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

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.



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http://www.ferrellgas.com

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