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Ferrellgas Partners, L.P. Reports Fiscal 2016 Earnings

OVERLAND PARK, Kan., Sept. 28, 2016 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. (NYSE:FGP) (“Ferrellgas” or the “Company”) today reported financial results for the full fiscal year ended July 31, 2016.

/EIN News/ -- The Company reported a net loss attributable to Ferrellgas Partners, L.P. of $665.4 million, compared to net earnings attributable to Ferrellgas Partners, L.P. of $29.6 million in the full fiscal year 2015.  The net loss for the current fiscal year includes a one-time non-cash impairment charge of $628.8 million in our Midstream operations – Crude oil Logistics segment and a one-time non-cash impairment charge of $29.3 million in our Other midstream operations – water solutions reporting unit.

The Company also announced Adjusted EBITDA of $344.7 million for fiscal 2016, an increase of 14.8% from $300.2 million in the previous year.

Continued strong expense controls in the Propane and related equipment sales segment helped offset the impact of elevated temperatures, which were 19% warmer than normal and 16% warmer than the prior year period. Interest expense totaled $137.9 million for the full fiscal year in 2016, compared to $100.4 million in the prior year, primarily due to $500 million of notes issued in connection with the Bridger acquisition in June 2015.

“As we highlighted last quarter, record temperatures across the nation continue to have an adverse impact on the propane sector of our company and low oil prices have seriously damaged our midstream sector.” said James E. Ferrell, Interim President and Chief Executive Officer. “In particular, unusually warm winters over the past two years drove down propane sales across all our geographies, and low crude oil prices have negatively impacted our midstream logistics business.”

Because of the increase in debt incurred to fund the Bridger acquisition, the recently announced Jamex settlement and the effects of the record warm temperatures in fiscal 2016, our leverage ratio has increased to levels approaching the 5.5x limit provided in our secured credit facility and accounts receivable securitization facility.  On September 27, 2016, Ferrellgas obtained an amendment under the secured credit facility and accounts receivable securitization facility pursuant to which the maximum leverage ratio is increased to a range of 5.95x to 6.05x over the next six quarters.

Further, the Company is focused on the reduction of its debt and leverage ratio.  One tactic under consideration is a reduction in our quarterly distribution, which will continue to be determined by the board of directors of our general partner on a quarter-by-quarter basis. The distribution for the first quarter of fiscal 2017 has not yet been determined, but our board believes that it is possible that the annual distribution rate may be reduced from $2.05 to approximately $1.00 per common unit. Any such reduction, together with any other debt-reducing actions taken would likely remain in effect until our leverage ratio reaches a level that we deem appropriate for our business.

Mr. Ferrell stated, “In light of the recent developments related to our Jamex settlement, a prolonged downturn in the midstream sector, as well as two full years of erratic weather patterns driving down propane demand, we are taking prudent action at this time to preserve capital and improve the Company’s financial position. We are committed to strengthening our balance sheet by de-levering in a meaningful way. We are confident this action will support the long-term interests of our unitholders, employee-owners and other stakeholders, and we look forward to growth in distribution when our leverage ratio and debt return to more reasonable levels.”

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, 2016. Investors can request a hard copy of this filing free of charge and obtain more information about the partnership online at www.ferrellgas.com.

Forward Looking Statements 
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, 2016, and in 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   July 31, 2016   July 31, 2015            
                     
Current Assets:                    
Cash and cash equivalents   $ 4,965     $ 7,652              
Accounts and notes receivable, net (including $106,464 and 123,791 of            
accounts receivable pledged as collateral at July 31, 2016            
and July 31, 2015, respectively)     149,583       196,918      
Inventories     90,594       96,754      
Prepaid expenses and other current assets     39,973       64,285      
Total Current Assets     285,115       365,609      
             
Property, plant and equipment, net     774,680       965,217      
Goodwill     256,103       478,747      
Intangible assets, net     280,185       580,043      
Other assets, net (a)     86,443       48,113      
Assets held for sale     780       -      
Total Assets   $ 1,683,306     $ 2,437,729      
             
             
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)            
             
Current Liabilities:            
Accounts payable   $ 67,928     $ 83,974      
Short-term borrowings     101,291       75,319      
Collateralized note payable     64,000       70,000      
Other current liabilities     128,958       180,687      
Total Current Liabilities     362,177       409,980      
             
