Ferrellgas Partners Reports Second-Quarter Results

Mar 11, 2011, 07:00 ET from Ferrellgas Partners, L.P.

OVERLAND PARK, Kan., March 11, 2011 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the largest distributors of propane, today reported earnings for the fiscal second quarter ended January 31.

Revenues grew 8% in the quarter to $841.0 million from $777.9 million the year before on propane sales volumes that trailed prior year results by approximately 7%.  Propane sales volumes for the quarter were 328.4 million gallons, impacted in part by an 8% increase in the wholesale cost of propane from a year-ago levels.

President and Chief Executive Officer Steve Wambold explained, "The rise in wholesale propane costs combined with a slow start to the winter heating season impacted sales in the quarter.  Year to date nationwide temperatures were materially consistent with that of a year ago, but October's exceptional warmth along with warmer than normal temperatures in November and early-December significantly delayed the start of the winter heating season.  That delay could not be offset by the colder temperatures experienced in late-December and throughout January."

Wambold further commented, "Weakness in our first quarter's demand for agricultural sales continued this quarter resulting from this year's abnormally dry harvest season in comparison to last year's abnormally wet harvest season."

Gross profit in the quarter was $243.1 million, a modest decline of 2%, while operating expense savings was offset by a non-recurring general liability settlement in the quarter.    Net income totaled $22.4 million and excluding the $36.4 million loss on the extinguishment of debt, net earnings per unit were $0.82, compared to $1.10 the year before.

In November, the partnership refinanced its $450 million, 6.75% debt due 2014 through the issuance of $500 million, 6.5% debt due 2021.  Following this transaction, the partnership has no material debt maturities prior to November 2012 and no public debt maturities until 2017.  Adjusted EBITDA for the quarter was $121.0 million compared to $130.1 million in the second quarter of last year.

Wambold pointed out, "Not to be overlooked is the continued, strong performance of our Blue Rhino brand, which not only posted a 6% gain in transactions this quarter, but also positioned itself for significant growth in the next grilling season.  Blue Rhino signed two major contracts, Walgreens and Safeway, which will increase locations by more than 2,800 locations nationwide."

Wambold also cited the progress of the partnership's acquisition program.  "We continue to focus on accretive acquisitions to supplement our organic growth efforts," he said.  "During the second quarter we acquired Kings River Propane and Bennett Gas Company and earlier this week we announced the acquisition of Ram Propane in Dubois, WY."

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

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, 2011

July 31, 2010

Current Assets:

 Cash and cash equivalents

$             25,489

$     11,401

 Accounts and notes receivable, net (including $233,120 and $0 of

   accounts receivable pledged as collateral at January 31, 2011

   and July 31, 2010, respectively)

326,432

89,234

 Inventories

155,413

166,911

 Prepaid expenses and other current assets

31,503

13,842

   Total Current Assets

538,837

281,388

Property, plant and equipment, net

641,452

652,768

Goodwill

248,939

248,939

Intangible assets, net

213,792

221,057

Other assets, net

41,431

38,199

   Total Assets

$        1,684,451

$1,442,351

LIABILITIES AND PARTNERS' CAPITAL

Current Liabilities:

 Accounts payable

$           142,612

$     48,658

 Short term borrowings

54,482

67,203

 Collateralized note payable

145,000

-

 Other current liabilities (a)

112,454

108,054

   Total Current Liabilities

454,548

223,915

Long-term debt (a)

1,140,026

1,111,088

Other liabilities

21,770

21,446

Contingencies and commitments

-

-

Partners' Capital:

Common unitholders (70,827,760 and 69,521,818 units

  outstanding at January 31, 2011 and July 31, 2010, respectively)

115,469

141,281

General partner unitholder (715,432 and 702,241 units

  outstanding at January 31, 2011 and July 31, 2010, respectively)

(58,905)

(58,644)

Accumulated other comprehensive income (loss)

8,040

(415)

   Total Ferrellgas Partners, L.P. Partners' Capital

64,604

82,222

   Noncontrolling Interest

3,503

3,680

   Total Partners' Capital

68,107

85,902

   Total Liabilities and Partners' Capital

$        1,684,451

$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, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2011 AND 2010

(in thousands, except per unit data)

(unaudited)

Three months ended

Six months ended

Twelve months ended

January 31

January 31

January 31

2011

2010

2011

2010

2011

2010

Revenues:

 Propane and other gas liquids sales

$ 774,179

$ 724,348

$ 1,142,802

$ 1,052,014

$ 1,991,106

$ 1,797,243

 Other

66,813

53,504

98,382

77,908

219,216

206,502

   Total revenues

840,992

777,852

1,241,184

1,129,922

2,210,322

2,003,745

Cost of product sold:

 Propane and other gas liquids sales

559,416

503,980

815,902

704,900

1,368,536

1,165,996

 Other

38,500

25,208

51,358

31,388

128,608

123,802

Gross profit

243,076

248,664

373,924

393,634

713,178

713,947

Operating expense

107,562

104,436

202,822

200,570

409,112

398,741

Depreciation and amortization expense

19,990

20,647

40,365

41,174

81,682

82,133

General and administrative expense

11,005

11,047

21,392

22,830

44,657

42,347

Equipment lease expense

3,543

3,127

7,192

6,901

13,732

15,171

Non-cash employee stock ownership plan compensation charge

2,932

2,261

5,376

4,263

10,435

7,613

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

11,068

413

12,081

3,164

16,748

4,819

Loss on disposal of assets and other

603

1,122

371

2,784

6,072

9,225

Operating income

86,373

105,611

84,325

111,948

130,740

153,898

Interest expense

(26,395)

(26,216)

(53,272)

(48,911)

(105,645)

(91,367)

Loss on extinguishment of debt

(36,449)

0

(36,449)

(17,308)

(39,857)

(17,308)

Other income (expense), net

88

(863)

266

(556)

(286)

(716)

Earnings (loss) before income taxes

23,617

78,532

(5,130)

45,173

(15,048)

44,507

Income tax expense

1,198

674

716

252

2,380

1,678

Net earnings (loss)

22,419

77,858

(5,846)

44,921

(17,428)

42,829

Net earnings attributable to noncontrolling interest (a)

290

847

68

575

123

676

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

22,129

77,011

(5,914)

44,346

(17,551)

42,153

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

221

12,614

(59)

443

(176)

421

Common unitholders' interest in net earnings (loss)

$   21,908

$   64,397

$      (5,855)

$      43,903

$    (17,375)

$      41,732

Earnings (loss) Per Unit

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

$       0.31

$       0.93

$        (0.08)

$          0.64

$        (0.25)

$          0.61

Dilutive effect of two-class method (b)

-

0.17

-

-

-

-

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

$       0.31

$       1.10

$        (0.08)

$          0.64

$        (0.25)

$          0.61

Weighted average common units outstanding

70,668.8

69,450.3

70,114.2

68,979.1

69,813.9

68,493.2

Supplemental Data and Reconciliation of Non-GAAP Items:

Three months ended

Six months ended

Twelve months ended

January 31

January 31

January 31

2011

2010

2011

2010

2011

2010

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

$   22,129

$   77,011

$      (5,914)

$      44,346

$    (17,551)

$      42,153

 Income tax expense

1,198

674

716

252

2,380

1,678

 Interest expense

26,395

26,216

53,272

48,911

105,645

91,367

 Depreciation and amortization expense

19,990

20,647

40,365

41,174

81,682

82,133

EBITDA

69,712

124,548

88,439

134,683

172,156

217,331

 Loss on extinguishment of debt

36,449

0

36,449

17,308

39,857

17,308

 Non-cash employee stock ownership plan compensation charge

2,932

2,261

5,376

4,263

10,435

7,613

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

11,068

413

12,081

3,164

16,748

4,819

 Loss on disposal of assets and other

603

1,122

371

2,784

6,072

9,225

 Other income (expense), net

(88)

863

(266)

556

286

716

 Net earnings attributable to noncontrolling interest

290

847

68

575

123

676

Adjusted EBITDA (d)

120,966

130,054

142,518

163,333

245,677

257,688

 Net cash interest expense (e)

(24,660)

(25,355)

(48,382)

(46,679)

(96,617)

(88,665)

 Maintenance capital expenditures (f)

(3,436)

(1,296)

(7,848)

(11,409)

(16,407)

(20,633)

 Cash refund (paid) for taxes

168

(332)

85

(332)

(1,133)

(1,512)

 Proceeds from asset sales

1,122

1,228

3,200

3,161

9,259

6,455

Distributable cash flow to equity investors (g)

$   94,160

$ 104,299

$      89,573

$    108,074

$    140,779

$    153,333

Propane gallons sales

 Retail - Sales to End Users

249,227

269,801

369,788

402,275

648,476

682,668

 Wholesale - Sales to Resellers

79,156

83,882

126,932

130,956

237,537

239,224

 Total propane gallons sales

328,383

353,683

496,720

533,231

886,013

921,892

(a)

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

(b)

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, 2011 or for the six and twelve months ended January 31, 2011 and 2010.

(c)

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

2011

2010

2011

2010

2011

2010

     Operating expense

$     3,126

$        114

$        3,262

$           870

$        4,546

$        1,507

     General and administrative expense

7,942

299

8,819

2,294

12,202

3,312

     Total

$   11,068

$        413

$      12,081

$        3,164

$      16,748

$        4,819

(d)

Adjusted EBITDA is calculated as earnings (loss) before income tax expense, interest expense, depreciation and amortization expense, loss on extinguishment of debt, employee stock ownership plan compensation charge, stock and unit-based compensation charge, loss on disposal of assets and other, other income (expense), net and net earnings 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.

(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