Ferrellgas Partners, L.P. Reports Fiscal Third Quarter 2019 Results

June 10, 2019 7:01 AM

LIBERTY, Mo., June 10, 2019 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE: FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal third quarter ended April 30, 2019.

For the quarter, the Company reported a net earnings attributable to Ferrellgas Partners, L.P. of $20.5 million, or $.21 per common unit, compared to prior year period net loss of $10.9 million, or $.11 per common unit.

Adjusted EBITDA, a non-GAAP measure, was $88.6 million compared to $86.9 million in the prior year. The following table represents the contribution to adjusted EBITDA from ongoing propane operations as well as from assets that were sold during 2018.

(in millions)Q3 2019 Q3 2018
Propane Operations and Corporate Support$88.6 $84.6
Results from Assets Sold in 2018- $2.3
Consolidated Adjusted EBITDA$88.6 $86.9

On a trailing twelve month basis, adjusted EBITDA from ongoing propane operations and corporate support as of April 30, 2019 is $234.2 million compared to $229.4 million as of January 31, 2019.

The Company’s propane operations reported that total gallons sold of 264.1 million were 7% higher than prior year. Margin cents per gallon were 1.7¢, or 2.2 percent higher than the prior year despite increased competitive pressure in the tank exchange business. The Company continues its aggressive approach to gaining market share. This strategic focus resulted in nearly 26,000 new customers, or approximately 4 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 6 percent from prior year to over 54,300 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $18.3 million. The Company’s ongoing commitment to investing in the business led to higher operating expenses during the quarter which were largely associated with serving nearly 26,000 new customers and 3,000 new tank exchange locations. As a result of this investment and the growth in sales volumes, operating, general and administrative expenses in our Propane segment were $9.3 million higher than the prior year.

Liquidity of $292.3 million at April 30, 2019 resulted from $246.9 million of available borrowing capacity on the Company’s secured credit facility and accounts receivable securitization facility as well as $45.4 million of cash.

As previously announced, the Company indefinitely suspended its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in the senior unsecured notes due 2020. Additionally, as the Company continues to evaluate options to address leverage, the Company does not intend to comment further on its progress in this regard or on potential options until further disclosure is appropriate or required by law. For that reason, and in view of the information the Company otherwise makes available in earnings releases and quarterly and annual reports, the Company is suspending the practice of holding conference calls with investors, analysts and other interested parties in connection with periodic reporting of financial results for completed periods.

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. 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 27, 2018. 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, 2018, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

