OVERLAND PARK, Kan., March 7 /PRNewswire-FirstCall/ -- Ferrellgas
Partners, L.P. (NYSE: FGP), one of the nation's largest propane distributors,
today reported for the second fiscal quarter ended January 31 that Adjusted
EBITDA declined slightly to $103.2 million from $111.5 million for the same
quarter in the prior fiscal year, while net earnings were $51.2 million
compared to $59.2 million for the same period in the prior fiscal year. The
lower results were in part caused by the quarter's hedging performance.
Propane sales volume in the second fiscal quarter decreased to 267 million
gallons from 276 million gallons for the same fiscal quarter in the prior
year. During the fiscal quarter, nationwide, temperatures were 3 percent
warmer than normal, but 8 percent cooler than the same period in the prior
fiscal year.
Chairman and Chief Executive Officer James Ferrell pointed out, "The
second-quarter performance masked the underlying strength of our operations.
During the quarter operating expenses, driven by our operating platform,
decreased nearly 9 percent, with certain variable expenses being flexed
significantly in reaction to the lesser demand."
Ferrell also explained, "The unprecedented sharp increase in propane costs
was responsible for reduced results in our risk management operations. We
have already taken steps to reduce our exposure in this area."
Revenues for the fiscal second quarter increased 15 percent to
$764 million, from $662.8 million in the prior fiscal year period. Gross
profit for the period totaled $211 million, down from a near-record
$227.5 million in the same period the fiscal year before. On a
quarter-over-quarter basis, general and administrative expenses increased to
$11.1 million from nearly $10 million reflecting nonrecurring costs, while
equipment lease expense improved to $6.1 million from $6.5 million.
Looking ahead, President and Chief Operating Officer Steve Wambold
observed, "Our strategies remain on track and in the right direction with our
relatively new operating platform producing ongoing benefits. We fully expect
ongoing benefits, for example, we have driven the percentage of profitable
accounts to more than 80 percent and will continue to use the system to
identify unprofitable accounts and address them. Our Blue Rhino branded tank
exchange program is extremely healthy and we intend to add more than
1,100 locations by the end of July, positioning the partnership to do well
during the all-important summer season." Wambold concluded, "In addition, we
expect general and administrative expenses to return to more normal levels in
the third fiscal quarter."
The following is a comparison for the first half of fiscal 2008, as
compared to the first half of fiscal 2007. Net earnings and Adjusted EBITDA
were $28.3 million and $126.5 million, respectively, compared with
$29.7 million and $131.2 million, respectively. Revenues grew to $1.2 billion
from $1.0 billion, while gross profit was $342.5 million compared with
$354.6 million. Propane sales volumes were 408 million gallons, down from
437 million gallons. Operating and general and administrative expenses were
$181.5 million and $22.9 million, respectively, compared with $189.9 million
and $21 million. Equipment lease expense was $12.5 million, down from
$13.1 million.
Ferrellgas Partners, L.P., through its operating partnership. Ferrellgas,
L.P., serves approximately one million customers in all 50 states, the
District of Columbia and Puerto Rico. Ferrellgas employees indirectly own more
than 20 million common units of the partnership through an employee stock
ownership plan. More information about the partnership can be found online at
http://www.ferrellgas.com.
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 end July 31,
2007, and 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 January 31, 2008 July 31, 2007
Current Assets:
Cash and cash equivalents $37,018 $20,685
Accounts and notes receivable, net 169,074 118,320
Inventories 181,421 113,807
Prepaid expenses and other current
assets 26,727 16,772
Total Current Assets 414,240 269,584
Property, plant and equipment, net 696,586 720,190
Goodwill 249,145 249,481
Intangible assets, net 235,644 246,283
Other assets, net 19,636 17,865
Total Assets $1,615,251 $1,503,403
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $135,302 $62,103
Short term borrowings 128,052 57,779
Other current liabilities (a) 100,430 107,199
Total Current Liabilities 363,784 227,081
Long-term debt (a) 1,017,865 1,011,751
Other liabilities 23,481 22,795
Contingencies and commitments - -
Minority interest 4,834 5,119
Partners' Capital:
Common unitholders (62,958,674 and
62,957,674 units outstanding at
January 2008 and July 2007, respectively) 261,153 289,075
General partner unitholder (635,946
and 635,936 units outstanding at
January 2008 and July 2007, respectively) (57,435) (57,154)
Accumulated other comprehensive income 1,569 4,736
Total Partners' Capital 205,287 236,657
Total Liabilities and Partners'
Capital $1,615,251 $1,503,403
(a) The principal difference between the Ferrellgas Partners, L.P.
