Ferrellgas Partners’ Second-Quarter Results Improve Substantially; Adjusted EBITDA Increases 33%; Distributable Cash Flow Up 50%
OVERLAND PARK, Kan., March 7, 2013 /PRNewswire/ — Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation’s largest distributors of propane, today reported that results for the fiscal 2013 second quarter ended January 31 improved substantially, reflecting improved retail margins.
Adjusted EBITDA increased 33% to $116.1 million, from $87.5 million in the year-earlier quarter. Distributable cash flow to equity investors rose 50% to $93.1 million, from $62.2 million a year ago.
As expected revenues declined to $658.9 million, from $829.3 million, primarily attributable to a 39% decrease in the wholesale cost of propane from the year ago quarter. Benefiting from lower wholesale propane costs, gross profit rose 15% to $235.2 million or $.79 per gallon sold, in-line with both the trailing six and 12-month performance. Net earnings climbed 60% to $58.8 million, or $0.73 per unit, from $36.8 million, or $0.47 per unit.
During the second quarter, retail propane gallons sales were off less than 1% to 221.8 million gallons, while total volume sales declined approximately 2% to 298.5 million. The partnership continues to focus on more efficient and profitable deliveries of propane to its customers helping to offset the impact of unfavorable weather and economic conditions.
Operating expenses rose modestly to $105.6 million from $103.7 million, while general and administrative expense decreased modestly to $10.2 million. Excluding performance based incentive accruals, net operating and general and administrative expenses were down nearly $1.0 million, in-line on a cents-per-gallon sold basis with prior year results. Equipment lease expense rose to $3.8 million from $3.5 million.
Interest expense continued to reflect the partnership’s lower cost of borrowing, declining to $22.6 million, from $24.0 million the year before.
President and Chief Executive Officer Steve Wambold commented, “Second-quarter results represented the third consecutive quarter of positive momentum despite unusually warm weather. Temperatures during the quarter were slightly cooler than in the prior year, but still substantially warmer than normal. For the quarter, temperatures were more than 10% warmer than normal and in the key heating month of December temperatures were 1% warmer than the prior year or nearly 15% warmer than normal.
“For the trailing 12 month period, our Adjusted EBITDA performance was $237 million. As we continue to meet and exceed our operational objectives this year, we feel comfortable in increasing our previously forecasted fiscal 2013 Adjusted EBITDA range to $245 million to $260 million.” Adjusted EBITDA in fiscal 2012 was $193.1 million.
The partnership remains focused on growth both through organic and acquisition efforts, announcing three acquisitions in fiscal 2013 thus far. “The acquisition environment remains attractive, with strong interest from sellers,” commented Wambold.
For the first half of fiscal 2013, Adjusted EBITDA rose 42% to $147.7 million from $103.9 million. Net earnings totaled $41.0 million, or $0.51 per unit, versus $3.9 million, or $0.05 per unit. Revenue declined 25% to $1.0 billion primarily on lower wholesale propane costs, with gross profit increasing 13% to $375.2 million on higher retail margins.
Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., serves customers in all 50 states, the District of Columbia and Puerto Rico. Ferrellgas employees indirectly own more than 21 million common units of the partnership through an employee stock ownership plan. More information about the partnership can be found online at www.ferrellgas.com.
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 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, 2012, and other documents filed from time to time by these entities with the Securities and Exchange Commission.
Contact:
Tom Colvin, Investor Relations, (913) 661-1530
Scott Brockelmeyer, Media Relations, (913) 661-1830
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS January 31, 2013 July 31, 2012
------ ---------------- -------------
Current Assets:
Cash and cash
equivalents $12,109 $8,429
Accounts and notes receivable, net (including
$224,428 and $121,812 of
accounts receivable pledged as collateral at January
31, 2013
and July 31, 2012,
respectively) 238,558 124,004
Inventories 130,073 127,598
Prepaid expenses and
other current assets 30,069 29,315
Total Current Assets 410,809 289,346
Property, plant and
equipment, net 610,984 626,551
Goodwill 248,944 248,944
Intangible assets, net 183,659 189,118
Other assets, net 48,603 43,320
Total Assets $1,502,999 $1,397,279
========== ==========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Current Liabilities:
Accounts payable $103,379 $47,824
Short-term borrowings 72,678 95,730
Collateralized note
payable 134,000 74,000
Other current
liabilities 122,915 122,667
Total Current
Liabilities 432,972 340,221
Long-term debt (a) 1,081,388 1,059,085
Other liabilities 30,960 25,499
Contingencies and
commitments - -
Partners' Deficit:
Common unitholders (79,015,619 and 79,006,619 units
outstanding at
January 31, 2013 and
July 31, 2012,
respectively) 20,673 43,701
General partner unitholder (798,138 and 798,047
units outstanding at
January 31, 2013 and
July 31, 2012,
respectively) (59,863) (59,630)
Accumulated other
comprehensive loss (4,547) (13,159)
------ -------
Total Ferrellgas
Partners, L.P.
