Ferrellgas Partners, L.P. Reports Full Fiscal Year and Fourth Quarter 2020 Results

Rhea-AI Summary

Ferrellgas Partners, L.P. (OTC:FGPR) reported a 32% increase in operating income, totaling $35.6 million for the fiscal year, despite facing an 8% rise in temperatures and a 3.5% decrease in propane volumes. The fourth quarter saw a gross profit increase of $13.5 million (10%). Retail customer growth was recorded at 3%, and tank exchange locations rose to over 59,000, contributing to a 14% volume growth. However, the company reported a net loss of $82.5 million for the year, up from $64.2 million the previous year. Adjusted EBITDA increased 15%, reflecting successful operational initiatives.

Positive

• Operating income increased by $35.6 million (32%) year-over-year.
• Adjusted EBITDA rose by over $35 million (15%) compared to last year.
• Retail customer growth of 3% indicates market expansion.
• Tank exchange locations increased to over 59,000, contributing to 14% volume growth.
• Margin per gallon increased by 9% due to strategic placements.

Negative

• Net loss increased to $82.5 million from $64.2 million year-over-year.
• Suspension of quarterly cash distribution due to not meeting fixed charge coverage ratio.
• Operating expenses rose due to new customer growth and a $17.3 million reserve for bad debt.

• Operating Income for the year increased by $35.6 million, over 30% from prior year, despite weather that was 8% warmer than prior year, which led to a 3.5% decrease in volumes.
• Gross Profit for the fourth fiscal quarter increased by $13.5 million, or 10%.
• Retail customer growth of 3% over prior year.
• Tank Exchange sale locations now exceed 59,000, up over 4,000 from prior year, leading to 14% growth in volumes.

OVERLAND PARK, Kan., Oct. 15, 2020 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC:FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal year and fourth quarter ended July 31, 2020.

Despite significant economic and operational uncertainties in the US, the Company produced exceptionally strong results through the end of fiscal 2020, leading to a $35.6 million increase in operating income, or 32% growth over the prior year and set a foundation for continued growth in fiscal 2021. Due to warmer winter weather and the slowdown in the economy, the gallons of propane sold for the year were 873.5 million, compared to 904.8 million last year. However, these decreases were partially offset by continued increase residential demand resulting from 3% retail customer growth as the Company continues to aggressively seek market share. Additionally, Blue Rhino sales locations increased over 8%. Margin per gallon for the year was 7.0¢, or 9% higher than the prior year, attributable to strategic product placement, sound supply chain logistics strategies and lower wholesale propane prices. Overall, the increase in margin and increases in tank exchange volumes and customer growth were partially offset by decreased industrial and commercial sales volumes due to the slowdown of the economy. This has resulted in an increase in gross margin dollars of $36.4 million. Operating expenses increased due to the growth of new customers, but also included a $17.3 million reserve for bad debt related to Bridger, a non-core acquisition that has now been divested. Additionally, the $35.6 million growth in operating income was complimented by a $38.4 million, or 35.3%, decrease in capital expenditures as the Company focused on the utilization of existing assets and negotiated lower steel prices.

The Company has numerous initiatives underway to increase efficiency and profitability, these initiatives helped to produce strong results in 4Q and enable continued high performance in the areas of growth and operational expense management. Strong execution by a leaner and more agile workforce of essential workers is driving high performance throughout the company, both in the field and in corporate locations. Successful transition of essential workers from a corporate work-place to a technology centric work-from-home environment decreased various general and administrative expenses as well as travel expense throughout the Company. Lastly, our continued commitment to safely serving our over 700 thousand customers while adapting to the ever-changing circumstances and new operating protocols to help protect the health and safety of our customers and employees remains our top priority.

For the fiscal year, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $82.5 million, or $0.84 per common unit, compared to prior year period net loss of $64.2 million, or $0.65 per common unit. For the quarter, the net loss attributable to Ferrellgas Partners, L.P. was $70.0 million, or $0.71 per common unit, compared to prior year’s fourth quarter net loss of $71.0 million, or $0.72 per common unit.

Adjusted EBITDA, a non-GAAP measure, increased by over $35 million, or 15%, compared to prior year. For the fourth quarter, Adjusted EBITDA was $26.7 million compared to $4.0 million in last year’s quarter resulting from the previously discussed initiatives.

