Q3 2025 Ferrellgas Partners LP Earnings Call

Operator: Good day and welcome to the Ferrellgas Partners 3rd Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants are on the listen-only mode. Please be advised that this call is being recorded.

Good day.

Michelle: Hum that Exterran Partners' third quarter fiscal 2025 earnings conference call. At this time all participants are in a listen only mode. Please be advised that this call is being recorded I will now turn the call over to Michelle <unk>. Please go ahead.

Operator: I will now turn the call over to Michelle Magat. Please go ahead. Thank you.

Speaker Change: Thank you good morning, everyone. Thank you for joining us today for our third quarter conference call on Michelle Bad Guy Vice President Corporate Affairs for Ferro Gout, I'm also or the company's investor contact and I look forward to getting to know many of you in the coming months.

Michelle Magat: Good morning, everyone. Thank you for joining us today for our third quarter conference call. I'm Michelle Magi, Vice President, Corporate Affairs for Ferrellgas. I'm also the company's investor contact, and I look forward to getting to know many of you in the coming month. Today's call includes prepared remarks, as well as answers to a few previously submitted questions from our President and Chief Executive Officer Tamria Zertuche.

Tim: Today's call includes prepared remarks, as well as answers to a few previously submitted questions from our President and Chief Executive Officer, Tim <unk>.

Michelle Magat: Please note that this call may contain forward-looking statements as determined by federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed forward-looking statements. These statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in any forward-looking statement. We undertake no obligation to publicly update any forward-looking statements, except to the extent required by law.

Tim: Please note that this call may contain forward looking statements as determined by federal Securities laws for this purpose any statements made during this call that are not statements of historical fact may be deemed forward looking statements.

Tim: These statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release as a result actual operations or results may differ materially from the results discussed in any forward looking statements. We undertake no obligation to publicly update any forward.

Tim: Looking statements.

To the extent required by law.

Michelle Magat: In addition, please refer to the 8K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This morning's conference call is being webcast and is also available for replay via our website.

Tim: In addition, please refer to the 8-K earnings release to find disclosures and reconciliation of non-GAAP financial measures that may be referenced on today's call.

Maria: This mornings conference call is being webcast and is also available for replay via our website with that I'd like to turn the call over to you Tim Maria.

Tamria Zertuche: With that, I'd like to turn the call over to Tamria. Thank you, Michelle. Welcome to our third quarter fiscal 2025 earnings call.

Tim Maria: Thank you Michelle.

Maria: Welcome to our third quarter fiscal 2025 earnings call.

Tamria Zertuche: Ferrellgas has a unique story, one I am proud to speak about today. We are a company of hard-working and committed people. Our people set us apart. We pride ourselves on being one of the largest propane suppliers in the U.S., with a reputation of being one of the most trusted companies in America. As you may already know, Ferrellgas was once again recognized as one of the most trustworthy companies in America by Newsweek. This is a recognition. We accept confidently, as it shows one of the fundamental strengths of our company, our people. We are owned and operated by our employees who consistently focus on operational excellence and safety first.

Speaker Change: <unk> has a unique story when I'm proud to speak about today, we are a company of hardworking and committed people our people set us apart.

We pride ourselves on being one of the largest propane suppliers in the U S with a reputation of being one of the most trusted companies in America.

You may already know Ferro gas was once again recognized as one of the most trustworthy companies in America by Newsweek. This is a recognition we accept confidently as it shows one of the fundamental strengths of our company our people.

We are owned and operated by our employees, who consistently focus on operational excellence and safety first.

Tamria Zertuche: We have a nationwide infrastructure that provides mission-critical, clean, affordable energy to all 50 states. We continue to invest in our infrastructure and technology. Most recently, we launched a telematics technology platform to manage our fleet, which has helped reduce fuel costs, minimize idling time, and ensure fleet assets are deployed where they are needed most. Additionally, we have continued to invest in our Blue Rhino tank refurbishment footprint, adding automation and safety components that help with productivity and our Inventory Turns goal. Having a reliable infrastructure, it's fueled our ability to grow.

Tim: We have a nationwide infrastructure that provides mission critical clean affordable energy to all 50 states.

We continue to invest in our infrastructure and technology. Most recently, we launched a telematics technology platform to manage our fleet, which has helped to reduce fuel costs minimize idling time and insured fleet assets are deployed where they are needed. Most additionally, we have continued to <unk>.

