Company Quick10K Filing
Ferrellgas Partners
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 97 $102
10-Q 2019-12-06 Quarter: 2019-10-31
10-K 2019-10-15 Annual: 2019-07-31
10-Q 2019-06-10 Quarter: 2019-04-30
10-Q 2019-03-08 Quarter: 2019-01-31
10-Q 2018-12-06 Quarter: 2018-10-31
10-K 2018-09-27 Annual: 2018-07-31
10-Q 2018-06-07 Quarter: 2018-04-30
10-Q 2018-03-08 Quarter: 2018-01-31
10-Q 2017-12-07 Quarter: 2017-10-31
10-K 2017-09-28 Annual: 2017-07-31
10-Q 2017-06-09 Quarter: 2017-04-30
10-Q 2017-03-09 Quarter: 2017-01-31
10-Q 2016-12-09 Quarter: 2016-10-31
10-K 2016-09-28 Annual: 2016-07-31
10-Q 2016-06-08 Quarter: 2016-04-30
10-Q 2016-03-10 Quarter: 2016-01-31
10-Q 2015-12-09 Quarter: 2015-10-31
10-K 2015-09-29 Annual: 2015-07-31
10-Q 2015-06-09 Quarter: 2015-04-30
10-Q 2015-03-11 Quarter: 2015-01-31
10-Q 2014-12-10 Quarter: 2014-10-31
10-K 2014-09-29 Annual: 2014-07-31
10-Q 2014-06-09 Quarter: 2014-04-30
10-Q 2014-03-10 Quarter: 2014-01-31
10-Q 2013-12-06 Quarter: 2013-10-31
10-K 2013-09-26 Annual: 2013-07-31
10-Q 2013-06-06 Quarter: 2013-04-30
10-Q 2013-03-07 Quarter: 2013-01-31
10-Q 2012-12-10 Quarter: 2012-10-31
10-K 2012-10-01 Annual: 2012-07-31
10-Q 2012-06-08 Quarter: 2012-04-30
10-Q 2012-03-09 Quarter: 2012-01-31
10-Q 2011-12-09 Quarter: 2011-10-31
10-K 2011-09-26 Annual: 2011-07-31
10-Q 2011-06-07 Quarter: 2011-04-30
10-Q 2011-03-11 Quarter: 2011-01-31
10-Q 2010-12-10 Quarter: 2010-10-31
10-K 2010-09-28 Annual: 2010-07-31
10-Q 2010-06-09 Quarter: 2010-04-30
10-Q 2010-03-10 Quarter: 2010-01-31
8-K 2019-12-10 Officers, Other Events
8-K 2019-12-06 Earnings, Regulation FD, Exhibits
8-K 2019-11-19 Enter Agreement
8-K 2019-11-07 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-10-15
8-K 2019-07-23
8-K 2019-06-10 Earnings, Regulation FD, Exhibits
8-K 2019-05-17 Regulation FD
8-K 2019-03-08 Earnings, Regulation FD, Exhibits
8-K 2019-02-14 Regulation FD
8-K 2019-01-10
8-K 2018-12-06 Earnings, Regulation FD, Exhibits
8-K 2018-11-21 Officers, Other Events
8-K 2018-11-16 Regulation FD
8-K 2018-09-27 Earnings, Regulation FD, Exhibits
8-K 2018-09-07 Exhibits
8-K 2018-09-06 Regulation FD
8-K 2018-07-31 M&A, Other Events, Exhibits
8-K 2018-06-25 Other Events
8-K 2018-06-07 Earnings, Regulation FD, Exhibits
8-K 2018-05-18 Regulation FD
8-K 2018-05-14 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-05-04 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-05-03 Officers
8-K 2018-05-03 Officers
8-K 2018-03-08 Earnings, Regulation FD, Exhibits
8-K 2018-02-20 Other Events, Exhibits
8-K 2018-02-16 Regulation FD
8-K 2018-01-16 Other Events, Exhibits
FGP 2019-10-31
Part I - Financial Information
Item 1.Financial Statements (Unaudited)
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.17 fgp-20191031ex1017c1058.htm
EX-10.34 fgp-20191031ex10345302d.htm
EX-31.1 fgp-20191031ex31135f642.htm
EX-31.2 fgp-20191031ex3126c2ae0.htm
EX-31.3 fgp-20191031ex3136ebc64.htm
EX-31.4 fgp-20191031ex314c14455.htm
EX-32.1 fgp-20191031ex3218e65a4.htm
EX-32.2 fgp-20191031ex322a5ad28.htm
EX-32.3 fgp-20191031ex3233128da.htm
EX-32.4 fgp-20191031ex3243ed8f0.htm

