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Ferrellgas Partners, L.P. Reports Third Quarter Fiscal 2020 Results

  • Gross Profit increased by $6.2 million, or almost three percent, compared to the prior year period as a result of an 8 cent increase in gross margin per gallon combined with a 24 percent increase in tank exchange volumes.
  • Propane sales volume for the quarter decreased by 17.2 million gallons due to  weather that was 10 percent warmer than the prior year and to the widespread slowdown of the economy due to COVID-19 primarily impacting the Industrial/Commercial customer base.
  • Successfully issued $700M of Senior Secured Notes due 2025

OVERLAND PARK, Kan., June 04, 2020 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC Pink: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its third quarter ended April 30, 2020.

For the quarter, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $15.4 million, or $0.16 per common unit, compared to prior year period net earnings of $20.5 million, or $0.21 per common unit.  The $15.4 million net loss attributable to Ferrellgas Partners, L.P. includes $37.4 million loss from early extinguishment of debt.  Adjusted EBITDA, a non-GAAP measure, for the quarter was $92.3 million compared to $88.6 million in the prior year’s third quarter, a 4 percent increase.

The Company’s propane operations reported that total gallons sold for the quarter were 246.8 million, down from 264.1 million gallons in the prior year due to warmer temperatures than prior year and the widespread slowdown of the economy due to COVID-19, partially offset by customer growth. Gross margin cents per gallon were 8 cents, or 10 percent higher than the prior year due to wholesale propane prices that were approximately 50 percent lower than the prior year. The Company continues its aggressive operating strategies in gaining market share.  This strategic focus resulted in over 22,000 new customers and over 3,900 new tank exchange selling locations, or approximately three and seven percent more than prior year, respectively. Additionally, the Company successfully issued $700M of senior first lien notes due 2025.  Proceeds were used to repay the senior secured credit facility, to collateralize letters of credit and for general corporate purposes.

As previously announced, the Company indefinitely suspended its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in the senior unsecured notes due June of 2020.  Additionally, Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to address our upcoming debt maturities.  The Company does not intend to comment further on its progress in this regard or on potential options until further disclosure is appropriate or required by law.  For that reason, and in view of the information the Company otherwise makes available in earnings releases and quarterly and annual reports, the Company has suspended the practice of holding conference calls with investors, analysts and other interested parties in connection with periodic reporting of financial results for completed periods.

About Ferrellgas
Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., and subsidiaries, serves propane customers in all 50 states, the District of Columbia, and Puerto Rico. Ferrellgas employees indirectly own 22.8 million common units of the partnership, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed a Form 10-K with the Securities and Exchange Commission on October 15, 2019. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership online at www.ferrellgas.com.

Forward Looking Statements
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 include those 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, 2019, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

Investor Relations – InvestorRelations@ferrellgas.com

 
 
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
         
ASSETS   April 30, 2020   July 31, 2019
                 
Current Assets:                
Cash and cash equivalents (including $141,318 and $0 of restricted cash   $ 318,847     $ 11,054  
at April 30, 2020 and July 31, 2019, respectively)                
Accounts and notes receivable, net (including $134,443 and $106,145 of accounts                
receivable pledged as collateral at April 30, 2020 and July 31, 2019, respectively)     142,952       107,596  
Inventories     65,209       80,454  
Prepaid expenses and other current assets     47,223       42,275  
Total Current Assets     574,231       241,379  
                 
Property, plant and equipment, net     596,978       596,723  
Goodwill, net     247,195       247,195  
Intangible assets, net     103,966       108,557  
Operating lease right-of-use asset     110,497       -  
Other assets, net     87,472       69,105  
Total Assets   $ 1,720,339     $ 1,262,959  
                 
                 
LIABILITIES AND PARTNERS' DEFICIT                
                 
Current Liabilities:                
Accounts payable   $ 37,025     $ 33,364  
Short-term borrowings     -       43,000  
Collateralized note payable     -       62,000  
Current portion of long-term debt (a)     359,050       631,756  
Current operating lease liabilities     31,914       -  
Other current liabilities     174,823       138,237  
Total Current Liabilities     602,812       908,357  
                 
Long-term debt     2,146,044       1,457,004  
Operating lease liabilities     76,133       -  
Other liabilities     52,167       36,536  
Contingencies and commitments                
                 
