Ferrellgas Partners, L.P. Reports Third Quarter Fiscal 2023 Results

• Financial Highlights
  • Gross Profit for the third fiscal quarter increased $10.4 million, or 4%, compared to the prior year period.
  • Margin per gallon for the third fiscal quarter increased $0.13, or 12%, compared to the prior year period.
  • Net earnings attributable to Ferrellgas Partners, L.P. increased $4.8 million, or 7%, compared to the prior year period.
  • Adjusted EBITDA increased by $8.5 million, or 7%, compared to the prior year period.
• Company Highlights
  • Ferrellgas was named as one of the “Most Trustworthy Companies in America” by Newsweek magazine.
  • The Company welcomed Apollo Propane, Inc. located in Moraine, Ohio, as its newest acquisition to the Ferrellgas Family during the third fiscal quarter.
  • 198 employees received Ferrellgas Flame Awards in the areas of Safety, Customer Service, Innovation, and Leadership. Additionally, Blue Rhino recognized three Golden Rhino Award recipients in the third fiscal quarter.   
    

LIBERTY, Mo., June 14, 2023 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its third fiscal quarter ended April 30, 2023.

“We were honored that our Company was named by Newsweek as one of the ‘Most Trustworthy Companies in America’ based on the results of an independent survey,” said James E. Ferrell, Chief Executive Officer and President. “As the only national propane company on the list, we take pride in our over 84-year history of serving our customers, who know they can trust that their needs for clean, affordable energy will be taken care of by our 4,000-plus employee-owners.”

Third quarter fiscal results continued this positive trend. Gross profit increased $10.4 million, or 4%, for the third fiscal quarter. Revenues decreased $60.2 million for the third fiscal quarter compared to the prior year period. Gallons sold decreased 7%, or 17.8 million gallons, compared to the prior year third fiscal quarter as near-record warmer weather reduced customer demand. However, cost of sales was favorable with a decrease of $70.6 million, or 19%, for the third fiscal quarter. Margin per gallon increased $0.13, or 12%, compared to the prior year period. Ferrellgas has achieved positive results in contract negotiations with both suppliers and customers as it continues to leverage asset utilization management practices.

Operating income per gallon increased $0.04, or 11%, compared to the prior year period. Operating income for the third fiscal quarter increased $4.6 million, or 5%, compared to the prior year period. A focus on cost containment and strategic initiatives on right-timed delivery contributed to these favorable results, which were partially offset by higher fleet charges related to cost of diesel, maintenance and repairs.

The Company reported net earnings attributable to Ferrellgas Partners, L.P. of $72.4 million and $67.6 million, for the third fiscal quarters of 2023 and 2022, respectively. Adjusted EBITDA, a non-GAAP financial measure, increased by $8.5 million, or 7%, to $125.6 million in the third fiscal quarter 2023 compared to $117.1 million in the prior year period. The change was primarily due to the $4.6 million increase in operating income, noted above, and a favorable EBITDA adjustment for $3.6 million in legal fees related to non-core businesses.

As previously announced, on April 7, 2023, the Company made a cash distribution in the aggregate amount of approximately $49.9 million to holders of record of the Class B Units as of March 23, 2023. The aggregate distribution of approximately $150.0 milion paid to date was made possible by the Company’s continued strong performance.

Several factors were key in driving the Company’s positive quarterly results. New mobile technology consisting of handheld devices for drivers to capture information and other tank monitoring notifications enable Ferrellgas, as a national logistics company, to deliver propane efficiently and in a timely manner. More importantly, the leadership and experience of the Company’s employee-owners enable it to provide for its customers both on a routine basis and during critical events. Using its nationwide footprint, the Company ships on all major supply avenues – truck, rail, sea – and has relationships with more than 100 carriers.

We also had almost 200 third quarter nominations for Ferrellgas Flame awards during the quarter. 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. The International Rhino Foundation (“IRF”) joined a Company call to further its partnership and educate employee-owners on the benefits of rhinoceroses to the world’s ecosystems. Blue Rhino released limited edition propane tank sleeves in support of the IRF’s “Keep the Five Alive” event, which raises awareness about the need to save the five rhinoceros species remaining in the wild.

While the country has seen workers move around for other opportunities, most employee-owners are choosing to stay with Ferrellgas. Company-wide, retention has improved almost 13% through the 2023 fiscal year period. Front-line employee retention, which includes drivers, service technicians, material handlers, and production employees, among others, improved almost 12% through the 2023 fiscal year.