First in our Blue Rhino tank refurbishment footprint, adding automation and safety components that help with productivity and our inventory turns goal.

Tim: Having a reliable infrastructure it fuels our ability to grow some examples of our growth.

Tamria Zertuche: Some examples of our growth.

Tamria Zertuche: is a win in retail this quarter, entering into multi-year deals with several new national account customers. These deals are expected to add more than 2.5 million gallons of new business. Ferrellgas has demonstrated infrastructure resilience through our storm response efforts. During severe weather events in 2-3, we demonstrated just what being a nationwide provider does. We mobilized drivers and support staff from outside the affected areas to maintain service continuity. This allowed uninterrupted propane delivery where needed most.

Michelle: Is a win in retail this quarter entering into multi year deals with several new national account customers.

Michelle: These deals are expected to add more than $2 5 million gallons of new business.

Michelle: Paragon has demonstrated infrastructure resilience through our storm response efforts.

Michelle: During severe weather events in Q3, we demonstrated just what being a nationwide provider does we mobilized drivers and support staff from outside the affected areas to maintain service continuity. This allowed uninterrupted propane delivery where needed most.

Tamria Zertuche: Not only do we deliver on our promise to customers and employees, but we also generate a consistent cash flow with an asset-efficient business model, delivering exceptional results. I am proud of this team. I'm confident in our strategy, a strategy proven to deliver exceptional value and service to our customers.

Michelle: Not only do we deliver on our promise to customers and employees, but we also generate a consistent cash flow within asset efficient business model delivering exceptional results.

Michelle: I am proud of this team.

Michelle: Confident in our strategy, our strategy proven to deliver exceptional value and service to our customers.

Nick Hymer: I would like to introduce our controller, Nick Hymer. He is going to review our Q3 financial results. Thanks, Tamria. In the third fiscal quarter, we generated strong revenue growth of nine percent, which was driven by strong field performance in inclement weather and residential market growth. We also delivered solid gross profit gains and net earnings growth of 12% in the quarter versus the prior year. Our retail sales increased $32.7 million or 9% compared to the prior year quarter and partially aligns with the increase in retail gallons sold of 8.8 million gallons or 5%. The third fiscal quarter 2025 was warmer than normal by 4%, but 12% cooler than the third quarter of 2024, which aligns with a 12% increase in gallons sold to residential customers.

Speaker Change: I would like to introduce our controller Nick Hymer. He is going to review our Q3 financial results Nick.

Nick Hymer: Thanks Andrea.

Speaker Change: In the third fiscal quarter, we generated strong revenue growth of 9%.

Speaker Change: Which was driven by strong field performance and inclement weather and residential market growth.

Michelle: We also delivered solid gross profit gains and net earnings growth of 12% in the quarter versus the prior year.

Michelle: Our retail sales increased $32 7 million or 9% compared to the prior year quarter and partially aligns with the increase in retail gallons sold of eight.

Michelle: 8 million gallons or 5%.

Michelle: Yes.

Michelle: The third fiscal quarter, 2025 was warmer than normal by 4%, but 12% cooler than the third quarter of 2024, which aligns with a 12% increase in gallons sold to residential customers.

Nick Hymer: Propane sales volumes during the third fiscal quarter increased 13.4 million gallons or 6% compared to the prior year period. Additionally, increases of 6% and 2.6% in wholesale propane prices at our two major supply points contributed to the increase in revenue. residential sales volume growth of 12% over the prior year quarter drove the majority of the with other retail volume for industrial, commercial, national, and agricultural customers growing at 2%. Our wholesale business, which includes the Blue Rhino Tank Exchange brand, experienced a great quarter. Wholesale sales increased $9.9 million, or 8%, compared to the prior year period, with a corresponding increase of 4.6 million gallons, or 10%, compared to the prior year period.

Michelle: Propane sales volumes during the third fiscal quarter increased $13 4 million gallons or 6% compared to the prior year period.

Michelle: Additionally, increases up 6% and two 6% in wholesale propane prices at our two major supply points contributed to the increase in revenues.

Michelle: Residential sales volume growth of 12% over the prior year quarter drove the majority of the increase with other retail volume for industrial commercial national and agricultural customers growing at 2%.

Michelle: Our wholesale business, which includes the Blue Rhino tank exchange brand experienced a great quarter.

Michelle: Wholesale sales increased $9 9 million or 8% compared to the prior year period.

Michelle: With a corresponding increase of $4 6 million gallons or 10% compared to the prior year period.

