OVERLAND PARK, Kan., March 8 /PRNewswire-FirstCall/ -- Ferrellgas
Partners, L.P. (NYSE: FGP), one of the nation's largest propane distributors,
today reported earnings for its second quarter ended January 31, 2005.
Propane sales for the second quarter increased 4 percent to 331 million
gallons, from 319 million gallons sold in the second quarter of fiscal 2004.
This increase in sales volume primarily reflects the contribution from the
Blue Rhino portable propane tank exchange operations, which more than offset
gallon sales impacted by winter heating season temperatures that were 7%
warmer than normal and 5% warmer than the same period last year.
"We continue to be pleased with the growth we are seeing from the Blue
Rhino tank exchange operations," said James E. Ferrell, Chairman, President
and Chief Executive Officer. "Blue Rhino has enjoyed a 25% growth in tank
exchange transactions and a 20% growth in same store sale transactions, year
to date. With the addition of more than 3,000 new locations since our
transaction last April, our brand recognition and aggressive sales efforts
have helped us achieve impressive organic growth. We are well positioned for
this summer's grilling season and look forward to a strong contribution from
these operations."
Gross profit for the quarter increased 14 percent to $221.8 million,
compared to $194.9 million reported in the second quarter of fiscal 2004.
This increase in gross profit was primarily due to the contribution from the
Blue Rhino operations and improved margins from retail locations, which were
partially offset by risk management results that were less than last year's
contribution.
Operating and general and administrative expenses for the second quarter
were $98.0 million and $11.5 million, respectively, compared to $79.8 million
and $9.0 million in the second quarter of fiscal 2004. Increases in these
expenses primarily reflect acquisitions completed in the last twelve-month
period and, to a lesser extent, anticipated costs associated with the on-going
roll-out of the partnership's new technology initiative to its retail
distribution outlets.
Interest and depreciation and amortization expenses were $23.2 million and
$21.3 million, respectively, compared to $17.3 million and $12.7 million in
the second quarter of fiscal 2004. Increases in these expenses primarily
reflect the impact of acquisitions completed in the last twelve-month period,
including the Blue Rhino transaction. Equipment lease expense for the quarter
was $6.2 million, compared to $4.7 million in the prior year's quarter
primarily reflecting costs associated with the implementation of the
partnership's new technology initiative.
"As we prepare to roll-out our new technology initiative to the remaining
two-thirds of our retail distribution outlets this spring, we are encouraged
by the results from the locations that operated on this new platform this
winter," said Mr. Ferrell. "As a result, we have identified numerous
operational efficiencies and cost saving opportunities that we have taken
action this winter to implement. These recent actions will result in more
than $10 million of sustained annual operating expense savings and upon the
completion of the rollout of the platform this year, we believe we can achieve
an additional $20 million contribution to adjusted EBITDA in fiscal 2006."
Adjusted EBITDA and net earnings for the second quarter were
$106.1 million and $57.1 million, respectively, compared to $101.4 million and
$67.1 million reported in the prior year period.
For the six-months ended January 31, 2005, propane sales volumes and gross
profit were 516 million gallons and $337.0 million, respectively, and
operating and general and administrative expenses were $187.0 million and
$21.8 million, respectively. Interest and depreciation and amortization
expenses for the six-month period were $46.1 million and $41.2 million,
respectively, and equipment lease expense for the period was $11.9 million.
Adjusted EBITDA and net earnings for the period were $116.2 million and
$22.1 million, respectively.
The partnership also announced today that the parent company of its
general partner, Ferrell Companies, Inc., has agreed to extend an existing
distribution priority on common units of the partnership it owns in favor of
common units owned by public investors. The existing provision in Ferrellgas'
partnership agreement provides the common units owned by the public a right to
receive distributions on available cash before distributions are made on
common units held by Ferrell Companies. This provision was originally
scheduled to expire at the end of calendar year 2005 and has been extended to
April 30, 2010. No other terms of the provision were modified. This
provision grants the partnership the ability to defer quarterly common unit
distributions to Ferrell Companies on a limited basis, if necessary, providing
public common unitholders additional distribution coverage. Ferrell Companies
owns approximately 18 million common units of the partnership.
Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas,
L.P., currently serves more than one million customers in all 50 states,
Puerto Rico, the U.S. Virgin Islands and Canada. Ferrellgas employees
indirectly own approximately 18 million common units of Ferrellgas Partners
through an employee stock ownership plan.
