Ferrellgas Partners' Posts Significantly Improved First-Quarter Results; Adjusted EBITDA Nearly Doubles

Dec 10, 2012, 07:00 ET from Ferrellgas Partners, L.P.

OVERLAND PARK, Kan., Dec. 10, 2012 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane today reported results for the fiscal 2013 first quarter ended October 31.  The improved financial performance reflects both margin expansion to more historic levels and the partnership's focus on further cost reductions throughout its operations.

Adjusted EBITDA increased 93% to a near-record $31.6 million, from $16.4 million in the year-earlier quarter. Distributable cash flow improved nearly $21 million to a record $11.0 million for the same time period.  Gross profit rose 9% to a near-record $140.1 million, from $128.7 million a year earlier. Based on these results, the seasonal first-quarter loss decreased 46% to $17.8 million, or $0.22 per unit, from $32.9 million, or $0.42 per unit.

As expected, lower wholesale propane prices caused both revenues and cost of product sold to decline.  Revenues were $362.9 million, down 33% compared to $538.4 million in the prior year quarter, while total cost of product sold was $222.9 million, down 46% compared to $409.7 million in the prior year period.  

President and Chief Executive Officer Steve Wambold commented, "Fiscal 2013 is off to an encouraging start, with the positive momentum of fiscal 2012's fourth quarter carrying over into the first quarter.  We continue to focus on both profitable growth while driving operational efficiencies in our business through more optimal routing and scheduling of our propane deliveries."

Propane sales were 179.4 million gallons, reduced by 9% in the quarter primarily due to the partnership's focus on optimizing delivery efficiencies to residential customers.  Correspondingly, operating expense decreased 3% to $96.4 million, from $99.4 million the year before.  General and administrative expense declined 6% to $8.8 million, from $9.4 million in the year prior.

Wambold pointed out, "The full impact of our cost-reduction initiative was even greater on an apples-to-apples basis, as excluding performance-based incentive compensation operating expense and general and administrative expense were down 5% and 13%, respectively." He added, "We remain on track to surpass our announced $20 million cost savings goal by the end of fiscal 2013."

Wambold continued, "Based on the strength of our underlying fundamentals and a belief that winter temperatures will be more seasonal this year than last, we are projecting Adjusted EBITDA of between $240 million and $260 million for fiscal 2013. Although weather always plays a key role in our performance, we believe that fundamental changes we have made to our pricing and cost structure make financial results in this range possible assuming more normal variations in winter heating season temperatures."

Contributing to the optimistic outlook is a growing pipeline of potential acquisitions, Wambold pointed out. "We made two acquisitions in the first quarter, Capital City Propane, headquartered in Sacramento, and El Paso-based Flores Gas. These acquisitions were perfect geographic fits, strengthening our presence in the key markets of California and Texas, as well as meeting our criterion of being immediately accretive to earnings."

Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., serves approximately one million customers in all 50 states, the District of Columbia and Puerto Rico. Ferrellgas employees indirectly own 21.7 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

October 31, 2012

July 31, 2012

Current Assets:

  Cash and cash equivalents

$                 8,678

$         8,429

  Accounts and notes receivable, net (including $139,433 and $121,812 of accounts receivable pledged as collateral at October 31, 2012 and July 31, 2012, respectively)

146,946

124,004

  Inventories

136,813

127,598

  Prepaid expenses and other current assets

36,681

29,315

    Total Current Assets

329,118

289,346

Property, plant and equipment, net

616,921

626,551

Goodwill

248,944

248,944

Intangible assets, net

187,577

189,118

Other assets, net

46,448

43,320

    Total Assets

$          1,429,008

$  1,397,279

LIABILITIES AND PARTNERS' DEFICIT

Current Liabilities:

  Accounts payable

$               67,865

$       47,824

  Short-term borrowings

117,897

95,730

  Collateralized note payable

82,000

74,000

  Other current liabilities

132,076

122,667

    Total Current Liabilities

399,838

340,221

Long-term debt (a)

1,069,261

1,059,085

Other liabilities

29,476

25,499

Contingencies and commitments

-

-

Partners' Deficit: 

 Common unitholders (79,015,619 and 79,006,619 units outstanding at October 31, 2012 and July 31, 2012, respectively)

(7,799)

43,701

 General partner unitholder (798,138 and 798,047 units outstanding at October 31, 2012 and July 31, 2012, respectively)

(60,150)

(59,630)

 Accumulated other comprehensive loss

(2,795)

(13,159)

    Total Ferrellgas Partners, L.P. Partners' Deficit

(70,744)

