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): December 7, 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 December 7, 2017, Ferrellgas Partners, L.P. issued a press release regarding its financial results for the first fiscal quarter ended October 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 December 7, 2017, reporting its financial results for the first fiscal quarter ended October 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.

 

2

 

Exhibit Index

 

Exhibit No.		Description
99.1		Press release of Ferrellgas Partners, L.P. dated December 7, 2017, reporting its financial results for the first fiscal quarter ended October 31, 2017.

 

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:	December 7, 2017	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:	December 7, 2017	By	/s/ Doran N. Schwartz
			Doran N. Schwartz
			Chief Financial Officer and Sole Director
		FERRELLGAS, L.P.
		By Ferrellgas, Inc. (General Partner)
Date:	December 7, 2017	By	/s/ Doran N. Schwartz
			Doran N. Schwartz
			Senior Vice President; Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)
		FERRELLGAS FINANCE CORP.
Date:	December 7, 2017	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 FIRST QUARTER FISCAL 2018

 

OVERLAND PARK, Kan., December 7, 2017 — Ferrellgas Partners, L.P. (NYSE: FGP) (“Ferrellgas” or the “Company”) today reported financial results for its first fiscal quarter ended October 31, 2017. The Company reported a net loss attributable to Ferrellgas Partners, L.P. of $47.9 million, or $0.49 per common unit, compared to a net loss attributable to Ferrellgas Partners, L.P. of $43.1 million, or $0.44 per common unit, for the prior year period.

 

The Company reported that total gallons sold in the first quarter increased more than 9.5 million gallons over the same period in the prior year, which partially offset the effects of lower margins as the Company aggressively competes for new customers.  The Company reported adjusted EBITDA of $26.2 million, compared to $29.0 million in the prior year period.

 

At the end of this first quarter of the Company’s fiscal year, its leverage ratio was 7.57x reflecting peak working capital requirements. 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.

 

“Ferrellgas has entered the winter heating season with renewed vigor, and while we are optimistic about temperatures nearer to the norm we are focusing on several initiatives that will increase EBITDA regardless of weather,” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our Retail propane operations continue to add customers in significant numbers across all segments positioning the Company for potential future volume and cash flow growth. Further, we’ve closed on a number of accretive, bolt-on acquisitions that complement our strategic footprint. In our Blue Rhino business, we are reconfiguring our production facilities footprint in order to reduce freight costs and streamline production —initiatives that are particularly important as we added more than 2,300 new Blue Rhino locations in Q1 with more added since quarter end.  Blue Rhino growth is also important to us because is it less weather dependent. As for Midstream operations, the business has stabilized and is now focused on growth particularly in its trucking operations. The business exited a barge lease that was a significant headwind for EBITDA, and we are evaluating certain underperforming assets to find the best way to move forward with them.”

 

Mr. Ferrell continued, “These initiatives are the product of a leaner, more agile organization with a flatter management structure. I like our management team including the recent addition of Doran Schwartz as our Chief Financial Officer complementing an already strong and seasoned leadership team.  All of our employees are focused and working hard to generate more cash flow.  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 October 31, 2017, 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

Tom Colvin, Investor Relations — [email protected], 816-792-6908

 

 

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

 

		October 31, 2017			July 31, 2017
ASSETS
Current Assets:
Cash and cash equivalents		$	7,100		$	5,760
Accounts and notes receivable, net (including $137,244 and $109,407 of accounts receivable pledged as collateral at October 31, 2017 and July 31, 2017, respectively)		191,428			165,084
Inventories		112,338			92,552
Prepaid expenses and other current assets		68,068			33,388
Total Current Assets		378,934			296,784
Property, plant and equipment, net		738,729			731,923
Goodwill, net		256,103			256,103
Intangible assets, net		250,629			251,102
Other assets, net		80,559			74,057
Total Assets		$	1,704,954		$	1,609,969
LIABILITIES AND PARTNERS’ DEFICIT
Current Liabilities:
Accounts payable		$	99,198		$	85,561
Short-term borrowings		263,200			59,781
Collateralized note payable		88,000			69,000
Other current liabilities		200,879			126,224
Total Current Liabilities		651,277			340,566
Long-term debt (a)		1,812,155			1,995,795
Other liabilities		34,799			31,118
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at October 31, 2017 and July 31, 2017)		(754,456		)	(701,188		)
General partner unitholder (989,926 units outstanding at October 31, 2017 and July 31, 2017)		(67,528		)	(66,991		)
Accumulated other comprehensive income		32,915			14,601
Total Ferrellgas Partners, L.P. Partners’ Deficit		(789,069		)	(753,578		)
Noncontrolling Interest		(4,208		)	(3,932		)
Total Partners’ Deficit		(793,277		)	(757,510		)
Total Liabilities and Partners’ Deficit		$	1,704,954		$	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						Twelve months ended
		October 31						October 31
		2017			2016			2017			2016
Revenues:
Propane and other gas liquids sales		$	302,758		$	242,399		$	1,378,771		$	1,199,466
Midstream operations		120,760			108,044			479,419			539,612
Other		31,137			29,099			147,200			208,685
Total revenues		454,655			379,542			2,005,390			1,947,763
Cost of sales:
Propane and other gas liquids sales		179,515			119,212			754,458			561,894
Midstream operations		108,125			94,642			442,922			412,272
Other		13,702			11,746			69,223			123,535
Gross profit		153,313			153,942			738,787			850,062
Operating expense		110,462			104,992			437,221			447,921
Depreciation and amortization expense		25,732			26,202			102,881			139,736
General and administrative expense		13,164			12,482			47,662			48,821
Equipment lease expense		6,741			7,349			28,516			29,150
Non-cash employee stock ownership plan compensation charge		3,962			3,754			15,296			26,093
Non-cash stock-based compensation charge (a)		—			1,881			1,417			3,083
Asset impairments		—			—			—			628,802
Loss on asset sales and disposal		895			6,423			8,929			22,341
Operating income (loss)		(7,643		)	(9,141		)	96,865			(495,885		)
Interest expense		(40,807		)	(35,428		)	(157,864		)	(139,577		)
Other income, net		511			508			1,477			740
Loss before income taxes		(47,939		)	(44,061		)	(59,522		)	(634,722		)
Income tax expense (benefit)		377			(590		)	(176		)	218
Net loss		(48,316		)	(43,471		)	(59,346		)	(634,940		)
Net loss attributable to noncontrolling interest (b)		(401		)	(398		)	(297		)	(6,245		)
Net loss attributable to Ferrellgas Partners, L.P.		(47,915		)	(43,073		)	(59,049		)	(628,695		)
Less: General partner’s interest in net loss		(479		)	(431		)	(590		)	(6,287		)
Common unitholders’ interest in net loss		$	(47,436	)	$	(42,642	)	$	(58,459	)	$	(622,408	)
Loss Per Common Unit
Basic and diluted net loss per common unitholders’ interest		$	(0.49	)	$	(0.44	)	$	(0.60	)	$	(6.35	)
Weighted average common units outstanding - basic		97,152.7			97,457.6			97,443.7			97,949.0

 

 

Supplemental Data and Reconciliation of Non-GAAP Items:

 

		Three months ended						Twelve months ended
		October 31						October 31
		2017			2016			2017			2016
Net loss attributable to Ferrellgas Partners, L.P.		$	(47,915	)	$	(43,073	)	$	(59,049	)	$	(628,695	)
Income tax expense (benefit)		377			(590		)	(176		)	218
Interest expense		40,807			35,428			157,864			139,577
Depreciation and amortization expense		25,732			26,202			102,881			139,736
EBITDA		19,001			17,967			201,520			(349,164		)
Non-cash employee stock ownership plan compensation charge		3,962			3,754			15,296			26,093
Non-cash stock based compensation charge (a)		—			1,881			1,417			3,083
Asset impairments		—			—			—			628,802
Loss on asset sales and disposal		895			6,423			8,929			22,341
Other income, net		(511		)	(508		)	(1,477		)	(740		)
Severance expense $358 and $414 included in operating expense for the three months ended period October 31, 2017 and 2016, respectively. Also includes $1,305 and $1,055 included in general and administrative expense for the three months ended October 31, 2017 and 2016, respectively. Includes $358 and $938 in operating expense for the twelve months ended October 31, 2017 and 2016, respectively. Also includes $1,795 and $1,128 in general and administrative expense for the twelve months ended October 31, 2017 and 2016, respectively.		1,663			1,469			2,153			2,066
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $1,607 and $1,839 included in cost of sales for the three and twelve months ended October 31, 2017, respectively, and $308 and $(140) for the three and twelve months ended October 31, 2016, respectively. Also includes $(2,120) included in operating expense for the twelve months ended October 31, 2017, and (1,877) and (1,330) for the three and twelve months ended October 31, 2016, respectively.		1,607			(1,569		)	(281		)	(1,470		)
Acquisition and transition expenses (included in general and administrative expense)		—			—			—			84
Net loss attributable to noncontrolling interest (b)		(401		)	(398		)	(297		)	(6,245		)
Adjusted EBITDA (c)		26,216			29,019			227,260			324,850
Net cash interest expense (d)		(38,057		)	(33,618		)	(148,027		)	(133,976		)
Maintenance capital expenditures (e)		(8,704		)	(3,322		)	(22,317		)	(14,244		)
Cash paid for taxes		(6		)	(1		)	(315		)	(778		)
Proceeds from asset sales		1,208			1,720			7,440			6,730
Distributable cash flow attributable to equity investors (f)		(19,343		)	(6,202		)	64,041			182,582
Distributable cash flow attributable to general partner and non-controlling interest		(387		)	(124		)	1,281			3,652
Distributable cash flow attributable to common unitholders		(18,956		)	(6,078		)	62,760			178,930
Less: Distributions paid to common unitholders		9,715			49,791			38,860			200,467
Distributable cash flow excess/(shortage)		$	(28,671	)	$	(55,869	)	$	23,900		$	(21,537	)
Propane gallons sales
Retail - Sales to End Users		119,294			111,188			572,978			552,986
Wholesale - Sales to Resellers		53,429			51,990			227,690			227,545
Total propane gallons sales		172,723			163,178			800,668			780,531
Midstream operations barrels
Salt water volume processed		4,940			3,703			18,752			15,512
Crude oil hauled		12,150			11,264			50,135			66,411
Crude oil sold		1,829			1,792			7,507			7,117

 

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

 

			Three months ended						Twelve months ended
			October 31						October 31
			2017			2016			2017			2016
	Operating expense		$	—		$	94		567			$	144
	General and administrative expense		—			1,787			850			2,939
	Total		$	—		$	1,881		$	1,417		$	3,083

 

(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, becauseit 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 .