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 December 9, 2015 - 6:00 AM EST
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Ferrellgas Partners, L.P. Reports Results for First Quarter Fiscal 2016

Strong Performance From Bridger With Meaningful Progress on Acquisition Integration


Ferrellgas Continues Successful Ongoing Transformation Into a Diversified Midstream MLP

OVERLAND PARK, Kan., Dec. 09, 2015 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) today announced Adjusted EBITDA of $48.9 million for the first quarter of fiscal 2016 ended October 31, up 42% from $34.4 million in the same quarter of last year, due to strong results from the Bridger acquisition, which the partnership completed in June 2015. Distributable Cash Flow (DCF) to equity investors for the quarter was $11.2 million, producing DCF coverage of 1.08x for the trailing twelve month period.

President and Chief Executive Officer Stephen L. Wambold commented, “We are excited to report a solid first quarter that represents our first full quarter of combined results following the completed acquisition of Bridger and officially welcoming the organization into the Ferrellgas family. We continue to integrate Bridger, which will serve as a platform for continued midstream growth and diversification. We are also encouraged by the continued solid financial and operational performance of our Propane segment. While persisting warmer nationwide temperatures during our first fiscal quarter put pressure on our Propane segment’s results, our flexibility, focus on maintaining strong margins and commitment to containing retail expenses allowed us to offset the unfavorable operating environment.”

Mr. Wambold concluded, “We are more excited than ever about the future of Ferrellgas and the strong pipeline of acquisition and organic development opportunities. With our acquisition of Bridger we have established a firm foundation for a powerful midstream growth platform and we expect to continue developing our already diverse footprint and extensive customer base in high-growth regions over the course of fiscal 2016 and beyond.”

Propane margin cents per gallon continued to benefit from lower wholesale commodity prices, and during the first fiscal quarter, prices were 57% lower than those of the same quarter in fiscal 2015. Strong margin cents per gallon and lower operating expenses in the Propane and related equipment sales segment helped minimize the effect of warmer temperatures in the more highly concentrated geographic areas Ferrellgas serves. Temperatures were 31% warmer than normal and 13% warmer than prior year for the first fiscal quarter.

Adjusted EBITDA from the Midstream - Crude Oil Logistics segment was $24.8 million during the first fiscal quarter, driven exclusively by the Bridger acquisition which exceeded management’s expectations for the first full fiscal quarter subsequent to the closing of the acquisition.  These results reflect management’s focus on expense controls as well as Bridger’s strong customer relationships and contractual agreements which helped navigate a volatile commodity price environment.  The partnership is on pace to generate $100 million of adjusted EBITDA in this segment for full-year fiscal 2016.

Operating expense for the first quarter increased to $115.0 million from $102.9 million in the first fiscal quarter of 2015, primarily due to the additional operating expenses associated with the Bridger acquisition. General and administrative expense rose to $12.2 million from $10.8 million in the fiscal first quarter of 2015, also as a result of the acquisition.

Interest expense increased to $33.8 million for the first fiscal quarter from $23.9 million a year ago, reflecting increased borrowings to fund acquisition and growth capital expenditures. The seasonal Net loss for the quarter was $80.6 million, or $0.79 per common unit, compared to $33.2 million, or $0.40 per common unit in the prior year quarter. The increase in seasonal Net loss is due in part to a one-time, non-cash goodwill write-off related to the partnership’s midstream water solutions operations and a one-time loss on trucks held for sale.

Ferrellgas today also reaffirmed its previously provided estimates for full-year fiscal 2016 Adjusted EBITDA of $400 million to $420 million based on continued confidence in the partnership’s traditional retail operations and expected strong contributions from Bridger.

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, and provides midstream services to major energy companies in the United States. 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 29, 2015. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership online at www.ferrellgas.com.

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 are 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, 2015, in the Form 10-Q of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the quarter ended October 31, 2015 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES       
CONSOLIDATED BALANCE SHEETS       
(in thousands, except unit data)       
(unaudited)       
            
ASSETS October 31, 2015 July 31, 2015       
            
Current Assets:           
Cash and cash equivalents $8,892  $7,652        
Accounts and notes receivable, net (including $113,792 and 123,791 of           
accounts receivable pledged as collateral at October 31, 2015           
and July 31, 2015, respectively)  178,678   196,918        
Inventories  96,079   96,754        
Prepaid expenses and other current assets  57,556   64,285        
Total Current Assets  341,205   365,609        
            
Property, plant and equipment, net  941,283   965,217        
Goodwill  459,615   478,747        
Intangible assets, net  562,326   580,043        
Other assets, net  72,917   74,440        
Assets held for sale  8,840   -        
Total Assets $2,386,186  $2,464,056        
            
