Ferrellgas Partners, L.P. Reports Results for Second Quarter Fiscal 2017

OVERLAND PARK, Kan., March 09, 2017 (GLOBE NEWSWIRE) -- Ferrellgas Partners, L.P. FGP ("Ferrellgas" or the "Company") today announced financial results for its second fiscal quarter ended January 31, 2017. The Company reported net earnings attributable to Ferrellgas Partners, L.P. of $38.1 million, compared to net earnings of $57.1 million for the same period in 2016.

Adjusted EBITDA was $105.0 million, compared to $138.3 million in the prior year period primarily due to decreased contributions from the midstream crude oil logistics segment. Propane gallons sold were up 7% to 267.7 million gallons, compared to 250.2 million gallons in the prior year period. Operating income generated by the propane and related equipment sales segment was $95.3 million, compared to $97.8 million in the prior year period.

"Weather for the second fiscal quarter was 4% colder than last year but a stunning 14% warmer than normal," said James E. Ferrell, the Company's interim President and Chief Executive Officer. "Our efforts to increase market share resulted in gallons increasing approximately 7%, but resulted in overall margins lower than the prior year period, due to customer mix and location."

Mr. Ferrell continued, "The leadership changes we announced earlier this year are going to reap significant benefits. Dan Giannini at Bridger and Geoff Berger at Blue Rhino are going to drive growth and improved results. In addition, Randy Schott, a 28-year veteran of Ferrellgas and Sr. Vice President in charge of our large Retail propane business has also instilled a growth mindset in his people. Morale in the company could not be higher."

At the end of the second fiscal quarter, the Company's leverage ratio was 5.81x, which was lower than the limit allowed under its secured credit facility and accounts receivable securitization facility, as amended in September 2016.

Mr. Ferrell added, "We were pleased to be able to upsize the Company's recent note issuance to $175 million. Our goal is to return to a leverage ratio of 4.5x or a level we deem appropriate for our business."

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. These statements often use words such as "anticipate," "believe," "intend," "plan," "projection," "forecast," "strategy," "position," "continue," "estimate," "expect," "may," "will," or the negative of those terms or other variations of them or comparable terminology. Forward-looking statements, include, but are not limited to: Ferrellgas' debt reduction plans, Ferrellgas' leverage ratio reduction plans, statements regarding future unitholder returns, growth and improved results, plans to increase the utilization of certain assets, the anticipated impact of Ferrellgas' actions on its balance sheet and liquidity position, and the anticipated impact of Ferrellgas' leadership changes. While Ferrellgas believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: risks related to Ferrellgas' ability to generate sufficient cash flow to pay distributions, to make payments on its debt obligations and to execute its business plan; Ferrellgas' ability to access funds on acceptable terms, if at all, because of the terms and conditions governing its indebtedness or otherwise; local, regional and national economic conditions and the impact they may have on Ferrellgas and its customers; the effect of weather conditions on the demand for propane; the prices of wholesale propane, motor fuel and crude oil; disruptions to the supply of propane; the termination or non-renewal of certain arrangements or agreements; adverse changes in our relationships with our national propane customers; significant delays in the collection of, or uncollectibility of, accounts or notes receivable; the financial condition of Ferrellgas' customers; and the failure of any customer to perform its contractual obligations. 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, the Form 10-Q of these entities for the fiscal quarter ended January 31, 2017, and in other documents filed from time to time by these entities with the Securities and Exchange Commission.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Except as required by law, Ferrellgas undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE, SIX AND TWELVE MONTHS ENDED JANUARY 31, 2017 AND 2016
(in thousands, except per unit data)
(unaudited)
	Three months ended						Six months ended						Twelve months ended
	January 31						January 31						January 31
		2017			2016			2017			2016			2017			2016
Revenues:
Propane and other gas liquids sales	$	437,375		$	376,856		$	679,774		$	622,157		$	1,259,985		$	1,323,945
Midstream operations		96,787			188,333			204,831			382,003			448,066			474,123
Other		45,088			84,049			74,187			116,224			169,724			237,378
Total revenues		579,250			649,238			958,792			1,120,384			1,877,775			2,035,446

Cost of sales:
Propane and other gas liquids sales		235,029			174,829			354,241			296,580			622,094			678,298
Midstream operations		87,024			148,443			181,666			302,047			350,853			374,450
Other		20,657			55,774			32,403			70,222			88,418			150,956

