Ferrellgas Partners, L.P. Reports Results for Third Quarter

OVERLAND PARK, Kan., June 09, 2017 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today announced financial results for its third fiscal quarter ended April 30, 2017. The Company reported net earnings attributable to Ferrellgas Partners, L.P. of $6.5 million, compared to net earnings of $18.7 million for the same period in 2016.

Adjusted EBITDA was $76.8 million compared to $108.0 million in the prior year period primarily due to decreased contributions from the midstream operations segment.

“Weather for the third fiscal quarter was 2.7% warmer than last year, but more importantly 19.5% warmer than normal,” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our retail gallons were consistent with those of the prior year on a weather adjusted basis, but overall margins were lower than the prior year period due to customer mix.”

Mr. Ferrell continued, “Further, we continue to move forward with plans to drive growth and improve results at Blue Rhino and are analyzing ways to become more operationally efficient.”

Propane gallons sold were 212.2 million gallons, compared to 223.4 million gallons in the prior year quarter. Operating income generated by the propane operations and related equipment sales segment was $67.1 million, compared to $78.7 million in the prior year period.

During the third fiscal quarter the Company executed an amendment to its secured credit facility to address leverage and interest coverage ratios and to right size the facility. Mr. Ferrell added, “We were pleased to be able to adjust our leverage ratio to 7.75x and our interest coverage ratio to 1.75x through the quarter ending April 2018 and to right size the facility from $700 million to $575 million. With this amendment behind us we can concentrate our efforts on reducing our debt with the goal of returning to a leverage ratio of 4.5x or lower.” At the end of the third fiscal quarter, the Company’s leverage ratio was 6.45x, which was significantly lower than the 7.75x limit allowed under its secured credit facility and accounts receivable securitization facility, both as amended in April 2017.

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, and provides midstream services to major energy companies in the United States. 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 28, 2016. 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. 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. Forward-looking statements, include, but are not limited to: Ferrellgas’ debt reduction plans, Ferrellgas’ leverage ratio reduction plans, statements regarding future unitholder returns, growth and improved results, plans to increase the utilization of certain assets, the anticipated impact of Ferrellgas’ actions on its balance sheet and liquidity position, and the anticipated impact of Ferrellgas’ leadership changes. While Ferrellgas believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: risks related to Ferrellgas’ ability to generate sufficient cash flow to pay distributions, to make payments on its debt obligations and to execute its business plan; Ferrellgas’ ability to access funds on acceptable terms, if at all, because of the terms and conditions governing its indebtedness or otherwise; local, regional and national economic conditions and the impact they may have on Ferrellgas and its customers; the effect of weather conditions on the demand for propane; the prices of wholesale propane, motor fuel and crude oil; disruptions to the supply of propane; the termination or non-renewal of certain arrangements or agreements; adverse changes in our relationships with our national propane customers; significant delays in the collection of, or uncollectibility of, accounts or notes receivable; the financial condition of Ferrellgas’ customers; and the failure of any customer to perform its contractual obligations. 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, 2016, the Form 10-Q of these entities for the fiscal quarter ended April 30, 2017, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Except as required by law, Ferrellgas undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.


FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
	Three months ended						Nine months ended						Twelve months ended
	April 30						April 30						April 30
		2017			2016			2017			2016			2017			2016
Revenues:
Propane and other gas liquids sales	$	369,437		$	338,929		$	1,049,211		$	961,086		$	1,290,493		$	1,217,207
Midstream operations		126,676			105,424			331,507			487,427			469,318			574,254
Other		41,996			65,119			116,183			181,343			146,601			220,906
Total revenues		538,109			509,472			1,496,901			1,629,856			1,906,412			2,012,367

Cost of sales:
Propane and other gas liquids sales		197,487			152,261			551,728			448,841			667,320			576,875
Midstream operations		118,767			71,852			300,433			373,899			397,768			444,425
Other		20,810			41,203			53,213			111,425			68,025			134,450

Gross profit		201,045			244,156			591,527			695,691			773,299			856,617

Operating expense		104,773			115,140			322,274			346,584			433,600			461,953
Depreciation and amortization expense		25,737			38,352			77,546			112,698			115,361			140,701
General and administrative expense		9,978			12,354			33,889			36,656			45,812			63,386
Equipment lease expense		7,270			7,244			22,035			21,554			29,314			28,153
Non-cash employee stock ownership plan compensation charge		4,697			9,978			11,396			18,375			20,616			26,360
Non-cash stock-based compensation charge (a)		-			1,091			3,298			6,757			5,865			13,038
Asset impairments		-			-			-			29,316			628,802			29,316
Loss on asset sales and disposal		2,393			5,779			8,861			23,220			16,476			25,741

