Ferrellgas Partners Reports Strong Third-Quarter Results; Raises Adjusted EBITDA Guidance to Record $285-$290 Million
June 09 2014 - 7:00AM
Ferrellgas Partners, L.P. (NYSE:FGP) today reported strong
financial results for the fiscal 2014 third quarter ended April 30,
with Adjusted EBITDA and gross profit reaching record levels.
Adjusted EBITDA improved to $99.8 million from $98.5 million in
the year-earlier quarter. Distributable cash flow to equity
investors was $75.7 million producing distributable cash flow
coverage on the partnership's quarterly distribution of 1.2x. Gross
profit increased 3% to $230.5 million on anticipated margin
improvement.
Reflecting the third-quarter performance and the establishment
of midstream operations in May 2014, the partnership raised its
fiscal 2014 Adjusted EBITDA guidance to a record $285 million to
$290 million, up from previously provided guidance of $275 million
to $285 million. The partnership posted record Adjusted EBITDA of
$272 million for fiscal 2013.
President and Chief Executive Officer Steve Wambold pointed out,
"I am extremely pleased with the way our propane operations team
performed during what proved to be a very challenging quarter.
While temperatures in the quarter were 5% colder than a year ago,
the partnership contended with significant propane supply and
infrastructure challenges that negatively impacted our efficiency
metrics. However, these same industry challenges provided the
partnership the opportunity to acquire many new customers due to
service failures experienced by other providers."
Propane sales volumes for the quarter were 257.9 million
gallons, slightly below a year ago, but consistent with planned
levels. This year's winter heating season was more evenly spread
over the partnership's fiscal second and third quarters contrasted
with last year, which was heavily concentrated in the fiscal third
quarter.
Operating expense in the quarter was $113.9 million, compared to
$107.2 million in the year-earlier quarter, primarily reflecting
the increased cost associated with meeting customer demand while
contending with seasonably cold temperatures and propane supply
shortages. General and administrative expense decreased to $12.2
million from $13.4 million, but excluding the timing of
performance-based incentives was materially in line with the
prior-year quarter. Interest expense declined 9% to $20.2 million,
reflecting the favorable long-term debt refinancing completed last
fall.
Wambold further commented, "Blue Rhino posted a strong start to
the grilling season this quarter, as sales transactions grew by
more than 18% over prior year levels. The partnership continued to
experience increased sales transactions in May from its Blue Rhino
brand and we believe that this positive momentum will continue
throughout the summer grilling season."
For the nine-month period ended April 30, Adjusted EBITDA
improved to $262.6 million from $246.2 million a year ago, while
distributable cash flow increased to $190.6 million from $180.3
million. Propane sales volumes grew 6%, exceeding planned levels on
nationwide temperatures that were 6% colder than normal. Gross
profit rose 7% to $642.9 million, driven by higher sales volumes
and, to a lesser extent, margins that improved $0.01 per
gallon.
On May 1, the partnership announced the acquisition of Sable
Environmental, LLC and a related entity ("Sable"), a fast-growing
privately held fluid logistics provider in the Eagle Ford Shale
region of South Texas. The acquisition, which prompted the
establishment of a midstream division, demonstrated the
partnership's commitment to strategic diversification and growth of
cash flow.
On June 6, the partnership amended its secured credit facility
to better facilitate its strategic focus on further business
diversification. Immediately following the amendment, the
partnership increased the size of this facility from $500 million
to $600 million providing increased liquidity for future
acquisitions.
Wambold reported, "Sable's management has hit the ground
running, performing ahead of plan while capitalizing on growth
opportunities. In May, the partnership acquired a sixth salt water
disposal site and began construction of a seventh site that will be
operational in the fall of 2014 supporting the growth of our
customer base. The partnership estimates the Sable operations will
contribute $25 million of Adjusted EBITDA in fiscal 2015." He
added, "The business development team is assessing numerous
opportunities to expand these operations and to further diversify
cash flows from other lines of business. We look forward to
further progress in this area in fiscal 2015."
On May 5, Ferrellgas acquired Viking Propane, based in Madison,
Calif., which enhances the partnership's strong California
presence, extending the service territory west of Sacramento.
