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

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 June 8, 2016 - 3:01 AM EDT
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Ferrellgas Partners, L.P. Reports Results for Third Quarter Fiscal 2016

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.     
                             
                              
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: Ferrellgas Partners, L.P.

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Source: Equities.com News (June 8, 2016 - 3:01 AM EDT)

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