OVERLAND PARK, Kan., June 9, 2015 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) announced today Adjusted EBITDA of $96.3 million for fiscal 2015's third quarter ended April 30, down 4% from the $99.8 million in the prior year quarter reflecting temperatures that were 6% warmer than prior year quarter. Distributable Cash Flow (DCF) to equity investors in the quarter was $70.0 million producing DCF coverage of 1.12x for the trailing twelve month period.
Propane margin cents per gallon benefited from wholesale commodity prices that were 54% lower than the prior year. Operating expense of $106.9 million was down more than 6% from the year-ago level driven primarily by the company's ability to flex down our variable delivery costs, including personnel and fuel cost, which more than offset additional operating expenses associated with our midstream acquisition in May of 2014. Strong margin cents per gallon and lower operating expenses helped minimize the effect of warmer temperatures in the more highly concentrated geographic areas we serve.
"We are pleased with our third quarter results given the challenges presented by the warmer weather" said President and Chief Executive Officer Stephen L. Wambold. "Strong propane margins, operational flexibility, and a continued focus on expense discipline in our retail operations are continuing to offset the effect of the warmer temperatures, and as such we are comfortable reaffirming our full-year adjusted EBITDA guidance of $300 million to $320 million."
Ferrellgas recently announced the acquisition of Bridger Logistics, LLC for $837.5 million. The Bridger transaction, scheduled to close in our fourth quarter 2015, is expected to be immediately accretive to DCF, supportive of distribution growth, and pushes the company to its near-term diversification goal. In addition to that achievement, Ferrellgas remains dedicated to the aggressive pursuit of accretive, complementary acquisitions in both the traditional propane space and midstream.
"We've made smart business decisions over the last few years and put ourselves in position to move boldly and decisively on the acquisition front," Wambold said. "Our acquisition pipeline is strong and keeps getting stronger, and we remain committed to exploring a wide range of opportunities that fit our model and our culture."
For the first nine months ended April 30 of fiscal 2015, Adjusted EBITDA improved to $267.6 million, up from $262.6 million posted in the first nine months of the prior fiscal year. Similar to our quarterly results, strong margin cents per gallon and operating expense declines offset temperatures that were 8% warmer than the fiscal 2014 period. Net earnings were $89.4 million or $1.06 per unit for the first nine months of fiscal 2015.
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, and provides midstream services to major energy companies in the United States. Ferrellgas employees indirectly own 22.8 million common units of the partnership, or 25.5% of the outstanding units, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed a Form 10-K with the Securities and Exchange Commission on September 29, 2014. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership 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, 2014 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.
| FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||
| FOR THE THREE, NINE AND TWELVE MONTHS ENDED APRIL 30, 2015 AND 2014 | ||||||
| (in thousands, except per unit data) | ||||||
| (unaudited) | ||||||
| Three months ended | Nine months ended | Twelve months ended | ||||
| April 30 | April 30 | April 30 | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Revenues: | ||||||
| Propane and other gas liquids sales | $ 445,667 | $ 625,117 | $ 1,400,895 | $ 1,796,786 | $ 1,751,452 | $ 2,109,290 |
| Other | 86,884 | 97,000 | 240,984 | 210,044 | 289,457 | 248,213 |
| Total revenues | 532,551 | 722,117 | 1,641,879 | 2,006,830 | 2,040,909 | 2,357,503 |
| Cost of product sold: | ||||||
| Propane and other gas liquids sales | 253,684 | 422,256 | 849,190 | 1,232,516 | 1,073,062 | 1,421,677 |
| Other | 59,586 | 69,388 | 153,736 | 131,443 | 180,445 | 152,551 |
| Gross profit | 219,281 | 230,473 | 638,953 | 642,871 | 787,402 | 783,275 |
| Operating expense | 106,883 | 113,923 | 316,913 | 333,632 | 429,474 | 434,470 |
| Depreciation and amortization expense | 23,324 | 20,913 | 70,576 | 61,771 | 93,007 | 82,593 |
| General and administrative expense | 8,252 | 12,194 | 29,701 | 35,070 | 40,614 | 44,701 |
| Equipment lease expense | 6,347 | 4,638 | 17,674 | 12,978 | 22,441 | 17,113 |
