For immediate release
Contact:
Ryan VanWinkle, Investor Relations, 913-661-1528
Scott Brockelmeyer, Media Relations, 913-661-1830
Ferrellgas Partners, L.P. Reports
Record Fiscal 2007 Results
Overland Park, KS(September 28, 2007)—Ferrellgas Partners, L.P. (NYSE:FGP), one of the nation’s largest propane distributors, today reported record results, including a nearly 40% increase in net earnings and a gain of nearly 10% in Adjusted EBITDA for the fiscal year ended July 31.
“We are pleased with our strong fourth quarter performance, achieving our earnings guidance for the fiscal year,”said Steve Wambold, President and Chief Operating Officer. “These anticipated, record financial results spotlight the significant contributions realized from investments made in our retail operating platform in recent years. We will continue to find opportunities to leverage our state-of-the-art logistics system, continuing the positive momentum we’ve generated over the last several years.”
Net earnings for the fiscal year rose to $34.8 million and Adjusted EBITDA grew by more than $21 million to a record $237.1 million, each as compared to the prior year results.
Gross profit for the fiscal year climbed to a record $688.0 million, a $24.2 million increase as compared to $663.8 million achieved in fiscal 2006, reflecting improved margins from improved customer visibility. Propane sales for the fiscal year were 805 million gallons, materially unchanged from the prior year sales volume on Nationwide temperatures that were 6% warmer than normal, while 6% cooler than in the prior fiscal year.
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Ferrellgas
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Operating and general and administrative expenses for the fiscal year were $380.8 million and $44.9 million, respectively, compared to $374.8 million and $47.7 million, respectively, while equipment lease expense was $26.1 million, down from $27.3 in fiscal 2006. Interest expense for the fiscal year was $88.0 million, up from $84.2 million in fiscal 2006.
Net earnings for the fiscal year was negatively impacted with the adoption by the Michigan legislature in July of a new Michigan Business Tax that replaced the state’s existing Single Business Tax. The financial impact of this change in taxation was an obligation of the partnership to record a $2.8 million non-cash charge to its earnings in the fourth quarter to establish a new state deferred income tax liability. Currently bills are being considered in the Michigan legislature that, if passed, would reverse much of this deferred income tax/non-cash impact to the partnership’s financial statements.
For the fourth quarter, propane sales volumes and gross profit were 123 million gallons and $123.0 million, respectively. Operating and general and administrative expenses were $93.6 million and $12.0 million, respectively. Interest expense and equipment lease expense were $21.7 million and $6.4 million, respectively. These results produced an expected Adjusted EBITDA of $10.8 million and a seasonal net loss of $38.6 million for the fourth fiscal quarter.
Ferrellgas Partners, L.P., through its operating partnership. Ferrellgas, L.P., serves more than 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 atwww.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.
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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
| ASSETS | July 31, 2007 | July 31, 2006 | ||||||
Current Assets: | ||||||||
| Cash and cash equivalents | $ | 20,685 | $ | 16,525 | ||||
| Accounts and notes receivable, net | 118,320 | 116,369 | ||||||
| Inventories | 113,807 | 154,613 | ||||||
| Prepaid expenses and other current assets | 16,772 | 15,334 | ||||||
Total Current Assets | 269,584 | 302,841 | ||||||
| Property, plant and equipment, net | 720,190 | 740,101 | ||||||
| Goodwill | 249,481 | 246,050 | ||||||
| Intangible assets, net | 246,283 | 248,546 | ||||||
| Other assets, net | 17,865 | 11,962 | ||||||
Total Assets | $ | 1,503,403 | $ | 1,549,500 | ||||
LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
Current Liabilities: | ||||||||
| Accounts payable | $ | 62,103 | $ | 82,212 | ||||
| Short term borrowings | 57,779 | 52,647 | ||||||
| Other current liabilities (a) | 107,199 | 140,738 | ||||||
Total Current Liabilities | 227,081 | 275,597 | ||||||
| Long-term debt (a) | 1,011,751 | 983,545 | ||||||
| Other liabilities | 22,795 | 19,178 | ||||||
| Contingencies and commitments | — | — | ||||||
| Minority interest | 5,119 | 5,435 | ||||||
Partners’ Capital: | ||||||||
| Common unitholders (62,957,674 and 60,885,784 units | ||||||||
| outstanding at July 2007 and July 2006, respectively) | 289,075 | 321,194 | ||||||
| General partner unitholder (635,936 and 615,008 units | ||||||||
| outstanding at July 2007 and July 2006, respectively) | (57,154 | ) | (56,829 | ) | ||||
| Accumulated other comprehensive income | 4,736 | 1,380 | ||||||
Total Partners’ Capital | 236,657 | 265,745 | ||||||
Total Liabilities and Partners’ Capital | $ | 1,503,403 | $ | 1,549,500 | ||||
| (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. | ||||||||
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FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND TWELVE MONTHS ENDED JULY 31, 2007 AND 2006
(in thousands, except per unit data)
(unaudited)
| Three months ended July 31, | Twelve months ended July 31 | |||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
