FGP
$5.69
Ferrellgas Partners LP
($.26)
(4.37%)
Earnings Details
4th Quarter July 2016
Wednesday, September 28, 2016 7:05:09 AM
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Summary

Ferrellgas Partners LP (FGP) Recent Earnings

Ferrellgas Partners LP (FGP) reported a 4th Quarter July 2016 loss of $2.51 per share on revenue of $409.5 million. The consensus estimate was a loss of $0.45 per share on revenue of $437.5 million. Revenue grew 7.1% on a year-over-year basis.

Ferrellgas Partners LP is engaged in the retail distribution of propane and related equipment and midstream operations.

Results
Reported Earnings
($2.51)
Earnings Whisper
-
Consensus Estimate
($0.45)
Reported Revenue
$409.5 Mil
Revenue Estimate
$437.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Ferrellgas Partners, L.P. Reports Fiscal 2016 Earnings

Ferrellgas Partners, L.P. (FGP) ("Ferrellgas" or the "Company") today reported financial results for the full fiscal year ended July 31, 2016.

The Company reported a net loss attributable to Ferrellgas Partners, L.P. of $665.4 million, compared to net earnings attributable to Ferrellgas Partners, L.P. of $29.6 million in the full fiscal year 2015. The net loss for the current fiscal year includes a one-time non-cash impairment charge of $628.8 million in our Midstream operations - Crude oil Logistics segment and a one-time non-cash impairment charge of $29.3 million in our Other midstream operations - water solutions reporting unit.

The Company also announced Adjusted EBITDA of $344.7 million for fiscal 2016, an increase of 14.8% from $300.2 million in the previous year.

Continued strong expense controls in the Propane and related equipment sales segment helped offset the impact of elevated temperatures, which were 19% warmer than normal and 16% warmer than the prior year period. Interest expense totaled $137.9 million for the full fiscal year in 2016, compared to $100.4 million in the prior year, primarily due to $500 million of notes issued in connection with the Bridger acquisition in June 2015.

"As we highlighted last quarter, record temperatures across the nation continue to have an adverse impact on the propane sector of our company and low oil prices have seriously damaged our midstream sector." said James E. Ferrell, Interim President and Chief Executive Officer. "In particular, unusually warm winters over the past two years drove down propane sales across all our geographies, and low crude oil prices have negatively impacted our midstream logistics business."

Because of the increase in debt incurred to fund the Bridger acquisition, the recently announced Jamex settlement and the effects of the record warm temperatures in fiscal 2016, our leverage ratio has increased to levels approaching the 5.5x limit provided in our secured credit facility and accounts receivable securitization facility. On September 27, 2016, Ferrellgas obtained an amendment under the secured credit facility and accounts receivable securitization facility pursuant to which the maximum leverage ratio is increased to a range of 5.95x to 6.05x over the next six quarters.

Further, the Company is focused on the reduction of its debt and leverage ratio. One tactic under consideration is a reduction in our quarterly distribution, which will continue to be determined by the board of directors of our general partner on a quarter-by-quarter basis. The distribution for the first quarter of fiscal 2017 has not yet been determined, but our board believes that it is possible that the annual distribution rate may be reduced from $2.05 to approximately $1.00 per common unit. Any such reduction, together with any other debt-reducing actions taken would likely remain in effect until our leverage ratio reaches a level that we deem appropriate for our business.

Mr. Ferrell stated, "In light of the recent developments related to our Jamex settlement, a prolonged downturn in the midstream sector, as well as two full years of erratic weather patterns driving down propane demand, we are taking prudent action at this time to preserve capital and improve the Company’s financial position. We are committed to strengthening our balance sheet by de-levering in a meaningful way. We are confident this action will support the long-term interests of our unitholders, employee-owners and other stakeholders, and we look forward to growth in distribution when our leverage ratio and debt return to more reasonable levels."