Gross profit		236,540			270,192			390,482			451,535			816,410			831,742

Operating expense		112,509			116,463			217,501			231,444			443,967			453,696
Depreciation and amortization expense		25,607			37,367			51,809			74,346			127,976			125,673
General and administrative expense		11,429			12,062			23,911			24,302			48,188			59,284
Equipment lease expense		7,416			7,278			14,765			14,310			29,288			27,256
Non-cash employee stock ownership plan compensation charge		2,945			3,141			6,699			8,397			25,897			24,948
Non-cash stock-based compensation charge (a)		1,417			(2,456	)		3,298			5,666			6,956			15,218
Asset impairments		-			-			-			29,316			628,802			29,316
Loss on asset sales and disposal		45			2,524			6,468			17,441			19,862			22,165

Operating income (loss)		75,172			93,813			66,031			46,313			(514,526	)		74,186

Interest expense		(36,819	)		(34,730	)		(72,247	)		(68,518	)		(141,666	)		(120,627	)
Other income (expense), net		763			(298	)		1,271			(420	)		1,801			(143	)

Earnings (loss) before income taxes		39,116			58,785			(4,945	)		(22,625	)		(654,391	)		(46,584	)

Income tax expense (benefit)		588			1,030			(2	)		186			(224	)		(660	)

Net earnings (loss)		38,528			57,755			(4,943	)		(22,811	)		(654,167	)		(45,924	)

Net earnings (loss) attributable to noncontrolling interest (b)		430			628			32			(145	)		(6,443	)		(295	)

Net earnings (loss) attributable to Ferrellgas Partners, L.P.		38,098			57,127			(4,975	)		(22,666	)		(647,724	)		(45,629	)

Less: General partner's interest in net earnings (loss)		381			571			(50	)		(227	)		(6,477	)		(456	)

Common unitholders' interest in net earnings (loss)	$	37,717		$	56,556		$	(4,925	)	$	(22,439	)	$	(641,247	)	$	(45,173	)

Earnings (loss) Per Unit
Basic and diluted net earnings (loss) per common unitholders' interest	$	0.39		$	0.58		$	(0.05	)	$	(0.23	)	$	(6.57	)	$	(0.48	)

Weighted average common units outstanding		97,152.7			98,334.4			97,305.1			99,355.6			97,652.0			93,169.4


Supplemental Data and Reconciliation of Non-GAAP Items:

	Three months ended						Six months ended						Twelve months ended
	January 31						January 31						January 31
		2017			2016			2017			2016			2017			2016


Net earnings (loss) attributable to Ferrellgas Partners, L.P.	$	38,098		$	57,127		$	(4,975	)	$	(22,666	)	$	(647,724	)	$	(45,629	)
Income tax expense (benefit)		588			1,030			(2	)		186			(224	)		(660	)
Interest expense		36,819			34,730			72,247			68,518			141,666			120,627
Depreciation and amortization expense		25,607			37,367			51,809			74,346			127,976			125,673
EBITDA		101,112			130,254			119,079			120,384			(378,306	)		200,011
Non-cash employee stock ownership plan compensation charge		2,945			3,141			6,699			8,397			25,897			24,948
Non-cash stock based compensation charge (a)		1,417			(2,456	)		3,298			5,666			6,956			15,218
Asset impairments		-			-			-			29,316			628,802			29,316
Loss on asset sales and disposal		45			2,524			6,468			17,441			19,862			22,165
Other (income) expense, net		(763	)		298			(1,271	)		420			(1,801	)		143
Change in fair value of contingent consideration (included in operating expense)		-			-			-			(100	)		-			(100	)
Severance costs $414 and $938 included in operating costs for the six and twelve months ended period January 31, 2017 and $490, $1,545 and $1,618 included in general and administrative costs for the three, six and twelve months ended January 31, 2017. Also includes $805 in operating costs for the six and twelve months ended January 31, 2016 and $51 in general and administrative costs for the six and twelve months ended January 31, 2016.


