Ferrellgas Partners LP

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Ferrellgas Partners' Second-Quarter Results Improve Substantially; Adjusted EBITDA Increases 33%; Distributable Cash Flow Up 50%

OVERLAND PARK, Kan., March 7, 2013 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported that results for the fiscal 2013 second quarter ended January 31 improved substantially, reflecting improved retail margins.

Adjusted EBITDA increased 33% to $116.1 million, from $87.5 million in the year-earlier quarter. Distributable cash flow to equity investors rose 50% to $93.1 million, from $62.2 million a year ago.

As expected revenues declined to $658.9 million, from $829.3 million, primarily attributable to a 39% decrease in the wholesale cost of propane from the year ago quarter.  Benefiting from lower wholesale propane costs, gross profit rose 15% to $235.2 million or $. 79 per gallon sold, in-line with both the trailing six and 12-month performance.  Net earnings climbed 60% to $58.8 million, or $0.73 per unit, from $36.8 million, or $0.47 per unit.

During the second quarter, retail propane gallons sales were off less than 1% to 221.8 million gallons, while total volume sales declined approximately 2% to 298.5 million.  The partnership continues to focus on more efficient and profitable deliveries of propane to its customers helping to offset the impact of unfavorable weather and economic conditions.

Operating expenses rose modestly to $105.6 million from $103.7 million, while general and administrative expense decreased modestly to $10.2 million.  Excluding performance based incentive accruals, net operating and general and administrative expenses were down nearly $1.0 million, in-line on a cents-per-gallon sold basis with prior year results.  Equipment lease expense rose to $3.8 million from $3.5 million

Interest expense continued to reflect the partnership's lower cost of borrowing, declining to $22.6 million, from $24.0 million the year before.

President and Chief Executive Officer Steve Wambold commented, "Second-quarter results represented the third consecutive quarter of positive momentum despite unusually warm weather. Temperatures during the quarter were slightly cooler than in the prior year, but still substantially warmer than normal.  For the quarter, temperatures were more than 10% warmer than normal and in the key heating month of December temperatures were 1% warmer than the prior year or nearly 15% warmer than normal.

"For the trailing 12 month period, our Adjusted EBITDA performance was $237 million.  As we continue to meet and exceed our operational objectives this year, we feel comfortable in increasing our previously forecasted fiscal 2013 Adjusted EBITDA range to $245 million to $260 million." Adjusted EBITDA in fiscal 2012 was $193.1 million.

The partnership remains focused on growth both through organic and acquisition efforts, announcing three acquisitions in fiscal 2013 thus far. "The acquisition environment remains attractive, with strong interest from sellers," commented Wambold.

For the first half of fiscal 2013, Adjusted EBITDA rose 42% to $147.7 million from $103.9 million. Net earnings totaled $41.0 million, or $0.51 per unit, versus $3.9 million, or $0.05 per unit.  Revenue declined 25% to $1.0 billion primarily on lower wholesale propane costs, with gross profit increasing 13% to $375.2 million on higher retail margins. 

Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., serves customers in all 50 states, the District of Columbia and Puerto Rico. 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, 2012, 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

January 31, 2013


July 31, 2012





Current Assets:




  Cash and cash equivalents

$              12,109


$         8,429

  Accounts and notes receivable, net (including $224,428 and $121,812 of




    accounts receivable pledged as collateral at January 31, 2013




    and July 31, 2012, respectively)

238,558


124,004

  Inventories

130,073


127,598

  Prepaid expenses and other current assets

30,069


29,315

    Total Current Assets

410,809


289,346





Property, plant and equipment, net

610,984


626,551

Goodwill

248,944


248,944

Intangible assets, net

183,659


189,118

Other assets, net

48,603


43,320

    Total Assets

$         1,502,999


$  1,397,279









LIABILITIES AND PARTNERS' DEFICIT








Current Liabilities:




  Accounts payable

$            103,379


$       47,824

  Short-term borrowings

72,678


95,730

  Collateralized note payable

134,000


74,000

  Other current liabilities

122,915


122,667

    Total Current Liabilities

432,972


340,221





Long-term debt (a)

1,081,388


1,059,085

Other liabilities

30,960


25,499

Contingencies and commitments

-


-





Partners' Deficit: 




 Common unitholders (79,015,619 and 79,006,619 units outstanding at




   January 31, 2013 and July 31, 2012, respectively)

20,673


43,701

 General partner unitholder (798,138 and 798,047 units outstanding at




   January 31, 2013 and July 31, 2012, respectively)

(59,863)


(59,630)

 Accumulated other comprehensive loss

(4,547)


(13,159)

    Total Ferrellgas Partners, L.P. Partners' Deficit

(43,737)


(29,088)

    Noncontrolling Interest

1,416


1,562

    Total Partners' Deficit

(42,321)


(27,526)

    Total Liabilities and Partners' Deficit

$         1,502,999


$  1,397,279













(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.




 

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2013 AND 2012

(in thousands, except per unit data)

(unaudited)

 



Three months ended 


Six months ended


Twelve months ended



January 31


January 31


January 31



2013


2012


2013


2012


2013


2012

Revenues:













  Propane and other gas liquids sales


$ 583,074


$ 779,567


$ 918,355


$ 1,293,786


$ 1,785,514


$ 2,363,241

  Other


75,791


49,705


103,419


73,912


207,654


186,488

    Total revenues


658,865


829,272


1,021,774


1,367,698


1,993,168


2,549,729














Cost of product sold:













  Propane and other gas liquids sales


376,236


600,600


589,893


1,003,722


1,188,057


1,797,164

  Other


47,437


24,468


56,634


31,094


120,863


104,206














Gross profit 


235,192


204,204


375,247


332,882


684,248


648,359














Operating expense (including $403 of non-recurring severance 













  charges for the twelve month period ended January 31, 2013)


105,599


103,741


202,033


203,152


397,861


407,611

Depreciation and amortization expense


20,751


21,042


41,626


41,716


83,751


83,837

General and administrative expense (including $279 of non-recurring













  severance charges for the twelve month period ended January 31, 2013)


10,190


10,344


18,964


19,708


36,372


50,476

Equipment lease expense


3,827


3,528


7,750


7,057


15,341


14,300

Non-cash employee stock ownership plan compensation charge


7,447


1,937


9,849


4,516


14,773


9,297

Non-cash stock and unit-based compensation charge (b)


3,120


1,565


6,212


4,482


10,573


5,889

Loss (gain) on disposal of assets and other


2,120


523


2,391


832


7,594


4,094














Operating income


82,138


61,524


86,422


51,419


117,983


72,855














Interest expense


(22,619)


(24,046)


(45,054)


(47,433)


(90,875)


(96,046)

Loss on extinguishment of debt


-


-


-


-


-


(10,513)

Other income (expense), net


241


80


332


47


791


348














Earnings (loss) before income taxes


59,760


37,558


41,700


4,033


27,899


(33,356)














Income tax expense


917


771


653


141


1,640


666














Net earnings (loss)


58,843


36,787


41,047


3,892


26,259


(34,022)














Net earnings (loss) attributable to noncontrolling interest (a)


636


413


498


122


432


(58)














Net earnings (loss) attributable to Ferrellgas Partners, L.P.


58,207


36,374


40,549


3,770


25,827


(33,964)














Less: General partner's interest in net earnings (loss)


3,138


364


405


38


258


(339)














Common unitholders' interest in net earnings (loss)


$   55,069


$   36,010


$   40,144


$        3,732


$      25,569


$    (33,625)














Earnings (loss) Per Unit













Basic and diluted net earnings (loss) per common unitholders' interest


$       0.70


$       0.47


$       0.51


$          0.05


$          0.32


$        (0.45)

Dilutive effect of two-class method (c)


0.03


-


-


-


-


-

Adjusted net earnings (loss) per unit available to common unitholders


$       0.73


$       0.47


$       0.51


$          0.05


$        (0.04)


$          1.05














Weighted average common units outstanding


79,015.6


76,401.6


79,014.4


76,184.0


78,995.4


75,373.4

 

 


Supplemental Data and Reconciliation of Non-GAAP Items:



















Three months ended 


Six months ended


Twelve months ended



January 31


January 31


January 31



2012


2011


2012


2011


2013


2012



























Net earnings (loss) attributable to Ferrellgas Partners, L.P.


