Ferrellgas Partners, L.P. Reports Third Quarter Fiscal 2024 Results

Rhea-AI Summary

Ferrellgas Partners, L.P. (OTC: FGPR) reported a decrease of $21.6 million, or 17%, in Adjusted EBITDA for Q3 fiscal 2024, totaling $104 million compared to $125.6 million in the prior year. This decline was attributed to a $19.6 million drop in gross profit, primarily due to warmer than normal weather and higher medical claims. Revenue fell by $71.6 million, offset slightly by a $52 million reduction in the cost of product. Gallons sold decreased by 24.6 million, or 11%, though margin per gallon increased by 4%. Net earnings were $52.8 million, down from $72.4 million. The company made a total distribution of $99.9 million in April 2024.

Despite the downturn in some areas, Blue Rhino's EBITDA increased by 19% due to higher consumer demand for grilling and tank usage. The company continues to focus on technological investments and strategic initiatives, including the expansion of self-service kiosks and home delivery services for propane tanks.

Positive

• Blue Rhino's EBITDA increased by 19% due to higher consumer demand.
• Margin per gallon increased by 4%.
• The company leveraged its national footprint and supply contacts effectively.
• Technological investments reduced costs by over $1.2 million.
• Expansion of self-service kiosks and home delivery services.

Negative

• Adjusted EBITDA decreased by $21.6 million, or 17%.
• Gross profit decreased by $19.6 million, or 7%.
• Gallons sold decreased by 24.6 million, or 11%.
• Net earnings decreased to $52.8 million from $72.4 million.
• Operating income per gallon decreased by 10%.

LIBERTY, Mo., June 19, 2024 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its third fiscal quarter ended April 30, 2024.

Adjusted EBITDA, a non-GAAP financial measure, decreased by $21.6 million, or 17%, to $104.0 million in the third fiscal quarter compared to $125.6 million in the prior year quarter. The decreases in both Adjusted EBITDA and net earnings attributable to Ferrellgas Partners, L.P. were primarily driven by a $19.6 million decrease in gross profit noted below, which primarily related to warmer than normal weather and $5.0 million related to higher medical claims realized under the company’s self-insured medical plan.

In sharing fiscal third quarter results, Tamria Zertuche, President and Chief Executive Officer of Ferrellgas commented, “Regarding our retail business, we have taken positive steps over the last four years to create balance across the different customers segments in our business. Our focus has been on growing our weather agnostic customer base, by customer type and geographic location. We have made great progress in the areas of Autogas, Tank Exchange, and Industrial Customer segments. However, the extended, unseasonably warm heating season negatively impacted demand volumes attributed to the heating segments of our business. In the areas of the country where we have the most customer density, the weather patterns we experienced were 10% warmer than the prior year quarter. We did see some business closings and the effects of inflation, which contributed to a decrease in retail customers in some areas of our national footprint when compared to the prior year period. We will be able to re-deploy these assets related to closed businesses for gallon growth occurring in future periods. Our experienced operations professionals appropriately responded to the weather anomaly - they managed expenses in all areas of operations, including driving fleet expenses down by over 8% when compared to prior year.” 

The $71.6 million decrease in revenue was partially offset by a decrease of $52.0 million in cost of product as compared to the prior year period. Gross profit decreased by $19.6 million, or 7%, for the third fiscal quarter compared to the prior year period. Gallons sold for the third fiscal quarter of 2024 decreased 24.6 million, or 11%, as the trend of above average temperatures continued for much of the United States.

Margin per gallon for the Company increased 4% for the third fiscal quarter of 2024 compared to the prior year period. The favorable increase was primarily due to segment mix, our Platinum Plus fixed cost program for residential customers and national account pricing improvement.

Operating income per gallon decreased 10% for the third fiscal quarter of fiscal 2024 compared to the prior year period. We recognized net earnings attributable to Ferrellgas Partners, L.P. of $52.8 million and $72.4 million in the third fiscal quarter of fiscal 2024 and 2023, respectively.

As previously announced, on April 9, 2024, the Company made a cash distribution in the aggregate amount of $99.9 million to holders of record of the Class B units as of March 25, 2024. The total distributions paid to date of approximately $250.0 million were discretionary and made possible by the Company’s continued strong performance.

