Q4 2024 Ferrellgas Partners LP Earnings Call

September 27, 2024

[music].

James Ferrell: James Ferrell, Tamria Zertuche, Michael Cole. Good day and thank you for standing by.

Good day, and thank you for standing by welcome.

Operator: Welcome to the Ferrellgas fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded.

Speaker Change: Welcome to the federal gas fourth quarter 2024 earnings conference call.

Speaker Change: This time, all participants are in a listen only mode.

Please be advised that today's conference is being recorded.

Tamria Zertuche: I would now like to hand the conference over to your host today, Tamria Zertuche, President and CEO. Please go ahead. Welcome to our fourth quarter fiscal 2024 earnings call. The fourth fiscal quarter showcased our employee owners and their ability to manage and execute against our overall strategic initiatives. It is our people that are responsible for the winds we had this quarter and this year. Like last quarter, you will hear about our tank exchange business and the growth we have experienced due to the increase in overall locations. Our retail operations team was focused on fourth quarter seasonal prep for the next heating season, all while growing the commercial side of our business, especially in the autogas segment.

Speaker Change: I would now like to hand, the conference over to your host today.

Yes, or TG, President and CEO. Please go ahead.

Welcome to our fourth quarter fiscal 2024 earnings call the fourth fiscal quarter showcased our employee owners and their ability to manage and execute against our overall strategic initiatives. It is our people that are responsible for the wins, we had this quarter and this year like last quarter, you'll hear about our take extra.

Speaker Change: <unk> business and the growth we have experienced due to the increase in overall locations.

Our retail operations team was focused on fourth quarter seasonal prep for the next heating season, all while growing the commercial side of our business, especially in the auto gas segment. We grew in the fourth fiscal quarter as compared to prior year. So you will hear how we were able to do that through our focus on counter seasonal business opportunities.

Tamria Zertuche: We grew in this fourth fiscal quarter as compared to prior year, so you will hear how we were able to do that through our focus on counter seasonal business opportunities. You will also hear about our emergency response support before, during, and after recent storms. Our commitment to the communities we serve is clear not only during normal business operations but also during those times when weather events disrupt other energy sources. Propane has proven time and again to be available when other energy sources are not. Feral gas is committed to propane and all the advantages it provides our customers.

Speaker Change: We'll also hear about our emergency response support before during and after recent storms our commitment to the communities. We serve is clear not only during normal business operations, but also during those times when weather events disrupt other energy sources propane has proven.

Speaker Change: Time, and again to be available when other energy sources are not ferrell gas is committed to propane and all the advantages it provides our customers.

Tamria Zertuche: I am proud of our company, its people and their focus on safety, our customers and results.

Mike Call: I am proud of our company its people and their focus on safety our customers and the results I will now turn the floor over to our Chief Financial Officer, Mike call to go over the financial results for this quarter.

Michael Cole: I will now turn the floor over to our Chief Financial Officer, Mike Cole, to go over the financial results for this quarter. Thank you, Tamria, and thank you all for joining us today. I would like to remind everyone 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. These factors are discussed in our Form 10-K filed on September 27th, 2000 and 24, and other documents filed from time to time with the Securities and Exchange Commission. Additionally, we know that the purpose of this call is to discuss the results of operations for the fourth fiscal quarter in the full year ended July 31st, 2024.

Speaker Change: Thank you Pam and thank you all for joining us today.

Mike Call: I would like to remind everyone 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.

Mike Call: These factors are discussed in our Form 10-K filed on September 27th 2024, and other documents filed from time to time with the Securities and Exchange Commission.

Mike Call: Additionally, we note that the purpose of this call is to discuss the results of operations for the fourth fiscal quarter.

Mike Call: Full year ended July 31 2024.

Michael Cole: on seasonally warm weather and higher medical insurance claims were the two biggest drivers impacting our fiscal 2024 EBITDA decrease. Weather in fiscal 2024 was 10% warmer than normal and 4% warmer than fiscal 2023, which correlates with a 44.3 million or 5% decrease in gallons sold compared to the prior year. Additionally, we paid 11.3 million more in medical insurance claims compared to Fiscal 2023. Although our business will always be impacted to an extent by weather, we are making progress in our efforts to become more weather agnostic. As the cost of medical claims continues to escalate, we strive to make health a priority for employee owners through a wellness program which encourages preventative care.

Unseasonably warm weather and higher medical insurance claims were the two biggest drivers impacting our fiscal 2024 EBITDA decrease.

Speaker Change: Weather in fiscal 2024 was 10% warmer than normal and 4% warmer than fiscal 2023.

Speaker Change: Which correlates with a $44 3 million or 5% decrease in gallons sold compared to the prior year.

Speaker Change: Additionally, we paid $11 3 million more in medical insurance claims compared to fiscal 2023.

Speaker Change: Though our business will always be impacted to an extent by whether we are making progress in our efforts to become more weather agnostic as the cost of medical claims continues to escalate, we strive to make health a priority for our employee owners throw a wellness program, which encourages preventative care we.

Michael Cole: We also continually evaluate our medical plan, and we recently selected a top broker to help ensure planned performance. We continue to strategically focus on efforts to become what more weather agnostic. These initiatives include investments in our Blue Rhino tank exchange brand on the wholesale side and targeting specific locations and customer types on the retail side. Strategic investments in our blue rhino tank exchange business reflect increases in EBITDA of 42% and 26% for the fourth fiscal quarter and fiscal 2024, respectively. We added over 6,000 tank exchange locations for a 10% increase compared to the prior year period.

Speaker Change: Also continually evaluate our medical plan and we were recently selected a top broker to help ensure planned performance.

Speaker Change: We continue to strategically focus on efforts to become more weather agnostic. These initiatives include investments in our Blue Rhino tank exchange brand on the wholesale side and targeting specific locations and customer types on the retail side stroke.

Speaker Change: Strategic investments in our Blue Rhino tank exchange of business reflect increases in EBITDA of 42% and 26% for the fourth fiscal quarter and fiscal 2024, respectively.

Speaker Change: We added over 6000 tank exchange locations for a 10% increase compared to the prior year period.

Michael Cole: As with last quarter, we continue to see more business closings from the effects of inflation, which contributed to a decrease in retail customers in some areas of our national footprint, and these decreases were not fully offset by customer gains during the fiscal year. However, in our retail business, we did benefit from the opening of six locations in growing coastal regions and augmentation of our auto gas customers, both of which are weather-agnostic opportunities. Gross profit was flat, with an increase of $0.4 million for the fourth fiscal quarter and a decrease of $24.1 million, or 2%, for fiscal 2024 compared to the respective prior year periods.

Speaker Change: As with last quarter, we continue to see more business closings from the effects of inflation, which contributed to a decrease in retail customers in some areas of our national footprint and these decreases were not fully offset by customer gains during the fiscal year.

Speaker Change: However, in our retail business, we did benefit from the opening of six locations in growing coastal regions and augmentation of our auto gas customers, both of which are weather agnostic opportunities.

Speaker Change: Gross profit was flat with an increase of zero point $4 million for the fourth fiscal quarter, and a decrease of $24 $1 million or 2% for fiscal 2024 compared to the respective prior year periods.

Michael Cole: Margin per gallon was favorable for both the fourth fiscal quarter and fiscal 2024 due to segment mix and pricing acumen. Cost of product sold decreased by $1.9 million or 1%, which was partially offset by a decrease of $1.4 million or 0.4% in revenues for the fourth fiscal quarter. Gallant sold during the quarter decreased 6.1 million gallons or 4% as we continue to see some additional business closings and the effects of inflation, which contributed to a decrease in retail customers. For fiscal 2024, revenues decreased $189.3 million or 9%, which was partially offset by a decrease of $165.3 million or 16% in cost of product sold.