Nick Hymer: The increase was driven by a 4.7 million increase in wholesale gallons sold and a 3.1 million increase in tank exchange sales due to organic growth and preparation for peak sales. Improved operational efficiency, in addition to 9% higher revenue, drove increases in gross profit of $16.9 million, or 6%, in the third fiscal quarter. This is partially offset by an increase of $28.1 million or 12% in cost of products. We recognize net earnings attributable to Ferrellgas Partners LP of $59.1 million and $52.8 million in the third fiscal quarter of fiscal years 2025 and 2024, respectively. The $6.3 million increase was primarily due to the $16.9 million increase in gross profit previously referenced.

Michelle: The increase was driven by a $4 7 million increase in wholesale gallons sold and.

Michelle: And a $3 1 million increase in tank exchange sales due to organic growth in preparation for peak season.

Michelle: Improved operational efficiency. In addition to 9% higher revenue drove increases in gross profit of $16 9 million or 6% in the third fiscal quarter.

Michelle: This was partially offset by an increase of $28 1 million or 12% in cost of products sold.

Michelle: We recognized net earnings attributable to Ferro gas partners LP of $59 1 million and $52 8 million in the third fiscal quarter of fiscal years, 2025, and 2024, respectively.

Michelle: The $6 3 million increase was primarily due to the $16 $9 million increase in gross profit previously referenced.

Nick Hymer: which is partially offset by an $8.8 million increase in operating expenses and a $3.5 million increase in interest. The $8.8 million increase in operating expense was due to increases of $7.8 million in plant and other, $700,000 in personnel. and $300,000 in vehicle. The increase in Plant Another was primarily due to increases of $3.5 million in legal costs. $1.6 million in software expense. $1 million for capitalized tank installations and plant supplies. and $800,000 for property. For the third fiscal quarter, adjusted EBITDA, a non-GAAP financial measure, increased by $10.8 million, or 10% to $114.8 million, compared to $104 million in the prior year quarter.

Michelle: Which was partially offset by an $8 8 million increase in operating expenses and a $3 5 million increase in interest expense.

Michelle: The $8 8 million increase in operating expense was due to increases of $7 8 million in plant another <unk>.

Michelle: 700 and personnel.

Michelle: 300000 and vehicle expenses.

Michelle: The increase in plant another was primarily due to increases of $3 5 million in legal cost.

Michelle: One 6 million in software expense $1 million for capitalized tank installations and plant supplies.

Michelle: And 800000 per property maintenance.

Michelle: For the third fiscal quarter adjusted EBITDA, a non-GAAP financial measure increased by $10 8 million or 10% to $114 8 million compared to $104 million in the prior year prior year quarter.

Nick Hymer: The $16.9 million increase in gross profit and $1.1 million decrease in general and administrative expense after adjusting for a $600,000 increase in EBITDA adjustments . drove the increase in adjusted EBITDA for the third fiscal quarter as compared to the prior year period. This increase was partially offset by an $8.8 million increase in operating expenses previously mentioned.

Michelle: The $16 $9 million increase in gross profit and $1 $1 million decrease in general and administrative expense after adjusting for a $600000 increase in EBITDA adjustments.

Michelle: Drove the increase in adjusted EBITDA for the third fiscal quarter as compared to the prior year period.

Michelle: This increase was partially offset by an $8 8 million increase in operating expenses previously mentioned.

Nick Hymer: The results speak for themselves, a solid quarter by our field professionals.

Michelle: The results speak for themselves a solid quarter by our field professionals.

Tamria Zertuche: Back to you, Camria. Thanks, Nick. While delivering the solid Q3 operational results, we also executed on impactful capital projects, several within Blue Rhino production plants to improve efficiency and expand our capabilities to serve customer demands.

Speaker Change: Back to your Cambria.

Cambria: Thanks, Nick.

Cambria: While delivering these solid Q3 operational results. We also executed an impactful capital projects several within Blue Rhino production plants to improve efficiency and expand our capabilities to serve customer demand.

Tamria Zertuche: Now, during periods of economic uncertainty, we have historically observed a shift in consumer behavior towards a more cost effective home based leisure activity in the backyard. So the company is well positioned. to meet the increases in demand through our robust supply network and our customer focused service model. Our north-central region experienced a significant ice storm in March. They worked tirelessly and safely to ensure our customers had propane.

Cambria: During periods of economic uncertainty, we have historically observed a shift in consumer behavior towards a more cost effective home based leisure activity in the backyard.