Ferrellgas Partners Earnings 2019-10-31

FGP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
ZAGG 201 395 242 493 172 9 38 283 35% 7.4 2%
SPWH 162 584 496 852 284 23 55 184 33% 3.3 4%
BNED 152 1,502 1,082 2,019 533 -18 34 143 26% 4.2 -1%
FGP 102 1,330 1,330 1,753 0 -127 43 2,141 0% 49.4 -10%
AMRK 85 705 633 4,783 32 0 21 169 1% 8.1 0%
PRTS 58 109 73 218 76 -10 -4 57 35% -13.0 -9%
BGFV 42 700 525 1,000 302 -0 25 35 30% 1.4 -0%
KIRK 23 469 367 620 184 -15 12 8 30% 0.6 -3%
TKAT 7 44 35 2 0 -9 -8 -28 23% 3.4 -20%
ONEW

10-Q 1 fgp-20191031x10q.htm 10-Q fgp_Current Folio_10Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended October 31, 2019

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from to

 

Commission file numbers: 001‑11331, 333‑06693, 000‑50182 and 000‑50183

 

Ferrellgas Partners, L.P.

Ferrellgas Partners Finance Corp.

Ferrellgas, L.P.

Ferrellgas Finance Corp.

(Exact name of registrants as specified in their charters)

 

Delaware

 

43‑1698480

Delaware

 

43‑1742520

Delaware

 

43‑1698481

Delaware

 

14‑1866671

(States or other jurisdictions of incorporation or organization)

 

(I.R.S. Employer Identification Nos.)

 

 

 

7500 College Boulevard,
Suite 1000, Overland Park, Kansas

 

66210

(Address of principal executive office)

 

(Zip Code)

 

Registrants’ telephone number, including area code: (913) 661‑1500

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☒ No ◻

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “Large Accelerated Filer,” “Accelerated Filer,” “Smaller Reporting Company,” and “Emerging Growth Company” in Rule 12b‑2 of the Exchange Act.

 

Ferrellgas Partners, L.P.:

 

 

 

Large Accelerated Filer ☐

Accelerated Filer 

Non-accelerated Filer ☐

Smaller Reporting Company ☐

 

 

 

Emerging Growth Company ☐

 

Ferrellgas Partners Finance Corp,  Ferrellgas, L.P. and Ferrellgas Finance Corp.:

 

Large Accelerated Filer ☐

Accelerated Filer ☐

Non-accelerated Filer 

Smaller Reporting Company ☐

 

 

 

Emerging Growth Company ☐

 

If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Ferrellgas Partners, L.P. and Ferrellgas, L.P. ☐

Ferrellgas Partners Finance Corp.  and Ferrellgas Finance Corp. ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b‑2 of the Exchange Act).

Ferrellgas Partners, L.P. and Ferrellgas, L.P. Yes ☐ No 

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. Yes  No ☐

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Units

 

FGP

 

New York Stock Exchange

At November 30, 2019, the registrants had common units or shares of common stock outstanding as follows:

Ferrellgas Partners, L.P.

97,152,665

Common Units

Ferrellgas Partners Finance Corp.

1,000

Common Stock

Ferrellgas, L.P.

n/a

n/a

Ferrellgas Finance Corp.

