Ferrellgas Partners, L.P. Reports Results for Third Quarter

OVERLAND PARK, Kan., June 08, 2016 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its third fiscal quarter ended April 30, 2016. The Company reported Net earnings attributable to Ferrellgas Partners, L.P. of $18.7 million, compared to $35.8 million for the quarter ended April 30, 2015.

Adjusted EBITDA was $108.0 million, an increase of 12% over the same quarter last year, including $25.2 million of Adjusted EBITDA from the Bridger Logistics acquisition which was completed in June of 2015.

“Like many in our industry, we continue to be impacted by the extremely warm temperatures nationwide, and the downturn in the commodities market, including lower crude oil prices and project delays and cancellations,” said Stephen L. Wambold, President and Chief Executive Officer. “We experienced an average of 18% warmer weather than normal during the quarter, which reduced heating needs across all our geographies and significantly drove down propane segment volumes and revenues. Notwithstanding these operating conditions, we are pleased to have delivered a 12% year-over-year increase in Adjusted EBITDA.”

Mr. Wambold continued, “Bridger continues to perform well, providing gross profits and adjusted EBITDA in our third quarter that more than offset decreases in our water solutions and propane segments. Importantly, we remain focused on reducing expenses and continue to evaluate value-enhancing organic and external growth opportunities to drive growth and mitigate the impact of the challenging operating environment. We expect our distributable cash flow coverage to rebound to more than 1.0x by the end of 2016, with leverage dropping below 5.0x. We continue to execute against our strategic plan and remain confident that we have the initiatives in place to create value for all Ferrellgas unitholders.”

Continued strong expense controls in the Propane and related equipment sales segment and strong results from the Midstream Crude Oil segment helped offset the impact of elevated temperatures, which were 18% warmer than normal and 21% warmer than the prior year period.

Even though there were strong expense controls, due to the Bridger Transaction, Operating expense and General and administrative expense for the third fiscal quarter increased to $115.1 million and $12.4 million respectively.

Interest expense totaled $34.4 million for the third fiscal quarter, compared to $23.5 in the prior year period, primarily due to $500 million of notes issued in connection with the Bridger acquisition in June 2015.

Net earnings for the quarter were $18.9 million, or $0.19 per common unit, compared to net earnings of $36.2 million, or $0.43 per common unit, in the prior year period. The decrease in net earnings is primarily related to the impact of warm weather on our propane and related equipment sales segment and the increases in Depreciation and amortization expense and interest expense both primarily related to the acquisition of Bridger.

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, and provides midstream services to major energy companies in the United States. 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 September 29, 2015. 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 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, 2015, in the Form 10-Q of Ferrellgas Partners, L.P., Ferrellgas Partners Finance Corp., Ferrellgas, L.P., and Ferrellgas Finance Corp. for the quarters ended October 31, 2015, January 31, 2016 and April 30, 2016 and in other documents filed from time to time by these entities with the Securities and Exchange Commission.


FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)


ASSETS	April 30, 2016			July 31, 2015

Current Assets:
Cash and cash equivalents	$	6,266		$	7,652
Accounts and notes receivable, net (including $134,538 and 123,791 of
accounts receivable pledged as collateral at April 30, 2016
and July 31, 2015, respectively)		192,704			196,918
Inventories		87,739			96,754
Prepaid expenses and other current assets		35,857			64,285
Total Current Assets		322,566			365,609

Property, plant and equipment, net		981,453			965,217
Goodwill		446,333			478,747
Intangible assets, net		551,372			580,043
Other assets, net		70,280			74,440
Assets held for sale		845			-
Total Assets	$	2,372,849		$	2,464,056


LIABILITIES AND PARTNERS' CAPITAL

Current Liabilities:
Accounts payable	$	78,063		$	83,974
Short-term borrowings		9,071			75,319
Collateralized note payable		77,000			70,000
Other current liabilities		161,394			180,687
Total Current Liabilities		325,528			409,980

Long-term debt (a)		1,960,331			1,804,392
Other liabilities		33,347			41,975
Contingencies and commitments

Partners' Capital:
Common unitholders (98,002,665 and 100,376,789 units outstanding at
April 30, 2016 and July 31, 2015)		122,740			299,730
General partner unitholder (989,926 and 1,013,907 units outstanding at
April 30, 2016 and July 31, 2015)		(58,829	)		(57,042	)
Accumulated other comprehensive loss		(12,709	)		(38,934	)
Total Ferrellgas Partners, L.P. Partners' Capital		51,202			203,754
Noncontrolling Interest		2,441			3,955
Total Partners' Capital		53,643			207,709
Total Liabilities and Partners' Capital	$	2,372,849		$	2,464,056

(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.


FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, NINE AND TWELVE MONTHS ENDED APRIL 30, 2016 AND 2015
(in thousands, except per unit data)
(unaudited)
	Three months ended						Nine months ended						Twelve months ended
	April 30						April 30						April 30
		2016			2015			2016			2015			2016			2015
Revenues:
Propane and other gas liquids sales	$	338,929		$	445,667		$	961,086		$	1,400,895		$	1,217,207		$	1,751,452
Midstream operations		105,424			5,293			487,427			20,362			574,254			27,797
Other		65,119			81,591			181,343			220,622			220,906			261,660
Total revenues		509,472			532,551			1,629,856			1,641,879			2,012,367			2,040,909

Cost of product sold:
Propane and other gas liquids sales		152,261			253,684			448,841			849,190			576,875			1,073,062
Midstream operations		71,852			1,877			373,899			6,064			444,425			8,034
Other		41,203			57,709			111,425			147,672			134,450			172,411

Gross profit		244,156			219,281			695,691			638,953			856,617			787,402

Operating expense		115,140			106,883			346,584			316,913			461,953			429,474
Depreciation and amortization expense		38,352			23,324			112,698			70,576			140,701			93,007
General and administrative expense		12,354			8,252			36,656			29,701			63,386			40,614
Equipment lease expense		7,244			6,347			21,554			17,674			28,153			22,441
Non-cash employee stock ownership plan compensation charge		9,978			8,566			18,375			16,728			26,360			28,128
Non-cash stock-based compensation charge (a)		1,091			3,271			6,757			19,701			13,038			28,027
Goodwill impairment charge		-			-			29,316			-			29,316			-
Loss on disposal of assets		5,779			2,203			23,220			4,578			25,741			7,638

Operating income		54,218			60,435			100,531			163,082			67,969			138,073

Interest expense		(34,371	)		(23,510	)		(102,889	)		(71,797	)		(131,488	)		(93,927	)
Other income (expense), net		331			212			(89	)		(415	)		(24	)		(1,392	)

Earnings (loss) before income taxes		20,178			37,137			(2,447	)		90,870			(63,543	)		42,754

Income tax expense (benefit)		1,260			917			1,446			1,448			(317	)		1,573

Net earnings (loss)		18,918			36,220			(3,893	)		89,422			(63,226	)		41,181

Net earnings (loss) attributable to noncontrolling interest (b)		233			408			88			1,027			(470	)		581

Net earnings (loss) attributable to Ferrellgas Partners, L.P.		18,685			35,812			(3,981	)		88,395			(62,756	)		40,600

Less: General partner's interest in net earnings (loss)		187			358			(40	)		884			(628	)		406

Common unitholders' interest in net earnings (loss)	$	18,498		$	35,454		$	(3,941	)	$	87,511		$	(62,128	)	$	40,194

Earnings (loss) Per Unit
Basic and diluted net earnings (loss) per common unitholders' interest	$	0.19		$	0.43		$	(0.04	)	$	1.06		$	(0.64	)	$	0.49

Weighted average common units outstanding		98,002.7			82,717.6			98,911.2			82,536.1			96,899.5			82,200.8


Supplemental Data and Reconciliation of Non-GAAP Items:

	Three months ended						Nine months ended						Twelve months ended
	April 30						April 30						April 30
		2016			2015			2016			2015			2016			2015


