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Ferrellgas Partners, L.P. Reports Results for First Quarter Fiscal 2018

OVERLAND PARK, Kan., Dec. 07, 2017 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for its first fiscal quarter ended October 31, 2017. The Company reported a net loss attributable to Ferrellgas Partners, L.P. of $47.9 million, or $0.49 per common unit, compared to a net loss attributable to Ferrellgas Partners, L.P. of $43.1 million, or $0.44 per common unit, for the prior year period.

/EIN News/ -- The Company reported that total gallons sold in the first quarter increased more than 9.5 million gallons over the same period in the prior year, which partially offset the effects of lower margins as the Company aggressively competes for new customers.  The Company reported adjusted EBITDA of $26.2 million, compared to $29.0 million in the prior year period. 

At the end of this first quarter of the Company’s fiscal year, its leverage ratio was 7.57x reflecting peak working capital requirements. This level was lower than the 7.75x limit allowed under its secured credit facility and accounts receivable securitization facilities, as amended in April 2017. Based on the Company’s current forecast, the leverage ratio is expected to continue to strengthen and decrease throughout the fiscal year.

“Ferrellgas has entered the winter heating season with renewed vigor, and while we are optimistic about temperatures nearer to the norm we are focusing on several initiatives that will increase EBITDA regardless of weather,” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our Retail propane operations continue to add customers in significant numbers across all segments positioning the Company for potential future volume and cash flow growth. Further, we’ve closed on a number of accretive, bolt-on acquisitions that complement our strategic footprint. In our Blue Rhino business, we are reconfiguring our production facilities footprint in order to reduce freight costs and streamline production initiatives that are particularly important as we added more than 2,300 new Blue Rhino locations in Q1 with more added since quarter end.  Blue Rhino growth is also important to us because is it less weather dependent. As for Midstream operations, the business has stabilized and is now focused on growth particularly in its trucking operations. The business exited a barge lease that was a significant headwind for EBITDA, and we are evaluating certain underperforming assets to find the best way to move forward with them.”

Mr. Ferrell continued, “These initiatives are the product of a leaner, more agile organization with a flatter management structure. I like our management team including the recent addition of Doran Schwartz as our Chief Financial Officer complementing an already strong and seasoned leadership team.  All of our employees are focused and working hard to generate more cash flow.  We are well positioned for fiscal 2018 and building a foundation for the long-term success of our Company.”

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, 2017. 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, 2017, the Form 10-Q of these entities for the fiscal quarter ended October 31, 2017, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

Contacts
Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833
Tom Colvin, Investor Relations – tomcolvin@ferrellgas.com, 816-792-6908

 
FERRELLGAS PARTNERS, L.P.  AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
         
ASSETS   October 31, 2017   July 31, 2017
         
Current Assets:        
  Cash and cash equivalents   $   7,100     $   5,760  
  Accounts and notes receivable, net (including $137,244 and $109,407 of
    accounts receivable pledged as collateral at October 31, 2017 and
    July 31, 2017, respectively)
    191,428       165,084  
  Inventories     112,338       92,552  
  Prepaid expenses and other current assets     68,068       33,388  
    Total Current Assets     378,934       296,784  
         
Property, plant and equipment, net     738,729       731,923  
Goodwill, net     256,103       256,103  
Intangible assets, net     250,629       251,102  
Other assets, net     80,559       74,057  
    Total Assets   $   1,704,954     $   1,609,969  
         
         
LIABILITIES AND PARTNERS' DEFICIT        
         
Current Liabilities:        
  Accounts payable   $   99,198     $   85,561  
  Short-term borrowings     263,200         59,781  
  Collateralized note payable     88,000       69,000  
  Other current liabilities     200,879       126,224  
    Total Current Liabilities     651,277       340,566  
         
Long-term debt (a)     1,812,155       1,995,795  
Other liabilities     34,799       31,118  
Contingencies and commitments        
         
