FGP Ferrellgas Partners LP

Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal third quarter ended April 30, 2019.

For the quarter, the Company reported a net earnings attributable to Ferrellgas Partners, L.P. of $20.5 million, or $.21 per common unit, compared to prior year period net loss of $10.9 million, or $.11 per common unit.

Adjusted EBITDA, a non-GAAP measure, was $88.6 million compared to $86.9 million in the prior year. The following table represents the contribution to adjusted EBITDA from ongoing propane operations as well as from assets that were sold during 2018.

(in millions)	Q3 2019		Q3 2018
Propane Operations and Corporate Support	$88.6		$84.6
Results from Assets Sold in 2018	-		$2.3
Consolidated Adjusted EBITDA	$88.6		$86.9

On a trailing twelve month basis, adjusted EBITDA from ongoing propane operations and corporate support as of April 30, 2019 is $234.2 million compared to $229.4 million as of January 31, 2019.

The Company’s propane operations reported that total gallons sold of 264.1 million were 7% higher than prior year. Margin cents per gallon were 1.7¢, or 2.2 percent higher than the prior year despite increased competitive pressure in the tank exchange business. The Company continues its aggressive approach to gaining market share.  This strategic focus resulted in nearly 26,000 new customers, or approximately 4 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 6 percent from prior year to over 54,300 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $18.3 million.  The Company’s ongoing commitment to investing in the business led to higher operating expenses during the quarter which were largely associated with serving nearly 26,000 new customers and 3,000 new tank exchange locations.  As a result of this investment and the growth in sales volumes, operating, general and administrative expenses in our Propane segment were $9.3 million higher than the prior year.

Liquidity of $292.3 million at April 30, 2019 resulted from $246.9 million of available borrowing capacity on the Company’s secured credit facility and accounts receivable securitization facility as well as $45.4 million of cash.