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, 2004, the Form 10-Q of these entities for
the fiscal quarter ended October 31, 2004 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 January 31, 2005 July 31, 2004
Current assets:
Cash and cash equivalents $31,501 $15,428
Accounts and notes receivable, net 141,226 114,211
Inventories 122,131 103,578
Prepaid expenses and other current assets 12,638 10,022
Total current assets 307,496 243,239
Property, plant and equipment, net 796,199 792,436
Goodwill 258,856 261,768
Intangible assets, net 268,321 265,125
Other assets 17,837 15,607
Total assets $1,648,709 $1,578,175
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable $131,244 $104,309
Other current liabilities (a) 87,369 92,793
Short-term borrowings 70,600 -
Total current liabilities 289,213 197,102
Long-term debt (a) 1,059,389 1,153,652
Other liabilities 22,687 20,531
Contingencies and commitments - -
Minority interest 5,532 4,791
Partners' capital:
Senior unitholder (1,994,146 units
outstanding and liquidation preference
$79,766 at both January 2005 and
July 2004) 79,766 79,766
Common unitholders (54,105,705 and
48,772,875 units outstanding at January
2005 and July 2004, respectively) 250,534 178,994
General partner unitholder (566,665 and
512,798 units outstanding at January
2005 and July 2004, respectively) (56,707) (57,391)
Accumulated other comprehensive
income (loss) (1,705) 730
Total partners' capital 271,888 202,099
Total liabilities and partners'
capital $1,648,709 $1,578,175
(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 AND SIX MONTHS ENDED JANUARY 31, 2005 AND 2004
(in thousands, except per unit data)
(Unaudited)
Three months ended Six months ended
January 31 January 31
2005 2004 2005 2004
Revenues:
Gas liquids and
related sales $605,744 $457,433 $932,855 $689,487
Other 50,564 24,348 83,141 47,708
Total revenues 656,308 481,781 1,015,996 737,195
Cost of product sold 434,518 286,899 679,034 446,148
Gross profit 221,790 194,882 336,962 291,047
Operating expense 97,971 79,804 187,011 152,283
Depreciation and
amortization expense 21,333 12,665 41,180 23,860
General and administrative
expense 11,517 8,982 21,839 15,873
Equipment lease expense 6,153 4,732 11,919 9,243
Employee stock ownership
plan compensation charge 2,358 2,164 4,445 3,948
Loss on disposal of assets
and other 1,817 1,926 3,073 3,552
Operating income 80,641 84,609 67,495 82,288
Interest expense (23,196) (17,291) (46,059) (34,085)
Interest income 657 470 976 801
Earnings before income
taxes and minority
interest 58,102 67,788 22,412 49,004
Income tax expense
(benefit) 339 - (67) -
Minority interest (a) 645 733 350 595
Net earnings 57,118 67,055 22,129 48,409
Distributions to senior
unitholder 1,994 1,994 3,988 3,988
Net earnings available to
general partner 7,595 16,713 181 1,896
Net earnings available to
common unitholders $47,529 $48,348 $17,960 $42,525
Basic earnings per
common unit:
Net earnings per common
unitholder (b) $0.88 $1.24 $0.35 $1.11
Weighted average common
units outstanding 53,706.5 39,048.2 52,032.5 38,377.2
Supplemental Data and Reconciliation of Non-GAAP Item:
Three months ended Six months ended
January 31 January 31
2005 2004 2005 2004
Propane sales volumes
(in thousands of
gallons) 331,461 318,767 516,160 494,339
Net earnings $57,118 $67,055 $22,129 $48,409
Income tax expense
(benefit) 339 - (67) -
Interest expense 23,196 17,291 46,059 34,085
Depreciation and
amortization expense 21,333 12,665 41,180 23,860
Interest income (657) (470) (976) (801)
EBITDA $101,329 $96,541 $108,325 $105,553
Employee stock
ownership plan
compensation charge 2,358 2,164 4,445 3,948
Loss on disposal of
assets and other 1,817 1,926 3,073 3,552
Minority interest (a) 645 733 350 595
Adjusted EBITDA (c) $106,149 $101,364 $116,193 $113,648
(a) Amounts allocated to the general partner for its 1.0101% interest in
the operating partnership, Ferrellgas, L.P.
(b) Ferrellgas implemented Emerging Issues Task Force ("EITF") 03-6
"Participating Securities and the Two-Class Method under FASB
Statement No. 128, Earnings per Share" in the quarter ended
January 31, 2005, which was the first quarter affected by this
consensus. EITF 03-6 requires the calculation of net earnings per
limited partner unit for each period presented according to
distributions declared and participation rights in undistributed
earnings, as if all of the earnings for the period had been
distributed. In periods with undistributed earnings above certain
levels, the calculation according to the two-class method results in
an increased allocation of undistributed earnings to the general
partner and a dilution of the earnings to the limited partners. Due
to the seasonality of the propane business, the dilution effect of
EITF 03-6 on net earnings per limited partner unit will typically
impact the three months and six months ending January 31. The
dilutive effect of EITF 03-6 on basic net earnings per common unit
was $0.14 and $0.41 for the three months ended January 31, 2005 and
2004, respectively, and $0.00 and $0.04 for the six months ended
January 31, 2005 and 2004, 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, 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 to 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.
Contact:
Ryan VanWinkle, Investor Relations, 913-661-1528
Scott Brockelmeyer, Media Relations, 913-661-1830
SOURCE Ferrellgas Partners, L.P.
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Related links:
http://www.ferrellgas.com
CONTACT:
Ryan VanWinkle, Investor Relations,
+1-913-661-1528, or Scott Brockelmeyer, Media Relations,
+1-913-661-1830, both of Ferrellgas Partners, L.P.
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