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Ferrellgas Partners, L.P. Reports First Quarter Fiscal 2020 Results

  • Gross Profit increased by $10.4 million, or 7.2 percent, compared to the prior year period as a result of a 3 percent increase in retail customers and a 4 percent increase in tank exchange selling locations combined with a 4.2¢ increase in margin cpg.
  • Propane sales volume for the quarter increased 1.3 million gallons despite weather that was 4 percent warmer than the prior year as a result of the growth in customer count.
  • Successfully completed two accretive retail acquisitions during the quarter.

/EIN News/ -- OVERLAND PARK, Kan., Dec. 06, 2019 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its first quarter ended October 31, 2019.

For the quarter, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $45.3 million, or $0.46 per common unit, compared to prior year period net loss of $57.0 million, or $0.58 per common unit.  Adjusted EBITDA, a non-GAAP measure, for the quarter was $25.1 million compared to $17.8 million in the prior year’s first quarter, a 41 percent increase.

The Company’s propane operations reported that total gallons sold for the quarter were 179.9 million, up from 178.6 million gallons in the prior year. Margin cents per gallon were 4.2¢, or 5.7 percent higher than the prior year despite increased competitive pressures in the tank exchange business. The Company continues its aggressive operating strategies in gaining market share.  This strategic focus resulted in over 18,000 new customers, or approximately 3 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 4 percent from prior year to over 55,900 locations. Continued commitment to operating expense control during this growth period resulted in a $14.1 million in Operating Income despite a mere $4.2 million increase, or 3.8 percent, in operating expenses during the quarter.

The Company also successfully completed two accretive retail acquisitions in Colorado and New York during the quarter. 

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 June of 2020.  Additionally, Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to address our upcoming debt maturities.  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 has suspended 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 October 15, 2019. 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, 2019, 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   October 31, 2019   July 31, 2019
         
Current Assets:        
Cash and cash equivalents   $ 29,805     $ 11,054  
Accounts and notes receivable, net (including $118,164 and $106,145 of accounts        
receivable pledged as collateral at October 31, 2019 and July 31, 2019, respectively)     123,841       107,596  
Inventories     84,995       80,454  
Prepaid expenses and other current assets     50,582       42,275  
Total Current Assets     289,223       241,379  
         
Property, plant and equipment, net     598,887       596,723  
Goodwill, net     247,195       247,195  
Intangible assets, net     108,493       108,557  
Operating lease right-of-use asset     124,047       -  
Other assets, net     75,443       69,105  
Total Assets   $ 1,443,288     $ 1,262,959  
         
         
LIABILITIES AND PARTNERS' DEFICIT        
         
Current Liabilities:        
Accounts payable   $ 44,421     $ 33,364  
Short-term borrowings     80,000       43,000  
Collateralized note payable     73,000       62,000  
Current portion of long-term debt (a)     358,080       631,756  
Current operating lease liabilities     33,832       -  
Other current liabilities     187,731       138,237  
Total Current Liabilities     777,064       908,357  
         
Long-term debt     1,731,920       1,457,004  
Operating lease liabilities     88,773       -  
Other liabilities     36,915       36,536  
Contingencies and commitments        
         
Partners Deficit:        
Common unitholders (97,152,665 units outstanding at October 31, 2019 and July 31, 2019)     (1,091,704 )     (1,046,245 )
General partner unitholder (989,926 units outstanding at October 31, 2019 and July 31, 2019)     (70,935 )     (70,476 )
Accumulated other comprehensive loss     (20,598 )     (14,512 )
Total Ferrellgas Partners, L.P. Partners' Deficit     (1,183,237 )     (1,131,233 )
Noncontrolling interest     (8,147 )     (7,705 )
Total Partners' Deficit     (1,191,384 )     (1,138,938 )
Total Liabilities and Partners' Deficit   $ 1,443,288     $ 1,262,959  
         
(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
      2019       2018       2019       2018  
Revenues:                
Propane and other gas liquids sales   $ 273,385     $ 334,966     $ 1,547,277     $ 1,675,184  
Midstream operations         -       -       161,559  
Other     19,829       17,343       78,020       134,053  
Total revenues     293,214       352,309       1,625,297       1,970,796  
                 
Cost of sales:                
Propane and other gas liquids sales     134,028       204,136       832,408       998,035  
Midstream operations         0       0       147,434  
Other     3,681       3,047       12,040       57,999  
                 
