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Ferrellgas Partners, L.P. Reports Third Quarter 2021 Results

·15-min read
  • Financial Highlights

    • Gross Profit increased by $30.2 million, or almost 13%, compared to the prior year period as a result of a $.06 increase in gross margin per gallon and 13.3 million higher gallon volumes.

    • Operating Income for the quarter increased by $25.4 million.

    • Tank Exchange selling locations now total 62,400, up over 4,000 from prior year, contributing to a 22% growth in volumes.

    • Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. successfully emerge from bankruptcy and completed the financial restructuring plan.

  • Company Highlights

    • The Ferrellgas Management Development Program, a diverse leadership, management and mentorship program, proudly placed 11 graduates in operations management positions across the country.

    • Ferrellgas launched Ferrell University, a professional development program for current Ferrellgas employees in all roles throughout the company.

    • Ferrellgas partnered with Operation BBQ to provide relief to storm impacted areas in southern United States.

    • Ferrellgas joins newly formed The World LPG Association Youth Council Steering Committee.

OVERLAND PARK, Kan., June 14, 2021 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its third quarter ended April 30, 2021.

"At Ferrellgas, we continue to focus on the disciplined execution of our operating strategy and delivering a memorable customer experience. By investing in our employees and technology we continue to place customer service at the center of our growth strategy,” said James E. Ferrell, Chief Executive Officer and President. “We are excited for the recent graduates of our unique Management Development Program, who are now joining our high-performing field operations across the company. These new leaders, like our tenured managers, are committed to creating value for our customers and the communities we serve.”

The Company’s strong performance continues and strengthened during the third quarter of fiscal 2021, leading to a $25.4 million increase in operating income. The Company sold 260.2 million propane gallons for the quarter, compared to 246.8 million in the same quarter last year. Sales volumes grew by 13.9 million gallons. Margin per gallon for the quarter was $.064, or 7% higher than the prior year, attributable to strategic product positioning, sound supply chain logistics, and a growing customer base. The National Accounts channel performed 10.8% higher in volume than the prior year quarter. Also contributing to a strong gallon performance are right-timed deliveries that shifted gallons into this quarter, additional marketing on key consumer platforms, improved use of marketing analytics, and weather that was 8% colder than the prior-year quarter. Blue Rhino tank exchange sales continued to grow due to further market share penetration, national marketing strategies, and continued growth in backyard and outdoor appliance usage.

Overall gallon performance contributed to an increase in gross margin of $30.2 million, or 13% higher than prior year. Highlighting the Company’s delivery efficiency strategies, in response to increased volumes, operating expenses increased a nominal 2.5% while decreasing 2.7% per unit. The Company demonstrated continued operational excellence on its strategic initiative of delivering gallons more efficiently, which led to a significant containment of operating expenses during the quarter. Decreased labor expense, less miles driven to deliver more volume, and better utilization of our fleet resulted in less fuel consumed and fewer repairs and maintenance.

The third quarter continues to demonstrate Ferrellgas’ strength as a high-performing, customer-centric, technology enabled, logistics company. As the Company continues to transform, an emphasis on leadership development, excellence in operational expense management, and implementation of logistics fundamentals continue to increase efficiency and profitability. Strong execution by high-performing managers and an agile workforce of essential workers is driving morale and high performance throughout the Company, both in the field and in corporate locations.

For this quarter, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $66.8 million, or $15.25 per common unit, compared to the prior year quarter of a net loss of $15.4 million, or $3.14 per common unit. The current quarter loss is primarily attributable to the $109.9 million loss on extinguishment of debt incurred through our successful restructuring transactions, as compared to $37.4 million in the prior year quarter. Adjusted EBITDA, a non-GAAP measure, increased by $26.9 million, or 29.0%, to $119.2 million in the current quarter compared to $92.4 million in the prior year quarter.

“Our performance is made possible through our focus on customer service and being a trusted partner for warmth, support of agriculture, autogas, and other critical needs,” Ferrell added. “Performance is further strengthen by the incredibly dedicated employees of Ferrellgas and their unwavering commitment to our customers, partners, and communities. Our people continue to generate strong results, while spending less on controllable costs. We are also investing in our customers, employees, and cutting edge technology. I could not be more proud of our people and the continued transformation of the company.”

As previously announced, on January 11, 2021, Ferrellgas Partners and Ferrellgas Partners Finance Corp. commenced the Chapter 11 Cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On March 5, 2021, the Bankruptcy Court entered an order confirming the restructuring plan. On March 30, 2021, Ferrellgas Partners and Ferrellgas Partners Finance Corp. emerged from bankruptcy. The Company also completed its financial restructuring greatly improving the health of its balance sheet and paving the way for future prosperity.