Partners Deficit:                
Common unitholders (97,152,665 units outstanding at April 30, 2020 and July 31, 2019)     (1,057,859 )     (1,046,245 )
General partner unitholder (989,926 units outstanding at April 30, 2020 and July 31, 2019)     (70,593 )     (70,476 )
Accumulated other comprehensive loss     (20,580 )     (14,512 )
Total Ferrellgas Partners, L.P. Partners' Deficit     (1,149,032 )     (1,131,233 )
Noncontrolling interest     (7,785 )     (7,705 )
Total Partners' Deficit     (1,156,817 )     (1,138,938 )
Total Liabilities and Partners' Deficit   $ 1,720,339     $ 1,262,959  
                 
         
(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $357 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per unit data)
(unaudited)
 
    Three months ended   Nine months ended   Twelve months ended
    April 30   April 30   April 30
      2020       2019       2020       2019       2020       2019  
Revenues:                        
Propane and other gas liquids sales   $ 391,745     $ 459,556     $ 1,150,377     $ 1,344,634     $ 1,414,601     $ 1,641,311  
Midstream operations             -       -       -       -       21,688  
Other     20,385       20,069       65,800       60,677       80,657       89,833  
Total revenues     412,130       479,625       1,216,177       1,405,311       1,495,258       1,752,832  
                                                 
Cost of sales:                                                
Propane and other gas liquids sales     176,265       250,389       548,136       766,056       684,596       936,618  
Midstream operations     -       -       -       -       -       25,849  
Other     2,740       2,320       9,774       8,789       12,391       23,104  
                                                 
Gross profit     233,125       226,916       658,267       630,466       798,271       767,261  
                                                 
Operating expense - personnel, vehicle, plant & other     121,558       119,991       364,334       351,541       481,661       472,532  
Depreciation and amortization expense     20,366       20,617       59,380       59,214       79,012       84,444  
General and administrative expense     12,560       11,516       36,447       42,037       54,404       56,705  
Operating expense - equipment lease expense     8,075       8,319       24,724       24,597       33,200       32,041  
Non-cash employee stock ownership plan compensation charge     757       (4 )     2,182       4,688       3,187       7,816  
Loss on asset sales and disposals     1,859       1,683       6,242       8,403       8,807       149,388  
                                                 
Operating income (loss)     67,950       64,794       164,958       139,986       138,000       (35,665 )
                                                 
Interest expense     (45,703 )     (44,162 )     (138,948 )     (132,931 )     (183,636 )     (177,543 )
Loss on extinguishment of debt     (37,399 )     -       (37,399 )     -       (37,399 )     -  
Other income (expense), net     (158 )     251       (214 )     356       (201 )     (138 )
                                                 
Earnings (loss) before income tax expense (benefit)     (15,310 )     20,883       (11,603 )     7,411       (83,236 )     (213,346 )
                                                 
Income tax expense (benefit)     161       123       794       284       833       (2,676 )
                                                 
Net earnings (loss)     (15,471 )     20,760       (12,397 )     7,127       (84,069 )     (210,670 )
                                                 
Net earnings (loss) attributable to noncontrolling interest (a)     (78 )     299       133       337       (502 )     (1,776 )
                                                 
Net earnings (loss) attributable to Ferrellgas Partners, L.P.     (15,393 )     20,461       (12,530 )     6,790       (83,567 )     (208,894 )
                                                 
Less: General partner's interest in net earnings (loss)     (154 )     205       (125 )     68       (835 )     (2,089 )
                                                 
Common unitholders' interest in net earnings (loss)   $ (15,239 )   $ 20,256     $ (12,405 )   $ 6,722     $ (82,732 )   $ (206,805 )
                                                 
Earnings (loss) Per Common Unit                                                
Basic and diluted net earnings loss per common unitholders' interest   $ (0.16 )   $ 0.21     $ (0.13 )   $ 0.07     $ (0.85 )   $ (2.13 )
                                                 
Weighted average common units outstanding - basic     97,152.7       97,152.7       97,152.7       97,152.7       97,152.7       97,152.7  
                                                 
                                                 
Supplemental Data and Reconciliation of Non-GAAP Items:
                         
