FERRELLGAS PARTNERS L P - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - June 4, 2020

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Exhibit 99.1

 

Ferrellgas Partners, L.P. Reports THIRD

Quarter Fiscal 2020 Results

 

  ·  Gross Profit increased by $6.2 million, or almost 3 percent, compared to the prior year period as a result of an 8 cent increase in gross margin per gallon combined with a 24 percent increase in tank exchange volumes.
     
  ·  Propane sales volume for the quarter decreased by 17.2 million gallons due to weather that was 10 percent warmer than the prior year and to the widespread slowdown of the economy due to COVID-19 primarily impacting the Industrial/Commercial customer base.
     
  ·  Successfully issued $700M of Senior Secured Notes due 2025

 

OVERLAND PARK, KS., June 4, 2020 (GLOBE NEWSWIRE) – Ferrellgas Partners, L.P. (OTC Pink: FGPR) (“Ferrellgas” or the “Company”) today reported financial results for its third quarter ended April 30, 2020.

 

For the quarter, the Company reported a net loss attributable to Ferrellgas Partners, L.P. of $15.4 million, or $0.16 per common unit, compared to prior year period net earnings of $20.5 million, or $0.21 per common unit. The $15.4 million net loss attributable to Ferrellgas Partners, L.P. includes $37.4 million loss from early extinguishment of debt. Adjusted EBITDA, a non-GAAP measure, for the quarter was $92.3 million compared to $88.6 million in the prior year’s third quarter, a 4 percent increase.

 

The Company’s propane operations reported that total gallons sold for the quarter were 246.8 million, down from 264.1 million gallons in the prior year due to warmer termperatures than prior year and the widespread slowdown of the economy due to COVID-19, partially offset by customer growth. Gross margin cents per gallon were 8 cents, or 10 percent higher than the prior year due to wholesale propane prices that were approximately 50 percent lower than the prior year. The Company continues its aggressive operating strategies in gaining market share. This strategic focus resulted in over 22,000 new customers and over 3,900 new tank exchange selling locations, or approximately three and seven percent more than prior year, respectively. Additionally, the Company successfully issued $700M of senior first lien notes due 2025. Proceeds were used to repay the senior secured credit facility, to collateralize letters of credit and for general corporate purposes.

 

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 June of 2020. Additionally, Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to address our upcoming debt maturities. The Company does not intend to comment further on its progress in this regard or on potential options until further disclosure is appropriate or required by law.  For that reason, and in view of the information the Company otherwise makes available in earnings releases and quarterly and annual reports, the Company has suspended the practice of holding conference calls with investors, analysts and other interested parties in connection with periodic reporting of financial results for completed periods.

 

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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, 2019. 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, 2019, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

 

Contacts

 

Investor Relations – InvestorRelations@ferrellgas.com

 

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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

 

ASSETS   April 30, 2020    July 31, 2019 
Current Assets:          
Cash and cash equivalents (including $141,318 and $0 of restricted cash at April 30, 2020 and July 31, 2019, repspectively)  $318,847   $11,054 
Accounts and notes receivable, net (including $134,443 and $106,145 of accounts receivable pledged as collateral at April 30, 2020 and July 31, 2019, respectively)   142,952    107,596 
Inventories   65,209    80,454 
Prepaid expenses and other current assets   47,223    42,275 
Total Current Assets   574,231    241,379 
           
Property, plant and equipment, net   596,978    596,723 
Goodwill, net   247,195    247,195 
Intangible assets, net   103,966    108,557 
Operating lease right-of-use asset   110,497    - 
Other assets, net   87,472    69,105 
Total Assets  $1,720,339   $1,262,959 
           
           
LIABILITIES AND PARTNERS' DEFICIT          
           
Current Liabilities:          
Accounts payable  $37,025   $33,364 
Short-term borrowings   -    43,000 
Collateralized note payable   -    62,000 
Current portion of long-term debt (a)   359,050    631,756 
Current operating lease liabilities   31,914    - 
Other current liabilities   174,823    138,237 
Total Current Liabilities   602,812    908,357 
           
Long-term debt   2,146,044    1,457,004 
Operating lease liabilities   76,133    - 
Other liabilities   52,167    36,536 
Contingencies and commitments          
           
Partners Deficit:          
Common unitholders (97,152,665 units outstanding at April 30, 2020 and July 31, 2019)   (1,057,859)   (1,046,245)
General partner unitholder (989,926 units outstanding at April 30, 2020 and July 31, 2019)   (70,593)   (70,476)
Accumulated other comprehensive loss   (20,580)   (14,512)
Total Ferrellgas Partners, L.P. Partners' Deficit   (1,149,032)   (1,131,233)
Noncontrolling interest   (7,785)   (7,705)
Total Partners' Deficit   (1,156,817)   (1,138,938)
Total Liabilities and Partners' Deficit  $1,720,339   $1,262,959 

 

(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   Nine months ended   Twelve months ended 
   April 30   April 30   April 30 
   2020   2019   2020   2019   2020   2019 
Revenues:                        
Propane and other gas liquids sales  $391,745   $459,556   $1,150,377   $1,344,634   $1,414,601   $1,641,311 
Midstream operations        -    -    -    -    21,688 
Other   20,385    20,069    65,800    60,677    80,657    89,833 
Total revenues   412,130    479,625    1,216,177    1,405,311    1,495,258    1,752,832 
                               
Cost of sales:                              
Propane and other gas liquids sales   176,265    250,389    548,136    766,056    684,596    936,618 
Midstream operations   -    -    -    -    -    25,849 
Other   2,740    2,320    9,774    8,789    12,391    23,104 
                               
