Press release from PR Newswire
Ferrellgas Partners Reports Record Fourth-Quarter Results; Balanced Gross Profit Improvement With Significant Expense Savings Driving Performance
Monday, October 01, 2012
Ferrellgas Partners Reports Record Fourth-Quarter Results; Balanced Gross Profit Improvement With Significant Expense Savings Driving Performance07:00 EDT Monday, October 01, 2012OVERLAND PARK, Kan., Oct. 1, 2012 /PRNewswire/ -- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest distributors of propane, today reported record fiscal fourth quarter results for the period ended July 31, 2012. The partnership's Adjusted EBITDA rose 78% to a record $18.1 million from $10.1 million in the year-earlier quarter. Propane sales increased modestly to 150.9 million gallons from 150.5 million gallons while gross profit increased 3% to a near record $130.0 million, as compared to $126.3 million achieved in the year ago period. The results were achieved despite temperatures in the fiscal quarter that were 38% warmer than experienced in the prior year period.President and Chief Executive Officer Steve Wambold explained, "Our fourth-quarter results highlight our ongoing efforts to both drive profitable growth and manage expenses in this highly competitive operating environment. We remain committed to driving significant cost savings throughout our operations providing both the opportunity to be more competitive for new business and provide immediate financial returns for investors." Wambold indicated that the previously announced cost savings goal of $20 million would likely be surpassed by the end of fiscal 2013.As expected, fourth-quarter revenues declined to $341.8 million from $449.7 million the year before attributable primarily to sharply lower wholesale propane costs. General and administrative expense declined nearly 35% to $8.4 million from $12.9 million the year before while operating expense was practically unchanged at $100.0 million on modestly increased sales volumes. Equipment lease expense rose slightly to $3.8 million from $3.6 million while interest expense improved nearly 6% to $22.4 million from $23.7 million. The fourth-quarter seasonal net loss improved to $35.9 million, or $0.45 per common unit from $41.3 million, or $0.53 per common unit in the prior year quarter. Commenting further on the outlook for fiscal 2013, Wambold noted, "We expect a continuation of our organic gallon growth. In addition, the opportunities for acquisitions seem to be heating up after a lull." Last month Ferrellgas strengthened its presence in California with the acquisition of Capitol City Propane in Sacramento. For the fiscal year, propane sales volumes declined 2% to 878 million gallons sold despite temperatures that were 18% warmer than experienced in fiscal 2011. Revenues totaled $2.3 billion, compared with $2.4 billion in fiscal 2011 while gross profit declined 7% to $641.9 million on lesser sales volumes and margins. General and administrative decreased 29% to $37.1 million (including a $10.0 million litigation reserve recorded in the prior year quarter) while operating expenses decreased 2% to $399.0 million, matching prior year distribution costs on a cent per gallon sold basis. Equipment lease expense of $14.6 million was materially unchanged from year-ago levels. Interest expense declined more than 8% to $93.3 million. The net loss for the fiscal year improved to $10.9 million, or $0.14 per unit, versus $43.8 million, or $0.60 per unit. Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., serves approximately one million customers in all 50 states, the District of Columbia and Puerto Rico. Ferrellgas employees indirectly own 21.7 million common units of the partnership through an employee stock ownership plan. More information about the partnership can be found online at www.ferrellgas.com.Statements in this release concerning expectations for the future are forward-looking statements. A variety of known and unknown risks, uncertainties and other factors could cause results, performance and expectations to differ materially from anticipated results, performance and expectations. These risks, uncertainties and other factors are discussed in the Form 10-K of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the fiscal year ended July 31, 2012, and other documents filed from time to time by these entities with the Securities and Exchange Commission.Contact:Tom Colvin, Investor Relations, (913) 661-1530Scott Brockelmeyer, Media Relations, (913) 661-1830 FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGSFOR THE THREE AND TWELVE MONTHS ENDED JULY 31, 2012 AND 2011(in thousands, except per unit data)(unaudited)Three months ended Twelve months endedJuly 31July 312012201120122011Revenues: Propane and other gas liquids sales$ 310,515$ 421,746$ 2,160,945$ 2,212,257 Other31,26027,912178,147210,958 Total revenues341,775449,6582,339,0922,423,215Cost of product sold: Propane and other gas liquids sales196,643310,3411,601,8861,609,344 Other15,11213,03895,323124,470Gross profit 130,020126,279641,883689,401Operating expense (including $126 and $626 of non-recurring severance charges for the three and twelve month periods ended July 31, 2012, respectively)100,006100,646398,980407,281Depreciation and amortization expense21,00222,09183,84182,486General and administrative expense (including $166 and $429 of non-recurring severance charges for the three and twelve month periods ended July 31, 2012, respectively)8,44512,88937,11652,160Equipment lease expense3,8023,59314,64814,435Non-cash employee stock ownership plan compensation charge2,7212,1909,44010,157Non-cash stock and unit-based compensation charge (b)3,976(221)8,84313,488Loss on disposal of assets and other3,9832,7996,0353,633Operating income (loss)(13,915)(17,708)82,980105,761Interest expense(22,350)(23,680)(93,254)(101,885)Loss on extinguishment of debt---(46,962)Other income, net25858506567Loss before income taxes(36,007)(41,330)(9,768)(42,519)Income tax expense (benefit)(157)(47)1,1281,241Net loss(35,850)(41,283)(10,896)(43,760)Net earnings (loss) attributable to noncontrolling interest (a)(321)(376)56(112)Net loss attributable to Ferrellgas Partners, L.P.