Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the
“Company”) today reported financial results for its first quarter
ended October 31, 2019.
For the quarter, the Company reported a net loss
attributable to Ferrellgas Partners, L.P. of $45.3 million, or
$0.46 per common unit, compared to prior year period net loss of
$57.0 million, or $0.58 per common unit. Adjusted EBITDA, a
non-GAAP measure, for the quarter was $25.1 million compared to
$17.8 million in the prior year’s first quarter, a 41 percent
increase.
The Company’s propane operations reported that
total gallons sold for the quarter were 179.9 million, up from
178.6 million gallons in the prior year. Margin cents per gallon
were 4.2¢, or 5.7 percent higher than the prior year despite
increased competitive pressures in the tank exchange business. The
Company continues its aggressive operating strategies in gaining
market share. This strategic focus resulted in over 18,000
new customers, or approximately 3 percent more than prior year.
Additionally, the Company’s current Blue Rhino tank exchange sales
locations have increased over 4 percent from prior year to over
55,900 locations. Continued commitment to operating expense control
during this growth period resulted in a $14.1 million in Operating
Income despite a mere $4.2 million increase, or 3.8 percent, in
operating expenses during the quarter.
The Company also successfully completed two
accretive retail acquisitions in Colorado and New York during the
quarter.
As previously announced, the Company
indefinitely suspended its quarterly cash distribution as a result
of not meeting the required fixed charge coverage ratio contained
in the senior unsecured notes due June of 2020. Additionally,
Ferrellgas has engaged Moelis & Company LLC as its financial
advisor and the law firm of Squire Patton Boggs LLP to assist in
our ongoing process to address our upcoming debt maturities.
The Company does not intend to comment further on its
progress in this regard or on potential options until further
disclosure is appropriate or required by law. For that
reason, and in view of the information the Company otherwise makes
available in earnings releases and quarterly and annual reports,
the Company has suspended the practice of holding conference calls
with investors, analysts and other interested parties in connection
with periodic reporting of financial results for completed
periods.
|
FERRELLGAS PARTNERS, L.P. AND
SUBSIDIARIES |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(in thousands, except unit data) |
|
(unaudited) |
| |
|
|
|
|
|
ASSETS |
|
October 31, 2019 |
|
July 31, 2019 |
| |
|
|
|
|
| Current
Assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,805 |
|
|
$ |
11,054 |
|
|
Accounts and notes receivable, net (including $118,164 and $106,145
of accounts |
|
|
|
|
|
receivable pledged as collateral at October 31, 2019 and July 31,
2019, respectively) |
|
|
123,841 |
|
|
|
107,596 |
|
|
Inventories |
|
|
84,995 |
|
|
|
80,454 |
|
|
Prepaid expenses and other current assets |
|
|
50,582 |
|
|
|
42,275 |
|
|
Total Current Assets |
|
|
289,223 |
|
|
|
241,379 |
|
| |
|
|
|
|
| Property, plant and equipment,
