Ferrellgas Partners, L.P. Reports Full Fiscal Year and Fourth Quarter Fiscal 2023 Results

Rhea-AI Summary

Financial Highlights: Gross profit increased $9.6 million (5%) for Q4 and $79.2 million (9%) for fiscal 2023. Margin per gallon increased 10% for Q4 and 12% for fiscal 2023. Net loss of $29.1 million for Q4 compared to a net loss of $19.4 million in the prior year period. Net earnings of $136.9 million and $148.0 million for fiscal 2023 and 2022, respectively. Adjusted EBITDA decreased by $5.2 million (15%) for Q4 compared to the prior year period, but increased by $20.1 million (6%) for fiscal 2023 compared to fiscal 2022.

Positive

• Gross profit increased for Q4 and fiscal 2023. Margin per gallon increased for Q4 and fiscal 2023. Net earnings for fiscal 2023 increased compared to fiscal 2022. Adjusted EBITDA increased for fiscal 2023.

Negative

• Net loss for Q4 increased compared to the prior year period. Adjusted EBITDA decreased for Q4 compared to the prior year period.

• Financial Highlights
  • Gross Profit for the fourth fiscal quarter and fiscal 2023 increased $9.6 million, or 5%, and $79.2 million, or 9%, respectively, compared to the prior year periods.
  • Margin per gallon for the fourth fiscal quarter and fiscal 2023 increased 10% and 12%, respectively, compared to the prior year periods.
  • Net loss attributable to Ferrellgas Partners, L.P. was $29.1 million for the fourth fiscal quarter compared to a net loss of $19.4 million in the prior year period. Net earnings attributable to Ferrellgas Partners, L.P. was $136.9 million and $148.0 million for fiscal 2023 and 2022, respectively.
  • Adjusted EBITDA for the fourth fiscal quarter decreased by $5.2 million, or 15%, compared to the prior year period. For fiscal 2023, Adjusted EBITDA increased by $20.1 million, or 6%, compared to fiscal 2022.
• Company Highlights
  • On July 31, 2023, Ferrellgas announced the appointment of Tamria Zertuche as President and CEO, effective August 1, 2023.
  • Ferrellgas celebrated the 25^th anniversary of its Employee Stock Ownership Plan (ESOP).
  • Ferrellgas honored drivers who had a perfect non-incident year with Incident Free Safety Awards. Additionally, 208 employees received Ferrellgas Flame Awards and Blue Rhino recognized three Golden Rhino Award recipients in the fourth fiscal quarter.
    

LIBERTY, Mo., Sept. 29, 2023 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its fiscal year (“fiscal 2023”) and fourth fiscal quarter ended July 31, 2023.

“We are honored to have the very best professional drivers in the industry, and this year we celebrated hundreds of our drivers with an Incident Free Safety Award they will proudly display on their vehicles,” said James E. Ferrell, Executive Chairman and Chairman of the Board for Ferrellgas. “Our customers know they can trust their needs for clean, affordable energy to our 4,000-plus safety minded employee-owners.”

Gross profit increased $9.6 million, or 5%, for the fourth fiscal quarter, and $79.2 million, or 9%, for fiscal 2023 compared to the respective prior year periods. The positive change was primarily driven by favorable margins, and partially offset by a decrease in wholesale gross profit attributable to an increase in cost of sales related to our tank exchange business. Revenues decreased $45.7 million, or 12%, for the fourth fiscal quarter related to lower overall cost of product as compared to the prior year period. For fiscal 2023, revenues decreased $88.1 million, or 4%. Right-timed deliveries drove a 3% decrease in gallons sold both for the fourth fiscal quarter and fiscal 2023 as well as warmer weather trends when considering fiscal 2023. Margin per gallon increased $0.12, or 10%, in the fourth fiscal quarter and $0.13, or 12%, in fiscal 2023.

We recognized a net loss attributable to Ferrellgas Partners, L.P. of $29.1 million and $19.4 million in the fourth fiscal quarter of fiscal 2023 and 2022, respectively. In fiscal 2023 and 2022, we had net earnings attributable to Ferrellgas Partners, L.P. of $136.9 million and $148.0 million, respectively. Operating expense as a percentage of total revenue increased 27% for the fourth fiscal quarter and 12% for fiscal 2023.

