OVERLAND PARK, Kan., March 11, 2015 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) today reported strong results for fiscal 2015's second quarter ended January 31, 2015, despite temperatures being 9% warmer than a year ago and 4% warmer than normal.
For the second year in a row, the company posted record-setting adjusted EBITDA in its second quarter, with this year's figure reaching $136.9 million. Distributable cash flow (DCF) to equity investors in the quarter was $110.3 million, producing DCF coverage of 1.16 x. During the last 12 months, the partnership generated $27 million of excess cash flow to fund organic and acquisitive growth. Net earnings for the second quarter climbed 41% to $86.4 million, or $1.02 per common unit, from $61.1 million, or $0.76 per common unit primarily due to a loss of $20.9 million for extinguishment of debt in the prior year period that was not repeated.
"We're quite pleased with our second-quarter results," commented President and Chief Executive Officer Steve Wambold. "Improved propane margins and lower expenses in our retail operations more than offset the negative effects of Mother Nature and the effect lower commodity costs had on our midstream operations. We're seeing the strategic initiatives we've undertaken over the last three years targeting operational discipline and flexibility having their desired effect in our propane operations. We were also buoyed by Blue Rhino's continued positive momentum."
Further, the partnership reiterated its full-year adjusted EBITDA guidance of $300 million to $320 million. Driven by widespread cold temperatures in February and early March and ongoing cost discipline, Ferrellgas posted strong February results. "We're off to a strong start to our third quarter," continued Wambold, "and we are optimistic about an extended heating season and its impact on demand."
While retail propane sales, adversely affected by warmer weather, declined to 216 million gallons from 247 million gallons the year before, margins significantly improved as the cost of propane decreased dramatically from prior year.
Blue Rhino's performance exceeded expectations in the second quarter with record volume, up 3% over year-ago levels, and solid same-store gains registered across convenience, drug, grocery and hardware stores.
Operating expense of $107.1 million was down more than 8% from the year-ago level, benefiting from both the lower cost of fuel and the operational ability to flex our expenses down in warmer periods. General and administrative expense declined 12% to $10.6 million. Interest expense was up 10% to $24.4 million, primarily attributable to merger and acquisition activity.
"The acquisition environment remains attractive," Wambold said. "and our pipeline has grown significantly in recent weeks. We remain committed to achieving our diversification strategy through accretive, complementary acquisitions, and we are aggressively but deliberately pursuing some excellent opportunities that fit our model."
For the first half of fiscal 2015, Adjusted EBITDA improved 5% to $171.3 million. Operating expense declined 4% to $210 million, while general and administrative expense decreased 6% to $21.5 million. Net earnings climbed to $53.2 million, or $0.63 per unit, from $36.1 million, or $0.45 per unit, the year before.
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, and provides midstream services to major energy companies in the United States. Ferrellgas employees indirectly own 22.8 million, or 27.5% of the outstanding 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 September 29, 2014. Investors can request a hard copy of this filling free of charge and obtain more information about the partnership online at www.ferrellgas.com.
This press release contains certain forward-looking statements that management believes to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management's control. You should read the Partnership's Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are adverse weather conditions, cost volatility and availability of propane, increased customer conservation measures, the capacity to transport propane to our market areas, and the impact of pending and future legal proceedings, political, economic and regulatory conditions in the U.S. and abroad. The Partnership undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today.
| FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES | ||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||
| FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2015 AND 2014 | ||||||
| (in thousands, except per unit data) | ||||||
| (unaudited) | ||||||
| Three months ended | Six months ended | Twelve months ended | ||||
| January 31 | January 31 | January 31 | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Revenues: | ||||||
| Propane and other gas liquids sales | $ 560,867 | $ 789,446 | $ 955,228 | $ 1,171,669 | $ 1,930,902 | $ 1,992,581 |
