FGP Ferrellgas Partners LP

OVERLAND PARK, Kan., Sept. 29 /PRNewswire-FirstCall/ -- Ferrellgas Partners, L.P. (NYSE:FGP), one of the nation's largest propane distributors, reported for the fiscal fourth quarter ended July 31 Adjusted EBITDA of $10.4 million, in line with prior year results. For full-year fiscal 2008, Adjusted EBITDA totaled $221.9 million compared to fiscal 2007 record Adjusted EBITDA performance of $237.1 million. The traditional fourth-quarter loss was $38.8 million, or $0.61 per unit, materially unchanged from a year ago. For the full-year fiscal 2008 and 2007, respectively, Ferrellgas earned $24.7 million, or $0.39 per unit, and $34.8 million, or $0.55 per unit, respectively. Fourth-quarter revenues climbed more than 27 percent to $419.7 million from $329.1 million the year before, as propane sales rose to 140.2 million gallons from 136.5 million gallons. Gross profit increased to $125.0 million from $123.0 million. For the full year, revenues rose to $2.29 billion from $1.99 billion the year before, while propane sales decreased to 838.8 million gallons from 891.9 million gallons. Gross profit declined to $662.3 million from $688.0 million. Operating expense for the fiscal 2008 fourth quarter and year was $97.3 million and $372.1 million, respectively, compared with $93.6 million and $380.8 million in the year-earlier periods. On a comparable basis, general & administrative expense was $11.8 million and $45.6 million, respectively, and $12.0 million and $44.9 million, respectively, in fiscal 2007. Equipment lease expense declined to $6.0 million from $6.4 million in the quarter and to $24.5 million from $26.1 million for the year. The Blue Rhino brand continued to contribute in fiscal 2008 closing the year with 43,200 locations, an increase of 2,300 over year-ago levels. Included were more than 500 additional 7Eleven stores and more than 200 new RaceTrac convenience locations. "In light of the challenging operating environment, we are quite pleased with our fourth-quarter and full-year results," noted James E. Ferrell, Chairman and Chief Executive Officer. "While these results fell just short of our full-year Adjusted EBITDA target of $225 million, they exclude more than $3 million of anticipated earnings from certain higher margin sales that were realized and incrementally benefited our earnings in the first month of fiscal 2009. With the wholesale price of propane increasing 47% over the past year, approaching fiscal 2007's record financial results reflects a performance that's a tribute to our employees." Looking to the current fiscal year, President and Chief Operating Officer Steve Wambold emphasized, "We're better positioned now than we've ever been. Our platform continues to operate more efficiently, and we remain confident more cost savings can be realized. We're particularly encouraged by the fourth-quarter increase in gallons sold, a trend that we believe will carry over into the first quarter of our new fiscal year, despite conservation's ongoing impact." Wambold emphasized, "We're especially focused on improving margins. Moreover, we believe we have good reason to be optimistic about the outlook for fiscal 2009 and are projecting Adjusted EBITDA in excess of our fiscal 2007 record performance." Chief Financial Officer Ryan VanWinkle pointed out, "During the fourth quarter, we took a major step in addressing our near-term capital needs." At the end of July the partnership announced a private placement of $200 million in notes. 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, 2008, 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 July 31, 2008 July 31, 2007 ------ ------------- ------------- Current Assets: Cash and cash equivalents $16,614 $20,685 Accounts and notes receivable, net 145,081 118,320 Inventories 152,301 113,807 Price risk management assets 26,086 5,097 Prepaid expenses and other current assets 10,924 11,675 ------ ------ Total Current Assets 351,006 269,584 Property, plant and equipment, net 685,328 720,190 Goodwill 248,939 249,481 Intangible assets, net 225,273 246,283 Other assets, net 18,685 17,865 ------ ------ Total Assets $1,529,231 $1,503,403 ========== ========== LIABILITIES AND PARTNERS' CAPITAL --------------------------------- Current Liabilities: Accounts payable $71,348 $62,103 Short term borrowings 125,729 57,779 Other current liabilities (a) 107,854 107,199 ------- ------- Total Current Liabilities 304,931 227,081 Long-term debt (a) 