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 28, 2016. 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, 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
July 31, 2016
July 31, 2015
Current Assets:
Cash and cash equivalents
$
4,965
$
7,652
Accounts and notes receivable, net (including $106,464 and 123,791 of
accounts receivable pledged as collateral at July 31, 2016
and July 31, 2015, respectively)
149,583
196,918
Inventories
90,594
96,754
Prepaid expenses and other current assets
39,973
64,285
Total Current Assets
285,115
365,609
Property, plant and equipment, net
774,680
965,217
Goodwill
256,103
478,747
Intangible assets, net
280,185
580,043
Other assets, net (a)
86,443
48,113
Assets held for sale
780
-
Total Assets
$
1,683,306
$
2,437,729
LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT)
Current Liabilities:
Accounts payable
$
67,928
$
83,974
Short-term borrowings
101,291
75,319
Collateralized note payable
64,000
70,000
Other current liabilities
128,958
180,687
Total Current Liabilities
362,177
409,980
Long-term debt (a) (b)
1,941,335
1,778,065
Other liabilities
31,574
41,975
Contingencies and commitments
Partners’ Capital (Deficit):
Common unitholders (98,002,665 and 100,376,789 units outstanding at
July 31, 2016 and July 31, 2015)
(570,754
)
299,730
General partner unitholder (989,926 and 1,013,907 units outstanding at
July 31, 2016 and July 31, 2015)
(65,835
)
(57,042
)
Accumulated other comprehensive loss
(10,468
)
(38,934
)
Total Ferrellgas Partners, L.P. Partners’ Capital (Deficit)
(647,057
)
203,754
Noncontrolling Interest
(4,723
)
3,955
Total Partners’ Capital (Deficit)
(651,780
)
207,709
Total Liabilities and Partners’ Capital
$
1,683,306
$
2,437,729
(a) Reflects the reclassification of debt issuance costs within Long-term debt that was previously reported within Other assets, net.
(b) 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 AND TWELVE MONTHS ENDED JULY 31, 2016 AND 2015
(in thousands, except per unit data)
(unaudited)
Three months ended
Twelve months ended
July 31
July 31
2016
2015
2016
2015
Revenues:
Propane and other gas liquids sales
$
241,282
$
256,121
$
1,202,368
$
1,657,016
Midstream operations
137,811
86,827
625,238
107,189
Other
30,418
39,563
211,761
260,185
Total revenues
409,511
382,511
2,039,367
2,024,390
Cost of sales:
Propane and other gas liquids sales
115,592
128,034
564,433
977,224
Midstream operations
97,335
70,526
471,234
76,590
Other
14,812
23,025
126,237
170,697
Gross profit
181,772
160,926
877,463
799,879
Operating expense
111,326
115,369
457,910
432,282
Depreciation and amortization expense
37,815
28,003
150,513
98,579
General and administrative expense
11,923
26,730
48,579
56,431
Equipment lease expense
7,279
6,599
28,833
24,273
Non-cash employee stock ownership plan compensation charge
9,220
7,985
27,595
24,713
Non-cash stock-based compensation charge (a)
2,567
6,281
9,324
25,982
Asset impairments
628,802
-
658,118
-
Loss on asset sales and disposal
7,615
2,521
30,835
7,099
Operating income (loss)
(634,775 )
(32,562
)
(534,244
)
130,520
Interest expense
(35,048
)
(28,599
)
(137,937
)
(100,396
)
Other income (expense), net
199
65
110
(350
)
Earnings (loss) before income taxes
(669,624 )
(61,096
)
(672,071
)
29,774
Income tax benefit
(1,482
)
(1,763
)
(36
)
(315
)
Net earnings (loss)
(668,142 )
(59,333
)
(672,035
)
30,089
Net earnings (loss) attributable to noncontrolling interest (b)
(6,708
)
(558
)
(6,620
)
469
Net earnings (loss) attributable to Ferrellgas Partners, L.P.
(661,434 )
(58,775
)
(665,415
)
29,620
Less: General partner’s interest in net earnings (loss)
(6,614
)
(588
)
(6,654
)
296
Common unitholders’ interest in net earnings (loss)
$
(654,820 )
$
(58,187
)
$
(658,761
)
$
29,324
Earnings (loss) Per Unit
Basic and diluted net earnings (loss) per common unitholders’ interest
$
(6.68
)
$
(0.64
)
$
(6.68
)
$
0.35
Weighted average common units outstanding
98,002.7
90,908.0
98,682.8
84,646.2
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended
Twelve months ended
July 31
July 31
2016
2015
2016
2015
Net earnings (loss) attributable to Ferrellgas Partners, L.P.
$
(661,434 )
$
(58,775
)
$
(665,415
)
$
29,620
Income tax benefit
(1,482
)
(1,763
)
(36
)
(315
)
Interest expense
35,048
28,599
137,937
100,396
Depreciation and amortization expense
37,815
28,003
150,513
98,579
EBITDA
(590,053 )
(3,936
)
(377,001
)
228,280
Non-cash employee stock ownership plan compensation charge
9,220
7,985
27,595
24,713
Non-cash stock based compensation charge (a)
2,567
6,281
9,324
25,982
Asset impairments
628,802
-
658,118
-
Loss on asset sales and disposal
7,615
2,521
30,835
7,099
Other income (expense), net
(199
)
(65
)
(110
)
350
Change in fair value of contingent consideration (included in operating expense)
-
-
(100
)
(6,300
)
Severance costs ($128 and $1,329 included in operating costs for the three and twelve months ended period
July 31, 2016 and $0 and $124 included in general and administrative costs for the three and twelve months
ended period July 31, 2016)
128
-
1,453
-
Litigation accrual and related legal fees associated with a class action lawsuit (included in general
and administrative expense)
-
-
-
806
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(7) and $1,585 included in operating
expense for the three and twelve months ended July 31, 2016 and $4,021 and $2,412 for the three and twelve
months ended July 31, 2015. Also includes $(1,849) and $(448) included in midstream operations cost of sales
for the three and twelve months ended July 31, 2016, respectively.
(1,856
)
4,021
1,137
2,412
Acquisition and transition expenses (included in general and administrative expense)
0
16,373
99
16,373
Net earnings (loss) attributable to noncontrolling interest (b)
(6,708
)
(558
)
(6,620
)
469
Adjusted EBITDA (c)
49,516
32,622
344,730
300,184
Net cash interest expense (d)
(33,604
)
(27,551
)
(132,860
)
(96,150
)
Maintenance capital expenditures (e)
(3,549
)
(4,749
)
(17,137
)
(19,612
)
Cash paid for taxes
(345
)
(379
)
(777
)
(712
)
Proceeds from asset sales
51
1,845
6,023
5,905
Distributable cash flow to equity investors (f)
12,069
1,788
199,979
189,615
Distributable cash flow attributable to general partner and non-controlling interest
241
35
4,000
3,792
Distributable cash flow attributable to common unitholders
11,828
1,753
195,979
185,823
Less: Distributions paid to common unitholders
50,226
41,359
202,119
165,433
Distributable cash flow excess/(shortage)
$
(38,398
)
$
(39,606
)
$
(6,140
)
$
20,390
Propane gallons sales
Retail - Sales to End Users
87,625
90,055
552,771
608,781
Wholesale - Sales to Resellers
56,129
58,997
226,121
270,065
Total propane gallons sales
143,754
149,052
778,892
878,846
Contact:
Jim Saladin, Media Relations - jimsaladin@ferrellgas.com, 913-661-1833
Jack Herrold, Investor Relations - jackherrold@ferrellgas.com, 913-661-1851

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