1,000

Common Stock

Documents Incorporated by Reference: None

EACH OF FERRELLGAS PARTNERS FINANCE CORP. AND FERRELLGAS FINANCE CORP. MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A) AND (B) OF FORM 10‑Q AND ARE THEREFORE, WITH RESPECT TO EACH SUCH REGISTRANT, FILING THIS FORM 10‑Q WITH THE REDUCED DISCLOSURE FORMAT.

 

 

 

FERRELLGAS PARTNERS, L.P.

FERRELLGAS PARTNERS FINANCE CORP.

FERRELLGAS, L.P.

FERRELLGAS FINANCE CORP.

TABLE OF CONTENTS

 

 

 

Page

PART I - FINANCIAL INFORMATION 

 

ITEM 1. 

FINANCIAL STATEMENTS (unaudited)

 

 

 

 

 

Ferrellgas Partners, L.P. and Subsidiaries

 

 

Condensed Consolidated Balance Sheets – October 31, 2019 and July 31, 2019

3

 

Condensed Consolidated Statements of Operations – Three months ended October 31, 2019 and 2018

4

 

Condensed Consolidated Statements of Comprehensive Loss – Three months ended October 31, 2019 and 2018

5

 

Condensed Consolidated Statement of Partners’ Deficit – Three months ended October 31, 2019 and 2018

6

 

Condensed Consolidated Statements of Cash Flows – Three months ended October 31, 2019 and 2018

7

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

 

Ferrellgas Partners Finance Corp.

 

 

Condensed Balance Sheets – October 31, 2019 and July 31, 2019

26

 

Condensed Statements of Operations – Three months ended October 31, 2019 and 2018

27

 

Condensed Statements of Cash Flows – Three months ended October 31, 2019 and 2018

28

 

Notes to Condensed Financial Statements

29

 

 

 

 

Ferrellgas, L.P. and Subsidiaries

 

 

Condensed Consolidated Balance Sheets – October 31, 2019 and July 31, 2019

30

 

Condensed Consolidated Statements of Operations – Three months ended October 31, 2019 and 2018

31

 

Condensed Consolidated Statements of Comprehensive Loss – Three months ended October 31, 2019 and 2018

32

 

Condensed Consolidated Statement of Partners’ Deficit – Three months ended October 31, 2019 and 2018 

33

 

Condensed Consolidated Statements of Cash Flows – Three months ended October 31, 2019 and 2018

34

 

Notes to Condensed Consolidated Financial Statements

35

 

 

 

 

Ferrellgas Finance Corp.

 

 

Condensed Balance Sheets – October 31, 2019 and July 31, 2019

58

 

Condensed Statements of Operations – Three months ended October 31, 2019 and 2018

59

 

Condensed Statements of Cash Flows – Three months ended October 31, 2019 and 2018

60

 

Notes to Condensed Financial Statements

61

 

 

 

ITEM 2. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

62

ITEM 3. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

77

ITEM 4. 

CONTROLS AND PROCEDURES

79

 

 

 

PART II - OTHER INFORMATION 

 

ITEM 1. 

LEGAL PROCEEDINGS

79

ITEM 1A. 

RISK FACTORS

80

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

80

ITEM 3. 

DEFAULTS UPON SENIOR SECURITIES

80

ITEM 4. 

MINE SAFETY DISCLOSURES

80

ITEM 5. 

OTHER INFORMATION

80

ITEM 6. 

EXHIBITS

82

 

2

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS (unaudited)

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

 

 

 

 

 

 

 

 

    

October 31, 2019

    

July 31, 2019

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,805

 

$

11,054

Accounts and notes receivable, net (including $118,164 and $106,145 of accounts receivable pledged as collateral at October 31, 2019 and July 31, 2019, respectively)

 

 

123,841

 

 

107,596

Inventories

 

 

84,995

 

 

80,454

Prepaid expenses and other current assets

 

 

50,582

 

 

42,275

Total current assets

 

 

289,223

 

 

241,379

 

 

 

  

 

 

  

Property, plant and equipment, net

 

 

598,887

 

 

596,723

Goodwill, net

 

 

247,195

 

 

