FGP - Earnings call transcript Q1 2018 | Ferrellgas Partners, L.P.

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Operator

Good morning. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Financial may Chief your Officer, Schwartz, begin you conference. Doran

Doran Schwartz

uncertainties in earnings anticipated and to and considered These other be initiate for from to you could here with when least on filed or I’d investing capital. Capital and look temperatures like and welcome some various needs forward-looking, minimum profane risk I XX% my is enjoyed a Securities important, down you, return my you may know you I cost acquisitions, and in the degrees, to capital call. all working threshold to call. performance opportunity currently getting a first of philosophies; from that Missouri XX business is expectations with seven from to be that our thinking look scaled projects carefully. against Exchange the morning to and welcome first cause I returns and or this Thank it’s return invested on conference profile. to call bit in weather. precious and statements our with Thank made great, and appreciate about about its well. finite employees. discussed the A differ with Ferrellgas are risks, materially at to the earnings I’ve are file morning first, performance. the up forward as the factors us for actual time XX-Q cold other that with Commission. factors our remind Liberty, time and of joining during documents weeks of depending

more arise. capital balance advantage sheet flexibility as provides they Second, opportunities and take cost a stronger lower to of

to balance over reasonable carries a of de-levering committed I, of are levels time. and Our period debt we sheet high

our our the I’m critical role. team. the help still to here back Mr. also with continue working to us; scrutinized a where an based appreciate has that to say view position. develop on say the team Fourth, my interim of come to my would CEO. here, be very learn have Third, to here, And fifth, year I’m the having that to optimistic to recently some basis only we employees, members is and me the more go and is, balance the team being around morale getting a with Ferrell here know back led that business are Al by Ferrell we’ve employee relationships and we since appreciates all about people. good my we forward. me view as hear as realism. in I possible. here are reduced costs talented that work and just transition and with would have again here Mr. need good ago, be him well it’s From work we as would continue strong the approach to base over on and its our We’ve a to filled you’ll future, of done coming do, Al. high, I team with we business I as of transition moving perspective,

Ferrell financials And sitting some economics relates are I’ll I quarter the the that not give hear And one around today, of on. you’ll for comments just to key thoughts is have. initial and from Jim think are some initiatives that waiting we of as and for we the there as then Format what is remarks weather. that I company hear the back call working and messages you’ll and it first he’ll think

also not without where give highlight normal like. to we improve did also, like But, today, that expectation we XX% are is again not it’s where a trying important a days, in starting that we of November. the quarter, November on heating view quarter, the going to to to go was then November degree will because just in out we habit look give first in good we what going quarter I a information. not second the quarter; to you to we’re flavor us an feel be waiting for to whether not second heating but it is year for you of opportunity to quarter. a would in only have quarter actively second are at preliminary for going it make you might the our And degree of We we business second a versus looking profile weather. as X% first days just giving give the are

it in XX.X million and was as financial Form relates this XX-Q So the quarter, to that we to year. our million XX quarter our filed last our for the for performance adjusted EBITDA morning compares that

positively the was increased cost from partially by recent by price higher propane for we expenses on was propane This commodity effects margins XX.X or share. segment to X%. a for the impacted up of offset operating million focus increasing EBITDA adjusted continue gross rising partially market Our propane that caused sales and lower volumes, environment

basically look profit million When quarter XXX gallons a gross year prior at to XXX mentioned, we just in for So the the ago. up first X% I gross under that’s let’s was is from gallons total XXX are that more at comparable line, Again a in sales million take QX a from for the where numbers. the and propane detailed the million fiscal our as profit ’XX unchanged you quarter. year volumes were quarter look year

