Ferrellgas Partners, L.P. Reports Second Quarter 2021 Results

Rhea-AI Summary

Ferrellgas Partners, L.P. (OTC: FGPRQ) reported a strong operational performance for Q2 of fiscal 2021, with a $18.2 million increase in operating income and a 3.6% rise in gross profit to $9.6 million. Despite selling 285.3 million gallons of propane, a decrease from 305.3 million the previous year, gross margin improved by 11% to $.093 per gallon. The company reduced operating expenses by 10%, totaling $13 million, thanks to efficient delivery strategies. Following the Bankruptcy Court's confirmation of its restructuring plan, Ferrellgas aims to fortify its financial foundation without impacting operations.

Positive

• Operating income increased by $18.2 million.
• Gross profit rose by $9.6 million or 3.6%.
• Operating expenses decreased by $13 million or 10%.
• Gross margin improved to $0.093 per gallon, 11% higher than the prior year.
• Volume growth of Blue Rhino tank exchange sales continues.

Negative

• Propane sales volume decreased from 305.3 million gallons to 285.3 million gallons.
• Indefinite suspension of quarterly cash distributions.

• Gross Profit increased by $9.6 million, or almost 3.6%, compared to the prior year period as a result of an $.09 increase in gross margin per gallon.
• Operating Income for the quarter increased by $18.2 million.
• Operating expense decreased by $13 million or 10%.  
• Tank Exchange sale locations now exceed 62,500, up over 5,000 from prior year, contributing to 36% growth in volumes.
• Bankruptcy Court confirms plan for holding company, Ferrellgas Partners, L.P.
  

OVERLAND PARK, Kan., March 08, 2021 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (OTC: FGPRQ) (“Ferrellgas” or the “Company”) today reported financial results for its second quarter ended January 31, 2021.

The Company continued its strong operational performance during the second quarter of fiscal 2021, leading to an $18.2 million increase in operating income and setting a foundation for continued growth in fiscal 2021. The Company implemented strategic initiatives, including right-timed delivery of gallons, which led to significant decreases in operating expense during the quarter. These strategies result in less labor, fewer miles driven, less fuel consumed by trucks and less repairs and maintenance while also smoothing out gallons delivered throughout the year. The Company sold 285.3 million propane gallons for the quarter, compared to 305.3 million in the prior year quarter. However, these overall volume decreases were partially offset by a continued increase in Blue Rhino tank exchange sales due to further market share penetration, successful execution of certain marketing strategies, and “stay at home” buying trends. Margin per gallon for the quarter was $.093, or 11% higher than the prior year, attributable to strategic product placement and better execution of our supply chain and logistics strategies, which drove enhanced profitability per customer. Overall, the increases noted above were partially offset by decreased retail sales volumes due primarily to implementation of the right-timed deliveries strategy and weather that was 2.7% warmer than the prior year quarter and a relatively weaker economy. This has resulted in an increase in gross profit of $9.6 million or 3.6% higher than prior year. Operating expenses decreased $13 million or 10% due to the strategies to deliver gallons more efficiently.

The Company continues to implement numerous initiatives to increase efficiency and profitability. These initiatives produced strong results in the second quarter 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.

For the quarter, the Company reported net earnings attributable to Ferrellgas Partners, L.P. of $63.3 million, or $0.64 per common unit, compared to prior year period net earnings of $48.2 million, or $0.49 per common unit. Adjusted EBITDA, a non-GAAP measure, increased by $19.5 million, or 16%, to $140.9 million in the current quarter compared to $121.4 million in the prior year quarter. “Our people continue to generate strong results with less operating expenses. I could not be more proud of our people or the continued transformation of the company.” said James E. Ferrell, Chief Executive Officer and President of Ferrellgas.

As previously disclosed, the Company entered into a Transaction Support Agreement (the “TSA”) with a majority of the holders of the Company’s 8.625% Senior Notes Due 2020 (the “2020 Notes”) on December 10, 2020. The TSA sets forth a restructuring process to satisfy the obligations under the 2020 Notes and refinance the balance sheet of the Company and its operating partnership. The transactions contemplated by the TSA are intended to de-lever our balance sheet, consistent with the Company’s strategy to create a solid financial foundation for future growth.

The TSA executed between the Company and its noteholders will permit Ferrellgas to remain an independent, employee-owned business under current management while restructuring substantially all of its debt. Importantly, the restructuring will have no impact on the Company’s operations, will not inhibit its ability to provide propane to its almost 800,000 customers throughout the United States and Puerto Rico, and will allow its premier Blue Rhino tank exchange business to continue to expand beyond the current 62,500 selling locations.

