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): September 28, 2017

 

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 September 28, 2017, Ferrellgas Partners, L.P. issued a press release regarding its financial results for the fourth fiscal quarter and fiscal year ended July 31, 2017. 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 September 28, 2017, reporting its financial results for the fourth fiscal quarter and fiscal year ended July 31, 2017.

 

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.

 

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Exhibit Index

 

Exhibit No.		Description
99.1		Press release of Ferrellgas Partners, L.P. dated September 28, 2017, reporting its financial results for the fourth fiscal quarter and fiscal year ended July 31, 2017.

 

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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:  September 28, 2017	By	/s/ Alan C. Heitmann
		Alan C. Heitmann
		Executive Vice President and Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)
	FERRELLGAS PARTNERS FINANCE CORP.
Date:  September 28, 2017	By	/s/ Alan C. Heitmann
		Alan C. Heitmann
		Chief Financial Officer and Sole Director
	FERRELLGAS, L.P.
	By Ferrellgas, Inc. (General Partner)
Date:  September 28, 2017	By	/s/ Alan C. Heitmann
		Alan C. Heitmann
		Executive Vice President and Chief Financial Officer;; Treasurer (Principal Financial and Accounting Officer)
	FERRELLGAS FINANCE CORP.
Date:  September 28, 2017	By	/s/ Alan C. Heitmann
		Alan C. Heitmann
		Chief Financial Officer and Sole Director

 

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Exhibit 99.1

 

FERRELLGAS PARTNERS, L.P. REPORTS RESULTS FOR FISCAL 2017

 

OVERLAND PARK, Kan., September 28, 2017 — Ferrellgas Partners, L.P. (NYSE: FGP) (“Ferrellgas” or the “Company”) today announced financial results for its fiscal year ended July 31, 2017. The Company reported net loss attributable to Ferrellgas Partners, L.P. of $54.2 million, compared to net loss of $665.4 million for the same period in 2016.

 

Adjusted EBITDA was $230.1 million compared to $344.7 million in the prior year period primarily due to decreased contributions from the midstream operations segment.

 

“Weather for fiscal 2017 was a stunning 18% warmer than normal, and significantly affected our financial results” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our strategy is to increase market share as reflected in our 2% increase in retail gallons sold, exceeding those of prior year on an absolute and weather adjusted basis. Overall gross margin was lower than the prior year period due to customer mix  and an increase in the overall wholesale cost of propane.”

 

Propane gallons sold were 791.1 million gallons, compared to 778.9 million gallons in the prior year. Operating income generated by the propane operations and related equipment sales segment was $187.9 million, compared to $204.9 million in the prior year period.

 

Our midstream operations segment generated an operating loss of $26.3 million this year compared to $648.3 million in fiscal 2016 primarily due to the impairment charge of $658.1 million recorded last 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 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. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,”

 

1

 

“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, 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.

 

Contacts

 

Jack Herrold, Investor Relations — [email protected], 913-661-1851

Jim Saladin, Media Relations — [email protected], 913-661-1833

 

 

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

 

ASSETS		July 31, 2017			July 31, 2016
Current Assets:
Cash and cash equivalents		$	5,760		$	4,965
Accounts and notes receivable, net (including $109,407 and $106,464 of accounts receivable pledged as collateral at July 31, 2017 and July 31, 2016, respectively, and net of allowance for doubtful accounts of $1,976 and $5,067 at 2017 and 2016, respectively)		165,084			149,583
Inventories		92,552			90,594
Prepaid expenses and other current assets		33,388			39,973
Total Current Assets		296,784			285,115
Property, plant and equipment, net		731,923			774,680
Goodwill		256,103			256,103
Intangible assets, net		251,102			280,185
Other assets, net		74,057			87,223
Total Assets		$	1,609,969		$	1,683,306

 

LIABILITIES AND PARTNERS’ DEFICIT
Current Liabilities:
Accounts payable		$	85,561		$	67,928
Short-term borrowings		59,781			101,291
Collateralized note payable		69,000			64,000
Other current liabilities		126,224			128,958
Total Current Liabilities		340,566			362,177
Long-term debt (a)		1,995,795			1,941,335
Other liabilities		31,118			31,574
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 and 98,002,665 units outstanding at July 31, 2017 and July 31, 2016)		(701,188		)	(570,754		)
General partner unitholder (989,926 units outstanding at July 31, 2017 and July 31, 2016)		(66,991		)	(65,835		)
Accumulated other comprehensive income (loss)		14,601			(10,468		)
Total Ferrellgas Partners, L.P. Partners’ Deficit		(753,578		)	(647,057		)
Noncontrolling Interest		(3,932		)	(4,723		)
Total Partners’ Deficit		(757,510		)	(651,780		)
Total Liabilities and Partners’ Deficit		$	1,609,969		$	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.

