Ferrellgas Partners Reports Record Adjusted EBITDA On Increased Sales And Operating Efficiencies; Fiscal 2014 Adjusted EBITDA Guidance Raised

10 Mar, 2014, 07:00 ET from Ferrellgas Partners, L.P.

OVERLAND PARK, Kan., March 10, 2014 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported a strong performance for the fiscal 2014 second quarter ended January 31, primarily reflecting increased sales volumes and operational efficiencies.

Adjusted EBITDA rose 17% to a record $136.4 million from $116.1 million in the year-earlier quarter. Distributable cash flow grew 20% to $111.9 million from $93.1 million. Distributable cash flow coverage for the trailing 12-month period ended January 31 was 1.2x, the highest level since fiscal 2003.  

Second-quarter sales volumes grew 15% to 342.9 million gallons reflecting nationwide temperatures that were 18% colder than in the unusually mild prior-year quarter. Correspondingly, gross profit increased 15% to a record $269.5 million reflecting these increased sales volumes, as margins matched the prior-year quarter at $0.79 per gallon sold.

"The return of more seasonal temperatures drove performance slightly greater than our expectation for the quarter," commented President and Chief Executive Officer Steve Wambold.  Temperatures, as reported by the National Oceanic and Atmospheric Administration in the more highly concentrated geographic areas the partnership serves, were 6% colder than normal in the quarter.  Wambold further commented "Propane supply challenges dominated the headlines during our fiscal second quarter. I'm proud of the way Ferrellgas employees responded to this challenge, whether it was ensuring our locations had product on hand to meet our many commitments, safely navigating snow- and ice-covered roadways, or patiently answering questions from our customers."

Second-quarter operating expense rose to $116.7 million from $105.6 million resulting from higher sales volumes; however on a cent-per-gallon sold basis improved to $0.34 from $0.35. General and administrative expense increased to $12.1 million from $10.2 million; however, excluding performance-based incentives, was relatively unchanged at $8.5 million. Interest expense declined 2% to $22.1 million from $22.6 million in the prior-year quarter.

Net earnings for the quarter were $61.1 million, or $0.72 per unit, including a loss on the early extinguishment of debt associated with the refinancing of the partnership's senior notes in November 2013. Excluding this nonrecurring expense, net earnings per common unit were $0.87 compared to $0.70 in the prior-year quarter.  

Wambold added, "The third quarter is off to a strong start, with February results behind us and seasonably cool temperatures forecasted for the remainder of the heating season. Therefore, we are increasing our Adjusted EBITDA guidance for fiscal 2014 to $275 million to $285 million from $265 million to $275 million." For the trailing 12 months ended January 31, the partnership's Adjusted EBITDA performance was $287.3 million.

Wambold concluded, "Our liquidity for this time of year is very strong, with more than $250 million of borrowing capacity on our credit facility to fund future working capital and growth capital needs.  We remain very active in the acquisition market, both inside and outside the retail propane space and are enthusiastic about our growth opportunities in the years to come."

For the first six months of the fiscal year, Adjusted EBITDA rose 10% to $162.8 million on sales volumes that grew 12% to 533.9 million gallons. Gross profit rose 10% to a record $412.4 million on these increased sales volumes, while margins declined slightly to $0.77 per gallon sold as a result of the higher wholesale cost of propane. Consistent with the quarter's results, operating expense rose to $219.7 million on increased sales volumes, but improved on a cent-per-gallon sold basis to $0.41 from $0.42 reflecting operational efficiencies. Distributable cash flow for the six-month period also grew 10% to $115.0 million.

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 Scott Brockelmeyer, Media Relations, (913) 661-1830

 

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2014 AND 2013

(in thousands, except per unit data)

(unaudited)

Three months ended 

Six months ended

Twelve months ended

January 31

January 31

January 31

2014

2013

2014

2013

2014

2013

Revenues:

  Propane and other gas liquids sales

$    789,446

$   583,074

$   1,171,669

$     918,355

$   1,992,581

$   1,785,514

  Other

80,237

75,791

113,044

103,419

245,825

207,654

    Total revenues

869,683

658,865

1,284,713

1,021,774

2,238,406

1,993,168

Cost of product sold:

  Propane and other gas liquids sales

551,506

376,236

810,260

589,893

1,312,628

1,188,057

  Other

48,709

47,437

62,055

56,634

149,877

120,863

Gross profit 

269,468

235,192

412,398

375,247

775,901

684,248

Operating expense (including $626 of non-recurring severance 

  charges for the twelve month period ended January 31, 2013)

116,743

105,599

219,709

202,033

427,735

397,861

Depreciation and amortization expense

20,643

20,751

40,858

41,626

82,576

83,751

General and administrative expense (including $429 of non-recurring

  severance charges for the twelve month period ended January 31, 2013)

12,095

10,190

22,876

18,964

45,939

36,372

Equipment lease expense

4,274

3,827

8,340

7,750

16,573

15,341

Non-cash employee stock ownership plan compensation charge

3,636

7,447

6,679

9,849

12,599

14,773

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

5,919

3,120

10,350

6,212

17,683

10,573

Loss on disposal of assets and other

1,337

2,120

1,694

2,391

9,724

7,594

Operating income

104,821

82,138

101,892

86,422

163,072

117,983

Interest expense

(22,090)

(22,619)

(44,183)

(45,054)

(88,274)

(90,875)

Loss on extinguishment of debt

(20,901)

-

(21,202)

-

(21,202)

-

Other income, net

57

241

273

332

506

791

Earnings before income taxes

61,887

59,760

36,780

41,700

54,102

27,899

Income tax expense

764

917

714

653

1,916

1,640

Net earnings

61,123

58,843

36,066

41,047

52,186

26,259

Net earnings attributable to noncontrolling interest (b)

659

636

445

498

688

432

Net earnings attributable to Ferrellgas Partners, L.P.

60,464

58,207

35,621

40,549

51,498

25,827

Less: General partner's interest in net earnings

3,663

3,138

356

405

515

258

Common unitholders' interest in net earnings

$      56,801

$     55,069

$        35,265

$       40,144

$        50,983

$        25,569

Earnings Per Unit

Basic and diluted net earnings per common unitholders' interest

$          0.72

$         0.70

$            0.45

$           0.51

$            0.64

$            0.32

Adjustment for effect of two-class method (c)

0.04

0.03

-

-

-

-

Adjusted net earnings per unit available to common unitholders

$          0.76

$         0.73

$            0.45

$           0.51

$            0.64

$            0.32

Weighted average common units outstanding

79,129.4

79,015.6

79,102.6

79,014.4

79,083.1

78,995.4

 

Supplemental Data and Reconciliation of Non-GAAP Items:

Three months ended 

Six months ended

Twelve months ended

January 31

January 31

January 31

2014

2013

2014

2013

2014

2013

Net earnings attributable to Ferrellgas Partners, L.P.

$      60,464

$     58,207

$        35,621

$       40,549

$        51,498

$        25,827

  Income tax expense

764

917

714

653

1,916

1,640

  Interest expense

22,090

22,619

44,183

45,054

88,274

90,875

  Depreciation and amortization expense

20,643

20,751

40,858

41,626

82,576

83,751

EBITDA

103,961

102,494

121,376

127,882

224,264

202,093

  Loss on extinguishment of debt

20,901

-

21,202

-

21,202

-

  Non-cash employee stock ownership plan compensation charge

3,636

7,447

6,679

9,849

12,599

14,773

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

5,919

3,120

10,350

6,212

17,683

10,573

  Loss on disposal of assets and other

1,337

2,120

1,694

2,391

9,724

7,594

  Other income, net

(57)

(241)

(273)

(332)

(506)

(791)