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 2020.  Additionally, as the Company continues to evaluate options to address leverage, 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 is suspending 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 September 27, 2018. 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, 2018, 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, 2019				July 31, 2018
Current Assets:
Cash and cash equivalents		$	45,434			$	119,311
Accounts and notes receivable, net (including $160,959 and $120,079 of accounts
receivable pledged as collateral at April 30, 2019 and July 31, 2018, respectively)			157,229				126,054
Inventories			78,449				83,694
Prepaid expenses and other current assets			25,489				34,862
Total Current Assets			306,601				363,921
Property, plant and equipment, net			603,923				557,723
Goodwill, net			247,508				246,098
Intangible assets, net			109,634				120,951
Other assets, net			62,326				74,588
Total Assets		$	1,329,992			$	1,363,281
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable		$	41,408			$	46,820
Short-term borrowings			-				32,800
Collateralized note payable			62,000				58,000
Other current liabilities			160,507				142,025
Total Current Liabilities			263,915				279,645
Long-term debt (a)			2,084,506				2,078,637
Other liabilities			35,879				39,476
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at April 30, 2019 and July 31, 2018)			(976,902	)			(978,503	)
General partner unitholder (989,926 units outstanding at April 30, 2019 and July 31, 2018)			(69,776	)			(69,792	)
Accumulated other comprehensive income (loss)			(846	)			20,510
Total Ferrellgas Partners, L.P. Partners' Deficit			(1,047,524	)			(1,027,785	)
Noncontrolling interest			(6,784	)			(6,692	)
Total Partners' Deficit			(1,054,308	)			(1,034,477	)
Total Liabilities and Partners' Deficit		$	1,329,992			$	1,363,281
(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
	2019				2018				2019				2018				2019				2018
Revenues:
Propane and other gas liquids sales	$	459,556			$	451,302			$	1,344,634			$	1,346,299			$	1,641,311			$	1,615,500
Midstream operations		-				22,595				-				260,631				21,688				395,827
Other		20,069				41,913				60,677				118,691				89,833				147,670
Total revenues		479,625				515,810				1,405,311				1,725,621				1,752,832				2,158,997
Cost of sales:
Propane and other gas liquids sales		250,389				260,419				766,056				802,852				936,618				945,279
Midstream operations		-				14,518				-				229,710				25,849				358,716
Other		2,320				19,850				8,789				54,339				23,104				68,393
Gross profit		226,916				221,023				630,466				638,720				767,261				786,609
Operating expense		119,991				116,579				351,541				350,757				472,532				460,234
Depreciation and amortization expense		20,617				25,348				59,214				76,565				84,444				102,370
General and administrative expense		11,516				11,678				42,037				39,733				56,705				52,824
Equipment lease expense		8,319				7,133				24,597				20,828				32,041				27,917
Non-cash employee stock ownership plan compensation charge		(4	)			2,738				4,688				10,731				7,816				14,423
Asset impairments		-				-				-				10,005				-				10,005
Loss on asset sales and disposals		1,683				6,270				8,403				46,414				149,388				52,010
Operating income (loss)		64,794				51,277				139,986				83,687				(35,665	)			66,826
Interest expense		(44,162	)			(40,375	)			(132,931	)			(123,855	)			(177,543	)			(164,233	)
Other income (expense), net		251				227				356				1,422				(138	)			1,463
Earnings (loss) before income tax benefit		20,883				11,129				7,411				(38,746	)			(213,346	)			(95,944	)
Income tax expense (benefit)		123				67				284				282				(2,676	)			(667	)
Net earnings (loss)		20,760				11,062				7,127				(39,028	)			(210,670	)			(95,277	)
Net earnings (loss) attributable to noncontrolling interest (b)		299				201				337				(131	)			(1,776	)			(612	)
Net earnings (loss) attributable to Ferrellgas Partners, L.P.		20,461				10,861				6,790				(38,897	)			(208,894	)			(94,665	)
Less: General partner's interest in net earnings (loss)		205				109				68				(389	)			(2,089	)			(947	)
Common unitholders' interest in net earnings (loss)	$	20,256			$	10,752			$	6,722			$	(38,508	)		$	(206,805	)		$	(93,718	)
Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest	$	0.21			$	0.11			$	0.07			$	(0.40	)		$	(2.13	)		$	(0.96	)
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
	2019				2018				2019				2018				2019				2018
Net earnings (loss) attributable to Ferrellgas Partners, L.P.	$	20,461			$	10,861			$	6,790			$	(38,897	)		$	(208,894	)		$	(94,665	)
Income tax expense (benefit)		123				67				284				282				(2,676	)			(667	)
Interest expense		44,162				40,375				132,931				123,855				177,543				164,233
Depreciation and amortization expense		20,617				25,348				59,214				76,565				84,444				102,370
EBITDA		85,363				76,651				199,219				161,805				50,417				171,271
Non-cash employee stock ownership plan compensation charge		(4	)			2,738				4,688				10,731				7,816				14,423
Asset impairments		-				-				-				10,005				-				10,005
Loss on asset sales and disposal		1,683				6,270				8,403				46,414				149,388				52,010
Other income (expense), net		(251	)			(227	)			(356	)			(1,422	)			138				(1,463	)
Severance costs $690 included in operating costs for the nine and twelve months ended period April 30, 2019 and $910 included in general and administrative costs for the nine and twelve months ended April 30, 2019. Also includes $358 in operating costs for the nine and twelve months ended period April 30, 2018 and $1,305 included in general and administrative costs for the nine and twelve months ended April 30, 2018.		-				-				1,600				1,663				1,600				1,663
Legal fees and settlements		1,471				1,289				10,643				3,407				13,301				3,407
Multi-employer pension plan withdrawal settlement		-				-				1,524				-				1,524				-
Exit costs associated with contracts - Midstream dispositions		-				-				-				-				11,804				-
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(759) included in operating expense for the twelve months ended April 30, 2018. Also includes $1,293 and $3,044 included in midstream operations cost of sales for the nine and twelve months ended April 30, 2018, respectively.		-				-				-				1,293				-				2,285
Net earnings (loss) attributable to noncontrolling interest (b)		299				201				337				(131	)			(1,776	)			(612	)
Adjusted EBITDA (c)		88,561				86,922				226,058				233,765				234,212				252,989
Net cash interest expense (d)		(40,747	)			(37,873	)			(123,325	)			(115,664	)			(168,553	)			(153,782	)
Maintenance capital expenditures (e)		(13,506	)			(5,741	)			(45,038	)			(19,085	)			(53,570	)			(25,502	)
Cash refund from (paid for) taxes		(23	)			470				(21	)			458				(188	)			176
Proceeds from certain asset sales		456				148				2,416				4,355				7,264				8,144
Distributable cash flow attributable to equity investors (f)		34,741				43,926				60,090				103,829				19,165				82,025
Distributable cash flow attributable to general partner and non-controlling interest		695				879				1,202				2,077				383				1,641
Distributable cash flow attributable to common unitholders (g)		34,046				43,047				58,888				101,752				18,782				80,384
Less: Distributions paid to common unitholders		-				9,715				9,715				29,146				19,430				38,861
Distributable cash flow excess/(shortage)	$	34,046			$	33,332			$	49,173			$	72,606			$	(648	)		$	41,523
Propane gallons sales
Retail - Sales to End Users		204,441				189,183				573,152				543,548				666,572				635,326
Wholesale - Sales to Resellers		59,641				57,121				179,256				185,492				233,974				241,710
Total propane gallons sales		264,082				246,304				752,408				729,040				900,546				877,036

(b)	Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(c)	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, asset impairments, loss on asset sales and disposal, other income (expense), net, severance costs, legal fees and settlements, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, unrealized (non-cash) losses (gains) on changes in fair value of derivatives, 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.
(d)	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.
(e)	Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
(f)	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.
(g)	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.