Operating income (loss)		46,197			54,218			112,228			100,531			(522,547	)		67,969

Interest expense		(39,860	)		(34,371	)		(112,107	)		(102,889	)		(147,155	)		(131,488	)
Other income (expense), net		162			331			1,433			(89	)		1,632			(24	)

Earnings (loss) before income taxes		6,499			20,178			1,554			(2,447	)		(668,070	)		(63,543	)

Income tax expense (benefit)		(192	)		1,260			(194	)		1,446			(1,676	)		(317	)

Net earnings (loss)		6,691			18,918			1,748			(3,893	)		(666,394	)		(63,226	)

Net earnings (loss) attributable to noncontrolling interest (b)		155			233			187			88			(6,521	)		(470	)

Net earnings (loss) attributable to Ferrellgas Partners, L.P.		6,536			18,685			1,561			(3,981	)		(659,873	)		(62,756	)

Less: General partner's interest in net earnings (loss)		66			187			16			(40	)		(6,599	)		(628	)

Common unitholders' interest in net earnings (loss)	$	6,470		$	18,498		$	1,545		$	(3,941	)	$	(653,274	)	$	(62,128	)

Earnings (loss) Per Common Unit
Basic and diluted net loss per common unitholders' interest	$	0.07		$	0.19		$	0.02		$	(0.04	)	$	(6.70	)	$	(0.64	)

Weighted average common units outstanding - basic		97,152.7			98,002.7			97,255.4			98,911.2			97,443.7			96,899.5


Supplemental Data and Reconciliation of Non-GAAP Items:

	Three months ended						Nine months ended						Twelve months ended
	April 30						April 30						April 30
		2017			2016			2017			2016			2017			2016


Net earnings (loss) attributable to Ferrellgas Partners, L.P.	$	6,536		$	18,685		$	1,561		$	(3,981	)	$	(659,873	)	$	(62,756	)
Income tax expense (benefit)		(192	)		1,260			(194	)		1,446			(1,676	)		(317	)
Interest expense		39,860			34,371			112,107			102,889			147,155			131,488
Depreciation and amortization expense		25,737			38,352			77,546			112,698			115,361			140,701
EBITDA		71,941			92,668			191,020			213,052			(399,033	)		209,116
Non-cash employee stock ownership plan compensation charge		4,697			9,978			11,396			18,375			20,616			26,360
Non-cash stock-based compensation charge (a)		-			1,091			3,298			6,757			5,865			13,038
Asset impairments		-			-			-			29,316			628,802			29,316
Loss on asset sales and disposal		2,393			5,779			8,861			23,220			16,476			25,741
Other (income) expense, net		(162	)		(331	)		(1,433	)		89			(1,632	)		24
Change in fair value of contingent consideration (included in operating expense)		-			-			-			(100	)		-			(100	)
Severance expense $414 and $542 included in operating expense for the nine and twelve months ended period April 30, 2017 and $1,545 included in general and administrative expense for both the nine and twelve months ended April 30, 2017. Also includes $396, $1,201 and $1,201 in operating expense for the three, nine and twelve months ended April 30, 2016 and $73, $124 and $124 in general and administrative expense for the three, nine and twelve months ended April 31, 2016.		-			469			1,959			1,325			2,087			1,325
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments $(227), $(3,238) and $(3,245) included in operating expense for the three, nine and twelve months ended April 30, 2017 and $(3,142), $1,592 and $5,613 for the three, nine and twelve months ended April 30, 2016. Also includes $(2,007), $(1,211) and $(3,060) included in cost of sales for the three, nine and twelve months ended April 30, 2017, respectively, and $1,227, $1,401 and $1,401 for each of the three, nine and twelve months ended April 30, 2016.		(2,234	)		(1,915	)		(4,449	)		2,993			(6,305	)		7,014
Acquisition and transition expenses (included in general and administrative expense)		-			14			-			99			-			16,472
Net earnings (loss) attributable to noncontrolling interest (b)		155			233			187			88			(6,521	)		(470	)
Adjusted EBITDA (c)		76,790			107,986			210,839			295,214			260,355			327,836
Net cash interest expense (d)		(37,140	)		(32,849	)		(105,470	)		(99,256	)		(139,074	)		(126,807	)
Maintenance capital expenditures (e)		(3,442	)		(4,159	)		(10,518	)		(13,588	)		(14,067	)		(18,337	)
Cash paid for taxes		(2	)		(427	)		(28	)		(432	)		(373	)		(811	)
Proceeds from asset sales		130			3,096			4,163			5,972			4,214			7,817
Distributable cash flow attributable to equity investors (f)		36,336			73,647			98,986			187,910			111,055			189,698
Distributable cash flow attributable to general partner and non-controlling interest		727			1,473			1,980			3,758			2,222			3,793
Distributable cash flow attributable to common unitholders		35,609			72,174			97,006			184,152			108,833			185,905
Less: Distributions paid to common unitholders		9,715			50,267			69,221			151,933			119,407			193,292
Distributable cash flow excess/(shortage)	$	25,894		$	21,907		$	27,785		$	32,219		$	(10,574	)	$	(7,387	)

