Ferrellgas Partners, L.P. Reports Results for Third Quarter Fiscal 2016

in Closing Bell Story‎ / Energy News / Midstream / MLPs   by—

OVERLAND PARK, Kan., June 08, 2016 (GLOBE NEWSWIRE) — Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its third fiscal quarter ended April 30, 2016. The Company reported Net earnings attributable to Ferrellgas Partners, L.P. of $18.7 million, compared to $35.8 million for the quarter ended April 30, 2015.

Adjusted EBITDA was $108.0 million, an increase of 12% over the same quarter last year, including $25.2 million of Adjusted EBITDA from the Bridger Logistics acquisition which was completed in June of 2015.

“Like many in our industry, we continue to be impacted by the extremely warm temperatures nationwide, and the downturn in the commodities market, including lower crude oil prices and project delays and cancellations,” said Stephen L. Wambold, President and Chief Executive Officer. “We experienced an average of 18% warmer weather than normal during the quarter, which reduced heating needs across all our geographies and significantly drove down propane segment volumes and revenues. Notwithstanding these operating conditions, we are pleased to have delivered a 12% year-over-year increase in Adjusted EBITDA.”

Mr. Wambold continued, “Bridger continues to perform well, providing gross profits and adjusted EBITDA in our third quarter that more than offset decreases in our water solutions and propane segments. Importantly, we remain focused on reducing expenses and continue to evaluate value-enhancing organic and external growth opportunities to drive growth and mitigate the impact of the challenging operating environment. We expect our distributable cash flow coverage to rebound to more than 1.0x by the end of 2016, with leverage dropping below 5.0x. We continue to execute against our strategic plan and remain confident that we have the initiatives in place to create value for all Ferrellgas unitholders.”

Continued strong expense controls in the Propane and related equipment sales segment and strong results from the Midstream Crude Oil segment helped offset the impact of elevated temperatures, which were 18% warmer than normal and 21% warmer than the prior year period.

Even though there were strong expense controls, due to the Bridger Transaction, Operating expense and General and administrative expense for the third fiscal quarter increased to $115.1 million and $12.4 million respectively.

Interest expense totaled $34.4 million for the third fiscal quarter, compared to $23.5 in the prior year period, primarily due to $500 million of notes issued in connection with the Bridger acquisition in June 2015.

Net earnings for the quarter were $18.9 million, or $0.19 per common unit, compared to net earnings of $36.2 million, or $0.43 per common unit, in the prior year period. The decrease in net earnings is primarily related to the impact of warm weather on our propane and related equipment sales segment and the increases in Depreciation and amortization expense and interest expense both primarily related to the acquisition of 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.