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 1.1 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, 2020. 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, 2020, 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, 2021

July 31, 2020

Current Assets:

Cash and cash equivalents (including $11,500 and $95,759 of restricted cash at April 30, 2021 and July 31, 2020, respectively)

$

222,849

$

333,761

Accounts and notes receivable, net (including $103,703 of accounts receivable pledged as collateral at July 31, 2020)

170,516

101,438

Inventories

69,742

72,664

Prepaid expenses and other current assets

73,984

35,944

Total Current Assets

537,091

543,807

Property, plant and equipment, net

582,838

591,042

Goodwill, net

246,946

247,195

Intangible assets, net

97,560

104,049

Operating lease right-of-use asset

93,341

107,349

Other assets, net

86,914

74,748

Total Assets

$

1,644,690

$

1,668,190

LIABILITIES, MEZZANINE AND EQUITY

Current Liabilities:

Accounts payable

$

54,320

$

33,944

Current portion of long-term debt

1,565

859,095

Current operating lease liabilities

26,669

29,345

Other current liabilities

178,514

167,466

Total Current Liabilities

261,068

1,089,850

Long-term debt

1,443,095

1,646,396

Operating lease liabilities

78,498

89,022

Other liabilities

51,427

51,190

Contingencies and commitments

Mezzanine Equity:

Senior preferred units (700,000 units outstanding at April 30, 2021)

651,854

Equity:

Common unitholders

Class A (4,857,605 units outstanding at April 30, 2021 and July 31, 2020)

(1,181,241

)

(1,126,452

)

Class B (1,300,000 units outstanding at April 30, 2021)

388,147

General partner unitholder (49,496 units outstanding at April 30, 2021 and July 31, 2020)

(71,840

)

(71,287

)

Accumulated other comprehensive income (loss)

31,845

(2,303

)

Total Ferrellgas Partners, L.P. Equity

(833,089

)

(1,200,042

)

Noncontrolling interest

(8,163

)

(8,226

)

Total Equity

(841,252

)

(1,208,268

)

Total Liabilities, Mezzanine and Equity

$

1,644,690

$

1,668,190


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

2021

2020

2021

2020

2021

2020

Revenues:

Propane and other gas liquids sales

$

542,036

$

391,745

$

1,351,519

$

1,150,377

$

1,616,933

$

1,414,601

Other

22,694

20,385

67,665

65,800

83,900

80,657

Total revenues

564,730

412,130

1,419,184

1,216,177

1,700,833

1,495,258

Cost of sales:

Propane and other gas liquids sales

298,386

176,265

706,790

548,136

831,707

684,596

Other

2,985

2,740

10,156

9,774

13,385

12,391

Gross profit

263,359

233,125

702,238

658,267

855,741

798,271

Operating expense - personnel, vehicle, plant & other

124,624

121,558

348,898

364,334

477,619

481,661

Depreciation and amortization expense

21,281

20,366

63,920

59,380

85,021

79,012

General and administrative expense

15,205

12,560

48,760

36,447

58,065

54,404

Operating expense - equipment lease expense

6,770

8,075

20,462

24,724

28,755

33,200

Non-cash employee stock ownership plan compensation charge

811

757

2,281

2,182

2,970

3,187

Loss on asset sales and disposals

1,345

1,859

2,238

6,242

3,920

8,807

Operating income

93,323

67,950

215,679

164,958

199,391

138,000

Interest expense

(42,189

)

(45,703

)

(149,010

)

(138,948

)

(203,024

)

(183,636

)

Loss on extinguishment of debt

(109,922

)

(37,399

)

(109,922

)

(37,399

)

(109,922

)

(37,399

)

Other income (expense), net

553

(158

)

4,169

(214

)

3,923

(201

)

Reorganization items, net

(9,007

)

(10,207

)

(10,207

)

Loss before income tax expense

(67,242

)

(15,310

)

(49,291

)

(11,603

)

(119,839

)

(83,236

)

Income tax expense

193

161

606

794

663

833

Net loss

(67,435

)

(15,471

)

(49,897

)

(12,397

)

(120,502

)

(84,069

)

Net earnings (loss) attributable to noncontrolling interest (a)

(641

)

(78

)

(308

)

133

(944

)

(502

)

Net loss attributable to Ferrellgas Partners, L.P.