            
LIABILITIES AND PARTNERS' CAPITAL           
            
Current Liabilities:           
Accounts payable $63,553  $83,974        
Short-term borrowings  95,391   75,319        
Collateralized note payable  68,000   70,000        
Other current liabilities  200,964   180,687        
Total Current Liabilities  427,908   409,980        
            
Long-term debt (a)  1,823,182   1,804,392        
Other liabilities  38,458   41,975        
Contingencies and commitments           
            
Partners' Capital:            
Common unitholders (100,376,789 units outstanding at both           
October 31, 2015 and July 31, 2015)  182,403   299,730        
General partner unitholder (1,013,907 units outstanding at both           
October 31, 2015 and July 31, 2015)  (58,228)  (57,042)       
Accumulated other comprehensive loss  (30,411)  (38,934)       
Total Ferrellgas Partners, L.P. Partners' Capital  93,764   203,754        
Noncontrolling Interest  2,874   3,955        
Total Partners' Capital  96,638   207,709        
Total Liabilities and Partners' Capital $2,386,186  $2,464,056        
            
(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $182 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 
CONSOLIDATED STATEMENTS OF EARNINGS 
FOR THE THREE AND TWELVE MONTHS ENDED OCTOBER 31, 2015 AND 2014 
(in thousands, except per unit data) 
(unaudited) 
  Three months ended   Twelve months ended 
  October 31  October 31 
   2015   2014    2015   2014  
Revenues:          
Propane and other gas liquids sales $245,301  $394,361   $1,507,956  $2,159,481  
Midstream operations  193,670   7,916    292,943   15,351  
Other  32,175   41,078    251,282   259,353  
Total revenues  471,146   443,355    2,052,181   2,434,185  
           
Cost of product sold:          
Propane and other gas liquids sales  121,751   264,814    834,161   1,462,448  
Midstream operations  153,604   1,968    228,226   3,938  
Other  14,448   21,892    163,253   164,728  
           
Gross profit   181,343   154,681    826,541   803,071  
           
Operating expense  114,981   102,883    444,380   446,110  
Depreciation and amortization expense  36,979   23,309    112,249   87,296  
General and administrative expense  12,240   10,828    57,843   46,030  
Equipment lease expense  7,032   5,532    25,773   19,211  
Non-cash employee stock ownership plan compensation charge  5,256   4,374    25,595   23,120  
Non-cash stock-based compensation charge (a)  8,122   16,112    17,992   36,189  
Goodwill impairment charge  29,316   -    29,316   -  
Loss on disposal of assets  14,917   961    21,055   7,090  
           
Operating income (loss)  (47,500)  (9,318)   92,338   138,025  
           
Interest expense  (33,788)  (23,912)   (110,272)  (88,321) 
Loss on extinguishment of debt  -   -    -   (20,901) 
Other income (expense), net  (122)  (449)   (23)  (1,144) 
           
Earnings (loss) before income taxes  (81,410)  (33,679)   (17,957)  27,659  
           
Income tax expense (benefit)  (844)  (510)   (649)  2,056  
           
Net earnings (loss)  (80,566)  (33,169)   (17,308)  25,603  
           
Net earnings (loss) attributable to noncontrolling interest (b)  (773)  (294)   (10)  424  
           
Net earnings (loss) attributable to Ferrellgas Partners, L.P.  (79,793)  (32,875)   (17,298)  25,179  
           
Less: General partner's interest in net earnings (loss)  (798)  (329)   (173)  252  
           
Common unitholders' interest in net earnings (loss) $(78,995) $(32,546)  $(17,125) $24,927  
           
Earnings (loss) Per Unit          
Basic and diluted net earnings (loss) per common unitholders' interest $(0.79) $(0.40)  $(0.19) $0.31  
           
Weighted average common units outstanding  100,376.8   82,179.7    89,232.9   80,433.5  
           
           
Supplemental Data and Reconciliation of Non-GAAP Items: 
           
  Three months ended   Twelve months ended 
  October 31  October 31 
   2015   2014    2015   2014  
           