Viking represents the fourth retail propane acquisition in the
current fiscal year that began August 1. Wambold observed, "The
pipeline for propane acquisitions remains robust, and the
partnership is confident it can increase its retail propane
footprint not only through acquisitions, but also through organic
growth."
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
mainstream services to major energy companies in the United States.
Ferrellgas employees indirectly own more than 21 million common
units of the partnership through an employee stock ownership plan.
More information about the partnership can be found 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, 2013, the Form 10-Q for the quarter ended April 30, 2014 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 STATEMENTS
OF EARNINGS |
FOR THE THREE, NINE AND
TWELVE MONTHS ENDED APRIL 30, 2014 AND 2013 |
(in thousands, except
per unit data) |
(unaudited) |
|
|
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
Twelve months
ended |
|
April
30 |
April
30 |
April
30 |
|
2014 |
2013 |
2014 |
2013 |
2014 |
2013 |
Revenues: |
|
|
|
|
|
|
Propane and other gas liquids sales |
$ 625,117 |
$ 508,408 |
$ 1,796,786 |
$ 1,426,763 |
$ 2,109,290 |
$ 1,737,278 |
Other |
97,000 |
94,612 |
210,044 |
198,031 |
248,213 |
229,291 |
Total revenues |
722,117 |
603,020 |
2,006,830 |
1,624,794 |
2,357,503 |
1,966,569 |
|
|
|
|
|
|
|
Cost of product sold: |
|
|
|
|
|
|
Propane and other gas liquids sales |
422,256 |
313,207 |
1,232,516 |
903,100 |
1,421,677 |
1,099,743 |
Other |
69,388 |
66,714 |
131,443 |
123,348 |
152,551 |
138,460 |
|
|
|
|
|
|
|
Gross profit |
230,473 |
223,099 |
642,871 |
598,346 |
783,275 |
728,366 |
|
|
|
|
|
|
|
Operating expense (including $126 of
severance charges for the twelve month period ended April 30,
2013) |
113,923 |
107,188 |
333,632 |
309,221 |
434,470 |
409,227 |
Depreciation and amortization expense |
20,913 |
20,896 |
61,771 |
62,522 |
82,593 |
83,524 |
General and administrative expense (including
$166 of severance charges for the twelve month period ended April
30, 2013) |
12,194 |
13,432 |
35,070 |
32,396 |
44,701 |
40,841 |
Equipment lease expense |
4,638 |
4,098 |
12,978 |
11,848 |
17,113 |
15,650 |
Non-cash employee stock ownership plan
compensation charge |
3,710 |
2,824 |
10,389 |
12,673 |
13,485 |
15,394 |
Non-cash stock and unit-based compensation
charge (a) |
5,832 |
2,222 |
16,182 |
8,434 |
21,293 |
12,410 |
Loss on disposal of assets and other |
1,732 |
3,337 |
3,426 |
5,728 |
8,119 |
9,711 |
|
|
|
|
|
|
|
Operating income |
67,531 |
69,102 |
169,423 |
155,524 |
161,501 |
141,609 |
|
|
|
|
|
|
|
Interest expense |
(20,189) |
(22,084) |
(64,372) |
(67,138) |
(86,379) |
(89,488) |
Loss on extinguishment of debt |
-- |
-- |
(21,202) |
-- |
(21,202) |
-- |
Other income, net |
225 |
185 |
498 |
517 |
546 |
775 |
|
|
|
|
|
|
|
Earnings before income
taxes |
47,567 |
47,203 |
84,347 |
88,903 |
54,466 |
52,896 |
|
|
|
|
|
|
|
Income tax expense |
1,677 |
2,023 |
2,391 |
2,676 |
1,570 |
2,519 |
|
|
|
|
|
|
|
Net earnings |
45,890 |
45,180 |
81,956 |
86,227 |
52,896 |
50,377 |
|
|
|
|
|
|
|
Net earnings attributable to noncontrolling
interest (b) |
505 |
499 |
950 |
997 |
694 |
676 |
|
|
|
|
|
|
|
Net earnings attributable to Ferrellgas