1,034,719 1,011,751 Other liabilities 23,237 22,795 Contingencies and commitments - - Minority interest 4,220 5,119 Partners' Capital: Common unitholders (62,961,674 and 62,957,674 units outstanding at July 2008 and 2007, respectively) 201,618 289,075 General partner unitholders (635,977 and 635,936 units outstanding at July 2008 and 2007, respectively) (58,036) (57,154) Accumulated other comprehensive income 18,542 4,736 ------ ----- Total Partners' Capital 162,124 236,657 ------- ------- Total Liabilities and Partners' Capital $1,529,231 $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 AND TWELVE MONTHS ENDED JULY 31, 2008 AND 2007 (in thousands, except per unit data) (unaudited) Three months ended Twelve months ended July 31, July 31, -------------- ---------------- 2008 2007 2008 2007 ---- ---- ---- ---- Revenues: Propane and other gas liquids sales $390,547 $298,691 $2,055,281 $1,757,423 Other 29,168 30,401 235,408 235,017 ------ ------ ------- ------- Total revenues 419,715 329,092 2,290,689 1,992,440 Cost of product sold: Propane and other gas liquids sales 279,500 190,881 1,491,918 1,147,169 Other 15,246 15,184 136,478 157,223 ------ ------ ------- ------- Gross profit 124,969 123,027 662,293 688,048 Operating expense 97,250 93,614 372,078 380,838 Depreciation and amortization expense 21,638 21,447 85,521 87,383 General and administrative expense 11,757 11,993 45,612 44,870 Equipment lease expense 5,994 6,369 24,478 26,142 Employee stock ownership plan compensation charge 2,720 2,924 12,413 11,225 Loss on disposal of assets and other 2,521 1,230 11,250 10,822 ----- ----- ------ ------ Operating income (loss) (16,911) (14,550) 110,941 126,768 Interest expense (20,361) (21,710) (86,712) (87,953) Other interest income (expense) (309) 274 1,039 3,145 ---- --- ----- ----- Earnings (loss) before income taxes and minority interest (37,581) (35,986) 25,268 41,960 Income tax expense (benefit) - current 1,132 (25) 1,732 3,461 Income tax expense (benefit) - deferred (g) 402 2,951 (1,650) 3,099 Minority interest (a) (335) (333) 497 600 ---- ---- --- --- Net earnings (loss) (38,780) (38,579) 24,689 34,800 Net earnings (loss) available to general partner (388) (386) 247 348 ---- ---- --- --- Net earnings (loss) available to common unitholders $(38,392) $(38,193) $24,442 $34,452 ======== ======== ======= ======= Earnings Per Unit ----------------- Basic earnings (loss) per common unit available to common unitholders $(0.61) $(0.61) $0.39 $0.55 Weighted average common units outstanding 62,961.7 62,956.4 62,959.5 62,755.8 Supplemental Data and Reconciliation of Non-GAAP Items: Three months ended Twelve months ended July 31, July 31, ---- ---- ---- ---- 2008 2007 2008 2007 ---- ---- ---- ---- Net earnings (loss) $(38,780) $(38,579) $24,689 $34,800 Income tax expense (benefit) 1,534 2,926 82 6,560 Interest expense 20,361 21,710 86,712 87,953 Depreciation and amortization expense 21,638 21,447 85,521 87,383 Interest income 309 (274) (1,039) (3,145) --- ---- ------ ------ EBITDA 5,062 7,230 195,965 213,551 Employee stock ownership plan compensation charge 2,720 2,924 12,413 11,225 Unit and stock-based compensation charge (b) 433 (276) 1,816 889 Loss on disposal of assets and other 2,521 1,230 11,250 10,822 Minority interest (335) (333) 497 600 ---- ---- --- --- Adjusted EBITDA (c) 10,401 10,775 221,941 237,087 Net cash interest expense (d) (21,585) (22,297) (89,781) (88,878) Maintenance capital expenditures (e) (5,536) (3,190) (20,594) (16,935) Cash paid for taxes (2,514) (865) (3,841) (3,742) Proceeds from asset sales 2,209 2,761 10,874 9,830 ----- ----- ------ ----- Distributable cash flow to equity investors (f) $(17,025) $(12,816) $118,599 $137,362 ======== ======== ======== ======== Propane gallons sales Retail - Sales to End Users 89,585 91,560 656,832 702,716 Wholesale - Sales to Resellers 50,603 44,938 182,015 189,172 ------ ------ ------- ------- Total propane gallons sales 140,188 136,498 838,847 891,888 ======= ======= ======= ======= (a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. (b) 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. (c) 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. (d) 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. (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 or similarly titled measures used by other corporations and partnerships. (g) 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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