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Ferrellgas Partners' profit at record level

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Staff writer ▼ | June 10, 2014
Ferrellgas Partners, L.P. reported strong financial results for the fiscal 2014 third quarter ended April 30, with Adjusted EBITDA and gross profit reaching record levels.
Ferrellgas Partners
Ferrellgas PartnersFerrellgas Partners, L.P. reported strong financial results for the fiscal 2014 third quarter ended April 30, with Adjusted EBITDA and gross profit reaching record levels.

Adjusted EBITDA improved to $99.8 million from $98.5 million in the year-earlier quarter. Distributable cash flow to equity investors was $75.7 million producing distributable cash flow coverage on the partnership's quarterly distribution of 1.2x. Gross profit increased 3% to $230.5 million on anticipated margin improvement.

Reflecting the third-quarter performance and the establishment of midstream operations in May 2014, the partnership raised its fiscal 2014 Adjusted EBITDA guidance to a record $285 million to $290 million, up from previously provided guidance of $275 million to $285 million. The partnership posted record Adjusted EBITDA of $272 million for fiscal 2013.

Propane sales volumes for the quarter were 257.9 million gallons, slightly below a year ago, but consistent with planned levels. This year's winter heating season was more evenly spread over the partnership's fiscal second and third quarters contrasted with last year, which was heavily concentrated in the fiscal third quarter.

Operating expense in the quarter was $113.9 million, compared to $107.2 million in the year-earlier quarter, primarily reflecting the increased cost associated with meeting customer demand while contending with seasonably cold temperatures and propane supply shortages. General and administrative expense decreased to $12.2 million from $13.4 million, but excluding the timing of performance-based incentives was materially in line with the prior-year quarter. Interest expense declined 9% to $20.2 million, reflecting the favorable long-term debt refinancing completed last fall.

For the nine-month period ended April 30, Adjusted EBITDA improved to $262.6 million from $246.2 million a year ago, while distributable cash flow increased to $190.6 million from $180.3 million. Propane sales volumes grew 6%, exceeding planned levels on nationwide temperatures that were 6% colder than normal. Gross profit rose 7% to $642.9 million, driven by higher sales volumes and, to a lesser extent, margins that improved $0.01 per gallon.

On May 1, the partnership announced the acquisition of Sable Environmental, LLC and a related entity, a fast-growing privately held fluid logistics provider in the Eagle Ford Shale region of South Texas. The acquisition, which prompted the establishment of a midstream division, demonstrated the partnership's commitment to strategic diversification and growth of cash flow.

On June 6, the partnership amended its secured credit facility to better facilitate its strategic focus on further business diversification. Immediately following the amendment, the partnership increased the size of this facility from $500 million to $600 million providing increased liquidity for future acquisitions.

On May 5, Ferrellgas acquired Viking Propane, based in Madison, Calif., which enhances the partnership's strong California presence, extending the service territory west of Sacramento. Viking represents the fourth retail propane acquisition in the current fiscal year that began August 1.