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

Jun 08, 2012, 07:00 ET from Ferrellgas Partners, L.P.

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