“I want to thank all our people in the field and corporate who work so hard to support our Blue Rhino tank exchange and Retail operations,” Ferrell added. “These drivers, billing specialists, technicians, customer service workers, and many more, all work together to meet our goals and serve our customers. I could not be prouder of all that they accomplish.”

On Wednesday, June 14, 2023, the Company will conduct a teleconference on the Internet at https://edge.media-server.com/mmc/p/m5rtuq5d to discuss the results of operations for the third fiscal quarter ended April 30, 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 30, 2022. 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, 2022, 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		April 30, 2023				July 31, 2022
Current assets:
Cash and cash equivalents (including $11,127 and $11,208 of restricted cash at April 30, 2023 and July 31, 2022, respectively)		$	104,657			$	158,737
Accounts and notes receivable, net			199,042				150,395
Inventories			97,813				115,187
Price risk management asset			8,463				43,015
Prepaid expenses and other current assets			35,324				30,764
Total current assets			445,299				498,098
Property, plant and equipment, net			619,285				603,148
Goodwill, net			257,006				257,099
Intangible assets (net of accumulated amortization of $347,423 and $440,121 at April 30, 2023 and July 31, 2022, respectively)			108,806				97,638
Operating lease right-of-use assets			60,244				72,888
Other assets, net			64,713				79,244
Total assets		$	1,555,353			$	1,608,115
LIABILITIES, MEZZANINE AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	49,791			$	57,586
Broker margin deposit liability			6,207				32,805
Current portion of long-term debt			2,717				1,792
Current operating lease liabilities			24,150				25,824
Other current liabilities			159,054				185,805
Total current liabilities			241,919				303,812
Long-term debt			1,455,209				1,450,016
Operating lease liabilities			36,941				47,231
Other liabilities			32,076				43,518
Contingencies and commitments
Mezzanine equity:
Senior preferred units, net of issue discount and other offering costs (700,000 units outstanding at April 30, 2023 and July 31, 2022)			651,349				651,349
Equity (Deficit):
Limited partner unitholders
Class A (4,857,605 units outstanding at April 30, 2023 and July 31, 2022)			(1,160,913	)			(1,229,823	)
Class B (1,300,000 units outstanding at April 30, 2023 and July 31, 2022)			383,012				383,012
General partner unitholder (49,496 units outstanding at April 30, 2023 and July 31, 2022)			(70,119	)			(71,320	)
Accumulated other comprehensive (loss) income			(7,298	)			37,907
Total Ferrellgas Partners, L.P. deficit			(855,318	)			(880,224	)
Noncontrolling interest			(6,823	)			(7,587	)
Total deficit			(862,141	)			(887,811	)
Total liabilities, mezzanine and deficit		$	1,555,353			$	1,608,115

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,
		2023				2022				2023				2022				2023				2022
Revenues:
Propane and other gas liquids sales		$	559,047			$	622,211			$	1,596,777			$	1,652,419			$	1,962,237			$	1,969,752
Other			28,300				25,332				87,802				74,568				109,895				92,361
Total revenues			587,347				647,543				1,684,579				1,726,987				2,072,132				2,062,113
Cost of sales:
Propane and other gas liquids sales			291,826				362,958				852,399				966,709				1,059,694				1,141,855
Other			3,673				3,176				12,692				10,343				14,858				12,915
Gross profit			291,848				281,409				819,488				749,935				997,580				907,343
Operating expense - personnel, vehicle, plant & other			147,477				147,293				434,572				392,418				562,757				509,336
Operating expense - equipment lease expense			5,861				5,775				17,471				17,487				23,078				24,087
Depreciation and amortization expense			23,753				23,067				69,453				65,306				94,044				86,768
General and administrative expense			16,213				10,962				54,161				39,321				67,620				50,626
Non-cash employee stock ownership plan compensation charge			767				776				2,212				2,436				2,946				3,370
Loss (gain) on asset sales and disposals			958				1,299				2,928				(6,566	)			2,876				(6,973	)
Operating income			96,819				92,237				238,691				239,533				244,259				240,129
Interest expense			(24,297	)			(23,965	)			(72,483	)			(74,499	)			(98,077	)			(99,105	)
Gain on extinguishment of debt			—				—				—				—				—				5,088
Other income, net			852				99				1,865				4,406				2,292				4,483
Reorganization expense - professional fees			—				—				—				—				—				(236	)
Earnings before income tax expense			73,374				68,371				168,073				169,440				148,474				150,359
Income tax expense			367				248				888				825				1,044				960
Net earnings			73,007				68,123				167,185				168,615				147,430				149,399
Net earnings attributable to noncontrolling interest (a)			580				537				1,203				1,230				840				836
Net earnings attributable to Ferrellgas Partners, L.P.		$	72,427			$	67,586			$	165,982			$	167,385			$	146,590			$	148,563
Class A unitholders' interest in net earnings (loss)		$	6,115			$	7,336			$	16,608			$	16,668			$	(18,828	)		$	(17,989	)
Net earnings (loss) per unitholders' interest
Basic and diluted net earnings (loss) per Class A Unit		$	1.26			$	1.51			$	3.42			$	3.43			$	(3.88	)		$	(3.70	)
Weighted average Class A Units outstanding - basic and diluted			4,858				4,858				4,858				4,858				4,858				4,858

