June 8, 2016 - 7:02 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 
[email protected] or (913) 661-1851

Jim Saladin, Media Relations 
[email protected] or (913) 661-1833

Scott Brockelmeyer, Media Relations
[email protected] or (913) 661-1830

Source: GlobeNewswire (June 8, 2016 - 7:02 AM EDT)

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