Gross profit   233,125    226,916    658,267    630,466    798,271    767,261 
                               
Operating expense - personnel, vehicle, plant & other   121,558    119,991    364,334    351,541    481,661    472,532 
Depreciation and amortization expense   20,366    20,617    59,380    59,214    79,012    84,444 
General and administrative expense   12,560    11,516    36,447    42,037    54,404    56,705 
Operating expense - equipment lease expense   8,075    8,319    24,724    24,597    33,200    32,041 
Non-cash employee stock ownership plan compensation charge   757    (4)   2,182    4,688    3,187    7,816 
Loss on asset sales and disposals   1,859    1,683    6,242    8,403    8,807    149,388 
                               
Operating income (loss)   67,950    64,794    164,958    139,986    138,000    (35,665)
                               
Interest expense   (45,703)   (44,162)   (138,948)   (132,931)   (183,636)   (177,543)
Loss on extinguishment of debt   (37,399)   -    (37,399)   -    (37,399)   - 
Other income (expense), net   (158)   251    (214)   356    (201)   (138)
                               
Earnings (loss) before income tax expense (benefit)   (15,310)   20,883    (11,603)   7,411    (83,236)   (213,346)
                               
Income tax expense (benefit)   161    123    794    284    833    (2,676)
                               
Net earnings (loss)   (15,471)   20,760    (12,397)   7,127    (84,069)   (210,670)
                               
Net earnings (loss) attributable to noncontrolling interest (a)   (78)   299    133    337    (502)   (1,776)
                               
Net earnings (loss) attributable to Ferrellgas Partners, L.P.   (15,393)   20,461    (12,530)   6,790    (83,567)   (208,894)
                               
Less: General partner's interest in net earnings (loss)   (154)   205    (125)   68    (835)   (2,089)
                               
Common unitholders' interest in net earnings (loss)  $(15,239)  $20,256   $(12,405)  $6,722   $(82,732)  $(206,805)
                               
Earnings (loss) Per Common Unit                              
Basic and diluted net earnings loss per common unitholders' interest  $(0.16)  $0.21   $(0.13)  $0.07   $(0.85)  $(2.13)
                               
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   Nine months ended   Twelve months ended 
   April 30   April 30   April 30 
   2020   2019   2020   2019   2020   2019 
Net earnings (loss) attributable to Ferrellgas Partners, L.P.  $(15,393)  $20,461   $(12,530)  $6,790   $(83,567)  $(208,894)
Income tax expense (benefit)   161    123    794    284    833    (2,676)
Interest expense   45,703    44,162    138,948    132,931    183,636    177,543 
Depreciation and amortization expense   20,366    20,617    59,380    59,214    79,012    84,444 
EBITDA   50,837    85,363    186,592    199,219    179,914    50,417 
Non-cash employee stock ownership plan compensation charge   757    (4)   2,182    4,688    3,187    7,816 
Loss on asset sales and disposal   1,859    1,683    6,242    8,403    8,807    149,388 
Loss on extinguishment of debt   37,399    -    37,399    -    37,399    - 
Other income (expense), net   158    (251)   214    (356)   201    138 
Severance expense includes $690 in operating expense and $910 in general and administrative expense for the nine and twelve months ended period ending April 30, 2019.   -    -    -    1,600    -    1,600 
Legal fees and settlements related to non-core businesses   1,325    1,471    5,887    10,643    13,608    13,301 
Multi-employer pension plan withdrawal settlement   -    -    -    1,524    -    1,524 
Exit costs associated with contracts - Midstream dispositions   -    -    -    -    -    11,804 
Lease accounting standard adjustment and other   80    -    134    -    134    - 
Net earnings (loss) attributable to noncontrolling interest (a)   (78)   299    133    337    (502)   (1,776)
Adjusted EBITDA (b)   92,337    88,561    238,783    226,058    242,748    234,212 
Net cash interest expense (c)   (43,442)   (40,747)   (129,341)   (123,325)   (170,806)   (168,553)
Maintenance capital expenditures (d)   (6,803)   (13,506)   (18,700)   (45,038)   (20,436)   (53,570)
Cash paid for taxes   (49)   (23)   (50)   (21)   (170)   (188)
Proceeds from certain asset sales   851    456    2,510    2,416    4,343    7,264 
Distributable cash flow attributable to equity investors (e)   42,894    34,741    93,202    60,090    55,679    19,165 
Distributable cash flow attributable to general partner and non-controlling interest   858    695    1,864    1,202    1,113    383 
Distributable cash flow attributable to common unitholders (f)   42,036    34,046    91,338    58,888    54,566    18,782 
Less: Distributions paid to common unitholders   -    -    -    9,715    -    19,430 
Distributable cash flow excess/(shortage)  $42,036   $34,046   $91,338   $49,173   $54,566   $(648)
                               
Propane gallons sales                              
Retail - Sales to End Users   186,175    204,441    552,340    573,152    651,454    666,572 
Wholesale - Sales to Resellers   60,660    59,641    179,695    179,256    233,005    233,974 
Total propane gallons sales   246,835    264,082    732,035    752,408    884,459    900,546 

 

(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 (benefit), 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, severance expense, legal fees and settlements related to non-core businesses, multi-employer pension plan withdrawal settlement, exit costs associated with contracts - Midstream dispositions, 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, 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.
(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 .

 

 

FERRELLGAS PARTNERS L P Reports