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 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 quarters ended October 31, 2015, January 31, 2016 and April 30, 2016 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 April 30, 2016 July 31, 2015
Current Assets:
Cash and cash equivalents $   6,266 $   7,652
Accounts and notes receivable, net (including $134,538 and 123,791 of
accounts receivable pledged as collateral at April 30, 2016
and July 31, 2015, respectively) 192,704 196,918
Inventories 87,739 96,754
Prepaid expenses and other current assets 35,857 64,285
Total Current Assets 322,566 365,609
Property, plant and equipment, net 981,453 965,217
Goodwill 446,333 478,747
Intangible assets, net 551,372 580,043
Other assets, net 70,280 74,440
Assets held for sale 845   –
Total Assets $   2,372,849 $   2,464,056
LIABILITIES AND PARTNERS’ CAPITAL
Current Liabilities:
Accounts payable $   78,063 $   83,974
Short-term borrowings 9,071   75,319
Collateralized note payable 77,000 70,000
Other current liabilities 161,394 180,687
Total Current Liabilities 325,528 409,980
Long-term debt (a) 1,960,331 1,804,392
Other liabilities 33,347 41,975
Contingencies and commitments
Partners’ Capital: 
Common unitholders (98,002,665 and 100,376,789 units outstanding at
April 30, 2016 and July 31, 2015) 122,740 299,730
General partner unitholder (989,926 and 1,013,907 units outstanding at
April 30, 2016 and July 31, 2015) (58,829 ) (57,042 )
 Accumulated other comprehensive loss (12,709 ) (38,934 )
Total Ferrellgas Partners, L.P. Partners’ Capital 51,202 203,754
Noncontrolling Interest 2,441 3,955
Total Partners’ Capital 53,643 207,709
Total Liabilities and Partners’ Capital $   2,372,849 $   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, NINE AND TWELVE MONTHS ENDED APRIL 30, 2016 AND 2015
(in thousands, except per unit data)
(unaudited)
Three months ended  Nine months ended  Twelve months ended
April 30 April 30 April 30
2016 2015 2016 2015 2016 2015
Revenues:
Propane and other gas liquids sales $ 338,929 $ 445,667 $ 961,086 $ 1,400,895 $ 1,217,207 $ 1,751,452
Midstream operations   105,424   5,293   487,427   20,362   574,254   27,797
Other 65,119 81,591 181,343 220,622 220,906 261,660
Total revenues 509,472 532,551 1,629,856 1,641,879 2,012,367 2,040,909
Cost of product sold:
Propane and other gas liquids sales 152,261 253,684 448,841 849,190 576,875 1,073,062
Midstream operations 71,852 1,877 373,899 6,064 444,425 8,034
Other 41,203 57,709 111,425 147,672 134,450 172,411
Gross profit  244,156 219,281 695,691 638,953 856,617 787,402
Operating expense 115,140 106,883 346,584 316,913 461,953 429,474
Depreciation and amortization expense 38,352 23,324 112,698 70,576 140,701 93,007
General and administrative expense 12,354 8,252 36,656 29,701 63,386 40,614
Equipment lease expense 7,244 6,347 21,554 17,674 28,153 22,441
Non-cash employee stock ownership plan compensation charge 9,978 8,566 18,375 16,728 26,360 28,128
Non-cash stock-based compensation charge (a) 1,091 3,271 6,757 19,701 13,038 28,027
Goodwill impairment charge   –   – 29,316   – 29,316   –
Loss on disposal of assets 5,779 2,203 23,220 4,578 25,741 7,638
Operating income 54,218 60,435 100,531 163,082 67,969 138,073
Interest expense (34,371 ) (23,510 ) (102,889 ) (71,797 ) (131,488 ) (93,927 )
Other income (expense), net 331 212 (89 ) (415 ) (24 ) (1,392 )
Earnings (loss) before income taxes 20,178 37,137 (2,447 ) 90,870 (63,543 ) 42,754
Income tax expense (benefit)   1,260   917   1,446   1,448   (317 )   1,573
Net earnings (loss) 18,918 36,220 (3,893 ) 89,422 (63,226 ) 41,181
Net earnings (loss) attributable to noncontrolling interest (b) 233 408 88 1,027 (470 ) 581
Net earnings (loss) attributable to Ferrellgas Partners, L.P.   18,685   35,812   (3,981 )   88,395   (62,756 )   40,600
Less: General partner’s interest in net earnings (loss)   187   358   (40 )   884   (628 )   406
Common unitholders’ interest in net earnings (loss) $   18,498 $   35,454 $   (3,941 ) $   87,511 $   (62,128 ) $   40,194
Earnings (loss) Per Unit
Basic and diluted net earnings (loss) per common unitholders’ interest $   0.19 $   0.43 $   (0.04 ) $   1.06 $   (0.64 ) $   0.49
Weighted average common units outstanding 98,002.7 82,717.6 98,911.2 82,536.1 96,899.5 82,200.8
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended  Nine months ended  Twelve months ended
April 30 April 30 April 30
2016 2015 2016 2015 2016 2015
Net earnings (loss) attributable to Ferrellgas Partners, L.P. $   18,685 $   35,812 $   (3,981 ) $   88,395 $   (62,756 ) $   40,600
Income tax expense (benefit)   1,260   917   1,446   1,448   (317 )   1,573
Interest expense 34,371 23,510 102,889 71,797 131,488 93,927