Partners, L.P. |
45,385 |
44,681 |
81,006 |
85,230 |
52,202 |
49,701 |
|
|
|
|
|
|
|
Less: General partner's interest in net
earnings |
454 |
447 |
810 |
852 |
522 |
497 |
|
|
|
|
|
|
|
Common unitholders' interest in net
earnings |
$ 44,931 |
$ 44,234 |
$ 80,196 |
$ 84,378 |
$ 51,680 |
$ 49,204 |
|
|
|
|
|
|
|
Earnings Per Unit |
|
|
|
|
|
|
Basic and diluted net earnings per common
unitholders' interest |
$ 0.57 |
$ 0.56 |
$ 1.01 |
$ 1.07 |
$ 0.65 |
$ 0.62 |
|
|
|
|
|
|
|
Weighted average common units
outstanding |
79,177.8 |
79,054.4 |
79,127.1 |
79,027.5 |
79,113.2 |
79,018.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data and
Reconciliation of Non-GAAP Items: |
|
|
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
Twelve months
ended |
|
April
30 |
April
30 |
April
30 |
|
2014 |
2013 |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to
Ferrellgas Partners, L.P. |
$ 45,385 |
$ 44,681 |
$ 81,006 |
$ 85,230 |
$ 52,202 |
$ 49,701 |
Income tax expense |
1,677 |
2,023 |
2,391 |
2,676 |
1,570 |
2,519 |
Interest expense |
20,189 |
22,084 |
64,372 |
67,138 |
86,379 |
89,488 |
Depreciation and amortization
expense |
20,913 |
20,896 |
61,771 |
62,522 |
82,593 |
83,524 |
EBITDA |
88,164 |
89,684 |
209,540 |
217,566 |
222,744 |
225,232 |
Loss on extinguishment of debt |
-- |
-- |
21,202 |
-- |
21,202 |
-- |
Non-cash employee stock ownership plan
compensation charge |
3,710 |
2,824 |
10,389 |
12,673 |
13,485 |
15,394 |
Non-cash stock and unit-based
compensation charge (a) |
5,832 |
2,222 |
16,182 |
8,434 |
21,293 |
12,410 |
Loss on disposal of assets and other |
1,732 |
3,337 |
3,426 |
5,728 |
8,119 |
9,711 |
Other income, net |
(225) |
(185) |
(498) |
(517) |
(546) |
(775) |
Severance costs |
-- |
-- |
-- |
-- |
-- |
292 |
Litigation accrual and related legal fees
associated with a class action lawsuit |
97 |
113 |
1,422 |
1,338 |
1,652 |
1,338 |
Net earnings attributable to
noncontrolling interest (b) |
505 |
499 |
950 |
997 |
694 |
676 |
Adjusted EBITDA (c) |
99,815 |
98,494 |
262,613 |
246,219 |
288,643 |
264,278 |
Net cash interest expense (d) |
(19,941) |
(20,631) |
(61,507) |
(62,829) |
(82,173) |
(83,656) |
Maintenance capital expenditures (e) |
(4,762) |
(3,466) |
(13,345) |
(10,996) |
(17,419) |
(15,522) |
Cash paid for taxes |
(225) |
(43) |
(403) |
(88) |
(865) |
(752) |
Proceeds from asset sales |
785 |
1,850 |
3,267 |
8,013 |
5,234 |
9,441 |
Distributable cash flow to equity
investors (f) |
75,672 |
76,204 |
190,625 |
180,319 |
193,420 |
173,789 |
Distributable cash flow to general partner
and non-controlling interest |
1,513 |
1,524 |
3,813 |
3,606 |
3,868 |
3,476 |
Distributable cash flow to common
unitholder |
74,159 |
74,680 |
186,812 |
176,713 |
189,552 |
170,313 |
Less: Distributions paid |
39,594 |
39,536 |
118,702 |
118,552 |
158,237 |
158,054 |
Distributable cash flow
excess |
$ 34,565 |
$ 35,144 |
$ 68,110 |
$ 58,161 |
$ 31,315 |
$ 12,259 |
Propane gallons sales |
|
|
|
|
|
|
Retail - Sales to End Users |
185,961 |
196,009 |
558,142 |
542,688 |
653,377 |
637,719 |
Wholesale - Sales to Resellers |
71,963 |
71,113 |
233,664 |
202,396 |
294,715 |
258,237 |
Total propane gallons sales |
257,924 |
267,122 |
791,806 |
745,084 |
948,092 |
895,956 |
|
|
|
|
|
|
|