The warmer than normal temperatures and continued focus on strategic initiatives drove a 19% increase during the third fiscal quarter in Blue Rhino’s EBITDA compared to the prior year period. Consumer demand surged as the warmer weather prompted an early kick-off to the grilling season. Additionally, Blue Rhino tank usage increased in areas where the electric grid failed due to the heat. We leveraged our national footprint, supply contacts, and our experienced labor force, executing well against higher-than-normal demand in our tank exchange business.

As grilling season arrives, consumers now have even more convenient options to get a Blue Rhino tank. To date, we have installed over 500 self-service kiosks which allow consumers to purchase a propane cylinder 24 hours a day. Home delivery service is also available in 19 markets with plans to expand. More than 50% of these home delivery purchases are from repeat customers. Additionally, Blue Rhino decreased capital expense by nearly $8.0 million in fiscal year 2024 due to supply chain improvements and inventory turn improvements. Blue Rhino recently onboarded two major accounts which added approximately 5,500 tank exchange selling locations to increase total selling locations to over 68,000, an increase of 12% compared to the prior year period.

Investing in technology is one of our key strategic initiatives. We’ve reduced costs over $1.2 million in fiscal 2024 installing tank monitors. Tank monitoring and telematics technology ensure our customers have a ready supply of propane in addition to improving the efficiency of our delivery efforts. The Company’s new credit processing platform, a seamless payment process for our customers, is on track to deliver annual, recurring savings to the company as our payment processor charges us a lower interchange fee on debit card payments. Work also continues on our previously announced enterprise resource planning system implementation.

As an active member of the National Propane Gas Association (“NPGA”), several key recent regulatory actions benefited us and others in the propane industry. The NPGA successfully led a coalition to oppose the Environmental Protection Agency (“EPA”) proposal to sunset Energy Star labels on all gas appliances. As a result, the EPA instead proposed to increase the efficiency level of the Energy Star certification for residential furnaces. On another front, the NPGA worked with Congress to preserve propane’s inclusion and eligibility for several programs in the Federal Aviation Administration Reauthorization Act, which provides financing to airports to purchase alternative fuel vehicles and propane-powered generators. Additional efforts continue as the NPGA seeks to promote the use of propane and favorable legislation at both the federal and state levels.

On Wednesday, June 19, 2024, the Company will conduct a live teleconference on the Internet at https://edge.media-server.com/mmc/p/kmjvaheb to discuss the results of operations for the third fiscal quarter ended April 30, 2024. The live 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 or through the webcast portal to be answered during live Q&A.

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 over 68,000 locations nationwide. Blue Rhino is proudly celebrating its 30^th birthday this year with an exclusive sweepstakes, prizes, and more. Ferrellgas employees indirectly own 1.1 million Class A Units of the partnership, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed an Annual Report on Form 10-K for the fiscal year ended July 31, 2023, 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.