balance sheet and that of Ferrellgas, L.P., is $268 million of 8 3/4%
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, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2008 AND 2007
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended
January 31, January 31,
2008 2007 2008 2007
Revenues:
Propane and other gas liquids
sales $684,456 $581,997 $1,043,391 $926,916
Other 79,512 80,776 115,493 112,270
Total revenues 763,968 662,773 1,158,884 1,039,186
Cost of product sold:
Propane and other gas liquids
sales 504,524 380,009 757,043 614,695
Other 48,422 55,301 59,382 69,921
Gross profit 211,022 227,463 342,459 354,570
Operating expense 91,020 99,844 181,479 189,855
Depreciation and amortization
expense 21,075 22,035 42,440 43,691
General and administrative
expense 11,115 9,963 22,908 21,048
Equipment lease expense 6,143 6,454 12,494 13,098
Employee stock ownership plan
compensation charge 3,072 2,739 6,246 5,580
Loss on disposal of assets and
other 3,680 3,492 6,067 6,495
Operating income 74,917 82,936 70,825 74,803
Interest expense (22,851) (22,329) (45,137) (44,709)
Interest income 181 920 998 1,890
Earnings before income taxes
and minority interest 52,247 61,527 26,686 31,984
Income tax expense - current 670 1,418 357 1,399
Income tax expense (benefit) -
deferred (h) (206) 254 (2,381) 483
Minority interest (a) 585 666 412 426
Net earnings 51,198 59,189 28,298 29,676
Net earnings available to
general partner 3,657 6,257 283 297
Net earnings available to
common unitholders $47,541 $52,932 $28,015 $29,379
Earnings Per Unit
Basic and diluted net earnings
available per common unit $0.76 $0.84 $0.44 $0.47
Dilutive effect of EITF 03-6
(b) 0.05 0.09 - -
Adjusted net earnings per unit
available to common
unitholders $0.81 $0.93 $0.44 $0.47
Weighted average common units
outstanding 62,958.7 62,884.2 62,958.7 62,561.4
Twelve months ended January 31,
2008 2007
Revenues:
Propane and other gas liquids sales $1,873,898 $1,691,057
Other 238,240 205,433
Total revenues 2,112,138 1,896,490
Cost of product sold:
Propane and other gas liquids sales 1,289,517 1,092,610
Other 146,684 133,902
Gross profit 675,937 669,978
Operating expense 372,462 377,889
Depreciation and amortization expense 86,132 85,918
General and administrative expense 46,730 46,270
Equipment lease expense 25,538 26,201
Employee stock ownership plan
compensation charge 11,891 10,933
Loss on disposal of assets and other 10,394 11,397
Operating income 122,790 111,370
Interest expense (88,381) (86,829)
Interest income 2,253 3,028
Earnings before income taxes and
minority interest 36,662 27,569
Income tax expense - current 2,532 3,469
Income tax expense (benefit)
- deferred (h) 122 1,237
Minority interest (a) 587 473
Net earnings 33,421 22,390
Net earnings available to general
partner 334 224
Net earnings available to common
unitholders $33,087 $22,166
Earnings Per Unit
Basic and diluted net earnings
available per common unit $0.53 $0.36
Dilutive effect of EITF 03-6 (b) - -
Adjusted net earnings per unit
available to common unitholders $0.53 $0.36
Weighted average common units
outstanding 62,956.1 61,609.7
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended
January 31, January 31,
2008 2007 2008 2007
Propane gallons 266,525 275,915 407,670 437,160
Net earnings $51,198 $59,189 $28,298 $29,676
Income tax expense (benefit) 464 1,672 (2,024) 1,882
Interest expense 22,851 22,329 45,137 44,709
Depreciation and amortization
expense 21,075 22,035 42,440 43,691
Interest income (181) (920) (998) (1,890)
EBITDA 95,407 104,305 112,853 118,068
Employee stock ownership plan
compensation charge 3,072 2,739 6,246 5,580
Unit and stock-based compensation
charge (c) 450 333 900 666
Loss on disposal of assets and other 3,680 3,492 6,067 6,495
Minority interest 585 666 412 426
Adjusted EBITDA (d) 103,194 111,535 126,478 131,235
Net cash interest expense (e) (24,115) (22,352) (46,098) (44,272)
Maintenance capital expenditures (f) (6,344) (5,735) (9,468) (9,719)
Cash paid for taxes (68) - (1,279) (1,765)
Proceeds from asset sales 3,272 1,882 6,250 5,506
Distributable cash flow to equity
investors (g) $75,939 $85,330 $75,883 $80,985
Twelve months ended January 31,
2008 2007
Propane gallons 775,242 795,351
Net earnings $33,421 $22,390
Income tax expense (benefit) 2,654 4,706
Interest expense 88,381 86,829
Depreciation and amortization
expense 86,132 85,918
Interest income (2,253) (3,028)
EBITDA 208,335 196,815
Employee stock ownership plan
compensation charge 11,891 10,933
Unit and stock-based compensation
charge (c) 1,123 1,294
Loss on disposal of assets and
other 10,394 11,397
Minority interest 587 473
Adjusted EBITDA (d) 232,330 220,912
Net cash interest expense (e) (90,846) (87,240)
Maintenance capital expenditures
(f) (16,684) (16,663)
Cash paid for taxes (3,256) (2,680)
Proceeds from asset sales 10,574 10,266
Distributable cash flow to equity
investors (g) $132,118 $124,595
(a) Amounts allocated to the general partner for its 1.0101% interest in
the operating partnership, Ferrellgas, L.P.
