Ferrellgas Partners, L.P. Reports financial results for its fiscal year ended July 31, 2017
OREANDA-NEWS. Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today announced financial results for its fiscal year ended July 31, 2017. The Company reported net loss attributable to Ferrellgas Partners, L.P. of $54.2 million, compared to net loss of $665.4 million for the same period in 2016.
Adjusted EBITDA was $230.1 million compared to $344.7 million in the prior year period primarily due to decreased contributions from the midstream operations segment.
“Weather for fiscal 2017 was a stunning 18% warmer than normal, and significantly affected our financial results,” said James E. Ferrell, the Company’s interim President and Chief Executive Officer. “Our strategy is to increase market share as reflected in our 2% increase in retail gallons sold, exceeding those of prior year on an absolute and weather adjusted basis. Overall gross margin was lower than the prior year period due to customer mix and an increase in the overall wholesale cost of propane.”
Propane gallons sold were 791.1 million gallons, compared to 778.9 million gallons in the prior year. Operating income generated by the propane operations and related equipment sales segment was $187.9 million, compared to $204.9 million in the prior year period.
Our midstream operations segment generated an operating loss of $26.3 million this year compared to $648.3 million in fiscal 2016 primarily due to the impairment charge of $658.1 million recorded last year.
About Ferrellgas
Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., and subsidiaries, serves propane customers in all 50 states, the District of Columbia, and Puerto Rico, and provides midstream services to major energy companies in the United States. Ferrellgas employees indirectly own 22.8 million common units of the partnership, through an employee stock ownership plan. Ferrellgas Partners, L.P. filed a Form 10-K with the Securities and Exchange Commission on September 28, 2017. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership online at www.ferrellgas.com.
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except unit data) | ||||||||
(unaudited) | ||||||||
ASSETS | July 31, 2017 | July 31, 2016 | ||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 5,760 | $ | 4,965 | ||||
Accounts and notes receivable, net (including $109,407 and $106,464 of | ||||||||
accounts receivable pledged as collateral at July 31, 2017 and | ||||||||
July 31, 2016, respectively and net of allowance for doubtful accounts of | ||||||||
$1,976 and $5,067 at 2017 and 2016, respectively) | 165,084 | 149,583 | ||||||
Inventories | 92,552 | 90,594 | ||||||
Prepaid expenses and other current assets | 33,388 | 39,973 | ||||||
Total Current Assets | 296,784 | 285,115 | ||||||
Property, plant and equipment, net | 731,923 | 774,680 | ||||||
Goodwill | 256,103 | 256,103 | ||||||
Intangible assets, net | 251,102 | 280,185 | ||||||
Other assets, net | 74,057 | 87,223 | ||||||
Total Assets | $ | 1,609,969 | $ | 1,683,306 | ||||
LIABILITIES AND PARTNERS' DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 85,561 | $ | 67,928 | ||||
Short-term borrowings | 59,781 | 101,291 | ||||||
Collateralized note payable | 69,000 | 64,000 | ||||||
Other current liabilities | 126,224 | 128,958 | ||||||
Total Current Liabilities | 340,566 | 362,177 | ||||||
Long-term debt (a) | 1,995,795 | 1,941,335 | ||||||
Other liabilities | 31,118 | 31,574 | ||||||
Contingencies and commitments | ||||||||
Partners Deficit: | ||||||||
Common unitholders (97,152,665 and 98,002,665 units outstanding at | ||||||||
July 31, 2017 and July 31, 2016) | (701,188 | ) | (570,754 | ) | ||||
General partner unitholder (989,926 units outstanding at July 31, 2017 and July 31, 2016) | (66,991 | ) | (65,835 | ) | ||||
Accumulated other comprehensive income (loss) | 14,601 | (10,468 | ) | |||||
Total Ferrellgas Partners, L.P. Partners' Deficit | (753,578 | ) | (647,057 | ) | ||||
Noncontrolling Interest | (3,932 | ) | (4,723 | ) | ||||
Total Partners' Deficit | (757,510 | ) | (651,780 | ) | ||||
Total Liabilities and Partners' Deficit | $ | 1,609,969 | $ | 1,683,306 | ||||
(a) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $357 million of 8.625% notes | ||||||||
which are liabilities of Ferrellgas Partners, L.P. and not of Ferrellgas, L.P. | ||||||||
FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per unit data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
July 31 | July 31 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Propane and other gas liquids sales | $ | 269,201 | $ | 241,282 | $ | 1,318,412 | $ | 1,202,368 | ||||||||
