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Ferrellgas Partners’ Second-Quarter Results Improve Substantially; Adjusted EBITDA Increases 33%; Distributable Cash Flow Up 50%

March 7, 2013

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.


Source: PR Newswire