Partners' Deficit (43,737) (29,088)
Noncontrolling Interest 1,416 1,562
Total Partners' Deficit (42,321) (27,526)
Total Liabilities and
Partners' Deficit $1,502,999 $1,397,279
========== ==========
(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that
of Ferrellgas, L.P., is $182 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
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2013 AND 2012
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
---------- ---------- ----------
2013 2012 2013 2012 2013 2012
---- ---- ---- ---- ---- ----
Revenues:
Propane and other gas liquids
sales $583,074 $779,567 $918,355 $1,293,786 $1,785,514 $2,363,241
Other 75,791 49,705 103,419 73,912 207,654 186,488
------ ------ ------- ------ ------- -------
Total revenues 658,865 829,272 1,021,774 1,367,698 1,993,168 2,549,729
Cost of product sold:
Propane and other gas liquids
sales 376,236 600,600 589,893 1,003,722 1,188,057 1,797,164
Other 47,437 24,468 56,634 31,094 120,863 104,206
------ ------ ------ ------ ------- -------
Gross profit 235,192 204,204 375,247 332,882 684,248 648,359
Operating expense (including
$403 of non-recurring
severance
charges for the twelve month
period ended January 31, 2013) 105,599 103,741 202,033 203,152 397,861 407,611
Depreciation and amortization
expense 20,751 21,042 41,626 41,716 83,751 83,837
General and administrative
expense (including $279 of
non-recurring
severance charges for the
twelve month period ended
January 31, 2013) 10,190 10,344 18,964 19,708 36,372 50,476
Equipment lease expense 3,827 3,528 7,750 7,057 15,341 14,300
Non-cash employee stock
ownership plan compensation
charge 7,447 1,937 9,849 4,516 14,773 9,297
Non-cash stock and unit-based
compensation charge (b) 3,120 1,565 6,212 4,482 10,573 5,889
Loss (gain) on disposal of
assets and other 2,120 523 2,391 832 7,594 4,094
----- --- ----- --- ----- -----
Operating income 82,138 61,524 86,422 51,419 117,983 72,855
Interest expense (22,619) (24,046) (45,054) (47,433) (90,875) (96,046)
Loss on extinguishment of debt - - - - - (10,513)
Other income (expense), net 241 80 332 47 791 348
--- --- --- --- --- ---
Earnings (loss) before income
taxes 59,760 37,558 41,700 4,033 27,899 (33,356)
Income tax expense 917 771 653 141 1,640 666
--- --- --- --- ----- ---
Net earnings (loss) 58,843 36,787 41,047 3,892 26,259 (34,022)
Net earnings (loss)
attributable to noncontrolling
interest (a) 636 413 498 122 432 (58)
--- --- --- --- --- ---
Net earnings (loss)
attributable to Ferrellgas
Partners, L.P. 58,207 36,374 40,549 3,770 25,827 (33,964)
Less: General partner's
interest in net earnings
(loss) 3,138 364 405 38 258 (339)
----- --- --- --- --- ----
Common unitholders' interest in
net earnings (loss) $55,069 $36,010 $40,144 $3,732 $25,569 $(33,625)
======= ======= ======= ====== ======= ========
Earnings (loss) Per Unit
------------------------
Basic and diluted net earnings
(loss) per common unitholders'
interest $0.70 $0.47 $0.51 $0.05 $0.32 $(0.45)
Dilutive effect of two-class
method (c) 0.03 - - - - -
Adjusted net earnings (loss)
per unit available to common
unitholders $0.73 $0.47 $0.51 $0.05 $(0.04) $1.05
===== ===== ===== ===== ====== =====
Weighted average common units
outstanding 79,015.6 76,401.6 79,014.4 76,184.0 78,995.4 75,373.4
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
---------- ---------- ----------
2012 2011 2012 2011 2013 2012
---- ---- ---- ---- ---- ----
Net earnings (loss)
attributable to Ferrellgas
Partners, L.P. $58,207 $36,374 $40,549 $3,770 $25,827 $(33,964)
Income tax expense 917 771 653 141 1,640 666
Interest expense 22,619 24,046 45,054 47,433 90,875 96,046
Depreciation and amortization
expense 20,751 21,042 41,626 41,716 83,751 83,837
EBITDA 102,494 82,233 127,882 93,060 202,093 146,585
Loss on extinguishment of debt - - - - - 10,513
Non-cash employee stock
ownership plan compensation
charge 7,447 1,937 9,849 4,516 14,773 9,297
Non-cash stock and unit-based
