Ferrellgas Partners Reports Second-Quarter Earnings

Mar 09, 2012, 07:00 ET from Ferrellgas Partners, L.P.

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.



RELATED LINKS

http://www.ferrellgas.com