Midstream operations | 135,196 | 137,811 | 466,703 | 625,238 | ||||||||||||
Other | 28,979 | 30,418 | 145,162 | 211,761 | ||||||||||||
Total revenues | 433,376 | 409,511 | 1,930,277 | 2,039,367 | ||||||||||||
Cost of sales: | ||||||||||||||||
Propane and other gas liquids sales | 142,427 | 115,592 | 694,155 | 564,433 | ||||||||||||
Midstream operations | 129,006 | 97,335 | 429,439 | 471,234 | ||||||||||||
Other | 14,054 | 14,812 | 67,267 | 126,237 | ||||||||||||
Gross profit | 147,889 | 181,772 | 739,416 | 877,463 | ||||||||||||
Operating expense | 109,477 | 111,326 | 431,751 | 457,910 | ||||||||||||
Depreciation and amortization expense | 25,805 | 37,815 | 103,351 | 150,513 | ||||||||||||
General and administrative expense | 13,091 | 11,923 | 46,980 | 48,579 | ||||||||||||
Equipment lease expense | 7,089 | 7,279 | 29,124 | 28,833 | ||||||||||||
Non-cash employee stock ownership plan compensation charge | 3,692 | 9,220 | 15,088 | 27,595 | ||||||||||||
Non-cash stock-based compensation charge (a) | - | 2,567 | 3,298 | 9,324 | ||||||||||||
Asset impairments | - | 628,802 | - | 658,118 | ||||||||||||
Loss on asset sales and disposal | 5,596 | 7,615 | 14,457 | 30,835 | ||||||||||||
Operating income (loss) | (16,861 | ) | (634,775 | ) | 95,367 | (534,244 | ) | |||||||||
Interest expense | (40,378 | ) | (35,048 | ) | (152,485 | ) | (137,937 | ) | ||||||||
Other income (expense), net | 41 | 199 | 1,474 | 110 | ||||||||||||
Loss before income taxes | (57,198 | ) | (669,624 | ) | (55,644 | ) | (672,071 | ) | ||||||||
Income tax benefit | (949 | ) | (1,482 | ) | (1,143 | ) | (36 | ) | ||||||||
Net loss | (56,249 | ) | (668,142 | ) | (54,501 | ) | (672,035 | ) | ||||||||
Net loss attributable to noncontrolling interest (b) | (481 | ) | (6,708 | ) | (294 | ) | (6,620 | ) | ||||||||
Net loss attributable to Ferrellgas Partners, L.P. | (55,768 | ) | (661,434 | ) | (54,207 | ) | (665,415 | ) | ||||||||
Less: General partner's interest in net loss | (558 | ) | (6,614 | ) | (542 | ) | (6,654 | ) | ||||||||
Common unitholders' interest in net loss | $ | (55,210 | ) | $ | (654,820 | ) | $ | (53,665 | ) | $ | (658,761 | ) | ||||
Loss Per Common Unit | ||||||||||||||||
Basic and diluted net loss per common unitholders' interest | $ | (0.57 | ) | $ | (6.68 | ) | $ | (0.55 | ) | $ | (6.68 | ) | ||||
Weighted average common units outstanding - basic | 97,152.7 | 98,002.7 | 97,229.5 | 98,682.8 | ||||||||||||
Supplemental Data and Reconciliation of Non-GAAP Items: | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
July 31 | July 31 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net loss attributable to Ferrellgas Partners, L.P. | $ | (55,768 | ) | $ | (661,434 | ) | $ | (54,207 | ) | $ | (665,415 | ) | ||||
Income tax benefit | (949 | ) | (1,482 | ) | (1,143 | ) | (36 | ) | ||||||||
Interest expense | 40,378 | 35,048 | 152,485 | 137,937 | ||||||||||||
Depreciation and amortization expense | 25,805 | 37,815 | 103,351 | 150,513 | ||||||||||||
EBITDA | 9,466 | (590,053 | ) | 200,486 | (377,001 | ) | ||||||||||
Non-cash employee stock ownership plan compensation charge | 3,692 | 9,220 | 15,088 | 27,595 | ||||||||||||
Non-cash stock based compensation charge (a) | - | 2,567 | 3,298 | 9,324 | ||||||||||||
Asset impairments | - | 628,802 | - | 658,118 | ||||||||||||
Loss on asset sales and disposal | 5,596 | 7,615 | 14,457 | 30,835 | ||||||||||||
Other (income) expense, net | (41 | ) | (199 | ) | (1,474 | ) | (110 | ) | ||||||||
Change in fair value of contingent consideration (included in operating expense) | - | - | - | (100 | ) | |||||||||||
Severance expense $414 included in operating expense for the twelve months ended period July 31, 2017 | ||||||||||||||||
and $1,545 included in general and administrative expense for the twelve months ended July 31, 2017. | ||||||||||||||||
Also includes $128 and $1,329 in operating expense for the three and twelve months ended July 31, 2017 | ||||||||||||||||
and $124 general and administrative expense for the twelve months ended July 31, 2017. | - | 128 | 1,959 | 1,453 | ||||||||||||
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $1,751, and $540 | ||||||||||||||||
included in cost of sales for the three and twelve months ended July 31, 2017, respectively, and | ||||||||||||||||
$(1,849) and $(448) for the three and twelve months ended July 31, 2016, respectively. Also includes $(759) and | ||||||||||||||||
$(3,997) included in operating expense for the three and twelve months ended July 31, 2017, respectively, and | ||||||||||||||||
