Q1 2022 Ferrellgas Partners LP Earnings Call

December 17, 2021

Speaker 1: Welcome to the fiscal 2022 Q1 earnings call. At this time, all participants' lines are open. To help reduce background noise, please press star six to mute and unmute your line. Please be advised that today's conference is being recorded. And without further ado, I would now like to hand the conference over to one of your speakers today, Mr. Jim Farrell. Please go ahead.

Good day and thank you for standing by welcome to the fiscal 'twenty 'twenty to Q1 earnings call. At this time all participants lines are open to help reduce background noise. Please press the star Stakes to mute and then three line. Please be advised that the lease conference is being recorded and without further Ado I would now like behind the con.

Grain school with one of your speakers today, Mr. Jim Farrell. Please go ahead Sir.

Speaker 2: Thank you and good morning everyone. Welcome to the first quarter fiscal 2022 earnings call of Feral Gas. Some of you have submitted questions ahead of time that we will address at the end of the call. We have not done so in our remarks.

Thank you and good morning, everyone.

Welcome to the first quarter of fiscal 2022 earnings call apparel gas. Some of you have submitted questions ahead of time that we will address at the end of the call. We have not done so in our remarks.

Speaker 2: I will allow our Chief Operating Officer Tamara Zartuche to talk more about how well the company is running, but I want to say a few things about why we continue to perform so well.

I will allow our chief operating officer, Tim Reeves or to chase to talk more about how well the company is running well.

Want to say a few things about why we continue to perform so well.

Speaker 2: We are building off of what was begun over two years ago when metrics and dashboards began to appear as our very modern technology platform was implemented. All of this accelerated when the COVID crisis hit and we were able to knit far-flung management together virtually like never before.

We're building off of what was it began over two years ago metrics and dashboards began to appear.

Our very modern technology platform most implemented all of this accelerated when the Covid crisis hit and we were able to Nip far-flung management together virtually like.

Speaker 2: Over the course of the last 12 months, Temerian has continued our transformation that at its core became a learning organization, teaching our people about responsibility and accountability and about business. I could not be more proud of how they have responded. I will now turn to the next speaker.

Like never before.

Over the course of the last 12 months temporary and has continued our transformation that at its core became a learning organization teaching our people about responsibility and accountability and about goodness.

I could not be more proud of how they have responded.

I will now turn the floor older Cambria.

Speaker 3: Thank you, Jim, and welcome to our first quarter fiscal 2022 earnings call. Thank you all for joining us.

Thank you, Jim and welcome to our first quarter fiscal 2022 earnings call. Thank you all for joining us.

Speaker 3: I would like to remind you that some statements made during this call may be considered forward-looking and that various risks, uncertainties, and other factors could cause actual performance to differ materially from anticipated performance.

I would like to remind you that some statements made during this call maybe considered forward looking and that various risks uncertainties and other factors could cause actual performance to differ materially from anticipated performance. These factors are discussed in our Form 10-K filed earlier this.

Speaker 3: These factors are discussed in our Form 10-K filed earlier this year and other documents filed from time to time with the Securities and Exchange Commission. Additionally, we note that the purpose for this call is to discuss the results of operations for the first fiscal quarter ended October 31, 2021.

Yeah, and other documents filed from time to time with the Securities and Exchange Commission.

Additionally, we note that the purpose for this call is to discuss the results of operations for the first fiscal quarter ended October 31st 2021.

Speaker 3: The company's strong performance was driven by operating income of $12.4 million for the first quarter. This represents an increase of 60% compared to the same period last year.

The company's strong performance was driven by operating income of $12 4 million for the first quarter. This represents an increase of 60% compared to the same period last year.

Speaker 3: The company demonstrated continued operational excellence at the strategic initiative of delivering gowns more efficiently, which led to continued containment of operating expenses during the quarter.

Company demonstrated continued operational excellence.

Strategic initiatives are delivering gallon more efficiently, which led to continued containment of operating expenses during the quarter.

Speaker 3: These operating expenses as a percentage of total revenue were approximately 7.4% lower than the prior year period.

These operating expenses as a percentage of total revenue were approximately seven 4% lower than the prior year period margin per gallon for the quarter increased by 11%.

Speaker 3: margin per gallon for the quarter increased by 11 cents or 12 percent higher than the prior year period.

Or 12% higher than the prior year period.

Speaker 3: This resulted in an increase to the first fiscal quarter growth profit of $10.8 million.

This resulted in an increase to the first fiscal quarter gross profit of $10 8 million or six 7% higher than prior year period.

Speaker 3: or 6.7% higher than prior year period.

Speaker 3: the company's continued emphasis on leadership, development, excellence, and operational expense management and implementation of logistics fundamentals continues to increase efficiency and profitability.

The company's continued emphasis on leadership development excellence and operational expense management and implementation of logistics fundamentals continued to increase efficiency.

Speaker 3: For the quarter, the net loss attributable to Ferrel Gas Partners LP was 8.6 million or 5.25 per Class A unit, compared to prior year first quarter net loss of 46.1 million or 9.39 per Class A unit.

And profitability.

For the quarter, the net loss attributable to Ferro Paas partners L. P. Eight.

$8 6 million or 525 per class a unit compared to prior year first quarter net loss of $46 1 million or 939 per class a unit.

Speaker 3: Adjusted EBITDA, a non-GAAP measure, increased by 3.4 million or 10 percent compared to prior year quarter. For the first quarter, adjusted EBITDA was 37.3 million compared to 33.9 million in last year's quarter.

Adjusted EBITDA.

Non-GAAP measure increased by $3 4 million or 10% compared to prior year quarter for the first quarter. Adjusted EBITDA was $37 3 million compared to $33 9 million in last year's quarter.

Speaker 3: The Ferrel Gas family of employee owners continues to grow. Ferrel Gas welcomed its newest acquisitions to the first quarter. Starlight, located on Long Island, New York, and Northern Cascades in Washington State. These acquisitions will strengthen our positioning in those areas and strengthen our foundation for growth in years to come. Additionally, Blue Rhino continues to be the market leader in tank exchange.

The federal gas family of employee owners continues to grow paragraph welcomed its newest acquisition to the first quarter Starlight located on long Island, New York and Northern Cascade in Washington State. These acquisitions will strengthen our positioning in those areas and strengthen.

Our foundation for growth in years to come. Additionally, blue Rhino continues to be the market leader in <unk>.

Speaker 3: During this past quarter, Feral Gas began its partnership with Operation Warm, bringing warmth through winter coats to families in need across the United States.

Exchange.

During this past quarter Faro gas began its partnership with operation warm, bringing warm winter coats to families in need across the United States.

Speaker 3: Ferrel Gas employees support the communities they work and live in, in two ways, with great service and by giving back.

Gas employees support the community they work and live in in two ways with great service and by giving back.

Speaker 3: The partnership represents the company's continued commitment to the areas we serve.

The partnership represents the company's continued commitment to the areas we serve.

Speaker 3: Our management development program continues to be a success while also contributing to our performance. Now in its second year, we will host the fourth class of candidates beginning in February . This leadership initiative provides an opportunity for excellence in leadership, logistics, and operations management.

Our management development program continues to be a success, while also contributing to our performance now in its second year, we will host the fourth class of candidates beginning in February.

This leadership initiative provides an opportunity for excellence and leadership logistics and operations management.

Speaker 3: As we continue to evolve into a technology-enabled logistics company,

As we continue to evolve into a technology enabled logistics company.

Speaker 3: providing a clean, desirable fuel to a tenured customer base, we have acquired a new service mark. Fuel life is the day where designers and engineers and customers search for all languages o dial regent hot gasSilent Hi, I'm

Providing a clean desirable fuel to a tenured customer base, we have acquired a new service Mark fuel life simply.

Speaker 3: This mark was built on consumer data that shows propane consumers value simplicity. Our expectation is that this new branding will help grow consumer preference for feral gas while telling the story of what our company stands for.

This mark was built on consumer data that shows propane consumers value simplicity.

Our expectation is that this new branding will help grow consumer preference for federal gas, while telling the story of what our company sales force.

Speaker 3: In an effort to provide more transparency, we will address a few questions that we have received over the last several days. Jim will take the first question.

In an effort to provide more transparency, we will address a few questions that we have received over the last several days.

Jim will take the first question.

Speaker 2: I'm going to add one in here that we hadn't planned on. There is always a question about our CFO leaving the organization. He resigned and we will begin a search.

I'm going to add 100, but we hadn't planned on there is always a question about our CFO.

Organization.

He resigned.

And we will begin a search.

That's about all I can tell you.

Speaker 2: Also, I have a question about whether we have formulated a strategy to address the B units to minimize eventual dilution.

Also have a question about the.

What are we formulated our strategy two.

To address the B units could minimize the eventual dilution.

Speaker 2: The answer to that is pretty simple. We have a long-term financial plan, which includes the repayment of the BU units. As employee owners, it's in our interest to ensure the least possible dilution.

And the answer to that it's pretty simple we have a long term financial plan, which includes the repayment of the bigger units.

Employee owners, it's in our interest to ensure the least possible dilution for.

Speaker 2: we will continue to analyze the best solution to decrease our leverage.

For the as.

We will continue to analyze the best solution.

To decrease our leverage.

Speaker 2: Second question I'm going to answer is that can you provide an overview of the current M&A environment and your strategy for acquisition?

Second question I'm going to answer is that can you provide an overview of the current M&A environment and your strategy for acquisitions.

Speaker 2: The current economy has created an environment suitable for small businesses interested in selling.

The current economy.

Created an environment suitable for small businesses interested in selling.

Speaker 2: will continue to focus carefully, strategically about acquisition.

We will continue to focus carefully.

Strategically about acquisitions.

Speaker 2: Our focus will be on opportunities that meet our standards, leverage our network, and create economies of scale.

Our focus will be on opportunities that meet our standards will leverage on that work and create economies of scale.

Speaker 2: Can you explain why the company's commodity hedge position has doubled in the last year?

Can you explain why the company's commodity hedge position has doubled in the last year.

Speaker 2: That hedge, by the way, backs up our fixed price sales, primarily for our Platinum Plus program. And the cash you see on the balance sheet is the exchange giving us mark-to-market increases over what we had bought at.

That hedge either way box.

Fixed price sales, primarily for our platinum plus program.

And the cash you see on the balance sheet is the exchange, giving us mark to market increases over what we have what we have bought back.

Speaker 2: It's not a speculative position. Platinum Plus is one of the best in the business, accounting for about 30% of our estimated total volume.

It's not a speculative positions.

<unk> plus is one of the best in the business accounting for about 30%.

Our estimated total volume.

Speaker 2: And what are our plans about capital allocation?

And what are our plans about capital allocation.

Speaker 2: Well, we were actively acquiring new customers, customers that will make us money.

Well we were.

We're actively acquiring new customers customers that world My coast money.

Speaker 2: and the growth there is the area we focus on for capital and allocation.

And the growth the growth there is the area, we focus on for capital allocation.

Speaker 2: Our high-performing sales team is winning in the marketplace. We also anticipate continued success in M&A.

High performance sales team is winning in the marketplace.

We also anticipate continued success in M&A.

Speaker 2: Now I'm going to hand it over to Tamaria to answer the last few questions.

Now I'm going to hand, it over to Tim Murray you to answer the last few questions.

Speaker 3: Thank you, Jim. Farrell Gass has – the next question is that Farrell Gass has seen three consecutive quarters of year-over-year decline in retail customer count. What's driving the decline? The timing of our delivery that we look to be very efficient, right-time delivery does move gallons out.

And in Europe.

Thank you Dan Paragon has the next question is that Paragon has seen three consecutive quarters of year over year decline in retail customer count what's driving the decline.

The timing of our delivery that we look to be very efficient right time deliveries does move gallons out.

Speaker 3: Additionally, you know, we have been very intentional about our strategic asset management. This has allowed us to move more gallons through our current customer base.

Additionally, we have been very intentional about our strategic asset management that has allowed us to move more gallons through our current customer base.

Speaker 3: The next question is, how sustainable is feral gas's current trend of margin improvement?

The next question is how sustainable external gas current trend of margin improvement.

Speaker 3: We have shown consistent improvement in all aspects of our business and this excellence in the areas of cost management, customer service, and then our focus on our employee base and the retention of our employee base is a solid foundation for continued.

We have shown consistent improvement in all aspects of our business and this excellence in the areas of cost management customer service and then our focus on our unemployed base and our retention of our employee base is a solid foundation for continued success.

Speaker 3: That is the end of our questions. I'm now going to turn the call back to our moderator, but before I do that, as mentioned in the announcement for this call, any additional questions may be submitted via our Investor Relations email box at InvestorRelations at FeralGas.com. Thank you.

Sure.

That is the end of our questions I'm now going to turn the call back to our moderator, but before I do that as mentioned in the announcement for this call any additional questions may be submitted via our Investor Relations E Mail box at Investor Relations at <unk> Dot com. Thank you.

<unk>.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect. Presenters, please stand by.

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

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Speaker 4: .

Speaker 1: Good day, and thank you for standing by. Welcome to the fiscal 2022 Q1 earnings call. At this time, all participants' lines are open. To help reduce background noise, please press star six to mute and unmute your line. Please be advised that today's conference is being recorded. And without further ado, I would now like to hand the conference over to one of your speakers today, Mr. Jim Farrell. Please go ahead.

Good day and thank you for standing by welcome to the fiscal 'twenty 'twenty to Q1 earnings call. At this time all participants lines are open to help reduce background nice piece breadth as far as six to mute and then enjoy line. Please be advised that the this conference is being recorded and without further Ado I would now like behind it.

One friend school with one of your speakers today, Mr. Jim Farrell. Please go ahead Sir.

Speaker 2: Thank you and good morning, everyone. Welcome to the first quarter fiscal 2022 earnings call, Ferrel Gas. Some of you have submitted questions ahead of time that we will address at the end of the call. We have not done so in our remarks.

Thank you and good morning, everyone.

Welcome to <unk> first quarter fiscal 2022 earnings call apparel gas. Some of you who have submitted questions ahead of time that we will address at the end of the call. We have not done so in our remarks.

Speaker 2: I will allow our Chief Operating Officer, Tamri, to talk more about how well the company is running, but I want to say a few things about why we continue to perform so well.

We'll allow our chief operating officer, Tim Reeves are too cheap to talk more about how well the company is running well.

Speaker 2: We are building off of what was begun over two years ago when metrics and dashboards began to appear as our very modern technology platform was implemented. All of this accelerated when the COVID crisis hit and we were able to nip far-flung management together virtually like never before.

We are building off of what was began over two years ago, our metrics and dashboards began to appear.

Our very modern technology platform implemented all of this accelerated when the Covid crisis hit and we were able to nib far-flung management together virtually.

Speaker 2: Over the course of the last 12 months, Temeria has continued our transformation that at its core became a learning organization, teaching our people about responsibility and accountability and about business. I could not be more proud of how they have responded. I will now turn

Could not be more proud of how they have responded.

I will now turn the floor older Cambria.

Speaker 3: Thank you, Jim, and welcome to our first quarter fiscal 2022 earnings call. Thank you all for joining.

Thank you, Jim and welcome to our first quarter fiscal 2022 earnings call. Thank you all for joining us I.

Speaker 3: These factors are discussed in our Form 10-K , filed earlier this year, and other documents filed from time to time with the Securities and Exchange Commission. Additionally, we note that the purpose for this call is to discuss the results of operations for the first fiscal quarter ended October 31, 2020.

Yeah, and other documents filed from time to time with the Securities and Exchange Commission.

Additionally, we note that the purpose for this call is to discuss the results of operations for the first fiscal quarter ended October 31st 2021.

The company's strong performance was driven by operating income of $12 4 million for the first quarter. This represents an increase of 60% compared to the same period last year.

Speaker 3: The company demonstrated continued operational excellence as a strategic initiative of delivering gowns more efficiently, which led to continued containment of operating expenses during the quarter.

The company demonstrated continued operational excellence.

T J <unk> initiatives are delivering gallons more efficiently, which led to continued containment of operating expenses during the quarter.

Speaker 3: These operating expenses as a percentage of total revenue were approximately 7.4% lower than the prior year period.

These operating expenses as a percentage of total revenue were approximately seven 4% lower than the prior year period margin per gallon for the quarter increased by 11%.

Speaker 3: Margin per gallon for the quarter increased by 11 cents or 12% higher than the prior year period.

Or 12% higher than the prior year period.

Speaker 3: This resulted in an increase to the first fiscal quarter gross profit of $10.8 million.

This resulted in an increase to the first fiscal quarter gross profit of $10 8 million or six 7% higher than prior year period.

Speaker 3: or 6.7 percent higher than prior year period.

The Companys continued emphasis on leadership.

<unk> excellence in operational expense management and implementation of logistics fundamentals continued to increase efficiency and profitability.

Speaker 3: For the quarter, the net loss attributable to Ferrel Gas Partners LP was $8.6 million or $5.25 per class A unit, compared to prior year first quarter net loss of $46.1 million or $9.39 per class A unit.

For the quarter, the net loss attributable to Ferro gas partners L. P was $8 6 million or 525 per class a unit compared to prior year first quarter net loss of $46 1 million or 939 per class a unit.

Adjusted EBITDA, a non-GAAP measure increased by $3 4 million or 10% compared to prior year quarter for the first quarter. Adjusted EBITDA was $37 3 million compared to $33 9 million in last year's quarter.

Speaker 3: The Ferrel Gas family of employee owners continues to grow. Ferrel Gas welcomes its newest acquisitions to the first quarter. Starlight, located on Long Island, New York, and Northern Cascades in Washington State. These acquisitions will strengthen our positioning in those areas and strengthen our foundation for growth in years to come. Additionally, Blue Rhino continues to be the market leader in tank exchange.

The federal gas family of employee owners continues to grow.

<unk> welcomed its newest acquisition to the first quarter.

Starlight located on long Island, New York, and Northern Cascade in Washington State.

These acquisitions will strengthen our positioning in those areas and strengthen our foundation for growth in years to come. Additionally, blue Rhino continues to be the market leader in tank exchange.

Speaker 3: During this past quarter, FerroGas began its partnership with Operation Warm, bringing warmth through winter coats to families in need across the United States.

During this past quarter Faro gas began its partnership with operation warm, bringing warrants to winter coats to families in need across the United States <unk>.

Speaker 3: Feral Gas employees support the communities they work and live in, in two ways, with great service and by giving back.

<unk> employees support the community they work and live in in two ways with great service and by giving back.

Speaker 3: The partnership represents the company's continued commitment to the areas we serve.

The partnership represents the company's continued commitment to the areas we serve.

This leadership initiative provides an opportunity for excellence and leadership logistics and operations management.

Speaker 3: As we continue to evolve into a technology-enabled logistics company,

As we continue to evolve into a technology enabled logistics company.

Speaker 3: providing a clean desirable fuel to a tenured customer base, we have acquired a new service mark, fuel life.

Providing a clean desirable fuel to a tenured customer base, we have acquired a new service Mark fuel life simply.

Speaker 3: This mark was built on consumer data that shows propane consumers value simplicity. Our expectation is that this new branding will help grow consumer preference for ferrogas while telling the story of what our company stands for.

This mark was built on consumer data that shows propane consumers value simplicity RF.

Our expectation is that this new branding will help grow consumer preference for ferro gas, while telling the story of what our company sales force.

Speaker 3: In an effort to provide more transparency, we will address a few questions that we have received over the last several days. Jim will take the first question.

Jim will take the first question.

Speaker 2: I'm going to add one in here that we haven't planned on. There is always a question about our CFO leaving the organization. He resigned. And we will begin a search.

I'm going to add 100, but we havent planned on there is always a question about our CFO, leaving the organization.

He resigned.

And we will begin a search.

That's about all I can tell you.

Speaker 2: Also, I have a question about whether we have formulated a strategy to address the B units to minimize eventual dilution.

Also have a question about <unk>.

What are we formulated a strategy to.

To address the b units to minimize the eventual dilution.

Speaker 2: The answer to that is pretty simple. We have a long-term financial plan, which includes the repayment of the B units. As employee owners, it's in our interest to ensure the least possible dilution for the A's. We will continue to analyze the best solution.

And the answer to that it's pretty simple we have a long term financial plan, which includes the repayment of the bigger units.

Employee owners, it's in our interest to ensure the least possible dilution for.

For the as.

We will continue to analyze the best solution.

To decrease our leverage.

Speaker 2: Second question I'm going to answer is that can you provide an overview of the current M&A environment and your strategy for acquisition?

Second question I'm going to answer it but can you provide an overview of the current M&A environment and your strategy for acquisitions.

Speaker 2: The current economy has created an environment suitable for small businesses interested in selling.

Our current economy.

<unk> created an environment suitable for small businesses interested in selling.

Speaker 2: We'll continue to focus carefully, strategically about acquisition.

We will continue to focus carefully stir.

Strategically about acquisitions.

Speaker 2: Our focus will be on opportunities that meet our standards, leverage our network, and create economies of scale.

Focus will be on opportunities that meet our standards and return that work and create economies of scale.

Speaker 2: Can you explain why the company's commodity hedge position has doubled in the last year?

Can you explain why the company's commodity hedge position has doubled in the last year.

That hedge either way backs up our.

Fixed price sales, primarily for our platinum plus program.

And the cash you see on the balance sheet.

The exchange, giving us mark to market increases over what we have what we have bought back.

Speaker 2: It's not a speculative position. Platinum Plus is one of the best in the business, accounting for about 30% of our estimated total volume.

It's not a speculative position.

<unk> plus is one of the best in the business accounting for about 30%.

Our estimated total volume.

Speaker 2: And what are our plans about capital allocation?

And what are our plans about capital allocation.

Speaker 2: Well, we're actively acquiring new customers, customers that will make us money.

Well we were.

We're actively acquiring new customers customers that will make us money.

Speaker 2: and the growth there is the area we focus on for capital allocation.

And the growth the growth there is the area, we focus on for capital allocation.

Speaker 2: Our high-performing sales team is winning in the marketplace. We also anticipate continued success in M&A.

High performance sales team is winning in the marketplace.

We also anticipate continued success in M&A.

Speaker 2: Now I'm going to hand it over to Tamaria to answer the last few questions.

Now I'm going to hand, it over to Tim Murray you to answer the last few questions.

Tim really in Europe.

Thank you Dan Belga has the next question is that Paragon has seen three consecutive quarters of year over year decline in retail customer count what's driving the decline.

The timing of our delivery that we look to be very efficient right time deliveries does move gallons out.

Speaker 3: Additionally, you know, we have been very intentional about our strategic asset management. This has allowed us to move more gallons through our current customer base.

Additionally, we have been very intentional about our strategic asset management that has allowed us to move more gallons through our current customer base.

Speaker 3: The next question is, how sustainable is feral gas's current trend of margin improvement?

The next question is how sustainable is zero gas current trend of margin improvement.

Have shown consistent improvement in all aspects of our business and this excellence in the areas of cost management customer service and then our focus on our employee base and our retention of our employee base.

Speaker 3: That is the end of our questions. I'm now going to turn the call back to our moderator. But before I do that, as mentioned in the announcement for this call, any additional questions may be submitted via our Investor Relations email box at InvestorRelations at FergalGas.com. Thank you.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect. Presenters, please stand by.

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

Q1 2022 Ferrellgas Partners LP Earnings Call

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