           
Net earnings (loss) attributable to Ferrellgas Partners, L.P. $(79,793) $(32,875)  $(17,298) $25,179  
Income tax expense (benefit)  (844)  (510)   (649)  2,056  
Interest expense  33,788   23,912    110,272   88,321  
Depreciation and amortization expense  36,979   23,309    112,249   87,296  
EBITDA  (9,870)  13,836    204,574   202,852  
Loss on extinguishment of debt  -   -    -   20,901  
Non-cash employee stock ownership plan compensation charge  5,256   4,374    25,595   23,120  
Non-cash stock based compensation charge (a)  8,122   16,112    17,992   36,189  
Goodwill impairment charge  29,316   -    29,316   -  
Loss on disposal of assets  14,917   961    21,055   7,090  
Other income (expense), net  122   449    23   1,144  
Change in fair value of contingent consideration (included in operating expense)  (100)  (1,800)   (4,600)  3,200  
Severance costs ($805 included in operating costs and $51 included in general and administrative costs)  856   -    856   -  
Litigation accrual and related legal fees associated with a          
class action lawsuit (included in general and administrative expense)  -   723    83   1,147  
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives  1,038   -    3,450   -  
Acquisition and transition expenses (included in general and administrative expense)  15   -    16,388   -  
Net earnings (loss) attributable to noncontrolling interest (b)  (773)  (294)   (10)  424  
Adjusted EBITDA (c)  48,899   34,361    314,722   296,067  
Net cash interest expense (d)  (32,502)  (22,890)   (105,762)  (85,990) 
Maintenance capital expenditures (e)  (6,215)  (5,088)   (20,739)  (18,624) 
Cash paid for taxes  -   (260)   (452)  (1,076) 
Proceeds from asset sales  1,013   1,417    5,501   4,624  
Distributable cash flow to equity investors (f)  11,195   7,540    193,270   195,001  
Distributable cash flow attributable to general partner and non-controlling interest  224   151    3,865   3,900  
Distributable cash flow attributable to common unitholders  10,971   7,389    189,405   191,101  
Less: Distributions paid to common unitholders  51,443   41,356    175,520   161,136  
Distributable cash flow excess/(shortage) $(40,472) $(33,967)  $13,885  $29,965  
           
Propane gallons sales          
Retail - Sales to End Users  110,973   124,147    595,607   650,253  
Wholesale - Sales to Resellers  50,566   61,935    258,696   291,368  
Total propane gallons sales  161,539   186,082    854,303   941,621  
           
Salt water volume - Midstream operations (barrels processed)  4,734   3,997    17,766   6,497  
Crude oil hauled - Midstream operations (barrels)  24,264   0    34,711   0  
Crude oil sold - Midstream operations (barrels)  1,510      2,006    
           
(a)  Non-cash stock-based compensation charges consist of the following:          
           
  Three months ended  Twelve months ended 
  October 31  October 31 
   2015   2014    2015   2014  
Operating expense $1,218  $3,545   $2,848  $8,082  
General and administrative expense  6,904   12,567    15,144   28,107  
Total $8,122  $16,112   $17,992  $36,189  
           
           
(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 attributable to Ferrellgas Partners, L.P., income tax expense(benefit), interest expense, depreciation and amortization expense, loss on extinguishment of debt, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, goodwill impairment charge, loss on disposal of assets, other income, net, change in fair value of contingent consideration, litigation accrual and related legal fees associated with a class action lawsuit, unrealized (non-cash) losses on changes in fair value of derivatives, acquisition and transition expenses 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 income (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) Management considers distributable cash flow to equity investors a meaningful non-GAAP measure of the partnership's ability to declare and pay quarterly distributions to equity investors. Distributable cash flow to equity investors, as management defines it, may not be comparable to distributable cash flow to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow 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. 
           
The following table includes a reconciliation of forecasted net earnings atttributable to Ferrellgas Partners, L.P. to forecasted Adjusted EBITDA for the fiscal year ending July 31, 2016.  
           
         Forecast 
         Fiscal Year 
         Ending 
         July 31, 
          2016  
Net earnings attributable to Ferrellgas Partners, L.P. (estimate) (g)         20,000  
Interest expense (estimate)         134,000  
Income tax expense (estimate)         1,000  
Depreciation and amortization expense (estimate)         150,000  
Non-cash employee stock ownership plan compensation charge (estimate)         28,000  
Non-cash stock based compensation charge (estimate)         27,000  
Loss on disposal of assets (estimate)         19,900  
Change in fair value of contingent consideration (included in operating expense)         (100) 
Severance costs         900  
Goodwill impairment charge         29,300  
Adjusted EBITDA (h)         410,000  
           
(g) Represents estimated net earnings attributable to Ferrellgas Partners, L.P. after adjusting for change in fair value of gains and losses on commodity and interest rate derivative instruments not associated with current-period transactions. It is impracticable to determine actual gains and losses on these instruments not associated with current-period transactions that will be reported in GAAP net income as such gains and losses will depend upon future changes in commodity prices and interest rates which cannot be forecasted.  
           
(h) Represents the midpoint of Adjusted EBITDA guidance range for fiscal 2016.  


Contacts

Jack Herrold, Investor Relations – jackherrold@ferrellgas.com or (913) 661-1851

Jim Saladin, Media Relations – jimsaladin@ferrellgas.com or (913) 661-1833

Scott Brockelmeyer, Media Relations – scottbrockelmeyer@ferrellgas.com or (913) 661-1830

Source: GlobeNewswire (December 9, 2015 - 6:00 AM EST)

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