Net earnings (loss) attributable to Ferrellgas Partners, L.P.	$	18,685		$	35,812		$	(3,981	)	$	88,395		$	(62,756	)	$	40,600
Income tax expense (benefit)		1,260			917			1,446			1,448			(317	)		1,573
Interest expense		34,371			23,510			102,889			71,797			131,488			93,927
Depreciation and amortization expense		38,352			23,324			112,698			70,576			140,701			93,007
EBITDA		92,668			83,563			213,052			232,216			209,116			229,107
Non-cash employee stock ownership plan compensation charge		9,978			8,566			18,375			16,728			26,360			28,128
Non-cash stock based compensation charge (a)		1,091			3,271			6,757			19,701			13,038			28,027
Goodwill impairment charge		-			-			29,316			-			29,316			-
Loss on disposal of assets		5,779			2,203			23,220			4,578			25,741			7,638
Other income (expense), net		(331	)		(212	)		89			415			24			1,392
Change in fair value of contingent consideration (included in operating expense)		-			-			(100	)		(6,300	)		(100	)		(1,300	)
Severance costs ($396 and $1,201 included in operating costs for the three and nine months ended period
April 30, 2016 and $73 and $124 included in general and administrative costs for the three and nine months
ended period April 30, 2016)		469			-			1,325			-			1,325			-
Litigation accrual and related legal fees associated with a
class action lawsuit (included in general and administrative expense)		-			83			-			806			-			1,133
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives		(1,915	)		(1,609	)		2,993			(1,609	)		7,014			(1,609	)
Acquisition and transition expenses (included in general and administrative expense)		14			-			99			-			16,472			-
Net earnings (loss) attributable to noncontrolling interest (b)		233			408			88			1,027			(470	)		581
Adjusted EBITDA (c)		107,986			96,273			295,214			267,562			327,836			293,097
Net cash interest expense (d)		(32,849	)		(22,422	)		(99,256	)		(68,599	)		(126,807	)		(90,778	)
Maintenance capital expenditures (e)		(4,159	)		(5,151	)		(13,588	)		(14,863	)		(18,337	)		(19,191	)
Cash paid for taxes		(427	)		(67	)		(432	)		(333	)		(811	)		(746	)
Proceeds from asset sales		3,096			1,331			5,972			4,060			7,817			5,317
Distributable cash flow to equity investors (f)		73,647			69,964			187,910			187,827			189,698			187,699
Distributable cash flow attributable to general partner and non-controlling interest		1,473			1,400			3,758			3,757			3,793			3,754
Distributable cash flow attributable to common unitholders		72,174			68,564			184,152			184,070			185,905			183,945
Less: Distributions paid to common unitholders		50,267			41,359			151,933			124,074			193,292			164,688
Distributable cash flow excess/(shortage)	$	21,907		$	27,205		$	32,219		$	59,996		$	(7,387	)	$	19,257

Propane gallons sales
Retail - Sales to End Users		164,713			178,583			465,146			518,726			555,201			611,942
Wholesale - Sales to Resellers		58,645			67,823			169,992			211,068			228,989			272,616
Total propane gallons sales		223,358			246,406			635,138			729,794			784,190			884,558

Salt water volume - Midstream operations (barrels processed)		4,024			4,515			12,980			13,234			16,781			15,734
Crude oil hauled - Midstream operations (barrels)		16,215						64,824						75,271
Crude oil sold - Midstream operations (barrels)		1,866			53			4,969			175			5,290

(a) Non-cash stock-based compensation charges consist of the following:

	Three months ended						Nine months ended						Twelve months ended
	April 30						April 30						April 30
Operating expense		2016			2015			2016			2015			2016			2015
General and administrative expense	$	131		$	621		$	883		$	4,233		$	1,825		$	6,065
Total		960			2,650			5,874			15,468			11,213			21,962
	$	1,091		$	3,271		$	6,757		$	19,701		$	13,038		$	28,027

(b) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
(c) Adjusted EBITDA is calculated as net earnings (loss) attributable to Ferrellgas Partners, L.P., income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, goodwill impairment charge, loss on disposal of assets, other income (expense), net, change in fair value of contingent consideration, severance costs, litigation accrual and related legal fees associated with a class action lawsuit, unrealized (non-cash) losses (gains) on changes in fair value of derivatives, acquisition and transition expenses 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 expense, 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 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.

The following table includes a reconciliation of forecasted net earnings attributable to Ferrellgas Partners, L.P. to forecasted Adjusted EBITDA for the fiscal year ending July 31, 2016.





																Forecast
																Fiscal Year
																Ending
																July 31,
																	2016
Net earnings attributable to Ferrellgas Partners, L.P. (estimate) (g)																	(14,500	)
Interest expense (estimate)																	136,000
Income tax expense (estimate)																	300
Depreciation and amortization expense (estimate)																	150,100
Non-cash employee stock ownership plan compensation charge (estimate)																	27,400
Non-cash stock based compensation charge (estimate)																	13,000
Loss on disposal of assets (estimate)																	24,650
Change in fair value of contingent consideration (included in operating expense)																	(100	)
Severance costs																	1,350
Goodwill impairment charge																	29,300
Adjusted EBITDA (h)																	367,500

(g) Represents estimated net earnings attributable to Ferrellgas Partners, L.P. after adjusting for change in fair value of gains and losses on commodity and interest rate derivative instruments not associated with current-period transactions. It is impracticable to determine actual gains and losses on these instruments not associated with current-period transactions that will be reported in GAAP net income as such gains and losses will depend upon future changes in commodity prices and interest rates which cannot be forecasted.

(h) Represents the midpoint of Adjusted EBITDA guidance range for fiscal 2016.

Ferrellgas Partners, L.P. Reports Results for Third Quarter Fiscal 2016

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