Ferrellgas Partners, L.P. Reports Results for Fiscal 2017
September 28 2017 - 7:00AM
Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the
“Company”) today announced financial results for its fiscal year
ended July 31, 2017. The Company reported net loss attributable to
Ferrellgas Partners, L.P. of $54.2 million, compared to net loss of
$665.4 million for the same period in 2016.
Adjusted EBITDA was $230.1 million compared to $344.7 million in
the prior year period primarily due to decreased contributions from
the midstream operations segment.
“Weather for fiscal 2017 was a stunning 18% warmer than normal,
and significantly affected our financial results,” said James E.
Ferrell, the Company’s interim President and Chief Executive
Officer. “Our strategy is to increase market share as reflected in
our 2% increase in retail gallons sold, exceeding those of prior
year on an absolute and weather adjusted basis. Overall gross
margin was lower than the prior year period due to customer mix and
an increase in the overall wholesale cost of propane.”
Propane gallons sold were 791.1 million gallons, compared to
778.9 million gallons in the prior year. Operating income generated
by the propane operations and related equipment sales segment was
$187.9 million, compared to $204.9 million in the prior year
period.
Our midstream operations segment generated an operating loss of
$26.3 million this year compared to $648.3 million in fiscal 2016
primarily due to the impairment charge of $658.1 million recorded
last year.
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 28, 2017.
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. These statements often use
words such as “anticipate,” “believe,” “intend,” “plan,”
“projection,” “forecast,” “strategy,” “position,” “continue,”
“estimate,” “expect,” “may,” “will,” or the negative of those terms
or other variations of them or comparable terminology.
Forward-looking statements, include, but are not limited to:
Ferrellgas’ debt reduction plans, Ferrellgas’ leverage ratio
reduction plans, statements regarding future unitholder returns,
growth and improved results, plans to increase the utilization of
certain assets, the anticipated impact of Ferrellgas’ actions on
its balance sheet and liquidity position, and the anticipated
impact of Ferrellgas’ leadership changes. While Ferrellgas believes
that the assumptions concerning future events are reasonable, it
cautions that there are inherent difficulties in predicting certain
important factors that could impact the future performance or
results of its business. Among the factors that could cause results
to differ materially from those indicated by such forward-looking
statements are: risks related to Ferrellgas’ ability to generate
sufficient cash flow to pay distributions, to make payments on its
debt obligations and to execute its business plan; Ferrellgas’
ability to access funds on acceptable terms, if at all, because of
the terms and conditions governing its indebtedness or otherwise;
local, regional and national economic conditions and the impact
they may have on Ferrellgas and its customers; the effect of
weather conditions on the demand for propane; the prices of
wholesale propane, motor fuel and crude oil; disruptions to the
supply of propane; the termination or non-renewal of certain
arrangements or agreements; adverse changes in our relationships
with our national propane customers; significant delays in the
collection of, or uncollectibility of, accounts or notes
receivable; the financial condition of Ferrellgas’ customers; and
the failure of any customer to perform its contractual obligations.
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, 2017, and in other documents
filed from time to time by these entities with the Securities and
Exchange Commission.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements in this press release
are qualified in their entirety by these cautionary statements.
Except as required by law, Ferrellgas undertakes no obligation and
does not intend to update or revise any forward-looking statements,
whether as a result of new information, future results or
otherwise.