compensation charge (b) 3,120 1,565 6,212 4,482 10,573 5,889
Loss (gain) on disposal of
assets and other 2,12 0 523 2,391 832 7,594 4,094
Other (income) expense, net (241) (80) (332) (47) (791) (348)
Nonrecurring severance costs - - - - 1,055 -
Nonrecurring litigation reserve
and related legal fees 537 892 1,225 892 1,225 12,345
Net earnings (loss)
attributable to noncontrolling
interest 636 413 498 122 432 (58)
Adjusted EBITDA (d) 116,113 87,483 147,725 103,857 236,954 188,317
Net cash interest expense (e) (21,123) (22,724) (42,198) (44,755) (85,043) (89,726)
Maintenance capital
expenditures (f) (3,255) (3,511) (7,530) (8,838) (14,736) (16,427)
Cash paid for taxes (27) (87) (45) (90) (719) (766)
Proceeds from asset sales 1,392 1,011 6,163 2,374 9,531 5,168
Distributable cash flow to
equity investors (g) $93,100 $62,172 $104,115 $52,548 $145,987 $86,566
======= ======= ======== ======= ======== =======
Propane gallons sales
Retail - Sales to End Users 221,796 223,977 346,679 356,825 609,172 642,445
Wholesale -Sales to Resellers 76,728 81,129 131,283 144,550 245,545 261,893
Total propane gallons sales 298,524 305,106 477,962 501,375 854,717 904,338
======= ======= ======= ======= ======= =======
(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(b) Non-cash stock and unit-based compensation charges consist of the following:
Three months ended Six months ended Twelve months ended
January 31 January 31 January 31
---------- ---------- ----------
2013 2012 2013 2012 2013 2012
---- ---- ---- ---- ---- ----
Operating expense $593 $673 $1,304 $1,840 $2,211 $2,335
General and administrative
expense 2,527 892 4,908 2,642 8,362 3,554
Total $3,120 $1,565 $6,212 $4,482 $10,573 $5,889
====== ====== ====== ====== ======= ======
(c) FASB guidance regarding
participating securities and the
two-class method requires the
calculation of net earnings
(loss) per common unitholders'
interest for each period
presented according to
distributions declared and
participation rights in
undistributed earnings, as if all
of the earnings or loss for the
period had been distributed. In
periods with undistributed
earnings above certain levels,
the calculation according to the
two-class method results in an
increased allocation of
undistributed earnings to the
general partner and a dilution of
the earnings to the limited
partners. Due to the seasonality
of the propane business, the
dilution effect of the guidance
on the two-class method
typically impacts only the three
months ending January 31. This
guidance did not result in a
dilutive effect for the three
months ended January 31, 2012 or
for the six and twelve months
ended January 31, 2013 and 2012.
(d) Adjusted EBITDA is calculated as
earnings (loss) before income tax
expense, interest expense,
depreciation and amortization
expense, loss on extinguishment
of debt, non-cash employee stock
ownership plan compensation
charge, non-cash stock and unit-
based compensation charge, loss
(gain) on disposal of assets and
other, other income (expense),
net, nonrecuring serverance
costs, nonrecurring litigation
reserve and related legal fees
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
inaccordance with GAAP.
(e) Net cash interest expense is the
sum of interest expense less non-
cash interest expense and other
income (expense), net. This
amount includes interest expense
related to the accounts
receivable securitization
facility.
Maintenance capital expenditures
include capitalized expenditures
for betterment and replacement of
property, plant and equipment.
(f)
(g) Management considers Distributable
cash flow to equity investors a
meaningful non-GAAP measure of
the partnership's ability to
declare and pay quarterly
distributions to common
unitholders. Distributable cash
flow to equity investors, as
management defines it, may not be
comparable to distributable cash
flow or similarly titled measures
used by other corporations and
partnerships.
SOURCE Ferrellgas Partners, L.P.