Supplemental Data and Reconciliation of Non-GAAP Items:

		Three months ended								Nine Months ended								Twelve months ended
		April 30,								April 30,								April 30,
		2023				2022				2023				2022				2023				2022
Net earnings attributable to Ferrellgas Partners, L.P.		$	72,427			$	67,586			$	165,982			$	167,385			$	146,590			$	148,563
Income tax expense			367				248				888				825				1,044				960
Interest expense			24,297				23,965				72,483				74,499				98,077				99,105
Depreciation and amortization expense			23,753				23,067				69,453				65,306				94,044				86,768
EBITDA			120,844				114,866				308,806				308,015				339,755				335,396
Non-cash employee stock ownership plan compensation charge			767				776				2,212				2,436				2,946				3,370
Loss (gain) loss on asset sales and disposal			958				1,299				2,928				(6,566	)			2,876				(6,973	)
Gain on extinguishment of debt			—				—				—				—				—				(5,088	)
Other income, net			(852	)			(99	)			(1,865	)			(4,406	)			(2,292	)			(4,483	)
Reorganization expense - professional fees			—				—				—				—				—				236
Severance costs include $0, $51 and $82 in operating expense for the three, nine and twelve months ended April 30, 2023, respectively. Also includes $0, $593 and $594 in general and administrative expense for the three, nine and twelve months ended April 30, 2023, respectively.			—				49				644				546				676				546
Legal fees and settlements related to non-core businesses			3,295				(303	)			17,274				4,635				20,577				6,192
Net earnings attributable to noncontrolling interest (a)			580				537				1,203				1,230				840				836
Adjusted EBITDA (b)			125,592				117,125				331,202				305,890				365,378				330,032
Net cash interest expense (c)			(21,426	)			(25,654	)			(64,297	)			(72,393	)			(91,270	)			(94,830	)
Maintenance capital expenditures (d)			(5,208	)			(5,477	)			(15,415	)			(13,116	)			(19,318	)			(24,767	)
Cash paid for income taxes			(217	)			(243	)			(713	)			(650	)			(1,081	)			(918	)
Proceeds from certain asset sales			591				642				2,079				3,368				2,824				4,249
Distributable cash flow attributable to equity investors (e)			99,332				86,393				252,856				223,099				256,533				213,766
Less: Distributions accrued or paid to preferred unitholders			15,590				15,715				48,063				49,037				64,313				65,050
Distributable cash flow attributable to general partner and non-controlling interest			(1,986	)			(1,720	)			(5,056	)			(4,462	)			(5,130	)			(4,275	)
Distributable cash flow attributable to Class A and B Unitholders (f)			81,756				68,958				199,737				169,600				187,090				144,441
Less: Distributions paid to Class A and B Unitholders (g)			49,998				—				49,998				49,998				99,996				49,998
Distributable cash flow excess (h)		$	31,758			$	68,958			$	149,739			$	119,602			$	87,094			$	94,443
Propane gallons sales
Retail - Sales to End Users			182,937				198,783				514,995				529,884				609,427				625,817
Wholesale - Sales to Resellers			51,015				52,943				155,829				158,955				203,390				210,010
Total propane gallons sales			233,952				251,726				670,824				688,839				812,817				835,827

(a) 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.

(b) Adjusted EBITDA is calculated as net 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, gain on extinguishment of debt, other income, net, reorganization expense – professional fees, severance costs, legal fees and settlements related to non-core businesses, 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 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.

(c) 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 terminated accounts receivable securitization facility.

(d) 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.

(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 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.

(f) 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.

(g) The Company did not pay any distributions to Class A Unitholders during any of the periods in fiscal 2023 or fiscal 2022.

(h) Distributable cash flow 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 or, previously, under our terminated accounts receivable securitization facility. Management considers Distributable cash flow excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow 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 excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow excess should be viewed in conjunction with measurements that are computed in accordance with GAAP.