net |
|
|
598,887 |
|
|
|
596,723 |
|
| Goodwill, net |
|
|
247,195 |
|
|
|
247,195 |
|
| Intangible assets, net |
|
|
108,493 |
|
|
|
108,557 |
|
| Operating lease right-of-use
asset |
|
|
124,047 |
|
|
|
- |
|
| Other assets, net |
|
|
75,443 |
|
|
|
69,105 |
|
|
Total Assets |
|
$ |
1,443,288 |
|
|
$ |
1,262,959 |
|
| |
|
|
|
|
| |
|
|
|
|
|
LIABILITIES AND PARTNERS' DEFICIT |
|
|
|
|
| |
|
|
|
|
| Current
Liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
44,421 |
|
|
$ |
33,364 |
|
|
Short-term borrowings |
|
|
80,000 |
|
|
|
43,000 |
|
|
Collateralized note payable |
|
|
73,000 |
|
|
|
62,000 |
|
|
Current portion of long-term debt (a) |
|
|
358,080 |
|
|
|
631,756 |
|
|
Current operating lease liabilities |
|
|
33,832 |
|
|
|
- |
|
|
Other current liabilities |
|
|
187,731 |
|
|
|
138,237 |
|
|
Total Current Liabilities |
|
|
777,064 |
|
|
|
908,357 |
|
| |
|
|
|
|
| Long-term debt |
|
|
1,731,920 |
|
|
|
1,457,004 |
|
| Operating lease
liabilities |
|
|
88,773 |
|
|
|
- |
|
| Other liabilities |
|
|
36,915 |
|
|
|
36,536 |
|
| Contingencies and
commitments |
|
|
|
|
| |
|
|
|
|
| Partners
Deficit: |
|
|
|
|
| Common unitholders (97,152,665
units outstanding at October 31, 2019 and July 31, 2019) |
|
|
(1,091,704 |
) |
|
|
(1,046,245 |
) |
| General partner unitholder
(989,926 units outstanding at October 31, 2019 and July 31,
2019) |
|
|
(70,935 |
) |
|
|
(70,476 |
) |
| Accumulated other
comprehensive loss |
|
|
(20,598 |
) |
|
|
(14,512 |
) |
|
Total Ferrellgas Partners, L.P. Partners'
Deficit |
|
|
(1,183,237 |
) |
|
|
(1,131,233 |
) |
|
Noncontrolling interest |
|
|
(8,147 |
) |
|
|
(7,705 |
) |
|
Total Partners' Deficit |
|
|
(1,191,384 |
) |
|
|
(1,138,938 |
) |
|
Total Liabilities and Partners' Deficit |
|
$ |
1,443,288 |
|
|
$ |
1,262,959 |
|
| |
|
|
|
|
| (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 |
| |
|
October 31 |
|
October 31 |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
Propane and other gas liquids sales |
|
$ |
273,385 |
|
|
$ |
334,966 |
|
|
$ |
1,547,277 |
|
|
$ |
1,675,184 |
|
|
Midstream operations |
|
|
|
|
- |
|
|
|
- |
|
|
|
161,559 |
|
|
Other |
|
|
19,829 |
|
|
|
17,343 |
|
|
|
78,020 |
|
|
|
134,053 |
|
|
Total revenues |
|
|
293,214 |
|
|
|
352,309 |
|
|
|
1,625,297 |
|
|
|
1,970,796 |
|
| |
|
|
|
|
|
|
|
|
| Cost of
sales: |
|
|
|
|
|
|
|
|
| Propane and other gas liquids
sales |
|
|
134,028 |
|
|
|
204,136 |
|
|
|
832,408 |
|
|
|
998,035 |
|
| Midstream operations |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
147,434 |
|
| Other |
|
|
3,681 |
|
|
|
3,047 |
|
|
|
12,040 |
|
|
|
57,999 |
|
| |
|
|
|
|
|
|
|
|
| Gross
profit |
|
|
155,505 |
|
|
|
145,126 |
|
|
|
780,849 |
|
|
|
767,328 |
|
| |
|
|
|
|
|
|
|
|
| Operating expense - personnel,
vehicle, plant & other |
|
|
114,543 |
|
|
|
110,331 |
|
|
|
473,080 |
|
|
|
471,617 |
|
| Depreciation and amortization
expense |
|
|
19,219 |
|
|
|
18,992 |
|
|
|
79,073 |
|
|
|
95,055 |
|
| General and administrative
expense |
|
|
9,695 |
|
|
|
14,179 |
|
|
|
55,510 |
|
|
|
55,416 |
|
| Operating expense - equipment
lease expense |
|
|
8,388 |
|
|
|
7,863 |
|
|
|
33,598 |
|
|
|
29,394 |
|
| Non-cash employee stock