Depreciation and amortization expense 38,352 23,324 112,698 70,576 140,701 93,007
EBITDA   92,668   83,563   213,052   232,216   209,116   229,107
Non-cash employee stock ownership plan compensation charge   9,978 8,566   18,375 16,728 26,360 28,128
Non-cash stock based compensation charge (a)   1,091 3,271   6,757 19,701 13,038 28,027
Goodwill impairment charge   –   –   29,316   – 29,316   –
Loss on disposal of assets   5,779 2,203   23,220 4,578 25,741 7,638
Other income (expense), net   (331 ) (212 )   89 415 24 1,392
Change in fair value of contingent consideration (included in operating expense)   –   –   (100 )   (6,300 )   (100 )   (1,300 )
Severance costs ($396 and $1,201 included in operating costs for the three and nine months ended period
April 30, 2016 and $73 and $124 included in general and administrative costs for the three and nine months
ended period April 30, 2016)   469   –   1,325   –   1,325   –
Litigation accrual and related legal fees associated with a
class action lawsuit (included in general and administrative expense)   –   83   – 806   – 1,133
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives (1,915 )   (1,609 ) 2,993   (1,609 )   7,014   (1,609 )
Acquisition and transition expenses (included in general and administrative expense) 14   – 99   –   16,472   –
Net earnings (loss) attributable to noncontrolling interest (b) 233 408 88 1,027 (470 ) 581
Adjusted EBITDA (c)   107,986   96,273   295,214   267,562   327,836   293,097
Net cash interest expense (d) (32,849 )   (22,422 )   (99,256 )   (68,599 )   (126,807 ) (90,778 )
Maintenance capital expenditures (e) (4,159 )   (5,151 )   (13,588 )   (14,863 )   (18,337 ) (19,191 )
Cash paid for taxes   (427 )   (67 )   (432 )   (333 )   (811 ) (746 )
Proceeds from asset sales   3,096   1,331   5,972   4,060   7,817   5,317
Distributable cash flow to equity investors (f)   73,647   69,964   187,910   187,827   189,698   187,699
Distributable cash flow attributable to general partner and non-controlling interest   1,473   1,400   3,758   3,757   3,793   3,754
Distributable cash flow attributable to common unitholders   72,174   68,564   184,152   184,070   185,905   183,945
Less: Distributions paid to common unitholders   50,267   41,359   151,933   124,074   193,292   164,688
Distributable cash flow excess/(shortage) $   21,907 $   27,205 $   32,219 $   59,996 $   (7,387 ) $   19,257
Propane gallons sales
Retail – Sales to End Users 164,713 178,583 465,146 518,726 555,201 611,942
Wholesale – Sales to Resellers 58,645 67,823 169,992 211,068 228,989 272,616
Total propane gallons sales 223,358 246,406 635,138 729,794 784,190 884,558
Salt water volume – Midstream operations (barrels processed) 4,024   4,515 12,980 13,234   16,781   15,734
Crude oil hauled – Midstream operations (barrels) 16,215 64,824   75,271
Crude oil sold – Midstream operations (barrels) 1,866 53 4,969 175   5,290
(a)  Non-cash stock-based compensation charges consist of the following:
Three months ended Nine months ended Twelve months ended
April 30 April 30 April 30
Operating expense 2016 2015 2016 2015 2016 2015
General and administrative expense $   131 $   621 $   883 $   4,233 $   1,825 $   6,065
Total   960   2,650   5,874   15,468   11,213   21,962
$   1,091 $   3,271 $   6,757 $   19,701 $   13,038 $   28,027
(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., income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, goodwill impairment charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration, severance costs, litigation accrual and related legal fees associated with a class action lawsuit, unrealized (non-cash) losses (gains) 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 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 attributable 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)   (14,500 )
  Interest expense (estimate)   136,000
  Income tax expense (estimate)   300
  Depreciation and amortization expense (estimate)   150,100
  Non-cash employee stock ownership plan compensation charge (estimate)   27,400
  Non-cash stock based compensation charge (estimate)   13,000
  Loss on disposal of assets (estimate)   24,650
  Change in fair value of contingent consideration (included in operating expense)   (100 )
  Severance costs   1,350
  Goodwill impairment charge   29,300
Adjusted EBITDA (h)   367,500
(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.
Legal Notice
Market Data copyright © 2020 QuoteMedia. Data delayed 15 minutes unless otherwise indicated (view delay times for all exchanges). RT=Real-Time, EOD=End of Day, PD=Previous Day. Market Data powered by QuoteMedia. Terms of Use.