Speaker Change: Margin per gallon was favorable for both the fourth fiscal quarter and fiscal 2024 due to segment mix and pricing acumen.

Speaker Change: Cost of products sold decreased by $1 $9 million or 1%, which was partially offset by a decrease of $1 4 million or 0.4% and revenues for the fourth fiscal quarter.

Gallons sold during the quarter decreased $6 1 million gallons or 4% as we continued to see some additional business closings and the effects of inflation.

Speaker Change: Which contributed to a decrease in retail customers.

Speaker Change: For fiscal 2024 revenues decreased to $189 $3 million or 9%, which was partially offset by a decrease of $165 3 million or 16% in cost of products sold.

Michael Cole: This was primarily due to warmer than normal weather, a decrease in retail customers is previously discussed, and lower wholesale propane prices at our two major supply points. We recognize that net loss attributable to Ferrellgas Partners LP of $20.8 million and $29.1 million in the fourth fiscal quarter of 2024 and 2023, respectively. In fiscal 2024 and 2023, we had net earnings attributable to Ferrellgas Partners LP of $110.2 million and $136.9 million, respectively. For the quarter, Adjusted EBITDA, a non-GAAP financial measure, increased by $4.6 million, or 16%, to $33.6 million compared to $29 million in the prior year quarter.

Speaker Change: This was primarily due to warmer than normal weather a decrease in retail customers as previously discussed and lower wholesale propane prices at our two major supply points.

Speaker Change: We recognized a net loss attributable to Ferro gas partners LP of $28 million and $29 one.

Speaker Change: $1 million in the fourth fiscal quarter of 24 and 2023, respectively.

Speaker Change: In fiscal 2024, and 2023, we had net earnings attributable to Ferro gas partners LP of $110 $2 million.

$136 $9 million respectively.

For the quarter adjusted EBITDA, a non-GAAP financial measure increased by $4 6 million or 16% to $33 6 million compared to $29 million in the prior year quarter.

Michael Cole: The change was primarily due to a $7.7 million decrease in general and administrative expense after adjusting for a $1.8 million decrease in EBITDA adjustments in a $3.7 million increase in operating expense. The decrease in general and administrative expense was primarily due to approximately $6 million reduction in incentive accruals compared to the prior year period. The increase in operating expense consisted of increases of $5.3 million in plant and other cost and $1 million in personnel expense, partially offset by a decrease of $2.6 million in vehicle cost. For fiscal 2024, adjusted EBITDA decreased by $42.8 million or 12% to $317.4 million compared to $360.2 million in fiscal year 2023.

Speaker Change: The change was primarily due to a seven $7 million decrease in general and administrative expense.

Speaker Change: After adjusting for a $1 $8 million decrease in EBITDA adjustments and a $3 $7 million increase in operating expense.

The decrease in general and administrative expense was primarily due to approximately $6 million reduction in incentive accruals compared to the prior year period.

Speaker Change: The increase in operating expense consisted of increases of $5 $3 million in plants and other cost and $1 million in personnel expense, partially offset by a decrease of $2 $6 million in vehicle cost.

Speaker Change: For fiscal 2024, adjusted EBITDA decreased by $42 8 million or 12% to $317 4 million compared to $362 million in fiscal year 2023.

Michael Cole: In addition to the $24.1 million decrease in gross profit previously noted, a $24.1 million increase in operating expense, and a $3.7 million decrease in general and administrative expense, after adjusting for a $16.7 million decrease in EBITDA adjustments, contributed to the decrease. The increase in operating expense was driven by increases of $13.1 million in personnel expense, $5.6 million in vehicle expense, and $5.4 million in plant and other cost. Increases of $11.3 million in medical insurance claims paid under our self-insured benefits plan in $6.6 million in payroll cost, partially offset by a decrease for incentive accruals, comprised the change in personnel expense.

Speaker Change: In addition to the $24 $1 million decrease in gross profit previously noted a $24 $1 million increase in operating expense and a $3 $7 million decrease in general and administrative expense after adjusting for a $16 7 million.

Speaker Change: The dollar decrease in EBITDA adjustments contributed to the decrease.

The increase in operating expense was driven by increases of $13 1 million in personnel expense.

Speaker Change: $5 $6 million in vehicle expense and $5 $4 million in plant and other costs.

Increases of $11 $3 million in medical insurance claims paid under our self insured benefits plan and $6 $6 million in payroll costs, partially offset by a decrease for incentive accruals comprise the change in personnel expense.

Speaker Change: The increase in vehicle expense was primarily due to increases of $5 $7 million for repairs and maintenance and zero point $6 million in telematics technology, partially offset by a decrease in fuel cost.

Michael Cole: Cost. The increase in plants and other costs was primarily due to increases of $4.5 million in miscellaneous expense. $1.5 million for property repairs and network cost, and $1.2 million related to legal and general liability cost. These increases were partially offset by a decrease in credit card fees related to a new payment platform, which charges less in processing fees. The decrease in general and administrative expense was primarily due to a reduction in incentives accruals.

Speaker Change: The increase in plant and other costs was primarily due to increases of $4 5 million in miscellaneous expense.

Speaker Change: $1 5 million for property repairs and network costs, and $1 $2 million related to legal and general liability costs.

These increases were partially offset by a decrease in credit card fees related to a new payment platform.

Speaker Change: <unk> charges less and processing fees.

Speaker Change: The decrease in general and administrative expense was primarily due to a reduction in incentive accruals.

Tamria Zertuche: I will now turn the call back over to Tamria. I want to start by highlighting the improvements Blue Rhino has made in creating efficiencies in their supply chain. That team really excelled in the areas of supply chain management and removed multiple days of supply across its nationwide network. This improved our free cash flow and decreased capital expenditures. As we see power outages from storms and other events, the company, with its national distribution network, readily steps up to provide easily accessible portable fuel. Both Blue Rhino and Ferrellgas were on hand to help storm victims and support Operation Barbecue Relief by providing propane and tanks to fuel meals for those impacted by the storm and first responders in response to Hurricane Ferrell.

Speaker Change: I will now turn the call back over to Tamara.

Speaker Change: I wanted to start by highlighting the improvement Blue Rhino has made in creating efficiencies in their supply chain that team really excelled in the areas of supply chain management and removed multiple days of supply across the nation wide network. This improved our free cash flow and decreased capital expenditures.

Speaker Change: As we see power outages from storms and other events the company with its national distribution network rapidly steps up to provide easily accessible portable fuel both blue Rhino and Farrell gas were on hand to help storm victims and support operation Bbq relief by providing propane and <unk>.

Speaker Change: Tanks to fuel meals for those impacted by the storm and first responders in response to hurricane barrel.

Tamria Zertuche: A category one storm, which made landfall in Texas in July of 2024, in addition to providing an energy source for those without power. Another great example of our progress to become more weather agnostic is the growth in our autogas business. In July of 24, we completed the installation of an 18,000-gallon tank and autogas pumps, which will be used to help transport nearly 200,000 students to school this year. We continue to expand our business in other areas of the country outside of the Midwest, such as our fiscal 24 acquisition of Eastern Sierra Propane in California. This is the largest acquisition we have made in the last 10 years.

Speaker Change: A category, one storm, which made landfall in Texas in July of 2024. In addition to providing an energy source for those without power.

Speaker Change: Another Great example of our progress to become more weather agnostic is the growth in our auto gas business.

Speaker Change: In July 24, we completed the installation of an 18000 gallon tank and auto gas pumps, which will be used to help transport nearly 200000 students to school this year.

Speaker Change: We continue to expand our business in other areas of the country outside of the Midwest such as our fiscal 'twenty four acquisition of Eastern Sierra propane in California. This is the largest acquisition we have made in the last 10 years.