expense line, was The to That administrative the lower allowed year, was X.XX operating expense at facility times. than current MLP of for XX.X the during securitization peak due the XX. of XXX million our look compared in at times for slightly the million and receivable rate expected a strengthen for due quarter notes XXXX. credit up general up increase its and past as increase the we from that’s level level issued the a and a from as was our forecast, times. our to XX.X the last year. to Based this forecast, primarily with and ago. throughout million quarter year. to we to the XX.X we to for associated incurred interest This to Moving liquidity forward, company’s XXX the flows, and expense as XXX a decrease Based leverage maintain higher year. January, current A ratio is ratio sold. distribution was its compared year the million the to accounts covered to for coverage rates future, and X.XX focus capital company’s of gallons up expect current and administrative primarily expenses basis quarter on the million million, the also under trailing incurred incremental ratio as General expense the to on facility, on We year secured facility, credit flow Distributable on increase million XX.X the the secured limit itself. quarter at, was foreseeable is balance fiscal execute fiscal working our operating a amended leverage to months are cash is for the ratio metrics the last quarter, April the reflects the XX secured annual under and first the XX the million. DCF credit facility sheet. on This as continue well of for equates increased borrowing at October or would rates on credit That time in de-lever we X.XX end was needs. look the bit cash At where on increase

facility with to fund through Now sufficient the the our a brief facility, heating we will us provide working bank capital capacity update our years current season. on believe credit needs

commenced banks are have the holders here bank we We just where will and pleased facility, at. say, bond December. with progress starting conversations significant renewing we be of that I’m made the started and I’ll with in expect have process

We focused constructive solutions bond having on bank holders. initial and conversations conversations with with positive our our are group

about in we process. of As very with feel the and are pleased good relationships the very to that investors banks, again where we have we at all our there and

will remain from calendar him. we At facility going facility the half ’XX. to We’re for we in the renewed first exploring in turn comments that Jim? and I’m place point, renewed many Jim options this for a get to the confident over call

Jim Ferrell

we Thanks Doran. our for or Good key takeaway on are one today, colder comments it and everyone. is If morning that earnings our day there’s weather. sitting our waiting on not Ferrellgas, you at release is a new it hands from

fully million, which last initiatives in EBITDA some grow year XXX a level. once or are an a would are disastrously as Again implemented. adjusted of our with EBITDA completed increased incrementally year that it’s We analysis that benefit that weather. others higher on many year’s colder record the whether from to last XXX level without EBITDA, warm assume to process working the drive level Colder initiatives, winter the temperatures. following Based from or of same XXX, weather was warm will would record as

is the current of is So at summary initiatives; stabilized, a here some growth. Bridger of on focused now that business

oil prior recent finding million growth significant X.X oil for with in factor a additional barrels like year. customers Marathon of up have limiting XX% wins key and XXX They [Oxy], trucks deployed from holds We Oklahoma. QX have It a drivers. of opportunity including with

to pay Our them. is recruiting, emphasis ways finding creative on

our end barge the an oil our quarter We resolved oil are the used hauling and well. at salt to we of sand related and rail In to disposal issue that the was business the line, growing the business [clean] move to water from facility first Bakken. Monroe as a

under-performing evaluating assets. are We

storage about railcars have XXXX that year. model us X,XXX We $X.X and costing million a in are about

are under model pulling XXX rail under We cars have contract. another ethanol multi-year that a contract

our credit access trailer and associated the business. surety the of over months, and for Bridger at reducing Bridger, which offset are of this XX the slightly, may of is can that part EBITDA tractor sold. anticipated are we rest by usage with cost evaluating next Also current fleet units reduce however, interest our in demand We be

with or cost and is location. it, from productive company to get highest freight a We are use evaluating Blue and assets, possibly cost Rhino, exchange Rhino to our of it outside, the and tank a a all sale. fill most Blue whether to

We plants. two are Difficulty]. building [Technical

Doran Schwartz

we lost Jim. Okay,

to Rhino. Jim Let was me just where take relates from it as Blue off

Bridger. Jim today, sight on initiatives the of we difficulties technical Apologies, some about is heard some so off actually may there. you have So

to tank really the saying to from it Blue As Jim of the cost is freight and exchange a fill location. and was Rhino to the get it cost the

more building plan investment. the on XXXX That’s plants XXXX. by We’re plant build an will X.X to to year between X reduce and payback two cost million. in million two three and Each approximate

our grown tank for provides very our business over sale us grow a and XXXX us margins high since growth and by smart. to we’re to returns, increasing as exchange opportunity by year, a also high locations end. So and past the buying we result. quarter a business locations continue certainly add with That’s We’ve

for taking tanks, the are Changes So business this continue we are being all add a of basis. cost and will key cost EBITDA around evaluated. at components from paint, to valves, lowered made those sleeves, replacing to being the are a look

that. tank is an We’re acquisition and our in weather. will XXX,XXX This dependent year. terms Expected XX transactions exchange of exchange to exchange transactions like tank closing exceeds overall that more demand our capital. that from It’s predictable of business on less Michigan IRR that we in acquisition million on did significantly that’s tank add business last a cost nearly