ownership plan compensation charge |
|
|
795 |
|
|
|
2,748 |
|
|
|
3,740 |
|
|
|
12,645 |
|
| Asset impairments |
|
|
|
|
- |
|
|
|
- |
|
|
|
10,005 |
|
| Loss on asset sales and
disposals |
|
|
2,235 |
|
|
|
4,504 |
|
|
|
8,699 |
|
|
|
191,008 |
|
| |
|
|
|
|
|
|
|
|
| Operating income
(loss) |
|
|
630 |
|
|
|
(13,491 |
) |
|
|
127,149 |
|
|
|
(97,812 |
) |
| |
|
|
|
|
|
|
|
|
| Interest expense |
|
|
(45,697 |
) |
|
|
(43,878 |
) |
|
|
(179,438 |
) |
|
|
(171,538 |
) |
| Other income (expense),
net |
|
|
(132 |
) |
|
|
19 |
|
|
|
218 |
|
|
|
436 |
|
| |
|
|
|
|
|
|
|
|
| Loss before income
tax benefit |
|
|
(45,199 |
) |
|
|
(57,350 |
) |
|
|
(52,071 |
) |
|
|
(268,914 |
) |
| |
|
|
|
|
|
|
|
|
| Income tax expense
(benefit) |
|
|
518 |
|
|
|
158 |
|
|
|
683 |
|
|
|
(2,897 |
) |
| |
|
|
|
|
|
|
|
|
| Net loss |
|
|
(45,717 |
) |
|
|
(57,508 |
) |
|
|
(52,754 |
) |
|
|
(266,017 |
) |
| |
|
|
|
|
|
|
|
|
| Net loss attributable to
noncontrolling interest (b) |
|
|
(373 |
) |
|
|
(493 |
) |
|
|
(178 |
) |
|
|
(2,336 |
) |
| |
|
|
|
|
|
|
|
|
| Net loss attributable to
Ferrellgas Partners, L.P. |
|
|
(45,344 |
) |
|
|
(57,015 |
) |
|
|
(52,576 |
) |
|
|
(263,681 |
) |
| |
|
|
|
|
|
|
|
|
| Less: General partner's
interest in net loss |
|
|
(453 |
) |
|
|
(570 |
) |
|
|
(525 |
) |
|
|
(2,637 |
) |
| |
|
|
|
|
|
|
|
|
| Common unitholders'
interest in net loss |
|
$ |
(44,891 |
) |
|
$ |
(56,445 |
) |
|
$ |
(52,051 |
) |
|
$ |
(261,044 |
) |
| |
|
|
|
|
|
|
|
|
| Loss Per Common
Unit |
|
|
|
|
|
|
|
|
| Basic and diluted net earnings
loss per common unitholders' interest |
|
$ |
(0.46 |
) |
|
$ |
(0.58 |
) |
|
$ |
(0.54 |
) |
|
$ |
(2.69 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted average common units
outstanding - basic |
|
|
97,152.7 |
|
|
|
97,152.7 |
|
|
|
97,152.7 |
|
|
|
97,152.7 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Supplemental Data and Reconciliation of Non-GAAP
Items: |
| |
|
|
|
|
|
|
|
|
| |
|
Three months ended |
|
Twelve months ended |
| |
|
October 31 |
|
October 31 |
| |
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Net loss attributable
to Ferrellgas Partners, L.P. |
|
$ |
(45,344 |
) |
|
$ |
(57,015 |
) |
|
$ |
(52,576 |
) |
|
$ |
(263,681 |
) |
|
Income tax expense (benefit) |
|
|
518 |
|
|
|
158 |
|
|
|
683 |
|
|
|
(2,897 |
) |
|
Interest expense |
|
|
45,697 |
|
|
|
43,878 |
|
|
|
179,438 |
|
|
|
171,538 |
|
|
Depreciation and amortization expense |
|
|
19,219 |
|
|
|
18,992 |
|
|
|
79,073 |
|
|
|
95,055 |
|
| EBITDA |
|
|
20,090 |
|
|
|
6,013 |
|
|
|
206,618 |
|
|
|
15 |
|
|
Non-cash employee stock ownership plan compensation charge |
|
|
795 |
|
|
|
2,748 |
|
|
|
3,740 |
|
|
|
12,645 |
|
|
Asset impairments |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,005 |
|
|
Loss on asset sales and disposal |
|
|
2,235 |
|
|
|
4,504 |
|
|
|
8,699 |
|
|
|
191,008 |
|
|
Other income (expense), net |
|
|
132 |
|
|
|
(19 |
) |
|
|
(218 |
) |
|
|
(436 |
) |
|
Severance expense includes $690 in operating expense and $910
in general and administrative expense |
|
|
|
|
|
|
|
|
|
for the twelve months ended period ending October 31, 2018. |
|
|
- |
|
|
|
- |
|
|
|
1,600 |
|
|
|