Fourth fiscal quarter results were impacted by an increase of $10.6 million in operating loss as operating expense increased $14.8 million primarily due to the Company increasing personnel for growth projects, including increased acquisitions and the expansion by the company’s tank exchange brand, Blue Rhino, into self-service vending. These expenses were partially offset by the $9.6 million increase in gross profit discussed above.

The $11.1 million decrease in net earnings attributable to Ferrellgas Partners, L.P. for fiscal 2023 compared to fiscal 2002 corresponds with an $11.4 million decrease in operating income driven by a $56.9 million increase in operating expense and an $18.0 million increase in general and administrative expense. The increase in operating expense was primarily due to increases of approximately $28.8 million in personnel expense from planned increases in compensation across the company and the addition of service technicians in high-growth areas. In addition, the company had a planned expense of $13.3 million in vehicle repairs, maintenance, and fuel costs due to continued high market costs in these growth areas for fiscal 2023. The remainder of the increase was primarily related to higher claims costs. The increase in general and administrative expense was primarily due to a $13.8 million increase in legal costs associated with a non-core business and $2.1 million of non-recurring costs related to the implementation of an ERP system as part of our business transformation initiatives.

Adjusted EBITDA, a non-GAAP financial measure, decreased by $5.2 million, or 15%, to $29.0 million in the fourth fiscal quarter compared to $34.2 million in the prior year quarter. The change was primarily due to the $9.7 million increase in net loss attributable to Ferrellgas Partners, L.P., as noted above, and favorable EBITDA adjustments for asset sales and disposals, business transformation costs and legal fees related to a non-core business, which aggregated to $6.1 million.

Adjusted EBITDA increased $20.1 million, or 6%, to $360.2 million for fiscal 2023 compared to $340.1 million in fiscal 2022. This was primarily the result of margin performance from retail operations which was $83.8 million favorable relative to fiscal 2022, partially offset by increases in operating, general and administrative expenses, some of which are non-recurring and factored into the adjustments to EBITDA.

On July 31, 2023, the Company announced the appointment of Tamria Zertuche as President and CEO, and the appointment of Mr. Ferrell to Executive Chairman of the Board, both effective August 1, 2023. As Chief Operating Officer, Ms. Zertuche transformed Ferrellgas into a technology-enabled logistics company while also significantly improving financial performance. Her background in information technology and 19 years with Ferrellgas in positions of increasing responsibility have well prepared her for this new leadership role.

On July 17, 1998, Mr. Ferrell transferred his family’s equity interest in the company to an Employee Stock Ownership Trust. This allowed employee ownership of the company through an ESOP, which is still celebrated 25 years later by our employee-owners, who continue to demonstrate excellence.

The Company had more than 200 nominations for Ferrellgas Flame awards during the fourth fiscal quarter, including 27 in Safety, 87 in Customer Service, 20 in Innovation, and 74 in Leadership. This employee recognition program is yet another way Ferrellgas shows appreciation to its most valuable resource, its employee-owners. In addition to performance recognition, Ferrellgas believes in education and continuous improvement. The Golden Rhino Award program recognizes a Blue Rhino employee or group each quarter from production, operations and corporate for their accomplishments.

On Friday, September 29, 2023, the Company will conduct a teleconference at https://edge.media-server.com/mmc/p/qxo7mic3 to discuss the results of operations for the fiscal year ended July 31, 2023. The webcast of the teleconference will begin at 8:30 a.m. Central Time (9:30 a.m. Eastern Time). Questions may be submitted via the investor relations e-mail box at InvestorRelations@ferrellgas.com.

