FGP Ferrellgas Partners LP

OVERLAND PARK, Kan., June 6 /PRNewswire-FirstCall/ -- Ferrellgas Partners, L.P. (NYSE:FGP), one of the nation's largest propane distributors, today reported for the third fiscal quarter ended April 30 Adjusted EBITDA of $85.1 million, down from the record $95.1 million for the same quarter in the prior fiscal year. Net earnings were $35.2 million, or $0.55 per unit, compared with a record $43.7 million, or $0.69 per unit, the year before. The decreases continued to reflect sharply higher propane costs that pressured margins and triggered customer conservation. Partially offsetting these factors were higher fee income and an ongoing tight rein on expenses. Propane sales volume in the third fiscal quarter decreased to 252 million gallons from 271 million gallons in the prior-year's third quarter, mirroring similar trends from the first half of the fiscal year. Chairman and Chief Executive Officer James Ferrell pointed out, "In light of the hurdles we had to clear, which included a 44-percent increase in the cost of propane, we achieved Adjusted EBITDA that approached our budget for the quarter. Our operating platform's efficiencies contributed to that performance as operating expense declined 4 percent on a year-over-year basis. General and administrative expense decreased more than 7 percent." Ferrell pointed out, "In this current, challenging environment, our team performed remarkably well and deserves a lot of credit. We continue to believe that we have in place the fundamentals that will lead to improved operations." President and Chief Operating Officer Steve Wambold reported, "Our Blue Rhino brand had a solid third quarter, reaching its volume goals, while successfully implementing price increases with its customers. Moreover, Blue Rhino is off to an excellent start in the fourth quarter, having added 2,500 selling locations over the past year and having recently secured a commitment for more than 1,000 additional locations from an existing customer to be installed prior to the end of July." Wambold pointed out, "Based on Blue Rhino's positive momentum and our well-established expense control efforts, we expect meaningful improvement in our Adjusted EBITDA results in the fourth quarter over year-earlier results. We expect that this performance will result in Adjusted EBITDA for the full fiscal year in the range of $225.0 million to $230.0 million." Third quarter revenues rose to $712.1 million from $624.2 million in the year-earlier period, with higher wholesale propane commodity prices and additional fee income contributing to the increase. Gross profit decreased to $194.9 million from $210.5 million. Operating expense was $93.3 million versus $97.4 million a year ago while general and administrative expense was $10.9 million compared with $11.8 million. Equipment lease expenses also declined, to $6.0 million from $6.7 million. Comparable figures for the nine months were as follows: Revenues of $1.87 billion and $1.66 billion a year ago; gross profit, $537.3 million and $565.0 million; propane sales volume, 699 million gallons and 755 million gallons; operating expense, $274.8 million and $287.2 million; general and administrative expense, $33.9 million and $32.9 million; equipment lease expense, $18.5 million and $19.8 million; Adjusted EBITDA, $211.5 million and $226.3 million; and net earnings $63.5 million, or $1.00 per unit and $73.4 million and $1.16 per unit. Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., serves approximately one million customers in all 50 states, the District of Columbia, and Puerto Rico. Ferrellgas employees indirectly own more than 20 million common units of the partnership through an employee stock ownership plan. More information about the partnership can be found online at http://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, 2007, and other documents filed from time to time by these entities with the Securities and Exchange Commission. Contact: Tom Colvin, Investor Relations, 913-661-1530 Scott Brockelmeyer, Media Relations, 913-661-1830 FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) (unaudited) ASSETS April 30, 2008 July 31, 2007 Current Assets: Cash and cash equivalents $20,864 $20,685 Accounts and notes receivable, net 162,580 118,320 Inventories 121,833 113,807 Price risk management assets 17,228 5,097 Prepaid expenses and other current assets 14,690 11,675 Total Current Assets 337,195 269,584 Property, plant and equipment, net 693,742 720,190 Goodwill 248,877 249,481 Intangible assets, net 230,449 246,283 Other assets, net 20,032 17,865 Total Assets $1,530,295 $1,503,403 LIABILITIES AND PARTNERS' CAPITAL Current Liabilities: Accounts payable $75,674 $62,103 Short term borrowings 71,025 57,779 Other current liabilities (a) 100,844 107,199 Total Current Liabilities 247,543 227,081 Long-term debt (a) 1,028,518 1,011,751 Other liabilities 24,041 22,795 Contingencies and commitments -- -- Minority interest 4,968 5,119 Partners' Capital: Common unitholders (62,961,674 and 62,957,674 units outstanding at April 2008 and July 2007, respectively) 268,399 289,075 General partner unitholder (635,977 and 635,936 units outstanding at April 2008 and July 2007, respectively) (57,361) (57,154) Accumulated other comprehensive income 14,187 4,736 Total Partners' Capital 225,225 236,657 Total Liabilities and Partners' Capital $1,530,295 $1,503,403 (a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $268 million of 8 3/4% 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, 2008 AND 2007 (in thousands, except per unit data) (unaudited) Three months ended Nine months ended April 30, April 30, 2008 2007 2008 2007 Revenues: Propane and other gas liquids sales $621,343 $531,816 $1,664,734 $1,458,732 Other 90,747 92,346 206,240 204,616 Total revenues 712,090 624,162 1,870,974 1,663,348 Cost of product sold: Propane and other gas liquids sales 455,375 341,593 1,212,418 956,288 Other 61,850 72,118 121,232 142,039 Gross profit 194,865 210,451 537,324 565,021 Operating expense 93,349 97,369 274,828 287,224 Depreciation and amortization expense 21,443 22,245 63,883 65,936 General and administrative expense 10,947 11,829 33,855 32,877 Equipment lease expense 5,990 6,675 18,484 19,773 Employee stock ownership plan compensation charge 3,447 2,721 9,693 8,301 Loss on disposal of assets and other 2,662 3,097 8,729 9,592 Operating income 57,027 66,515 127,852 141,318 Interest expense (21,214) (21,534) (66,351) (66,243) Interest income 350 981 1,348 2,871 Earnings before income taxes and minority interest 36,163 45,962 62,849 77,946 Income tax expense -- current 243 2,087 600 3,486 Income tax expense (benefit) -- deferred (h) 329 (335) (2,052) 148 Minority interest (a) 420 507 832 933 Net earnings 35,171 43,703 63,469 73,379 Net earnings available to general partner 352 1,860 635 734 Net earnings available to common unitholders $34,819 $41,843 $62,834 $72,645 Earnings Per Unit Basic and diluted net earnings available per common unit $0.55 $0.66 $1.00 $1.16 Dilutive effect of EITF 03-6 (b) -- 0.03 -- -- Adjusted net earnings per unit available to common unitholders $0.55 $0.69 $1.00 $1.16 Weighted average common units outstanding 62,958.9 62,950.4 62,958.7 62,688.2 Twelve months ended April 30, 2008 2007 Revenues: Propane and other gas liquids sales $1,963,425 $1,756,041 Other 236,641 238,585 Total revenues 2,200,066 1,994,626 Cost of product sold: Propane and other gas liquids sales 1,403,299 1,145,839 Other 136,416 162,701 Gross profit 660,351 686,086 Operating expense 368,442 380,173 Depreciation and amortization expense 85,330 87,025 General and administrative expense 45,848 45,773 Equipment lease expense 24,853 26,370 Employee stock ownership plan compensation charge 12,617 11,057 Loss on disposal of assets and other 9,959 11,613 Operating income 113,302 124,075 Interest expense (88,061) (87,585) Interest income 1,622 3,452 Earnings before income taxes and minority interest 26,863 39,942 Income tax expense -- current 575 3,892 Income tax expense (benefit) -- deferred (h) 899 295 Minority interest (a) 499 604 Net earnings 24,890 35,151 Net earnings available to general partner 249 352 Net earnings available to common unitholders $24,641 $34,799 Earnings Per Unit Basic and diluted net earnings available per common unit $0.39 $0.56 Dilutive effect of EITF 03-6 (b) -- -- Adjusted net earnings per unit available to common unitholders $0.39 $0.56 Weighted average common units outstanding 62,958.1 62,211.1 Supplemental Data and Reconciliation of Non-GAAP Items: Three months ended Nine months ended April 30, April 30, 2008 2007 2008 2007 Net earnings $35,171 $43,703 $63,469 $73,379 Income tax expense (benefit) 572 1,752 (1,452) 3,634 Interest expense 21,214 21,534 66,351 66,243 Depreciation and amortization expense 21,443 22,245 63,883 65,936 Interest income (350) (981) (1,348) (2,871) EBITDA 78,050 88,253 190,903 206,321 Employee stock ownership plan compensation charge 3,447 2,721 9,693 8,301 Unit and stock-based compensation charge (c) 483 499 1,383 1,165 Loss on disposal of assets and other 2,662 3,097 8,729 9,592 Minority interest 420 507 832 933 Adjusted EBITDA (d) 85,062 95,077 211,540 226,312 Net cash interest expense (e) (22,098) (22,451) (68,196) (66,723) Maintenance capital expenditures (f) (5,590) (4,026) (15,058) (13,745) Cash paid for taxes (48) (1,112) (1,327) (2,877) Proceeds from asset sales 2,415 1,563 8,665 7,069 Distributable cash flow to equity investors (g) $59,741 $69,051 $135,624 $150,036 Propane gallons sales Retail - Sales to End Users 204,683 220,654 567,247 611,156 Wholesale - Sales to Resellers 47,427 50,768 131,412 144,234 Total propane gallons sales 252,110 271,422 698,659 755,390 