(b) Emerging Issues Task Force ("EITF") 03-6 "Participating Securities
and the Two-Class Method under FASB Statement No. 128, Earnings per
Share," requires the calculation of net earnings per limited partner
unit for each period presented according to distributions declared
and participation rights in undistributed earnings, as if all of the
earnings for the period had to be 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
earnings to the limited partners. Due to the seasonality of the
propane business, the dilution effect of EITF 03-6 on net earnings
per limited partner unit will typically only impact the three months
ending January 31. EITF 03-6 did not have a dilutive effect on the
six and twelve months ended January 31, 2008 and 2007.
(c) Statement of Financial Accounting Standards ("SFAS") No. 123( R),
"Share-Based Payment" requires that the cost resulting from all
share-based payment transactions be recognized in the financial
statements. Share-based payment transactions resulted in a non-cash
compensation charge of $0.2 million and $0.1 million to operating
expense, for the three months ended January 31, 2008 and 2007,
respectively, and $0.3 million and $0.2 million to operating expense
for the six months ended January 31, 2008 and 2007, respectively. A
non-cash compensation charge of $0.3 million and $0.2 million was
recorded to general and administrative expense for the three months
ended January 31, 2008 and 2007, respectively, and $0.6 million and
$0.5 million for the six months ended January 31, 2008 and 2007,
respectively. A non-cash charge of $0.4 and $0.3 was recorded to
operating expense for the twelve months ended January 31, 2008 and
2007, respectively. A non-cash charge of $0.7 and $1.0 was recorded
to general and administrative expense for the twelve months ended
January 31, 2008 and 2007, respectively.
(d) Management considers Adjusted EBITDA to be a chief measurement of the
partnership's overall economic performance and return on invested
capital. Adjusted EBITDA is calculated as earnings before interest,
income taxes, depreciation and amortization, employee stock ownership
plan compensation charge, unit and stock-based compensation charge,
loss on disposal of assets and other, minority interest, and other
non-cash and non-operating charges. 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
are unusual or non-recurring, and makes it easier to compare its
results with other companies that have different financing and
capital structures. In addition, management believes this measure is
consistent with the manner in which the partnership's lenders and
investors measure its overall performance and liquidity, including
its ability to pay quarterly equity distributions, service its
long-term debt and other fixed obligations and fund its capital
expenditures and working capital requirements. 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 interest income. This amount also
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 common unitholders. Distributable
cash flow to equity investors, as management defines it, may not be
comparable to distributable cash flow or similarly titled measures
used by other corporations and partnerships.
(h) During the fourth quarter of fiscal 2007 the governor of the state of
Michigan signed into law a new Michigan Business Tax. The passing
of this new tax law caused Ferrellgas to recognize a one time
deferred tax expense of $2.8 million during fiscal 2007. During
fiscal 2008 a credit for this deferred tax expense was created by a
new Michigan tax law. The passing of this new tax law caused
Ferrellgas to recognize a one time deferred tax credit during fiscal
2008.
SOURCE Ferrellgas Partners, L.P.
CONTACT: Ryan VanWinkle, Investor Relations, +1-913-661-1528, or Scott
Brockelmeyer, Media Relations, +1-913-661-1830, both of Ferrellgas Partners,
L.P.
