Ferrellgas Partners' Third-Quarter Adjusted EBITDA Up 39%; Distributable Cash Flow Climbs 59%; Fiscal 2013 Adjusted EBITDA Range Raised To $270-$275 Million

News provided by

Ferrellgas Partners, L.P.

Jun 06, 2013, 07:00 ET

OVERLAND PARK, Kan., June 6, 2013 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE:FGP), one of the nation's largest distributors of propane, today reported record Adjusted EBITDA, distributable cash flow and gross profit for its fiscal third quarter ended April 30, primarily attributable to increased propane sales volumes, margins and improved operating efficiencies.

Adjusted EBITDA increased 39% to $98.5 million from $70.8 million in the prior year quarter. Distributable cash flow to equity investors rose 59% to $76.2 million from $48.0 million a year ago. Through April, the partnership's trailing 12 month distributable cash flow coverage stands at a healthy 1.08x.

President and CEO Steve Wambold pointed out, "We are extremely proud of our operational and financial performance this year as it is indicative of what our operations are capable of producing for investors in a more normal operating environment."  Wambold further remarked, "Our positive momentum has continued into our fiscal fourth quarter.  As a result, we are raising our Adjusted EBITDA guidance for fiscal 2013 to a range of $270 million to $275 million, producing a distributable cash flow coverage to equity investors of greater than 1.1x."  Adjusted EBITDA for the trailing 12-months was $264.3 million. Adjusted EBITDA in fiscal 2012 was $193.1 million.

Wambold continued, "Especially encouraging this quarter was that our propane sales volumes grew 18% over the prior year quarter to 267.1 million gallons. These sales volumes not only reflect temperatures that were 6 % colder than normal, but also our organic growth efforts of recent years."

Third-quarter revenues decreased modestly to $603.0 million from $629.6 million on lower sales prices to consumers, while the partnership's gross profit climbed 25% to $223.1 million on increased sales and improved margins.  Fiscal third quarter gross profit margins improved $0.05 cents per gallon sold, from $0.79 to $0.84.

Third-quarter operating expense increased to $107.2 million, or $0.40 per gallon sold, from $95.8 million, or $0.42 per gallon sold, on increased propane sales volumes and performance based incentive accruals. Excluding performance based incentives, operating expenses improved by 12% from $0.42 per gallon sold to $0.37 per gallon sold, which was made possible by the partnership's efficiency initiatives.  Similarly, general and administrative expense increased to $13.4 million from $9.0 million as a result of performance based incentives.  Excluding these incentives, G&A expense decreased to $8.6 million from $8.9 million.

Equipment lease expense was $4.1 million, compared with $3.8 million the year before. Interest expense again declined to $22.1 million from $23.5 million a year ago, reflecting lower borrowing rates.

Net earnings more than doubled to $45.2 million, or $0.56 per unit, from $21.l million, or $0.26 per unit. Wambold noted, "Our Blue Rhino operations are well positioned to capitalize on the all-important grilling season, adding more than 950 selling locations since this time last year.  The acquisition environment continues to be quite attractive, and we remain interested in complementary acquisitions, including some diversification, as indicated by the purchase of Mr. Bar-B-Q during the third quarter." He added, "We focus on deals that are immediately accretive to earnings, and all our recent acquisitions have handily exceeded their proformas."

For the nine months, gross profit was up 17%, primarily attributable to margin improvement and increased sales volumes.  Propane sales volumes grew 2% to 745.1 million on nationwide temperatures that were 4% warmer than normal.  Adjusted EBITDA rose 41% and distributable cash flow climbed 79%. Consistent with the quarter, operating expense was impacted by both increased sales volumes and performance based incentives.  After adjusting for the impact of performance based incentives, operating expense was practically unchanged, $297.8 million versus $298.7 million, as our operating efficiencies offset the incremental cost associated with increased sales volumes.  General and administrative expense, excluding the impact of performance based incentives declined to $25.5 million from $28.4 million. Net earnings surged to $86.2 million, or $1.07 per unit, from $25.0 million, or $0.32 per unit.

