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

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.



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