(a) Non-cash
stock and unit-based compensation charges consist of the
following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
Nine months ended |
Twelve months ended |
|
April 30 |
April 30 |
April 30 |
|
2014 |
2013 |
2014 |
2013 |
2014 |
2013 |
Operating expense |
$ 1,166 |
$ 422 |
$ 3,503 |
$ 1,726 |
$ 4,168 |
2,521 |
General and administrative
expense |
4,666 |
1,800 |
12,679 |
6,708 |
17,125 |
9,889 |
Total |
$ 5,832 |
$ 2,222 |
$ 16,182 |
$ 8,434 |
$ 21,293 |
$ 12,410 |
|
(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
earnings before income tax expense, interest expense, depreciation
and amortization expense, loss on extinguishment of debt,
non-cash employee stock ownership plan compensation charge,
non-cash stock and unit-based compensation charge, loss on disposal
of assets and other, other income, net, severance costs, litigation
accrual and related legal fees associated with a class action
lawsuit and net earnings 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, 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
common unitholders. 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. |
|
|
FERRELLGAS PARTNERS,
L.P. AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(in thousands, except
unit data) |
(unaudited) |
|
|
|
ASSETS |
April 30, 2014 |
July 31, 2013 |
|
|
|
Current Assets: |
|
|
Cash and cash equivalents |
$ 134,397 |
$ 6,464 |
Accounts and notes receivable, net
(including $230,798 and $130,025 of accounts receivable pledged as
collateral at April 30, 2014 and July 31, 2013, respectively) |
247,576 |
131,791 |
Inventories |
110,721 |
117,116 |
Prepaid expenses and other current
assets |
37,496 |
25,608 |
Total Current
Assets |
530,190 |
280,979 |
|
|
|
Property, plant and equipment, net |
584,991 |
589,727 |
Goodwill |
253,331 |
253,362 |
Intangible assets, net |
177,817 |
189,516 |
Other assets, net |
43,540 |
42,444 |
Total Assets |
$ 1,589,869 |
$ 1,356,028 |
|
|
|
LIABILITIES AND PARTNERS'
DEFICIT |
|
|
|
|
|
Current Liabilities: |
|
|
Accounts payable |
$ 79,105 |
$ 49,128 |
Short-term borrowings |
77,956 |
50,054 |
Collateralized note payable |
155,000 |
82,000 |
Other current liabilities |
129,124 |
121,102 |
Total Current
Liabilities |
441,185 |
302,284 |
|
|
|
Long-term debt (a) |
1,205,370 |
1,106,940 |
Other liabilities |
32,238 |
33,431 |
Contingencies and commitments |
-- |
-- |
|
|
|
Partners'
Deficit: |
|
|
Common unitholders (79,187,419 and
79,072,819 units outstanding at April 30, 2014 and July 31, 2013,
respectively) |
(39,292) |
(28,931) |
General partner unitholder (799,873 and
798,715 units outstanding at April 30, 2014 and July 31, 2013,
respectively) |
(60,467) |
(60,362) |
Accumulated other comprehensive
income |
9,848 |
1,697 |
Total Ferrellgas Partners, L.P.
Partners' Deficit |
(89,911) |
(87,596) |
Noncontrolling Interest |
987 |
969 |
Total Partners'
Deficit |
(88,924) |
(86,627) |
Total Liabilities and Partners'
Deficit |
$ 1,589,869 |
$ 1,356,028 |
|
|
|
(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. |
CONTACT: Alan Heitmann, Investor Relations
alheitmann@ferrellgas.com or (816) 792-6879
Scott Brockelmeyer, Media Relations
scottbrockelmeyer@ferrellgas.com or (913) 661-1830
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