OVERLAND PARK, Kan., June 6 /PRNewswire-FirstCall/ -- Ferrellgas Partners,
L.P. (NYSE: FGP), one of the nation's largest propane distributors, today
reported for the third fiscal quarter ended April 30 Adjusted EBITDA of $85.1
million, down from the record $95.1 million for the same quarter in the prior
fiscal year. Net earnings were $35.2 million, or $0.55 per unit, compared
with a record $43.7 million, or $0.69 per unit, the year before. The
decreases continued to reflect sharply higher propane costs that pressured
margins and triggered customer conservation. Partially offsetting these
factors were higher fee income and an ongoing tight rein on expenses.
Propane sales volume in the third fiscal quarter decreased to 252 million
gallons from 271 million gallons in the prior-year's third quarter, mirroring
similar trends from the first half of the fiscal year.
Chairman and Chief Executive Officer James Ferrell pointed out, "In light
of the hurdles we had to clear, which included a 44-percent increase in the
cost of propane, we achieved Adjusted EBITDA that approached our budget for
the quarter. Our operating platform's efficiencies contributed to that
performance as operating expense declined 4 percent on a year-over-year basis.
General and administrative expense decreased more than 7 percent."
Ferrell pointed out, "In this current, challenging environment, our team
performed remarkably well and deserves a lot of credit. We continue to
believe that we have in place the fundamentals that will lead to improved
operations."
President and Chief Operating Officer Steve Wambold reported, "Our Blue
Rhino brand had a solid third quarter, reaching its volume goals, while
successfully implementing price increases with its customers. Moreover, Blue
Rhino is off to an excellent start in the fourth quarter, having added 2,500
selling locations over the past year and having recently secured a commitment
for more than 1,000 additional locations from an existing customer to be
installed prior to the end of July."
Wambold pointed out, "Based on Blue Rhino's positive momentum and our
well-established expense control efforts, we expect meaningful improvement in
our Adjusted EBITDA results in the fourth quarter over year-earlier results.
We expect that this performance will result in Adjusted EBITDA for the full
fiscal year in the range of $225.0 million to $230.0 million."
Third quarter revenues rose to $712.1 million from $624.2 million in the
year-earlier period, with higher wholesale propane commodity prices and
additional fee income contributing to the increase. Gross profit decreased to
$194.9 million from $210.5 million. Operating expense was $93.3 million
versus $97.4 million a year ago while general and administrative expense was
$10.9 million compared with $11.8 million. Equipment lease expenses also
declined, to $6.0 million from $6.7 million.
Comparable figures for the nine months were as follows: Revenues of $1.87
billion and $1.66 billion a year ago; gross profit, $537.3 million and $565.0
million; propane sales volume, 699 million gallons and 755 million gallons;
operating expense, $274.8 million and $287.2 million; general and
administrative expense, $33.9 million and $32.9 million; equipment lease
expense, $18.5 million and $19.8 million; Adjusted EBITDA, $211.5 million and
$226.3 million; and net earnings $63.5 million, or $1.00 per unit and $73.4
million and $1.16 per unit.
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 ended 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 April 30, 2008 July 31, 2007
Current Assets:
Cash and cash equivalents $20,864 $20,685
Accounts and notes receivable, net 162,580 118,320
Inventories 121,833 113,807
Price risk management assets 17,228 5,097
Prepaid expenses and other current assets 14,690 11,675
Total Current Assets 337,195 269,584
Property, plant and equipment, net 693,742 720,190
Goodwill 248,877 249,481
Intangible assets, net 230,449 246,283
Other assets, net 20,032 17,865
Total Assets $1,530,295 $1,503,403
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $75,674 $62,103
Short term borrowings 71,025 57,779
Other current liabilities (a) 100,844 107,199
Total Current Liabilities 247,543 227,081
Long-term debt (a) 1,028,518 1,011,751
Other liabilities 24,041 22,795
Contingencies and commitments -- --
Minority interest 4,968 5,119
Partners' Capital:
Common unitholders (62,961,674 and
62,957,674 units outstanding at April
2008 and July 2007, respectively) 268,399 289,075
General partner unitholder (635,977
and 635,936 units outstanding at April
2008 and July 2007, respectively) (57,361) (57,154)
Accumulated other comprehensive income 14,187 4,736
Total Partners' Capital 225,225 236,657
Total Liabilities and Partners' Capital $1,530,295 $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, NINE AND TWELVE MONTHS ENDED APRIL 30, 2008 AND 2007
(in thousands, except per unit data)
(unaudited)
Three months ended Nine months ended
April 30, April 30,
2008 2007 2008 2007
Revenues:
Propane and other gas
liquids sales $621,343 $531,816 $1,664,734 $1,458,732
Other 90,747 92,346 206,240 204,616
Total revenues 712,090 624,162 1,870,974 1,663,348
Cost of product sold:
Propane and other gas
liquids sales 455,375 341,593 1,212,418 956,288
Other 61,850 72,118 121,232 142,039
Gross profit 194,865 210,451 537,324 565,021
Operating expense 93,349 97,369 274,828 287,224
Depreciation and amortization
expense 21,443 22,245 63,883 65,936
General and administrative
expense 10,947 11,829 33,855 32,877
Equipment lease expense 5,990 6,675 18,484 19,773