| Non-cash employee stock ownership plan compensation charge | 8,566 | 3,710 | 16,728 | 10,389 | 28,128 | 13,485 |
| Non-cash stock-based compensation charge (a) | 3,271 | 5,832 | 19,701 | 16,182 | 28,027 | 21,293 |
| Loss on disposal of assets | 2,203 | 1,732 | 4,578 | 3,426 | 7,638 | 8,119 |
| Operating income | 60,435 | 67,531 | 163,082 | 169,423 | 138,073 | 161,501 |
| Interest expense | (23,510) | (20,189) | (71,797) | (64,372) | (93,927) | (86,379) |
| Loss on extinguishment of debt | -- | -- | -- | (21,202) | -- | (21,202) |
| Other income (expense), net | 212 | 225 | (415) | 498 | (1,392) | 546 |
| Earnings before income taxes | 37,137 | 47,567 | 90,870 | 84,347 | 42,754 | 54,466 |
| Income tax expense | 917 | 1,677 | 1,448 | 2,391 | 1,573 | 1,570 |
| Net earnings | 36,220 | 45,890 | 89,422 | 81,956 | 41,181 | 52,896 |
| Net earnings attributable to noncontrolling interest (b) | 408 | 505 | 1,027 | 950 | 581 | 694 |
| Net earnings attributable to Ferrellgas Partners, L.P. | 35,812 | 45,385 | 88,395 | 81,006 | 40,600 | 52,202 |
| Less: General partner's interest in net earnings | 358 | 454 | 884 | 810 | 406 | 522 |
| Common unitholders' interest in net earnings | $ 35,454 | $ 44,931 | $ 87,511 | $ 80,196 | $ 40,194 | $ 51,680 |
| Earnings Per Unit | ||||||
| Basic and diluted net earnings per common unitholders' interest | $ 0.43 | $ 0.57 | $ 1.06 | $ 1.01 | $ 0.49 | $ 0.65 |
| Weighted average common units outstanding | 82,717.6 | 79,177.8 | 82,536.1 | 79,127.1 | 82,200.8 | 79,113.2 |
| Supplemental Data and Reconciliation of Non-GAAP Items: | ||||||
| Three months ended | Nine months ended | Twelve months ended | ||||
| April 30 | April 30 | April 30 | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Net earnings attributable to Ferrellgas Partners, L.P. | $ 35,812 | $ 45,385 | $ 88,395 | $ 81,006 | $ 40,600 | $ 52,202 |
| Income tax expense | 917 | 1,677 | 1,448 | 2,391 | 1,573 | 1,570 |
| Interest expense | 23,510 | 20,189 | 71,797 | 64,372 | 93,927 | 86,379 |
| Depreciation and amortization expense | 23,324 | 20,913 | 70,576 | 61,771 | 93,007 | 82,593 |
| EBITDA | 83,563 | 88,164 | 232,216 | 209,540 | 229,107 | 222,744 |
| Loss on extinguishment of debt | -- | -- | -- | 21,202 | -- | 21,202 |
| Non-cash employee stock ownership plan compensation charge | 8,566 | 3,710 | 16,728 | 10,389 | 28,128 | 13,485 |
| Non-cash stock based compensation charge (a) | 3,271 | 5,832 | 19,701 | 16,182 | 28,027 | 21,293 |
| Loss on disposal of assets | 2,203 | 1,732 | 4,578 | 3,426 | 7,638 | 8,119 |
| Other income (expense), net | (212) | (225) | 415 | (498) | 1,392 | (546) |
| Change in fair value of contingent consideration (included in operating expense) | -- | -- | (6,300) | -- | (1,300) | -- |
| Litigation accrual and related legal fees associated with a class action lawsuit (included in operating expense) | 83 | 97 | 806 | 1,422 | 1,133 | 1,652 |
| Unrealized (non-cash) gain on changes in fair value of derivatives not designated as hedging instruments | (1,609) | -- | (1,609) | -- | (1,609) | -- |
| Net earnings attributable to noncontrolling interest (b) | 408 | 505 | 1,027 | 950 | 581 | 694 |
| Adjusted EBITDA (c) | 96,273 | 99,815 | 267,562 | 262,613 | 293,097 | 288,643 |
| Net cash interest expense (d) | (22,422) | (19,941) | (68,599) | (61,507) | (90,778) | (82,173) |
| Maintenance capital expenditures (e) | (5,151) | (4,762) | (14,863) | (13,345) | (19,191) | (17,419) |
| Cash paid for taxes | (67) | (225) | (333) | (403) | (746) | (865) |
| Proceeds from asset sales | 1,331 | 785 | 4,060 | 3,267 | 5,317 | 5,234 |
| Distributable cash flow to equity investors (f) | 69,964 | 75,672 | 187,827 | 190,625 | 187,699 | 193,420 |
| Distributable cash flow attributable to general partner and non-controlling interest | 1,400 | 1,514 | 3,757 | 3,813 | 3,754 | 3,868 |
| Distributable cash flow attributable to common unitholders | 68,564 | 74,158 | 184,070 | 186,812 | 183,945 | 189,552 |
| Less: Distributions paid to common unitholders | 41,359 | 39,593 | 124,074 | 118,702 | 164,688 | 158,237 |
| Distributable cash flow excess/(shortage) | $ 27,205 | $ 34,565 | $ 59,996 | $ 68,110 | $ 19,257 | $ 31,315 |
| Propane gallons sales | ||||||
| Retail - Sales to End Users | 178,583 | 185,961 | 518,726 | 558,142 | 611,942 | 653,377 |
| Wholesale - Sales to Resellers | 67,823 | 71,963 | 211,068 | 233,664 | 272,616 | 294,715 |
| Total propane gallons sales | 246,406 | 257,924 | 729,794 | 791,806 | 884,558 | 948,092 |
| Midstream operations (barrels processed) | 4,515 | -- | 13,234 | 15,734 | -- | |
| (a) Non-cash stock-based compensation charges consist of the following: | ||||||
| Three months ended | Nine months ended | Twelve months ended | ||||
| April 30 | April 30 | April 30 | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Operating expense | $ 621 | $ 1,166 | $ 4,233 | $ 3,503 | $ 6,065 | $ 4,168 |
| General and administrative expense | 2,650 | 4,666 | 15,468 | 12,679 | 21,962 | 17,125 |
| Total | $ 3,271 | $ 5,832 | $ 19,701 | $ 16,182 | $ 28,027 | $ 21,293 |
| (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 attributable to Ferrellgas Partners, L.P., 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-based compensation charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration, litigation accrual and related legal fees associated with a class action lawsuit, unrealized (non-cash) gain on changes in fair value of derivatives not designated as hedging instruments and net earnings 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 income (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) 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 equity investors. Distributable cash flow to equity investors, as management defines it, may not be comparable to distributable cash flow to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow 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. | ||||||
| The following table includes a reconciliation of forecasted net earnings attributable to Ferrellgas Partners, L.P. to forecasted Adjusted EBITDA for the fiscal year ending July 31, 2015. | |
| Forecast | |
| Fiscal Year | |
| Ending | |
| July 31, | |
| 2015 | |
| Net earnings attributable to Ferrellgas Partners, L.P. (estimate) (g) | $ 70,500 |
| Interest expense (estimate) | 95,000 |
| Income tax expense (estimate) | 1,500 |
| Depreciation and amortization expense (estimate) | 93,000 |
| Non-cash employee stock ownership plan compensation charge (estimate) | 25,000 |
| Non-cash stock based compensation charge (estimate) | 24,000 |
| Loss on disposal of assets (estimate) | 6,400 |
| Change in fair value of contingent consideration (included in operating expense) (estimate) | (6,300) |
| Litigation accrual and related legal fees associated with a class action lawsuit (estimate) | 900 |
| Adjusted EBITDA (h) | $ 310,000 |
| (g) Represents estimated net earnings attributable to Ferrellgas Partners, L.P. after adjusting for change in fair value of gains and losses on commodity and interest rate derivative instruments not associated with current-period transactions. It is impracticable to determine actual gains and losses on these instruments not associated with current-period transactions that will be reported in GAAP net income as such gains and losses will depend upon future changes in commodity prices and interest rates which cannot be forecasted. | |
| (h) Represents the midpoint of Adjusted EBITDA guidance range for fiscal 2015. | |
| FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except unit data) | ||
| (unaudited) | ||
| ASSETS | April 30, 2015 | July 31, 2014 |
| Current Assets: | ||
| Cash and cash equivalents | $ 7,409 | $ 8,289 |
| Accounts and notes receivable, net (including $182,305 and $159,003 of accounts receivable pledged as collateral at April 30, 2015 and July 31, 2014, respectively) | 189,569 | 178,602 |
| Inventories | 98,636 | 145,969 |
| Prepaid expenses and other current assets | 45,406 | 32,071 |
| Total Current Assets | 341,020 | 364,931 |
| Property, plant and equipment, net | 614,287 | 611,787 |
| Goodwill | 285,436 | 273,210 |
| Intangible assets, net | 300,663 | 276,171 |
| Other assets, net | 51,451 | 46,171 |
| Total Assets | $ 1,592,857 | $ 1,572,270 |
| LIABILITIES AND PARTNERS' DEFICIT | ||
| Current Liabilities: | ||
| Accounts payable | $ 54,164 | $ 69,360 |
| Short-term borrowings | -- | 69,519 |
| Collateralized note payable | 117,000 | 91,000 |
| Other current liabilities | 146,198 | 125,161 |
| Total Current Liabilities | 317,362 | 355,040 |
| Long-term debt (a) | 1,344,392 | 1,292,214 |
| Other liabilities | 34,458 | 36,662 |
| Contingencies and commitments | ||
| Partners' Deficit: | ||
| Common unitholders (82,717,620 and 81,228,237 units outstanding at April 30, 2015 and July 31, 2014, respectively) | (16,717) | (57,893) |
| General partner unitholder (835,532 and 820,487 units outstanding at April 30, 2015 and July 31, 2014, respectively) | (60,238) | (60,654) |
| Accumulated other comprehensive income (loss) | (27,247) | 6,181 |
| Total Ferrellgas Partners, L.P. Partners' Deficit | (104,202) | (112,366) |
| Noncontrolling Interest | 847 | 720 |
| Total Partners' Deficit | (103,355) | (111,646) |
| Total Liabilities and Partners' Deficit | $ 1,592,857 | $ 1,572,270 |
| (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. | ||