Tamria Zertuche: Strategic acquisitions throughout the country help to mitigate the impact of weather conditions in specific regions. I'm proud of our company and its employee owners for the many ways we work to invest in technology and initiatives to deliver propane to our customers in a timely, safe, and efficient manner. Our tank monitors to telematics to our strategic vendor partnerships. We do our very best to serve our customers and continually improve.

Strategic acquisitions throughout the country helped to mitigate the impact of weather conditions and specific regions.

Speaker Change: I am proud of our company and its employee owners for the many ways, we work to invest in technology and initiatives to deliver propane to our customers in a timely and safe and efficient manner or take monitors to telematics to our strategic vendor partnerships, we do our very best to serve our customers and continually improve.

Speaker Change: Sure.

Operator: I will now turn the call back over to our moderator as we move to the live Q&A section of our call.

Speaker Change: I will now turn the call back over to our moderator as we move to the live Q&A section of our call.

Speaker Change: Okay.

Operator: Good morning. We've received questions into our inbox, and this is my call, and Tamry is her Tucci, and we will go through some of the questions that we have received in our inbox. The first question, can you provide an update on the Eddie Stone case? case. In July, we appealed the District Court's judgment to the third sort of court of appeals. We have no further updates to provide at this time and would direct you to the disclosures in our 10-K. With the current revolving credit facility, expiring in March of 2025, can you provide an update as to when it will be renewed?

Speaker Change: Good morning.

Speaker Change: We've we've received questions into our inbox and this is my call.

Speaker Change: Temporary as of TG and we will go through some of the questions that we've received in our inbox.

The first question can you provide an update on the <unk> case.

Speaker Change: In July we appealed the district court's judgment to the court of Appeals, we have no further updates to provide at this time and would direct you to the disclosures in our 10-K.

Speaker Change: With our current revolving credit facility expires in March of 2025 can you provide an update as to when it will be renewed.

Operator: We do not have a specific date targeted for the extension. We've been working with our existing bank group, and they remain supportive. We will continue to work with them to amend and extend the existing revolving credit facility.

Speaker Change: We do not have a specific date targeted for the extension we've been working with our existing bank group and they remain supportive.

Speaker Change: We will continue to work with them to amend and extend the existing revolving credit facility. We certainly appreciate and recognize that it does have the March 2025 maturity and that is one of the top priorities for the company over the coming weeks.

Operator: We certainly appreciate and recognize that it does have the March 2025 maturity, and that is one of the top priorities for the company over the coming weeks. Another question related to that that came in relates to our 2016 year notes. And the question is how is a company planning to handle the refinancing of the 2026 senior notes, the B units, the preferred units, and the capital structure. As we've talked about in the past, you know, those capital securities are complex securities and they have a lot of provisions that are intertwined with one another. We haven't engaged an outside investment bank to help us review and for them to make recommendations regarding our capital structure.

Speaker Change: Another question related to that that we that came in relates to our 2006 senior notes and the question is how is the company planning to handle the refinancing of the 2026 senior notes the B units the preferred units and the capital structure.

Speaker Change: As we've talked about in the past those capital Securities are complex securities and they have a lot of provisions that are intertwined with one another we havent engaged an outside investment bank to help us review and for them to make recommendations regarding our capital structure.

Operator: We'll be taking their recommendations into account as we continue discussions with our bank group and holders of those capital securities.

We will be taking their recommendations into account as we continue discussions with our bank group and holders of those capital Securities.

Operator: You know, we received a question about the Fourth Amendment and the restriction on moving funds between the units, between the MLP and the OLP. The question is in the fourth amendment to the credit facility, Ferrell Gas was restricted for moving funds to MLP, which means the company can no longer make distributions to the Class A or Class B units. Will the amended facility address this issue or remove this restriction? Our response to that is, you know, it will work with the bank group, and that will be determined as we work through the amendment and extension process with the bank group.

Speaker Change: We received a question about the fourth amendment.

Speaker Change: And the restriction on moving funds between the units between the MLP and the LLP.

Speaker Change: The question is in the fourth amendment to the credit facility Farrell gas was restricted for moving funds to MLP, which means the company can no longer make distributions to the class a or class b units will be amended facility address this issue or removed this restriction.

Speaker Change: Our response to that is.

Speaker Change: We will work with our bank group.

Speaker Change: And that will be determined as we work through the amendment and extension process with.

Speaker Change: With the Bank group.

Operator: You know, the third party investment bank that I mentioned just a moment ago, they will assist in that process, and again, we'll take the recommendations into consideration as we work through the process. I will note that our bank group has been supportive of the company, and we expect them to continue to be supportive as we work through that amendment process, but it's too early to know or to make a take a view on whether or not those restrictions on cash distributions from the OLP to the MLP will be revised or eliminated.

Speaker Change: The third party investment banks that I mentioned, just a moment ago. They will assist in that process and again, we will take our recommendations into consideration as we work through the process.

Speaker Change: I will note our bank group has been supportive of the company and we expect them to continue to be supportive as we work through that amendment process, but it's too early to know where to make take a view on whether or not those restrictions on cash distributions from the <unk> to the MLP will be revised or eliminated.

Speaker Change: Yes.

Operator: In life, there was a question that came in regarding the Eddie Stone ruling and whether or not it has an impact on our thinking around the class B units. The question is, in light of the Eddie Stone ruling, how has your thinking or timing of class B redemption changed, if at all? The class B units can be converted any time pursuant to our financing documents up until March of 2026. I'm sorry; they could be redeemed at any time, provided we meet the conversion redemption threshold up to March of 2026. After March of 26, they can be converted in the Class B units.

Speaker Change: And there was a question that came in regarding the Edie stone ruling and whether or not it has an impact on our thinking around the class B units. The question is in light of the Edisto enrolling how has your thinking or timing of class B redemption changed if at all.

Speaker Change: The class B units can be converted anytime pursuant to our financing documents up until March of 2026, I'm sorry, they can be redeemed at any time provided we meet the conversion redemption threshold up to March of 2026.

Speaker Change: After March of 2006, they can be converted into class a units our position has not changed regarding the class b units and the redemption and conversion dynamics that eastone ruling certainly adds another variable to that process, but as we noted on our 10-K, we have been advised that we have.

Operator: is. Our position has not changed regarding the Class B units and the redemption and conversion dynamics. The Eddie Stone ruling certainly adds another variable to that process, but as we noted on our 10-K, we have been advised that we have strong grounds for the appeal. And, as I noted earlier, our policy is not to comment on pending litigation, and I'll defer you to the 10-Q disclosures.

Speaker Change: Strong grounds for the appeal.

And as I noted earlier, our policy is not to comment on pending litigation and I'll refer you to the 10-Q disclosures.

Operator: So maybe we'll take a little break and answer some of the questions around the business. A good question about Lurano and the Generator Supply Business preparing for Hurricane Helene. You know, both retail and Lurano compared had been preparing for the storm really since the beginning of the weekend, and based on landfall assessments, we prioritize our routes, we restocked the splays and getting them ready for the communities that we're also preparing for the storm. I'm very proud of our employees that do all they can to not only prepare the communities, but also our yards and all of our work environment.

Speaker Change: So maybe we will take a little break and answer some other questions around the business a good question about blue Rhino and the generator supply business preparing for Hurricane Helene.

Both retailers, we ran up in here and have been preparing for the storm at least from the beginning of the weekend and based on landfall assessments, we prioritize our road to restock displays and getting them ready for the communities that we're also performed by the storm.

Speaker Change: Very proud of our employees that do all they can not only prepare the communities, but also our yards in all of our work environment.

Operator: As of yesterday morning, all of our routes were running. Obviously, as the storm made landfall, we prioritize the safety of our drivers first and foremost. And then, as the landfall impacted areas open up later today, we'll assess, you know, damage and road conditions and get back out there to really address our community needs.

