Ferrellgas Partners' Second-Quarter Results Improve Substantially; Adjusted EBITDA Increases 33%; Distributable Cash Flow Up 50%

07 Mar, 2013, 07:00 ET from Ferrellgas Partners, L.P.

OVERLAND PARK, Kan., March 7, 2013 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported that results for the fiscal 2013 second quarter ended January 31 improved substantially, reflecting improved retail margins.

Adjusted EBITDA increased 33% to $116.1 million, from $87.5 million in the year-earlier quarter. Distributable cash flow to equity investors rose 50% to $93.1 million, from $62.2 million a year ago.

As expected revenues declined to $658.9 million, from $829.3 million, primarily attributable to a 39% decrease in the wholesale cost of propane from the year ago quarter.  Benefiting from lower wholesale propane costs, gross profit rose 15% to $235.2 million or $.79 per gallon sold, in-line with both the trailing six and 12-month performance.  Net earnings climbed 60% to $58.8 million, or $0.73 per unit, from $36.8 million, or $0.47 per unit.

During the second quarter, retail propane gallons sales were off less than 1% to 221.8 million gallons, while total volume sales declined approximately 2% to 298.5 million.  The partnership continues to focus on more efficient and profitable deliveries of propane to its customers helping to offset the impact of unfavorable weather and economic conditions.

Operating expenses rose modestly to $105.6 million from $103.7 million, while general and administrative expense decreased modestly to $10.2 million.  Excluding performance based incentive accruals, net operating and general and administrative expenses were down nearly $1.0 million, in-line on a cents-per-gallon sold basis with prior year results.  Equipment lease expense rose to $3.8 million from $3.5 million

Interest expense continued to reflect the partnership's lower cost of borrowing, declining to $22.6 million, from $24.0 million the year before.

President and Chief Executive Officer Steve Wambold commented, "Second-quarter results represented the third consecutive quarter of positive momentum despite unusually warm weather. Temperatures during the quarter were slightly cooler than in the prior year, but still substantially warmer than normal.  For the quarter, temperatures were more than 10% warmer than normal and in the key heating month of December temperatures were 1% warmer than the prior year or nearly 15% warmer than normal.

"For the trailing 12 month period, our Adjusted EBITDA performance was $237 million.  As we continue to meet and exceed our operational objectives this year, we feel comfortable in increasing our previously forecasted fiscal 2013 Adjusted EBITDA range to $245 million to $260 million." Adjusted EBITDA in fiscal 2012 was $193.1 million.

The partnership remains focused on growth both through organic and acquisition efforts, announcing three acquisitions in fiscal 2013 thus far. "The acquisition environment remains attractive, with strong interest from sellers," commented Wambold.

For the first half of fiscal 2013, Adjusted EBITDA rose 42% to $147.7 million from $103.9 million. Net earnings totaled $41.0 million, or $0.51 per unit, versus $3.9 million, or $0.05 per unit.  Revenue declined 25% to $1.0 billion primarily on lower wholesale propane costs, with gross profit increasing 13% to $375.2 million on higher retail margins. 

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, 2012, 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, 2013

July 31, 2012

Current Assets:

  Cash and cash equivalents

$              12,109

$         8,429

  Accounts and notes receivable, net (including $224,428 and $121,812 of

    accounts receivable pledged as collateral at January 31, 2013

    and July 31, 2012, respectively)

238,558

124,004

  Inventories

130,073

127,598

  Prepaid expenses and other current assets

30,069

29,315

    Total Current Assets

410,809

289,346

Property, plant and equipment, net

610,984

626,551

Goodwill

248,944

248,944

Intangible assets, net

183,659

189,118

Other assets, net

48,603

43,320

    Total Assets

$         1,502,999

$  1,397,279

LIABILITIES AND PARTNERS' DEFICIT

Current Liabilities:

  Accounts payable

$            103,379

$       47,824

  Short-term borrowings

72,678

95,730

  Collateralized note payable

134,000

74,000

  Other current liabilities

122,915

122,667

    Total Current Liabilities

432,972

340,221

Long-term debt (a)

1,081,388

1,059,085

Other liabilities

30,960

25,499

Contingencies and commitments

-

-

Partners' Deficit: 

 Common unitholders (79,015,619 and 79,006,619 units outstanding at

   January 31, 2013 and July 31, 2012, respectively)

20,673

43,701

 General partner unitholder (798,138 and 798,047 units outstanding at

   January 31, 2013 and July 31, 2012, respectively)

(59,863)

(59,630)

 Accumulated other comprehensive loss

(4,547)

(13,159)

    Total Ferrellgas Partners, L.P. Partners' Deficit

(43,737)

(29,088)

    Noncontrolling Interest

1,416

1,562

    Total Partners' Deficit

(42,321)

(27,526)

    Total Liabilities and Partners' Deficit

$         1,502,999

$  1,397,279

(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, 2013 AND 2012

(in thousands, except per unit data)

(unaudited)

 

Three months ended 

Six months ended

Twelve months ended

January 31

January 31

January 31

2013

2012

2013

2012

2013

2012

Revenues:

  Propane and other gas liquids sales

$ 583,074

$ 779,567

$ 918,355

$ 1,293,786

$ 1,785,514

$ 2,363,241

  Other

75,791

49,705

103,419

73,912

207,654

186,488

    Total revenues

658,865

829,272

1,021,774

1,367,698

1,993,168

2,549,729

Cost of product sold:

  Propane and other gas liquids sales

376,236

600,600

589,893

1,003,722

1,188,057

1,797,164

  Other

47,437

24,468

56,634

31,094

120,863

104,206

Gross profit 

235,192

204,204

375,247

332,882

684,248

648,359

Operating expense (including $403 of non-recurring severance 

  charges for the twelve month period ended January 31, 2013)

105,599

103,741

202,033

203,152

397,861

407,611

Depreciation and amortization expense

20,751

21,042

41,626

41,716

83,751

83,837

General and administrative expense (including $279 of non-recurring

  severance charges for the twelve month period ended January 31, 2013)

10,190

10,344

18,964

19,708

36,372

50,476

Equipment lease expense

3,827

3,528

7,750

7,057

15,341

14,300

Non-cash employee stock ownership plan compensation charge

7,447

1,937

9,849

4,516

14,773

9,297

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

3,120

1,565

6,212

4,482

10,573

5,889

Loss (gain) on disposal of assets and other

2,120

523

2,391

832

7,594

4,094

Operating income

82,138

61,524

86,422

51,419

117,983

72,855

Interest expense

(22,619)

(24,046)

(45,054)

(47,433)

(90,875)

(96,046)

Loss on extinguishment of debt

-

-

-

-

-

(10,513)

Other income (expense), net

241

80

332

47

791

348

Earnings (loss) before income taxes

59,760

37,558

41,700

4,033

27,899

(33,356)

Income tax expense

917

771

653

141

1,640

666

Net earnings (loss)

58,843

36,787

41,047

3,892

26,259

(34,022)

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

636

413

498

122

432

(58)

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

58,207

36,374

40,549

3,770

25,827

(33,964)

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

3,138

364

405

38

258

(339)

Common unitholders' interest in net earnings (loss)

$   55,069

$   36,010

$   40,144

$        3,732

$      25,569

$    (33,625)

Earnings (loss) Per Unit

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

$       0.70

$       0.47

$       0.51

$          0.05

$          0.32

$        (0.45)

Dilutive effect of two-class method (c)

0.03

-

-

-

-

-

Adjusted net earnings (loss) per unit available to common unitholders

$       0.73

$       0.47

$       0.51

$          0.05

$        (0.04)

$          1.05

Weighted average common units outstanding

79,015.6

76,401.6

79,014.4

76,184.0

78,995.4

75,373.4

 

 

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

2013

2012

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

$   58,207

$   36,374

$   40,549

$        3,770

$      25,827

$    (33,964)

  Income tax expense

917

771

653

141

1,640

666

  Interest expense

22,619

24,046

45,054

47,433

90,875

96,046

  Depreciation and amortization expense

20,751

21,042

41,626

41,716

83,751

83,837

EBITDA

102,494

82,233

127,882

93,060

202,093

146,585

  Loss on extinguishment of debt

-

-

-

-

-

10,513

  Non-cash employee stock ownership plan compensation charge

7,447

1,937

9,849

4,516

14,773

9,297

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

3,120

1,565

6,212

4,482

10,573

5,889

  Loss (gain) on disposal of assets and other

2,12     0

523

2,391

832

7,594

4,094

  Other (income) expense, net

(241)

(80)

(332)

(47)

(791)

(348)

  Nonrecurring severance costs

-

-

-

-

1,055

-

  Nonrecurring litigation reserve and related legal fees

537

892

1,225

892

1,225

12,345

  Net earnings (loss) attributable to noncontrolling interest

636

413

498

122

432

(58)

Adjusted EBITDA (d)

116,113

87,483

147,725

103,857

236,954

188,317

  Net cash interest expense (e)

(21,123)

(22,724)

(42,198)

(44,755)

(85,043)

(89,726)

  Maintenance capital expenditures (f)

(3,255)

(3,511)

(7,530)

(8,838)

(14,736)

(16,427)

  Cash paid for taxes

(27)

(87)

(45)

(90)

(719)

(766)

  Proceeds from asset sales

1,392

1,011

6,163

2,374

9,531

5,168

Distributable cash flow to equity investors (g)

$   93,100

$   62,172

$ 104,115

$      52,548

$    145,987

$      86,566

Propane gallons sales

  Retail - Sales to End Users

221,796

223,977

346,679

356,825

609,172

642,445

  Wholesale - Sales to Resellers

76,728

81,129

131,283

144,550

245,545

261,893

  Total propane gallons sales

298,524

305,106

477,962

501,375

854,717

904,338

(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

2013

2012

2013

2012

2013

2012

      Operating expense

$         593

$         673

$      1,304

$         1,840

$         2,211

$         2,335

      General and administrative expense

2,527

892

4,908

2,642

8,362

3,554

      Total

$      3,120

$      1,565

$      6,212

$         4,482

$       10,573

$         5,889

(c)

FASB guidance regarding participating securities and the two-class method requires the calculation of net earnings (loss) 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 three months ended January 31, 2012 or for the six and twelve months ended January 31, 2013 and 2012.

(d)

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 (gain) on disposal of assets and other, other income (expense), net, nonrecuring serverance 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 inaccordance with GAAP.

(e)

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.

(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.

SOURCE Ferrellgas Partners, L.P.



RELATED LINKS

http://www.ferrellgas.com