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

April 30, 2013

July 31, 2012





Current Assets:



  Cash and cash equivalents

$               12,260

$                 8,429

  Accounts and notes receivable, net (including $183,957 and $121,812 of accounts receivable pledged as collateral at April 30, 2013 and July 31, 2012, respectively)

198,188

 

124,004

  Inventories

107,210

127,598

  Prepaid expenses and other current assets

23,384

29,315

    Total Current Assets

341,042

289,346





Property, plant and equipment, net

604,716

626,551

Goodwill

253,286

248,944

Intangible assets, net

195,191

189,118

Other assets, net

46,391

43,320

    Total Assets

$          1,440,626

$          1,397,279










LIABILITIES AND PARTNERS' DEFICIT








Current Liabilities:



  Accounts payable

$               70,285

$               47,824

  Short-term borrowings

21,450

95,730

  Collateralized note payable

116,000

74,000

  Other current liabilities

123,456

122,667

    Total Current Liabilities

331,191

340,221





Long-term debt (a)

1,106,669

1,059,085

Other liabilities

31,727

25,499

Contingencies and commitments

-

-





Partners' Deficit: 



 Common unitholders (79,070,819 and 79,006,619 units outstanding at April 30, 2013 and July 31, 2012, respectively)

31,047

 

43,701

 General partner unitholder (798,695 and 798,047 units outstanding at April 30, 2013 and July 31, 2012, respectively)

(59,757)

 

(59,630)

 Accumulated other comprehensive loss

(1,841)

(13,159)

    Total Ferrellgas Partners, L.P. Partners' Deficit

(30,551)

(29,088)

    Noncontrolling Interest

1,590

1,562

    Total Partners' Deficit

(28,961)

(27,526)

    Total Liabilities and Partners' Deficit

$          1,440,626

$          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, NINE AND TWELVE MONTHS ENDED APRIL 30, 2013 AND 2012

(in thousands, except per unit data)

(unaudited)









































Three months ended 

Nine months ended

Twelve months ended


April 30

April 30

April 30


2013

2012

2013

2012

2013

2012

Revenues:











  Propane and other gas liquids sales

$           508,408

$     556,644

$  1,426,763

$  1,850,430

$  1,737,278

$  2,272,176

  Other

94,612

72,975

198,031

146,887

229,291

174,799

    Total revenues

603,020

629,619

1,624,794

1,997,317

1,966,569

2,446,975













Cost of product sold:











  Propane and other gas liquids sales

313,207

401,521

903,100

1,405,243

1,099,743

1,715,584

  Other

66,714

49,117

123,348

80,211

138,460

93,249













Gross profit 

223,099

178,981

598,346

511,863

728,366

638,142


























Operating expense (including $126 of severance charges for the twelve months ended April 30, 2013, and $277, $500 and $500 for the three, nine and twelve months ended April 30, 2012, respectively)

107,188

95,822

309,221

298,974

409,227

399,620

Depreciation and amortization expense

20,896

21,123

62,522

62,839

83,524

84,930

General and administrative expense (including $166 of severance charges for the twelve months ended April 30, 2013, and $113, $263 and $263 for the three, nine and twelve months ended April 30, 2012, respectively)

13,432

8,963

32,396

28,671

40,841

41,560

Equipment lease expense

4,098

3,789

11,848

10,846

15,650

14,439

Non-cash employee stock ownership plan compensation charge

2,824

2,203

12,673

6,719

15,394

8,909

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

2,222

385

8,434

4,867

12,410

4,646

Loss on disposal of assets and other

3,337

1,220

5,728

2,052

9,711

4,851













Operating income

69,102

45,476

155,524

96,895

141,609

79,187













Interest expense

(22,084)

(23,471)