247,195

Intangible assets (net of accumulated amortization of $416,512 and $414,210 at October 31, 2019 and July 31, 2019, respectively)

 

 

108,493

 

 

108,557

Operating lease right-of-use assets

 

 

124,047

 

 

 —

Other assets, net

 

 

75,443

 

 

69,105

Total assets

 

$

1,443,288

 

$

1,262,959

 

 

 

  

 

 

  

LIABILITIES AND PARTNERS' DEFICIT

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Accounts payable

 

$

44,421

 

$

33,364

Short-term borrowings

 

 

80,000

 

 

43,000

Collateralized note payable

 

 

73,000

 

 

62,000

Current portion of long-term debt

 

 

358,080

 

 

631,756

Current operating lease liabilities

 

 

33,832

 

 

 —

Other current liabilities

 

 

187,731

 

 

138,237

Total current liabilities

 

 

777,064

 

 

908,357

 

 

 

  

 

 

  

Long-term debt

 

 

1,731,920

 

 

1,457,004

Operating lease liabilities

 

 

88,773

 

 

 —

Other liabilities

 

 

36,915

 

 

36,536

Contingencies and commitments (Note L)

 

 

 

 

 

 

 

 

 

  

 

 

  

Partners' deficit:

 

 

  

 

 

  

Common unitholders (97,152,665 units outstanding at October 31, 2019 and July 31, 2019)

 

 

(1,091,704)

 

 

(1,046,245)

General partner unitholder (989,926 units outstanding at October 31, 2019 and July 31, 2019)

 

 

(70,935)

 

 

(70,476)

Accumulated other comprehensive loss

 

 

(20,598)

 

 

(14,512)

Total Ferrellgas Partners, L.P. partners' deficit

 

 

(1,183,237)

 

 

(1,131,233)

Noncontrolling interest

 

 

(8,147)

 

 

(7,705)

Total partners' deficit

 

 

(1,191,384)

 

 

(1,138,938)

Total liabilities and partners' deficit

 

$

1,443,288

 

$

1,262,959

 

See notes to condensed consolidated financial statements.

3

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except unit data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

For the three months ended October 31, 

 

 

    

2019

    

2018

 

Revenues:

 

 

 

 

 

 

 

Propane and other gas liquids sales

 

$

273,385

 

$

334,966

 

Other

 

 

19,829

 

 

17,343

 

Total revenues

 

 

293,214

 

 

352,309

 

 

 

 

  

 

 

  

 

Costs and expenses:

 

 

  

 

 

  

 

Cost of sales - propane and other gas liquids sales

 

 

134,028

 

 

204,136

 

Cost of sales - other

 

 

3,681

 

 

3,047

 

Operating expense - personnel, vehicle, plant and other

 

 

114,543

 

 

110,331

 

Operating expense - equipment lease expense

 

 

8,388

 

 

7,863

 

Depreciation and amortization expense

 

 

19,219

 

 

18,992

 

General and administrative expense

 

 

9,695

 

 

14,179

 

Non-cash employee stock ownership plan compensation charge

 

 

795

 

 

2,748

 

Loss on asset sales and disposals

 

 

2,235

 

 

4,504

 

 

 

 

  

 

 

  

 

Operating income (loss)

 

 

630

 

 

(13,491)

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(45,697)

 

 

(43,878)

 

Other income (expense), net

 

 

(132)

 

 

19

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(45,199)

 

 

(57,350)

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

518

 

 

158

 

 

 

 

 

 

 

 

 

Net loss

 

 

(45,717)

 

 

(57,508)

 

 

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interest

 

 

(373)

 

 

(493)

 

 

 

 

 

 

 

 

 

Net loss attributable to Ferrellgas Partners, L.P.

 

 

(45,344)

 

 

(57,015)

 

 

 

 

 

 

 

 

 

Less: General partner's interest in net loss

 

 

(453)

 

 

(570)

 

 

 

 

 

 

 

 

 

Common unitholders' interest in net loss

 

$

(44,891)

 

$

(56,445)

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common unit

 

$

(0.46)

 

$

(0.58)

 

 

 

 

 

 

 

 

 

Cash distributions declared per common unit

 

$

 —

 

$

 —

 

 

See notes to condensed consolidated financial statements.