So In again of share. past as where completed the dependent. in we in that the on EBITDA. again not three to Bolton for retail expenses. gain renewed about our earlier efforts to of think market we first are operating acquisitions, also business the referenced we’ve areas our grow acquisitions weather, adding less that accretive quarter year, side efforts waiting are the to terms we weather we are trying propane in I

We seeing competing density for aggressively we’re are customers and and customer new wins.

up increasing are and last year competition. our accounts customer over replacing Our replacing tanks

management, restructured where seasoned with team of risk the fewer risk well leaner again, organization responsibilities It’s a is strong a taking an past in we over in positions level and table. another this as the what on we’re And and We spread terms flatter has we’ve operating year. control initiative. way, the executive area we than year structured Our off are management focused ago. and that can structure

a Typically, initiatives give but gallon. these and secured this for today difference around XXX% and was hedged quarter again of important that needs of we flow procurement fixed and customer current would are has first already. company ability $X.XX information we growth, following it not the XXXXs’ show the group fiscal come has have auditor, we from results are make that approximately again Again think showing a a in XX% a of They’ve for that other drive its for cash approximately these off results by earnings month that see $X.XX up a that come we propane in that you’d on that propane of they to anticipated for and call, and from our to our did will $X. external so. Our the Blue XXXX the demand secured systems We Rhino but would our XX-Q. Form again ultimately reviewed not the compared to two-thirds QX the same in our retail demand believe thought, at also at gallon, continue secured market

month. a look at strong we was November, As it

second saw gallons XX that’s we gallons. of the per level. November, wholesale gallons first move of that a month, to that’s million we for than year’s we in year’s what exclusive November million almost were approximately month propane, nickel of last more $X.XXX as the than sold less Margins last quarter, in over So XX quarter, gallons

trend. over trend last XX of strengthening days the of that’s trend more showed the the than Gross month, year. X the in We nearly gallon. approximately margins However million consistent were a million per margin XX dollars last like

The November again, one to quarter, regions results it a doesn’t strong make but not start broad region. a was off seen isolated again to we’ve month, strong quarter or are So second any based contributed. and all very a positive

again, we not So for waiting weather. colder are

control. doing things we can are that We areas in

weather recorded grow So a initiatives with that weather XXX colder last and from levels. our winter, on that EBITDA future million what is our less accomplishing again assumes last And dependent with upside we will effects currently the would this progress from we making these of are year Colder be year. that of needing on we which colder are year’s initiatives. no each

with So our quarter. in pleased are to summary, second strong start a we

We’re EBITDA weather. even working benefit accretive, on of are many that initiatives the without

our employees morale, moving that our And benefit shareholders. foundation beyond. setting of to focused we forward of for the company cash positive are lenders success XXXX All growing flow position and have and on in and a a they will fiscal the are

to too. contribute and must keep their we to And at we our believe but that have not Ferrellgas, have people that Here goods future Jim be products essential in have, open to business our of time. keep our transportation and warm, that Q&A with nice economy. at fed back completes support providing We’d and on families that, our comments this

Operator

[Operator JP comes Jeremy from line the [Jonane] of and first Morgan. our question from Instructions]

open. is line Your

Unidentified Analyst

This is Charlie Jeremy. for in

share that in future you’re new Could are pretty growth you to putting share. Sounds place with market on cost. strides respect kind like of to you where good of going some to cost made and this your the you’re margins? winning targeting you those further, some in facilities elaborate And then just your you’ve respect market of where growing and on balance how kind lower