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. Additionally, as the Company continues to evaluate options to address its leverage, the Company does not intend to comment further on its progress in this regard or on potential options until further disclosure is appropriate or required by law. 

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 October 15, 2020. 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, 2020, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts

Investor Relations – InvestorRelations@ferrellgas.com

 

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS		July 31, 2020				July 31, 2019
Current Assets:
Cash and cash equivalents (including $95,759 and $0 of restricted cash at July 31, 2020 and July 31, 2019, respectively)		$	333,761			$	11,054
Accounts and notes receivable, net (including $103,703 and $106,145 of accounts receivable pledged as collateral at July 31, 2020 and July 31, 2019, respectively)			101,438				107,596
Inventories			72,664				80,454
Prepaid expenses and other current assets			35,944				42,275
Total Current Assets			543,807				241,379
Property, plant and equipment, net			591,042				596,723
Goodwill, net			247,195				247,195
Intangible assets, net			104,049				108,557
Operating lease right-of-use asset			107,349				-
Other assets, net			74,748				69,105
Total Assets		$	1,668,190			$	1,262,959
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable		$	33,944			$	33,364
Short-term borrowings			-				43,000
Collateralized note payable			-				62,000
Current portion of long-term debt (a)			859,095				631,756
Current operating lease liabilities			29,345				-
Other current liabilities			167,466				138,237
Total Current Liabilities			1,089,850				908,357
Long-term debt			1,646,396				1,457,004
Operating lease liabilities			89,022				-
Other liabilities			51,190				36,536
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at July 31, 2020 and July 31, 2019)			(1,126,452	)			(1,046,245	)
General partner unitholder (989,926 units outstanding at July 31, 2020 and July 31, 2019)			(71,287	)			(70,476	)
Accumulated other comprehensive loss			(2,303	)			(14,512	)
Total Ferrellgas Partners, L.P. Partners' Deficit			(1,200,042	)			(1,131,233	)
Noncontrolling interest			(8,226	)			(7,705	)
Total Partners' Deficit			(1,208,268	)			(1,138,938	)
Total Liabilities and Partners' Deficit		$	1,668,190			$	1,262,959
(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								Twelve months ended
		July 31								July 31
			2020				2019				2020				2019
Revenues:
Propane and other gas liquids sales		$	265,414			$	264,224			$	1,415,791			$	1,608,858
Other			16,235				14,857				82,035				75,534
Total revenues			281,649				279,081				1,497,826				1,684,392
Cost of sales:
Propane and other gas liquids sales			124,917				136,460				673,053				902,516
Other			3,229				2,617				13,003				11,406
Gross profit			153,503				140,004				811,770				770,470
Operating expense - personnel, vehicle, plant & other			128,721				117,327				493,055				468,868
Depreciation and amortization expense			21,101				19,632				80,481				78,846
General and administrative expense			9,305				17,957				45,752				59,994
Operating expense - equipment lease expense			8,293				8,476				33,017				33,073
Non-cash employee stock ownership plan compensation charge			689				1,005				2,871				5,693
Loss on asset sales and disposals			1,682				2,565				7,924				10,968
Operating income (loss)			(16,288	)			(26,958	)			148,670				113,028
Interest expense			(54,014	)			(44,688	)			(192,962	)			(177,619	)
Loss on extinguishment of debt			-				-				(37,399	)			-
Other income (expense), net			(246	)			13				(460	)			369
Loss before income tax expense			(70,548	)			(71,633	)			(82,151	)			(64,222	)
Income tax expense			57				39				851				323
Net loss			(70,605	)			(71,672	)			(83,002	)			(64,545	)
Net loss attributable to noncontrolling interest (a)			(636	)			(635	)			(503	)			(298	)
Net loss attributable to Ferrellgas Partners, L.P.			(69,969	)			(71,037	)			(82,499	)			(64,247	)
Less: General partner's interest in net loss			(700	)			(710	)			(825	)			(642	)
Common unitholders' interest in net loss		$	(69,269	)		$	(70,327	)		$	(81,674	)		$	(63,605	)
Loss Per Common Unit
Basic and diluted net loss per common unitholders' interest		$	(0.71	)		$	(0.72	)		$	(0.84	)		$	(0.65	)