$(7) and $1,585 for the three and twelve months ended July 31, 2016, respectively. | 992 | (1,856 | ) | (3,457 | ) | 1,137 | ||||||||||
Acquisition and transition expenses (included in general and administrative expense) | - | - | - | 99 | ||||||||||||
Net loss attributable to noncontrolling interest (b) | (481 | ) | (6,708 | ) | (294 | ) | (6,620 | ) | ||||||||
Adjusted EBITDA (c) | 19,224 | 49,516 | 230,063 | 344,730 | ||||||||||||
Net cash interest expense (d) | (38,118 | ) | (33,604 | ) | (143,588 | ) | (132,860 | ) | ||||||||
Maintenance capital expenditures (e) | (6,417 | ) | (3,549 | ) | (16,935 | ) | (17,137 | ) | ||||||||
Cash paid for taxes | (282 | ) | (345 | ) | (310 | ) | (777 | ) | ||||||||
Proceeds from asset sales | 3,789 | 51 | 7,952 | 6,023 | ||||||||||||
Distributable cash flow attributable to equity investors (f) | (21,804 | ) | 12,069 | 77,182 | 199,979 | |||||||||||
Distributable cash flow attributable to general partner and non-controlling interest | (436 | ) | 241 | 1,544 | 4,000 | |||||||||||
Distributable cash flow attributable to common unitholders | (21,368 | ) | 11,828 | 75,638 | 195,979 | |||||||||||
Less: Distributions paid to common unitholders | 9,715 | 50,226 | 78,936 | 202,119 | ||||||||||||
Distributable cash flow shortage | $ | (31,083 | ) | $ | (38,398 | ) | $ | (3,298 | ) | $ | (6,140 | ) | ||||
Propane gallons sales | ||||||||||||||||
Retail - Sales to End Users | 91,778 | 87,625 | 564,872 | 552,771 | ||||||||||||
Wholesale - Sales to Resellers | 56,218 | 56,129 | 226,251 | 226,121 | ||||||||||||
Total propane gallons sales | 147,996 | 143,754 | 791,123 | 778,892 | ||||||||||||
Midstream operations barrels | ||||||||||||||||
Crude oil hauled | 12,700 | 14,587 | 49,249 | 79,411 | ||||||||||||
Crude oil sold | 2,242 | 1,891 | 7,470 | 6,860 | ||||||||||||
(a) Non-cash stock-based compensation charges consist of the following: | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
July 31 | July 31 | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Operating expense | $ | - | $ | 385 | $ | 661 | $ | 1,268 | ||||||||
General and administrative expense | - | 2,182 | 2,637 | 8,056 | ||||||||||||
Total | $ | - | $ | 2,567 | $ | 3,298 | $ | 9,324 | ||||||||
(b) Amounts allocated to the general partner for its 1.0101% interest in the operating partnership, Ferrellgas, L.P. | ||||||||||||||||
(c) Adjusted EBITDA is calculated as net loss attributable to Ferrellgas Partners, L.P., less the sum of the following: income tax benefit, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, asset impairments, loss on asset sales and disposal, other (income) expense, net, change in fair value of contingent consideration, severance expense, unrealized (non-cash) losses (gains) on changes in fair value of derivatives, acquisition and transition expenses and net loss attributable to noncontrolling interest. 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 makes it easier to compare its results with other companies that have different financing and capital structures. 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 other expense, net. This amount 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) Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest, maintenance capital expenditures, cash paid for taxes, and proceeds from asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to equity investors. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to distributable cash flow attributable to equity investors or similarly titled measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP. | ||||||||||||||||
(g) Distributable cash flow attributable to common unitholders is calculated as Distributable cash flow attributable to equity investors minus distributable cash flow attributable to general partner and noncontrolling interests. Management considers distributable cash flow attributable to common unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to common unitholders. Distributable cash flow attributable to common unitholders, as management defines it, may not be comparable to distributable cash flow attributable to common unitholders or similarly titled measurements used by other corporations and partnerships. Items added to our calculation of distributable cash flow attributable to common unit holders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to common unitholders may not be consistent with that of other companies and should be viewed in conjunction with measurements that are computed in accordance with GAAP. | ||||||||||||||||
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