- |
|
|
Legal fees and settlements related to non-core businesses |
|
|
2,043 |
|
|
|
3,564 |
|
|
|
16,843 |
|
|
|
9,629 |
|
|
Multi-employer pension plan withdrawal settlement |
|
|
- |
|
|
|
1,524 |
|
|
|
- |
|
|
|
1,524 |
|
|
Exit costs associated with contracts - Midstream dispositions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,804 |
|
|
Unrealized (non-cash) gains on changes in fair value of derivatives
$(314) included in |
|
|
|
|
|
|
|
|
|
midstream operations cost of sales for the twelve months ended
October 31, 2018. |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(314 |
) |
|
Lease accounting standard adjustment |
|
|
170 |
|
|
|
|
|
170 |
|
|
|
|
Net loss attributable to noncontrolling interest (b) |
|
|
(373 |
) |
|
|
(493 |
) |
|
|
(178 |
) |
|
|
(2,336 |
) |
| Adjusted EBITDA
(c) |
|
|
25,092 |
|
|
|
17,841 |
|
|
|
237,274 |
|
|
|
233,544 |
|
|
Net cash interest expense (d) |
|
|
(42,583 |
) |
|
|
(40,899 |
) |
|
|
(166,474 |
) |
|
|
(163,734 |
) |
|
Maintenance capital expenditures (e) |
|
|
(6,467 |
) |
|
|
(5,385 |
) |
|
|
(47,856 |
) |
|
|
(24,298 |
) |
|
Cash refund from (paid for) taxes |
|
|
- |
|
|
|
(2 |
) |
|
|
(139 |
) |
|
|
295 |
|
|
Proceeds from certain asset sales |
|
|
835 |
|
|
|
1,061 |
|
|
|
4,023 |
|
|
|
9,056 |
|
| Distributable cash
flow attributable to equity investors (f) |
|
|
(23,123 |
) |
|
|
(27,384 |
) |
|
|
26,828 |
|
|
|
54,863 |
|
| Distributable cash flow
attributable to general partner and non-controlling interest |
|
|
(462 |
) |
|
|
(548 |
) |
|
|
537 |
|
|
|
1,097 |
|
| Distributable cash flow
attributable to common unitholders (g) |
|
|
(22,661 |
) |
|
|
(26,836 |
) |
|
|
26,291 |
|
|
|
53,766 |
|
| Less: Distributions paid to
common unitholders |
|
|
- |
|
|
|
9,715 |
|
|
|
- |
|
|
|
38,861 |
|
| Distributable cash
flow excess/(shortage) |
|
$ |
(22,661 |
) |
|
$ |
(36,551 |
) |
|
$ |
26,291 |
|
|
$ |
14,905 |
|
| |
|
|
|
|
|
|
|
|
| Propane gallons
sales |
|
|
|
|
|
|
|
|
|
Retail - Sales to End Users |
|
|
129,901 |
|
|
|
129,667 |
|
|
|
672,500 |
|
|
|
647,341 |
|
|
Wholesale - Sales to Resellers |
|
|
50,039 |
|
|
|
48,960 |
|
|
|
233,645 |
|
|
|
235,741 |
|
|
Total propane gallons sales |
|
|
179,940 |
|
|
|
178,627 |
|
|
|
906,145 |
|
|
|
883,082 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (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 expense (benefit), interest expense, depreciation |
|
| and amortization
expense, non-cash employee stock ownership plan compensation
charge, asset impairments, loss on asset sales and disposals, other
income (expense), net, severance |
|
| expense, legal
fees and settlements related to non-core businesses, multi-employer
pension plan withdrawal settlement, exit costs associated with
contracts - Midstream dispositions, unrealized (non-cash)
gains |
|
| on changes in
fair value of derivatives, lease accounting standard
adjustment 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 expense,
maintenance capital expenditures and cash paid for taxes
plus |
|
| proceeds from
certain 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 interest. 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 . |
|