Cautionary Note Regarding Forward-Looking Statements

Statements included in this release concerning current estimates, expectations, projections about future results, performance, prospects, opportunities, plans, actions and events and other statements, concerns, or matters that are not historical facts are forward-looking statements as defined under federal securities laws. 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. 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, including 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; competition from other industry participants and other energy sources; energy efficiency and technology advances; significant delays in the collection of accounts or notes receivable; customer, counterparty, supplier or vendor defaults; changes in demand for, and production of, hydrocarbon products; inherent operating and litigation risks in gathering, transporting, handling and storing propane; costs of complying with, or liabilities imposed under, environmental, health and safety laws; the impact of pending and future legal proceedings; the interruption, disruption, failure or malfunction of our information technology systems including due to cyber-attack; economic and political instability, particularly in areas of the world tied to the energy industry, including the ongoing conflict between Russia and Ukraine; disruptions in the capital and credit markets; and access to available capital to meet our operating and debt-service requirements. These risks, uncertainties, and other factors also include those discussed in the Annual Report on 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. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this release are made only as of the date hereof. Ferrellgas disclaims any intention or obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except unit data)
(unaudited)
ASSETS		April 30, 2024				July 31, 2023
Current assets:
Cash and cash equivalents (including $10,783 and $11,126 of restricted cash at April 30, 2024 and July 31, 2023, respectively)		$	73,645			$	137,347
Accounts and notes receivable, net			178,163				159,379
Inventories			91,275				98,104
Price risk management asset			5,398				11,966
Prepaid expenses and other current assets			28,270				29,135
Total current assets			376,751				435,931
Property, plant and equipment, net			622,524				615,174
Goodwill, net			257,006				257,006
Intangible assets (net of accumulated amortization of $356,519 and $349,614 at April 30, 2024 and July 31, 2023, respectively)			114,531				106,615
Operating lease right-of-use assets			56,040				57,839
Other assets, net			60,840				58,838
Total assets		$	1,487,692			$	1,531,403
LIABILITIES, MEZZANINE AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable		$	47,742			$	35,115
Current portion of long-term debt			2,620				2,597
Current operating lease liabilities			24,098				24,600
Other current liabilities			153,945				197,030
Total current liabilities			228,405				259,342
Long-term debt			1,459,856				1,456,184
Operating lease liabilities			33,387				34,235
Other liabilities			28,741				29,084
Contingencies and commitments
Mezzanine equity:
Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at April 30, 2024 and July 31, 2023)			651,349				651,349
Equity (Deficit):
Limited partner unitholders
Class A (4,857,605 Units outstanding at April 30, 2024 and July 31, 2023)			(1,221,021	)			(1,205,103	)
Class B (1,300,000 Units outstanding at April 30, 2024 and July 31,2023)			383,012				383,012
General partner Unitholder (49,496 Units outstanding at April 30, 2024 and July 31, 2023)			(69,716	)			(70,566	)
Accumulated other comprehensive income			1,018				1,059
Total Ferrellgas Partners, L.P. deficit			(906,707	)			(891,598	)
Noncontrolling interest			(7,339	)			(7,193	)
Total deficit			(914,046	)			(898,791	)
Total liabilities, mezzanine and deficit		$	1,487,692			$	1,531,403