Contacts
Jack Herrold, Investor Relations —
jackherrold@ferrellgas.com, 913-661-1851 Jim Saladin, Media
Relations — jimsaladin@ferrellgas.com, 913-661-1833
|
FERRELLGAS PARTNERS,
L.P. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands, except unit data) |
(unaudited) |
|
|
|
|
|
ASSETS |
|
July 31, 2017 |
|
July 31, 2016 |
|
|
|
|
|
Current
Assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
5,760 |
|
|
$ |
4,965 |
|
Accounts
and notes receivable, net (including $109,407 and $106,464 of |
|
|
|
|
accounts
receivable pledged as collateral at July 31, 2017 and |
|
|
|
|
July 31,
2016, respectively and net of allowance for doubtful accounts
of |
|
|
|
|
$1,976
and $5,067 at 2017 and 2016, respectively) |
|
|
165,084 |
|
|
|
149,583 |
|
Inventories |
|
|
92,552 |
|
|
|
90,594 |
|
Prepaid
expenses and other current assets |
|
|
33,388 |
|
|
|
39,973 |
|
Total Current Assets |
|
|
296,784 |
|
|
|
285,115 |
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
731,923 |
|
|
|
774,680 |
|
Goodwill |
|
|
256,103 |
|
|
|
256,103 |
|
Intangible assets, net |
|
|
251,102 |
|
|
|
280,185 |
|
Other
assets, net |
|
|
74,057 |
|
|
|
87,223 |
|
Total Assets |
|
$ |
1,609,969 |
|
|
$ |
1,683,306 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS' DEFICIT |
|
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
85,561 |
|
|
$ |
67,928 |
|
Short-term borrowings |
|
|
59,781 |
|
|
|
101,291 |
|
Collateralized note payable |
|
|
69,000 |
|
|
|
64,000 |
|
Other
current liabilities |
|
|
126,224 |
|
|
|
128,958 |
|
Total Current Liabilities |
|
|
340,566 |
|
|
|
362,177 |
|
|
|
|
|
|
Long-term debt (a) |
|
|
1,995,795 |
|
|
|
1,941,335 |
|
Other liabilities |
|
|
31,118 |
|
|
|
31,574 |
|
Contingencies and
commitments |
|
|
|
|
|
|
|
|
|
Partners Deficit: |
|
|
|
|
Common
unitholders (97,152,665 and 98,002,665 units outstanding at |
|
|
|
|
July 31,
2017 and July 31, 2016) |
|
|
(701,188 |
) |
|
|
(570,754 |
) |
General
partner unitholder (989,926 units outstanding at July 31, 2017 and
July 31, 2016) |
|
|
(66,991 |
) |
|
|
(65,835 |
) |
Accumulated other comprehensive income (loss) |
|
|
14,601 |
|
|
|
(10,468 |
) |
Total Ferrellgas Partners, L.P. Partners'
Deficit |
|
|
(753,578 |
) |
|
|
(647,057 |
) |
Noncontrolling Interest |
|
|
(3,932 |
) |
|
|
(4,723 |
) |
Total Partners' Deficit |
|
|
(757,510 |
) |
|
|
(651,780 |
) |
Total Liabilities and Partners' Deficit |
|
$ |
1,609,969 |
|
|
$ |
1,683,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The principal difference between the Ferrellgas Partners,
L.P. balance sheet and that of Ferrellgas, L.P., is $357 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 |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in thousands, except per unit
data) |
(unaudited) |
|
|
Three months
ended |
|
Twelve months
ended |
|
|
July 31 |
|
July 31 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
Propane
and other gas liquids sales |
|
$ |
269,201 |
|
|
$ |
241,282 |
|
|
$ |
1,318,412 |
|
|
$ |
1,202,368 |
|
Midstream
operations |
|
|
135,196 |
|
|
|
137,811 |
|
|
|
466,703 |
|
|
|
625,238 |
|
Other |
|
|
28,979 |
|
|
|
30,418 |
|
|
|
145,162 |
|
|
|
211,761 |
|
Total revenues |
|
|
433,376 |
|
|
|
409,511 |
|
|
|
1,930,277 |
|
|
|
2,039,367 |
|
|
|
|
|
|
|
|
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
Propane
and other gas liquids sales |
|
|
142,427 |