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. Its Blue Rhino propane exchange brand is sold at more than 60,000 locations nationwide. Ferrellgas was named one of Newsweek’s Most Trustworthy Companies in America in 2023. Ferrellgas employees indirectly own 1.1 million Class A 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 29, 2023. 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, L.P., Ferrellgas Partners Finance Corp., and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2023, 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, 2023				July 31, 2022
Current assets:
Cash and cash equivalents (including $11,126 and $11,208 of restricted cash at July 31, 2023 and 2022, respectively)		$	137,347			$	158,737
Accounts and notes receivable, net			159,379				150,395
Inventories			98,104				115,187
Price risk management asset			11,966				43,015
Prepaid expenses and other current assets			29,135				30,764
Total current assets			435,931				498,098
Property, plant and equipment, net			615,174				603,148
Goodwill, net			257,006				257,099
Intangible assets (net of accumulated amortization of $349,614 and $440,121 at July 31, 2023 and 2022, respectively)			106,615				97,638
Operating lease right-of-use assets			57,839				72,888
Other assets, net			58,838				79,244
Total assets		$	1,531,403			$	1,608,115
LIABILITIES, MEZZANINE AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	35,115			$	57,586
Current portion of long-term debt			2,597				1,792
Current operating lease liabilities			24,600				25,824
Other current liabilities			197,030				218,610
Total current liabilities			259,342				303,812
Long-term debt			1,456,184				1,450,016
Operating lease liabilities			34,235				47,231
Other liabilities			29,084				43,518
Contingencies and commitments
Mezzanine equity:
Senior preferred units, net of issue discount and other offering costs (700,000 units outstanding at July 31, 2023 and 2022)			651,349				651,349
Equity (Deficit):
Limited partner unitholders
Class A (4,857,605 units outstanding at July 31, 2023 and 2022)			(1,205,103	)			(1,229,823	)
Class B (1,300,000 units outstanding at July 31, 2023 and 2022)			383,012				383,012
General partner unitholder (49,496 units outstanding at July 31, 2023 and 2022)			(70,566	)			(71,320	)
Accumulated other comprehensive income			1,059				37,907
Total Ferrellgas Partners, L.P. deficit			(891,598	)			(880,224	)
Noncontrolling interest			(7,193	)			(7,587	)
Total deficit			(898,791	)			(887,811	)
Total liabilities, mezzanine and deficit		$	1,531,403			$	1,608,115

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
		Three months ended									Year ended
			July 31,								July 31,
			2023				2022				2023				2022
Revenues:
Propane and other gas liquids sales			$	320,115			$	365,460			$	1,916,892			$	2,017,879
Other				21,771				22,093				109,573				96,661
Total revenues				341,886				387,553				2,026,465				2,114,540
Cost of sales:
Propane and other gas liquids sales				150,958				207,295				1,003,357				1,174,004
Other				3,221				2,166				15,913				12,509
Gross profit				187,707				178,092				1,007,195				928,027
Operating expense - personnel, vehicle, plant & other				142,948				128,185				577,520				520,603
Operating expense - equipment lease expense				5,781				5,607				23,252				23,094
Depreciation and amortization expense				23,917				24,591				93,370				89,897
General and administrative expense				16,577				13,459				70,738				52,780
Non-cash employee stock ownership plan compensation charge				723				734				2,935				3,170
Loss (gain) on asset sales and disposals				2,763				(52	)			5,691				(6,618	)
Operating (loss) income				(5,002	)			5,568				233,689				245,101
Interest expense				(25,229	)			(25,594	)			(97,712	)			(100,093	)
Other income, net				760				427				2,625				4,833
(Loss) earnings before income tax expense				(29,471	)			(19,599	)			138,602				149,841
Income tax expense				93				156				981				981
Net (loss) earnings				(29,564	)			(19,755	)			137,621				148,860
Net (loss) earnings attributable to noncontrolling interest (1)				(463	)			(363	)			740				867
Net (loss) earnings attributable to Ferrellgas Partners, L.P.			$	(29,101	)		$	(19,392	)		$	136,881			$	147,993
Class A unitholders' interest in net (loss) earnings			$	(45,060	)		$	(83,283	)		$	10,171			$	(18,770	)
Net (loss) earnings per unitholders' interest
Basic and diluted net (loss) earnings per Class A Unit			$	(9.28	)		$	(17.14	)		$	2.09			$	(3.86	)
Weighted average Class A Units outstanding - basic and diluted				4,858				4,858				4,858				4,858
(1)	Amounts allocated to the general partner for its 1.0101% interest (excluding the economic interest attributable to the preferred unitholders) in the operating partnership, Ferrellgas, L.P.