(67,138)

(70,904)

(89,488)

(94,584)

Other income, net

185

201

517

248

775

306













Earnings (loss) before income taxes

47,203

22,206

88,903

26,239

52,896

(15,091)













Income tax expense

2,023

1,144

2,676

1,285

2,519

1,238













Net earnings (loss)

45,180

21,062

86,227

24,954

50,377

(16,329)













Net earnings attributable to noncontrolling interest (a)

499

255

997

377

676

1













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

44,681

20,807

85,230

24,577

49,701

(16,330)













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

447

208

852

246

497

(163)













Common unitholders' interest in net earnings (loss)

$             44,234

$       20,599

$       84,378

$       24,331

$       49,204

$     (16,167)













Earnings (loss) Per Unit











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

$                 0.56

$           0.26

$           1.07

$           0.32

$           0.62

$         (0.21)













Weighted average common units outstanding

79,054.4

78,960.0

79,027.5

77,095.8

79,018.5

76,797.1

Supplemental Data and Reconciliation of Non-GAAP Items:















Three months ended 

Nine months ended

Twelve months ended


April 30

April 30

April 30


2013

2012

2013

2012

2013

2012


























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

$             44,681

$       20,807

$       85,230

$       24,577

$       49,701

$     (16,330)

  Income tax expense

2,023

1,144

2,676

1,285

2,519

1,238

  Interest expense

22,084

23,471

67,138

70,904

89,488

94,584

  Depreciation and amortization expense

20,896

21,123

62,522

62,839

83,524

84,930

EBITDA

89,684

66,545

217,566

159,605

225,232

164,422

  Non-cash employee stock ownership plan compensation charge

2,824

2,203

12,673

6,719

15,394

8,909

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

2,222

385

8,434

4,867

12,410

4,646

  Loss on disposal of assets and other

3,337

1,220

5,728

2,052

9,711

4,851

  Other income, net

(185)

(201)

(517)

(248)

(775)

(306)

  Severance costs

-

390

-

763

292

763

  Nonrecurring litigation reserve and related legal fees

113

-

1,338

892

1,338

1,879

  Net earnings attributable to noncontrolling interest

499

255

997

377

676

1

Adjusted EBITDA (c)

98,494

70,797

246,219

175,027

264,278

185,165

  Net cash interest expense (d)

(20,631)

(22,018)

(62,829)

(66,773)

(83,656)

(88,733)

  Maintenance capital expenditures (e)

(3,466)

(2,680)

(10,996)

(11,518)

(15,522)

(15,034)

  Cash paid for taxes

(43)

(10)

(88)

(100)

(752)

(657)

  Proceeds from asset sales

1,850

1,940

8,013

4,314

9,441

6,035

Distributable cash flow to equity investors (f)

$             76,204

$       48,029

$     180,319

$     100,950

$     173,789

$       86,776













Propane gallons sales











  Retail - Sales to End Users

196,009

167,462

542,688

524,287

637,719

619,898

  Wholesale - Sales to Resellers

71,113

58,421

202,396

202,971

258,237

257,873

  Total propane gallons sales

267,122

225,883

745,084

727,258

895,956

877,771




(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 

Nine months ended

Twelve months ended


April 30

April 30

April 30


2013

2012

2013

2012

2013

2012

      Operating expense

$                   422

$             112

$          1,726

$          1,952

$          2,521

$          1,877

      General and administrative expense

1,800

273

6,708

2,915

9,889

2,769

      Total

$                2,222

$             385

$          8,434

$          4,867

$        12,410

$          4,646

(c) 

Adjusted EBITDA is calculated as earnings (loss) before income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock and unit-based compensation charge, loss on disposal of assets and other, other income, net, serverance costs, nonrecurring litigation reserve and related legal fees 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 inaccordance with GAAP.

(d) 

Net cash interest expense is the sum of interest expense less non-cash interest expense and other income, 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 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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