UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of Earliest Event Reported): March 8, 2018

 

Ferrellgas Partners, L.P.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code:  913-661-1500

 

n/a

Former name or former address, if changed since last report

 

Ferrellgas Partners Finance Corp.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code:  913-661-1500

 

n/a

Former name or former address, if changed since last report

 

Ferrellgas, L.P.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code:  913-661-1500

 

n/a

Former name or former address, if changed since last report

 

Ferrellgas Finance Corp.

(Exact name of registrant as specified in its charter)

 

 

 

Registrant’s telephone number, including area code:  913-661-1500

 

n/a

Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

The information included in Item 7.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.02 of this Current Report on Form 8-K.

 

Item 7.01 Regulation FD Disclosure.

 

On March 8, 2018, Ferrellgas Partners, L.P. issued a press release regarding its financial results for the second fiscal quarter ended January 31, 2018. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.

 

Exhibit 99.1 — Press release of Ferrellgas Partners, L.P. dated March 8, 2018, reporting its financial results for the second fiscal quarter ended January 31, 2018.
 
Limitation on Materiality and Incorporation by Reference
The information in this Current Report on Form 8-K related to Items 2.02 and 7.01, including Exhibit 99.1 furnished herewith, is being furnished to the SEC pursuant to Item 2.02 and Item 7.01 of Form 8-K and is not deemed to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18. In addition, such information is not to be incorporated by reference into any registration statement of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P. or Ferrellgas Finance Corp. or other filings of such entities made pursuant to the Exchange Act or the Securities Act, unless specifically identified as being incorporated therein by reference.

 

The furnishing of particular information in this Current Report, including Exhibit 99.1 furnished herewith, pursuant to Item 7.01 of Form 8-K is not intended to, and does not, constitute a determination or admission by Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P. or Ferrellgas Finance Corp. as to the materiality or completeness of any such information that is required to be disclosed solely by Regulation FD of the Exchange Act.

 

2

 

Exhibit Index

 

Exhibit No.		Description
99.1		Press release of Ferrellgas Partners, L.P. dated March 8, 2018, reporting its financial results for the second fiscal quarter ended January 31, 2018.

 

3

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

		FERRELLGAS PARTNERS, L.P.
		By Ferrellgas, Inc. (General Partner)
Date:	March 8, 2018	By	/s/ Doran N. Schwartz
			Doran N. Schwartz
			Senior Vice President; Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)
		FERRELLGAS PARTNERS FINANCE CORP.
Date:	March 8, 2018	By	/s/ Doran N. Schwartz
			Doran N. Schwartz
			Chief Financial Officer and Sole Director
		FERRELLGAS, L.P.
		By Ferrellgas, Inc. (General Partner)
Date:	March 8, 2018	By	/s/ Doran N. Schwartz
			Doran N. Schwartz
			Senior Vice President; Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)
		FERRELLGAS FINANCE CORP.
Date:	March 8, 2018	By	/s/ Doran N. Schwartz
			Doran N. Schwartz
			Chief Financial Officer and Sole Director

 

4

Exhibit 99.1

 

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 8, 2018 — 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 — [email protected], 913-661-1833

Bill Ruisinger, Investor Relations — [email protected], 816-792-7914

 

 

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

 

		January 31, 2018			July 31, 2017
ASSETS
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			—			6,956
Asset impairments		10,005			—			10,005			—			10,005			628,802
Loss on asset sales and disposals		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			—			6,956
Asset impairments		10,005			—			10,005			—			10,005			628,802
Loss on asset sales and disposals		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 incurred related to a lawsuit		2,118			—			2,118			—			2,118			—
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 (g)		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 earnings (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 disposals, other income, net, severance costs, professional fees, unrealized (non-cash) losses (gains) 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)   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 .