Investor Relations – InvestorRelations@ferrellgas.com

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS April 30, 2019 July 31, 2018
Current Assets:
Cash and cash equivalents $45,434 $119,311
Accounts and notes receivable, net (including $160,959 and $120,079 of accounts
receivable pledged as collateral at April 30, 2019 and July 31, 2018, respectively) 157,229 126,054
Inventories 78,449 83,694
Prepaid expenses and other current assets 25,489 34,862
Total Current Assets 306,601 363,921
Property, plant and equipment, net 603,923 557,723
Goodwill, net 247,508 246,098
Intangible assets, net 109,634 120,951
Other assets, net 62,326 74,588
Total Assets $1,329,992 $1,363,281
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable $41,408 $46,820
Short-term borrowings - 32,800
Collateralized note payable 62,000 58,000
Other current liabilities 160,507 142,025
Total Current Liabilities 263,915 279,645
Long-term debt (a) 2,084,506 2,078,637
Other liabilities 35,879 39,476
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at April 30, 2019 and July 31, 2018) (976,902) (978,503)
General partner unitholder (989,926 units outstanding at April 30, 2019 and July 31, 2018) (69,776) (69,792)
Accumulated other comprehensive income (loss) (846) 20,510
Total Ferrellgas Partners, L.P. Partners' Deficit (1,047,524) (1,027,785)
Noncontrolling interest (6,784) (6,692)
Total Partners' Deficit (1,054,308) (1,034,477)
Total Liabilities and Partners' Deficit $1,329,992 $1,363,281
(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 Nine months ended Twelve months ended
April 30 April 30 April 30
2019 2018 2019 2018 2019 2018
Revenues:
Propane and other gas liquids sales$459,556 $451,302 $1,344,634 $1,346,299 $1,641,311 $1,615,500
Midstream operations - 22,595 - 260,631 21,688 395,827
Other 20,069 41,913 60,677 118,691 89,833 147,670
Total revenues 479,625 515,810 1,405,311 1,725,621 1,752,832 2,158,997
Cost of sales:
Propane and other gas liquids sales 250,389 260,419 766,056 802,852 936,618 945,279
Midstream operations - 14,518 - 229,710 25,849 358,716
Other 2,320 19,850 8,789 54,339 23,104 68,393
Gross profit 226,916 221,023 630,466 638,720 767,261 786,609
Operating expense 119,991 116,579 351,541 350,757 472,532 460,234
Depreciation and amortization expense 20,617 25,348 59,214 76,565 84,444 102,370
General and administrative expense 11,516 11,678 42,037 39,733 56,705 52,824
Equipment lease expense 8,319 7,133 24,597 20,828 32,041 27,917
Non-cash employee stock ownership plan compensation charge (4) 2,738 4,688 10,731 7,816 14,423
Asset impairments - - - 10,005 - 10,005
Loss on asset sales and disposals 1,683 6,270 8,403 46,414 149,388 52,010
Operating income (loss) 64,794 51,277 139,986 83,687 (35,665) 66,826
Interest expense (44,162) (40,375) (132,931) (123,855) (177,543) (164,233)
Other income (expense), net 251 227 356 1,422 (138) 1,463
Earnings (loss) before income tax benefit 20,883 11,129 7,411 (38,746) (213,346) (95,944)
Income tax expense (benefit) 123 67 284 282 (2,676) (667)
Net earnings (loss) 20,760 11,062 7,127 (39,028) (210,670) (95,277)
Net earnings (loss) attributable to noncontrolling interest (b) 299 201 337 (131) (1,776) (612)
Net earnings (loss) attributable to Ferrellgas Partners, L.P. 20,461 10,861 6,790 (38,897) (208,894) (94,665)
Less: General partner's interest in net earnings (loss) 205 109 68 (389) (2,089) (947)
Common unitholders' interest in net earnings (loss)$20,256 $10,752 $6,722 $(38,508) $(206,805) $(93,718)
Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest$0.21 $0.11 $0.07 $(0.40) $(2.13) $(0.96)
Weighted average common units outstanding - basic 97,152.7 97,152.7 97,152.7 97,152.7 97,152.7 97,152.7
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Nine months ended Twelve months ended
April 30 April 30 April 30
2019 2018 2019 2018 2019 2018
Net earnings (loss) attributable to Ferrellgas Partners, L.P.$20,461 $10,861 $6,790 $(38,897) $(208,894) $(94,665)
Income tax expense (benefit) 123 67 284 282 (2,676) (667)
Interest expense 44,162 40,375 132,931 123,855 177,543 164,233
Depreciation and amortization expense 20,617 25,348 59,214 76,565 84,444 102,370
EBITDA 85,363 76,651 199,219 161,805 50,417 171,271
Non-cash employee stock ownership plan compensation charge (4) 2,738 4,688 10,731 7,816 14,423
Asset impairments - - - 10,005 - 10,005
Loss on asset sales and disposal 1,683 6,270 8,403 46,414 149,388 52,010
Other income (expense), net (251) (227) (356) (1,422) 138 (1,463)
Severance costs $690 included in operating costs for the nine and twelve months ended period April 30, 2019 and $910 included in general and administrative costs for the nine and twelve months ended April 30, 2019. Also includes $358 in operating costs for the nine and twelve months ended period April 30, 2018 and $1,305 included in general and administrative costs for the nine and twelve months ended April 30, 2018. - - 1,600 1,663 1,600 1,663
Legal fees and settlements 1,471 1,289 10,643 3,407 13,301 3,407
Multi-employer pension plan withdrawal settlement - - 1,524 - 1,524 -
Exit costs associated with contracts - Midstream dispositions - - - - 11,804 -
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(759) included in operating expense for the twelve months ended April 30, 2018. Also includes $1,293 and $3,044 included in midstream operations cost of sales for the nine and twelve months ended April 30, 2018, respectively. - - - 1,293 - 2,285
Net earnings (loss) attributable to noncontrolling interest (b) 299 201 337 (131) (1,776) (612)
Adjusted EBITDA (c) 88,561 86,922 226,058 233,765 234,212 252,989
Net cash interest expense (d) (40,747) (37,873) (123,325) (115,664) (168,553) (153,782)
Maintenance capital expenditures (e) (13,506) (5,741) (45,038) (19,085) (53,570) (25,502)
Cash refund from (paid for) taxes (23) 470 (21) 458 (188) 176
Proceeds from certain asset sales 456 148 2,416 4,355 7,264 8,144
Distributable cash flow attributable to equity investors (f) 34,741 43,926 60,090 103,829 19,165 82,025
Distributable cash flow attributable to general partner and non-controlling interest 695 879 1,202 2,077 383 1,641
Distributable cash flow attributable to common unitholders (g) 34,046 43,047 58,888 101,752 18,782 80,384
Less: Distributions paid to common unitholders - 9,715 9,715 29,146 19,430 38,861
Distributable cash flow excess/(shortage)$34,046 $33,332 $49,173 $72,606 $(648) $41,523
Propane gallons sales
Retail - Sales to End Users 204,441 189,183 573,152 543,548 666,572 635,326
Wholesale - Sales to Resellers 59,641 57,121 179,256 185,492 233,974 241,710
Total propane gallons sales 264,082 246,304 752,408 729,040 900,546 877,036

(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, asset impairments, loss on asset sales and disposal, other income (expense), net, severance costs, legal fees and settlements, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, unrealized (non-cash) losses (gains) on changes in fair value of derivatives, 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 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. 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.

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