Scott Brockelmeyer, Media Relations, (913) 661-1830
FERRELLGAS PARTNERS, L.P. REPORTS RECORD FIRST-QUARTER RESULTS, WITH ADJUSTED EBITDA INCREASING MORE THAN 50 PERCENT; RAISES GUIDANCE FOR FISCAL 2009 ADJUSTED EBITDA
OVERLAND PARK, KS, December 9, 2008 /PR Newswire-First Call/ — Ferrellgas Partners, L.P. (NYSE:FGP), one of the largest distributors of propane, today reported sharply improved results for fiscal 2009’s first quarter ended October 31, 2008.
Adjusted EBITDA increased more than 50 percent to a record $35.2 million from the previous record of $23.3 million in the year-earlier period. The partnership also reported significant improvement in the seasonal net loss, $14.9 million, or $0.23 per common unit, contrasted with $22.9 million, or $0.36 per common unit, in fiscal 2008’s first quarter. Strong sales volumes, improved margins, and reduced general and administrative expense and equipment lease expense contributed to the favorable performance.
Revenues rose nearly 22 percent to $480.9 million from $394.9 million, while gross profit improved to a record $145.5 million from $131.4 million. Total propane gallon sales were up more than 10 percent, totaling 172.2 million compared with 155.9 million the year before.
Chairman and Chief Executive Officer James E. Ferrell observed, “We previously noted that the partnership had entered fiscal 2009 with positive momentum, and results exceeded expectations, as well as the analysts’ mean of a $0.33 loss.” He continued, “Based on the strong first-quarter performance and momentum carrying over into the second quarter, we are increasing our guidance for fiscal 2009 Adjusted EBITDA to $255 million from $245 million.” The partnership reported Adjusted EBITDA of $222 million for fiscal 2008 and a record $237 million for fiscal 2007.
President and Chief Operating Officer Steve Wambold explained, “Particularly gratifying was the increase in propane gallon sales that in part reflect organic growth in spite of the continuing, negative impact of customer conservation. It’s also noteworthy that general and administrative expense and equipment lease expense decreased nearly 23 percent and 16 percent, respectively in the quarter.”
Wambold also pointed out, “The increase in operating expenses reflects in part the double-digit percentage gain in sales volume. In fact, operating expenses per gallon declined two cents per gallon delivered highlighting our continued focus on operating efficiencies.”
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 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, 2008, 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
October 31, 2008
July 31, 2008
Current assets:
Cash and cash equivalents
$
19,319
$
16,614
Accounts and notes receivable, net
126,657
145,081
Inventories
161,232
152,301
Price risk management assets
2,649
26,086
Prepaid expenses and other current assets
23,145
10,924
Total current assets
333,002
351,006
Property, plant and equipment, net
683,789
685,328
Goodwill
248,939
248,939
Intangible assets, net
224,201
225,273
Other assets, net
20,259
18,685
Total assets
$
1,510,190
$
1,529,231
LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT)
Current liabilities:
Accounts payable
$
98,868
$
71,348
Short-term borrowings
105,419
125,729
Price risk management liabilities
122,158
7,336
Other current liabilities (a)
120,379
100,518
Total current liabilities
446,824
304,931
Long-term debt (a)
1,052,886
1,034,719
Other liabilities
22,870
23,237
Contingencies and commitments
—
—
Minority interest
3,873
4,220
Partners’ capital (deficit):
Common unitholders (63,192,503 and 62,961,674 units
outstanding at October 2008 and July 2008, respectively)
161,900
201,618
General partner unitholder (638,308 and 635,977 units
outstanding at October 2008 and July 2008, respectively)
(58,438
)
(58,036
)
Accumulated other comprehensive income (loss)
(119,725
)
18,542
Total partners’ capital (deficit)
(16,263
)
162,124
Total liabilities and partners’ capital (deficit)
$
1,510,190
$
1,529,231
(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 MONTHS ENDED OCTOBER 31, 2008 AND 2007
(in thousands, except per unit data)
(unaudited)
Three months ended October 31,
2008
2007
Revenues:
Propane and other gas liquids sales
$
436,888
$
358,935
Other
44,031
35,981
Total revenues
480,919
394,916
Cost of product sold:
Propane and other gas liquids sales
318,590
252,519
Other
16,814
10,960
Gross profit
145,515
131,437
Operating expense
96,217
90,459
Depreciation and amortization expense
21,316
21,365
General and administrative expense
9,086
11,793
Equipment lease expense
5,355
6,351
Employee stock ownership plan compensation charge
1,749
3,174
Loss on disposal of assets and other
2,582
2,387
Operating income (loss)
9,210
(4,092
)
Interest expense
(23,670
)
(22,286
)
Other income (expense), net
(818
)
817
Loss before income taxes and minority interest
(15,278
)
(25,561
)
Income tax benefit — current
(269
)
(311
)
Income tax benefit — deferred
(32
)
(2,177
)
Minority interest (a)
(90
)
(173
)
Net loss
(14,887
)
(22,900
)
Net loss available to general partner unitholder
(149
)
(229
)
Net loss available to common unitholders
$
(14,738
)
$
(22,671
)
Basic and diluted net loss available per common unit
$
(0.23
)
$
(0.36
)
Weighted average common units outstanding
63,052.0
62,958.7
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended October 31,
2008
2007
Net loss
$
(14,887
)
$
(22,900
)
Income tax (benefit
(301
)
(2,488
)
Interest expense
23,670
22,286
Depreciation and amortization expense
21,316
21,365
Other income (expense), net
818
(817
)
EBITDA
30,616
17,446
Employee stock ownership plan compensation charge
1,749
3,174
Unit and stock-based compensation charge (b)
328
450
Loss on disposal of assets and other
2,582
2,387
Minority interest
(90
)
(173
)
Adjusted EBITDA (c)
35,185
23,284
Net cash interest expense (d)
(23,759
)
(21,983
)
Maintenance capital expenditures (e)
(5,026
)
(3,124
)
Cash paid for taxes
(8
)
(1,211
)
Proceeds from asset sales
2,318
2,938
Distributable cash flow to equity investors (f)
$
8,710
$
(96
)
Propane gallons sales
Retail — Sales to end users
126,533
119,175
Wholesale — Sales to resellers
45,676
36,708
Total propane gallons sales
172,209
155,883
(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 October 31, 2008 and 2007, respectively, and $0.5 million and $0.3 million to operating expense for the twelve months ending October 31, 2008 and 2007, respectively. A non-cash compensation charge of $0.2 million and $0.3 million was recorded to general and administrative expense for the three months ended October 31, 2008 and 2007, respectively, and $1.2 million and $0.7 million to general and administrative expense for the twelve months ending October 31, 2008 and 2007, 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.
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