Supplemental Data and Reconciliation of Non-GAAP Items:
			Three months ended								Year ended
			July 31,								July 31,
			2023				2022				2023				2022
Net (loss) earnings attributable to Ferrellgas Partners, L.P.			$	(29,101	)		$	(19,392	)		$	136,881			$	147,993
Income tax expense				93				156				981				981
Interest expense				25,229				25,594				97,712				100,093
Depreciation and amortization expense				23,917				24,591				93,370				89,897
EBITDA				20,138				30,949				328,944				338,964
Non-cash employee stock ownership plan compensation charge				723				734				2,935				3,170
Loss (gain) loss on asset sales and disposal				2,763				(52	)			5,691				(6,618	)
Other income, net				(760	)			(427	)			(2,625	)			(4,833	)
Severance costs includes $51 in operating expense and $593 in general and administrative expense for the year ended July 31, 2023				—				32				644				578
Legal fees and settlements related to non-core businesses				4,477				3,303				21,751				7,938
Business transformation costs (1)				2,088				—				2,088				—
Net (loss) earnings attributable to noncontrolling interest (2)				(463	)			(363	)			740				867
Adjusted EBITDA (3)				28,966				34,176				360,168				340,066
Net cash interest expense (4)				(22,398	)			(26,973	)			(86,695	)			(99,366	)
Maintenance capital expenditures (5)				(4,754	)			(3,903	)			(20,169	)			(17,019	)
Cash paid for income taxes				(379	)			(368	)			(1,092	)			(1,018	)
Proceeds from certain asset sales				73				745				2,152				4,113
Distributable cash flow attributable to equity investors (6)				1,508				3,677				254,364				226,776
Less: Distributions accrued or paid to preferred unitholders				16,251				16,250				64,314				65,287
Distributable cash flow attributable to general partner and non-controlling interest				(31	)			(74	)			(5,087	)			(4,536	)
Distributable cash flow attributable to Class A and B Unitholders (7)				(14,774	)			(12,647	)			184,963				156,953
Less: Distributions paid to Class A and B Unitholders (8)				—				49,998				49,998				99,996
Distributable cash flow (shortage) excess (9)			$	(14,774	)		$	(62,645	)		$	134,965			$	56,957
Propane gallons sales
Retail - Sales to End Users				87,148				94,432				602,143				624,316
Wholesale - Sales to Resellers				50,061				47,561				205,890				206,516
Total propane gallons sales				137,209				141,993				808,033				830,832
(1)	Non-recurring costs included in “Operating, general and administrative expense” primarily related to the implementation of an ERP system as part of our business transformation initiatives.
(2)	Amounts allocated to the general partner for its 1.0101% interest (excluding the economic interest attributable to the preferred unitholders) in the operating partnership, Ferrellgas, L.P.
(3)	Adjusted EBITDA is calculated as net (loss) earnings attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss (gain) on asset sales and disposals, other income, net, severance costs, legal fees and settlements related to non-core businesses, business transformation costs, and net (loss) 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 make it easier to compare its results with other companies that have different financing and capital structures. Adjusted EBITDA, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.
(4)	Net cash interest expense is the sum of interest expense less non-cash interest expense and other income, net.
(5)	Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment, and may from time to time include the purchase of assets that are typically leased.
(6)	Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for income 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, including holders of the operating partnership’s Preferred Units. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to similarly titled measurements used by other companies. 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 should be viewed in conjunction with measurements that are computed in accordance with GAAP.
(7)	Distributable cash flow attributable to Class A and B Unitholders is calculated as Distributable cash flow attributable to equity investors minus distributions accrued or paid on the Preferred Units and distributable cash flow attributable to general partner and noncontrolling interest. Management considers distributable cash flow attributable to Class A and B Unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to Class A and B Unitholders. Distributable cash flow attributable to Class A and B Unitholders, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added to our calculation of distributable cash flow attributable to Class A and B Unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to Class A and B Unitholders should be viewed in conjunction with measurements that are computed in accordance with GAAP.
(8)	The Company did not pay any distributions to Class A Unitholders during any of the periods in fiscal 2023 or fiscal 2022.
(9)	Distributable cash flow (shortage) excess is calculated as Distributable cash flow attributable to Class A and B Unitholders minus Distributions paid to Class A and B Unitholders. Distributable cash flow excess, if any, is retained to establish reserves, to reduce debt, to fund capital expenditures and for other partnership purposes, and any shortage is funded from previously established reserves, cash on hand or borrowings under our Credit Facility. Management considers Distributable cash flow (shortage) excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow (shortage) excess, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow (shortage) excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow (shortage) excess should be viewed in conjunction with measurements that are computed in accordance with GAAP.