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