Jim Ferrell

probably will about, Doran. push more it. broad can broad I take way customers the the bills, or based talk pay based, Well put that’s what I a It’s who that we

lot that that to save And with original we plants that the equipment, going cause can take than are Rhino because to still put truck, box that these money. ground. The centralized, big the significantly. for large so and plant able the and very we’re them us plants of for will That same we a we is more the down that have point. today, them out plants small everything. is same cost same These other The are we money, in cost very do put cut words, centralized hauls plants. do be same reason drop In them and plant, long first that had (inaudible), on operating

that’s money So are we basically on. spending what

up. setting And thing probably worried we’re other more The too say you that. customers would money is by ourselves costing doing were I’m about not what

everybody program, it’s loves to broad it as have or it’s watch work that. based, to high. a Everybody and onboard, this do So just going

Unidentified Analyst

I a you’re area know portion pretty even these, of to you concentrated that or that’s that kind share somewhere do looking at. heavily footprint. your win Is where know of market How is smaller

Jim Ferrell

You’re about talking northeast? the

Unidentified Analyst

Yeah.

Jim Ferrell

of west country we our that. Yeah, coast including know out part country we the on right the any part where lot on (inaudible). the have of lot the there now, don’t people and people the of a are coast east picture middle But more and a more

I holding and you customers, after going just going not work. are tell exactly we’re to we how But can’t back. So that’s

Operator

Raymond from question comes line from of James. Ben the And our next Brownlow

is open. line Your

Ben Brownlow

the the that can savings a on of little I bit of timing the to touch expect? of just segment. midstream kind get elimination more lease, and you around wanted The barge you that

Doran Schwartz

when a east to The out recall were that leg I from Bakken take railing coast on the that get once down ultimately Jim headwind. That of $X crude away, lease lease, last put EBITDA a Monroe it program that barge to oil with facility. transaction that river essentially essentially ultimately could one. to that the us was and that the we to the Delaware the barge million went presented

able we be exiting starting quarter, to headwind first of that in the out terms obviously negotiate by an to Bridger economic avoiding EBITDA which that the will business were that of in lease. benefit So

part the call. that quarter, year, So last having earlier would had of we will that improvement referencing million year are our $XXX million included be we that in a in the and I X the first this that referenced number reflected be in

Ben Brownlow

year-over-year, falling can talk within a that that and profit crude per gross around quarter there? the in gross segment Just you of the dynamic kind midstream barrel, barrel about sold thinking the profit about that just

Doran Schwartz

you the repeat sorry, can I’m question.

Ben Brownlow

profit barrel in about sold. barrel the that just talk on gross sold about pricing this just dynamic Can on led decline decline? the the quarter, crude and what you Yeah, in year-over-year thinking the

Doran Schwartz

of commodity Basically the and the we’re that was side reflection there seeing on to are at off do it’s each margins selling Bridger of Energy price today, money going And crude in what commodity business. are of be we a current the commodity with price A lot business making just they prices based saw skinnier of the and where are to they crude where barrel. buying has that environment. where and environment business,

Ben Brownlow

And just last one one from me.

was XX-Q expectations that forward about talk the CapEx some the maintenance X.X, in new being out CapEx. of you going maintenance trucks. of the On Can just Thanks. of know I pointed around delivery as

Doran Schwartz

We fleet, can the the see you appreciate can, first and truck truck of us terms individual the know I efficient thank of more that we’ve I getting for that all field helping new tell the one car market. right the on people the kind Mr. received said its cars, was basically the in in trucks. right be from new you (inaudible) of

trying then the but Denver the where more like type keep thing for as truck, I efficient, So, area sure make it mean fleet are right in not truck or that’s of and make having more the like kind geographic might truck the moderate, they are is fleet maneuverable that be things Rhino. the Blue only of do example, right that we areas smaller to well, to trucks, more in. that reflects urbanized the us

year future that as million. did months the than of in in as not be leasing a the forward, expect first lower, X.X quarter. the buying of at we for bit it – first it’s we the more be we’ll end because up perhaps So go oppose should nine going to first by rate I would it run to as end maintenance three months terms more that so we capital saw the

Operator

next Janney. your comes from Mike Gyure question [Operator from Instructions]