4

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

For the three months ended October 31, 

 

 

    

2019

    

2018

 

 

 

 

 

 

 

 

 

Net loss

 

$

(45,717)

 

$

(57,508)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Change in value of risk management derivatives

 

 

(13,627)

 

 

(8,154)

 

Reclassification of (gains) losses on derivatives to earnings, net

 

 

7,479

 

 

(4,433)

 

Other comprehensive loss

 

 

(6,148)

 

 

(12,587)

 

Comprehensive loss

 

 

(51,865)

 

 

(70,095)

 

Less: Comprehensive loss attributable to noncontrolling interest

 

 

(435)

 

 

(620)

 

Comprehensive loss attributable to Ferrellgas Partners, L.P.

 

$

(51,430)

 

$

(69,475)

 

 

See notes to condensed consolidated financial statements.

5

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF PARTNERS’ DEFICIT

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Number of units

    

 

 

    

 

 

    

Accumulated

    

Total Ferrellgas

    

 

 

    

 

 

 

 

 

 

General

 

 

 

 

General

 

other

 

Partner, L.P.

 

 

 

 

 

 

 

 

Common

 

Partner

 

Common

 

Partner

 

comprehensive

 

partners’

 

Non-controlling

 

Total partners’

 

    

unitholders

    

unitholder

    

unitholders

    

unitholder

    

income (loss)

    

deficit

    

interest

    

deficit

Balance at July 31, 2019

 

97,152.7

 

989.9

 

$

(1,046,245)

 

$

(70,476)

 

$

(14,512)

 

$

(1,131,233)

 

$

(7,705)

 

$

(1,138,938)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions in connection with non-cash ESOP compensation charges

 

 

 

 

779

 

 

 8

 

 

 —

 

 

787

 

 

 8

 

 

795

Distributions

 

 

 

 

 —

 

 

 —

 

 

 

 

 —

 

 

(1)

 

 

(1)

Cumulative adjustment for lease accounting standard

 

 —

 

 —

 

 

(1,347)

 

 

(14)

 

 

 —

 

 

(1,361)

 

 

(14)

 

 

(1,375)

Net loss

 

 

 

 

(44,891)

 

 

(453)

 

 

 —

 

 

(45,344)

 

 

(373)

 

 

(45,717)

Other comprehensive loss

 

 

 

 

 

 

 —

 

 

(6,086)

 

 

(6,086)

 

 

(62)

 

 

(6,148)

Balance at October 31, 2019

 

97,152.7

 

989.9

 

$

(1,091,704)

 

$

(70,935)

 

$

(20,598)

 

$

(1,183,237)

 

$

(8,147)

 

$

(1,191,384)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Number of units

    

 

 

    

 

 

    

Accumulated

    

Total Ferrellgas

    

 

 

    

 

 

 

 

 

 

General

 

 

 

 

General

 

other

 

Partner, L.P.

 

 

 

 

 

 

 

 

Common

 

Partner

 

Common

 

Partner

 

comprehensive

 

partners’

 

Non-controlling

 

Total partners’

 

    

unitholders

    

unitholder

    

unitholders

    

unitholder

    

income (loss)

    

deficit

    

interest

    

deficit

Balance at July 31, 2018

 

97,152.7

 

989.9

 

$

(978,503)

 

$

(69,792)

 

$

20,510

 

$

(1,027,785)

 

$

(6,692)

 

$

(1,034,477)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contributions in connection with non-cash ESOP compensation charges

 

 

 

 

2,693

 

 

27

 

 

 —

 

 

2,720

 

 

28

 

 

2,748

Distributions

 

 

 

 

(9,716)

 

 

(98)

 

 

 —

 

 

(9,814)

 

 

(101)

 

 

(9,915)

Net loss

 

 

 

 

(56,445)

 

 

(570)

 

 

 —

 

 

(57,015)

 

 

(493)

 

 

(57,508)

Other comprehensive loss

 

 

 

 

 

 

 —

 

 

(12,460)

 

 

(12,460)

 

 

(127)

 

 

(12,587)

Balance at October 31, 2018

 

97,152.7

 

989.9

 

$

(1,041,971)

 

$

(70,433)

 

$

8,050

 

$

(1,104,354)

 

$

(7,385)

 

$

(1,111,739)

 

 

 

See notes to condensed consolidated financial statements.