Yesterday morning, all of our routes for running obviously at the storm made landfall we prioritize the safety of our drivers first and foremost and then as the land all impacted areas open up later today, we'll assess damage and load condition and get that up.

Speaker Change: Get back out there to really adjust our community needs.

Operator: We also had a question around the domestic propane supply markets and how they might be impacted based on the increase in exports over the next 12 to 18 months that are forecasted. We do not expect any impact on the domestic markets. The US has plenty of propane.

Speaker Change: We also had a question around the domestic propane supply markets and how they might be impacted based on the increase in exports over the next 12 months to 18 months that are forecasted.

We do not expect any impact on the domestic markets.

Speaker Change: Many of propane.

Operator: On September 3rd, Moody's downgraded Feral Gas, and we received a question regarding the downgrade. How has the company planning to address the recent downgrade for Moody's? What actions are being taken? When you go to the Moody's credit opinion, they cite things like our complex capital structure, liquidity concerns, and potential cost associated with Eddie Stone as contributing factors for the downgrade. We do expect those concerns to be addressed as we continue to work with our outside investment banker and as we work through the amendment and extension process with the banks. The Eddie Stone, as we noted, you know, with the appeal and the posting of the appeal bond, you know, that will take some time for the appeal process to work through and that there won't be any, you don't expect any immediate decisions on that from the courts.

On September.

September 3rd Moody's downgraded.

Speaker Change: Gas and we received a question regarding the downgrade how is the company planning to address the recent downgrade from Moody's what actions are being taken.

Speaker Change: When you go to the Moody's credit opinion, they cite things like our complex capital structure liquidity concerns potential cost associated with Eddie stone as contributing factors for the downgrade we.

Speaker Change: We do expect those concerns to be addressed as we continue to work with our outside investment banker and as we work through the amendment and extension process with the banks.

Speaker Change: Stone as we noted with the appeal and the posting of the appeal bond.

Speaker Change: We will take some time for the appeal process to work through and that there won't be any.

Speaker Change: We don't expect any immediate decisions on that from the courts in terms of the other issues cited by Moody's the complex capital structure again, we're addressing that.

Operator: In terms of the other issues cited by Moody's, the complex capital structure, again, we're addressing that with our investment banker, and liquidity concerns are primarily tied to, I believe, tied to the revolving credit facility in the March 2026 maturity.

Speaker Change: With our investment banker and liquidity concerns is primarily tied to I believe tied to the revolving credit facility in the March 2026 maturity.

Operator: That ties into a question we receive regarding the company's going concern and whether or not that downgrade or that the revolver maturity has an impact on the company's financial viability. You know, as, again, as I said, and as we talked about in the 10K, we are in discussions with the banks. We feel good about the support they've provided to the company, and as a result, let me first say the going concern is based on accounting guidance that when the revolver gets within a 12-month maturity, the auditors need to assess whether or not that creates a financial risk to a company and jeopardizes the going concern.

Speaker Change: That ties into a question we received regarding the companies going concern.

Whether or not.

Downgrade or that.

Speaker Change: The revolver maturity has an impact on the company's financial viability.

Speaker Change: Again, as I noted and as we talked about in the 10-K, we are in discussions with the banks we pill.

Speaker Change: We feel good about the support they have provided to the company and as a result, well let me back up let me first say the going concern is based on accounting guidance that when the revolver gets within a 12 month maturity.

Speaker Change: That the auditors need to assess whether or not that creates a financial risk to our company and jeopardizes the going concern.

Operator: We had discussions with our auditors, and we worked for a process, and we feel comfortable and confident in our ability to continue to support liquidity through cash access to capital markets and access to the bank markets.

Speaker Change: We had discussions with our auditors and we work for our process and we feel comfortable and confident in our ability to continue to support liquidity through cash access to capital markets and access to the bank markets.

Operator: I think that also there was a question around acquisitions and our investment acquisition. So obviously we're still engaged in the acquisition market, and as opportunities arise, Darrellgas is always looking for that fit. Our acquisition; we are very good at importing them and finding synergies. Again, as we announced today, this past year, we need our largest acquisition in the last 10 years. We're very proud of that.

Speaker Change: And I think that also there was a question around acquisitions.

Speaker Change: On acquisition.

Speaker Change: So obviously, we're still engaged in the acquisition market and as opportunities arise aircrafts is only looking for that are acquisition. We are very good at onboarding them and finding synergies.

Speaker Change: Again, as we announced today that this past year, we made our largest acquisition in the last 10 years, we're very proud of that.

Operator: There's been a few questions around how do we think about 2025 capital expenditures in comparison to 24. I want to call out again the supply chain acumen demonstrated by Blue Rhino this year, and we expect this performance that was seeded in this year to continue and create future positive opportunities. We want to talk about 24 just to kind of summarize it up because there's several questions around how we think about 25 as compared to 24. In summary, 24 is basically three main headwinds: weather, anomaly, medical claim issues, which we also believe were anomalies, and then inflationary pressures, which kind of impacted a few regional accounts who closed their doors.

There's been a few questions around how do we think about 2025 capital expenditures in comparison to 24.

Speaker Change: And I want to call out again, the supply chain acumen demonstrated by Blue Rhino this year.

Speaker Change: And we expect.

Speaker Change: This performance.

Speaker Change: Really kind of seeding a midyear to continue and create future positive opportunities.

I wanted to talk about 'twenty, four just to kind of summarize it up because there is several questions around how we think about 25% compared to 24.

Speaker Change: Some of our 24 is basically three main headwind weather anomaly medical claim issues, which we also believe were anomalies and then inflationary pressures, which kind of impacted a few regional accounts, who close their doors.

Operator: And as we've discussed in this earnings column and previous, we are repositioning those assets in our auto gas and our large construction or 10 peak segments. I want to call out that we graduated over 40 service checks from our training program; they're instrumental in our growth strategy. And we are managing operating expense. For instance, we saved diesel expense due to reduction in skip stops. Finally, we had major growth in our Southeast region or Southwest region, and we opened eight offices there.

Speaker Change: As we've discussed in this earnings call and on previous we are repositioning those assets in our auto gas in our large construction or chunky segments I wanted to call out that we graduated over 40 service tax from our training program. They are instrumental in our growth strategy.

Speaker Change: We are managing operating expense for instance, we saved diesel expense due to reduction in skip stops finally, we had major growth in our southeast region, our supply southwest region.

Speaker Change: We opened eight offices there.

Operator: Michael, I think that answers that.

Speaker Change: Michael I think that answers patents.

Operator: Would you go back to the financial side? Yeah, there has been some questions regarding expectations around fiscal year 25 EBITDA. As we've done previously, we don't provide EBITDA forecast to the market, but I would direct you to our 10-K and 10-Q filings where we identify and discuss key performance drivers. You can use those and look at the historical performance and come up with your estimates on what you think a normalized EBITDA number is for the company. I do think the disclosures, they identify the key variables to the performance in those prior periods, so that should help you get your mind around what the outlook for fiscal year 25 should look like.

Speaker Change: Two.

Speaker Change: The financial side.

Speaker Change: Yes, there has been some questions regarding.

Speaker Change: Expectations around fiscal year 'twenty five EBITDA.

As we've done previously we don't provide EBITDA forecast to the market, but I would direct you to our 10-K and 10-Q filings, where we identify and discuss key performance drivers.

Speaker Change: You can use those and you look at the historical performance and come up with your estimates on what you think a normalized EBITDA number is for the company I do think the disclosures.

Speaker Change: <unk> identified the key variables to the performance in those prior periods. So that should help you.

Get your mind around what the outlook for fiscal year 'twenty five should look like.

Speaker Change: And.

