) (224)
Net earnings (loss) (1,774) 38,528 (50,090) (4,943) (99,648) (654,167)
Net earnings (loss) attributable to noncontrolling interest (b) 69 430 (332) 32 (658) (6,443)
Net earnings (loss) attributable to Ferrellgas Partners, L.P. (1,843) 38,098 (49,758) (4,975) (98,990) (647,724)
Less: General partner's interest in net earnings (loss) (19) 381 (498) (50) (990) (6,477)
Common unitholders' interest in net earnings (loss) $(1,824) $37,717 $(49,260) $(4,925) $(98,000) $(641,247)
Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest $(0.02) $0.39 $(0.51) $(0.05) $(1.01) $(6.57)
Weighted average common units outstanding - basic 97,152.7 97,152.7 97,152.7 97,305.1 97,152.7 97,652.0
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
2018 2017 2018 2017 2018 2017
Net earnings (loss) attributable to Ferrellgas Partners, L.P. $(1,843) $38,098 $(49,758) $(4,975) $(98,990) $(647,724)
Income tax expense (benefit) (162) 588 215 (2) (926) (224)
Interest expense 42,673 36,819 83,480 72,247 163,718 141,666
Depreciation and amortization expense 25,485 25,607 51,217 51,809 102,759 127,976
EBITDA 66,153 101,112 85,154 119,079 166,561 (378,306)
Non-cash employee stock ownership plan compensation charge 4,031 2,945 7,993 6,699 16,382 25,897
Non-cash stock based compensation charge (a) - 1,417 - 3,298 0 6,956
Asset impairments 10,005 - 10,005 - 10,005 628,802
Loss on asset sales and disposal 39,249 45 40,144 6,468 48,133 19,862
Other income, net (684) (763) (1,195) (1,271) (1,398) (1,801)
Severance costs $358 included in operating costs for the six and twelve months ended period January 31, 2018 and $1,305 included in general and administrative costs for the six and twelve months ended January 31, 2018. Also includes $414 and $938 in operating costs for the six and twelve months ended 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. - 490 1,663 1,959 1,663 2,556
Professional fees related to a lawsuit 2,118 - 2,118 - 2,118 0
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(986) included in operating expense for the twelve months ended January 31, 2018 and $(1,134), $(3,011) and $(6,160) for the three, six and twelve months ended January 31, 2017. Also includes $(314), $1,293 and $1,037 included in midstream operations cost of sales for the three, six and twelve months ended January 31, 2018, respectively and $488, $796 and $174 for the three, six and twelve months ended January 31, 2017. (314) (646) 1,293 (2,215) 51 (5,986)
Acquisition and transition expenses (included in general and administrative expense) - - - - - 14
Net earnings (loss) attributable to noncontrolling interest (b) 69 430 (332) 32 (658) (6,443)
Adjusted EBITDA (c) 120,627 105,030 146,843 134,049 242,857 291,551
Net cash interest expense (d) (39,734) (34,712) (77,791) (68,330) (153,049) (134,783)
Maintenance capital expenditures (e) (4,640) (3,754) (13,344) (7,076) (23,203) (14,784)
Cash paid for taxes (6) (25) (12) (26) (296) (798)
Proceeds from asset sales 2,999 2,313 4,207 4,033 8,126 7,180
Distributable cash flow attributable to equity investors (f) 79,246 68,852 59,903 62,650 74,435 148,366
Distributable cash flow attributable to general partner and non-controlling interest 1,585 1,377 1,198 1,253 1,489 2,968
Distributable cash flow attributable to common unitholders 77,661 67,475 58,705 61,397 72,946 145,398
Less: Distributions paid to common unitholders 9,716 9,715 19,431 59,506 38,861 159,959
Distributable cash flow excess/(shortage) $67,945 $57,760 $39,274 $1,891 $34,085 $(14,561)
Propane gallons sales
Retail - Sales to End Users 235,071 201,580 354,365 312,768 606,469 565,106
Wholesale - Sales to Resellers 74,942 66,152 128,371 118,142 236,480 232,916
Total propane gallons sales 310,013 267,732 482,736 430,910 842,949 798,022
Midstream operations barrels
Salt water volume processed 4,851 4,002 9,791 7,705 38,191 15,292
Crude oil hauled 11,065 13,005 23,215 24,269 48,195 55,071
Crude oil sold 1,556 1,326 3,385 3,118 7,737 6,875
(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
2018 2017 2018 2017 2018 2017
Operating expense $- $567 $- $661 $- $1,177
General and administrative expense - 850 - 2,637 - 5,779
Total $- $1,417 $- $3,298 $- $6,956
(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, net, severance expense, 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 expense, maintenance capital expenditures and cash paid for taxes plus 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.
(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 .

Source:Ferrellgas Partners, L.P.