		490			-			1,959			856			2,556			856
Litigation accrual and related legal fees associated with a class action lawsuit (included in general and administrative expense)		-			-			-			-			-			83
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives $(1,134), $(3,011) and $(6,160) included in operating expense for the three, six and twelve months ended January 31, 2017 and $3,696, $4,734 and $7,146 for the three, six and twelve months ended January 31, 2016. Also includes $488, $796 and $174 included in midstream operations cost of sales for the three, six and twelve months ended January 31, 2017, respectively and $174 for each of the three, six and twelve months ended January 31, 2016.		(646	)		3,870			(2,215	)		4,908			(5,986	)		7,320
Acquisition and transition expenses (included in general and administrative expense)		-			70			-			85			14			16,458
Net earnings (loss) attributable to noncontrolling interest (b)		430			628			32			(145	)		(6,443	)		(295	)
Adjusted EBITDA (c)		105,030			138,329			134,049			187,228			291,551			316,123
Net cash interest expense (d)		(34,712	)		(33,905	)		(68,330	)		(66,407	)		(134,783	)		(116,380	)
Maintenance capital expenditures (e)		(3,754	)		(3,214	)		(7,076	)		(9,429	)		(14,784	)		(19,329	)
Cash paid for taxes		(25	)		(5	)		(26	)		(5	)		(798	)		(451	)
Proceeds from asset sales		2,313			1,863			4,033			2,876			7,180			6,052
Distributable cash flow to equity investors (f)		68,852			103,068			62,650			114,263			148,366			186,015
Distributable cash flow attributable to general partner and non-controlling interest		1,377			2,061			1,253			2,285			2,968			3,720
Distributable cash flow attributable to common unitholders		67,475			101,007			61,397			111,978			145,398			182,295
Less: Distributions paid to common unitholders		9,715			50,223			59,506			101,666			159,959			184,384
Distributable cash flow excess/(shortage)	$	57,760		$	50,784		$	1,891		$	10,312		$	(14,561	)	$	(2,089	)

Propane gallons sales
Retail - Sales to End Users		201,580			189,460			312,768			300,433			565,106			569,071
Wholesale - Sales to Resellers		66,152			60,781			118,142			111,347			232,916			238,167
Total propane gallons sales		267,732			250,241			430,910			411,780			798,022			807,238

Midstream operations barrels
Salt water volume processed		4,002			4,222			7,705			8,956			15,292			17,272
Crude oil hauled		13,005			24,345			24,269			48,609			55,071			59,056
Crude oil sold		1,326			1,593			3,118			3,103			6,875			3,599

(a) Non-cash stock-based compensation charges consist of the following:

	Three months ended						Six months ended						Twelve months ended
	January 31						January 31						January 31
		2017			2016			2017			2016			2017			2016
Operating expense	$	567		$	(466	)	$	661		$	752			1,177		$	2,315
General and administrative expense		850			(1,990	)		2,637			4,914			5,779			12,903
Total	$	1,417		$	(2,456	)	$	3,298		$	5,666		$	6,956		$	15,218


(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 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 disposal, other (income) expense, net, change in fair value of contingent consideration, severance costs, 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 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.

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
(unaudited)





ASSETS	January 31, 2017			July 31, 2016

Current Assets:
Cash and cash equivalents	$	14,710		$	4,965
Accounts and notes receivable, net (including $181,851 and $106,464 of
accounts receivable pledged as collateral at January 31, 2017 and
July 31, 2016, respectively)		223,978			149,583
Inventories		114,862			90,594
Prepaid expenses and other current assets		37,729			39,973
Total Current Assets		391,279			285,115

Property, plant and equipment, net		747,045			774,680
Goodwill, net		256,103			256,103
Intangible assets, net		264,165			280,185
Other assets, net		87,028			87,223
Total Assets	$	1,745,620		$	1,683,306


LIABILITIES AND PARTNERS' DEFICIT

Current Liabilities:
Accounts payable	$	108,271		$	67,928
Short-term borrowings		65,599			101,291
Collateralized note payable		133,000			64,000
Other current liabilities		134,945			128,958
Total Current Liabilities		441,815			362,177

Long-term debt (a)		1,966,909			1,941,335
Other liabilities		33,428			31,574
Contingencies and commitments

Partners' Capital (Deficit):
Common unitholders (97,152,665 and 98,002,665 units outstanding at
January 31, 2017 and July 31, 2016)		(641,239	)		(570,754	)
General partner unitholder (989,926 and 989,926 units outstanding at
January 31, 2017 and July 31, 2016)		(66,387	)		(65,835	)
Accumulated other comprehensive income (loss)		14,430			(10,468	)
Total Ferrellgas Partners, L.P. Partners' Deficit		(693,196	)		(647,057	)
Noncontrolling Interest		(3,336	)		(4,723	)
Total Partners' Deficit		(696,532	)		(651,780	)
Total Liabilities and Partners' Deficit	$	1,745,620		$	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.

Contacts

Jack Herrold, Investor Relations – jackherrold@ferrellgas.com, 913-661-1851

Jim Saladin, Media Relations – jimsaladin@ferrellgas.com, 913-661-1833

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Ferrellgas Partners, L.P. Reports Results for Second Quarter Fiscal 2017