Partners Deficit:        
 Common unitholders (97,152,665 units outstanding at        
  October 31, 2017 and July 31, 2017)     (754,456 )     (701,188 )
 General partner unitholder (989,926 units outstanding at        
  October 31, 2017 and July 31, 2017)     (67,528 )     (66,991 )
 Accumulated other comprehensive income     32,915       14,601  
  Total Ferrellgas Partners, L.P. Partners' Deficit     (789,069 )     (753,578 )
  Noncontrolling Interest     (4,208 )     (3,932 )
  Total Partners' Deficit     (793,277 )     (757,510 )
  Total Liabilities and Partners' Deficit   $   1,704,954     $   1,609,969  


(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 which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P.
     


FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per unit data)
(unaudited)
 
    Three months ended   Twelve months ended
    October 31   October 31
      2017       2016       2017       2016  
Revenues:                
  Propane and other gas liquids sales   $   302,758     $   242,399     $   1,378,771     $   1,199,466  
  Midstream operations       120,760         108,044         479,419         539,612  
  Other     31,137       29,099       147,200       208,685  
    Total revenues     454,655       379,542       2,005,390       1,947,763  
                 
Cost of sales:                
  Propane and other gas liquids sales     179,515       119,212       754,458       561,894  
  Midstream operations     108,125       94,642       442,922       412,272  
  Other     13,702       11,746       69,223       123,535  
                 
Gross profit     153,313       153,942       738,787       850,062  
                 
Operating expense     110,462       104,992       437,221       447,921  
Depreciation and amortization expense     25,732       26,202       102,881       139,736  
General and administrative expense     13,164       12,482       47,662       48,821  
Equipment lease expense     6,741       7,349       28,516       29,150  
Non-cash employee stock ownership plan compensation charge     3,962       3,754       15,296       26,093  
Non-cash stock-based compensation charge (a)       -       1,881       1,417       3,083  
Asset impairments       -         -         -         628,802  
Loss on asset sales and disposal     895       6,423       8,929       22,341  
                 
Operating income (loss)     (7,643 )     (9,141 )     96,865       (495,885 )
                 
Interest expense     (40,807 )     (35,428 )     (157,864 )     (139,577 )
Other income, net     511       508       1,477       740  
                 
Loss before income taxes     (47,939 )     (44,061 )     (59,522 )     (634,722 )
                 
Income tax expense (benefit)       377         (590 )       (176 )       218  
                 
Net loss     (48,316 )     (43,471 )     (59,346 )     (634,940 )
                 
Net loss attributable to noncontrolling interest (b)     (401 )     (398 )     (297 )     (6,245 )
                 
Net loss attributable to Ferrellgas Partners, L.P.       (47,915 )       (43,073 )       (59,049 )       (628,695 )
                 
Less: General partner's interest in net loss       (479 )       (431 )       (590 )       (6,287 )
                 
Common unitholders' interest in net loss   $   (47,436 )   $   (42,642 )   $   (58,459 )   $   (622,408 )
                 
Loss Per Common Unit                
Basic and diluted net loss per common unitholders' interest   $   (0.49 )   $   (0.44 )   $   (0.60 )   $   (6.35 )
                 
Weighted average common units outstanding - basic     97,152.7       97,457.6       97,443.7       97,949.0  
                                 


Supplemental Data and Reconciliation of Non-GAAP Items:
                 
    Three months ended   Twelve months ended
    October 31   October 31
      2017       2016       2017       2016  
                 