Propane gallons sales
Retail - Sales to End Users		160,326			164,713			473,094			465,146			560,719			555,201
Wholesale - Sales to Resellers		51,891			58,645			170,033			169,992			226,162			228,989
Total propane gallons sales		212,217			223,358			643,127			635,138			786,881			784,190

Midstream operations barrels
Salt water volume processed		4,635			4,024			12,340			12,980			15,903			16,781
Crude oil hauled		12,280			16,215			36,549			64,824			51,136			75,271
Crude oil sold		2,110			1,810			5,228			4,969			7,119			5,496

(a) Non-cash stock-based compensation charges consist of the following:

	Three months ended						Six months ended						Twelve months ended
	April 30						April 30						April 30
		2017			2016			2017			2016			2017			2016
Operating expense	$	-		$	131		$	661		$	883		$	1,046		$	1,825
General and administrative expense		-			960			2,637			5,874			4,819			11,213
Total	$	-		$	1,091		$	3,298		$	6,757		$	5,865		$	13,038


(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, non-cash stock-based compensation charge, asset impairments, loss on asset sales and disposal, other (income) expense, net, change in fair value of contingent consideration, severance costs, unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments, acquisition and transition expenses 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, maintenance capital expenditures and cash paid for taxes plus proceeds from 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 interests. 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 .


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





ASSETS	April 30, 2017			July 31, 2016

Current Assets:
Cash and cash equivalents	$	9,506		$	4,965
Accounts and notes receivable, net (including $143,337 and $106,464 of
accounts receivable pledged as collateral at April 30, 2017 and
July 31, 2016, respectively)		208,529			149,583
Inventories		92,757			90,594
Prepaid expenses and other current assets		30,563			39,973
Total Current Assets		341,355			285,115

Property, plant and equipment, net		743,508			774,680
Goodwill, net		256,103			256,103
Intangible assets, net		259,286			280,185
Other assets, net		79,017			87,223
Total Assets	$	1,679,269		$	1,683,306


LIABILITIES AND PARTNERS' DEFICIT

Current Liabilities:
Accounts payable	$	86,646		$	67,928
Short-term borrowings		38,389			101,291
Collateralized note payable		91,000			64,000
Other current liabilities		151,473			128,958
Total Current Liabilities		367,508			362,177

Long-term debt (a)		1,984,218			1,941,335
Other liabilities		31,029			31,574
Contingencies and commitments

Partners Deficit:
Common unitholders (97,152,665 and 98,002,665 units outstanding at
April 30, 2017 and July 31, 2016)		(639,881	)		(570,754	)
General partner unitholder (989,926 and 989,926 units outstanding at
April 30, 2017 and July 31, 2016)		(66,372	)		(65,835	)
Accumulated other comprehensive income (loss)		6,086			(10,468	)
Total Ferrellgas Partners, L.P. Partners' Deficit		(700,167	)		(647,057	)
Noncontrolling Interest		(3,319	)		(4,723	)
Total Partners' Deficit		(703,486	)		(651,780	)
Total Liabilities and Partners' Deficit	$	1,679,269		$	1,683,306



(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. Reports Results for Third Quarter Fiscal 2017

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