    Three months ended   Nine months ended   Twelve months ended
    April 30   April 30   April 30
      2020       2019       2020       2019       2020       2019  
                         
                                                 
Net earnings (loss) attributable to Ferrellgas Partners, L.P.   $ (15,393 )   $ 20,461     $ (12,530 )   $ 6,790     $ (83,567 )   $ (208,894 )
Income tax expense (benefit)     161       123       794       284       833       (2,676 )
Interest expense     45,703       44,162       138,948       132,931       183,636       177,543  
Depreciation and amortization expense     20,366       20,617       59,380       59,214       79,012       84,444  
EBITDA     50,837       85,363       186,592       199,219       179,914       50,417  
Non-cash employee stock ownership plan compensation charge     757       (4 )     2,182       4,688       3,187       7,816  
Loss on asset sales and disposal     1,859       1,683       6,242       8,403       8,807       149,388  
Loss on extinguishment of debt     37,399       -       37,399       -       37,399       -  
Other income (expense), net     158       (251 )     214       (356 )     201       138  
Severance expense includes $690 in operating expense and $910 in general and administrative                                                
expense for the nine and twelve months ended period ending April 30, 2019.     -       -       -       1,600       -       1,600  
Legal fees and settlements related to non-core businesses     1,325       1,471       5,887       10,643       13,608       13,301  
Multi-employer pension plan withdrawal settlement     -       -       -       1,524       -       1,524  
Exit costs associated with contracts - Midstream dispositions     -       -       -       -       -       11,804  
Lease accounting standard adjustment and other     80       -       134       -       134       -  
Net earnings (loss) attributable to noncontrolling interest (b)     (78 )     299       133       337       (502 )     (1,776 )
Adjusted EBITDA (b)     92,337       88,561       238,783       226,058       242,748       234,212  
Net cash interest expense (c)     (43,442 )     (40,747 )     (129,341 )     (123,325 )     (170,806 )     (168,553 )
Maintenance capital expenditures (d)     (6,803 )     (13,506 )     (18,700 )     (45,038 )     (20,436 )     (53,570 )
Cash refund from (paid for) taxes     (49 )     (23 )     (50 )     (21 )     (170 )     (188 )
Proceeds from certain asset sales     851       456       2,510       2,416       4,343       7,264  
Distributable cash flow attributable to equity investors (e)     42,894       34,741       93,202       60,090       55,679       19,165  
Distributable cash flow attributable to general partner and non-controlling interest     858       695       1,864       1,202       1,113       383  
Distributable cash flow attributable to common unitholders (f)     42,036       34,046       91,338       58,888       54,566       18,782  
Less: Distributions paid to common unitholders     -       -       -       9,715       -       19,430  
Distributable cash flow excess/(shortage)   $ 42,036     $ 34,046     $ 91,338     $ 49,173     $ 54,566     $ (648 )
                                                 
Propane gallons sales                                                
Retail - Sales to End Users     186,175       204,441       552,340       573,152       651,454       666,572  
Wholesale - Sales to Resellers     60,660       59,641       179,695       179,256       233,005       233,974  
Total propane gallons sales     246,835       264,082       732,035       752,408       884,459       900,546  
(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. 
(b) Adjusted EBITDA is calculated as net earnings (loss) attributable to Ferrellgas Partners, L.P., less the sum of the following: income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss on asset sales and disposals, loss on extinguishment of debt, other income (expense), net, severance expense, legal fees and settlements related to non-core businesses, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, lease accounting standard adjustment and other and net earnings (loss) 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. 
(c) Net cash interest expense is the sum of interest expense less non-cash interest expense and other expense, net. This amount includes interest expense related to the accounts receivable securitization facility. 
(d)  Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment. 
(e) Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for taxes plus proceeds from certain asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to distributable cash flow attributable to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP. 
(f)  Distributable cash flow attributable to common unitholders is calculated as Distributable cash flow attributable to equity investors minus distributable cash flow attributable to general partner and noncontrolling interest. Management considers distributable cash flow attributable to common unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow attributable to common unitholders, as management defines it, may not be comparable to distributable cash flow attributable to common unitholders or similarly titled measurements used by other corporations and partnerships. Items added to our calculation of distributable cash flow attributable to common unit holders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to common unitholders may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP