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Ferrellgas Partners Reports Solid Start To Fiscal Year

OVERLAND PARK, Kan., Dec. 6, 2013 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported results for the fiscal 2014 first quarter ended October 31.

The partnership reported Adjusted EBITDA of $26.4 million and Distributable Cash Flow of $3.0 million producing trailing 12 month distributable cash flow coverage of 1.08x on cash distributions paid to unitholders.  Revenues grew to $415.0 million, up 14% from $362.9 million in the prior-year quarter, reflecting both an increase in wholesale propane costs and sales volumes.

Gross profit rose 2% to a near record $142.9 million from $140.1 million a year earlier on increased sales volumes partially offset by lower retail margins adversely affected by the higher wholesale cost of propane that rose 20% over the year before.

President and Chief Executive Officer Steve Wambold commented, "Fiscal 2014 is off to a solid start with nationwide winter temperatures forecasted near normal levels this coming season.  Based on these weather forecasts, our first-quarter results and the strength of our underlying fundamentals, we project Adjusted EBITDA between $265 million and $275 million for fiscal 2014."

Propane sales grew 6% to 191.0 million gallons based upon increased wholesale and agricultural demand in the quarter.  Correspondingly, operating expense increased to $103.0 million, from $96.4 million the year before, each representing $0.54 per gallon sold.  General and administrative expense was $9.5 million, compared to $8.1 million in the year prior, each excluding nonrecurring litigation reserve and related legal fees that totaled $1.3 million and $0.7 million, respectively.  The partnership also expensed $0.3 million in the quarter associated with corporate development activities that ultimately did not result in a transaction.  The seasonal first-quarter loss was $25.1 million, or $0.31 per unit, compared to $17.8 million, or $0.22 per unit.

Wambold commented further, "We were very active in our acquisition efforts this quarter bidding on several growth opportunities; successfully acquiring KanGas Corporation, located in Basehor, KS during November.  We will continue to aggressively seek operations that strategically enhance our business operations, while maintaining our strict acquisition criteria."  Wambold concluded, "We further positioned ourselves for growth with the successful offering of $325 million 6.75% senior notes due 2022, which were used to refinance our existing $300 million 9.125% senior notes due 2017, and refinancing of our credit facility.  These transactions immediately increased our borrowing capacity more than $100 million while at the same time materially reducing interest expense going forward; we expect to save approximately $3.0 million in fiscal 2014 and approximately $5.0 million annually thereafter as a result of these transactions."

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, 2013, 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 or tomcolvin@ferrellgas.com
Scott Brockelmeyer, Media Relations, (913) 661-1830 or scottbrockelmeyer@ferrellgas.com

 


FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)


ASSETS


October 31, 2013


July 31, 2013






Current Assets:





  Cash and cash equivalents


$                    8,435


$                   6,464

  Accounts and notes receivable, net (including $167,645 and $130,025 of accounts receivable pledged as collateral at October 31, 2013 and July 31, 2013, respectively)


178,549


 

131,791

  Inventories


140,795


117,116

  Prepaid expenses and other current assets


42,647


25,608

    Total Current Assets


370,426


280,979






Property, plant and equipment, net


587,065


589,727

Goodwill


253,362


253,362

Intangible assets, net


184,296


189,516

Other assets, net


46,125


42,444

    Total Assets


$             1,441,274


$            1,356,028











LIABILITIES AND PARTNERS' DEFICIT










Current Liabilities:





  Accounts payable


$                  87,014


$                 49,128

  Short-term borrowings


115,083


50,054

  Collateralized note payable


97,000


82,000

  Other current liabilities


126,943


121,102

    Total Current Liabilities


426,040


302,284






Long-term debt (a)


1,116,150


1,106,940

Other liabilities


33,977


33,431

Contingencies and commitments










Partners' Deficit: 





 Common unitholders (79,081,819 and 79,072,819 units outstanding at October 31, 2013 and July 31, 2013, respectively)


(85,633)


(28,931)

 General partner unitholder (798,806 and 798,715 units outstanding at October 31, 2013 and July 31, 2013, respectively)


(60,934)


(60,362)

 Accumulated other comprehensive income


11,155


1,697

    Total Ferrellgas Partners, L.P. Partners' Deficit


(135,412)


(87,596)

    Noncontrolling Interest


519


969

    Total Partners' Deficit


(134,893)


(86,627)

    Total Liabilities and Partners' Deficit


$             1,441,274


$            1,356,028






(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 AND TWELVE MONTHS ENDED OCTOBER 31, 2013 AND 2012

(in thousands, except per unit data)

(unaudited)