  Nonrecurring severance costs

-

-

-

-

-

1,055

  Nonrecurring litigation reserve and related legal fees

-

537

1,325

1,225

1,668

1,225

  Net earnings attributable to noncontrolling interest (b)

659

636

445

498

688

432

Adjusted EBITDA (d)

136,356

116,113

162,798

147,725

287,322

236,954

  Net cash interest expense (e)

(20,980)

(21,123)

(41,566)

(42,198)

(82,863)

(85,043)

  Maintenance capital expenditures (f)

(4,446)

(3,255)

(8,583)

(7,530)

(16,123)

(14,736)

  Cash paid for taxes

(178)

(27)

(178)

(45)

(683)

(719)

  Proceeds from asset sales

1,165

1,392

2,482

6,163

6,299

9,531

Distributable cash flow to equity investors (g)

$    111,917

$     93,100

$      114,953

$     104,115

$      193,952

$      145,987

Propane gallons sales

  Retail - Sales to End Users

246,929

221,796

372,181

346,679

663,425

609,172

  Wholesale - Sales to Resellers

95,922

76,728

161,701

131,283

293,865

245,545

  Total propane gallons sales

342,851

298,524

533,882

477,962

957,290

854,717

(a)  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

2014

2013

2014

2013

2014

2013

      Operating expense

$         1,539

$           593

$           2,337

$          1,304

$            3,424

$           2,211

      General and administrative expense

4,380

2,527

8,013

4,908

14,259

8,362

      Total

$         5,919

$        3,120

$          10,350

$          6,212

$          17,683

$         10,573

(b)  Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.

(c)  FASB guidance regarding participating securities and the two-class method requires the calculation of net earnings 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 six and twelve months ended January 31, 2014 and 2013. Adjusted net earnings per unit available to common unitholders may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed inaccordance with GAAP.

(d)  Adjusted EBITDA is calculated as earnings 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 on disposal of assets and other, other income, net, nonrecuring serverance costs, nonrecurring litigation reserve and related legal fees and net earnings 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, net. This amount includes interest expense related to the accounts receivable securitization facility.

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

(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.

 

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

ASSETS

January 31, 2014

July 31, 2013

Current Assets:

  Cash and cash equivalents

$               18,292

$            6,464

  Accounts and notes receivable, net (including $314,475 and $130,025 of

    accounts receivable pledged as collateral at January 31, 2014

    and July 31, 2013, respectively)

356,359

131,791

  Inventories

135,830

117,116

  Prepaid expenses and other current assets

44,891

25,608

    Total Current Assets

555,372

280,979

Property, plant and equipment, net

582,484

589,727

Goodwill

253,331

253,362

Intangible assets, net

182,977

189,516

Other assets, net

46,630

42,444

    Total Assets

$          1,620,794

$     1,356,028

LIABILITIES AND PARTNERS' DEFICIT

Current Liabilities:

  Accounts payable

$             137,073

$          49,128

  Short-term borrowings

67,045

50,054

  Collateralized note payable

219,000

82,000

  Other current liabilities

112,241

121,102

    Total Current Liabilities

535,359

302,284

Long-term debt (a)

1,150,911

1,106,940

Other liabilities

35,724

33,431

Contingencies and commitments

-

-

Partners' Deficit: 

 Common unitholders (79,144,419 and 79,072,819 units outstanding at

   January 31, 2014 and July 31, 2013, respectively)

(54,480)

(28,931)

 General partner unitholder (799,439 and 798,715 units outstanding at

   January 31, 2014 and July 31, 2013, respectively)

(60,621)

(60,362)

 Accumulated other comprehensive income

13,078

1,697

    Total Ferrellgas Partners, L.P. Partners' Deficit

(102,023)

(87,596)

    Noncontrolling Interest

823

969

    Total Partners' Deficit

(101,200)

(86,627)

    Total Liabilities and Partners' Deficit

$          1,620,794

$     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.

 

SOURCE Ferrellgas Partners, L.P.



RELATED LINKS

http://www.ferrellgas.com