Ferrellgas Partners Reports Solid Third-Quarter Earnings; Expects Improved Fourth-Quarter Results

OVERLAND PARK, Kan., June 8, 2012 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported operating results for its fiscal third quarter ended April 30, 2012.

Propane sales for the quarter outperformed operating conditions declining 11% to 226 million gallons despite temperatures that were 23% warmer than in the prior year's quarter.  Revenues and gross profit directionally followed sales volumes declining to $629.6 million and $179.0 million, respectively while gross profit margins in the quarter improved nearly 6% to $0.79 per gallon sold reflecting lower wholesale prices.

Operating expense improved to $95.8 million, compared to $103.8 million in the prior year's quarter on lesser sales volumes and management's focus on long-term cost reductions.  General and administrative expense improved to $9.0 million, contrasted with $17.9 million the year prior (which included $10.5 million in litigation reserves and related legal fees, partially offset by incentive accrual reversals).  Excluding these prior year adjustments, G&A expense declined approximately $1 million this quarter primarily reflecting management's ongoing cost-reduction efforts. Equipment leasing expense of $3.8 million was materially in line with prior year levels while prior year financings reduced interest expense in the quarter by nearly $1.5 million to $23.5 million.

For the quarter, net earnings improved to $21.1 million, or $0.26 per unit, compared with $3.4 million, or $0.04 per unit, which included a loss on extinguishment of debt of $10.5 million, or $0.14 per unit.  And while Adjusted EBITDA declined modestly to $70.8 million from $74.3 million in the prior year quarter, distributable cash flow was practically unchanged at $48.0 million.  

"While the past winter proved to be most challenging for the propane industry with temperatures the second warmest in recorded history, several encouraging signs appeared in the third quarter," commented President and Chief Executive Officer Steve Wambold.  "Positive momentum is carrying over into the fourth quarter and we expect to report improved operating results in the quarters to follow."

Wambold explained, "Although the warm temperatures adversely affected retail propane sales, they did spark an early start to the grilling season. Our Blue Rhino tank exchange posted strong same-store sales gains with large retailers and across all trades."

Also contributing to the optimistic outlook are the continued progress of the company's cost-reduction program and the recent decline in wholesale propane costs. "We are increasingly confident that we will reach, if not exceed, our goal of more than $20 million in annualized cost savings by the end of fiscal 2013," Wambold pointed out. "And, propane costs are currently 53 % below year-ago levels."

Year-to-date, revenues were practically unchanged at $2 billion. Total propane gallon sales declined 3% to 727 million despite temperatures that were 18% warmer than in the prior year. Gross profit was $511.9 million, compared with $563.1 million. Operating expense decreased to $299.0 million from $306.6 million, general and administrative expense totaled $28.7 million compared with $39.3 million. Equipment lease expense was unchanged at $10.8 million. Interest expense of $70.9 million was $7.3 million less than a year ago. Net earnings were $25.0 million, or $0.32 per unit, contrasted with a net loss of $2.5 million, or $0.04 per unit during the prior year period. Adjusted EBITDA was $175.0 million and $217.5 million for the fiscal 2012 and 2011 nine-month periods, 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


April 30, 2012


July 31, 2011






Current Assets:





  Cash and cash equivalents


$       11,873


$        7,437

  Accounts and notes receivable, net

     (including $194,762 and $112,509 of accounts

     receivable pledged as collateral at April 30, 2012

     and July 31, 2011, respectively)


193,016


159,532

  Inventories


131,854


136,139

  Prepaid expenses and other current assets


18,285


23,885

    Total Current Assets


355,028


326,993






Property, plant and equipment, net


635,881


642,205

Goodwill


248,944


248,944

Intangible assets, net


194,420


204,136

Other assets, net


39,967


38,308

    Total Assets


$  1,474,240


$ 1,460,586











LIABILITIES AND PARTNERS' CAPITAL










Current Liabilities:





  Accounts payable


$       67,503


$      67,541

  Short-term borrowings


58,291


64,927

  Collateralized note payable


134,000


61,000

  Other current liabilities (a)


97,871


104,813

    Total Current Liabilities


357,665


298,281






Long-term debt (a)


1,044,187


1,050,920

Other liabilities


23,622


23,068

Contingencies and commitments


-


-






Partners' Capital: 





 Common unitholders (78,965,469 and 75,966,353 units outstanding at





   April 30, 2012 and July 31, 2011, respectively)


111,336


139,614

 General partner unitholder (797,631 and 767,337 units outstanding at





   April 30, 2012 and July 31, 2011, respectively)


(58,947)


(58,660)

 Accumulated other comprehensive income (loss)


(5,993)


4,633

    Total Ferrellgas Partners, L.P. Partners' Capital


46,396


85,587

    Noncontrolling Interest


2,370


2,730

    Total Partners' Capital


48,766


88,317

    Total Liabilities and Partners' Capital


$  1,474,240


$ 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, NINE AND TWELVE MONTHS ENDED APRIL 30, 2012 AND 2011

(in thousands, except per unit data)

(unaudited)










Three months ended 


Nine months ended


Twelve months ended



April 30


April 30


April 30



2012


2011


2012


2011


2012


2011

Revenues:













  Propane and other

  gas liquids sales


$     556,644


$     647,709


$   1,850,430


$  1,790,511


$  2,272,176


$  2,102,791

  Other


72,975


84,664


146,887


183,046


174,799


224,614

    Total revenues


629,619


732,373


1,997,317


1,973,557


2,446,975


2,327,405














Cost of product sold:













  Propane and other

  gas liquids sales


401,521


483,101


1,405,243


1,299,003


1,715,584


1,496,321

  Other


49,117


60,074


80,211


111,432


93,249


137,550














Gross profit 


178,981


189,198


511,863


563,122


638,142


693,534














Operating expense (including $277, $500 and $500 of non-recurring severance charges for the three, nine and twelve month periods ended April 30, 2012, respectively)


95,822


103,813


298,974


306,635


399,620


406,647

Depreciation and amortization expense


21,123


20,030


62,839


60,395


84,930


80,864

General and administrative expense (including $113, $263 and $263 of non-recurring severance charges for the three, nine and twelve month periods ended April 30, 2012, respectively)


8,963


17,879


28,671


39,271


41,560


51,385

Equipment lease expense


3,789


3,650


10,846


10,842


14,439


14,123

Non-cash employee stock ownership plan compensation charge


2,203


2,591


6,719


7,967


8,909


10,328

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


385


1,628


4,867


13,709


4,646


17,352

Loss on disposal of assets and other


1,220


463


2,052


834


4,851


3,839














Operating income


45,476


39,144


96,895


123,469


79,187


108,996














Interest expense


(23,471)


(24,933)


(70,904)


(78,205)


(94,584)


(104,645)

Loss on extinguishment of debt


-


(10,513)


-


(46,962)


-


(46,962)

Other income, net


201


243


248


509


306


486














Earnings (loss) before income taxes


22,206


3,941


26,239


(1,189)


(15,091)


(42,125)














Income tax expense


1,144


572


1,285


1,288


1,238


1,198














Net earnings (loss)


21,062


3,369


24,954


(2,477)


(16,329)


(43,323)














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


255


196


377


264


1


(82)














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


20,807


3,173


24,577


(2,741)


(16,330)


(43,241)














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


208


32


246


(27)


(163)


(432)














Common unitholders' interest in net earnings (loss)


$       20,599


$         3,141


$        24,331


$        (2,714)


$     (16,167)


$     (42,809)














Earnings (loss) Per Unit













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


$           0.26


$           0.04


$            0.32


$          (0.04)


$         (0.21)


$         (0.61)














Weighted average common units outstanding


78,960.0


73,145.6


77,095.8


71,102.5


76,797.1


70,704.0

 

Supplemental Data and Reconciliation of Non-GAAP Items:
















Three months ended 


Nine months ended


Twelve months ended



April 30


April 30


April 30



2012


2011


2012


2011


2012


2011



























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


$       20,807


$         3,173


$        24,577


$        (2,741)


$     (16,330)


$     (43,241)

  Income tax expense


1,144


572


1,285


1,288


1,238


1,198

  Interest expense


23,471


24,933


70,904


78,205


94,584


104,645

  Depreciation and amortization

  expense


21,123


20,030


62,839


60,395


84,930


80,864

EBITDA


66,545


48,708


159,605


137,147


164,422


143,466

  Loss on extinguishment of debt


-


10,513


-


46,962


-


46,962

  Non-cash employee stock ownership

  plan compensation charge


2,203


2,591


6,719


7,967


8,909


10,328

  Non-cash stock and unit-based

  compensation charge (b)


385


1,628


4,867


13,709


4,646


17,352

  Loss on disposal of assets and other


1,220


463


2,052


834


4,851


3,839

  Other income, net


(201)


(243)


(248)


(509)


(306)


(486)

  Nonrecurring severance costs


390


-


763


-


763


-

  Nonrecurring litigation reserve and

  related legal fees


-


10,466


892


11,133


1,879


11,133

  Net earnings (loss) attributable to

  noncontrolling interest


255


196


377


264


1


(82)

Adjusted EBITDA (c)


70,797


74,322


175,027


217,507


185,165


232,512

  Net cash interest expense (d)


(22,018)


(23,011)


(66,773)


(71,393)


(88,733)


(93,206)

  Maintenance capital expenditures (e)


(2,680)


(4,073)


(11,518)


(11,921)


(15,034)


(16,306)

  Cash paid for taxes


(10)


(119)


(100)


(34)


(657)


(642)

  Proceeds from asset sales


1,940


1,073


4,314


4,273


6,035


8,896

Distributable cash flow to equity investors (f)


$       48,029


$       48,192


$      100,950


$     138,432


$       86,776


$     131,254














Propane gallons sales













  Retail - Sales to End Users


167,462


190,009


524,287


559,797


619,898


649,855

  Wholesale - Sales to Resellers


58,421


62,441


202,971


189,373


257,873


241,062

  Total propane gallons sales


225,883


252,450


727,258


749,170


877,771


890,917








































(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 


Nine months ended


Twelve months ended



April 30


April 30


April 30



2012


2011


2012


2011


2012


2011

      Operating expense


$             112


$             570


$           1,952


$          3,832


$          1,877


$          4,834

      General and administrative expense


273


1,058


2,915


9,877


2,769


12,518

      Total


$             385


$           1,628


$           4,867


$         13,709


$          4,646


$        17,352















(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, net, nonrecurring severance 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 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

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