Ferrellgas Partners Reports First-Quarter Results

Dec 10, 2010, 07:05 ET from Ferrellgas Partners, L.P.

OVERLAND PARK, Kan., Dec. 10, 2010 /PRNewswire-FirstCall/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the largest distributors of propane, today reported that the seasonal net loss for the fiscal first quarter ended October 31 decreased to $28.3 million, or $0.40 per common unit, from $32.9 million, or $0.47 per common unit, the year before.

President and Chief Executive Officer Steve Wambold explained, "Our first quarter is traditionally slow due to the seasonality of our business; however, a warm start to the heating season delayed sales in the period. Propane sales for the quarter were 168.3 million gallons on temperatures that were 27% warmer than the prior-year period." First-quarter fiscal 2010 propane sales were 179.5 million gallons.

Wambold continued, "We are poised to capitalize on the return of more normal winter weather as our operating metrics remained positive. We have maintained healthy retail margins awaiting seasonal demand, while reducing both operating and general & administrative expenses to $95.4 million and $11.3 million, respectively. Equipment lease expense also decreased to $3.6 million in the quarter."

Revenues rose 14% to $400.2 million from $352.1 million reflecting increases in wholesale cost of propane, while Adjusted EBITDA declined to $21.6 million from $33.3 million a year ago, the result of warmer temperatures on propane sales.

In the quarter, the partnership announced the issuance of $500 million of 6.5% senior notes due 2021 and the issuance of $30 million in public equity. Proceeds from the transactions are being used to redeem senior debt that was issued at a blended interest rate of 7.3% and to fund both prior-year and ongoing growth initiatives.

Wambold pointed out, "Over the last several years we have been very proactive toward strengthening our balance sheet and improving our liquidity. With these most recent transactions we now have no public debt maturities until 2017 and have ample liquidity to continue our strategic growth initiatives while maintaining our financial leverage."

The partnership previously announced two acquisitions of retail propane operations in the quarter with customers in both Pennsylvania and California.

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 more than 20 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, 2010, 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

Jim Saladin, Media Relations, (913) 661-1833

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

ASSETS

October 31, 2010

July 31, 2010

Current Assets:

Cash and cash equivalents

$ 9,633

$ 11,401

Accounts and notes receivable, net (including $122,092 and $0 of

accounts receivable pledged as collateral at October 31, 2010

and July 31, 2010, respectively)

167,607

89,234

Inventories

169,818

166,911

Prepaid expenses and other current assets

30,121

13,842

Total Current Assets

377,179

281,388

Property, plant and equipment, net

648,986

652,768

Goodwill

248,939

248,939

Intangible assets, net

218,078

221,057

Other assets, net

37,724

38,199

Total Assets

$ 1,530,906

$ 1,442,351

LIABILITIES AND PARTNERS' CAPITAL

Current Liabilities:

Accounts payable

$ 71,358

$ 48,658

Short term borrowings

90,482

67,203

Collateralized note payable

66,000

-

Other current liabilities (a)

126,483

108,054

Total Current Liabilities

354,323

223,915

Long-term debt (a)

1,121,904

1,111,088

Other liabilities

21,421

21,446

Contingencies and commitments

-

-

Partners' Capital:

Common unitholders (69,611,843 and 69,521,818 units

outstanding at October 31, 2010 and July 31, 2010, respectively)

85,295

141,281

General partner unitholder (703,150 and 702,241 units

outstanding at October 31, 2010 and July 31, 2010, respectively)

(59,210)

(58,644)

Accumulated other comprehensive income (loss)

3,961

(415)

Total Ferrellgas Partners, L.P. Partners' Capital

30,046

82,222

Noncontrolling Interest

3,212

3,680

Total Partners' Capital

33,258

85,902

Total Liabilities and Partners' Capital

$ 1,530,906

$ 1,442,351

(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $280 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 AND TWELVE MONTHS ENDED OCTOBER 31, 2010 AND 2009

(in thousands, except per unit data)

(unaudited)

Three months ended

Twelve months ended

October 31

October 31

2010

2009

2010

2009

Revenues:

Propane and other gas liquids sales

$ 368,623

$ 327,666

$ 1,941,275

$ 1,720,431

Other

31,569

24,404

205,907

220,242

Total revenues

400,192

352,070

2,147,182

1,940,673

Cost of product sold:

Propane and other gas liquids sales

256,486

200,920

1,313,100

1,089,698

Other

12,858

6,180

115,316

142,219

Gross profit

130,848

144,970

718,766

708,756

Operating expense

95,396

96,890

407,520

401,408

Depreciation and amortization expense

20,375

20,527

82,339

81,705

General and administrative expense

11,264

13,778

49,258

46,074

Equipment lease expense

3,649

3,774

13,316

16,825

Employee stock ownership plan compensation charge

2,444

2,002

9,764

7,008

Loss (gain) on disposal of assets and other

(232)

1,662

6,591

12,122

Operating income (loss)

(2,048)

6,337

149,978

143,614

Interest expense

(26,877)

(22,695)

(105,466)

(88,544)

Loss on extinguishment of debt

-

(17,308)

(3,408)

(17,308)

Other income (expense), net

178

307

(1,237)

(196)

Earnings (loss) before income taxes

(28,747)

(33,359)

39,867

37,566

Income tax expense (benefit)

(482)

(422)

1,856

2,171

Net earnings (loss)

(28,265)

(32,937)

38,011

35,395

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

(222)

(272)

680

601

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

(28,043)

(32,665)

37,331

34,794

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

(280)

(327)

373

348

Common unitholders' interest in net earnings (loss)

$ (27,763)

$ (32,338)

$ 36,958

$ 34,446

Earnings (loss) Per Unit

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

$ (0.40)

$ (0.47)

$ 0.53

$ 0.51

Weighted average common units outstanding

69,559.6

68,507.9

69,506.8

66,915.9

Supplemental Data and Reconciliation of Non-GAAP Items:

Three months ended

Twelve months ended

October 31

October 31

2010

2009

2010

2009

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

$ (28,043)

$ (32,665)

$ 37,331

$ 34,794

Income tax expense (benefit)

(482)

(422)

1,856

2,171

Interest expense

26,877

22,695

105,466

88,544

Depreciation and amortization expense

20,375

20,527

82,339

81,705

EBITDA

18,727

10,135

226,992

207,214

Loss on extinguishment of debt

-

17,308

3,408

17,308

Employee stock ownership plan compensation charge

2,444

2,002

9,764

7,008

Unit and stock-based compensation charge (b)

1,013

2,751

6,093

4,735

Loss (gain) on disposal of assets and other

(232)

1,662

6,591

12,122

Other income (expense), net

(178)

(307)

1,237

196

Net earnings (loss) attributable to noncontrolling interest

(222)

(272)

680

601

Adjusted EBITDA (c)

21,552

33,279

254,765

249,184

Net cash interest expense (d)

(23,722)

(21,324)

(97,312)

(86,480)

Maintenance capital expenditures (e)

(4,412)

(10,113)

(14,267)

(26,853)

Cash paid for taxes

(83)

-

(1,633)

(1,504)

Proceeds from asset sales

2,078

1,933

9,365

7,814

Distributable cash flow to equity investors (f)

$ (4,587)

$ 3,775

$ 150,918

$ 142,161

Propane gallons sales

Retail - Sales to End Users

120,561

132,474

669,050

658,729

Wholesale - Sales to Resellers

47,776

47,074

242,263

223,436

Total propane gallons sales

168,337

179,548

911,313

882,165

(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.

(b) Unit and stock-based non-cash compensation charges consist of the following:

Three months ended

Twelve months ended

October 31

October 31

2010

2009

2010

2009

Operating expense

$ 136

$ 756

$ 1,533

$ 1,490

General and administrative expense

877

1,995

4,560

3,245

Total

$ 1,013

$ 2,751

$ 6,093

$ 4,735

(c) Management considers Adjusted EBITDA to be a chief measurement of the partnership's overall economic performance. Adjusted EBITDA is calculated as earnings (loss) before income tax expense (benefit), interest expense, depreciation and amortization expense, loss on extinguishment of debt, employee stock ownership plan compensation charge, unit and stock-based compensation charge, loss (gain) on disposal of assets and other, other income (expense), net 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