How can this company keep paying such a large dividend with negative earnings? I own a few shares and am wondering if it's a smart move to buy more, but I don't understand this negative earnings high dividend equation.
I don't think there is any question that we are posturing. Of course any insider with two ounces of common sense knows that we've got a trojan horse. None of the decisions being made now are for the long term good of the company. I'm not happy about it but it's the truth.
That's an easy one. The tools are all there but the implimentation of those tools by current leadership is very poor. The timing of some of the cuts have caused serious operational issues. I don't disagree with some of the cuts and right sizing the business but Area/Regional Managers have gone too far in an effort to look good to Jim and their respective VPs. They feel that if they cut harder and deeper than their peers then they are seen as strong leaders. The truth is that they are too gutless to stand up and tell it like it is. What a shame.
The coverage ratio on the distribution has been well below 1.0x (close to .65x). For those of you who know nothing about MLP's and base investing on the yield, what it means is that they had to borrow cash to pay the distribution. Jim Ferrell was more or less, forced to re-subordinate his units, giving the common unit holders preference. Essentially, he is forgoing his distributions so that the common holders can receive them, because if the common units fail to receive their distributions, FGP has no equity market to turn to. The fact that Jim Ferrell was forced to subordinate his units means that FGP will not be seeing a increase in the distribution for a long time. Look at holders of Inergy (NRGY) that have seen their distribution basically double over the past 3 years as well as the unit price do the same.
And to let you know, FGP doesn't pay a dividend, it pays a distribution, which is drastically different. If you have actually owned FGP(or any MLP) then you can attest that the pleasant K-1's are not anywhere near 1099's.
Plainespoken, if you think the employees are happy you are sadly mistaken. Employees were threatened with termination and told not to ask questions when senior managment would come around for visits. Anyone challenging policies or the new business model, even to try to make things better, was terminated, especially at the beginning. Eventually, many of those terminated were found to be right and things were changed, but it was too late for those good people that lost their jobs. And for those investors that thing that the whiners and moaners needed to go, well, there were many good people that kept their mouths shut, were extremely dedicated and loyal to the company, and were willing to change that were let go only because of the quotas to get rid of people.
Currently, employees are still faced with "management by intimidation". Senior management does not have the true story of how the "underlings" feel, but much of that is because there has been such an "elitist" and "bullying" society built at FG over the past few years by the young financial wizards who come in for a few years, try to make their mark, change the internal culture to reflect whatever leadership book was passed out at the annual meeting, and then are let go by Ferrell after 3-4 years. In the mean time, the people that are slogging through the snow and mud to make the money for the company suffer. They see confusion, the highest prices in the industry, lack of training, inept managers that no nothing about the propane business, a de-emphasis on serving the customer, having to drive trucks with problems that can't be fixed (especially bad when they see the company spend millions on a new corporate office for the sake of vanity), benefits taken away, computer systems that give inaccurate data, a general lack of concern from management about safety, and a senior management team that doesn't even follow the company's own leadership book (Plain Spoken Leadership). In short, the neither trust or respect the management of FG but they keep pumping the gas and making the money for them anyway.
Some would say that if things are that bad why don't you just go find another job, but jobs just aren't that plentiful in many rural areas and most of us would rather make a deal with the devil to feed our families. Plus, we keep hoping that someone in the executive management will finally see the light and change things for the better (it sure isn't the current leadership, or lack thereof). If you think they are changing for the better with regards to the employees and customers, you are mistaken.
This board seems like it is so full of haters and as usual, seem to only have half the story. Check biz journal for info.
Employees are happy. Only those who were cut with the rest of the "fat" are not.
401k match is back and has been for months.
Houston office was consolidated with KC operations, not closed.
Storage operation was costing too much time and money to keep up with new gov regulations and was not a core business, so it was sold at a premium.
FG is now starting to get solid. I guess I just dont see how cost savings and streamlining can be seen as a negative.
How can you say the underground storage didnt make any money? Any one who works or should i say worked with fna knows that no matter what the cost of all the regulations storage made money hand over fist! I cant even begin to tell you how we are underpaid (compared to the rest of the imdustry) but we put out more gallons/barrls a day than what any retail facility ever thought about......i guess the press release said it all.....non stratgic assests.....well when a man can aquire something in an aquistion and make something a round $140 million...guess what? We as awhole are stratgic too some people. But i do have to give credit to all of the effected former employees...you were the back bone! Good job well done!
Sorry bigo....I don't mean to piss on your flowers but sometimes the truth hurts and it appears you just got hurt.....
Like I said.....investors are happy! Good for you! Customers and employees are not happy. Bad for FG. Your comment about needing new employees may be somewhat true.....the problem is that FG is getting rid of a lot of good people and bringing in part timers........oh well, I guess as long as you get your dividend (distribution), you don't give a crap about anyone or anything else.
Ferrell cannot continue to operate with a distribution coverage ratio below 1.0x. The cash either has to be borrowed or the subordniated holders don't get paid. That is fine and dandy until the ESOP no longer gets distributions and the employees have already seen a halt in the contribution matching and now the subordinated units aren't receiving distributions. This cannot continue for long. The same thing happened to Star Gas (SGU). Everyone said, they've paid the distribution for x number of years...and suddenly the game ended for them and Star gas dropped 75% in one day and then they were all crying that they never saw it coming despite the numerous warning signs. FGP has a high yield for a reason, the reward has to be great in order to compensate for the risk. Most investors are not smart enough to realize that the market prices risk into the yield. GE has a low yield because people know GE is a AAA rated company, FGP has a nearly 10% yield because it has a lot of risk involved in it. They will not drive the price up to the point that the yield is low, because they could easily buy an MLP like Kinder Morgan that has increased its distribution just about every quarter for the last 5 or 6 years. All the simpleton investors see is a fat yield and they think that FGP is a gravy train, without ever asking why the yield is so high. In fact, many investors think an MLP with a higher yield is better than one with a lower yield, never thinking that the MLP with a lower yield gets a higher valuation because they are growing and increasing the distribution every quarter. Look at PAA, it just raised its distribution from .58 to .65 in just 1 quarter. How long has it been since FGP raised its distribution?