As previously announced, on January 11, 2021 Ferrellgas Partners and Ferrellgas Partners Finance Corp. commenced the Chapter 11 Cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On March 5, 2021, the Bankruptcy Court entered an order confirming the restructuring plan. The effectiveness of the plan is conditioned on certain requirements such as the operating partnership completing its refinancing. This confirmation is a positive step forward in our restructuring plans.

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.

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
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS		January 31, 2021				July 31, 2020
Current Assets:
Cash and cash equivalents (including $109,049 and $95,759 of restricted cash		$	326,483			$	333,761
at January 31, 2021 and July 31, 2020, respectively)
Accounts and notes receivable, net (including $200,443 and $103,703 of accounts
receivable pledged as collateral at January 31, 2021 and July 31, 2020, respectively)			206,280				101,438
Inventories			90,473				72,664
Prepaid expenses and other current assets			72,914				35,944
Total Current Assets			696,150				543,807
Property, plant and equipment, net			587,870				591,042
Goodwill, net			246,946				247,195
Intangible assets, net			99,644				104,049
Operating lease right-of-use asset			97,249				107,349
Other assets, net			91,159				74,748
Total Assets		$	1,819,018			$	1,668,190
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable		$	79,224			$	33,944
Current portion of long-term debt (a)			501,865				859,095
Current operating lease liabilities			27,895				29,345
Other current liabilities			191,908				167,466
Total Current Liabilities			800,892				1,089,850
Long-term debt			1,650,410				1,646,396
Operating lease liabilities			80,901				89,022
Other liabilities			49,541				51,190
Total Liabilities not subject to compromise			2,581,744				2,876,458
Liabilities subject to compromise			390,101				-
Total liabilites			2,971,845				2,876,458
Contingencies and commitments
Partners Deficit:
Common unitholders (97,152,665 units outstanding at January 31, 2021 and July 31, 2020)			(1,107,979	)			(1,126,452	)
General partner unitholder (989,926 units outstanding at January 31, 2021 and July 31, 2020)			(71,100	)			(71,287	)
Accumulated other comprehensive income (loss)			33,762				(2,303	)
Total Ferrellgas Partners, L.P. Partners' Deficit			(1,145,317	)			(1,200,042	)
Noncontrolling interest			(7,510	)			(8,226	)
Total Partners' Deficit			(1,152,827	)			(1,208,268	)
Total Liabilities and Partners' Deficit		$	1,819,018			$	1,668,190
(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 and $33 million of related accrued interest
which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P. Also Ferrellgas Partners, L.P. holds $19.9 million in cash.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
		Three months ended								Six months ended								Twelve months ended
		January 31								January 31								January 31
			2021				2020				2021				2020				2021				2020
Revenues:
Propane and other gas liquids sales		$	528,434			$	485,247			$	809,483			$	758,632			$	1,466,642			$	1,482,412
Other			25,126				25,586				44,971				45,415				81,591				80,341
Total revenues			553,560				510,833				854,454				804,047				1,548,233				1,562,753
Cost of sales:
Propane and other gas liquids sales			270,777				237,843				408,404				371,871				709,586				758,720
Other			3,504				3,353				7,171				7,034				13,140				11,971
Gross profit			279,279				269,637				438,879				425,142				825,507				792,062
Operating expense - personnel, vehicle, plant & other			115,247				128,233				224,274				242,776				474,553				480,094
Depreciation and amortization expense			21,249				19,795				42,639				39,014				84,106				79,263
General and administrative expense			20,475				14,192				33,555				23,887				55,420				53,360
Operating expense - equipment lease expense			6,862				8,261				13,692				16,649				30,060				33,444
Non-cash employee stock ownership plan compensation charge			762				630				1,470				1,425				2,916				2,426
Loss on asset sales and disposals			80				2,148				893				4,383				4,434				8,631
Operating income			114,604				96,378				122,356				97,008				174,018				134,844
Interest expense			(52,595	)			(47,548	)			(106,821	)			(93,245	)			(206,538	)			(182,095	)
Loss on extinguishment of debt			-				-				-				-				(37,399	)			-
Other income (expense), net			3,508				76				3,616				(56	)			3,212				208
Reorganization items, net			(1,200	)			0				(1,200	)			-				(1,200	)			-
Earnings (loss) before income tax expense			64,317				48,906				17,951				3,707				(67,907	)			(47,043	)
Income tax expense			326				115				413				633				631				795
Net earnings (loss)			63,991				48,791				17,538				3,074				(68,538	)			(47,838	)
Net earnings (loss) attributable to noncontrolling interest (a)			724				584				333				211				(381	)			(125	)
Net earnings (loss) attributable to Ferrellgas Partners, L.P.			63,267				48,207				17,205				2,863				(68,157	)			(47,713	)
