Ferrellgas Partners Reports Second-Quarter Earnings

OVERLAND PARK, Kan., March 9, 2012 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported operating results for its fiscal second quarter ended January 31, 2012.

Net earnings for the quarter rose 64% to $36.8 million while Adjusted EBITDA fell to $87.5 million resulting from near record warm, nationwide temperatures and significantly elevated wholesale propane costs.

Propane sales for the quarter declined 7% to 305.1 million gallons on temperatures that were 18% warmer than in the prior year's quarter and customer conservation resulting from historically high wholesale propane costs.

Second quarter revenues declined approximately 1% to $829.3 million while gross profit declined 16% to $204.2 million primarily on reduced weather dependent retail sales volumes and margins that were negatively impacted by rising wholesale propane costs. Operating expense of $103.7 million improved by nearly 4% on lower sales in the quarter and general and administrative expense improved by 6% to $10.3 million reflecting reductions in back office expense.  Equipment lease expense was materially unchanged at $3.5 million. The partnership continues to benefit from prior year financings, as interest expense for the quarter declined nearly 9% to $24.0 million and a loss associated with a prior year debt financing not repeated this quarter.

"This year has proven to be one of the most challenging the propane industry has faced," said President and Chief Executive Officer Steve Wambold. "While I am very pleased by our strong sales efforts and notable expense reductions, nothing can fully offset the impact from year to date temperatures that were 16% warmer than normal and wholesale propane costs that increased nearly 19%."

Wambold continued, "Despite the extremely challenging operating environment, we continue to look for opportunities to grow our customer base while reducing our operating costs for the benefit of our customers and unit holders alike.  We've made meaningful progress toward these goals.  For instance, we have announced five immediately accretive acquisitions this fiscal year, and are evaluating a growing list of other companies that could be accretive to earnings in the future.  We have additionally stepped up our efforts to reduce our overall operating costs which we believe will generate more than $20 million in annualized savings by fiscal 2013."

In the quarter, the partnership announced the expansion and extension of its accounts receivable securitization facility through January 2017. The partnership also announced the issuance of $50 million in Ferrellgas Partners common units. Proceeds from the equity offerings were used to reduce long-term borrowings on the partnership's bank funded credit facility.

Year to date, revenues of $1.4 billion rose on increased sales prices to customers primarily resulting from increased wholesale propane costs, while gross profit of $332.9 million decreased due to fewer weather dependent retail sales and margins negatively impacted by higher wholesale propane costs.

Propane sales volume for the six months ended January 31 were 501.4 million, up nearly 1% with increased wholesale sales volumes offsetting more weather dependent retail demand.  Operating expense remained materially unchanged at $203.2 million, while general and administrative expense declined 8% to $19.7 million reflecting back office expense reductions.  Year to date, interest expense was down 11% to $47.4 million reflecting prior year financings.  Net earnings and Adjusted EBITDA for the fiscal year were $3.9 million and $103.9 million, respectively.

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 nearly 22 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, 2011, 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


January 31, 2012


July 31, 2011






Current Assets:





 Cash and cash equivalents


$               15,725


$          7,437

 Accounts and notes receivable, net (including $293,163 and $112,509 of





   accounts receivable pledged as collateral at January 31, 2012





   and July 31, 2011, respectively)


292,890


159,532

 Inventories


170,479


136,139

 Prepaid expenses and other current assets


26,389


23,885

   Total Current Assets


505,483


326,993






Property, plant and equipment, net


641,013


642,205

Goodwill


248,944


248,944

Intangible assets, net


199,836


204,136

Other assets, net


40,397


38,308

   Total Assets


$          1,635,673


$   1,460,586











LIABILITIES AND PARTNERS' CAPITAL










Current Liabilities:





 Accounts payable


$             132,425


$        67,541

 Short-term borrowings


56,037


64,927

 Collateralized note payable


205,000


61,000

 Other current liabilities (a)


116,053


104,813

   Total Current Liabilities


509,515


298,281






Long-term debt (a)


1,032,993


1,050,920

Other liabilities


23,792


23,068

Contingencies and commitments


-


-






Partners' Capital:





Common unitholders (78,950,469 and 75,966,353 units outstanding at





  January 31, 2012 and July 31, 2011)


127,508


139,614

General partner unitholder (797,479 and 767,337 units outstanding at





  January 31, 2012 and July 31, 2011)


(58,784)


(58,660)

Accumulated other comprehensive income (loss)


(1,889)


4,633

   Total Ferrellgas Partners, L.P. Partners' Capital


66,835


85,587

   Noncontrolling Interest


2,538


2,730

   Total Partners' Capital


69,373


88,317

   Total Liabilities and Partners' Capital


$          1,635,673


$   1,460,586








(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, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2012 AND 2011

(in thousands, except per unit data)

(unaudited)



Three months ended


Six months ended


Twelve months ended



January 31


January 31


January 31



2012


2011


2012


2011


2012


2011

Revenues:













 Propane and other gas liquids sales


$ 779,567


$ 774,179


$ 1,293,786


$ 1,142,802


$ 2,363,241


$ 1,991,106

 Other


49,705


66,813


73,912


98,382


186,488


219,216

   Total revenues


829,272


840,992


1,367,698


1,241,184


2,549,729


2,210,322














Cost of product sold:













 Propane and other gas liquids sales


600,600


559,416


1,003,722


815,902


1,797,164


1,368,536

 Other


24,468


38,500


31,094


51,358


104,206


128,608














Gross profit


204,204


243,076


332,882


373,924


648,359


713,178














Operating expense


103,741


107,562


203,152


202,822


407,611


409,112

Depreciation and amortization expense


21,042


19,990


41,716


40,365


83,837


81,682

General and administrative expense


10,344


11,005


19,708


21,392


50,476


44,657

Equipment lease expense


3,528


3,543


7,057


7,192


14,300


13,732

Non-cash employee stock ownership plan compensation charge


1,937


2,932


4,516


5,376


9,297


10,435

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


1,565


11,068


4,482


12,081


5,889


16,748

Loss on disposal of assets and other


523


603


832


371


4,094


6,072














Operating income


61,524


86,373


51,419


84,325


72,855


130,740














Interest expense


(24,046)


(26,395)


(47,433)


(53,272)


(96,046)


(105,645)

Loss on extinguishment of debt


-


(36,449)


-


(36,449)


(10,513)


(39,857)

Other income (expense), net


80


88


47


266


348


(286)














Earnings (loss) before income taxes


37,558


23,617


4,033


(5,130)


(33,356)


(15,048)














Income tax expense


771


1,198


141


716


666


2,380














Net earnings (loss)


36,787


22,419


3,892


(5,846)


(34,022)


(17,428)














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


413


290


122


68


(58)


123














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


36,374


22,129


3,770


(5,914)


(33,964)


(17,551)














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


364


221


38


(59)


(339)


(176)














Common unitholders' interest in net earnings (loss)


$   36,010


$   21,908


$        3,732


$      (5,855)


$    (33,625)


$    (17,375)














Earnings (loss) Per Unit













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


$       0.47


$       0.31


$          0.05


$        (0.08)


$        (0.45)


$        (0.25)














Weighted average common units outstanding


76,401.6


70,668.8


76,184.0


70,114.2


75,373.4


69,813.9



























Supplemental Data and Reconciliation of Non-GAAP Items:
















Three months ended


Six months ended


Twelve months ended



January 31


January 31


January 31



2012


2011


2012


2011


2012


2011



























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


$   36,374


$   22,129


$        3,770


$      (5,914)


$    (33,964)


$    (17,551)

 Income tax expense


771


1,198


141


716


666


2,380

 Interest expense


24,046


26,395


47,433


53,272


96,046


105,645

 Depreciation and amortization expense


21,042


19,990


41,716


40,365


83,837


81,682

EBITDA


82,233


69,712


93,060


88,439


146,585


172,156

 Loss on extinguishment of debt


-


36,449


-


36,449


10,513


39,857

 Non-cash employee stock ownership plan compensation charge


1,937


2,932


4,516


5,376


9,297


10,435

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


1,565


11,068


4,482


12,081


5,889


16,748

 Loss on disposal of assets and other


523


603


832


371


4,094


6,072

 Other income (expense), net


(80)


(88)


(47)


(266)


(348)


286

 Nonrecurring litigation reserve and related legal fees


892


335


892


667


12,345


667

 Net earnings (loss) attributable to noncontrolling interest


413


290


122


68


(58)


123

Adjusted EBITDA (c)


87,483


121,301


103,857


143,185


188,317


246,344

 Net cash interest expense (d)


(22,724)


(24,660)


(44,755)


(48,382)


(89,726)


(96,617)

 Maintenance capital expenditures (e)


(3,511)


(3,436)


(8,838)


(7,848)


(16,427)


(16,407)

 Cash paid for taxes


(87)


168


(90)


85


(766)


(1,133)

 Proceeds from asset sales


1,011


1,122


2,374


3,200


5,168


9,259

Distributable cash flow to equity investors (f)


$   62,172


$   94,495


$      52,548


$      90,240


$      86,566


$    141,446














Propane gallons sales













 Retail - Sales to End Users


223,977


249,227


356,825


369,788


642,445


648,476

 Wholesale - Sales to Resellers


81,129


79,156


144,550


126,932


261,893


237,537

 Total propane gallons sales


305,106


328,383


501,375


496,720


904,338


886,013








































(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


Six months ended


Twelve months ended



January 31


January 31


January 31



2012


2011


2012


2011


2012


2011

     Operating expense


$        673


$     3,126


$        1,840


$        3,262


$        2,335


$        4,546

     General and administrative expense


892


7,942


2,642


8,819


3,554


12,202

     Total


$     1,565


$   11,068


$        4,482


$      12,081


$        5,889


$      16,748
















(c)

Adjusted EBITDA is calculated as earnings (loss) 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 (expense), net, a 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 in accordance 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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