(35,529)(40,907)(10,952)(43,648)Less: General partner's interest in net loss(356)(409)(110)(436)Common unitholders' interest in net loss$ (35,173)$ (40,498)$ (10,842)$ (43,212)Loss Per UnitBasic and diluted net loss per common unitholders' interest$ (0.45)$ (0.53)$ (0.14)$ (0.60)Weighted average common units outstanding78,992.075,907.677,572.472,313.6Supplemental Data and Reconciliation of Non-GAAP Items:Three months ended Twelve months endedJuly 31July 312012201120122011Net loss attributable to Ferrellgas Partners, L.P.$ (35,529)$ (40,907)$ (10,952)$ (43,648) Income tax expense (benefit)(157)(47)1,1281,241 Interest expense22,35023,68093,254101,885 Depreciation and amortization expense21,00222,09183,84182,486EBITDA7,6664,817167,271141,964 Loss on extinguishment of debt---46,962 Non-cash employee stock ownership plan compensation charge2,7212,1909,44010,157 Non-cash stock and unit-based compensation charge (b)3,976(221)8,84313,488 Loss on disposal of assets and other3,9832,7996,0353,633 Other income, net(258)(58)(506)(567) Nonrecurring severance costs292-1,055- Nonrecurring litigation reserve and related legal fees-98789212,120 Net earnings (loss) attributable to noncontrolling interest(321)(376)56(112)Adjusted EBITDA (c)18,05910,138193,086227,645 Net cash interest expense (d)(20,827)(21,960)(87,600)(93,353) Maintenance capital expenditures (e)(4,526)(3,516)(16,044)(15,437) Cash paid for taxes(664)(557)(764)(591) Proceeds from asset sales1,4281,7215,7425,994Distributable cash flow to equity investors (f)$ (6,530)$ (14,174)$ 94,420$ 124,258Propane gallons sales Retail - Sales to End Users95,03195,611619,318655,408 Wholesale - Sales to Resellers55,84154,902258,812244,275 Total propane gallons sales150,872150,513878,130899,683(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.(b) Non-cash stock and unit-based compensation charges consist of the following:Three months ended Twelve months endedJuly 31July 312012201120122011 Operating expense$ 795$ (75)$ 2,747$ 3,757 General and administrative expense3,181(146)6,0969,731 Total$ 3,976$ (221)$ 8,843$ 13,488(c) Adjusted EBITDA is calculated as earnings (loss) before income tax expense(benefit), interest expense, depreciation and amortization expense, loss on extinguishment of debt, non-cash employee stock ownership plan compensation charge, non-cash stock and unit-based compensation charge, loss on disposal of assets and other, other income, net, nonrecurring severance costs, nonrecurring litigation reserve and related legal fees and net earnings (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.(d) 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 accounts receivable securitization facility.(e) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.(f) Management considers Distributable cash flow to equity investors a meaningful non-GAAP measure of the partnership's ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow to equity investors, as management defines it, may not be comparable to distributable cash flow or similarly titled measures used by other corporations and partnerships. FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(in thousands, except unit data)(unaudited)ASSETSJuly 31, 2012July 31, 2011Current Assets: Cash and cash equivalents$ 8,429$ 7,437 Accounts and notes receivable, net (including $121,812 and $112,509 of accounts receivable pledged as collateral at July 31, 2012 and July 31, 2011, respectively)124,004159,532 Inventories127,598136,139 Prepaid expenses and other current assets29,31523,885 Total Current Assets289,346326,993Property, plant and equipment, net626,551642,205Goodwill248,944248,944Intangible assets, net189,118204,136Other assets, net43,32038,308 Total Assets$ 1,397,279$ 1,460,586LIABILITIES AND PARTNERS' CAPITAL(DEFICIT)Current Liabilities: Accounts payable$ 47,824$ 67,541 Short-term borrowings95,73064,927 Collateralized note payable74,00061,000 Other current liabilities122,667104,813 Total Current Liabilities340,221298,281Long-term debt (a)1,059,0851,050,920Other liabilities25,49923,068Contingencies and commitments--Partners' Capital(Deficit): Common unitholders (79,006,619 and 75,966,353 units outstanding at July 31, 2012 and July 31, 2011, respectively)43,701139,614 General partner unitholder (798,047 and 767,337 units outstanding at July 31, 2012 and July 31, 2011, respectively)(59,630)(58,660) Accumulated other comprehensive income (loss)(13,159)4,633 Total Ferrellgas Partners, L.P. Partners' Capital(Deficit)(29,088)85,587 Noncontrolling Interest1,5622,730 Total Partners' Capital(Deficit)(27,526)88,317 Total Liabilities and Partners' Capital(Deficit)$ 1,397,279$ 1,460,586a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $182 million of 8.625% notes which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P. SOURCE Ferrellgas Partners, L.P.