OVERLAND PARK, Kan., March 10 /PRNewswire-FirstCall/ -- Ferrellgas
Partners, L.P. (NYSE: FGP), one of the nation's largest propane distributors,
today reported earnings for its fiscal second quarter ended January 31, 2006.
Net earnings from continuing operations of $58.1 million for the fiscal
quarter improved by 8% while Adjusted EBITDA from continuing operations of
$105.9 million improved by 4%, each as compared to the second quarter of the
prior fiscal year as contributions from the partnership's new operating
platform more than offset the impacts of significantly warmer than normal
winter temperatures and the high wholesale energy commodity price on customer
demand.
Nationwide temperatures for the fiscal quarter, as measured by the
National Oceanic and Atmospheric Administration, were 13% warmer than normal
and 6% warmer than the same prior year period and for the month of January
2006, nationwide temperatures were 29% warmer than normal and 25% warmer than
January 2005 making it the warmest in recorded history. January typically
represents the partnership's largest gallon sales month.
Gross profit for the second fiscal quarter was $220.8 million compared to
$217.3 million achieved in the second quarter of fiscal 2005, as improved
margins resulting from enhanced pricing controls available under the new
operating platform and the continued growth in the Blue Rhino-branded tank
exchange sales more than offset the impact of reduced propane gallon sales in
the fiscal quarter.
Propane gallon sales for the second fiscal quarter were 283.3 million
compared to 331.5 million gallons sold in the second quarter of fiscal 2005.
For the first two months of the second fiscal quarter propane gallon sales
were off 7% compared to the same two-month period last year. However, with
the record-setting nationwide warm temperatures experienced during the month
of January, gallon sales for the fiscal quarter were most notably impacted by
January 2006 gallons sales that were off 27% compared to the same period last
year.
"Despite the impact from January's record warm temperatures, we are proud
of how our company managed through this challenging quarter," said James E.
Ferrell, Chairman, President and Chief Executive Officer. "We are pleased
that we continued our positive earnings momentum in the first two months of
the quarter by improving our year-to-date Adjusted EBITDA by more than
$24 million compared to the first five months of fiscal 2005. With the
return of some cooler temperatures at the beginning of our 3rd quarter, we are
again experiencing significant earnings improvement that we believe will be
reflected in our Adjusted EBITDA results in the last half of fiscal 2006."
Operating expense for the fiscal quarter was $96.6 million, down from
$97.4 million in the second quarter of fiscal 2005. Anticipated savings
achieved from the new operating platform were offset by increased variable
expenses, including vehicle fuel costs and the continued growth in tank
exchange sales volumes. General and administrative expense for the second
fiscal quarter was $11.8 million, which is consistent with the second quarter
of fiscal 2005 and equipment lease expense was $7.2 million, which is
consistent with the prior two fiscal quarters.
"This quarter's challenging environment gave us the opportunity to
showcase the capabilities of our new operating model. Although we are still
fine tuning the new model in an effort to better optimize our resources, the
results thus far are very impressive," said Mr. Ferrell. "Most notably, we
are pleased with the improved control we have in pricing our product to the
various channels of our business. With quicker access to better customer
information, we were able to improve margins this last quarter while
continuing to grow our net customer base."
For the six-months ended January 31, 2006, propane sales volumes and gross
profit were 451 million gallons and $348.4 million, respectively, and
operating and general and administrative expenses were $186.3 million and
$22.9 million, respectively. Interest and depreciation and amortization
expenses for the six-month period were $42.1 million and $42.7 million,
respectively, and equipment lease expense for the period was $14.2 million.
Adjusted EBITDA from continuing operations and net earnings from continuing
operations for the period were $126.2 million and $32.3 million, respectively.
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, Puerto Rico and Canada. Ferrellgas employees indirectly own more
than 18 million common units of the partnership 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, 2005, as amended on Form 10K/A, and other documents filed from time to
time by these entities with the Securities and Exchange Commission.
Contact:
Ryan VanWinkle, Investor Relations, 913-661-1528
Scott Brockelmeyer, Media Relations, 913-661-1830
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)
ASSETS January 31, 2006 July 31, 2005
Current Assets:
Cash and cash equivalents $30,212 $20,505
Accounts and notes receivable, net 118,705 107,778
Inventories 138,267 97,743
Prepaid expenses and other current
assets 15,811 12,861
Total Current Assets 302,995 238,887
Property, plant and equipment, net 745,874 766,765
Goodwill 233,805 234,142
Intangible assets, net 254,474 255,277
Other assets, net 12,784 13,902
Total Assets $1,549,932 $1,508,973
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Accounts payable $148,907 $108,667
Short term borrowings 22,167 19,800
Other current liabilities (a) 73,975 71,535
Total Current Liabilities 245,049 200,002
Long-term debt (a) 961,473 948,977
Other liabilities 20,120 20,165
Contingencies and commitments - -
Minority interest 6,000 6,151
Partners' Capital:
Common unitholders (60,478,074 and
60,134,054 units outstanding at
January 2006 and July 2005, respectively) 375,133 390,422
General partner unitholder (610,890
and 607,415 units outstanding at
January 2006 and July 2005, respectively) (56,285) (56,132)
Accumulated other comprehensive loss (1,558) (612)
Total Partners' Capital 317,290 333,678
Total Liabilities and Partners'
Capital $1,549,932 $1,508,973
