UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT 

Pursuant to Section 13 or 15(d) of the 

Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): March 15, 2021

 

Ferrellgas Partners, L.P. 

(Exact name of registrant as specified in its charter)

 

Delaware	001-11331	43-1698480
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

 

7500 College Blvd., Suite 1000, Overland Park, Kansas		66210
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: 913-661-1500

 

Not Applicable 

Former name or former address, if changed since last report

 

Ferrellgas Partners Finance Corp.

 

(Exact name of registrant as specified in its charter)

 

Delaware	333-06693-02	43-1742520
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

 

7500 College Blvd., Suite 1000, Overland Park, Kansas		66210
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: 913-661-1500

 

n/a 

Former name or former address, if changed since last report

 

Ferrellgas, L.P. 

(Exact name of registrant as specified in its charter)

 

Delaware	000-50182	43-1698481
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

 

7500 College Blvd., Suite 1000, Overland Park, Kansas		66210
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: 913-661-1500

 

n/a 

Former name or former address, if changed since last report

 

Ferrellgas Finance Corp. 

(Exact name of registrant as specified in its charter)

 

Delaware	000-50183	14-1866671
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)

 

7500 College Blvd., Suite 1000, Overland Park, Kansas		66210
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: 913-661-1500

 

n/a 

Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Ferrellgas Partners, L.P.

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Ferrellgas Partners Finance Corp.

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Ferrellgas, L.P.

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Ferrellgas Finance Corp.

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

 

 

 

Item 7.01. Regulation FD Disclosure.

 

The registrants are furnishing this Current Report on Form 8-K to make publicly available an investor presentation prepared by Ferrellgas, L.P., a direct subsidiary of Ferrellgas Partners, L.P. A copy of the investor presentation is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference in this Item 7.01.

 

The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 are deemed to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
99.1		Investor Presentation

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		Ferrellgas Partners, L.P. By:  Ferrellgas, Inc., its general partner
Date: March 15, 2021		By:		/s/ Brian W. Herrmann
				Name: Brian W. Herrmann Title: Interim Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)
		Ferrellgas Partners Finance Corp.
Date: March 15, 2021		By:		/s/ Brian W. Herrmann
				Name: Brian W. Herrmann Title: Interim Chief Financial Officer; and Sole Director
		Ferrellgas, L.P. By:  Ferrellgas, Inc., Ferrellgas GP II, LLC and Ferrellgas GP III, LLC, its general partners
Date: March 15, 2021		By:		/s/ Brian W. Herrmann
				Name: Brian W. Herrmann Title: Interim Chief Financial Officer; Treasurer (Principal Financial and Accounting Officer)
		Ferrellgas Finance Corp.
Date: March 15, 2021		By:		/s/ Brian W. Herrmann
				Name: Brian W. Herrmann Title: Interim Chief Financial Officer; and Sole Director

 

 

Exhibit 99.1

 

Ferrellgas Investor Presentation March 2021

 

Disclaimer Forward Looking Statements Statements included in this presentation include forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative of those terms or other variations of them or comparable terminology. These statements often discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future and are based upon the beliefs and assumptions of our management and on the information currently available to them. In particular, statements, express or implied, concerning our future operating results or our ability to generate sales, income or cash flow are forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on any forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially from those expressed in or implied by these 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. (the “MLP”), Ferrellgas Partners Finance Corp., Ferrellgas, L.P. (the “OLP”), and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2020, and in other documents filed from time to time by these entities with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by this cautionary notice. The forward-looking statements made by us speak only as of the date on which they are made. Factors or events that could cause our actual results to differ may emerge from time to time. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Non-GAAP Financial Information This presentation contains non-GAAP financial information such as Adjusted EBITDA, Adjusted EBITDA for continuing businesses, and Free Cash Flow. Our management believes the presentation of these measures is relevant and useful because it allows investors to view our performance in a manner similar to the method management uses, and makes it easier to compare our results with other companies that have different financing and capital structures. This method of calculating these measures may not be comparable to similarly titled measurements used by other corporations and partnerships. For a reconciliation of these measures to the nearest GAAP measures, please see the Appendix to this presentation.

 

CompanyOverview PG 3

 

Ferrellgas Company Overview Company highlights The nation’s second-largest retail marketer and leading distributor of propane and related accessories to residential, industrial, and agricultural customers throughout the U.S. Founded in 1939 – 80th anniversary of operations; a trusted consumer brand to millions of Americans Corporate headquarters in Liberty, Missouri Over 4,200 employees Maintain ~62,500 tank locations and 54 service centers around the U.S. Significant ownership by executive management, directors, and employees (28% of common units, 100% of GP) through Employee Stock Ownership Plan and direct Successfully integrated 93 independent propane retailers in the past 20 years Assets by the numbers 2,140 delivery trucks and 220 transport tractors 62,500 tank exchange locations, 864 manned retail locations ~50mm gallons of propane storage capacity (addl. ~50mm at supply points) 54 service centers, 811 service units PG 4 Source: LPGas Note: Data as of January 2021

 

Brands and Products Strong portfolio of brands in retail, wholesale and portable tank verticals PG 5

 

Differentiated Logistical Capabilities Strong Logistics Network 1,510 630650 71 876 1,100 473 Leased Owned 220 160 359 579634627 190 70220271 90 141 49 1040 Vast, Strategically-Positioned Real Estate Portfolio Over 2,000 acres of owned real estate Real estate locations are 62% owned and 38% leased National footprint and strategic locations that are positioned in close proximity to customers Shorter-length negotiable lease terms provide locational flexibility, with rent amounts pegged to CPI, and low fixed rent increases or no rent increases PG 6

 

National Footprint Provides True Competitive Advantage Footprint highlights Asset map second largest retail marketer of propane, with: ✓864 manned retail locations ✓~731,000 retail customers ✓~62,500 tank exchange locations ✓Presence in 50 states, District of Columbia, and Puerto Rico PG 7 Note: Data as of January 31, 2021 Ferrellgas Service Center Ferrellgas Service Unit Cobrand Service Unit Blue Rhino Production Blue Rhino Service Unit 1 Dot = 1 Customer Site

 

Customer Overview Customer Acquisition StrategyProfile of Customer Types Type H1 FY 2021 Volumes % H1 FY 2021 Revenue No Commodity Price Exposure Residential 143 35% ✓ Industrial / Commercial 90 22% ✓ Tank Exchange 49 12% ✓ National 56 14% ✓ Transport 22 5% ✓ Agricultural 26 6% ✓ Reseller 21 5% ✓ Dock 2 1% ✓ Focus on increasing density of residential customers Increase margins by delivering to customers in the same neighborhood Leverage national distributor network for commercial and portable tank exchange customers Emphasize strength in customer service and technology High quality service improves the customer experience and increases retention Digital tank monitoring and online chat windows provide useful and timely information to consumers Target more “leased tank” residential customers ~70% of residential customers lease their tanks, which is differentiated amongst the Company’s peers 10% of residential volumes attributed to customers enrolled in Autopay program Utilize digital marketing campaigns to strategically market and grow the leased tank residential customer base Customer-owned 30% FY 2020 Residential Volumes by Contract Type Will-call 58%Keep Full 42% Leased 70% PG 8 Note: H1 FY 2021 from August 2020 through January 2021

 

Overview of Blue Rhino Blue Rhino Overview Blue Rhino Revenue – Select Customers1 Acquired by Ferrellgas in 2004 20-pound tanks used for grilling, patio heaters, and mosquito elimination devices; COVID-19 driving increase year round usage Sold at ~62,500 tank exchange selling locations H1 FY 2021 revenues of $179.4 million and sales of 49 million gallons of propane Provides complementary counter-seasonal demand to retail business ($000) FY 2020AFY 2021 YTD 2,807 2,890 2,223 1,536 Since Pinnacle’s exit from the tank exchange space around Q3’20, FGP has onboarded or expanded the footprint of nine new retailers, who have provided ~$8 million of 172 721 192 177 185 revenue in Q2’21 vs ~$0 in Q2’20 37 29 22 20 35 36 70 141 140 Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul ($mm) H1 FY 2021 Monthly Gross Profit Retail propaneBlue Rhino $62$69 $95$101 $18$18 H1 FY21 Customer Volume Breakdown Client A 17% Client B $43$51 $16 $16 $15$17 $52 $77$82 Other 52% 11% Client C $27$35$47 AugSepOctNovDecJan Client E 5% 8% Client D 7% PG 9 Note: H1 FY 2021 from August 2020 through January 2021; Fiscal year 2021 as of January 31; numbers presented may not add up precisely to totals due to rounding 1.Select customers refers to customers where Blue Rhino increased its presence around the time Pinnacle exited tank exchange business in August 2020

 

Credit Highlights PG 10

 

Key Credit Highlights 1 Leading, national footprint with extensive logistics capabilities and geographic diversity 2 Large, fragmented addressable market with growing market share 3 Limited exposure to volatile commodity prices yields stable cash flows 4 Strong, sticky relationship with both suppliers and diverse, blue-chip customers 5 Proven track record of operational excellence 6 Experienced, high-quality management team supported by dedicated work-force Ability to serve customers in all 50 states, District of Columbia, and Puerto Rico 864 service locations and ~62,500 tank exchange locations Modern distribution fleet with an average age of 9 years Second largest retail marketer of propane based on H1 FY 2021 retail sales volume Midwest residential propane market is dominated by independent retailers and is ripe for consolidation Increasing switches from fuel oil to propane due to higher efficiency and lower per-gallon rates Ability to pass-through substantially all fluctuations in commodity prices ensures steady cash flows – no direct commodity price risk Spot-based contracts and bulk buying allows for effective hedging of future volumes Significant buying power and long-term relationships with suppliers Growing customer base with large, blue-chip anchors Reversal of shrinking customer base amid a declining market while managing costs Technological and service enhancements, such as advanced tank monitoring and cloud infrastructure, drive operational efficiency and customer experience Company has successfully acquired and integrated ~93 companies in the past 20 years Jim Ferrell has held leadership positions in the company since 1965 Employees own almost 28% of LP units and 100% of GP units PG 11

 

Diverse and Stable Business Mix Key characteristics of broad customer base and distribution network Ability to serve customers in all 50 states, District of Columbia, and Puerto Rico Broad geographic distribution reduces exposure to regional weather and economic patterns, increasing stability of cash flows Large, efficient distribution network lessens supply disruptions during demand spikes in colder seasons Exposure to multiple end markets including residential, commercial, and agricultural customers reduces demand variability Blue Rhino business provides counter-cyclical summer peak sales to smoothen cash flow profile Industry-leading technology, regularly upgraded distribution network, and high-quality service ensure customer satisfaction H1 FY 2021 volume by region H1 FY 2021 volume by customer type H1 FY 2021 gross margin by customer type Agricultural Reseller Dock Agricultural Reseller Transport Dock Central 35% East 38% 6% Transport 5% Tank exchange 12% 5%1% Residential 35% 3%3%1% National 5% Tank exchange 26% 1% Residential 39% West 27% National 14% Industrial / commercial 22% Industrial / commercial 22% PG 12 Note: H1 FY 2021 from August 2020 through January 2021

 

Large, Fragmented Addressable Market Propane is an Attractive Clean Fuel with a Growing Market 2018 U.S. Heating Sources by Homes Propane is a basic necessity to many customers for heating and agricultural purposes Heating Oil 4% Other 4% Propane Market Overview It is a clean burning, multi-use energy source Alternative to natural gas due to its portability Generally less expensive than electricity as a heating source The propane market in the U.S. was estimated to be $34.2bn in 2020 Overall forecasted propane demand growth of roughly 17% total in the U.S. between 2017 and 2025 Propane 5% Electricity 40% Natural Gas 47% Ferrellgas is a Leading Player in the U.S. Propane Market 2020 U.S. Propane Market Share by Volume1 Leading distributor of propane and related equipment in United States Superior Plus Fragmented market Ferrellgas Market Positioning Second largest retail marketer of propane based on FY 2020 retail sales volume Growmark5% 7% Suburban Propane 11% Ferrellgas 17% creates consolidation opportunities 5,000+ Independent Retailers 33% Amerigas 27% PG 13 Source: ReportLinker: “Global Propane Industry” 1.Market share data as of April 2020

 

Pass-Through Nature of the Business Limits Commodity Price Exposures Fixed prices (Ferrell Secured) ~30% FGP offers the option for clients to buy propane at fixed price Company hedges 100% of the contracted volumes Suppliers ~70% Floating prices FGP sells propane to clients at spot price + margin Business is a pure pass through of commodity prices, thus it has no direct commodity exposure 70% of FGP volumes have no direct commodity price exposure and the remaining are fully hedged Term up 90% of propane volume in the spring by negotiating with blue-chip suppliers Positioned well for the Winter due to term up in Spring and advantage over competition in Summer volume PG 14

 

Strong Relationships with Large, Stable Supplier Base Top 5 suppliers Credit rating Length of relationship H1 FY 2021 volumes (mm gal) Supplier A Ba1 / BBB->15 years 51.3 Supplier B Baa2 / BBB >15 years 48.1 44 total suppliers provided 203.3 million gallons of propane in H1 FY2021 $53.7mm in total product letters of credit with 32 suppliers Top 5 suppliers provided 92% of contracted volumes in H1 FY2021 Some suppliers have take-or-pay provisions if contract volume thresholds not met 53% of propane sourced from 7 suppliers in FY 2020, Supplier CBa2 / BB>15 years33.9 Supplier DA1 / A->15 years29.2 Supplier E->15 years24.1 but numerous alternative suppliers availableTotal H1 FY 2021 volumes by supplier Selected top suppliers Supplier E 12% Other 8% Supplier A 25% Supplier D 14% Supplier C 17% Supplier B 24% PG 15 Note: Fiscal year 2021 as of January 31; H1 FY 2021 from August 2020 through January 2021; numbers presented may not add up precisely to totals due to rounding

 

Diverse, Blue-Chip Customer Base Customer overviewRelationship summary – FY 2020 Top 5 retail clients by gross margin Length of relationship (years)1 2020 volumes (mm gal) Customer A 20 15.8 Customer B 21 13.9 ~632,000 residential clients ~87,000 industrial / commercial clients ~8,700 agricultural clients ~3,600 reseller clients ~135 propane wholesale clients Blue Rhino has approximately 8,100 independent retail customers 69% of residential customers utilize company equipment Customers in all 50 states, with a concentration in the Midwest 46% of tank exchange sales are to top 4 major retailers Selected top customers Customer C257.5 Customer D236.6 Customer E36.0 FirstGroup America, Inc. PG 16 Note: As of January 31, 2021 except where otherwise noted 1.Calculated as the years between date of first engagement and July 31, 2020

 

Technological Enhancements Provide Clear Competitive Advantage Technology highlights Advanced tank monitoring system FGP is implementing a new tank monitoring system that will provide cloud integration between client tanks, FGPs’ offices and field logistics Technology will be able to optimize distribution routes and reduce distribution costs It also improves client satisfaction by improving responsiveness to client demand Salesforce solutions Cyberattack prevention system and governance FGP employs Marketing Cloud, Sales Cloud, Service Cloud, and Field Service Lightning from Salesforce to improve customer experience and productivity, having achieved: 25% reduction in talk time 20% reduction in admin time 20% reduction in agent onboarding time 10% increase in first call resolutions 24/7 Security Incident Response Team (SIRT) constantly monitors FGP’s digital infrastructure to identify and respond to potential cyberattacks FG Security Council was established to oversee the company’s efforts in cybersecurity PG 17

 

Significant Acquisition Track Record with Proven Integration Capacities Key Acquisition TenetsM&A Track Record & Capabilities Identification of Strategic Targets Fragmented market with many “mom-and-pop” companies Target areas where Ferrellgas has excess fleet and storage capacity, creating significant cost-optimization potential Within these target areas, identify targets with deep community roots, sticky customers and large proportion of customers with leased tanks Proper Valuation and Targeted Returns Target a mid-teens unlevered return Acquisitions have averaged mid-to high-teens unlevered returns over the last 10 years Target mid-single digit cash flow acquisition multiples Key Integration Strategies Seek to maintain local management Leverage company brand and operational infrastructure Realize cost savings by maximizing infrastructure and transportation efficiencies Size of Acquisitions Currently evaluating $3-5mm acquisitions (purchase price), but would also evaluate $20-$40mm acquisitions under a different capital structure Value-accretive roll-up strategy in a highly fragment market: 5.1x average cash flow acquisition multiple1 Average purchase price of $4.5mm1 PG 18 1.Excludes Blue Rhino acquisition; purchase price multiple calculated as the Net Present Value (NPV) of the purchase price divided by pro forma Operating Cash Flow (OCF)

 

Returning to Strategic Leadership Jim Ferrell Steve Wambold Jim Ferrell Adj. EBITDA CAGR: ~10.0%Adj. EBITDA CAGR : ~0.2% Adj. EBITDA CAGR: ~8.7% ($mm) $294 $266 $229$230 11.0% 13.7% 17.7% 19.0% 2000200120022003200420052006200720082009201020112012201320142015201620172018201920202Q21 LTM Adj. EBITDAAdj. EBITDA Margin The return of Jim Ferrell has moved the Company forward, revitalized strengths and put on path to realize growth potential PG 19 Note: Fiscal year as of July 31; All CAGR’s calculated based on periods shown; 2000 - 2005 reflects Adjusted EBITDA of Ferrellgas Partners, L.P.; 2018 and 2019 have been adjusted to represent EBITDA from Propane Operations and Corporate Support only and exclude EBITDA from Assets sold; 2015 - 2017 reflect Adjusted EBITDA less EBITDA from Midstream operations – crude oil logistics, but may include Corporate expense associated with that line of business

 

StrategicInitiatives PG 20

 

Operational Improvements Drive EBITDA Growth 1 Delivery efficiency 2 Transport efficiency 3 Price performance Fleet Key Initiatives A goal of 10% reduction in miles driven attributed to the upgrade in routing and logistics excellence will have positive impact on diesel and fleet utilization Technology implementation including Salesforce and iOT enables real-time dispatch and routing Automation of new customer onboarding and customer self-service through Salesforce Service Cloud 50-60% of all routes to be moved to Company drivers and remaining 3rd party drivers managed through contracts favorable to Ferrellgas Leverage technology to drive efficiency to retail storage tanks, driven by new Director of Logistics Metrics around pricing performance analyzed centrally, aided by best in class pricing technology and analysts Platinum Plus reward program, leveraged for optimal customer retention and margin performance management▪ 35 opportunities identified including lease performance, onboard telematics and a new tire program ▪ Sustainable management practices, such as targeted route density, fleet utilization goals, manager-to-employee ratios, and Workforce resource management 6 Shared services 7 Incentive Plan productivity metrics, contribute to right sizing of employees across field operations Recruiting, staffing models, and relationship building for seasonal workforce employees has helped drive seasonal workforce rate from 4% to 20% Predictive modeling to be implemented, along with the addition of a Director of Analytics A robust, highly available virtual call center, efficient IVR, easy to use online chat and a compliant auto dialer help create a best in class self-service platform which continues to create opportunities in workforce utilization Salesforce Service Cloud implemented across Customer Service Organization since April 2020 Work from home allows flexibility for remote workforce and enables Ferrellgas to close unneeded office locations & Other▪ Implemented a Short Term Incentive Plan to increase alignment between management compensation and business performance PG 21

 

Ongoing Strategic Initiatives Drive Significant EBITDA Expansion 89 7 6 5 4 3 2Ferrellgas is focused on: 1 $265 Logistics best practices Evidenced based management Right sized staffing Management development program Operations education series FY2020 EBITDA Delivery efficiency Tranport efficiency Pricing performance Fleet management Workforce resource management Shared services Corporate efficiency Asset management Fleet utilization Near-term EBITDA Goal PG 22 Source: Company information; Note: Fiscal year ends July 31

 

Detailed Overview of Strategic Initiatives 1 Delivery efficiency ObjectiveCommentary Less early delivery▪ H1 FY 2021 reduction of 304,886 stops Tank monitors▪ Aimed to install 30,000 tank monitors for estimated total cost of $1.9mm, ~30,700 tank monitors installed at cost of $4.1mm Miles efficiency▪ Targeting cost savings of $0.03 / mile on reducing R&M expenses, H1 FY 2021 savings of $0.05 / mile on distanced traveled 2 Transport efficiency 3 Price Efficient use of 3rd party (Cylinders) Efficient use of 3rd party (Gallons) Efficient use of 3rd parties vs. FNA cylinders, targeting a $0.08 / cylinder savings rate Targeted savings of $1.7mm Efficient use of 3rd parties vs. FNA delivery, targeting a $0.01 / gallon delivered savings rate Currently saving just over $0.01 / gallon on YTD deliveries performanceMargin performance▪ Per gallon margin improvement of $0.0755, which would result in a $32mm margin increase on flat volumes1 4 ARI services▪ Targeted savings of $5.4mm from contract renegotiation Fleet management 5 Workforce Fleet management▪ Targeted cost savings of $1.8mm H1 FY 2021 cost savings of $1.3mm ($378 per vehicle for 3,388 vehicles) Warranty program▪ Targeted savings of $1.1mm; H1 FY 2021 warranty spend currently $239k lower than last FY resource management 6 Shared services 7 Corporate efficiency Headcount reduction2 Headcount reduction2 Corporate efficiency from WFH Headcount reduction yields annual savings of $14.7mm with $4.2mm, $8.0mm, and $2.2mm decrease in expenses from management ratio, retail driver, and service tech positions, respectively Exceeding target with annual savings of $10.0mm, with more headcount reduction numbers higher than budgeted Savings from acquisition team centralization and work from home on target to meet budget Documented travel reduction savings of $1.5mm H1 FY 2021 vs. H1 FY 2020 PG 23 Source: Company information; Note: Fiscal year ends July 31, H1 FY 2021 reflects August 2020 to January 2021 Decrease in H1 FY 2021 sales volumes results in ~$10mm EBITDA reduction Headcount reduction reference period is from January 2020 and is calculated on an annualized basis

 

Further Upside Opportunities Upside opportunities offer multiple avenues to further accelerate the Company’s growth trajectory beyond the initiatives already underway 1234 Extensive Real Estate Assets Licensing Proprietary Software Blue Rhino Technology Gov’t Incentives on Propane Adoption Company owns and leases broad portfolio of extensive, strategically-positioned real estate assets Several potential revenue streams from leasing or subleasing real estate portfolio Received multiple inbound inquiries Company has invested significantly into proprietary software used to manage its business Large number of fragmented businesses would realize significant efficiencies from licensing software Could further enhance M&A pipeline and make integration quicker and cheaper Development and commercialization of app-enabled home delivery service Continued innovation to drive ease of use to end customers, including vending partnerships with leading retailers Ease of use continues to be a driving factor for consumer choice Renewable propane is a more climate friendly alternative when compared to electricity for certain use cases Incoming government expected to enact more climate friendly policies related to energy – could adapt EU-style policies more favorable to LPG PG 24

 

Continuous Efforts For ESG EnvironmentSocialGovernance Propane is an approved clean fuel under the 1990 Clean Air Act and a sustainable energy source in support of the UN’s Sustainable Development Goal 7 Our delivery fleet includes clean-burning autogas vehicles, and Ferrellgas is also a leading provider of autogas for public, private, and school fleets Blue Rhino recycles millions of used propane tanks every year, keeping them out of landfills Blue Rhino supports Rhino Conservation with its sponsorship of the annual Bowling for Rhinos event Ferrellgas is an essential workforce delivering an essential and much-needed product Ferrellgas offices nationwide collect coats for those less fortunate through our Share The Warmth program Operation BBQ Relief cooks BBQ with Blue Rhino propane for the thousands of people affected by natural disasters each year The company recruits and develops students from leading universities through its Management Development Program A diverse leadership team that reflects our market and nation A culture inspired by the founder of the company PG 25

 

FinancialUpdate PG 26

 

Financial Policy Near-term focus on reducing leverage to enable long-term sustainable growth Efficiently manage the business and execute on strategic initiatives to decrease cost and increase margins Expected to spend within cash flow for any near-term growth project or acquisitions Active management of capital expenditures program Target acquisitions with a mid-teens unlevered return, building on successful track record Potential to pursue upside opportunities to accelerate growth trajectory including: Extensive real estate assets Licensing proprietary software Blue Rhino technology Government incentives on propane adoption Continue to hedge commodity and fuel cost exposure to reduce market price risk PG 27

 

Performance Through COVID-19 Granted “essential product” designation by the federal government to continue business operations and supply propane for cust omer needs, including cooking, heating, pandemic relief efforts and necessary construction – Increased residential demand also driven by national and local quarantine measures FY2019 to FY2020 reported a 32% year-over-year growth in operating income ($35.7mm) driven by increased residential demand, over 8% growth in Blue Rhino sales locations and 9% higher margin per gallon due to strategic product placement, supply chain logistics and reduced wholesale prices Continued to efficiently deliver propane through the pandemic by implementing initiatives such as staggered start times for d rivers Flexible organizational structure allows for flexibility to react to changes in demand and agility in times of uncertainty In a recent survey, 16% of respondents said that they will be using their government stimulus check on home improvement projects1 A separate study found that 54% of respondents have grilled more since the pandemic started, with 27% expecting to grill at an even higher frequency over the next year2 – The pandemic drove 21% of grill purchases this year; most were LP Grills2 (Gallons in thousands) Blue Rhino Sales by Gallons FY 2019FY 2020 11,262 8,766 6,986 7,877 10,3399,656 8,629 Results During COVID-19 ~24% increase in Blue Rhino sales when compared to same six months previous fiscal year 5,041 5,145 5,541 FebMarAprMayJunJul Increased demand for outdoor heating provides additional catalyst to support continued performance PG 28 Source: CRC Homeowner Survey | January 2021 Source: HPBA, Mid-to-High-End Grill Ownership Study | October 2020

 

Consistent Track Record of Delivering Results Consistent Gross Profit GrowthStrong EBITDA Growth ($ in millions)($ in millions) $829 $809 $266 $294 $746 $769 $229$230 2018201920202Q21 LTM % YoY Retail Gallon Growth 2018201920202Q21 LTM - 1% 15% 11% Robust Free Cash Flow (“FCF”) Generation and Conversion Non-acquisition capital expenditures (“capex”) ($ in millions) FCF Conversion, % of EBITDA $149$153 $200 $227 ($ in millions) $80$77 $65$67 65%67%75%77% 31% 30% 33% 35% 35% 33% 24% 23% Note: Fiscal year as of July 31 Free cash flow defined as EBITDA less capital expenditures

 

Appendix PG 30

 

Non-GAAP Reconciliation Dollar amounts in ($mm) Adjusted EBITDA$175$294$266$230$242 PG 31 Note: Fiscal year as of July 31