Cambria: The company is well positioned.

Tamria Zertuche: To meet the increases in demand through our robust supply network and our customer focused service model.

Tamria Zertuche: Our north Central region experienced a significant ice storm in March they worked tirelessly and safely to ensure our customers have propane. It is important to acknowledge their efforts as well as the efforts of all our employees, who bravely respond during serious weather events.

Tamria Zertuche: It is important to acknowledge their efforts, as well as the efforts of all our employees who bravely respond during serious weather events. The company continues to closely monitor global trade developments, including the imposition of tariffs on steel tanks and cylinders. and changes in trade policies that may affect our supply chain, cost structure and overall business operations. The company is exploring numerous potential actions to mitigate the effects of these developments as we strengthen and diversify our supplier relationships, in addition to leveraging our company's buying power as a national logistics company. We remain committed to proactively adapt to evolving trade conditions with a focus on minimizing disruption and improving financial performance.

Tamria Zertuche: The company continues to closely monitor global trade developments, including the imposition of tariffs on steel tanks and cylinders.

Cambria: And changes in trade policies that may affect our supply chain cost structure and overall business operations the.

Cambria: The company is exploring numerous potential actions to mitigate the effects of these developments as we strengthen and diversify our supplier relationships.

Cambria: In addition to leveraging our company's buying power as a national logistics company.

Tamria Zertuche: We remain committed to proactively adapt to evolving trade conditions with a focus on minimizing disruption and improving financial performance.

Tamria Zertuche: Finally, as previously disclosed, we are working with Mollison Company LLC, a global investment bank. We anticipate completing a refinancing in a timely manner.

Cambria: Finally, as previously disclosed we are working with Moelis <unk> company LLC, a global investment bank, we anticipate completing our refinancing in a timely manner.

Tamria Zertuche: Now I'd like to address just a few questions that came in ahead of our call. First, there were some questions around our CFO. As most of you know, our CFO recently retired. We have a CFO search and process.

Tamria Zertuche: Now I would like to address just a few questions that came in ahead of our call.

Tamria Zertuche: First there were some questions around our CFO as most of you know our CFO recently retired we have a CFO search and process, while we work on gaining a new CFO, Michelle Mackay, who knew medicine started this call has taken on expanded responsibilities, including Investor relations and earning communications.

Tamria Zertuche: While we work on gaining a new CFO, Michelle Magi, whom you met at the start of this call, has taken on expanded responsibilities, including investor relations and earning communications. She will be an excellent new contact for all interested.

Cambria: She will be an excellent new contact for all interested.

Tamria Zertuche: As it relates to tariffs, we had a few questions on that about how the company is mitigating the impact of tariffs. I think, and you should think about it like this, continuous improvement through investments in our business is our overall strategy to limit cost pressures really for any headwind. We remain focused on delivering safe, high quality products and services while working diligently to manage costs responsibly. Our priority is to provide value and stability for the consumers who rely on Ferrellgas and Blue Rhino every single day.

Tamria Zertuche: As it relates to tariffs we had a few questions on that about how the company is mitigating the impact of tariffs.

Tamria Zertuche: I think you should think about it like this continuous improvement through investments in our business is our overall strategy to limit cost pressures really for any headwind.

Tamria Zertuche: We remain focused on delivering safe high quality products and services, while working diligently to manage costs responsibly are.

Cambria: Our priority is to provide value and stability for the consumers who rely on federal gas and Blue Rhino every single day.

Tamria Zertuche: We've had numerous questions regarding our capital structure and our ongoing work with MOLUS and as discussed with this release, MOLUS and the company continue to evaluate the opportunities available.

Speaker Change: We've had numerous questions regarding our capital structure and our ongoing work with Moelis and as discussed with this release, Melissa and the company continue to evaluate the opportunities available.

Tamria Zertuche: Thank you for joining our call today. We have the best people in the industry. Their dedication and commitment to our customers is the key component that drives our growth and helps us to deliver on our promise to our customer. We are well positioned to capitalize on the opportunities ahead.

Tamria Zertuche: Thank you for joining our call today, we have the best people in the industry their dedication and commitment to our customers is the key component that drives our growth and helps us to deliver on our promise to our customer we are well positioned to capitalize on the opportunities ahead.

Tamria Zertuche: Thank you for your interest in Ferrellgas.

Speaker Change: Thank you for your interest in apparel, guys I'll hand, it back to the moderator.

Operator: I'll hand it back to the moderator.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.