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Investor Alert

press release

March 8, 2021, 4:30 p.m. EST

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

  • 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. ("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 .

COMTEX_382357520/2471/2021-03-08T16:30:08

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