Ferrellgas Partners LP Reports Mixed Results Amid Warm Winter and Inflationary Pressures

• Net Earnings: Ferrellgas reported a slight decrease in net earnings to $95.8 million in Q2 2024 from $98.1 million in Q2 2023.

• Gross Profit: Gross profit dipped by $3.9 million, or 1%, compared to the prior year period.

• Revenue: Total revenue saw a significant drop of $74.1 million, primarily due to lower propane sales.

• Gallons Sold: Propane gallons sold decreased by 13.6 million, or 5%, largely due to customer attrition and warmer weather.

• Adjusted EBITDA: Adjusted EBITDA fell by $9.0 million, or 6%, to $146.9 million in the second fiscal quarter.

• Acquisitions and Technology Investments: The acquisition of Eastern Sierra Propane and investments in ERP systems and tank monitoring installations highlight strategic growth and customer service enhancements.

On March 8, 2024, Ferrellgas Partners LP (FGPR) released its 8-K filing, detailing the financial outcomes for the second fiscal quarter ended January 31, 2024. The company, a leading distributor of propane and related equipment in the United States, faced a challenging quarter marked by one of the warmest winters on record and persistent inflationary conditions.

Despite these challenges, Ferrellgas' account and general managers succeeded in growing retail EBITDA and securing millions of gallons of new business. However, the company's gross profit decreased by $3.9 million, or 1%, compared to the prior year, with total revenue falling by $74.1 million. This was partially offset by a decrease in the cost of product, which dropped by $70.2 million. The company's wholesale sales price per gallon, which is partially correlated to the wholesale market price of propane, averaged 10.1% and 15.0% less than the previous year, affecting both revenue and cost of product changes.

The margin per gallon increased slightly from $1.21 to $1.26, and operating income per gallon rose from $0.44 to $0.46. However, gallons sold decreased by 13.6 million, or 5%, primarily due to customer attrition and warmer weather. Operating expenses as a percentage of total revenue increased by 13%, with a modest increase in operating expense personnel, vehicle, plant, and office by $2.3 million, or 1%.

Financial Highlights and Strategic Moves

Ferrellgas' net earnings attributable to the partnership were $95.8 million for the quarter, a slight decrease from $98.1 million in the same period last year. Adjusted EBITDA, a key metric for evaluating the company's operational efficiency, decreased by $9.0 million, or 6%, to $146.9 million. This decrease was primarily due to the drop in gross profit and an increase in operating, general, and administrative expenses after adjusting for a decrease in legal fees and settlements related to non-core businesses.

The company's strategic moves included the acquisition of Eastern Sierra Propane, which expands its service area and complements existing operations in California. Technology investments remain a strategic priority, with the implementation of an ERP system and customer service enhancements such as digital welcome packages and tank monitoring installations.

Blue Rhino, Ferrellgas' propane exchange brand, celebrated its 30th anniversary with a special edition tank sleeve and a nationwide sweepstakes, highlighting the company's focus on brand engagement and customer experience.

Looking Ahead

While Ferrellgas faces headwinds from inflation and weather-related challenges, the company's focus on strategic acquisitions and technology enhancements positions it for potential growth and improved operational efficiency. The company's ability to navigate these challenges will be critical as it continues to serve a diverse customer base across the United States.

Investors and interested parties can access more detailed financial information and engage with the company during the teleconference scheduled for March 8, 2024, to discuss the second fiscal quarter results.

Ferrellgas' comprehensive financial statements, including the balance sheet and statements of operations, are available in the 8-K filing. The company continues to serve customers nationwide, with a strong presence in all 50 states, the District of Columbia, and Puerto Rico, through its operating partnership and subsidiaries.

For more detailed financial analysis and the latest updates on Ferrellgas Partners LP, visit GuruFocus.com.

Explore the complete 8-K earnings release (here) from Ferrellgas Partners LP for further details.

This article first appeared on GuruFocus.