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Ferrellgas Partners, L.P. Reports First Quarter Fiscal 2024 Results

December 8, 2023 8:30 AM EST
  • Financial Highlights
    • Gross Profit for the first fiscal quarter decreased $1.0 million, or 1%, compared to the prior year period, driven by decreases of $42.3 million and $41.2 million in revenue and cost of sales, respectively. The revenue and cost of sales changes were primarily due to wholesale propane prices that were 28.6% lower from Mt. Belvieu, Texas and 30.6% lower from Conway, Kansas compared to the prior year period.
    • Margin per gallon for the first fiscal quarter was flat at $1.20 per gallon for both the current and prior year periods.
    • Net loss attributable to Ferrellgas Partners, L.P. was $17.5 million for the first fiscal quarter compared to a net loss of $4.5 million in the prior year period, driven, in part, by higher expenses incurred in response to and preparation for system growth.
    • Adjusted EBITDA for the first fiscal quarter decreased by $16.8 million compared to the prior year period, with the decrease largely attributable to the increase in net loss.
  • Company Highlights
    • Blue Rhino, the Company’s tank exchange brand, increased capacity 15% to 20% in its production facilities where we expect to see volume growth, as well as preparing our distribution yards, investing in vending technology, and adding micro-distribution centers to support growth.
    • Ferrellgas announced its continued partnership with Operation Warm, an organization that provides new coats and shoes to children in need across the country.
    • Blue Rhino honored its partnership with Operation BBQ Relief, an organization that serves people across the country impacted by natural disasters, with a limited edition tank sleeve.
    • 188 employees received Ferrellgas Flame Awards and Blue Rhino recognized three Golden Rhino Award recipients in the first fiscal quarter.   

LIBERTY, Mo., Dec. 08, 2023 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its first fiscal quarter ended October 31, 2023.

“It was an exciting quarter for Ferrellgas focused on Blue Rhino growth initiatives and preparation for our core business peak season ahead,” said Tamria Zertuche, President and Chief Executive Officer of Ferrellgas. “The employee-owners of Ferrellgas delivered the infrastructure, fleet and human resource activities needed for the strategic growth goals of Ferrellgas. We could not be more proud of the growth opportunities our sales teams, customer service representatives and drivers across the country help to deliver each and every day.”

Gross profit decreased slightly by $1.0 million, or 1%, for the first fiscal quarter compared to the prior year period. The main factor behind this change was a $42.3 million decrease in revenue, which was partially offset by a decrease of $41.2 million in cost of product as compared to the prior year period. Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at our two major supply points averaged 28.6% and 30.6% less in the first fiscal quarter of 2024 compared to the prior year period. These decreases impacted both the revenue and cost of product changes for the period. As expected, propane market cost reduction and stabilization impacted our current period gross profit. Margin per gallon was flat at $1.20 per gallon for both periods.

We recognized a net loss attributable to Ferrellgas Partners, L.P. of $17.5 million and $4.5 million in the first fiscal quarter of fiscal 2024 and 2023, respectively. Operating expense as a percentage of total revenue increased 26% for the first fiscal quarter compared to the prior year period. Operating expense – personnel, vehicle, plant and office increased $14.9 million, or 11%, primarily due to an increase of $5.0 million from the Company increasing personnel for growth projects (including increased acquisitions and the expansion by Blue Rhino into both self-service vending) and new customer growth, in addition to $3.0 million related to the timing of benefit payments. The remainder of the increase in operating expense was primarily driven by a $3.9 million increase in vehicle costs as trucks were refurbished to support new customer growth in Blue Rhino. Lower legal costs compared to the prior year period drove the majority of the $2.0 million decrease in General and administrative expense.

Adjusted EBITDA, a non-GAAP financial measure, decreased by $16.8 million, or 34%, to $32.9 million in the first fiscal quarter compared to $49.7 million in the prior year quarter. The change was primarily due to the $13.0 million increase in net loss attributable to Ferrellgas Partners, L.P., as noted above, and a $3.8 million EBITDA adjustment for legal fees related to a non-core business.

The Company announced its continued partnership with Operation Warm, a national nonprofit organization that provides new coats and shoes for children in need across the country. “Giving a child a new coat can be a transformative experience,” said Ms. Zertuche. “It truly makes a difference for so many children, and it’s one more way we can Fuel Life Simply for them and their families. As a company that supplies the propane that heats millions of American homes, supporting Operation Warm is a natural fit for us. Every child deserves to feel warm, safe, and loved.” The Company participated in two coat distribution events this year.

Blue Rhino celebrated Labor Day with a new, limited edition tank sleeve honoring our partnership with Operation BBQ Relief, a nonprofit organization that has served more than ten million meals to those impacted by natural disasters. The Company is proud to support such an important cause by providing the fuel needed to cook the meals served.

The Company had 188 nominations for Ferrellgas Flame awards during the first fiscal quarter, including 33 in Safety, 65 in Customer Service, 29 in Innovation, and 61 in Leadership. This employee recognition program is yet another way Ferrellgas shows appreciation to its most valuable resource, its employee-owners. In addition to performance recognition, Ferrellgas believes in education and continuous improvement. The Golden Rhino Award program recognizes a Blue Rhino employee or group each quarter from production, operations and corporate for their accomplishments.

