Ferrellgas Partners’ Earnings Call: Strategic Moves Amid Challenges

Ferrellgas Partners, L.P. ((FGPR)) has held its Q1 earnings call. Read on for the main highlights of the call.

Ferrellgas Partners, L.P. recently held its earnings call, revealing a mixed sentiment marked by strategic financial maneuvers and operational achievements, alongside some financial challenges. The company demonstrated its commitment to long-term growth through debt refinancing and securing new contracts, although it faced hurdles such as decreased adjusted EBITDA, increased expenses, and a net loss for the quarter.

Strengthened Financial Foundation

Ferrellgas Partners, L.P. has taken significant steps to strengthen its financial foundation by retiring $650 million of senior notes due in 2026 and replacing them with new notes maturing in 2031. This move enhances the company’s financial flexibility and extends its debt timeline. Additionally, the expansion of its revolving credit facility is poised to support future growth initiatives.

New and Renewed Contracts

The company showcased its ability to win and retain large nationwide customers by securing 7 new national contracts and renewing 5 existing ones. These contracts represent about 3.5 million gallons, underscoring Ferrellgas’s competitive edge in the market.

Operational and Safety Improvements

Ferrellgas has invested in in-cab safety technology and transitioned to a new PERC Education Program, which has led to improved safety measures and a reduction in recordable injuries. This commitment to safety is a testament to the company’s dedication to operational excellence.

Community Engagement

The company expanded its partnerships with Operation Warm and Operation Barbecue Relief, providing coats to children and meals to first responders. Ferrellgas also celebrated employee achievements through awards and recognition, highlighting its commitment to community and employee engagement.

Margin Improvement

Despite a decrease in revenue, Ferrellgas reported a 6% increase in margin per gallon during the first fiscal quarter. This improvement partially offset the revenue decline, demonstrating the company’s ability to maintain profitability.

Decrease in Adjusted EBITDA

The earnings call revealed a decrease in adjusted EBITDA by $6.5 million or 18%, bringing it down to $29.3 million compared to $35.8 million in the prior year quarter. This decline was primarily due to increased operating and administrative expenses.

Increased Operating and Administrative Expenses

Operating expenses rose by $5.6 million, driven by higher personnel costs and other expenses. General and administrative expenses also increased by $2.1 million, impacting the company’s overall financial performance.

Net Loss

Ferrellgas recognized a net loss attributable to Ferrellgas Partners L.P. of $26.9 million for the quarter. This loss reflects the financial challenges the company is currently navigating.

Forward-Looking Guidance

Looking ahead, Ferrellgas Partners, L.P. remains optimistic about its growth prospects. The company successfully refinanced $650 million of senior notes, enhancing its financial flexibility. With an expanded revolving credit facility and a significant increase in tank sets in the temp heat market, Ferrellgas is well-positioned for future growth. The company continues to focus on safety and community initiatives, signaling a commitment to operational excellence and social responsibility.

In summary, Ferrellgas Partners, L.P.’s earnings call painted a picture of a company navigating financial challenges while making strategic moves for future growth. The sentiment was mixed, with notable achievements in contract renewals and community engagement, alongside financial hurdles such as decreased EBITDA and increased expenses. Investors and stakeholders will be keenly watching how Ferrellgas leverages its strengthened financial foundation to overcome these challenges and capitalize on growth opportunities.