(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, 2006 AND 2005
(in thousands, except per unit data)
(unaudited)
Three months ended Six months ended
January 31, January 31,
2006 2005 2006 2005
Revenues:
Propane and other gas liquids
sales $580,381 $574,875 $933,799 $887,897
Other 72,187 47,016 104,367 77,766
Total revenues 652,568 621,891 1,038,166 965,663
Cost of product sold:
Propane and other gas liquids
sales 385,615 380,340 631,262 599,846
Other 46,114 24,284 58,469 36,010
Gross profit 220,839 217,267 348,435 329,807
Operating expense 96,611 97,388 186,335 185,860
Depreciation and amortization
expense 21,623 21,032 42,726 40,624
General and administrative
expense 11,773 11,517 22,941 21,839
Equipment lease expense 7,197 6,147 14,217 11,907
Employee stock ownership plan
compensation charge 2,467 2,358 4,924 4,445
Loss on sale of assets and other 1,041 1,817 2,637 3,073
Operating income 80,127 77,008 74,655 62,059
Interest expense (21,240) (23,196) (42,115) (46,059)
Interest income 531 657 908 976
Earnings before income taxes,
minority interest, and
discontinued operations 59,418 54,469 33,448 16,976
Income tax expense (benefit) 700 339 700 (67)
Minority interest (b) 654 608 452 295
Earnings from continuing
operations before
discontinued operations 58,064 53,522 32,296 16,748
Earnings from discontinued
operations, net of minority
interest - 3,596 - 5,381
Net earnings 58,064 57,118 32,296 22,129
Distributions to senior unitholder - 1,994 - 3,988
Net earnings available to general
partner 6,605 7,595 323 181
Net earnings available to common
unitholders $51,459 $47,529 $31,973 $17,960
Basic earnings per common unit:
Net earnings available to common
unitholders before discontinued
operations (c) $0.85 $0.82 $0.53 $0.25
Earnings from discontinued
operations - 0.06 - 0.10
Net earnings available to common
unitholders (e) $0.85 $0.88 $0.53 $0.35
Weighted average common units
outstanding 60,397.4 53,706.5 60,279.7 52,032.5
Supplemental Data and Reconciliation of Non-GAAP Items:
Three months ended Six months ended
January 31, January 31,
2006 2005 2006 2005
Propane gallons (j) 283,292 331,461 450,699 516,160
Net earnings $58,064 $57,118 $32,296 $22,129
Income tax expense
(benefit) 700 339 700 (67)
Interest expense 21,240 23,196 42,115 46,059
Depreciation and amortization
expense 21,623 21,032 42,726 40,624
Interest income (531) (657) (908) (976)
EBITDA 101,096 101,028 116,929 107,769
Employee stock ownership plan
compensation charge 2,467 2,358 4,924 4,445
Unit and stock-based
compensation charge (f) 688 - 1,235 -
Non-cash charges related to
discontinued operations(a) - 338 - 611
Loss on disposal of assets and
other 1,041 1,817 2,637 3,073
Minority interest (b) 654 608 452 295
Adjusted EBITDA (d) 105,946 106,149 126,177 116,193
Adjusted EBITDA from
discontinued operations - 3,934 - 5,992
Adjusted EBITDA from
continuing operations 105,946 102,215 126,177 110,201
Net cash interest
expense (g) (21,847) (22,537) (42,801) (44,601)
Maintenance capital
expenditures (h) (3,233) (5,217) (6,059) (11,041)
Distributable cash flow to
equity investors (i) $80,866 $74,461 $77,317 $54,559
(a) Non-cash earnings related to the storage and distribution business
sold during July 2005 that were classified as discontinued
operations for the three and six months ended January 31, 2005.
(b) Amounts allocated to the general partner for its 1.0101% interest in
the operating partnership, Ferrellgas, L.P.
(c) Amount calculated as 99% of the earnings (loss) before discontinued
operations less distribution to senior unit holder; the result then
divided by the weighted average common units outstanding.
(d) 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 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.
(e) Emerging Issues Task Force ("EITF") 03-6 "Participating Securities
and the Two-Class Method under FASB Statement No. 128, Earnings per
Share," 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 to be 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
earnings to the limited partners. Due to the seasonality of the
propane business, the dilution of effect of the EITF 03-6 on net
earnings per limited partner unit will typically impact the three
months ending January 31. The dilutive effect of EITF 03-6 on basic
net earnings per common unit was $0.10 and $0.14 for the three months
ended January 31, 2006 and 2005, respectively. EITF 03-6 did not
result in a dilutive effect for the six months ended January 31, 2006
and 2005.
(f) Statement of Financial Accounting Standards ("SFAS") No. 123( R),
"Share-Based Payment" was adopted during the first quarter of fiscal
2006 and requires that the cost resulting from all share-based payment
transactions be recognized in the financial statements. Management
adopted this standard using the modified prospective application
method which resulted in a non-cash compensation charge of
$0.1 million and $0.6 million to operating expense and general and
administrative expense, respectively, for the three months ended
January 31, 2006, and $0.2 million and $1.0 million to operating
expense and general and administrative expense, respectively, for the
six months ended January 31, 2006.
(g) 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.
(h) Maintenance capital expenditures include capitalized expenditures for
betterment and replacement of property, plant and equipment.
(i) 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, as management defines it, may not be comparable to
distributable cash flow or similarly titled measures used by other
corporations and partnerships.
(j) Propane gallons includes 2.1 million gallons and 2.8 million gallons
for the three and six months ended January 31, 2005 related to the
storage and distribution business sold during July 2005 that were
classified as discontinued operations.
SOURCE Ferrellgas Partners, L.P.
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Related links:
http://www.ferrellgas.com
CONTACT:
Investor Relations, Ryan VanWinkle,
+1-913-661-1528, or Media Relations, Scott Brockelmeyer,
+1-913-661-1830, both of Ferrellgas Partners
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