| Other | 105,106 | 80,237 | 154,100 | 113,044 | 299,573 | 245,825 |
| Total revenues | 665,973 | 869,683 | 1,109,328 | 1,284,713 | 2,230,475 | 2,238,406 |
| Cost of product sold: | ||||||
| Propane and other gas liquids sales | 330,692 | 551,506 | 595,506 | 810,260 | 1,241,634 | 1,312,628 |
| Other | 70,290 | 48,709 | 94,150 | 62,055 | 190,247 | 149,877 |
| Gross profit | 264,991 | 269,468 | 419,672 | 412,398 | 798,594 | 775,901 |
| Operating expense (including $(4,500), $(6,300) and $(1,300) of change in fair value of contingent consideration for the three, six and twelve month period ended January 31, 2015) | 107,147 | 116,743 | 210,030 | 219,709 | 436,514 | 427,735 |
| Depreciation and amortization expense | 23,943 | 20,643 | 47,252 | 40,858 | 90,596 | 82,576 |
| General and administrative expense | 10,621 | 12,095 | 21,449 | 22,876 | 44,556 | 45,939 |
| Equipment lease expense | 5,795 | 4,274 | 11,327 | 8,340 | 20,732 | 16,573 |
| Non-cash employee stock ownership plan compensation charge | 3,788 | 3,636 | 8,162 | 6,679 | 23,272 | 12,599 |
| Non-cash stock-based compensation charge (a) | 318 | 5,919 | 16,430 | 10,350 | 30,588 | 17,683 |
| Loss on disposal of assets | 1,414 | 1,337 | 2,375 | 1,694 | 7,167 | 9,724 |
| Operating income | 111,965 | 104,821 | 102,647 | 101,892 | 145,169 | 163,072 |
| Interest expense | (24,375) | (22,090) | (48,287) | (44,183) | (90,606) | (88,274) |
| Loss on extinguishment of debt | -- | (20,901) | -- | (21,202) | -- | (21,202) |
| Other income (expense), net | (178) | 57 | (627) | 273 | (1,379) | 506 |
| Earnings before income taxes | 87,412 | 61,887 | 53,733 | 36,780 | 53,184 | 54,102 |
| Income tax expense | 1,041 | 764 | 531 | 714 | 2,333 | 1,916 |
| Net earnings | 86,371 | 61,123 | 53,202 | 36,066 | 50,851 | 52,186 |
| Net earnings attributable to noncontrolling interest (b) | 913 | 659 | 619 | 445 | 678 | 688 |
| Net earnings attributable to Ferrellgas Partners, L.P. | 85,458 | 60,464 | 52,583 | 35,621 | 50,173 | 51,498 |
| Less: General partner's interest in net earnings | 11,955 | 3,663 | 526 | 356 | 502 | 515 |
| Common unitholders' interest in net earnings | $ 73,503 | $ 56,801 | $ 52,057 | $ 35,265 | $ 49,671 | $ 50,983 |
| Earnings Per Unit | ||||||
| Basic and diluted net earnings per common unitholders' interest | $ 0.89 | $ 0.72 | $ 0.63 | $ 0.45 | $ 0.61 | $ 0.64 |
| Dilutive effect of two-class method (c) | 0.13 | 0.04 | -- | -- | -- | -- |
| Adjusted net earnings per unit available to common unitholders | $ 1.02 | $ 0.76 | $ 0.63 | $ 0.45 | $ 0.61 | $ 0.64 |
| Weighted average common units outstanding | 82,716.9 | 79,129.4 | 82,448.3 | 79,102.6 | 81,337.7 | 79,083.1 |
| Supplemental Data and Reconciliation of Non-GAAP Items: | ||||||
| Three months ended | Six months ended | Twelve months ended | ||||
| January 31 | January 31 | January 31 | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Net earnings attributable to Ferrellgas Partners, L.P. | $ 85,458 | $ 60,464 | $ 52,583 | $ 35,621 | $ 50,173 | $ 51,498 |
| Income tax expense | 1,041 | 764 | 531 | 714 | 2,333 | 1,916 |
| Interest expense | 24,375 | 22,090 | 48,287 | 44,183 | 90,606 | 88,274 |
| Depreciation and amortization expense | 23,943 | 20,643 | 47,252 | 40,858 | 90,596 | 82,576 |
| EBITDA | 134,817 | 103,961 | 148,653 | 121,376 | 233,708 | 224,264 |
| Loss on extinguishment of debt | -- | 20,901 | -- | 21,202 | -- | 21,202 |
| Non-cash employee stock ownership plan compensation charge | 3,788 | 3,636 | 8,162 | 6,679 | 23,272 | 12,599 |
| Non-cash stock based compensation charge (a) | 318 | 5,919 | 16,430 | 10,350 | 30,588 | 17,683 |
| Loss on disposal of assets | 1,414 | 1,337 | 2,375 | 1,694 | 7,167 | 9,724 |
| Other income (expense), net | 178 | (57) | 627 | (273) | 1,379 | (506) |
| Change in fair value of contingent consideration | (4,500) | -- | (6,300) | -- | (1,300) | -- |
| Litigation accrual and related legal fees associated with a class action lawsuit | -- | -- | 723 | 1,325 | 1,147 | 1,668 |
| Net earnings attributable to noncontrolling interest (b) | 913 | 659 | 619 | 445 | 678 | 688 |
| Adjusted EBITDA (d) | 136,928 | 136,356 | 171,289 | 162,798 | 296,639 | 287,322 |
| Net cash interest expense (e) | (23,287) | (20,980) | (46,177) | (41,566) | (88,297) | (82,863) |
| Maintenance capital expenditures (f) | (4,624) | (4,446) | (9,712) | (8,583) | (18,802) | (16,123) |
| Cash paid for taxes | (6) | (178) | (266) | (178) | (904) | (683) |
| Proceeds from asset sales | 1,312 | 1,165 | 2,729 | 2,482 | 4,771 | 6,299 |
| Distributable cash flow to equity investors (g) | 110,323 | 111,917 | 117,863 | 114,953 | 193,407 | 193,952 |
| Distributable cash flow attributable to general partner and non-controlling interest | 2,206 | 2,238 | 2,357 | 2,299 | 3,868 | 3,879 |
| Distributable cash flow attributable to common unitholders | 108,117 | 109,679 | 115,506 | 112,654 | 189,539 | 190,073 |
| Less: Distributions paid to common unitholders | 41,359 | 39,573 | 82,715 | 79,109 | 162,922 | 158,179 |