(29,088)

    Noncontrolling Interest

1,177

1,562

    Total Partners' Deficit

(69,567)

(27,526)

    Total Liabilities and Partners' Deficit

$          1,429,008

$  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 AND TWELVE MONTHS ENDED OCTOBER 31, 2012 AND 2011

(in thousands, except per unit data)

(unaudited)

Three months ended 

Twelve months ended

October 31

October 31

2012

2011

2012

2011

Revenues:

  Propane and other gas liquids sales

$           335,281

$     514,219

$  1,982,007

$  2,357,853

  Other

27,628

24,207

181,568

203,596

    Total revenues

362,909

538,426

2,163,575

2,561,449

Cost of product sold:

  Propane and other gas liquids sales

213,657

403,122

1,412,421

1,755,980

  Other

9,197

6,626

97,894

118,238

Gross profit 

140,055

128,678

653,260

687,231

Operating expense (including $626 of non-recurring severance  charges for the twelve month period ended October 31, 2012)

96,434

99,411

396,003

411,432

Depreciation and amortization expense

20,875

20,674

84,042

82,785

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

8,774

9,364

36,526

51,137

Equipment lease expense

3,923

3,529

15,042

14,315

Non-cash employee stock ownership plan compensation charge

2,402

2,579

9,263

10,292

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

3,092

2,917

9,018

15,392

Loss (gain) on disposal of assets and other

271

309

5,997

4,174

Operating income (loss)

4,284

(10,105)

97,369

97,704

Interest expense

(22,435)

(23,387)

(92,302)

(98,395)

Loss on extinguishment of debt

-

-

-

(46,962)

Other income (expense), net

91

(33)

630

356

Earnings (loss) before income taxes

(18,060)

(33,525)

5,697

(47,297)

Income tax expense (benefit)

(264)

(630)

1,494

1,093

Net earnings (loss)

(17,796)

(32,895)

4,203

(48,390)

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

(138)

(291)

209

(181)

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

(17,658)

(32,604)

3,994

(48,209)

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

(177)

(326)

40

(482)

Common unitholders' interest in net earnings (loss)

$           (17,481)

$      (32,278)

$         3,954

$     (47,727)

Earnings (loss) Per Unit

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

$               (0.22)

$          (0.42)

$           0.05

$         (0.65)

Weighted average common units outstanding

79,013.3

75,966.4

78,338.3

73,928.5

Supplemental Data and Reconciliation of Non-GAAP Items:

Three months ended 

Twelve months ended

October 31

October 31

2012

2011

2012

2011

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

$           (17,658)

$      (32,604)

$         3,994

$     (48,209)

  Income tax expense (benefit)

(264)

(630)

1,494

1,093

  Interest expense

22,435

23,387

92,302

98,395

  Depreciation and amortization expense

20,875

20,674

84,042

82,785

EBITDA

25,388

10,827

181,832

134,064

  Loss on extinguishment of debt

-

-

-

46,962

  Non-cash employee stock ownership plan compensation charge

2,402

2,579

9,263

10,292

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

3,092

2,917

9,018

15,392

  Loss (gain) on disposal of assets and other

271

309

5,997

4,174

  Other (income) expense, net

(91)

33

(630)

(356)

  Nonrecurring severance costs

-

-

1,055

-

  Nonrecurring litigation reserve and related legal fees

688

-

1,580

11,788

  Net earnings (loss) attributable to noncontrolling interest

(138)

(291)

209

(181)

Adjusted EBITDA (c)

31,612

16,374

208,324

222,135

  Net cash interest expense (d)

(21,075)

(22,031)

(86,644)

(91,662)

  Maintenance capital expenditures (e)

(4,275)

(5,327)

(14,992)

(16,352)

  Cash paid for taxes

(18)

(3)

(779)

(511)

  Proceeds from asset sales

4,771

1,363

9,150

5,279

Distributable cash flow to equity investors (f)

$             11,015

$        (9,624)

$     115,059

$     118,889

Propane gallons sales

  Retail - Sales to End Users

124,883

132,848

611,353

667,695

  Wholesale - Sales to Resellers

54,555

63,421

249,946

259,920

  Total propane gallons sales

179,438

196,269

861,299

927,615

(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

2012

2011

2012

2011

      Operating expense

$                   711

$          1,167

$          2,291

4,788

      General and administrative expense

2,381

1,750

6,727

10,604

      Total

$                3,092

$          2,917

$          9,018

$        15,392

 

(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 (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.       

(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.



RELATED LINKS

http://www.ferrellgas.com