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Ferrellgas Partners LP Message Board

  • bonkthegrups bonkthegrups Mar 23, 2012 10:31 AM Flag

    Simple FGP analysis - please dispute if you can

    Please demonstrate ANY year where FGP has generated cash flow more than its distribution. Let's do some math:

    Let's look at operating income, add back depreciation (no cash) and deduct capital expenditures (cash) and deduct interest expense (cash), and compare that to their distributions for fiscal years ending July (income tax is nil):

    2011: 109+83-50-102 = $40 million vs. distributions of $145 million
    2010: 167+83-45-101 = $104 million vs. distributions of $140 million
    2009: 159+83-54-89 = $99 million vs. distributions of $133 million
    2008: 122+86-44-87 = $77 million vs. distributions of $127 million
    2007: 137+87-47-88 = $89 million vs. distributions of $127 million

    So let's cacluate the hole on the simple math above:

    2011: ($105) million
    2010: ($36) million
    2009: ($34) million
    2008: ($50) million
    2007: ($38) million

    So over 5 years that's payments outstripping the cash generation of about $263 million.

    Total debt right now looks about $1.3 billion. Total debt in FY 2007 was $1.07 billion.

    So they overpaid about $263 million, and racked up additional debt of about $230 million.

    See a pattern here? Now look at the debt covenants and ask yourself how long this can continue.

    Let's ignore this winter and just look at the average of the above FY 2007-FY 2011 numbers. I calculate about $82 million on average, vs. distributions of $150 million.

    My rough math above is that to stabilize the debt they probably need a 50% cut in tne distributionn but the longer they wait the more likely they may have to cut it completely to pay down debt. In my opinion they should do the right thing now and cut it by 75%, start paying down debt and then gradually increase the dividend over time on a sustainable basis. Of course this would knock the yield down to 3.6% on the current share price which is why I think a single digit share price is where it's headed.

    This is why I have been loaded to the gills with put options. The warm weather has just been gravy.

    Please explain where I am wrong and why they can keep paying and why I should go long. Thanks

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    • << All the analysts disagree with you. >>

      Well, well well. Looks like "all the analysts" are wrong.

      I am an "analyst", too - but of a different kind. :-)

    • Well all I see is talk that looks exactly like bullshat, and yes I suspect ur playing with ur self.

      All the analysts disagree with you.

      Theprice to book is high. FGP is going lower.

    • Cuz, imo, at current pps of approximately 14.5 it is oversold. Based on company statistics and numbers, the upside potential is now greater than the downside potential.

      To me, everything in the market is about probabilities - for every stock, the plus and minus probabilities change as the stock price goes up or down, affected by unpredictable variables, i.e. the weather, for FGP. Variables vary for each company depending on the type of business. The weight of such variables also vary in importance and impact to the business.

      For FGP, an important and significant variable is the weather. Since the weather, especially winter weather was warmer than normal, and the current weather is warmer than normal, the probability of it going lower is now higher than the probability of it to continue going higher. Therefore, the odds of FGP numbers improving on the upside is now higher than the probability of it continuing on the downside.

      That's why I am now bullish. :-)

      (But don't take me seriously - I just like to "talk" and play around. Hehe.)

    • You obviously took Accounting 101, but apparently dropped out to major in being an #$%$ You don't understand how a partnership functions. I am a retired CPA, and I'm only going to give you a hint, and an assignment. Read the 10-K and the partnership agreement. Then you'll be a more intelligent basher.

    • Not sure your analysis is wrong but according to the cash flow statement for this past quarter

      FGP increase it net case position after distributions were made - from the cash flow statement

      Increase in cash and cash equivalents (000) 8,288

      • 1 Reply to sjmorl
      • "Increase in cash and cash equivalents (000) 8,288"

        That's because of this:

        Net cash provided by financing activities 84,718 (i.e. raising more debt)

        Their operating cash flow was negative (44,024), and their investing cash flows (mostly capex) were negative (32,406).

        A single quarter shouldn't be looked at in isolation (e.g. this quarter they ramped up inventory buys ahead of winter).

        The real question is how long can they keep borrowing and borrowing before they hit a wall like Greece.

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