Less: General partner's interest in net earnings (loss)			633				482				172				29				(682	)			(476	)
Common unitholders' interest in net earnings (loss)		$	62,634			$	47,725			$	17,033			$	2,834			$	(67,475	)		$	(47,237	)
Earnings (loss) Per Common Unit
Basic and diluted net earnings (loss) per common unitholders' interest		$	0.64			$	0.49			$	0.18			$	0.03			$	(0.69	)		$	(0.49	)
Weighted average common units outstanding - basic			97,152.7				97,152.7				97,152.7				97,152.7				97,152.7				97,152.7
Supplemental Data and Reconciliation of Non-GAAP Items:
		Three months ended								Six months ended								Twelve months ended
		January 31								January 31								January 31
			2021				2020				2021				2020				2021				2020
Net earnings (loss) attributable to Ferrellgas Partners, L.P.		$	63,267			$	48,207			$	17,205			$	2,863			$	(68,157	)		$	(47,713	)
Income tax expense			326				115				413				633				631				795
Interest expense			52,595				47,548				106,821				93,245				206,538				182,095
Depreciation and amortization expense			21,249				19,795				42,639				39,014				84,106				79,263
EBITDA			137,437				115,665				167,078				135,755				223,118				214,440
Non-cash employee stock ownership plan compensation charge			762				630				1,470				1,425				2,916				2,426
Loss on asset sales and disposal			80				2,148				893				4,383				4,434				8,631
Loss on extinguishment of debt			-				-				-				-				37,399				-
Other income (expense), net			(3,508	)			(76	)			(3,616	)			56				(3,212	)			(208	)
Reorganization items, net			1,200				-				1,200				-				1,200				-
Severance expense includes $426, $927 and $1,667 in operating expense for the three, six and
twelve months ended January 31, 2021. Also includes $651, $834 and $834 in general and
administrative expense for the three, six and twelve months ended January 31, 2021.			1,077				-				1,761				-				2,501				-
Legal fees and settlements related to non-core businesses			3,628				2,519				6,136				4,562				8,882				13,754
Provision for doubtful accounts related to non-core businesses			(500	)			-				(500	)							16,825				-
Lease accounting standard adjustment and other			-				(116	)			-				54				107				54
Net earnings (loss) attributable to noncontrolling interest (b)			724				584				333				211				(381	)			(125	)
Adjusted EBITDA (b)			140,900				121,354				174,755				146,446				293,789				238,972
Net cash interest expense (c)			(48,243	)			(43,316	)			(99,959	)			(85,899	)			(196,306	)			(168,111	)
Maintenance capital expenditures (d)			(5,282	)			(5,430	)			(10,459	)			(11,897	)			(21,802	)			(27,139	)
Cash paid for income taxes			(270	)			(1	)			(305	)			(1	)			(593	)			(144	)
Proceeds from certain asset sales			1,737				824				2,437				1,659				4,775				3,948
Distributable cash flow attributable to equity investors (e)			88,842				73,431				66,469				50,308				79,863				47,526
Distributable cash flow attributable to general partner and non-controlling interest			1,904				1,468				1,329				1,006				1,597				950
Distributable cash flow attributable to common unitholders (f)			86,938				71,963				65,140				49,302				78,266				46,576
Less: Distributions paid to common unitholders			-				-				-				-				-				-
Distributable cash flow excess		$	86,938			$	71,963			$	65,140			$	49,302			$	78,266			$	46,576
Propane gallons sales
Retail - Sales to End Users			218,078				236,264				336,096				366,165				607,948				669,720
Wholesale - Sales to Resellers			67,252				68,996				116,842				119,035				233,336				231,986
Total propane gallons sales			285,330				305,260				452,938				485,200				841,284				901,706
(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 earnings (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, reorganization items, net
severance expense, legal fees and settlements related to non-core businesses, provision for doubtful accounts related to non-core businesses, lease accounting standard adjustment and other and net earnings (loss) attributable to
noncontrolling interest. Management believes the presentation of this measure is relevant and useful, becauseit 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 the financial results for Ferrellgas Partners, L.P. for Q2 of fiscal 2021?

Ferrellgas reported an operating income increase of $18.2 million and a gross profit increase of $9.6 million, reaching a total gross profit of $275.6 million.

How did Ferrellgas Partners, L.P.'s tank exchange sales perform?

Tank exchange locations exceeded 62,500, reflecting a growth of over 5,000 locations compared to the prior year.

What is the impact of the Bankruptcy Court's confirmation on Ferrellgas Partners, L.P.?

The confirmation allows Ferrellgas to restructure its debt without affecting its operational capabilities.

What was the adjusted EBITDA for Ferrellgas Partners, L.P. in Q2 of fiscal 2021?

The adjusted EBITDA increased by $19.5 million or 16%, totaling $140.9 million.

Why did Ferrellgas Partners, L.P. suspend its quarterly cash distribution?

Ferrellgas suspended its cash distribution due to not meeting the required fixed charge coverage ratio for its senior unsecured notes.