$   58,207


$   36,374


$   40,549


$        3,770


$      25,827


$    (33,964)

  Income tax expense


917


771


653


141


1,640


666

  Interest expense


22,619


24,046


45,054


47,433


90,875


96,046

  Depreciation and amortization expense


20,751


21,042


41,626


41,716


83,751


83,837

EBITDA


102,494


82,233


127,882


93,060


202,093


146,585

  Loss on extinguishment of debt


-


-


-


-


-


10,513

  Non-cash employee stock ownership plan compensation charge


7,447


1,937


9,849


4,516


14,773


9,297

  Non-cash stock and unit-based compensation charge (b)


3,120


1,565


6,212


4,482


10,573


5,889

  Loss (gain) on disposal of assets and other


2,12     0


523


2,391


832


7,594


4,094

  Other (income) expense, net


(241)


(80)


(332)


(47)


(791)


(348)

  Nonrecurring severance costs


-


-


-


-


1,055


-

  Nonrecurring litigation reserve and related legal fees


537


892


1,225


892


1,225


12,345

  Net earnings (loss) attributable to noncontrolling interest


636


413


498


122


432


(58)

Adjusted EBITDA (d)


116,113


87,483


147,725


103,857


236,954


188,317

  Net cash interest expense (e)


(21,123)


(22,724)


(42,198)


(44,755)


(85,043)


(89,726)

  Maintenance capital expenditures (f)


(3,255)


(3,511)


(7,530)


(8,838)


(14,736)


(16,427)

  Cash paid for taxes


(27)


(87)


(45)


(90)


(719)


(766)

  Proceeds from asset sales


1,392


1,011


6,163


2,374


9,531


5,168

Distributable cash flow to equity investors (g)


$   93,100


$   62,172


$ 104,115


$      52,548


$    145,987


$      86,566














Propane gallons sales













  Retail - Sales to End Users


221,796


223,977


346,679


356,825


609,172


642,445

  Wholesale - Sales to Resellers


76,728


81,129


131,283


144,550


245,545


261,893

  Total propane gallons sales


298,524


305,106


477,962


501,375


854,717


904,338








































(a)  Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.

(b)  Non-cash stock and unit-based compensation charges consist of the following:




















Three months ended 


Six months ended


Twelve months ended



January 31


January 31


January 31



2013


2012


2013


2012


2013


2012

      Operating expense


$         593


$         673


$      1,304


$         1,840


$         2,211


$         2,335

      General and administrative expense


2,527


892


4,908


2,642


8,362


3,554

      Total


$      3,120


$      1,565


$      6,212


$         4,482


$       10,573


$         5,889















(c)

FASB guidance regarding participating securities and the two-class method requires the calculation of net earnings (loss) per common unitholders' interest for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings or loss for the period had been 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 the earnings to the limited partners. Due to the seasonality of the propane business, the dilution effect of the guidance on the two-class method typically impacts only the three months ending January 31. This guidance did not result in a dilutive effect for the three months ended January 31, 2012 or for the six and twelve months ended January 31, 2013 and 2012.

(d)

Adjusted EBITDA is calculated as earnings (loss) 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 (gain) on disposal of assets and other, other income (expense), net, nonrecuring serverance costs, nonrecurring litigation reserve and related legal fees and net earnings (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 inaccordance with GAAP.

(e)

Net cash interest expense is the sum of interest expense less non-cash interest expense and other income (expense), net. This amount 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.



SOURCE Ferrellgas Partners, L.P.

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