Twelve months ended April 30, 2008 2007 Net earnings $24,890 $35,151 Income tax expense (benefit) 1,474 4,187 Interest expense 88,061 87,585 Depreciation and amortization expense 85,330 87,025 Interest income (1,622) (3,452) EBITDA 198,133 210,496 Employee stock ownership plan compensation charge 12,617 11,057 Unit and stock-based compensation charge (c) 1,107 1,447 Loss on disposal of assets and other 9,959 11,613 Minority interest 499 604 Adjusted EBITDA (d) 222,315 235,217 Net cash interest expense (e) (90,493) (88,155) Maintenance capital expenditures (f) (18,248) (17,290) Cash paid for taxes (2,192) (2,268) Proceeds from asset sales 11,426 10,285 Distributable cash flow to equity investors (g) $122,808 $137,789 Propane gallons sales Retail -- Sales to End Users 658,808 705,408 Wholesale -- Sales to Resellers 176,350 194,919 Total propane gallons sales 835,158 900,327 (a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. (b) Emerging Issues Task Force ("EITF") 03-6 "Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share," requires the calculation of net earnings per limited partner unit for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings for the period had to be distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of earnings to the limited partners. Due to the seasonality of the propane business, the dilution effect of EITF 03-6 on net earnings per limited partner unit will typically only impact the three months ending January 31. EITF 03-6 did not have a dilutive effect on the three, nine and twelve months ended April 30, 2008 and the nine and twelve months ended April 30, 2007. (c) Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment" requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. Share-based payment transactions resulted in a non-cash compensation charge of $0.1 million and $0.2 million to operating expense, for the three months ended April 30, 2008 and 2007, respectively, and $0.4 million and $0.3 million to operating expense for the nine months ended April 30, 2008 and 2007, respectively. A non-cash compensation charge of $0.3 million and $0.3 million was recorded to general and administrative expense for the three months ended April 30, 2008 and 2007, respectively, and $1.0 million and $0.9 million for the nine months ended April 31, 2008 and 2007, respectively. A non-cash charge of $0.4 million and $0.4 million was recorded to operating expense for the twelve months ended April 30, 2008 and 2007, respectively. A non-cash charge of $0.7 and $1.1 was recorded to general and administrative expense for the twelve months ended April 30, 2008 and 2007, respectively. (d) Management considers Adjusted EBITDA to be a chief measurement of the partnership's overall economic performance and return on invested capital. Adjusted EBITDA is calculated as earnings before interest, income taxes, depreciation and amortization, employee stock ownership plan compensation charge, unit and stock-based compensation charge, loss on disposal of assets and other, minority interest, and other non-cash and non-operating charges. 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 are unusual or non-recurring, and makes it easier to compare its results with other companies that have different financing and capital structures. In addition, management believes this measure is consistent with the manner in which the partnership's lenders and investors measure its overall performance and liquidity, including its ability to pay quarterly equity distributions, service its long-term debt and other fixed obligations and fund its capital expenditures and working capital requirements. 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. (e) Net cash interest expense is the sum of interest expense less non-cash interest expense and interest income. This amount also includes interest expense related to the accounts receivable securitization facility. (f) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment. (g) 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 or similarly titled measures used by other corporations and partnerships. (h) During the fourth quarter of fiscal 2007 the governor of the state of Michigan signed into law a new Michigan Business Tax. The passing of this new tax law caused Ferrellgas to recognize a one time deferred tax expense of $2.8 million during fiscal 2007. During fiscal 2008 a credit for this deferred tax expense was created by a new Michigan tax law. The passing of this new tax law caused Ferrellgas to recognize a one time deferred tax credit during fiscal 2008. DATASOURCE: Ferrellgas Partners, L.P. CONTACT: Tom Colvin, Investor Relations, +1-913-661-1530, or Scott Brockelmeyer, Media Relations, +1-913-661-1830, both of Ferrellgas Partners, L.P. Web site: http://www.ferrellgas.com/

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