Long-term debt (a) (b)     1,941,335       1,778,065      
Other liabilities     31,574       41,975      
Contingencies and commitments            
             
Partners' Capital (Deficit):             
Common unitholders (98,002,665 and 100,376,789 units outstanding at            
July 31, 2016 and July 31, 2015)     (570,754 )     299,730      
General partner unitholder (989,926 and 1,013,907 units outstanding at            
July 31, 2016 and July 31, 2015)     (65,835 )     (57,042 )    
Accumulated other comprehensive loss     (10,468 )     (38,934 )    
Total Ferrellgas Partners, L.P. Partners' Capital (Deficit)     (647,057 )     203,754      
Noncontrolling Interest     (4,723 )     3,955      
Total Partners' Capital (Deficit)     (651,780 )     207,709      
Total Liabilities and Partners' Capital   $ 1,683,306     $ 2,437,729      
                     
                     
(a) Reflects the reclassification of debt issuance costs within Long-term debt that was previously reported within Other assets, net.            
(b) The principal difference between the Ferrellgas Partners, L.P. balance sheet and that of Ferrellgas, L.P., is $182 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  
CONSOLIDATED STATEMENTS OF EARNINGS  
FOR THE THREE AND TWELVE MONTHS ENDED JULY 31, 2016 AND 2015  
(in thousands, except per unit data)  
(unaudited)  
    Three months ended    Twelve months ended   
    July 31   July 31  
      2016       2015       2016       2015    
Revenues:                  
Propane and other gas liquids sales   $ 241,282     $ 256,121     $ 1,202,368     $ 1,657,016    
Midstream operations     137,811       86,827       625,238       107,189    
Other     30,418       39,563       211,761       260,185    
Total revenues     409,511       382,511       2,039,367       2,024,390    
                   
Cost of sales:                  
Propane and other gas liquids sales     115,592       128,034       564,433       977,224    
Midstream operations     97,335       70,526       471,234       76,590    
Other     14,812       23,025       126,237       170,697    
                   
Gross profit      181,772       160,926       877,463       799,879    
                   
Operating expense     111,326       115,369       457,910       432,282    
Depreciation and amortization expense     37,815       28,003       150,513       98,579    
General and administrative expense     11,923       26,730       48,579       56,431    
Equipment lease expense     7,279       6,599       28,833       24,273    
Non-cash employee stock ownership plan compensation charge     9,220       7,985       27,595       24,713    
Non-cash stock-based compensation charge (a)     2,567       6,281       9,324       25,982    
Asset impairments     628,802       -       658,118       -    
Loss on asset sales and disposal     7,615       2,521       30,835       7,099    
                   
Operating income (loss)     (634,775 )     (32,562 )     (534,244 )     130,520    
                   
Interest expense     (35,048 )     (28,599 )     (137,937 )     (100,396 )  
Other income (expense), net     199       65       110       (350 )  
                   
Earnings (loss) before income taxes     (669,624 )     (61,096 )     (672,071 )     29,774    
                   
Income tax benefit     (1,482 )     (1,763 )     (36 )     (315 )  
                   
Net earnings (loss)     (668,142 )     (59,333 )     (672,035 )     30,089    
                   
Net earnings (loss) attributable to noncontrolling interest (b)     (6,708 )     (558 )     (6,620 )     469    
                   
Net earnings (loss) attributable to Ferrellgas Partners, L.P.     (661,434 )     (58,775 )     (665,415 )     29,620    
                   
Less: General partner's interest in net earnings (loss)     (6,614 )     (588 )     (6,654 )     296    
                   
Common unitholders' interest in net earnings (loss)   $ (654,820 )   $ (58,187 )   $ (658,761 )   $ 29,324    
                   
Earnings (loss) Per Unit                  
Basic and diluted net earnings (loss) per common unitholders' interest   $ (6.68 )   $ (0.64 )   $ (6.68 )   $ 0.35    
                   
Weighted average common units outstanding     98,002.7       90,908.0       98,682.8       84,646.2    
                   
                   
Supplemental Data and Reconciliation of Non-GAAP Items:  
                   
    Three months ended    Twelve months ended   
    July 31   July 31  
      2016       2015       2016       2015    
                   