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,
		2024				2023				2024				2023				2024				2023
Revenues:
Propane and other gas liquids sales		$	490,057			$	559,047			$	1,413,200			$	1,596,777			$	1,733,315			$	1,962,237
Other			25,717				28,300				83,464				87,802				105,235				109,895
Total revenues			515,774				587,347				1,496,664				1,684,579				1,838,550				2,072,132
Cost of sales:
Propane and other gas liquids sales			240,281				291,826				690,299				852,399				841,257				1,059,694
Other			3,195				3,673				11,366				12,692				14,587				14,858
Gross profit			272,298				291,848				794,999				819,488				982,706				997,580
Operating expense - personnel, vehicle, plant & other			150,629				147,477				454,913				434,572				597,861				562,757
Operating expense - equipment lease expense			5,275				5,861				15,994				17,471				21,775				23,078
Depreciation and amortization expense			25,340				23,753				74,179				69,453				98,096				94,044
General and administrative expense			13,305				16,213				43,321				54,161				59,898				67,620
Non-cash employee stock ownership plan compensation charge			880				767				2,500				2,212				3,223				2,946
Loss on asset sales and disposals			130				958				1,847				2,928				4,610				2,876
Operating income			76,739				96,819				202,245				238,691				197,243				244,259
Interest expense			(24,685	)			(24,297	)			(73,205	)			(72,483	)			(98,434	)			(98,077	)
Other income, net			1,324				852				3,509				1,865				4,269				2,292
Earnings before income tax expense			53,378				73,374				132,549				168,073				103,078				148,474
Income tax expense			240				367				711				888				804				1,044
Net earnings			53,138				73,007				131,838				167,185				102,274				147,430
Net earnings attributable to noncontrolling interest (1)			372				580				839				1,203				376				840
Net earnings attributable to Ferrellgas Partners, L.P.		$	52,766			$	72,427			$	130,999			$	165,982			$	101,898			$	146,590
Class A unitholders' interest in net (loss) earnings		$	(63,802	)		$	6,115			$	(18,853	)		$	16,608			$	(25,290	)		$	(18,830	)
Net (loss) earnings per unitholders' interest
Basic and diluted net (loss) earnings per Class A Unit		$	(13.13	)		$	1.26			$	(3.88	)		$	3.42			$	(5.21	)		$	(3.88	)
Weighted average Class A Units outstanding - basic and diluted			4,858				4,858				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								Nine months ended								Twelve months ended
		April 30,								April 30,								April 30,
		2024				2023				2024				2023				2024				2023
Net earnings attributable to Ferrellgas Partners, L.P.		$	52,766			$	72,427			$	130,999			$	165,982			$	101,898			$	146,590
Income tax expense			240				367				711				888				804				1,044
Interest expense			24,685				24,297				73,205				72,483				98,434				98,077
Depreciation and amortization expense			25,340				23,753				74,179				69,453				98,096				94,044
EBITDA			103,031				120,844				279,094				308,806				299,232				339,755
Non-cash employee stock ownership plan compensation charge			880				767				2,500				2,212				3,223				2,946
Loss on asset sales and disposal			130				958				1,847				2,928				4,610				2,876
Other income, net			(1,324	)			(852	)			(3,509	)			(1,865	)			(4,269	)			(2,292	)
Severance costs			—				—				—				644				-				676
Legal fees and settlements related to non-core businesses			323				3,295				1,480				17,274				5,957				20,577
Business transformation costs (1)			591				—				1,556				—				3,644				—
Net earnings attributable to noncontrolling interest (2)			372				580				839				1,203				376				840
Adjusted EBITDA (3)			104,003				125,592				283,807				331,202				312,773				365,378
Net cash interest expense (4)			(21,240	)			(21,426	)			(63,411	)			(64,297	)			(85,809	)			(91,270	)
Maintenance capital expenditures (5)			(5,383	)			(5,208	)			(13,952	)			(15,415	)			(18,706	)			(19,318	)
Cash paid for income taxes			(136	)			(217	)			(495	)			(713	)			(874	)			(1,081	)
Proceeds from certain asset sales			589				591				1,969				2,079				2,042				2,824
Distributable cash flow attributable to equity investors (6)			77,833				99,332				207,918				252,856				209,426				256,533
Less: Distributions accrued or paid to preferred unitholders			16,045				15,590				48,546				48,063				64,797				64,313
Distributable cash flow attributable to general partner and non-controlling interest			(1,557	)			(1,986	)			(4,159	)			(5,056	)			(4,190	)			(5,130	)
Distributable cash flow attributable to Class A and B Unitholders (7)			60,231				81,756				155,213				199,737				140,439				187,090
Less: Distributions paid to Class A and B Unitholders (8)			99,996				49,998				99,996				49,998				99,996				99,996
Distributable cash flow (shortage) excess (9)		$	(39,765	)		$	31,758			$	55,217			$	149,739			$	40,443			$	87,094
Propane gallons sales
Retail - Sales to End Users			162,282				182,937				479,776				514,995				566,924				609,427
Wholesale - Sales to Resellers			47,102				51,015				152,845				155,829				202,906				203,390
Total propane gallons sales			209,384				233,952				632,621				670,824				769,830				812,817

(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 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 on asset sales and disposals, other income, net, severance costs, legal fees and settlements related to non-core businesses, business transformation costs, 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.

(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 2024 or fiscal 2023.

(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 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.

FAQ

What were Ferrellgas Partners' Adjusted EBITDA for Q3 fiscal 2024?

Ferrellgas Partners reported Adjusted EBITDA of $104 million for Q3 fiscal 2024, a decrease of $21.6 million or 17% from the previous year.

How did the warmer weather impact Ferrellgas Partners' Q3 2024 results?

Warmer than normal weather led to a $19.6 million decrease in gross profit and an 11% drop in gallons sold for Ferrellgas Partners in Q3 2024.

What was Ferrellgas Partners' net earnings for Q3 fiscal 2024?

Ferrellgas Partners' net earnings for Q3 fiscal 2024 were $52.8 million, down from $72.4 million in the prior year.

How much did Blue Rhino's EBITDA increase in Q3 fiscal 2024?

Blue Rhino's EBITDA increased by 19% in Q3 fiscal 2024 compared to the prior year period.

What were the key strategic initiatives for Ferrellgas Partners in Q3 fiscal 2024?

Key strategic initiatives included technological investments, reducing costs by over $1.2 million, expanding self-service kiosks, and home delivery services for propane tanks.