(66,794

)

(15,393

)

(49,589

)

(12,530

)

(119,558

)

(83,567

)

Distribution to preferred unitholders

8,011

8,011

8,011

Less: General partner's interest in net loss

(748

)

(154

)

(576

)

(125

)

(1,276

)

(835

)

Class A unitholders' interest in net loss

$

(74,057

)

$

(15,239

)

$

(57,024

)

$

(12,405

)

$

(126,293

)

$

(82,732

)

Loss Per Class A Unit

Basic and diluted net loss per common unit

$

(15

)

$

(3

)

$

(12

)

$

(3

)

$

(26

)

$

(17

)

Weighted average common units outstanding - basic

4,858

4,858

4,858

4,858

4,858

4,858

Supplemental Data and Reconciliation of Non-GAAP Items:

Three months ended

Nine months ended

Twelve months ended

April 30

April 30

April 30

2021

2020

2021

2020

2021

2020

Net loss attributable to Ferrellgas Partners, L.P.

$

(66,794

)

$

(15,393

)

$

(49,589

)

$

(12,530

)

$

(119,558

)

$

(83,567

)

Income tax expense

193

161

606

794

663

833

Interest expense

42,189

45,703

149,010

138,948

203,024

183,636

Depreciation and amortization expense

21,281

20,366

63,920

59,380

85,021

79,012

EBITDA

(3,131

)

50,837

163,947

186,592

169,150

179,914

Non-cash employee stock ownership plan compensation charge

811

757

2,281

2,182

2,970

3,187

Loss on asset sales and disposal

1,345

1,859

2,238

6,242

3,920

8,807

Loss on extinguishment of debt

109,922

37,399

109,922

37,399

109,922

37,399

Other income (expense), net

(553

)

158

(4,169

)

214

(3,923

)

201

Reorganization items, net

9,007

10,207

10,207

Severance expense includes $0, $927 and $1,667 in operating expense for the three, nine and twelve months ended April 30, 2021. Also includes $0, $834 and $834 in general and administrative expense for the three, nine and twelve months ended April 30, 2021.

1,761

2,501

Legal fees and settlements related to non-core businesses

2,436

1,325

8,572

5,887

9,993

13,608

Provision for doubtful accounts related to non-core businesses

(500

)

16,825

Lease accounting standard adjustment and other

80

134

27

134

Net earnings (loss) attributable to noncontrolling interest (b)

(641

)

(78

)

(308

)

133

(944

)

(502

)

Adjusted EBITDA (b)

119,196

92,337

293,951

238,783

320,648

242,748

Net cash interest expense (c)

(37,757

)

(43,442

)

(137,716

)

(129,341

)

(190,621

)

(170,806

)

Maintenance capital expenditures (d)

(4,058

)

(6,803

)

(14,517

)

(18,700

)

(19,057

)

(20,436

)

Cash paid for income taxes

(133

)

(49

)

(438

)

(50

)

(677

)

(170

)

Proceeds from certain asset sales

1,270

851

3,707

2,510

5,194

4,343

Distributable cash flow attributable to equity investors (e)

78,518

42,894

144,987

93,202

115,487

55,679

Less: Distributions accrued or paid to preferred unitholders

8,011

8,011

8,011

Distributable cash flow attributable to general partner and non-controlling interest

1,571

(858

)

2,900

(1,864

)

6,038

1,113

Distributable cash flow attributable to Class A and B unitholders (f)

68,936

42,036

134,076

91,338

109,449

54,566

Less: Distributions accrued or paid to Class A and B unitholders

Distributable cash flow excess

$

68,936

$

42,036

$

134,076

$

91,338

$

109,449

$

54,566

Propane gallons sales

Retail - Sales to End Users

200,028

186,175

536,124

552,340

621,801

651,454

Wholesale - Sales to Resellers

60,128

60,660

176,970

179,695

232,804

233,005

Total propane gallons sales

260,156

246,835

713,094

732,035

854,605

884,459

(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, 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, reorganization items, net, severance expense, legal fees and settlements related to non-core businesses, provision for doubtful accounts related to non-core businesses, 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 income (expense), net. This amount includes interest expense related to the terminated 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 income 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, including holders of the operating partnership’s Preferred Units. 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 companies. 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 Class A and B unitholders is calculated as Distributable cash flow attributable to equity investors minus distributions accrued or paid on the Preferred Units and distributable cash flow attributable to general partner and noncontrolling interest. Management considers distributable cash flow attributable to Class A and B unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to Class A and B unitholders. Distributable cash flow attributable to Class A and B unitholders, as management defines it, may not be comparable to distributable cash flow attributable to Class A and B unitholders or similarly titled measurements used by other companies. Items added to our calculation of distributable cash flow attributable to Class A and B unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to Class A and B unitholders should be viewed in conjunction with measurements that are computed in accordance with GAAP.


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