Operator: I think we're looking through. I think we've addressed all of the comments. What we have done; there are some additional comments that have come in, but they're related to what we previously talked about. So we are not going to go back and repeat those.

Speaker Change: Thanks, we're looking through I think we've addressed all of the comments what we have done there are some additional comments that have come in but the related to what we previously talked about.

Speaker Change: So we are not going to go back and repeat those.

Operator: I think we're done.

Speaker Change: I think we're done I think we're done. Thank you so much for joining and we appreciate your support. Thank you tell the employees that Eric asked were very proud of you and us.

Operator: Thank you so much for joining in. We appreciate your support.

Operator: Thank you to all the employees of Ferrellgas. We're very proud of you.

Operator: And I'll turn it back over to the moderator.

Speaker Change: I will turn it back over to the moderator.

Operator: This concludes today's conference call. Thank you for participating.

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

Operator: You may now disconnect. Thank you very much.

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James Ferrell: I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I James Ferrell, Tamria Zertuche, Michael Cole James Ferrell, Tamria Zertuche, Michael Cole, Wendel Parks, Ferrellgas Partners James Ferrell, Tamria Zertuche, Michael Cole, Wendel Parks, Ferrellgas Partners James Ferrell, Tamria Zertuche, Michael Cole, Wendel Parks, Ferrellgas Partners Good day and thank you for standing by.

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Speaker Change: Good day, and thank you for standing by.

Operator: Welcome to the Ferrellgas 4th quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded.

Speaker Change: Welcome to the <unk> fourth quarter 2024 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: Please be advised that today's conference is being recorded.

Tamria Zertuche: I would now like to hand the conference over to your host today, Tamria Zertuche, President and CEO. Please go ahead. Welcome to our 4th quarter fiscal 2024 earnings call. The 4th fiscal quarter showcased our employee owners and their ability to manage and execute against our overall strategic initiatives. It is our people that are responsible for the winds we had this quarter and this year. Like last quarter, you will hear about our tank exchange business and the growth we have experienced due to the increase in overall locations. Our retail operations team was focused on 4th quarter seasonal prep for the next heating season, all while growing the commercial side of our business, especially in the auto gas segment.

Speaker Change: I would now like to hand, the conference over to your host today, Jim <unk>, President and CEO.

Jim <unk>: Go ahead.

Welcome to our fourth quarter fiscal 2024 earnings call the fourth fiscal quarter showcased our employee owners and their ability to manage and execute against our overall strategic initiatives.

Speaker Change: Are people that are responsible for the wind we had this quarter and this year like last quarter, you'll hear about our tank exchange business and the growth we have experienced due to the increase in overall locations.

Our retail operations team was focused on fourth quarter seasonal for the next heating season, all while growing the commercial side of our business, especially in the auto gas segment. We grew in this fourth fiscal quarter as compared to prior year. So you will hear how we were able to do that through our focus on counter seasonal business opportunities you will.

Tamria Zertuche: We grew in this 4th fiscal quarter as compared to prior year, so you will hear how we were able to do that through our focus on counter-seasonal business opportunities. You will also hear about our emergency response support before, during, and after recent storms. Our commitment to the communities we serve is clear, not only during normal business operations but also during those times when weather events disrupt other energy sources. Propane has proven time and again to be available when other energy sources are not. Feral gases committed to propane and all the advantages it provides our customers.

Speaker Change: Also here about our emergency response support.

Speaker Change: Four during and after recent storms our commitment to the communities we serve is clear.

Only during normal business operations, but also during those times when weather events disrupt other energy sources propane has proven time and again to be available. When other energy sources are not ferrell gas is committed to propane and all the advantages. It provides our customers I am proud of our company.

Tamria Zertuche: I am proud of our company, its people, and their focus on safety, our customers, and results.

Mike Call: Its people and their focus on safety, our customers and our results I will now turn the floor over to our Chief Financial Officer, Mike call to go over the financial results for this quarter.

Michael Cole: I will now turn the floor over to our Chief Financial Officer, Michael, to go over the financial results for this quarter. Thank you, Tamara, and thank you all for joining us today.

Mike Call: Thank you Anne Marie and thank you all for joining us today.

Michael Cole: I would like to remind everyone that some statements made during this call may be considered forward-looking, and at 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 on September 27th, 2024, and other documents filed from time to time with the Securities and Exchange Commission. Additionally, we know that the purpose of this call is to discuss the results of operations for the fourth fiscal quarter in the full year ended July 31st, 2024. Unseasonably warm weather and higher medical insurance claims were the two biggest drivers impacting our fiscal 2024 EBITDA decrease.

Speaker Change: These factors are discussed in our Form 10-K filed on September 27th 2024, and other documents filed from time to time with the Securities and Exchange Commission.

Speaker Change: Additionally, we note that the purpose of this call is to discuss the results of operations for the fourth fiscal quarter and full.

Speaker Change: Full year ended July 31 2024.

Unseasonably warm weather and higher medical insurance claims were the two biggest drivers impacting our fiscal 2024 EBITDA decrease.

Michael Cole: Weather in fiscal 2024 was 10% warmer than normal and 4% warmer than fiscal 2023, which correlates with a 44.3 million or 5% decrease in gallons sold compared to the prior year. Additionally, we paid 11.3 million more in medical insurance claims compared to Fiscal 2023. Although our business will always be impacted to an extent by weather, we are making progress in our efforts to become more weather agnostic. As the cost of medical claims continues to escalate, we strive to make health a priority for employee owners through a wellness program which encourages preventative care. We also continually evaluate our medical plan, and we will recently select a top broker to help ensure plan performance.

Speaker Change: Other than fiscal 2024 was 10% warmer than normal and 4% warmer than fiscal 2023, which correlates with a $44 3 million or 5% decrease in gallons sold compared to the prior year.

Additionally, we paid $11 3 million more in medical insurance claims compared to fiscal 2023.

Speaker Change: Although our business will always be impacted to an extent by whether we are making progress in our efforts to become more weather agnostic as the cost of medical claims continues to escalate, we strive to make health a priority for our employee owners through a wellness program, which encourages preventative care.

Speaker Change: We also continually evaluate our medical plan and we were recently selected a top broker to help ensure planned performance.

Michael Cole: We continue to strategically focus on efforts to become more weather agnostic. These initiatives include investments in our Blue Rhino tank exchange brand on the wholesale side and targeting specific locations and customer types on the retail side. Strategic investments in our blue rhino tank exchange business reflect increases in EBIDA of 42% and 26% for the fourth fiscal quarter and fiscal 2024, respectively. We added over 6,000 tank exchange locations for a 10% increase compared to the prior year period. As with last quarter, we continue to see more business closings from the effects of inflation, which contributed to a decrease in retail customers in some areas of our national footprint, and these decreases were not fully offset by customer gains during the fiscal year.

Speaker Change: Strategic investments in our Blue Rhino tank exchange of business reflect increases in EBITDA of 42% and 26% for the fourth fiscal quarter and fiscal 2024, respectively.

Speaker Change: We added over 6000 tank exchange locations for a 10% increase compared to the prior year period.

As with last quarter, we continued to see more business closings from the effects of inflation, which contributed to a decrease in retail customers in some areas of our national footprint and these decreases were not fully offset by customer gains during the fiscal year.

Michael Cole: However, in our retail business, we did benefit from the opening of six locations in growing coastal regions and augmentation of our auto gas customers, both of which are weather-agnostic opportunities. Gross profit was flat, with an increase of $0.4 million for the fourth fiscal quarter and a decrease of $24.1 million, or 2%, for fiscal 2024 compared to the respective prior year periods. margin per gallon was favorable for both the fourth fiscal quarter and fiscal 2024 due to segment mix and pricing acumen. cost of goods sold decreased by $1.9 million or 0.4% in revenues for the fourth fiscal quarter.