Three months ended 


Twelve months ended



October 31


October 31



2013


2012


2013


2012

Revenues:









  Propane and other gas liquids sales


$            382,223


$        335,281


$      1,786,209


$     1,982,007

  Other


32,807


27,628


241,379


181,568

    Total revenues


415,030


362,909


2,027,588


2,163,575










Cost of product sold:









  Propane and other gas liquids sales


258,754


213,657


1,137,358


1,412,421

  Other


13,346


9,197


148,605


97,894










Gross profit 


142,930


140,055


741,625


653,260










Operating expense (including $626 of severance costs for the twelve month period ended October 31, 2012)


102,966


96,434


416,591


396,003

Depreciation and amortization expense


20,215


20,875


82,684


84,042

General and administrative expense (including $429 of severance costs for the twelve month period ended October 31, 2012)


10,781


8,774


44,034


36,526

Equipment lease expense


4,066


3,923


16,126


15,042

Non-cash employee stock ownership plan compensation charge


3,043


2,402


16,410


9,263

Non-cash stock and unit-based compensation charge (b)


4,431


3,092


14,884


9,018

Loss on disposal of assets


357


271


10,507


5,997










Operating income (loss)


(2,929)


4,284


140,389


97,369










Interest expense


(22,093)


(22,435)


(88,803)


(92,302)

Loss on extinguishment of debt


(301)


-


(301)


0

Other income, net


216


91


690


630










Earnings (loss) before income taxes


(25,107)


(18,060)


51,975


5,697










Income tax expense (benefit)


(50)


(264)


2,069


1,494










Net earnings (loss)


(25,057)


(17,796)


49,906


4,203










Net earnings (loss) attributable to noncontrolling interest (a)


(214)


(138)


665


209










Net earnings (loss) attributable to Ferrellgas Partners, L.P.


(24,843)


(17,658)


49,241


3,994










Less: General partner's interest in net earnings (loss)


(248)


(177)


492


40










Common unitholders' interest in net earnings (loss)


$            (24,595)


$        (17,481)


$          48,749


$           3,954










Earnings (loss) Per Unit









Basic and diluted net earnings (loss) per common unitholders' interest


$                (0.31)


$            (0.22)


$              0.62


$             0.05










Weighted average common units outstanding


79,075.8


79,013.3


79,054.4


78,338.3











Supplemental Data and Reconciliation of Non-GAAP Items:




Three months ended 


Twelve months ended



October 31


October 31



2013


2012


2013


2012










Net earnings (loss) attributable to Ferrellgas Partners, L.P.


$            (24,843)


$        (17,658)


$           49,241


$            3,994

  Income tax expense (benefit)


(50)


(264)


2,069


1,494

  Interest expense


22,093


22,435


88,803


92,302

  Depreciation and amortization expense


20,215


20,875


82,684


84,042

EBITDA


17,415


25,388


222,797


181,832

  Loss on extinguishment of debt


301


-


301


-

  Non-cash employee stock ownership plan compensation charge


3,043


2,402


16,410


9,263

  Non-cash stock and unit-based compensation charge (b)


4,431


3,092


14,884


9,018

  Loss on disposal of assets


357


271


10,507


5,997

  Other income, net


(216)


(91)


(690)


(630)

  Severance costs


-


-


-


1,055

  Nonrecurring litigation reserve and related legal fees


1,325


688


2,205


1,580

  Net earnings (loss) attributable to noncontrolling interest


(214)


(138)


665


209

Adjusted EBITDA (c)


26,442


31,612


267,079


208,324

  Net cash interest expense (d)


(20,586)


(21,075)


(83,006)


(86,644)

  Maintenance capital expenditures (e)


(4,137)


(4,275)


(14,932)


(14,992)

  Cash paid for taxes


-


(18)


(532)


(779)

  Proceeds from asset sales


1,317


4,771


6,526


9,150

Distributable cash flow to equity investors (f)


$                3,036


$          11,015


$         175,135


$        115,059










Propane gallons sales









  Retail - Sales to End Users


125,252


124,883


638,292


611,353

  Wholesale - Sales to Resellers


65,779


54,555


274,671


249,946

  Total propane gallons sales


191,031


179,438


912,963


861,299



















(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 


Twelve months ended



October 31


October 31



2013


2012


2013


2012

      Operating expense


$                   798


$               711


$             2,478


$            2,291

      General and administrative expense


3,633


2,381


12,406


6,727

      Total


$                4,431


$            3,092


$           14,884


$            9,018



(c)

Adjusted EBITDA is calculated as earnings (loss) before income tax expense (benefit), 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 on disposal of assets, other income (expense), net, 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.

(d)

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.

(e)

Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.

(f)

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.

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