6

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

For the three months ended October 31, 

 

    

2019

    

2018

Cash flows from operating activities:

 

 

  

 

 

  

Net loss

 

$

(45,717)

 

$

(57,508)

Reconciliation of net loss to net cash provided by (used in) operating activities:

 

 

  

 

 

  

Depreciation and amortization expense

 

 

19,219

 

 

18,992

Non-cash employee stock ownership plan compensation charge

 

 

795

 

 

2,748

Loss on asset sales and disposals

 

 

2,235

 

 

4,504

Provision for doubtful accounts

 

 

665

 

 

519

Deferred income tax expense

 

 

554

 

 

150

Other

 

 

3,450

 

 

3,193

Changes in operating assets and liabilities, net of effects from business acquisitions:

 

 

  

 

 

  

Accounts and notes receivable, net of securitization

 

 

(14,410)

 

 

(10,654)

Inventories

 

 

(4,541)

 

 

(22,866)

Prepaid expenses and other current assets

 

 

(8,008)

 

 

(6,391)

Accounts payable

 

 

11,360

 

 

13,159

Accrued interest expense

 

 

34,167

 

 

31,987

Other current liabilities

 

 

8,214

 

 

6,677

Other assets and liabilities

 

 

(872)

 

 

(2,124)

Net cash provided by (used in) operating activities

 

 

7,111

 

 

(17,614)

 

 

 

  

 

 

  

Cash flows from investing activities:

 

 

  

 

 

  

Business acquisitions, net of cash acquired

 

 

(6,400)

 

 

(4,625)

Capital expenditures

 

 

(18,126)

 

 

(23,433)

Proceeds from sale of assets

 

 

835

 

 

1,061

Cash payments to construct assets in connection with future lease transactions

 

 

(16,879)

 

 

 —

Cash receipts in connection with leased vehicles

 

 

5,863

 

 

 —

Other

 

 

 —

 

 

(292)

Net cash used in investing activities

 

 

(34,707)

 

 

(27,289)

 

 

 

  

 

 

  

Cash flows from financing activities:

 

 

  

 

 

  

Distributions

 

 

 —

 

 

(9,814)

Payments on long-term debt

 

 

(512)

 

 

(281)

Net additions to (reductions in) short-term borrowings

 

 

37,000

 

 

(32,800)

Net additions to collateralized short-term borrowings

 

 

11,000

 

 

32,000

Cash paid for financing costs and other

 

 

(1,140)

 

 

(224)

Noncontrolling interest activity

 

 

(1)

 

 

(101)

Net cash provided by (used in) financing activities

 

 

46,347

 

 

(11,220)

 

 

 

  

 

 

  

Net change in cash and cash equivalents

 

 

18,751

 

 

(56,123)

Cash and cash equivalents - beginning of period

 

 

11,054

 

 

119,311

Cash and cash equivalents - end of period

 

$

29,805

 

$

63,188

 

See notes to condensed consolidated financial statements.

