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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.

/EIN News/ -- 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 .            
                         


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