Ferrellgas Partners, L.P.'s (FGPR) CEO Jim Ferrell on Q3 2021 Results - Earnings Call Transcript

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Ferrellgas Partners, L.P. (OTCPK:FGPR) Q3 2021 Earnings Conference Call June 22, 2021 11:00 AM ET

Company Participants

Jim Ferrell - Chief Executive Officer

Brian Herrmann - Interim Chief Financial Officer

Tamria Zertuche - Chief Operating Officer

Conference Call Participants


Ladies and gentlemen, thank you for standing by. And welcome to the Third Quarter Fiscal 2021 Earnings Call for Ferrellgas Partners, L.P. At this time, all participants’ lines are in a listen-only mode. Please be advised that today’s conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jim Ferrell. Thank you Please go ahead, sir.

Jim Ferrell

Good morning. And welcome to the Ferrellgas third quarter earnings call. My name is Jim Ferrell and I’m the CEO of the company. On behalf of the men and women who make this company work, I want to say how proud we are of the financial performance we continue to achieve.

The primary reason for the pride is that our strong showing continues to be due to increasingly sound operating practices as we transform ourselves into a technology-enabled logistics company.

It has only been a short time since we completed one of the more complicated balance sheet restructurings ever. We are keenly aware that portions of that refinancing were much more expensive than we wanted and based on our future financial performance, we intend to do something about that.

I will remind you that our ESOP still owns a sizable portion of common units and that the owners of that ESOP are the very people who work so hard to make our company successful. The ESOP will flourish once we are able to restore distribution to all common unitholders. So we all have adequate incentives to make that happen when it is right to do so. In fact, I myself own 5% of the commons.

I will now turn you over to Brian Herrmann, our Interim CFO, who will then hand you over to Tamria Zertuche, our Chief Operating Officer.

Brian Herrmann

Thank you, Jim, and welcome to our third quarter 2021 earnings call. Thank you all for joining us. I’d like to remind all of you that some statements made during this call may be considered forward-looking, and the 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 and other documents filed from time-to-time with the Securities and Exchange Commission. Additionally, we note that the purpose of this call is to discuss the results of operations for the third fiscal quarter ended April 30, 2021.

The company produced exceptionally strong results in the third quarter of fiscal 2021, leading to a $25.4 million increase in operating income or a 37.3% growth over the prior year quarter and continuing our strong performance in fiscal 2021.

The gallons of propane sold for the quarter were 260.2 million, compared to 246.8 million last year or a 13.9 million increase. Margin per gallon for the quarter was $6.04 or 7% higher than the prior year quarter, attributable to strategic product placement, sound supply chain logistics strategies and a growing customer base.

Blue Rhino tank exchange sales continued to increase due to further market share penetration, national marketing strategies and continued growth in backyard and outdoor appliance usage.

Also contributing to a strong gallon performance are right time deliveries that shift the gallons into this quarter, additional marketing strategies, platforms, improved use of our marketing analytics and weather that was 8% colder than prior year quarter. This has resulted in an increase in gross margin dollars of $30.2 million or [13%] (ph) higher than prior year quarter. Highlighting the company’s delivery efficiency strategies, in response to increased volumes, operating expenses increased to nominal 2.5%, while decreasing 2.7% per gallon.

The third quarter continues to demonstrate Ferrellgas’ strength as a high performing customer-centric technology-enabled logistics company. Strong execution by a leaner and more agile workforce of essential workers is driving high performance throughout the company, both in the field and in corporate locations. We focus on being a propane-only company.

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

Lastly, our continued commitment to safely serving our over 700,000 customers while adapting to the ever changing circumstances and new operating protocols to help protect the health and safety of our customers and employees remains our top priority.

For the quarter, the net loss attributable to Ferrellgas Partners L.P. was $66.8 million or $15.25 per common unit, compared to the prior year’s third quarter net loss of $15.4 million or $3.14 per common unit. The current quarter loss is primarily attributable to the $109.9 million loss on extinguishment of debt incurred through our successful restructuring transactions, as compared to $37.4 million in the prior year quarter.

Adjusted EBITDA, a non-GAAP measure, increased by $34.9 million or 37.8% compared to prior year quarter. For the third quarter adjusted EBITDA was $127.2 million, compared to $92.4 million in last year’s quarter resulting from the previously discussed initiatives.

As previously announced, the Ferrellgas Partners and Ferrellgas Partners Finance Corp. emerged from bankruptcy on March 30, 2021. We are extremely excited about our emergence and the restructuring transactions that recapitalized our balance sheet. We now have solid financial footing and our balance sheet that we will leverage for future growth.

At this time, I’d like to hand over the call to Tamria Zertuche, our Chief Operating Officer to discuss several other exciting developments in our company.

Tamria Zertuche

Thank you, Brian. Our retail and tank exchange businesses continue to grow. We have strategically added to our customer base with new locations that positively impacted our route density.

One of the keys to our success lies in our high performing employees and having a strong operations team throughout the country. We created the Ferrellgas Management Development Program last year to create a pipeline for diverse leadership and to provide Management Development and a Mentorship Program.

We proudly placed 11 graduates from our first class in operations management positions across the country in the third quarter. Our second class was just recently placed, and yesterday, marked the first day of our third class, the largest yet.

We also launched Ferrell University to serve as a professional development program for our current Ferrellgas employees. These programs work together to continually develop our people, while also providing a new influx of talent that will better position ourselves to further successful execution of our strategic initiatives. Ferrellgas continued to partner with Operation BBQ to provide relief to storm impacted areas in the Southern United States.

I will now turn the call back to our moderator. But before I do that, as mentioned in the announcement for this call, any additional questions may be submitted via our Investor Relations e-mail box at InvestorRelations@ferrellgas.com. Thank you.

Question-and-Answer Session

Q -


Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.

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