However, in our retail business, we did benefit from the opening of six locations in growing coastal regions and augmentation of our auto gas customers, both of which are weather agnostic opportunities.

Speaker Change: Margin per gallon was favorable for both the fourth fiscal quarter and fiscal 2024 due to segment mix and pricing acumen.

Speaker Change: Cost of products sold decreased by $1 $9 million or 1%, which was partially offset by a decrease of $1 $4 million or 0.4% and revenues for the fourth fiscal quarter.

Michael Cole: gallon sold during the quarter decreased 6.1 million gallons or 4% as we continue to see some additional business closings and the effects of inflation, which contributed to a decrease in retail customers. For fiscal 2024, revenues decreased $189.3 million or 9%, which was partially offset by a decrease of $165.3 million or 16% in cost of the product sold. This was primarily due to warmer than normal weather, a decrease in retail customers, as previously discussed, and lower wholesale propane prices at our two major supply points. We recognize the net loss attributable to Farrell Gas Partners LP of $20.8 million and $29.1 million in the fourth fiscal quarter of 2024 and 2023, respectively, and fiscal 2024 and 2023 we had net earnings attributable to Farrell Gas Partners LP of $110.2 million and $136.9 million.

Speaker Change: Gallons sold during the quarter decreased $6 1 million gallons or 4% as we continued to see some additional business closings and the effects of inflation.

Speaker Change: Which contributed to a decrease in retail customers.

Speaker Change: For fiscal 2024 revenues decreased to $189 3 million or 9%, which was partially offset by a decrease of $165 $3 million or 16% in cost of products sold.

Speaker Change: This was primarily due to warmer than normal weather a decrease in retail customers as previously discussed and lower wholesale propane prices at our two major supply points.

Speaker Change: We recognized a net loss attributable to Ferro gas partners LP of $28 million and 29 point.

Speaker Change: $1 million in the fourth fiscal quarter of 24 and 2023, respectively.

Speaker Change: Fiscal 2024, and 2023, we had net earnings attributable to Ferro gas partners LP of $110 $2 million and $136 $9 million respectively.

Michael Cole: Respect.

Michael Cole: actively. For the quarter, Adjusted EBITDA, a non-GAAP financial measure, increased by $4.6 million or 16% to $33.6 million compared to $29 million in the prior year of quarter. The change was primarily due to a $7.7 million decrease in general and administrative expense after adjusting for a $1.8 million decrease in EBITDA adjustments in a $3.7 million increase in operating expense. The decrease in general and administrative expense was primarily due to approximately $6 million reduction in incentive accruals compared to the prior year period. The increase in operating expense consisted of increases of $5.3 million in plant and other cost and $1 million in personnel expense, partially offset by a decrease of $2.6 million in vehicle cost.

Speaker Change: For the quarter adjusted EBITDA, a non-GAAP financial measure increased by $4 $6 million or 16% to $33 6 million compared to $29 million in the prior year quarter.

Speaker Change: The change was primarily due to a seven $7 million decrease in general and administrative expense.

Speaker Change: After adjusting for a $1 $8 million decrease in EBITDA adjustments and a $3 7 million dollar increase in operating expense.

Speaker Change: The decrease in general and administrative expense was primarily due to approximately $6 million reduction in incentive accruals compared to the prior year period.

Michael Cole: For fiscal 2024, Adjusted EBITDA decreased by $42.8 million, or 12%, to $317.4 million compared to $360.2 million in fiscal year 2023. In addition to the $24.1 million decrease in gross profit previously noted, a $24.1 million increase in operating expense and a $3.7 million decrease in general and administrative expense, after adjusting for a $16.7 million decrease in EBITDA adjustments, contributed to the decrease. The increase in operating expense was driven by increases of $13.1 million in personnel expense, $5.6 million in vehicle expense, and $5.4 million in plant and other cost. Increases of $11.3 million in medical insurance claims paid under our self-insured benefits plan, and $6.6 million in payroll cost, partially offset by a decrease for incentive accruals, comprise the change in personnel expense.

Speaker Change: For fiscal 2024, adjusted EBITDA decreased by $42 8 million or 12% to $317 4 million compared to $362 million in fiscal year 2023.

Speaker Change: Dollars decrease in EBITDA adjustments contributed to the decrease.

Speaker Change: The increase in operating expense was driven by increases of $13 $1 million in personnel expense.

Speaker Change: $5 $6 million in vehicle expense and $5 $4 million in plant and other cost.

Speaker Change: Increases of $11 $3 million in medical insurance claims paid under our self insured benefits plan and $6 $6 million in payroll costs, partially offset by a decrease for incentive accruals comprise the change in personnel expense.

Michael Cole: The increase in vehicle expense was primarily due to increases of $5.7 million for repairs and maintenance and $0.6 million in telematics technology, partially offset by a decrease in fuel cost. The increase in plants and other cost was primarily due to increases of $4.5 million in miscellaneous expense, $1.5 million for property repairs and network cost, and $1.2 million related to legal and general liability cost. These increases were partially offset by a decrease in credit card fees related to a new payment platform, which charges less in processing fees. The decrease in general in administrative expense was primarily due to a reduction in incentive accruals.

Speaker Change: The increase in vehicle expense was primarily due to increases of $5 $7 million for repairs and maintenance and zero point $6 million in telematics technology.

Speaker Change: Partially offset by a decrease in fuel cost.

The increase in plants and other costs was primarily due to increases of $4 $5 million in miscellaneous expense.

Speaker Change: $1 5 million for property repairs and network cost and $1 $2 million related to legal and general liability cost data.

These increases were partially offset by a decrease in credit card fees related to a new payment platform, which charges less and processing fees.

Speaker Change: The decrease in general and administrative expense was primarily due to a reduction in incentive accruals.

Tamria Zertuche: I will now turn the call back over to Tamria. I want to start by highlighting the improvements Blue Rhino has made in creating efficiencies in their supply chain. That team really excelled in the areas of supply chain management and removed multiple days of supply across the donation-wide network. This improved our free cash flow and decreased capital expenditures. As we see power outages from storms and other events, the company with its National Distribution Network readily steps up to provide easily accessible, portable fuel. Both Blue Rhino and Ferrell Gas were on hand to help storm victims and support Operation Barbecue Relief by providing propane and tanks to fuel meals for those impacted by the storm and first responders in response to Hurricane Barrel.

Speaker Change: I will now turn the call back over to Tamara.

Speaker Change: I wanted to start by highlighting the improvement Blue Rhino has made in creating efficiencies in their supply chain that team really excelled in the areas of supply chain management and remove multiple days of supply across the nation wide network. This improved our free cash flow and decreased capital expenditures.

Speaker Change: As we see power outages from storms and other events the company with its national distribution network rapidly steps up to provide easily accessible portable fuel.

Blue Rhino in furrow gas are on hand to help storm victims and support operation Bbq relief by providing propane and tanks to fuel meals for those impacted by the storm and first responders in response to hurricane barrel.

Tamria Zertuche: A category one storm, which made landfall in Texas in July of 2024, in addition to providing an energy source for those without power.

Speaker Change: A category, one storm, which made landfall in Texas in July of 2024. In addition to providing an energy source for those without power.

Tamria Zertuche: Another great example of our progress to become more weather agnostic is the growth in our autogas business. In July of 24, we completed the installation of an 18,000-gallon tank and autogas pumps, which will be used to help transport nearly 200,000 students to school this year. We continue to expand our business in other areas of the country outside of the Midwest, such as our fiscal 24 acquisition of Eastern Sierra Propane in California. This is the largest acquisition we have made in the last 10 years. Strategic acquisitions throughout the country help to mitigate the impact of weather conditions in specific regions.

Speaker Change: Another Great example of our progress to become more weather agnostic.

Speaker Change: The growth in our auto gas business in.

Speaker Change: In July 24, we completed the installation of an 18000 gallon tank and auto gas pumps, which will be used to help transport nearly 200000 students to school this year.

Speaker Change: Strategic acquisitions throughout the country helped to mitigate the impact of weather conditions and specific regions.

Tamria Zertuche: I'm proud of our company and its employee owners for the many ways we work to invest in technology and initiatives to deliver propane to our customers in a timely, safe, and efficient manner. Our tank monitors, to telematics, to our strategic vendor partnerships, we do our very best to serve our customers and continually improve.

Operator: I will now turn the call back over to our moderator as we move to the live Q&A section of our call.

I will now turn the call back over to our moderator as we move to the live Q&A section of our call.

Speaker Change: Okay.

Operator: Good morning. We've received questions into our inbox, and this is my call, and Tamry is her Tucci, and we will go through some of the questions that we have received in our inbox. The first question, can you provide an update on the Eddie Stone case? In July, we appealed the District Court's judgment to the third sort of court of appeals. We have no further updates to provide at this time and would direct you to the disclosures in our 10-K. With the current revolving credit facility expiring in March of 2025, can you provide an update as to when it will be renewed?

Speaker Change: Good morning.

Speaker Change: We've where we've received questions into our inbox and this is my call.

Speaker Change: Temporary as of TG and we will go through some of the questions that we've received in our inbox.

First question can you provide an update on the <unk> case.

In July we appealed the district court's judgment to the court of Appeals, we have no further updates to provide at this time and would direct you to the disclosures in our 10-K.

With our current revolving credit facility expiring in March of 2025 can you provide an update as to when it will be renewed.

Speaker Change: We do not have a specific date targeted for the extension we have been working with our existing bank group and they remain supportive.

Speaker Change: We'll continue to work with them to amend and extend the existing revolving credit facility. We certainly appreciate and recognize that it does have the March 2025 maturity and that is one of the top priorities for the company over the coming weeks.

Operator: We certainly appreciate and recognize that it does have the March 2025 maturity, and that is one of the top priorities for the company over the coming weeks. Another question related to that that came in relates to our 26 senior notes, and the question is how is a company planning to handle the refinancing of the 2026 senior notes, the B units, the preferred units, and the capital structure. As we've talked about in the past, you know, those capital securities are complex securities and they have a lot of provisions that are intertwined with one another. We have an engaged and outside investment bank to help us review and for them to make recommendations regarding our capital structure.

Speaker Change: Another question related to that.

Speaker Change: That came in relates to our 2006 senior notes and the question is how is the company planning to handle the refinancing of the 2026 senior notes the B units the preferred units and the capital structure.

Operator: We'll be taking their recommendations into account as we continue discussions with our bank group and holders of those capital securities.

Speaker Change: We will be taking their recommendations into account as we continue discussions with our bank group and holders of those capital Securities.

Operator: You know we received a question about the Fourth Amendment and the restriction on moving funds between the units, between the MLP and the OLP. The question is in the fourth amendment to the credit facility, Ferrellgas was restricted from moving funds to MLP, which means the company can no longer make distributions to the Class A or Class B units. Will the amended facility address this issue or remove this restriction? Our response to that is, you know, the Bank Group. And that will be determined as we work through the amendment and extension process with the bank group.

Speaker Change: We received a question about the fourth amendment.

Speaker Change: The restriction on moving funds between the units between the MLP and the LLP.

Speaker Change: Question is in the fourth amendment to the credit facility Farrell gas was restricted for moving funds to MLP, which means the company can no longer make distributions to the class a or class b units will be amended facility address this issue or removed this restriction.

Speaker Change: Our response to that is.

Speaker Change: We will work with our bank group.

And that will be determined as we work through the amendment and extension process with.

Speaker Change: With the Bank group.

Operator: You know, the third party investment bank that I mentioned just a moment ago; they will assist in that process, and again, we'll take the recommendations into consideration as we work through the process. I will note our bank group has been supportive of the company, and we expect them to continue to be supportive as we work through that amendment process, but it's too early to know or to make a take a view on whether or not those restrictions on cash distributions from the OLP to the MLP will be revised or eliminated.

The third party investment banks that I mentioned, just a moment ago. They will assist in that process and again, we will take our recommendations into consideration as we work through the process.

Speaker Change: I will note that our bank group has been supportive of the company and we expect them to continue to be supportive as we work through that amendment process, but it's too early to know where to make take a view on whether or not those restrictions on cash distributions from the <unk> to the MLP will be revised or eliminated.

Speaker Change: Okay.

Operator: In life, there was a question that came in regarding the Eddie Stone ruling and whether or not it has an impact on our thinking around the Class B units. The question is, in light of the Eddie Stone ruling, how has your thinking or timing of Class B redemption changed, if at all? The Class B units can be converted anytime pursuant to our financing documents up until March of 2026. I'm sorry; they could be redeemed at any time, provided we meet the conversion redemption threshold up to March of 2026. After March of 2026, they can be converted into Class A units.

Speaker Change: After March of 2006, they can be converted into class a units our position has not changed regarding the class b units and the redemption and conversion dynamics Daddy stone ruling certainly adds another variable to that process, but as we noted on our 10-K, we have been advised that we have strong grounds for the appeal.

Operator: Our position has not changed regarding the Class B units and the redemption and conversion dynamics. The Eddie Stone ruling certainly adds another variable to that process, but as we noted on our 10-K, we have been advised that we have strong grounds for the appeal and, as I noted earlier, our policy is not to comment on funding litigation, and I'll defer you to the 10-Q disclosures.

Speaker Change: And as I noted earlier, our policy is not to comment on pending litigation and I'll refer you to the 10-Q disclosures.

Operator: So maybe we'll take a little break and answer some of the questions around the business. A good question about Blue Rhino and the Generator Supply Business preparing for Hurricane Helene. You know, both retail and Blue Rhino have been preparing for the storm really since the beginning of the weekend, and based on landfall assessments, we prioritize our routes, we restock display, even getting them ready for the community that we're also preparing for the storm. I'm very proud of our employees that do all they can to not only prepare the communities, but also our yards and all of our work environment.

So maybe we will take a little break and answer some of the questions around the business a good question about blue Rhino and the generator supply business preparing for Hurricane Helene.

Speaker Change: Both retailers and Blue Rhino prepared and have been preparing for the storm really from the beginning of the weekend and based on landfall assessments, we prioritize our route to restock displays and getting them ready for the communities that we're also preparing for the storm.

Speaker Change: We're proud of our employees that do all they can not only prepare the communities, but also our yards in all of our work environment.

Operator: As of yesterday morning, all of our routes were running. Obviously, as the storm made landfall, we prioritize the safety of our drivers, first and foremost. And then, as the landfall-impacted areas open up later today, we'll assess, you know, damage and road conditions and get back out there to really address our community needs.

Speaker Change #100: Yesterday morning, all of our routes for running obviously at the storm made landfall we prioritize the safety of our drivers first and foremost and then as the land Paul impacted areas open up later today, we'll assess damage and road condition.

Speaker Change #100: Get back out there to really address that community needs.

Speaker Change #100: We also had a question around the domestic propane supply markets and how they might be impacted based on the increase in exports over the next 12 to 18 months that are forecasted.

Speaker Change #100: We do not expect any impact on the domestic markets.

Speaker Change #100: Plenty of propane.

Operator: On September 3rd, Moody's downgraded Ferrellgas, and we received a question regarding the downgrade. How is the company planning to address the recent downgrade for Moody's? What actions are being taken? When you go to the Moody's credit opinion, they cite things like our complex capital structure, liquidity concerns, and potential cost associated with Eddie Stone, as contributing factors for the downgrade. We do expect those concerns to be addressed as we continue to work with our outside investment banker and as we work through the amendment and extension process with the banks. The Eddie Stone, as we noted, with the appeal and the posting of the appeal bond, that will take some time for the appeal process to work through and that there won't be any, we don't expect any immediate decisions on that from the courts.

