Major propane distributor
Ferrellgas Partners L.P.
) reported third quarter fiscal 2012 pro forma earnings of 26 cents
per unit versus 32 cents per unit in the year-ago quarter. However,
the quarterly earnings edged out the Zacks Consensus Estimate of 20
GAAP and pro forma earnings were identical due to absence of
Ferrellgas reported quarterly revenue of $629.6 million, down
14.0% from the year-ago figure of $732.3 million. The quarterly
revenue surpassed the Zacks Consensus Estimate of $595.0
During the quarter, overall propane and other gas liquids sales
fell to $556.6 million compared with $647.7 million in the
On the cost side, Ferrellgas Partners' results were positive,
given its continuous drive towards cost control. Total operating
expense dropped 7.7% to $95.8 million from $103.8 million in the
prior-year quarter. Decline in cost of sales of 17% in conjunction
with significantly lower general and administrative expenses of
50.0% was the major contributor.
The partnership's operating income in the current quarter
totaled $45.5 million compared with $39.1 million in the year-ago
Adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) dropped 4.7% year over year to $70.8 million
from $74.3 million.
As of April 30, 2012, Ferrellgas had cash and cash equivalents
of $12 million versus $7.5 million as of July 31, 2011.
Distributable cash flow to equity as of April 30, 2012 changed
modestly to $48 million from $48.2 million in the prior-year
Long-term debt as of April 30, 2012 was $1,044.2 million
compared with $1,050.9 million as of July 31, 2011.
The partnership did not provide any specific guidance range for
the fourth quarter and fiscal 2012. However, the partnership
expects the results to benefit from cost reduction initiatives and
a decline in wholesale propane costs.
Recently, Ferrellgas Partners' foremost competitor
Energy Transfer Partners
) posted a disappointing first quarter 2012. Earnings of 25 cents
per unit declined 64.8% from 71 cents in the prior-year quarter and
fell short of the Zacks Consensus Estimate of 48 cents.
Quarterly revenue declined to $1,350.9 million from $1,687.6
million a year ago and fell short of the Zacks Consensus Estimate
of $1,748.0 million.
The partnership was able to register positive earnings surprise
in the reported quarter, reversing the negative trend of the past
three quarters. The cost control measures and lesser demand
fluctuation for propane despite a warmer winter benefited
We anticipate positive outcomes ahead owing to its continued
cost reduction efforts and improvement in operating income.
However, volatile demand due to weather variations might act as a
Ferrellgas Transfer Partners hold a Zacks #3 Rank which
translates into a short-term Hold rating.
Based in Overland Park, Kansas Ferrellgas Transfer Partners
engages in the distribution and sale of propane as well as related
equipment and supplies primarily in the United States. It is also
involved in the transportation of propane purchased from third
parties to nationwide and local retailers.
ENERGY TRAN PTR (ETP): Free Stock Analysis
FERRELLGAS -LP (FGP): Free Stock Analysis
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