Ferrellgas Partners, L.P. Reports Fiscal Second Quarter 2019 Results

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Total Retail propane sales volume for the quarter increased approximately 2 percent leading to a 4 percent increase in gross margin dollars over the prior year on weather that was 0.7 percent colder than the prior year.
Retail customer growth of approximately 25,000, or 4 percent over prior year.
Tank Exchange sale locations now exceed 53,700, up 10 percent compared to prior year.
5 accretive acquisitions of Blue Rhino independent distributors completed this fiscal year.

LIBERTY, Mo., March 08, 2019 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal second quarter ended January 31, 2019.

For the quarter, the Company reported a net earnings attributable to Ferrellgas Partners, L.P. of $43.3 million, or $.44 per common unit, compared to prior year period net loss of $1.8 million, or $(.02) per common unit.

Adjusted EBITDA, a non-GAAP measure, was $119.7 million compared to $120.6 million in the prior year. The following table represents the contribution to adjusted EBITDA from ongoing propane operations as well as from assets that were sold during 2018.

(in millions)	Q2 2019	Q2 2018
Propane Operations and Corporate Support	$119.7	$116.7
Results from Assets Sold in 2018	-	$3.9
Consolidated Adjusted EBITDA	$119.7	$120.6

On a trailing twelve month basis, adjusted EBITDA from ongoing propane operations and corporate support as of January 31, 2019 is $229.4 million compared to $226.5 million as of October 31, 2018.

The Company’s propane operations reported that total gallons sold of 309.7 million were consistent with the prior year. Margins were 3.1¢, or 4.2 percent higher than the prior year despite increased competitive pressure in the tank exchange business. The Company continues its aggressive approach to gaining market share. This strategic focus resulted in approximately 25,000 new customers, or approximately 4 percent more than prior year. Additionally, the Company’s current Blue Rhino tank exchange sales locations have increased over 10 percent from prior year to over 53,700 locations. Overall, the increase in sales volume growth and margins per gallon resulted in an increase in gross margin dollars of $9.3 million. The Company’s ongoing commitment to investing in the business led to higher operating expenses during the quarter which were largely associated with serving over 25,000 new customers, 5,000 new tank exchange locations and additional non-transport gallons sold. As a result of this investment and the growth in sales volumes, operating, general and administrative expenses in our Propane segment were $5.6 million higher than the prior year.

Liquidity of $236.8 million at January 31, 2019 resulted from $196.2 million of available borrowing capacity on the Company’s secured credit facility and $40.6 million of cash.

“We continue to pursue our strategy to invest in the growth of the business and are achieving success faster than anticipated,” said James E. Ferrell, Interim Chief Executive Officer and President of Ferrellgas. “We are committed to growing market share organically and through acquisitions. We continue the successful integration of Blue Rhino independent distributors as we capture more EBITDA from this business. We continue to invest in our best-in-class fleet. Additionally, continued favorable weather led to extremely strong performance in February that we expect to continue through the midpoint of our third 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 2020.

In addition to solidifying the Company’s liquidity with the fourth quarter 2018 closing of the $575 million secured credit facility and extension of its accounts receivable securitization facility and cash from 2018 announced asset sales, the Company continues to make progress in evaluating options to address its leverage.

“Our Company is focused on growth and operational excellence,” said Ferrell. “We have the liquidity to be flexible and continue this focused effort and I expect to resolve our leverage situation to the benefit of our Company for continued success.”

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. 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 27, 2018. 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. 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 include those 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, 2018, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

William Ruisinger, Interim Chief Financial Officer – billruisinger@ferrellgas.com 816-792-7914

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)

ASSETS	January 31, 2019			July 31, 2018

Current Assets:
Cash and cash equivalents	$	40,647		$	119,311
Accounts and notes receivable, net (including $201,717 and $120,079 of accounts receivable pledged as collateral at January 31, 2019 and July 31, 2018, respectively)		203,164			126,054
Inventories		89,784			83,694
Prepaid expenses and other current assets		36,616			34,862
Total Current Assets		370,211			363,921

Property, plant and equipment, net		584,334			557,723
Goodwill, net		247,478			246,098
Intangible assets, net		113,558			120,951
Other assets, net		72,539			74,588
Total Assets	$	1,388,120		$	1,363,281


LIABILITIES AND PARTNERS' DEFICIT

Current Liabilities:
Accounts payable	$	63,639		$	46,820
Short-term borrowings		-			32,800
Collateralized note payable		140,000			58,000
Other current liabilities		147,253			142,025
Total Current Liabilities		350,892			279,645

Long-term debt (a)		2,083,031			2,078,637
Other liabilities		37,547			39,476
Contingencies and commitments

Partners Deficit:
Common unitholders (97,152,665 units outstanding at January 31, 2019 and July 31, 2018)		(997,154	)		(978,503	)
General partner unitholder (989,926 units outstanding at January 31, 2019 and July 31, 2018)		(69,981	)		(69,792	)
Accumulated other comprehensive income (loss)		(9,049	)		20,510
Total Ferrellgas Partners, L.P. Partners' Deficit		(1,076,184	)		(1,027,785	)
Noncontrolling interest		(7,166	)		(6,692	)
Total Partners' Deficit		(1,083,350	)		(1,034,477	)
Total Liabilities and Partners' Deficit	$	1,388,120		$	1,363,281

(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						Six months ended						Twelve months ended
		January 31						January 31						January 31
			2019			2018			2019			2018			2019			2018
Revenues:
Propane and other gas liquids sales		$	550,112		$	592,239		$	885,078		$	894,997		$	1,633,057		$	1,533,635
Midstream operations			-			117,276			-			238,036			44,283			499,908
Other			23,265			45,641			40,608			76,778			111,677			147,753
Total revenues			573,377			755,156			925,686			1,209,811			1,789,017			2,181,296

Cost of sales:
Propane and other gas liquids sales			311,531			362,918			515,667			542,433			946,648			882,347
Midstream operations			-			107,067			-			215,192			40,367			462,965
Other			3,422			20,787			6,469			34,489			40,634			69,353

Gross profit			258,424			264,384			403,550			417,697			761,368			766,631

Operating expense			121,219			123,716			231,550			234,178			469,120			448,428
Depreciation and amortization expense			19,605			25,485			38,597			51,217			89,175			102,759
General and administrative expense			16,342			14,891			30,521			28,055			56,867			51,124
Equipment lease expense			8,415			6,954			16,278			13,695			30,855			28,054
Non-cash employee stock ownership plan compensation charge			1,944			4,031			4,692			7,993			10,558			16,382
Asset impairments			-			10,005			-			10,005			-			10,005
Loss on asset sales and disposals			2,216			39,249			6,720			40,144			153,975			48,133

Operating income (loss)			88,683			40,053			75,192			32,410			(49,182	)		61,746

Interest expense			(44,891	)		(42,673	)		(88,769	)		(83,480	)		(173,756	)		(163,718	)
Other income, net			86			684			105			1,195			(162	)		1,398

Earnings (loss) before income tax benefit			43,878			(1,936	)		(13,472	)		(49,875	)		(223,100	)		(100,574	)

Income tax expense (benefit)			3			(162	)		161			215			(2,732	)		(926	)

Net earnings (loss)			43,875			(1,774	)		(13,633	)		(50,090	)		(220,368	)		(99,648	)

Net earnings (loss) attributable to noncontrolling interest (b)			531			69			38			(332	)		(1,874	)		(658	)


Net earnings (loss) attributable to Ferrellgas Partners, L.P.			43,344			(1,843	)		(13,671	)		(49,758	)		(218,494	)		(98,990	)

Less: General partner's interest in net earnings (loss)			433			(19	)		(137	)		(498	)		(2,185	)		(990	)

Common unitholders' interest in net earnings (loss)		$	42,911		$	(1,824	)	$	(13,534	)	$	(49,260	)	$	(216,309	)	$	(98,000	)

Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest		$	0.44		$	(0.02	)	$	(0.14	)	$	(0.51	)	$	(2.23	)	$	(1.01	)

Weighted average common units outstanding - basic			97,152.7			97,152.7			97,152.7			97,152.7			97,152.7			97,152.7


Supplemental Data and Reconciliation of Non-GAAP Items:

		Three months ended						Six months ended						Twelve months ended
		January 31						January 31						January 31
			2019			2018			2019			2018			2019			2018

Net earnings (loss) attributable to Ferrellgas Partners, L.P.		$	43,344		$	(1,843	)	$	(13,671	)	$	(49,758	)	$	(218,494	)	$	(98,990	)
Income tax expense (benefit)			3			(162	)		161			215			(2,732	)		(926	)
Interest expense			44,891			42,673			88,769			83,480			173,756			163,718
Depreciation and amortization expense			19,605			25,485			38,597			51,217			89,175			102,759
EBITDA			107,843			66,153			113,856			85,154			41,705			166,561
Non-cash employee stock ownership plan compensation charge			1,944			4,031			4,692			7,993			10,558			16,382
Asset impairments			-			10,005			-			10,005			-			10,005
Loss on asset sales and disposal			2,216			39,249			6,720			40,144			153,975			48,133
Other income, net			(86	)		(684	)		(105	)		(1,195	)		162			(1,398	)
Severance costs $690 included in operating costs for the three, six and twelve months ended period January 31, 2019 and $910 included in general and administrative costs for the three, six and twelve months ended January 31, 2019. Also includes $358 in operating costs for the six and twelve months ended period January 31, 2018 and $1,305 included in general and administrative costs for the six and twelve months ended January 31, 2018.			1,600			-			1,600			1,663			1,600			1,663
Legal fees and settlements			5,608			2,118			9,172			2,118			13,119			2,118
Multi-employer pension plan withdrawal settlement			-			-			1,524			-			1,524			-
Exit costs associated with contracts - Midstream dispositions			-			-			-			-			11,804			-
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(986) included in operating expense for the twelve months ended January 31, 2018. Also includes $(314), $1,293 and $1,037 included in midstream operations cost of sales for the three, six and twelve months ended January 31, 2018, respectively.			-			(314	)		-			1,293			-			51
Net earnings (loss) attributable to noncontrolling interest (b)			531			69			38			(332	)		(1,874	)		(658	)
Adjusted EBITDA (c)			119,656			120,627			137,497			146,843			232,573			242,857
Net cash interest expense (d)			(41,679	)		(39,734	)		(82,578	)		(77,791	)		(165,679	)		(153,049	)
Maintenance capital expenditures (e)			(26,147	)		(4,640	)		(31,532	)		(13,344	)		(45,805	)		(23,203	)
Cash refund from (paid for) taxes			4			(6	)		2			(12	)		305			(296	)
Proceeds from certain asset sales			899			2,999			1,960			4,207			6,956			8,126
Distributable cash flow attributable to equity investors (f)			52,733			79,246			25,349			59,903			28,350			74,435
Distributable cash flow attributable to general partner and non-controlling interest			1,055			1,585			507			1,198			567			1,489
Distributable cash flow attributable to common unitholders (g)			51,678			77,661			24,842			58,705			27,783			72,946
Less: Distributions paid to common unitholders			-			9,716			9,715			19,431			29,145			38,861
Distributable cash flow excess/(shortage)		$	51,678		$	67,945		$	15,127		$	39,274		$	(1,362	)	$	34,085

Propane gallons sales
Retail - Sales to End Users			239,044			235,071			368,711			354,365			651,314			606,469
Wholesale - Sales to Resellers			70,655			74,942			119,615			128,371			231,454			236,480
Total propane gallons sales			309,699			310,013			488,326			482,736			882,768			842,949



(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 earnings (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 disposal, other income, net, severance expense, legal fees and settlements, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, unrealized (non-cash) loss (gain) on changes in fair value of derivatives, 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 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.

Source: Ferrellgas Partners, L.P.