|
|
|
115,592 |
|
|
|
694,155 |
|
|
|
564,433 |
|
Midstream
operations |
|
|
129,006 |
|
|
|
97,335 |
|
|
|
429,439 |
|
|
|
471,234 |
|
Other |
|
|
14,054 |
|
|
|
14,812 |
|
|
|
67,267 |
|
|
|
126,237 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
147,889 |
|
|
|
181,772 |
|
|
|
739,416 |
|
|
|
877,463 |
|
|
|
|
|
|
|
|
|
|
Operating expense |
|
|
109,477 |
|
|
|
111,326 |
|
|
|
431,751 |
|
|
|
457,910 |
|
Depreciation and amortization expense |
|
|
25,805 |
|
|
|
37,815 |
|
|
|
103,351 |
|
|
|
150,513 |
|
General
and administrative expense |
|
|
13,091 |
|
|
|
11,923 |
|
|
|
46,980 |
|
|
|
48,579 |
|
Equipment lease expense |
|
|
7,089 |
|
|
|
7,279 |
|
|
|
29,124 |
|
|
|
28,833 |
|
Non-cash
employee stock ownership plan compensation charge |
|
|
3,692 |
|
|
|
9,220 |
|
|
|
15,088 |
|
|
|
27,595 |
|
Non-cash
stock-based compensation charge (a) |
|
|
- |
|
|
|
2,567 |
|
|
|
3,298 |
|
|
|
9,324 |
|
Asset
impairments |
|
|
- |
|
|
|
628,802 |
|
|
|
- |
|
|
|
658,118 |
|
Loss on
asset sales and disposal |
|
|
5,596 |
|
|
|
7,615 |
|
|
|
14,457 |
|
|
|
30,835 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(16,861 |
) |
|
|
(634,775 |
) |
|
|
95,367 |
|
|
|
(534,244 |
) |
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(40,378 |
) |
|
|
(35,048 |
) |
|
|
(152,485 |
) |
|
|
(137,937 |
) |
Other
income (expense), net |
|
|
41 |
|
|
|
199 |
|
|
|
1,474 |
|
|
|
110 |
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(57,198 |
) |
|
|
(669,624 |
) |
|
|
(55,644 |
) |
|
|
(672,071 |
) |
|
|
|
|
|
|
|
|
|
Income
tax benefit |
|
|
(949 |
) |
|
|
(1,482 |
) |
|
|
(1,143 |
) |
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(56,249 |
) |
|
|
(668,142 |
) |
|
|
(54,501 |
) |
|
|
(672,035 |
) |
|
|
|
|
|
|
|
|
|
Net loss
attributable to noncontrolling interest (b) |
|
|
(481 |
) |
|
|
(6,708 |
) |
|
|
(294 |
) |
|
|
(6,620 |
) |
|
|
|
|
|
|
|
|
|
Net loss
attributable to Ferrellgas Partners, L.P. |
|
|
(55,768 |
) |
|
|
(661,434 |
) |
|
|
(54,207 |
) |
|
|
(665,415 |
) |
|
|
|
|
|
|
|
|
|
Less:
General partner's interest in net loss |
|
|
(558 |
) |
|
|
(6,614 |
) |
|
|
(542 |
) |
|
|
(6,654 |
) |
|
|
|
|
|
|
|
|
|
Common unitholders' interest in net loss |
|
$ |
(55,210 |
) |
|
$ |
(654,820 |
) |
|
$ |
(53,665 |
) |
|
$ |
(658,761 |
) |
|
|
|
|
|
|
|
|
|
Loss Per Common Unit |
|
|
|
|
|
|
|
|
Basic
and diluted net loss per common unitholders' interest |
|
$ |
(0.57 |
) |
|
$ |
(6.68 |
) |
|
$ |
(0.55 |
) |
|
$ |
(6.68 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average common units outstanding - basic |
|
|
97,152.7 |
|
|
|
98,002.7 |
|
|
|
97,229.5 |
|
|
|
98,682.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Data and Reconciliation of
Non-GAAP Items: |
|
|
|
|
|
|
|
|
|
|
|
Three months
ended |
|
Twelve months
ended |
|
|
July 31 |
|
July 31 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Ferrellgas Partners,
L.P. |
|
$ |
(55,768 |
) |
|
$ |
(661,434 |
) |
|
$ |
(54,207 |
) |
|
$ |
(665,415 |
) |
Income
tax benefit |
|
|
(949 |
) |
|
|
(1,482 |
) |
|
|
(1,143 |
) |
|
|
(36 |
) |
Interest
expense |
|
|
40,378 |
|
|
|
35,048 |
|
|
|
152,485 |
|
|
|
137,937 |
|
Depreciation and amortization expense |
|
|
25,805 |
|
|
|
37,815 |
|
|
|
103,351 |
|
|
|
150,513 |
|
EBITDA |
|
|
9,466 |
|
|
|
(590,053 |
) |
|
|
200,486 |
|
|
|
(377,001 |
) |
Non-cash
