Ferrellgas Partners, L.P. (FGP)

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Ferrellgas Partners L.P (FGP)

Q1 2017 Results Earnings Conference Call

December 09, 2016, 10:00 AM ET


Alan Heitmann - EVP and CFO

James Ferrell - Interim President and CEO


T.J. Schultz - RBC Capital Markets

Mirek Zak - Citigroup

Michael Gyure - Janney



Good morning. My name is Lindsey and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter Fiscal Year 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Mr. Al Heitmann, Executive Vice President and CFO, you may begin your conference.

Alan Heitmann

Thank you, Lindsey and good morning, everyone. I am joined this morning by Jim Ferrell, our Chairman of the Board and Interim President and CEO.

Before we get started, I would like to remind all of you that some of the statements made during this call maybe considered forward-looking and that various risk, uncertainties and other factors could cause actual performance to differ materially from anticipated performance. These factors are discussed in our Form 10-Q and other documents filed from time to time with the SEC.

Now with that, I would like to turn the call over to Jim Ferrell for his opening remarks. Jim?

James Ferrell

Thanks, Al. good morning, everyone. I’m still inside my first 100 days on the job but a lot has changed here since I took office. We're back to basics running a strong company and focused on organic growth. I am providing leadership to the people with this company depends on. My edict is simple, more money in, less money out get on board or off, make choices.

Decisions are being made on behalf of the company and its family of people who carry the load of making it work. My executives committee is made up of top officers from every discipline and we have formed a team that will work together to repair the balance sheet and rebuild the reputation of this great company.

The leadership of Bridger, our midstream, misadventure has been reconstituted into a team of men and women who are aligned with getting our stranded assets caused by the loss of our largest customer and slowdown of drilling back to work.

Our main stay retail propane business continues to be focused on customer growth under a veteran powerhouse. Blue Rhino was beginning to grow rapidly, even our dependable Ferrell North America Division has renewed focus. In other words, we’re back to work.

The internally stated goal is to preserve the company for another 75 years. It's a good place to work and many families depend on how well we turn the ship. We've always been America's primary propane supplier through our retail Ferrellgas and Blue Rhino tank exchange businesses, customers depends on us. That won't change. In addition, our midstream business is positioned well and producing fields that will provide opportunities.

Preservation and growth for another 75 years means to our people not only a good job but the restoration of the value of their eased op accounts. For many depends on that in their retirement. I personally am the second largest owner of the units.

The units owned by me combined with the units owned by the ESOP accounts for about 30% of the total common units. I don't think our alignment and the alignment of the employees with the public could be more clear. We will do what is necessary to restore value.

I am committed to pushing the ratio of debt to cash flow down to 4.5 or lower by paying off debt and by building cash flow responsibly. We are not selling assets to bring in money nor are we doing fancy deals to create an illusion. We're working our way out of our predicament.

Now let me talk a little about the first quarter results. Even though the weather nationwide was an incredible 6% warmer than last year hot fall which incidentally this fall was the warmest on record, the adjusted EBITDA cash flow for our propane business was about the same. It was in Bridger where we fell short, basically due to the permanent loss of the large customer we’ve talked about. But none of this is worrying me. I've laid out the goals we are shooting for and I am confident we’re going to be successful.

You are all aware that the Board last month unanimously decided to reduce quarterly distribution from $51.25 to $0.10 where will be held until we are well again. Our phase cash is some $160 million annual, cash that will be used to achieve our goals.

If I'm right, we will be back on top in short order that would mean a lot to our employees, our unitholders, our lenders and to me and while it is true that we need some cold weather to make this happen and I amhappy to tell you that the cash registers beginning to reign as I speak, morale is high here.

With that, I am going to turn this back to Al.

Alan Heitmann

Thanks Jim.

This morning we announced net loss of $43.5 million for our first fiscal quarter or $0.44 per common unit. This compares to a net loss of $80.6 million in the prior-year quarter or $0.79 per common unit.

As detailed in the earnings release and Form 10-Q which we filed earlier today, our first fiscal quarter 2017 adjusted EBITDA was $29 million compared to $48.9 million in the prior year period reflecting the effect of the Jamex settlement we reached in early September.

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