I went over the financial statements for last quarter and the January quarter last year.Taking into account what Suburban Propane said on their conference call, following is my conclusion.
Last quarter FGP gross profit was 24%. Last year the Jan quarter had a GP of 28%. Suburban indicated their quarter saw a 15% reduction in demand year over year due to the weather and other factors.
Applying this to FGP it looks like there will be about 45 million dollars of cash generated this quarter, 20 of which comes from depreciation. Assuming their working capital position has not radically changed and they have throttled their capital budget, they should be able to pay the distribution. If they will or not is the big question. James Ferrell owns a bunch of shares and the employees own about 33% of the outstanding shares. A distribution cut will be a massive blow damaging the share price for a long time. Also it will signal a huge management failure especially since they have been on an aquisition binge lately. Like many of us I have made a bunch of money on FGP over the years. In fact this was the first company I started buying after the financial meltdown in 2009.But I have to say I am very concerned about the near term prospects. I just do not see how they will get through the summer. Blue rhino is a good gig but it can not make up for the lack of filling 200 gallon tanks in the yard this winter. The up coming conference call will be interesting to say the least.
I actually wondered, after I've posted, whether my assumption was correct. I stand corrected. Thank you for piping in.
Btw, I used to love buying things - many just out of impulse, but I have changed. I find money can be better put to use thru helping others, especially on education needs (helping relatives mostly), and since I also care for the environment very much, I am very much interested in how we can preserve or conserve our environment but still have quality and enjoyable life. I have somewhat transitioned from materialism to existentialism. :-)
Cheers! Here's wishing you lots of profitable investments!
Either a declaration that the distribution will be cut or that it will continue should be well received. Think of the similarity to "buy the rumor, sell the news." Here we are selling the rumor ( a distribution cut ) to buy on the news (any news).
<<A distribution cut will be a massive blow damaging the share price for a long time. Also it will signal a huge management failure especially since they have been on an aquisition binge lately. >>
Management was aggressive, but weather did not aid their aggression. If this had been a really cold winter (which some forecasters, like Exacta Weather, were predicting) then we would be praising their aggression.
Long term hold from here will still be a good investment, IMO, even with a distribution cut that seems to be now baked into the price.
NRGY was taken out to the woodshed and flogged hard these past weeks as well, yet it seems to have reached bottom and was UP yesterday by 4.5%.
<< Long term hold from here will still be a good investment, IMO, even with a distribution cut that seems to be now baked into the price.>>
I agree with you 100%.
I am planning to get NRGY shares as well, and hold for a long time. The weather will always be fickle and the company just has to adjust to it, period - and they have been!