Weighted average common units outstanding - basic			97,152.7				97,152.7				97,152.7				97,152.7
Supplemental Data and Reconciliation of Non-GAAP Items:
		Three months ended								Twelve months ended
		July 31								July 31
			2020				2019				2020				2019
Net loss attributable to Ferrellgas Partners, L.P.		$	(69,969	)		$	(71,037	)		$	(82,499	)		$	(64,247	)
Income tax expense			57				39				851				323
Interest expense			54,014				44,688				192,962				177,619
Depreciation and amortization expense			21,101				19,632				80,481				78,846
EBITDA			5,203				(6,678	)			191,795				192,541
Non-cash employee stock ownership plan compensation charge			689				1,005				2,871				5,693
Loss on asset sales and disposal			1,682				2,565				7,924				10,968
Loss on extinguishment of debt			-				-				37,399				-
Other income (expense), net			246				(13	)			460				(369	)
Severance expense (includes $740 in operating expense for the three and twelve months ended July 31, 2020 and $690 in operating expense and $910 in general and administrative expense for the twelve months ended July 31, 2019)			740				-				740				1,600
Legal fees and settlements related to non-core businesses			1,421				7,721				7,308				18,364
Provision for doubtful accounts related to non-core businesses			17,325				-				17,325				-
Multi-employer pension plan withdrawal settlement			-				-				-				1,524
Lease accounting standard adjustment and other			27				-				161				-
Net loss attributable to noncontrolling interest (b)			(636	)			(635	)			(503	)			(298	)
Adjusted EBITDA (b)			26,697				3,965				265,480				230,023
Net cash interest expense (c)			(52,905	)			(41,465	)			(182,246	)			(164,790	)
Maintenance capital expenditures (d)			(4,540	)			(1,736	)			(23,240	)			(46,774	)
Cash paid for income taxes			(239	)			(120	)			(289	)			(141	)
Proceeds from certain asset sales			1,487				1,833				3,997				4,249
Distributable cash flow attributable to equity investors (e)			(29,500	)			(37,523	)			63,702				22,567
Distributable cash flow attributable to general partner and non-controlling interest			(590	)			(751	)			1,274				451
Distributable cash flow attributable to common unitholders (f)			(28,910	)			(36,772	)			62,428				22,116
Less: Distributions paid to common unitholders			-				-				-				9,715
Distributable cash flow excess/(shortage)		$	(28,910	)		$	(36,772	)		$	62,428			$	12,401
Propane gallons sales
Retail - Sales to End Users			85,677				99,114				638,017				672,266
Wholesale - Sales to Resellers			55,834				53,310				235,529				232,566
Total propane gallons sales			141,511				152,424				873,546				904,832
(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(b) Adjusted EBITDA is calculated as net loss attributable to Ferrellgas Partners, L.P., less the sum of the following: income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss on asset sales and disposals, loss on extinguishment of debt, other income (expense), net, severance expense, legal fees and settlements related to non-core businesses, provision for doubtful accounts related to non-core businesses, multi-employer pension plan withdrawal settlement, lease accounting standard adjustment and other and net 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.
(c) 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.
(d) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
(e) 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.
(f) 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 .

FAQ

What were Ferrellgas Partners' operating income results for fiscal 2020?

Ferrellgas reported an operating income increase of $35.6 million, a 32% growth over the prior year.

How did the warmer weather affect Ferrellgas' propane sales?

The warmer weather led to a 3.5% decrease in propane volumes sold, totaling 873.5 million gallons.

What is the net loss for Ferrellgas Partners in the fourth quarter?

The net loss for the fourth quarter was $70.0 million, compared to a loss of $71.0 million in the previous year.

What actions did Ferrellgas take regarding its quarterly cash distributions?

Ferrellgas indefinitely suspended its quarterly cash distribution due to not meeting the required fixed charge coverage ratio.

What initiatives are Ferrellgas pursuing to enhance efficiency?

Ferrellgas has numerous initiatives underway to increase efficiency and profitability, contributing to improved financial performance.