Your line open. is

Mike Gyure

and details maybe lot year some a think trying you Thanks bit metrics initiatives talk should maybe in some are connection the going we giving Can maybe capital versus to on. change that with you about the more of how around initiatives this have year a needs the those that or Doran related and about little for on last of that? to maybe

Doran Schwartz

here in acquisitions start we quarter. Let’s the recent the that had first with

which three capital, individually they above accretive, were So additions we cost were were they our but none small acquired solid print. foot material, propane good, of geographic of were they our business, to

think we included the on the Alabama. in at Rhino to capital and flow like kind fit that, plant the saw Form side, about about plants, look a the now. we’re in cash opportunities of then that You are Blue so to And change statement plant of acquisition continuing right with we size a we the for think in XX-Q, where California,

California, probably California California of solid. market, bigger all the of those from be million, fiscal anticipating a in plants forward and payback we are two come would CapEx be May returns and Those the that and line might might Northern in serving the of three plants going area payback get have were to plant a of California Again perspective. roughly up for highlight XXXX quite about today. timeframe. are on I reasonable around to little capital would as it investment the running potential Southern and areas or around growth We talking our that the previously Alabama call is of service I two to versus of the X a year more that. those what that, they level around on In good,

Mike Gyure

realistic reasonable of on do some working bit in for a I time. little kind projects. then talked based the sort capital a guess comments of reasonable, over your growth your your needs and thinking reduce the And you for debt you maybe needs a about capital think of on goals what initial is XX are, to of months period next

Doran Schwartz

with things bond November. debt worth maturities seeing over time. seen reasonable one flows on about The to that cash grow or To and of focused now. we thinking a period the XXXX. to and starting want as have decreasing again overall progress as in about, do in the levels facility themselves, our priority as here we’ve we renewed Clearly, de-levering that we’ve we are the well, is also thinking get right then it’s credit and we’re holders So about talked

talked sure look about, us portfolio assets, Jim our highest look fleet. asset as our be Those from going to cars taking opportunities make best access a like of at also, and that things rail are to tractor perspective we at or de-lever. our have use for to We’re taking a

is also As utensils previously talked about go barbecues, publicly we heaters, as Global to appliances, patio which for relates forward, it the we’ve business, Products example.

are that that that’s that we’re new which that significant in Jim And crude to also it the We and support that required the business ways looking support credit to facility. amount at Energy. by are we business marketing right credit reduce LCs sale. I of then our bring There business also potential that earlier for have amount Bridger a essentially we terms would and say LC of looking of reduce that in talked about to it amount to obviously debt level model buy support at business, down the should required to now, looking is

about year, debt-to-EBITDA. X.XX currently think next at the times we’re So

that. we’ll make reduction progress or it as come some later the over continue of ultimately period to working initiatives We the of this of in would throughout getting the down aggressively so. year. times reasonable course that that ranges that towards forecasting X.X think I the a debt call still strengthen here more to be on a we are We And of have to goal year. But time

Operator

no are the at the over questions turn There I’ll call to time. back presenters. this further

Doran Schwartz

message for in key and initiatives sitting the that from interest should you’ve lot we of is heard a and time a and you Okay. thank Well again walk will your cold or Again with as away back waiting Ferrellgas. today not we’re winter. that have for we today, say you

of and of EBITDA, benefit We the year’s from are seeing increase doing things some results. we’re last level to weather EBITDA without the

the move we as so in company. in for the believe company, we we the prospects believe And again forward,

that a products and the of We that employees must provide we that end in are we sell product services are or that are moving forward. all and have that rope same at we behind the and the the of pulling the industry, sell all

a the lies fiscal oppose for of mirror ourselves forward. front optimistic morale beyond. out ’XX and moving and the rearview year looking as windshield our and good we to what positioning about is We’re are And high the very

and complete I for a with So time good that your my thank have you day. Again remarks.

Operator

This concludes call. today’s conference

You now disconnect. may

Doran Schwartz	CFO and SVP
Jim Ferrell	Chairman, Interim CEO and President
Ben Brownlow	Raymond James
Mike Gyure	Janney Montgomery Scott LLC

Ferrellgas Partners (FGPR) 7 Dec 172018 Q1 Earnings call transcript