                 
Net loss attributable to Ferrellgas Partners, L.P.   $   (47,915 )   $   (43,073 )   $   (59,049 )   $   (628,695 )
  Income tax expense (benefit)     377         (590 )          (176 )             218  
  Interest expense     40,807       35,428       157,864       139,577  
  Depreciation and amortization expense     25,732       26,202       102,881       139,736  
EBITDA     19,001       17,967       201,520       (349,164 )
  Non-cash employee stock ownership plan compensation charge     3,962       3,754       15,296       26,093  
  Non-cash stock based compensation charge (a)                 -       1,881       1,417       3,083  
  Asset impairments               -                      -                     -       628,802  
  Loss on asset sales and disposal          895       6,423       8,929       22,341  
  Other income, net       (511 )     (508 )     (1,477 )     (740 )
  Severance expense $358 and $414 included in operating expense for the three months ended period October 31, 2017
    and 2016, respectively. Also includes $1,305 and $1,055 included in general and administrative expense for the
    three months ended October 31, 2017 and 2016, respectively. Includes $358 and $938 in operating expense for the twelve
    months ended October 31, 2017 and 2016, respectively. Also includes $1,795 and $1,128 in general and administrative
    expense for the twelve months ended October 31, 2017 and 2016, respectively.
    1,663       1,469       2,153              2,066  
  Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $1,607 and $1,839 included in cost of sales
    for the three and twelve months ended October 31, 2017, respectively, and $308 and $(140) for the three and twelve
    months ended October 31, 2016, respectively. Also includes $(2,120) included in operating expense for the twelve months
    ended October 31, 2017, and (1,877) and (1,330) for the three and twelve months ended October 31, 2016, respectively.
    1,607         (1,569 )       (281 )       (1,470 )
  Acquisition and transition expenses (included in general and administrative expense)        -         -         -          84  
  Net loss attributable to noncontrolling interest (b)     (401 )     (398 )     (297 )     (6,245 )
Adjusted EBITDA (c)       26,216         29,019         227,260         324,850  
  Net cash interest expense (d)     (38,057 )       (33,618 )       (148,027 )     (133,976 )
  Maintenance capital expenditures (e)     (8,704 )       (3,322 )       (22,317 )     (14,244 )
  Cash paid for taxes     (6 )       (1 )       (315 )     (778 )
  Proceeds from asset sales       1,208         1,720         7,440         6,730  
Distributable cash flow attributable to equity investors (f)       (19,343 )       (6,202 )       64,041         182,582  
Distributable cash flow attributable to general partner and non-controlling interest       (387 )       (124 )       1,281         3,652  
Distributable cash flow attributable to common unitholders       (18,956 )       (6,078 )       62,760         178,930  
Less: Distributions paid to common unitholders       9,715         49,791         38,860         200,467  
Distributable cash flow excess/(shortage)   $   (28,671 )   $   (55,869 )   $   23,900     $   (21,537 )
                 
Propane gallons sales                
  Retail - Sales to End Users     119,294       111,188       572,978       552,986  
  Wholesale - Sales to Resellers     53,429       51,990       227,690       227,545  
  Total propane gallons sales     172,723       163,178       800,668       780,531  
                 
Midstream operations barrels                
Salt water volume processed       4,940         3,703       18,752         15,512  
Crude oil hauled       12,150         11,264       50,135         66,411  
Crude oil sold       1,829         1,792       7,507         7,117  
                                 


(a)   Non-cash stock-based compensation charges consist of the following:
     


    Three months ended   Twelve months ended
    October 31   October 31
      2017     2016     2017     2016
  Operating expense   $   -    $   94     567   $   144
  General and administrative expense       -        1,787     850       2,939
  Total   $   -    $   1,881   $   1,417   $   3,083
                         


(b)   Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P.
     
(c)   Adjusted EBITDA is calculated as net loss attributable to Ferrellgas Partners, L.P., less the sum of the following: income tax expense (benefit), interest expense, depreciation
and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, asset impairments, loss on asset
sales and disposal, other income, net, severance expense, unrealized (non-cash) losses (gains) on changes in fair value of derivatives, acquisition and transition expenses
and net loss attributable to noncontrolling interest. 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 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.
     
(d)   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.
     
(e)   Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment.
     
(f)   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 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.
     
(g)   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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