Speaker Change #100: Okay.

Speaker Change #100: On September 3rd Moody's downgraded.

Speaker Change #101: Apparel gas and we received a question regarding the downgrade how is the company planning to address the recent downgrade from Moody's what actions are being taken.

When you go to the Moody's credit opinion, they cite things like our complex capital structure liquidity concerns potential cost associated with Eddie stone as contributing factors for the downgrade.

Speaker Change #101: We do expect those concerns to be addressed as we continue to work with our outside investment banker and as we work through the amendment and extension process with the banks.

Speaker Change #102: Stone as we noted with the appeal and the posting of the appeal bond.

Speaker Change #102: That will take some time for the appeal process to work through and that there won't be any.

Speaker Change #103: We don't expect any immediate decisions on that from the courts in terms of the other issues cited by Moody's the complex capital structure again, we're addressing that.

Operator: In terms of the other issues cited by Moody's, the complex capital structure, again, we're addressing that with our investment banker. And liquidity concerns is primarily tied to, I believe, tied to the revolving credit facility in the March 2026 maturity.

Speaker Change #104: With our investment banker and liquidity concerns is primarily tied to I believe tied to the revolving credit facility in the March 2026 maturity.

Operator: That ties into a question we receive regarding the company's going concern and whether or not that downgrade or that the revolver maturity has an impact on the company's financial viability. You know, as again, as I noted, and as we talked about in the 10-K, we are in discussions with the banks. We feel good about the support they've provided to the company. And as a result, well, let me back up, let me first say the going concern is based on accounting guidance that when the revolver gets within a 12 months maturity, that the auditors need to assess whether or not that creates a financial risk to a company and jeopardizes the going concern.

Speaker Change #105: That ties into a question we received regarding the companies going concern.

Speaker Change #104: Whether or not.

Speaker Change #104: Downgrade or that.

Speaker Change #106: Our revolver maturity has an impact on the company's financial viability.

Speaker Change #107: Again, as I noted and as we talked about in the 10-K, we are in discussions with the banks we pill.

We feel good about the support they have provided to the company and as a result.

Backup let me first say the going concern is based on accounting guidance that when the revolver gets within a 12 month maturity.

Speaker Change #108: That the auditors need to SaaS, whether or not that creates a financial risk to our company and jeopardizes the going concern.

Speaker Change #109: We had discussions with our auditors and we work for our process and we feel comfortable and confident in our ability to continue to support liquidity through cash access to capital markets and access to the bank markets.

Operator: I think that also, there was a question around acquisitions and our investment acquisition. So obviously, we're still engaged in the acquisition market, and as opportunities arise, the revolvers are always looking for that fit. Our acquisition; we are very good at importing them and finding synergies. Again, as we announced today, this past year, we need our largest acquisition in the last 10 years. We're very proud of that.

And I think that also there was a question around acquisitions and our impact on acquisition.

Speaker Change #110: So obviously, we're still engaged in the acquisition market and as opportunities arise airgas is always looking for that.

Speaker Change #111: <unk> acquisition, we're very good at Onboarding them and finding synergies.

Speaker Change #112: Again, as we announced today that this past year, we made our largest acquisition in the last 10 years, we're very proud of that.

Operator: There's been a few questions around how do we think about 2025 capital expenditures in comparison to 24. And you know, I want to call out again the supply chain acumen demonstrated by Blue Rhino this year. And we expect this performance that was kind of seeded in this year to continue and create future positive opportunities. We want to talk about 24 just to kind of summarize it up because there are several questions around how we think about 25 as compared to 24. We summarize 24 is basically three main headwinds: weather, anomaly, medical claim issues, which we also believe were anomalies, and then inflationary pressures, which kind of impacted a few regional accounts who closed their doors. As we've discussed in this learning column and previous, we are repositioning those assets in our auto gas and our large construction or temp heat segments.

Speaker Change #112: There's been a few questions around how do we think about 2025 capital expenditures in comparison to 24.

Speaker Change #112: And I want to call out again, the supply chain acumen demonstrated by Blue Rhino this year.

Speaker Change #112: And we expect.

Speaker Change #112: This performance.

Speaker Change #112: Kind of seeding a midyear to continue and create future positive opportunities.

Speaker Change #113: I wanted to talk about 'twenty, four just to kind of summarize it up because there is several questions around how we think about 'twenty five as compared to 24 months.

Speaker Change #114: <unk> 24 is basically three main headwind weather anomaly medical claim issues, which we also believe were anomalies and then inflationary pressures, which kind of impacted a few regional accounts, who close their doors and as we've discussed in this earnings call and in previous we are repositioning of assets in our <unk>.

Speaker Change #114: At our large construction or <unk> segments.

Operator: I want to call out that we graduated over 40 service checks from our training programs; they're instrumental in our growth strategy, and we are managing operating expense. For instance, we saved diesel expense due to reduction in skip stops. Finally, we had major growth in our Southeast region, or South-South West region, and we opened eight offices there.

Speaker Change #115: I wanted to call out that we graduated over 40 service tax from our training program. They are instrumental in our growth strategy.

Speaker Change #116: And we are managing operating expense for instance, we saved diesel expense due to reduction in skip stops finally, we had major growth in our southeast region, our southwest region.

Speaker Change #116: We opened eight offices there.

Operator: Michael, I think that answers that.

Speaker Change #117: Michael I think that answers that.

Operator: Let me go back to the financial side. Yeah, there has been some questions regarding expectations around fiscal year 25 EBITDA. As we've done previously, we don't provide EBITDA forecast to the market, but I would direct you to our 10-K and 10-Q filings where we identify and discuss key performance drivers. You can use those and look at the historical performance and come up with your estimates on what you think a normalized EBITDA number is for the company. I do think the disclosures; they identify the key variables to the performance in those prior periods, so that should help you get your mind around what the outlook for fiscal year 25 should look like.

Speaker Change #116: Yes.

Speaker Change #118: The financial side.

Speaker Change #118: Yes, there has been some questions regarding.

Speaker Change #119: Expectations around fiscal year 'twenty five EBITDA.

Speaker Change #120: As we've done previously we don't provide EBITDA forecast to the market, but I would direct you to our 10-K and 10-Q filings, where we identify and discuss key performance drivers.

Speaker Change #120: You can use those and you look at the historical performance and come up with your estimates.

Speaker Change #121: What you think a normalized EBITDA number is for the company I do think the disclosures.

Speaker Change #121: Identify the key variables to the performance in those prior periods. So that should help you.

Speaker Change #121: Get your mind around what the outlook for fiscal year 'twenty five should look like.

Operator: And I think we're looking through. I think we've addressed all of the comments. What we have done, there are some additional comments that have come in, but they're related to what we previously talked about, so we are not going to go back and repeat those.

Speaker Change #121: And thank.

Speaker Change #121: I think we're looking through I think we've addressed all of the comments what we have done there are some additional comments that have come in but the related to what we previously talked about.

Speaker Change #121: So we are not going to go back and repeat those.

Operator: I think we're done.

I think we're done I think we're done. Thank you so much for joining and we appreciate your support. Thank you to all the employees of <unk>, we're very proud of you and.

Operator: Thank you so much for joining in. We appreciate your support.

Operator: Thank you to all the employees of Feral Gas. We're very proud of you, and I'll turn it back over to the moderator.

Speaker Change #122: Now I'll turn it back over to the moderator.

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

Speaker Change #123: This concludes today's conference call. Thank you for participating you may now disconnect.

Q4 2024 Ferrellgas Partners LP Earnings Call

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