Ferrellgas Partners Reports Increased Third-Quarter Adjusted EBITDA; Expects Record Adjusted EBITDA for Year; Third-Quarter Propane Gallon Sales Up 3.5%

Jun 09, 2010, 07:00 ET from Ferrellgas Partners, L.P.

OVERLAND PARK, Kan., June 9 /PRNewswire-FirstCall/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the largest distributors of propane, today reported third-quarter Adjusted EBITDA of $88.2 million, an increase of 7.2% over $82.2 million the year before. Contributing to the improved performance was higher gross profit on continued strength of propane gallon sales and margins.

Propane gallon sales rose 3.5% to 247.5 million, which marks the fourth consecutive quarter of year-over-year volume gains. Retail and wholesale sales both were up, 2.7% and 6.1%, respectively.

Third-quarter revenues totaled $615.3 million, compared with $561.1 million the year before. Gross profit increased 10.2% to $208.8 million from $189.5 million, while operating income improved to $60.9 million from $57.3 million. Third-quarter net earnings declined to $28.6 million, or $0.41 per unit, from $32.5 million, or $0.48 per unit the year before reflecting the one-time impact of debt prepayment premiums paid in the quarter associated with the refinancing of Ferrellgas Partners' long-term debt due 2020.

Distributable cash flow was up nearly 2% over year-earlier levels, continuing fiscal 2010's positive momentum. For the nine months, distributable cash flow increased nearly 5%.

President and Chief Executive Officer Steve Wambold commented, "We are quite pleased with our third-quarter results, which reflect strong, underlying fundamentals. Despite the ongoing impact of a sluggish economy and customer conservation, we have continued to gain market share. We have also had to contend with unfavorable weather, as temperatures in the quarter were 3% warmer than the prior year in the markets we serve."

Wambold continued, "We are maintaining a tight rein on costs.  While general & administrative expense increased this quarter, it is solely due to the timing of performance-based incentive accruals which will be materially offset in the upcoming fourth quarter. Lastly, we remain quite encouraged by the continuing reduction in equipment leasing expense, which declined nearly 24%."

Turning to the fourth-quarter outlook, Wambold noted, "It's important to point out that last year's fourth quarter was exceptionally strong. Even so, we continue to forecast record Adjusted EBITDA for the full year, exceeding fiscal 2009's record $251.1 million." He added, "Our market-leading Blue Rhino brand is off to a solid start for the all-important grilling season, posting record unit sales in April."

Wambold concluded, "Our entire management team remains committed to profitable growth, both organically and through acquisitions. Our organic growth strategy has demonstrated its effectiveness. And, we continue to be alert for attractive acquisition opportunities, but we will not alter our disciplined approach that demands candidates meet strict criteria."

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, 2009, the Form 10-Q of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the fiscal quarter ended April 30, 2010, and other documents filed from time to time by these entities with the Securities and Exchange Commission.

On September 28, 2009 Ferrellgas Partners, L.P. filed its annual report for the fiscal year ended July 31, 2009 on Form 10-K with the SEC. This annual report is available to security holders and other interested parties at no charge on our website at www.ferrellgas.com and is also available in print to any security holder or other interested parties who requests it from our investor relations department free of charge.

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

April 30, 2010

July 31, 2009

Current Assets:

 Cash and cash equivalents

$         10,591

$          7,066

 Accounts and notes receivable, net

135,872

106,910

 Inventories

139,540

129,808

 Prepaid expenses and other current assets

18,689

15,031

   Total Current Assets

304,692

258,815

Property, plant and equipment, net

665,068

666,535

Goodwill

248,939

248,939

Intangible assets, net

226,400

212,037

Other assets, net

37,817

18,651

   Total Assets

$    1,482,916

$   1,404,977

LIABILITIES AND PARTNERS' CAPITAL

Current Liabilities:

 Accounts payable

$         70,540

$        49,337

 Short term borrowings

32,847

66,159

 Other current liabilities (a)

93,033

108,763

   Total Current Liabilities

196,420

224,259

Long-term debt (a)

1,104,059

1,010,073

Other liabilities

21,098

19,300

Contingencies and commitments

-

-

Partners' Capital:

Common unitholders (69,521,818 and 68,236,755 units

  outstanding at 2010 and 2009, respectively)

210,254

206,255

General partner unitholder (702,241 and 689,260 units

  outstanding at 2010 and 2009, respectively)

(57,948)

(57,988)

Accumulated other comprehensive income (loss)

4,252

(1,194)

   Total Ferrellgas Partners, L.P. Partners' Capital

156,558

147,073

   Noncontrolling Interest

4,781

4,272

   Total Partners' Capital

161,339

151,345

   Total Liabilities and Partners' Capital

$    1,482,916

$   1,404,977

(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $34.2 million of 8 3/4% notes and $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, NINE AND TWELVE MONTHS ENDED APRIL 30, 2010 AND 2009

(in thousands, except per unit data)

(unaudited)

Three months ended

Nine months ended

Twelve months ended

April 30,

April 30,

April 30,

2010

2009

2010

2009

2010

2009

Revenues:

 Propane and other gas liquids sales

$ 536,024

$ 461,850

$ 1,588,038

$ 1,546,274

$ 1,871,417

$ 1,936,821

 Other

79,266

99,283

157,174

210,558

186,485

239,726

   Total revenues

615,290

561,133

1,745,212

1,756,832

2,057,902

2,176,547

Cost of product sold:

 Propane and other gas liquids sales

355,316

295,881

1,060,216

1,042,153

1,225,431

1,321,653

 Other

51,132

75,714

82,520

136,153

99,220

151,399

Gross profit

208,842

189,538

602,476

578,526

733,251

703,495

Operating expense

106,560

94,993

308,000

296,920

411,815

394,170

Depreciation and amortization expense

20,848

20,635

62,022

62,170

82,346

83,808

General and administrative expense

11,893

8,520

37,017

29,367

49,032

41,124

Equipment lease expense

3,259

4,282

10,160

14,418

14,148

20,412

Employee stock ownership plan compensation charge

2,698

1,460

6,961

4,865

8,851

7,585

Loss on disposal of assets and other

2,696

2,323

5,480

8,924

9,598

11,445

Operating income

60,888

57,325

172,836

161,862

157,461

144,951

Interest expense

(25,933)

(22,027)

(74,844)

(69,090)

(95,273)

(89,451)

Debt prepayment premiums

(3,408)

-

(20,716)

-

(20,716)

-

Other income (expense), net

(529)

(190)

(1,085)

(1,351)

(1,055)

(1,660)

Earnings before income taxes

31,018

35,108

76,191

91,421

40,417

53,840

Income tax expense

1,754

1,847

2,006

2,713

1,585

4,247

Net earnings

29,264

33,261

74,185

88,708

38,832

49,593

Net earnings attributable to noncontrolling interest (a)

401

397

976

1,079

680

744

Net earnings attributable to Ferrellgas Partners, L.P.

28,863

32,864

73,209

87,629

38,152

48,849

Less: General partner's interest in net earnings

289

329

732

876

382

488

Common unitholders' interest in net earnings

$   28,574

$   32,535

$      72,477

$      86,753

$      37,770

$      48,361

Earnings Per Unit

Basic and diluted net earnings per common unitholders' interest

$       0.41

$       0.48

$          1.05

$          1.34

$          0.55

$          0.75

Weighted average common units outstanding

69,495.2

67,809.3

69,147.4

64,650.2

68,904.3

64,224.6

Supplemental Data and Reconciliation of Non-GAAP Items:

Three months ended

Nine months ended

Twelve months ended

April 30,

April 30,

April 30,

2010

2009

2010

2009

2010

2009

Net earnings attributable to Ferrellgas Partners, L.P.

$   28,863

$   32,864

$      73,209

$      87,629

$      38,152

$      48,849

 Income tax expense

1,754

1,847

2,006

2,713

1,585

4,247

 Interest expense

25,933

22,027

74,844

69,090

95,273

89,451

 Debt prepayment premiums

3,408

-

20,716

-

20,716

-

 Depreciation and amortization expense

20,848

20,635

62,022

62,170

82,346

83,808

 Other income (expense), net

529

190

1,085

1,351

1,055

1,660

EBITDA

81,335

77,563

233,882

222,953

239,127

228,015

 Employee stock ownership plan compensation charge

2,698

1,460

6,961

4,865

8,851

7,585

 Unit and stock-based compensation charge (b)

1,024

452

4,188

1,109

5,391

1,542

 Loss on disposal of assets and other

2,696

2,323

5,480

8,924

9,598

11,445

 Net earnings attributable to noncontrolling interest

401

397

976

1,079

680

744

Adjusted EBITDA (c)

88,154

82,195

251,487

238,930

263,647

249,331

 Net cash interest expense (d)

(26,422)

(21,547)

(73,101)

(68,476)

(93,540)

(90,061)

 Maintenance capital expenditures (e)

(4,174)

(4,785)

(15,583)

(17,327)

(20,022)

(22,863)

 Cash paid for taxes

(610)

(537)

(942)

(869)

(1,585)

(3,383)

 Proceeds from asset sales

1,436

1,973

4,597

6,878

5,918

9,087

Distributable cash flow to equity investors (f)

$   58,384

$   57,299

$    166,458

$    159,136

$    154,418

$    142,111

Propane gallons sales

 Retail - Sales to End Users

188,630

183,683

590,905

556,078

687,615

645,663

 Wholesale - Sales to Resellers

58,916

55,523

189,872

169,293

242,617

219,896

 Total propane gallons sales

247,546

239,206

780,777

725,371

930,232

865,559

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

(b)  FASB guidance relating to stock compensation requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. Share-based payment transactions resulted in a non-cash compensation charge of $0.3 million and $0.2 million to operating expense for the three months ended April 30, 2010 and 2009, respectively, $1.2 million and $0.4 million to operating expense for the nine months ended April 30, 2010 and 2009, respectively, and $1.6 million and $0.5 million to operating expense for the twelve months ended April 30, 2010 and 2009, respectively. A non-cash compensation charge of $0.7 million and $0.3 million was recorded to general and administrative expense for the three months ended April 30, 2010 and 2009, respectively, $3.0 million and $0.7 million to general and administrative expense for the nine months ended April 30, 2010 and 2009, respectively, and $3.8 million and $1.0 million to general and administrative expense for the twelve months ended April 30, 2010 and 2009, respectively.

(c)  Management considers Adjusted EBITDA to be a chief measurement of the partnership's overall economic performance and return on invested capital. Adjusted EBITDA is calculated as earnings before interest expense, income tax expense, depreciation and amortization expense, employee stock ownership plan compensation charge, unit and stock-based compensation charge, loss on disposal of assets and other, net earnings attributable to noncontrolling interest, and other income (expense), net. 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. In addition, management believes this measure is consistent with the manner in which the partnership's lenders and investors measure its overall performance including its ability to pay quarterly equity distributions, service its long-term debt and other fixed obligations and fund its capital expenditures and working capital requirements. 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 entities.

SOURCE Ferrellgas Partners, L.P.



RELATED LINKS

http://www.ferrellgas.com