On Friday, December 8, 2023, the Company will conduct a teleconference at https://edge.media-server.com/mmc/p/mymf73a9 to discuss the results of operations for the first fiscal quarter ended October 31, 2023. The webcast of the teleconference will begin at 8:30 a.m. Central Time (9:30 a.m. Eastern Time). Questions may be submitted via the investor relations e-mail box at [email protected].

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. Its Blue Rhino propane exchange brand is sold at 60,000 locations nationwide. Ferrellgas was named one of Newsweek’s Most Trustworthy Companies in America in 2023. Ferrellgas employees indirectly own 1.1 million Class A Units of the partnership, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed an Annual Report on Form 10-K for the fiscal year ended July 31, 2023 with the Securities and Exchange Commission on September 29, 2023. 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 Annual Report on Form 10-K of Ferrellgas Partners, L.P., Ferrellgas, L.P., Ferrellgas Partners Finance Corp., and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2023, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

Investor Relations – [email protected]

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except unit data)(unaudited)
       
ASSETS    October 31, 2023 July 31, 2023
       
Current assets:      
Cash and cash equivalents (including $10,789 and $11,126 of restricted cash at October 31, 2023 and July 31, 2023, respectively) $76,783  $137,347 
Accounts and notes receivable, net  150,504   159,379 
Inventories  105,829   98,104 
Price risk management asset  6,465   11,966 
Prepaid expenses and other current assets  43,025   29,135 
Total current assets  382,606   435,931 
       
Property, plant and equipment, net  616,212   615,174 
Goodwill, net  257,006   257,006 
Intangible assets (net of accumulated amortization of $351,971 and $349,614 at October 31, 2023 and July 31, 2023, respectively)  104,257   106,615 
Operating lease right-of-use assets  55,609   57,839 
Other assets, net  56,408   58,838 
Total assets $1,472,098  $1,531,403 
       
       
LIABILITIES, MEZZANINE AND EQUITY (DEFICIT)      
       
Current liabilities:      
Accounts payable $45,918  $35,115 
Current portion of long-term debt  2,597   2,597 
Current operating lease liabilities  24,954   24,600 
Other current liabilities  175,241   197,030 
Total current liabilities  248,710   259,342 
       
Long-term debt  1,456,368   1,456,184 
Operating lease liabilities  31,804   34,235 
Other liabilities  26,378   29,084 
       
Contingencies and commitments      
       
Mezzanine equity:      
Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at October 31, 2023 and July 31, 2023)  651,349   651,349 
       
Equity (Deficit):      
Limited partner unitholders      
Class A (4,857,605 Units outstanding at October 31, 2023 and July 31, 2023)  (1,237,866)  (1,205,103)
Class B (1,300,000 Units outstanding at October 31, 2023 and July 31,2023)  383,012   383,012 
General partner Unitholder (49,496 Units outstanding at October 31, 2023 and July 31, 2023)  (70,897)  (70,566)
Accumulated other comprehensive (loss) income  (9,125)  1,059 
Total Ferrellgas Partners, L.P. deficit  (934,876)  (891,598)
Noncontrolling interest  (7,635)  (7,193)
Total deficit  (942,511)  (898,791)
Total liabilities, mezzanine and deficit $1,472,098  $1,531,403 

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per unit data)(unaudited)
             
  Three months ended  Twelve months ended
  October 31,  October 31, 
   2023   2022   2023   2022 
Revenues:            
Propane and other gas liquids sales $338,934  $385,844  $1,869,982  $2,031,019 
Other  32,079   27,445   114,207   102,304 
Total revenues  371,013   413,289   1,984,189   2,133,323 
             
Cost of sales:            
Propane and other gas liquids sales  172,180   213,081   962,456   1,166,547 
Other  4,441   4,776   15,578   13,675 
             
Gross profit   194,392   195,432   1,006,155   953,101 
             
Operating expense - personnel, vehicle, plant & other  144,646   129,740   592,426   533,231 
Operating expense - equipment lease expense  5,376   6,024   22,604   23,428 
Depreciation and amortization expense  24,404   22,631   95,143   92,233 
General and administrative expense  12,825   14,833   68,730   55,038 
Non-cash employee stock ownership plan compensation charge  720   723   2,932   2,984 
Loss (gain) on asset sales and disposals  1,335   1,680   5,346   (6,348)
             
Operating income  5,086   19,801   218,974   252,535 
             
Interest expense  (24,161)  (25,009)  (96,864)  (99,707)
Other income, net  1,336   469   3,492   1,038 
             
(Loss) earnings before income tax expense  (17,739)  (4,739)  125,602   153,866 
             
Income tax expense  162   18   1,125   903 
             
Net (loss) earnings  (17,901)  (4,757)  124,477   152,963 
             
Net (loss) earnings attributable to noncontrolling interest (1)  (345)  (212)  607   909 
             
Net (loss) earnings attributable to Ferrellgas Partners, L.P. $(17,556) $(4,545) $123,870  $152,054 
             
Class A unitholders' interest in net loss $(33,632) $(20,751) $(2,710) $(13,996)
             
Net loss per unitholders' interest            
Basic and diluted net loss per Class A Unit $(6.92) $(4.27) $(0.56) $(2.88)
Weighted average Class A Units outstanding - basic and diluted  4,858   4,858   4,858   4,858 

      (1)   Amounts allocated to the general partner for its 1.0101% interest (excluding the economic interest attributable to the preferred unitholders) in the operating partnership, Ferrellgas, L.P.