Revenues: | ||||||||||||||||||||
| Propane and other gas liquids sales | $ | 298,691 | $ | 297,309 | $ | 1,757,423 | $ | 1,697,940 | ||||||||||||
| Other | 30,401 | 33,969 | 235,017 | 197,530 | ||||||||||||||||
Total revenues | 329,092 | 331,278 | 1,992,440 | 1,895,470 | ||||||||||||||||
Cost of product sold: | ||||||||||||||||||||
| Propane and other gas liquids sales | 190,881 | 189,551 | 1,147,169 | 1,109,177 | ||||||||||||||||
| Other | 15,184 | 20,662 | 157,223 | 122,450 | ||||||||||||||||
Gross profit | 123,027 | 121,065 | 688,048 | 663,843 | ||||||||||||||||
| Operating expense | 93,614 | 92,949 | 380,838 | 374,843 | ||||||||||||||||
| Depreciation and amortization expense | 21,447 | 21,089 | 87,383 | 84,953 | ||||||||||||||||
| General and administrative expense | 11,993 | 12,896 | 44,870 | 47,689 | ||||||||||||||||
| Equipment lease expense | 6,369 | 6,597 | 26,142 | 27,320 | ||||||||||||||||
| Employee stock ownership plan compensation charge | 2,924 | 2,756 | 11,225 | 10,277 | ||||||||||||||||
| Loss on disposal of assets and other | 1,230 | 2,021 | 10,822 | 7,539 | ||||||||||||||||
Operating income (loss) | (14,550 | ) | (17,243 | ) | 126,768 | 111,222 | ||||||||||||||
| Interest expense | (21,710 | ) | (21,342 | ) | (87,953 | ) | (84,235 | ) | ||||||||||||
| Interest income | 274 | 581 | 3,145 | 2,046 | ||||||||||||||||
Earnings (loss) before income taxes and minority interest | (35,986 | ) | (38,004 | ) | 41,960 | 29,033 | ||||||||||||||
| Income tax expense — current | (25 | ) | 406 | 3,461 | 2,862 | |||||||||||||||
| Income tax expense — deferred (g) | 2,951 | 147 | 3,099 | 662 | ||||||||||||||||
| Minority interest (a) | (333 | ) | (329 | ) | 600 | 500 | ||||||||||||||
Net earnings (loss) | (38,579 | ) | (38,228 | ) | 34,800 | 25,009 | ||||||||||||||
| Net earnings (loss) available to general partner | (386 | ) | (382 | ) | 348 | 250 | ||||||||||||||
Net earnings (loss) available to common unitholders | $ | (38,193 | ) | $ | (37,846 | ) | $ | 34,452 | $ | 24,759 | ||||||||||
Earnings Per Unit | ||||||||||||||||||||
| Basic earnings (loss) per common unit available to common unitholders | $ | (0.61 | ) | $ | (0.62 | ) | $ | 0.55 | $ | 0.41 | ||||||||||
| | ||||||||||||||||||||
| Weighted average common units outstanding | 62,956.4 | 60,795.4 | 62,755.8 | 60,459.5 | ||||||||||||||||
Supplemental Data and Reconciliation of Non-GAAP Items:
| Three months ended July 31, | Twelve months ended July 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Propane gallons | 123,165 | 127,005 | 804,732 | 808,890 | ||||||||||||
Net earnings (loss) | $ | (38,579 | ) | $ | (38,228 | ) | $ | 34,800 | $ | 25,009 | ||||||
| Income tax expense | 2,926 | 553 | 6,560 | 3,524 | ||||||||||||
| Interest expense | 21,710 | 21,342 | 87,953 | 84,235 | ||||||||||||
| Depreciation and amortization expense | 21,447 | 21,089 | 87,383 | 84,953 | ||||||||||||
| Interest income | (274 | ) | (581 | ) | (3,145 | ) | (2,046 | ) | ||||||||
EBITDA | 7,230 | 4,175 | 213,551 | 195,675 | ||||||||||||
| Employee stock ownership plan compensation charge | 2,924 | 2,756 | 11,225 | 10,277 | ||||||||||||
| Unit and stock-based compensation charge (b) | (276 | ) | 282 | 889 | 1,863 | |||||||||||
| Loss on disposal of assets and other | 1,230 | 2,021 | 10,822 | 7,539 | ||||||||||||
| Minority interest | (333 | ) | (329 | ) | 600 | 500 | ||||||||||
Adjusted EBITDA (c) | 10,775 | 8,905 | 237,087 | 215,854 | ||||||||||||
| Net cash interest expense (d) | (22,297 | ) | (21,432 | ) | (88,878 | ) | (85,769 | ) | ||||||||
| Maintenance capital expenditures (e) | (3,190 | ) | (3,545 | ) | (16,935 | ) | (13,003 | ) | ||||||||
| Cash paid for taxes | (865 | ) | (381 | ) | (3,742 | ) | (990 | ) | ||||||||
Distributable cash flow to equity investors (f) | $ | (15,577 | ) | $ | (16,453 | ) | $ | 127,532 | $ | 116,092 | ||||||
(a) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. (b) 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 $0.1 million to operating expense, for the three months ended July 31, 2007 and 2006, respectively, and $0.3 million and $0.4 million to operating expense for the twelve months ended July 31, 2007 and 2006, respectively. A non-cash compensation charge of $(0.2) million and $0.2 million was recorded to general and administrative expense for the three months ended July 31, 2007 and 2006, respectively, and $0.6 million and $1.5 million for the twelve months ended July 31, 2007 and 2006 respectively. (c) 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. (d) 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. (e) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment. (f) 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. (g) On July 12, 2007, the Governor of the State of Michigan signed into law a new Michigan Business Tax (the “MBT Act”), which provides a comprehensive restructuring of Michigan’s principal business tax regime. The main provision of the MBT Act imposes a new two-part tax on business income and modified gross receipts that is accounted for as an income tax in accordance with SFAS No. 109 “Accounting for Income Taxes” (“SFAS 109”). Although the effective date of the MBT is January 1, 2008, SFAS 109 requires all effects of a tax law change be accounted for in the period of the law’s enactment. As a result, during the fourth quarter of fiscal 2007, Ferrellgas recognized a one time increase to its deferred tax expense of $2.8 million. |
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