 

 

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per unit data)

(unaudited)

 

		Three months ended						Twelve months ended
		July 31						July 31
		2017			2016			2017			2016
Revenues:
Propane and other gas liquids sales		$	269,201		$	241,282		$	1,318,412		$	1,202,368
Midstream operations		135,196			137,811			466,703			625,238
Other		28,979			30,418			145,162			211,761
Total revenues		433,376			409,511			1,930,277			2,039,367
Cost of sales:
Propane and other gas liquids sales		142,427			115,592			694,155			564,433
Midstream operations		129,006			97,335			429,439			471,234
Other		14,054			14,812			67,267			126,237
Gross profit		147,889			181,772			739,416			877,463
Operating expense		109,477			111,326			431,751			457,910
Depreciation and amortization expense		25,805			37,815			103,351			150,513
General and administrative expense		13,091			11,923			46,980			48,579
Equipment lease expense		7,089			7,279			29,124			28,833
Non-cash employee stock ownership plan compensation charge		3,692			9,220			15,088			27,595
Non-cash stock-based compensation charge (a)		—			2,567			3,298			9,324
Asset impairments		—			628,802			—			658,118
Loss on asset sales and disposal		5,596			7,615			14,457			30,835
Operating income (loss)		(16,861		)	(634,775		)	95,367			(534,244		)
Interest expense		(40,378		)	(35,048		)	(152,485		)	(137,937		)
Other income (expense), net		41			199			1,474			110
Loss before income taxes		(57,198		)	(669,624		)	(55,644		)	(672,071		)
Income tax benefit		(949		)	(1,482		)	(1,143		)	(36		)
Net loss		(56,249		)	(668,142		)	(54,501		)	(672,035		)
Net loss attributable to noncontrolling interest (b)		(481		)	(6,708		)	(294		)	(6,620		)
Net loss attributable to Ferrellgas Partners, L.P.		(55,768		)	(661,434		)	(54,207		)	(665,415		)
Less: General partner’s interest in net loss		(558		)	(6,614		)	(542		)	(6,654		)
Common unitholders’ interest in net loss		$	(55,210	)	$	(654,820	)	$	(53,665	)	$	(658,761	)
Loss Per Common Unit
Basic and diluted net loss per common unitholders’ interest		$	(0.57	)	$	(6.68	)	$	(0.55	)	$	(6.68	)
Weighted average common units outstanding - basic		97,152.7			98,002.7			97,229.5			98,682.8

 

 

Supplemental Data and Reconciliation of Non-GAAP Items:

 

		Three months ended						Twelve months ended
		July 31						July 31
		2017			2016			2017			2016
Net loss attributable to Ferrellgas Partners, L.P.		$	(55,768	)	$	(661,434	)	$	(54,207	)	$	(665,415	)
Income tax benefit		(949		)	(1,482		)	(1,143		)	(36		)
Interest expense		40,378			35,048			152,485			137,937
Depreciation and amortization expense		25,805			37,815			103,351			150,513
EBITDA		9,466			(590,053		)	200,486			(377,001		)
Non-cash employee stock ownership plan compensation charge		3,692			9,220			15,088			27,595
Non-cash stock based compensation charge (a)		—			2,567			3,298			9,324
Asset impairments		—			628,802			—			658,118
Loss on asset sales and disposal		5,596			7,615			14,457			30,835
Other (income) expense, net		(41		)	(199		)	(1,474		)	(110		)
Change in fair value of contingent consideration (included in operating expense)		—			—			—			(100		)
Severance expense $414 included in operating expense for the twelve months ended period July 31, 2017 and $1,545 included in general and administrative expense for the twelve months ended July 31, 2017. Also includes $128 and $1,329 in operating expense for the three and twelve months ended July 31, 2016 and $124 general and administrative expense for the twelve months ended July 31, 2016.		—			128			1,959			1,453
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $1,751, and $540 included in cost of sales for the three and twelve months ended July 31, 2017, respectively, and $(1,849) and $(448) for the three and twelve months ended July 31, 2016, respectively. Also includes $(759) and $(3,997) included in operating expense for the three and twelve months ended July 31, 2017, respectively, and $(7) and $1,585 for the three and twelve months ended July 31, 2016, respectively.		992			(1,856		)	(3,457		)	1,137
Acquisition and transition expenses (included in general and administrative expense)		—			—			—			99
Net loss attributable to noncontrolling interest (b)		(481		)	(6,708		)	(294		)	(6,620		)
Adjusted EBITDA (c)		19,224			49,516			230,063			344,730
Net cash interest expense (d)		(38,118		)	(33,604		)	(143,588		)	(132,860		)
Maintenance capital expenditures (e)		(6,417		)	(3,549		)	(16,935		)	(17,137		)
Cash paid for taxes		(282		)	(345		)	(310		)	(777		)
Proceeds from asset sales		3,789			51			7,952			6,023
Distributable cash flow attributable to equity investors (f)		(21,804		)	12,069			77,182			199,979
Distributable cash flow attributable to general partner and non-controlling interest		(436		)	241			1,544			4,000
Distributable cash flow attributable to common unitholders (g)		(21,368		)	11,828			75,638			195,979
Less: Distributions paid to common unitholders		9,715			50,226			78,936			202,119
Distributable cash flow shortage		$	(31,083	)	$	(38,398	)	$	(3,298	)	$	(6,140	)
Propane gallons sales
Retail - Sales to End Users		91,778			87,625			564,872			552,771
Wholesale - Sales to Resellers		56,218			56,129			226,251			226,121
Total propane gallons sales		147,996			143,754			791,123			778,892
Midstream operations barrels
Crude oil hauled		12,700			14,587			49,249			79,411
Crude oil sold		2,242			1,891			7,470			6,860

 

(a)  Non-cash stock-based compensation charges consist of the following:

 

		Three months ended						Twelve months ended
		July 31						July 31
		2017			2016			2017			2016
Operating expense		$	—		$	385		$	661		$	1,268
General and administrative expense		—			2,182			2,637			8,056
Total		$	—		$	2,567		$	3,298		$	9,324

 

(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 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 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, 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.

(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 interests. 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 .