| Distributable cash flow excess/(shortage) | $ 66,758 | $ 70,106 | $ 32,791 | $ 33,545 | $ 26,617 | $ 31,894 |
| Propane gallons sales | ||||||
| Retail - Sales to End Users | 215,996 | 246,929 | 340,143 | 372,181 | 619,320 | 663,425 |
| Wholesale - Sales to Resellers | 81,310 | 95,922 | 143,245 | 161,701 | 276,756 | 293,865 |
| Total propane gallons sales | 297,306 | 342,851 | 483,388 | 533,882 | 896,076 | 957,290 |
| Midstream operations (barrels processed) | 4,722 | -- | 8,719 | 11,219 | -- | |
| (a) Non-cash stock-based compensation charges consist of the following: | ||||||
| Three months ended | Six months ended | Twelve months ended | ||||
| January 31 | January 31 | January 31 | ||||
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |
| Operating expense | $ 67 | $ 1,539 | $ 3,612 | $ 2,337 | $ 6,610 | $ 3,424 |
| General and administrative expense | 251 | 4,380 | 12,818 | 8,013 | 23,978 | 14,259 |
| Total | $ 318 | $ 5,919 | $ 16,430 | $ 10,350 | $ 30,588 | $ 17,683 |
| (b) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. | ||||||
| (c) FASB guidance regarding participating securities and the two-class method requires the calculation of net earnings per common unitholders' interest for each period presented according to distributions declared and participation rights in undistributed earnings, as if all of the earnings or loss for the period had been distributed. In periods with undistributed earnings above certain levels, the calculation according to the two-class method results in an increased allocation of undistributed earnings to the general partner and a dilution of the earnings to the limited partners. Due to the seasonality of the propane business, the dilution effect of the guidance on the two-class method typically impacts only the three months ending January 31. This guidance did not result in a dilutive effect for the six and twelve months ended January 31, 2015 and 2014. | ||||||
| (d) Adjusted EBITDA is calculated as net earnings attributable to Ferrellgas Partners, L.P., income tax expense, interest expense, depreciation and amortization expense, loss on extinguishment of debt, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration, litigation accrual and related legal fees associated with a class action lawsuit 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 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. | ||||||
| (e) Net cash interest expense is the sum of interest expense less non-cash interest expense and other income (expense), net. This amount includes interest expense related to the accounts receivable securitization facility. | ||||||
| (f) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment. | ||||||
| (g) 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 equity investors. Distributable cash flow to equity investors, as management defines it, may not be comparable to distributable cash flow to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow 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. | ||||||
| FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except unit data) | ||
| (unaudited) | ||
| ASSETS | January 31, 2015 | July 31, 2014 |
| Current Assets: | ||
| Cash and cash equivalents | $ 12,356 | $ 8,289 |
| Accounts and notes receivable, net (including $256,112 and $159,003 of accounts receivable pledged as collateral at January 31, 2015 and July 31, 2014, respectively) | 273,645 | 178,602 |
| Inventories | 132,273 | 145,969 |
| Prepaid expenses and other current assets | 66,615 | 32,071 |
| Total Current Assets | 484,889 | 364,931 |
| Property, plant and equipment, net | 611,008 | 611,787 |
| Goodwill | 285,617 | 273,210 |
| Intangible assets, net | 308,132 | 276,171 |
| Other assets, net | 57,391 | 46,171 |
| Total Assets | $ 1,747,037 | $ 1,572,270 |
| LIABILITIES AND PARTNERS' DEFICIT | ||
| Current Liabilities: | ||
| Accounts payable | $ 101,191 | $ 69,360 |
| Short-term borrowings | 67,431 | 69,519 |
| Collateralized note payable | 175,000 | 91,000 |
| Other current liabilities | 147,627 | 125,161 |
| Total Current Liabilities | 491,249 | 355,040 |
| Long-term debt (a) | 1,343,463 | 1,292,214 |
| Other liabilities | 40,360 | 36,662 |
| Contingencies and commitments | ||
| Partners' Deficit: | ||
| Common unitholders (82,717,620 and 81,228,237 units outstanding at January 31, 2015 and July 31, 2014, respectively) | (22,412) | (57,893) |
| General partner unitholder (835,532 and 820,487 units outstanding at January 31, 2015 and July 31, 2014, respectively) | (60,295) | (60,654) |
| Accumulated other comprehensive income (loss) | (45,883) | 6,181 |
| Total Ferrellgas Partners, L.P. Partners' Deficit | (128,590) | (112,366) |
| Noncontrolling Interest | 555 | 720 |
| Total Partners' Deficit | (128,035) | (111,646) |
| Total Liabilities and Partners' Deficit | $ 1,747,037 | $ 1,572,270 |
| (a) 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. | ||