                   
Net earnings (loss) attributable to Ferrellgas Partners, L.P.   $ (661,434 )   $ (58,775 )   $ (665,415 )   $ 29,620    
Income tax benefit     (1,482 )     (1,763 )     (36 )     (315 )  
Interest expense     35,048       28,599       137,937       100,396    
Depreciation and amortization expense     37,815       28,003       150,513       98,579    
EBITDA     (590,053 )     (3,936 )     (377,001 )     228,280    
Non-cash employee stock ownership plan compensation charge     9,220       7,985       27,595       24,713    
Non-cash stock based compensation charge (a)     2,567       6,281       9,324       25,982    
Asset impairments     628,802       -       658,118       -    
Loss on asset sales and disposal     7,615       2,521       30,835       7,099    
Other income (expense), net     (199 )     (65 )     (110 )     350    
Change in fair value of contingent consideration (included in operating expense)     -       -       (100 )     (6,300 )  
Severance costs ($128 and $1,329 included in operating costs for the three and twelve months ended period                  
July 31, 2016 and $0 and $124 included in general and administrative costs for the three and twelve months                  
ended period July 31, 2016)     128       -       1,453       -    
Litigation accrual and related legal fees associated with a class action lawsuit (included in general                  
and administrative expense)     -       -       -       806    
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(7) and $1,585 included in operating                
expense for the three and twelve months ended July 31, 2016 and $4,021 and $2,412 for the three and twelve                  
months ended July 31, 2015. Also includes $(1,849) and $(448) included in midstream operations cost of sales                  
for the three and twelve months ended July 31, 2016, respectively.     (1,856 )     4,021       1,137       2,412    
Acquisition and transition expenses (included in general and administrative expense)     0       16,373       99       16,373    
Net earnings (loss) attributable to noncontrolling interest (b)     (6,708 )     (558 )     (6,620 )     469    
Adjusted EBITDA (c)     49,516       32,622       344,730       300,184    
Net cash interest expense (d)     (33,604 )     (27,551 )     (132,860 )     (96,150 )  
Maintenance capital expenditures (e)     (3,549 )     (4,749 )     (17,137 )     (19,612 )  
Cash paid for taxes     (345 )     (379 )     (777 )     (712 )  
Proceeds from asset sales     51       1,845       6,023       5,905    
Distributable cash flow to equity investors (f)     12,069       1,788       199,979       189,615    
Distributable cash flow attributable to general partner and non-controlling interest     241       35       4,000       3,792    
Distributable cash flow attributable to common unitholders     11,828       1,753       195,979       185,823    
Less: Distributions paid to common unitholders     50,226       41,359       202,119       165,433    
Distributable cash flow excess/(shortage)   $ (38,398 )   $ (39,606 )   $ (6,140 )   $ 20,390    
                   
Propane gallons sales                  
Retail - Sales to End Users     87,625       90,055       552,771       608,781    
Wholesale - Sales to Resellers     56,129       58,997       226,121       270,065    
Total propane gallons sales     143,754       149,052       778,892       878,846    
                   
Midstream operations barrels                  
Salt water volume processed     3,563       3,801       16,543       17,035    
Crude oil hauled
    14,587       10,447       79,411       10,447    
Crude oil sold     1,891       527       6,860       702    
                   
(a)  Non-cash stock-based compensation charges consist of the following:                  
    Three months ended   Twelve months ended  
    July 31   July 31  
      2016       2015       2016       2015    
Operating expense   $ 385     $ 942     $ 1,268     $ 5,175    
General and administrative expense     2,182       5,339       8,056       20,807    
Total   $ 2,567     $ 6,281     $ 9,324     $ 25,982    
               
               
(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 earnings (loss) attributable to Ferrellgas Partners, L.P., income tax expense (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 disposals,
 
other income (expense), net, change in fair value of contingent consideration, litigation accrual and related legal fees associated with a class action lawsuit, unrealized (non-cash) losses (gains)  
on changes in fair value of derivatives, acquisition and transition expenses and net earnings (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)  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 equity investors. Distributable cash flow to equity investors, as management defines it, may not be comparable to distributable cash flow to equity investors or similarly titled
 
measurements used by other corporations and partnerships. Items added into our calculation of distributable cash flow to equity investors that will not occur on a continuing basis
 
may have associated cash payments. Distributable cash flow 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.
 
 
Contact:
Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833
Jack Herrold, Investor Relations – jackherrold@ferrellgas.com, 913-661-1851

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