Supplemental Data and Reconciliation of Non-GAAP Items:
             
  Three months ended  Twelve months ended
  October 31,  October 31, 
   2023   2022   2023   2022 
Net (loss) earnings attributable to Ferrellgas Partners, L.P. $(17,556) $(4,545) $123,870  $152,054 
Income tax expense  162   18   1,125   903 
Interest expense  24,161   25,009   96,864   99,707 
Depreciation and amortization expense  24,404   22,631   95,143   92,233 
EBITDA  31,171   43,113   317,002   344,897 
Non-cash employee stock ownership plan compensation charge  720   723   2,932   2,984 
Loss (gain) loss on asset sales and disposal  1,335   1,680   5,346   (6,348)
Other income, net  (1,336)  (469)  (3,492)  (1,038)
  Severance costs include $49 in operating expense and $585 in general and administrative expense for the twelve months ended October 31, 2023, respectively.     10   634   372 
Legal fees and settlements related to non-core businesses  1,054   4,872   17,933   10,679 
Business transformation costs (1)  274      2,362    
Net (loss) earnings attributable to noncontrolling interest (2)  (345)  (212)  607   909 
Adjusted EBITDA (3)  32,873   49,717   343,324   352,455 
Net cash interest expense (4)  (20,747)  (22,606)  (84,836)  (102,853)
Maintenance capital expenditures (5)  (4,530)  (5,832)  (18,867)  (19,272)
Cash paid for income taxes  (103)  (49)  (1,146)  (1,067)
Proceeds from certain asset sales  480   752   1,880   4,224 
Distributable cash flow attributable to equity investors (6)  7,973   21,982   240,355   233,487 
Less: Distributions accrued or paid to preferred unitholders  16,251   17,966   62,599   65,908 
Distributable cash flow attributable to general partner and non-controlling interest  (159)  (440)  (4,806)  (4,671)
Distributable cash flow attributable to Class A and B Unitholders (7)  (8,437)  3,576   172,950   162,908 
Less: Distributions paid to Class A and B Unitholders (8)        49,998   99,996 
Distributable cash flow (shortage) excess (9) $(8,437) $3,576  $122,952  $62,912 
             
Propane gallons sales            
Retail - Sales to End Users  114,440   118,396   598,187   626,887 
Wholesale - Sales to Resellers  47,765   43,869   209,786   206,330 
Total propane gallons sales  162,205   162,265   807,973   833,217 
             

(1)   Non-recurring costs included in “Operating, general and administrative expense” primarily related to the implementation of an ERP system as part of our business transformation initiatives.

(2)   Amounts allocated to the general partner for its 1.0101% interest (excluding the economic interest attributable to the preferred unitholders) in the operating partnership, Ferrellgas, L.P.

(3)   Adjusted EBITDA is calculated as net (loss) earnings attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss (gain) on asset sales and disposals, other income, net, severance costs, legal fees and settlements related to non-core businesses, business transformation costs, and net (loss) 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 make it easier to compare its results with other companies that have different financing and capital structures. Adjusted EBITDA, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

(4)   Net cash interest expense is the sum of interest expense less non-cash interest expense and other income, net.

(5)   Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment, and may from time to time include the purchase of assets that are typically leased.

(6)   Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for income taxes plus proceeds from certain 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, including holders of the operating partnership’s Preferred Units. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to similarly titled measurements used by other companies. 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 should be viewed in conjunction with measurements that are computed in accordance with GAAP.

(7)   Distributable cash flow attributable to Class A and B Unitholders is calculated as Distributable cash flow attributable to equity investors minus distributions accrued or paid on the Preferred Units and distributable cash flow attributable to general partner and noncontrolling interest. Management considers distributable cash flow attributable to Class A and B Unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to Class A and B Unitholders. Distributable cash flow attributable to Class A and B Unitholders, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added to our calculation of distributable cash flow attributable to Class A and B Unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to Class A and B Unitholders should be viewed in conjunction with measurements that are computed in accordance with GAAP.

(8)   The Company did not pay any distributions to Class A Unitholders during any of the periods in fiscal 2024 or fiscal 2023.

(9)   Distributable cash flow (shortage) excess is calculated as Distributable cash flow attributable to Class A and B Unitholders minus Distributions paid to Class A and B Unitholders. Distributable cash flow excess, if any, is retained to establish reserves, to reduce debt, to fund capital expenditures and for other partnership purposes, and any shortage is funded from previously established reserves, cash on hand or borrowings under our Credit Facility. Management considers Distributable cash flow (shortage) excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow (shortage) excess, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow (shortage) excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow (shortage) excess should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Source: Ferrellgas Partners, L.P.


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