employee stock ownership plan compensation charge |
|
|
3,692 |
|
|
|
9,220 |
|
|
|
15,088 |
|
|
|
27,595 |
|
Non-cash
stock based compensation charge (a) |
|
|
- |
|
|
|
2,567 |
|
|
|
3,298 |
|
|
|
9,324 |
|
Asset
impairments |
|
|
- |
|
|
|
628,802 |
|
|
|
- |
|
|
|
658,118 |
|
Loss on
asset sales and disposal |
|
|
5,596 |
|
|
|
7,615 |
|
|
|
14,457 |
|
|
|
30,835 |
|
Other
(income) expense, net |
|
|
(41 |
) |
|
|
(199 |
) |
|
|
(1,474 |
) |
|
|
(110 |
) |
Change in
fair value of contingent consideration (included in operating
expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(100 |
) |
Severance
expense $414 included in operating expense for the twelve months
ended period July 31, 2017 |
|
|
|
|
|
|
|
|
and
$1,545 included in general and administrative expense for the
twelve months ended July 31, 2017. |
|
|
|
|
|
|
|
|
Also
includes $128 and $1,329 in operating expense for the three and
twelve months ended July 31, 2017 |
|
|
|
|
|
|
|
|
and $124
general and administrative expense for the twelve months ended July
31, 2017. |
|
|
- |
|
|
|
128 |
|
|
|
1,959 |
|
|
|
1,453 |
|
Unrealized (non-cash) losses (gains) on changes in fair value of
derivatives $1,751, and $540 |
|
|
|
|
|
|
|
|
included
in cost of sales for the three and twelve months ended July 31,
2017, respectively, and |
|
|
|
|
|
|
|
|
$(1,849)
and $(448) for the three and twelve months ended July 31, 2016,
respectively. Also includes $(759) and |
|
|
|
|
|
|
|
|
$(3,997)
included in operating expense for the three and twelve months ended
July 31, 2017, respectively, and |
|
|
|
|
|
|
|
|
$(7) and
$1,585 for the three and twelve months ended July 31, 2016,
respectively. |
|
|
992 |
|
|
|
(1,856 |
) |
|
|
(3,457 |
) |
|
|
1,137 |
|
Acquisition and transition expenses (included in general and
administrative expense) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
99 |
|
Net loss
attributable to noncontrolling interest (b) |
|
|
(481 |
) |
|
|
(6,708 |
) |
|
|
(294 |
) |
|
|
(6,620 |
) |
Adjusted EBITDA (c) |
|
|
19,224 |
|
|
|
49,516 |
|
|
|
230,063 |
|
|
|
344,730 |
|
Net cash
interest expense (d) |
|
|
(38,118 |
) |
|
|
(33,604 |
) |
|
|
(143,588 |
) |
|
|
(132,860 |
) |
Maintenance capital expenditures (e) |
|
|
(6,417 |
) |
|
|
(3,549 |
) |
|
|
(16,935 |
) |
|
|
(17,137 |
) |
Cash paid
for taxes |
|
|
(282 |
) |
|
|
(345 |
) |
|
|
(310 |
) |
|
|
(777 |
) |
Proceeds
from asset sales |
|
|
3,789 |
|
|
|
51 |
|
|
|
7,952 |
|
|
|
6,023 |
|
Distributable cash flow attributable to equity investors
(f) |
|
|
(21,804 |
) |
|
|
12,069 |
|
|
|
77,182 |
|
|
|
199,979 |
|
Distributable cash flow attributable to general partner and
non-controlling interest |
|
|
(436 |
) |
|
|
241 |
|
|
|
1,544 |
|
|
|
4,000 |
|
Distributable cash flow attributable to common unitholders |
|
|
(21,368 |
) |
|
|
11,828 |
|
|
|
75,638 |
|
|
|
195,979 |
|
Less:
Distributions paid to common unitholders |
|
|
9,715 |
|
|
|
50,226 |
|
|
|
78,936 |
|
|
|
202,119 |
|
Distributable cash flow shortage |
|
$ |
(31,083 |
) |
|
$ |
(38,398 |
) |
|
$ |
(3,298 |
) |
|
$ |
(6,140 |
) |
|
|
|
|
|
|
|
|
|
Propane gallons sales |
|
|
|
|
|
|
|
|
Retail -
Sales to End Users |
|
|
91,778 |
|
|
|
87,625 |
|
|
|
564,872 |
|
|
|
552,771 |
|
Wholesale
- Sales to Resellers |
|
|
56,218 |
|
|
|
56,129 |
|
|
|
226,251 |
|
|
|
226,121 |
|
Total
propane gallons sales |
|
|
147,996 |
|
|
|
143,754 |
|
|
|