Gross profit     155,505       145,126       780,849       767,328  
                 
Operating expense - personnel, vehicle, plant & other     114,543       110,331       473,080       471,617  
Depreciation and amortization expense     19,219       18,992       79,073       95,055  
General and administrative expense     9,695       14,179       55,510       55,416  
Operating expense - equipment lease expense     8,388       7,863       33,598       29,394  
Non-cash employee stock ownership plan compensation charge     795       2,748       3,740       12,645  
Asset impairments         -       -       10,005  
Loss on asset sales and disposals     2,235       4,504       8,699       191,008  
                 
Operating income (loss)     630       (13,491 )     127,149       (97,812 )
                 
Interest expense     (45,697 )     (43,878 )     (179,438 )     (171,538 )
Other income (expense), net     (132 )     19       218       436  
                 
Loss before income tax benefit     (45,199 )     (57,350 )     (52,071 )     (268,914 )
                 
Income tax expense (benefit)     518       158       683       (2,897 )
                 
Net loss     (45,717 )     (57,508 )     (52,754 )     (266,017 )
                 
Net loss attributable to noncontrolling interest (b)     (373 )     (493 )     (178 )     (2,336 )
                 
Net loss attributable to Ferrellgas Partners, L.P.     (45,344 )     (57,015 )     (52,576 )     (263,681 )
                 
Less: General partner's interest in net loss     (453 )     (570 )     (525 )     (2,637 )
                 
Common unitholders' interest in net loss   $ (44,891 )   $ (56,445 )   $ (52,051 )   $ (261,044 )
                 
Loss Per Common Unit                
Basic and diluted net earnings loss per common unitholders' interest   $ (0.46 )   $ (0.58 )   $ (0.54 )   $ (2.69 )
                 
Weighted average common units outstanding - basic     97,152.7       97,152.7       97,152.7       97,152.7  
                 
                 
Supplemental Data and Reconciliation of Non-GAAP Items:
                 
    Three months ended   Twelve months ended
    October 31   October 31
      2019       2018       2019       2018  
                 
                 
Net loss attributable to Ferrellgas Partners, L.P.   $ (45,344 )   $ (57,015 )   $ (52,576 )   $ (263,681 )
Income tax expense (benefit)     518       158       683       (2,897 )
Interest expense     45,697       43,878       179,438       171,538  
Depreciation and amortization expense     19,219       18,992       79,073       95,055  
EBITDA     20,090       6,013       206,618       15  
Non-cash employee stock ownership plan compensation charge     795       2,748       3,740       12,645  
Asset impairments     -       -       -       10,005  
Loss on asset sales and disposal     2,235       4,504       8,699       191,008  
Other income (expense), net     132       (19 )     (218 )     (436 )
Severance expense includes $690  in operating expense and $910 in general and administrative expense                
for the twelve months ended period ending October 31, 2018.     -       -       1,600       -  
Legal fees and settlements related to non-core businesses     2,043       3,564       16,843       9,629  
Multi-employer pension plan withdrawal settlement     -       1,524       -       1,524  
Exit costs associated with contracts - Midstream dispositions     -       -       -       11,804  
Unrealized (non-cash) gains on changes in fair value of derivatives $(314) included in                
midstream operations cost of sales for the twelve months ended October 31, 2018.     -       -       -       (314 )
Lease accounting standard adjustment     170           170      
Net loss attributable to noncontrolling interest (b)     (373 )     (493 )     (178 )     (2,336 )
Adjusted EBITDA (c)     25,092       17,841       237,274       233,544  
Net cash interest expense (d)     (42,583 )     (40,899 )     (166,474 )     (163,734 )
Maintenance capital expenditures (e)     (6,467 )     (5,385 )     (47,856 )     (24,298 )
Cash refund from (paid for) taxes     -       (2 )     (139 )     295  
Proceeds from certain asset sales     835       1,061       4,023       9,056  
Distributable cash flow attributable to equity investors (f)     (23,123 )     (27,384 )     26,828       54,863  
Distributable cash flow attributable to general partner and non-controlling interest     (462 )     (548 )     537       1,097  
Distributable cash flow attributable to common unitholders (g)     (22,661 )     (26,836 )     26,291       53,766  
Less: Distributions paid to common unitholders     -       9,715       -       38,861  
Distributable cash flow excess/(shortage)   $ (22,661 )   $ (36,551 )   $ 26,291     $ 14,905  
                 
Propane gallons sales                
Retail - Sales to End Users     129,901       129,667       672,500       647,341  
Wholesale - Sales to Resellers     50,039       48,960       233,645       235,741  
Total propane gallons sales     179,940       178,627       906,145       883,082  
                 
                                 
(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, asset impairments, loss on asset sales and disposals, other income (expense), net, severance   
expense, legal fees and settlements related to non-core businesses, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions,  unrealized (non-cash) gains   
on changes in fair value  of derivatives, lease accounting standard adjustment and net 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 .   
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