Employee stock ownership plan
compensation charge 3,447 2,721 9,693 8,301
Loss on disposal of assets and
other 2,662 3,097 8,729 9,592
Operating income 57,027 66,515 127,852 141,318
Interest expense (21,214) (21,534) (66,351) (66,243)
Interest income 350 981 1,348 2,871
Earnings before income taxes
and minority interest 36,163 45,962 62,849 77,946
Income tax expense -- current 243 2,087 600 3,486
Income tax expense (benefit) --
deferred (h) 329 (335) (2,052) 148
Minority interest (a) 420 507 832 933
Net earnings 35,171 43,703 63,469 73,379
Net earnings available to
general partner 352 1,860 635 734
Net earnings available to
common unitholders $34,819 $41,843 $62,834 $72,645
Earnings Per Unit
Basic and diluted net earnings
available per common unit $0.55 $0.66 $1.00 $1.16
Dilutive effect of EITF 03-6 (b) -- 0.03 -- --
Adjusted net earnings per unit
available to common
unitholders $0.55 $0.69 $1.00 $1.16
Weighted average common units
outstanding 62,958.9 62,950.4 62,958.7 62,688.2
Twelve months ended April 30,
2008 2007
Revenues:
Propane and other gas liquids sales $1,963,425 $1,756,041
Other 236,641 238,585
Total revenues 2,200,066 1,994,626
Cost of product sold:
Propane and other gas liquids sales 1,403,299 1,145,839
Other 136,416 162,701
Gross profit 660,351 686,086
Operating expense 368,442 380,173
Depreciation and amortization expense 85,330 87,025
General and administrative expense 45,848 45,773
Equipment lease expense 24,853 26,370
Employee stock ownership plan
compensation charge 12,617 11,057
Loss on disposal of assets and other 9,959 11,613
Operating income 113,302 124,075
Interest expense (88,061) (87,585)
Interest income 1,622 3,452
Earnings before income taxes and
minority interest 26,863 39,942
Income tax expense -- current 575 3,892
Income tax expense (benefit) -- deferred (h) 899 295
Minority interest (a) 499 604
Net earnings 24,890 35,151
Net earnings available to general partner 249 352
Net earnings available to common unitholders $24,641 $34,799
Earnings Per Unit
Basic and diluted net earnings available per
common unit $0.39 $0.56
Dilutive effect of EITF 03-6 (b) -- --
Adjusted net earnings per unit available to
common unitholders $0.39 $0.56
Weighted average common units outstanding 62,958.1 62,211.1
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Nine months ended
April 30, April 30,
2008 2007 2008 2007
Net earnings $35,171 $43,703 $63,469 $73,379
Income tax expense (benefit) 572 1,752 (1,452) 3,634
Interest expense 21,214 21,534 66,351 66,243
Depreciation and amortization
expense 21,443 22,245 63,883 65,936
Interest income (350) (981) (1,348) (2,871)
EBITDA 78,050 88,253 190,903 206,321
Employee stock ownership plan
compensation charge 3,447 2,721 9,693 8,301
Unit and stock-based compensation
charge (c) 483 499 1,383 1,165
Loss on disposal of assets and
other 2,662 3,097 8,729 9,592
Minority interest 420 507 832 933
Adjusted EBITDA (d) 85,062 95,077 211,540 226,312
Net cash interest expense (e) (22,098) (22,451) (68,196) (66,723)
Maintenance capital
expenditures (f) (5,590) (4,026) (15,058) (13,745)
Cash paid for taxes (48) (1,112) (1,327) (2,877)
Proceeds from asset sales 2,415 1,563 8,665 7,069
Distributable cash flow to equity
investors (g) $59,741 $69,051 $135,624 $150,036
Propane gallons sales
Retail - Sales to End Users 204,683 220,654 567,247 611,156
Wholesale - Sales to Resellers 47,427 50,768 131,412 144,234
Total propane gallons sales 252,110 271,422 698,659 755,390
Twelve months ended April 30,
2008 2007
Net earnings $24,890 $35,151
Income tax expense (benefit) 1,474 4,187
Interest expense 88,061 87,585
Depreciation and amortization
expense 85,330 87,025
Interest income (1,622) (3,452)
EBITDA 198,133 210,496
Employee stock ownership plan
compensation charge 12,617 11,057
Unit and stock-based compensation
charge (c) 1,107 1,447
Loss on disposal of assets and
other 9,959 11,613
Minority interest 499 604
Adjusted EBITDA (d) 222,315 235,217
Net cash interest expense (e) (90,493) (88,155)
Maintenance capital expenditures (f) (18,248) (17,290)
Cash paid for taxes (2,192) (2,268)
Proceeds from asset sales 11,426 10,285
Distributable cash flow to equity
investors (g) $122,808 $137,789
Propane gallons sales
Retail -- Sales to End Users 658,808 705,408
Wholesale -- Sales to Resellers 176,350 194,919
Total propane gallons sales 835,158 900,327
(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
three, nine and twelve months ended April 30, 2008 and the nine
and twelve months ended April 30, 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 $0.1 million and $0.2 million to operating
expense, for the three months ended April 30, 2008 and 2007,
respectively, and $0.4 million and $0.3 million to operating expense
for the nine months ended April 30, 2008 and 2007, respectively. A
non-cash compensation charge of $0.3 million and $0.3 million was
recorded to general and administrative expense for the three months
ended April 30, 2008 and 2007, respectively, and $1.0 million and
$0.9 million for the nine months ended April 31, 2008 and 2007,
respectively. A non-cash charge of $0.4 million and $0.4 million was
recorded to operating expense for the twelve months ended April 30,
2008 and 2007, respectively. A non-cash charge of $0.7 and $1.1 was
recorded to general and administrative expense for the twelve months
ended April 30, 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: Tom Colvin, Investor Relations, +1-913-661-1530, or Scott
Brockelmeyer, Media Relations, +1-913-661-1830, both of Ferrellgas Partners,
L.P.
