Q2 2021 Ferrellgas Partners LP Earnings Call

March 22, 2021

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Ladies and gentlemen, thank you for standing by and welcome to the second quarter 'twenty 'twenty One earnings conference call. At this time, all participants lines are in a listen only mode.

Please be advised that today's conference is being recorded if you require any further assistance.

Please press Star Zero I would now like to hand, the conference over to your Speaker, Brian Herman interim Chief Financial Officer. Thank you. Please go ahead Sir.

Thank you operator, and welcome to our second quarter of 2021 earnings call. Thank you all for joining US before we get started I'd like to remind all of you that some statements made during this call may be considered forward looking.

On the various risks uncertainties and other factors could cause actual performance to differ materially from anticipated performance.

These factors are discussed on our form 10-K, and other documents filed from time to time with the Securities and Exchange Commission.

Additionally, we note that the purpose of this call is to discuss the results of operations for the second fiscal quarter ended January 31, 2021 has required by our senior secured bonds due 2025.

Therefore, we will not be discussing or responding to questions regarding our recently announced debt restructuring.

Despite significant economic and operational uncertainties in the U S. The company produced exceptional results in the second quarter of fiscal 'twenty one.

Leading to an $18 2 million increase in operating income or 18, 9% growth over the prior year quarter and continued our strong performance in fiscal 2021.

The gallons of propane sold for the quarter were $285 3 million compared to $305 3 million last year.

However, these decreases were partially offset by a continued increase in blue Rhino tank exchange sales due to increased strategies and marketing and stay at home buying trends. Additionally.

Additionally, blue Rhino sales locations now exceed 62500 up over 5000 from prior year.

<unk> per gallon for the quarter was nine or 11 cents higher than the prior year quarter attributable to strategic product placement sound supply chain logistics strategies and lower wholesale propane prices.

Overall, the increase in margin and increases in tank exchange volumes and customer growth were partially offset by decreased retail sales volumes due to right time deliveries and whether that was two 7% warmer than the prior year quarter on a relatively weaker economy.

This is a result of an increase in gross margin dollars of $9 6 million or three 6% higher than prior year quarter operating expenses decreased $13 million or 10% due to the strategies to deliver gallons more efficiently.

The company has numerous initiatives underway to increase efficiency and profitability. These initiatives helped to produce strong results in the second quarter enabled continued high performance in the areas of growth and operational expense management.

Strong execution by a leaner and more agile workforce of essential workers is driving high performance throughout the company both in the field and in corporate locations as we focus on being a propane only company <unk>.

Successful transition of essential workers from a corporate workplace to a technology centric work from home environment decreased various general and administrative expenses as well as travel expense throughout the company.

Lastly, our continued commitment to safety, serving our over 700000 customers, while adapting to the ever changing circumstances, and new operating protocols to help protect the health and safety of our customers.

Employees remains our top priority.

For the quarter the net earnings attributable to Ferro on gas partners LP was $63 3 million or <unk> 64 per common unit compared to prior year second quarter net earnings of $48 2 million per 49 per common unit.

Adjusted EBITDA, a non-GAAP measure.

Increased by $19 5 million or 16% compared to prior year quarter for.

For the second quarter, adjusted EBITDA was $140 9 million compared to $121 4 million in last year's quarter, resulting from the previously discussed initiatives.

As previously announced the company's indefinitely suspended its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in the senior unsecured notes due 2020.

Additionally, we previously announced an historic agreement with the majority bondholders on the senior notes. Due 2020, we are very excited about this agreement it will allow us to continue to satisfy all of our company's obligations to employees vendors suppliers and other partners without interruption.

For more information about that agreement. Please refer to the form 8-K filed December 11, 2020. Additionally, we recently announced our prepackaged chapter 11 proceeding was confirmed dependent on the successful execution of our bondholder agreement. We continue to meet the various milestones per this agreement on our moving closer to our planned financial restructuring.

We will continue to release updates.

As required by the SEC.

Now before I turn on the call back to the moderator.

We did receive a series of questions that I will go through here before we conclude the call.

First question.

Can you explain the persistent weakness in the Companys retail business a modest anything is management looking to do to stabilize results from that part of the business well.

Well.

I think the weakness is not perfectly understood. We are right timing our deliveries as we just previously discussed which is smoothing the volume out over the year and so the volumes are do look.

Different when compared to the prior year, but it's really just it's mainly a function of the right time deliveries as well as some impact with weather.

And then there is a question. The next question is what level of gross Capex spending is anticipated for the remainder of fiscal year 'twenty one.

We are looking at 60 to 80 million of Capex This year.

Thats.

That's what we expect at this point.

Has the recent sharp increase in steel costs impacted the companys acquisition cost of new propane tanks.

It has yes.

How will higher propane prices impact profitability for the balance of 2021.

We do not believe it will have an impact.

With the way that we manage our our company.

What was the savings from the lower fuel costs last year should we expect some of that to reverse in fiscal year 2021.

We are managing the business appropriately.

We are driving fewer miles based on our right time deliveries and our efficiency initiatives.

So we do not believe.

We believe we are managing it accordingly based on those initiatives in the environment. We're in.

Now what does the current environment for M&A look like.

We're going to remain disciplined buyers going forward.

Do you expect to list the series, a and <unk> series B preferreds on a major exchange like the New York stock exchange the.

The series B.

Series B units will not be listed.

And we do expect the series a.

Could potentially be listed again on the New York stock exchange over time.

<unk>.

That is our expectation.

Over a period of time in the future.

Subject to board approval when do you expect the company to be in a position to begin making distributions again on the common units as a possible. This could occur in 2021, we believe it's highly unlikely that that would help help happened in 2021 as we.

Try to execute.

The TSA and work through all of those transactions we.

We need to get that's the first step and then we just need to operate the company effectively forward.

Those are the questions that we received ahead of time, operator, I'll turn it back to you to conclude the call, but I think thank everyone for their time today.

Ladies and gentlemen.

This concludes today's conference call. Thank you for participating you may now disconnect.

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James.

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Jim.

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Jim.

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Todd.

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Jim.

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Michael.

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Michael.

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Average loans.

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Jim.

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Ryan.

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Alan.

Okay.

Adjusted EBITDA.

Jim.

Great.

Jim.

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Thanks Bill.

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Kevin.

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Jim.

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Todd.

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[music] expense.

Ladies and gentlemen, thank you for standing by and welcome to the second quarter 'twenty 'twenty One earnings conference call. At this time, all participants lines are in a listen only mode.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your Speaker, Brian Herman interim Chief Financial Officer. Thank you. Please go ahead Sir.

Thank you operator, and welcome to our second quarter 2021 earnings call. Thank you all for joining US before we get started I'd like to remind all of you that some statements made during this call may be considered forward looking.

On the various risks uncertainties and other factors could cause actual performance to differ materially from anticipated performance.

These factors are discussed on our form 10-K, and other documents filed from time to time with the Securities and Exchange Commission.

Additionally, we note that the purpose of this calls to discuss the results of operations for the second fiscal quarter ended January 31, 2021 has required by our senior secured bonds due 2025.

Therefore, we will not be discussing or responding to questions regarding our recently announced debt restructuring.

Despite significant economic and operational uncertainties in the U S. The company produced exceptional results in the second quarter of fiscal 'twenty one.

Leading to an $18 2 million increase in operating income or 18, 9% growth over the prior year quarter and continued our strong performance in fiscal 2021.

The gallons of propane sold for the quarter were $285 3 million compared to $305 3 million last year.

However, these decreases were partially offset by a continued increase in blue Rhino tank exchange sales due to increased strategies and marketing and stay at home buying trends.

Additionally, blue Rhino sales locations now exceed 62500 up over 5000 from prior year.

Margin per gallon for the quarter was nine or 11 cents higher than the prior year quarter attributable to strategic product placement sound supply chain and logistics strategies and lower wholesale propane prices.

Overall, the increase in margin increases in tank exchange volumes and customer growth were partially offset by decreased retail sales volumes due to right time deliveries on whether that was two 7% warmer than the prior year quarter on a relatively weaker economy.

This has resulted in an increase in gross margin dollars of $9 6 million or three 6% higher than prior year quarter operating expenses decreased $13 million or 10% due to the strategies to deliver gallons more efficiently.

Strong execution by a leaner and more agile workforce of the central workers is driving high performance throughout the company both in the field and in corporate locations as we focus on being a propane only company <unk>.

For the quarter, the net earnings attributable to Ferrell gas partners LP was $63 3 million or <unk> 64 cents per common unit compared to prior year second quarter net earnings of $48 2 million per 49 per common unit.

Adjusted EBITDA, a non-GAAP measure.

Increased by $19 5 million or 16% compared to prior year quarter for.

For the second quarter, adjusted EBITDA was $140 9 million compared to $121 4 million in last year's quarter, resulting from the previously discussed initiatives.

As previously announced the company's indefinitely.

<unk> its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in senior unsecured notes due 2020 <unk>.

Additionally, we previously announced an historic agreement with the majority of bondholders on the senior notes. Due 2020, we are very excited about this agreement it will allow us to continue to satisfy all of our company's obligations to employees vendors suppliers and other partners without interruption.

For more information about that agreement. Please refer to the form 8-K filed December 11th 2020. Additionally, we recently announced our prepackaged chapter 11 proceeding was confirmed dependent on the successful execution of our bondholder agreements. We continue to meet the various milestones per this agreement on moving closer to our planned financial restructuring.

We'll continue to release updates.

As required by the SEC.

Now before I turn on the call back to the moderator.

We did receive a series of questions that I will go through here before we conclude the call.

First question.

Can you explain the persistent weakness in the company's retail business and what if anything is management looking to do to stabilize results from that part of the business well.

Well.

I think the weakness is not perfectly understood. We are right timing our deliveries as we just previously discussed which is smoothing the volume out over the year and so the volumes are do look.

Different when compared to the prior year, but it's really just it's mainly a function of the right time deliveries as well as some impact with leather.

And then there's a question. The next question is what level of gross Capex spending is anticipated for the remainder of fiscal year 'twenty one.

We are looking at 60 to 80 million of Capex This year.

Thats.

That's what we expect at this point.

Has the recent sharp increase in steel costs impacted the companys acquisition cost of new propane tanks.

It has yes.

How will higher propane prices impact profitability for the balance of 2021.

We do not believe that will have an impact with the way that we manage our company.

What was the savings from the lower fuel costs last year should we expect some of that to reverse in fiscal year 2021.

We are managing the business appropriately.

We are driving fewer miles based on our right time deliveries and our efficiency initiatives.

So we do not believe we believe we are managing it accordingly based on those initiatives and the environment. We're in.

Now what does the current environment for M&A look like.

We're going to remain disciplined buyers going forward.

Do you expect to list the series, a and <unk> series B preferreds on on a major exchange like the New York Stock Exchange.

The series B.

Series B units will not be listed and we do expect a series a.

Could could potentially be listed again on the New York stock exchange overtime.

That is our expectation over over a period of time on the future.

Subject to board approval when do you expect the company to be in a position to begin making distributions again on the common units as a possible this could occur in 2021.

We believe it's highly unlikely that that will.

It happened in 2021 as we.

Try to execute.

The TSA and worked through all of those transactions we.

We need to get that's the first step and then we just need to operate the company effectively going forward.

Those are the questions that we received.

Operator, I'll turn it back to you to conclude the call, but I think thank everyone for their time today.

Ladies and gentlemen.

This concludes today's conference call. Thank you for participating you may now disconnect.

Q2 2021 Ferrellgas Partners LP Earnings Call

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