791,123 |
|
|
|
778,892 |
|
|
|
|
|
|
|
|
|
|
Midstream operations barrels |
|
|
|
|
|
|
|
|
Crude
oil hauled |
|
|
12,700 |
|
|
|
14,587 |
|
|
|
49,249 |
|
|
|
79,411 |
|
Crude
oil sold |
|
|
2,242 |
|
|
|
1,891 |
|
|
|
7,470 |
|
|
|
6,860 |
|
|
|
|
|
|
|
|
|
|
(a) Non-cash stock-based compensation charges consist of the
following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Twelve months ended |
|
|
July 31 |
|
July 31 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Operating
expense |
|
$ |
- |
|
|
$ |
385 |
|
|
$ |
661 |
|
|
$ |
1,268 |
|
General
and administrative expense |
|
|
- |
|
|
|
2,182 |
|
|
|
2,637 |
|
|
|
8,056 |
|
Total |
|
$ |
- |
|
|
$ |
2,567 |
|
|
$ |
3,298 |
|
|
$ |
9,324 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 loss
attributable to Ferrellgas Partners, L.P., less the sum of the
following: income tax benefit, interest expense,
depreciation and amortization expense, non-cash employee stock
ownership plan compensation charge, non-cash stock-based
compensation charge, asset impairments, loss on asset sales
and disposal, other (income) expense, net, change in fair value of
contingent consideration, severance expense, unrealized (non-cash)
losses (gains) on changes in fair value of derivatives,
acquisition and transition expenses and net 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) Distributable cash flow attributable to equity
investors is calculated as Adjusted EBITDA minus net cash interest,
maintenance capital expenditures, cash paid for taxes,
and proceeds from asset sales. Management considers
distributable cash flow attributable to equity investors a
meaningful measure of the partnership’s ability to declare and
pay quarterly distributions to equity investors. Distributable
cash flow attributable to equity investors, as management defines
it, may not be comparable to distributable cash
flow attributable to equity investors or similarly titled
measurements used by other corporations and partnerships. Items
added into our calculation of distributable cash
flow attributable to equity investors that will not occur on a
continuing basis may have associated cash payments. Distributable
cash flow attributable 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. |
(g) Distributable cash flow attributable to common
unitholders is calculated as Distributable cash flow attributable
to equity investors minus distributable cash flow attributable to
general partner and noncontrolling interests. Management
considers distributable cash flow attributable to common
unitholders a meaningful measure of the partnership’s ability to
declare and pay quarterly distributions to common unitholders.
Distributable cash flow attributable to common unitholders, as
management defines it, may not be comparable to
distributable cash flow attributable to common unitholders or
similarly titled measurements used by other corporations and
partnerships. Items added to our calculation of distributable cash
flow attributable to common unit holders that will not occur
on a continuing basis may have associated cash payments.
Distributable cash flow attributable to common unitholders may
not be consistent with that of other companies and should be viewed
in conjunction with measurements that are computed in accordance
with GAAP. |
|
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