 

7

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per unit data, unless otherwise designated)

(unaudited)

A.    Partnership organization and formation

Ferrellgas Partners, L.P. (“Ferrellgas Partners”) was formed April 19, 1994, and is a publicly traded limited partnership, owning an approximate 99% limited partner interest in Ferrellgas, L.P. (the "operating partnership"). Ferrellgas Partners and the operating partnership, collectively referred to as “Ferrellgas,” are both Delaware limited partnerships and are governed by their respective partnership agreements. Ferrellgas Partners was formed to acquire and hold a limited partner interest in the operating partnership. As of October 31, 2019, Ferrell Companies, Inc. ("Ferrell Companies") beneficially owns 22.8 million Ferrellgas Partners common units. Ferrellgas, Inc. (the "general partner"), a wholly-owned subsidiary of Ferrell Companies, has retained an approximate 1% general partner interest in Ferrellgas Partners and also holds an approximate 1% general partner interest in the operating partnership, representing an effective 2% general partner interest in Ferrellgas on a combined basis. As general partner, it performs all management functions required by Ferrellgas. Unless contractually provided for, creditors of the operating partnership have no recourse with regards to Ferrellgas Partners.

Ferrellgas Partners is a holding entity that conducts no operations and has two subsidiaries, Ferrellgas Partners Finance Corp. and the operating partnership. Ferrellgas Partners owns a 100% equity interest in Ferrellgas Partners Finance Corp., whose only business activity is to act as the co-issuer and co-obligor of debt issued by Ferrellgas Partners. The operating partnership is the only operating subsidiary of Ferrellgas Partners.

Ferrellgas is primarily engaged in the retail distribution of propane and related equipment sales. The propane distribution market is seasonal because propane is used primarily for heating in residential and commercial buildings. Ferrellgas serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia, and Puerto Rico.

Due to seasonality, the results of operations for the three months ended October 31, 2019 are not necessarily indicative of the results to be expected for the full fiscal year ending July 31, 2020.

The condensed consolidated financial statements of Ferrellgas reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the interim periods presented. All adjustments to the condensed consolidated financial statements were of a normal recurring nature. The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with (i) the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) the consolidated financial statements and accompanying notes included in Ferrellgas’ Annual Report on Form 10‑K for fiscal 2019.

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business.  Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020 that are classified as current in the condensed consolidated financial statements. The ability of Ferrellgas Partners to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns, Ferrellgas Partners believes there is substantial doubt about the entity’s ability to continue as a going concern. Ferrellgas has engaged Moelis & Company LLC as its financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to address our upcoming debt maturities. The successful outcome of Ferrellgas’ debt reduction strategy continues to remain uncertain. Additionally, see Note F – Debt below for further discussion of the outstanding debt.

 

B.    Summary of significant accounting policies

(1) Accounting estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from these estimates. Significant estimates impacting the condensed consolidated financial statements include

8

accruals that have been established for contingent liabilities, pending claims and legal actions arising in the normal course of business, useful lives of property, plant and equipment, residual values of tanks, capitalization of customer tank installation costs, amortization methods of intangible assets, valuation methods used to value sales returns and allowances, allowance for doubtful accounts, fair value of reporting units, recoverability of long-lived assets, assumptions used to value business combinations, fair values of derivative contracts and stock-based compensation calculations.

(2) New accounting standards:

FASB Accounting Standard Update No. 2016‑02

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 became effective for Ferrellgas for its annual reporting period beginning August 1, 2019, including interim periods within that reporting period. Ferrellgas adopted the standard using the transition relief option in ASU 2018-11, “Leases: Targeted Improvements” which, among other things, provides entities with an option to recognize the cumulative-effect adjustment from the modified retrospective application to the opening balance of retained earnings in the period of adoption and consequently, to continue to report comparative periods in compliance with the prior guidance (ASC 840). 

 

Ferrellgas elected the short-term lease recognition exemption for all leases that qualify, meaning it does not recognize right-of-use assets or lease liabilities for those leases. Ferrellgas also elected the practical expedient to not separate lease and non-lease components for its most significant leasing activity, which includes vehicle and real estate leases.

 

Additionally, Ferrellgas elected the package of three practical expedients which allows entities to not reassess initial direct costs, lease classification for existing or expired leases, and lease definition for existing or expired contracts as of the effective date of August 1, 2019. Ferrellgas did not, however, elect the hindsight method practical expedient which would have allowed it to reassess lease terms and impairment.

 

FASB Accounting Standard Update No. 2016‑13

In June 2016, the FASB issued ASU 2016‑13, Financial Instruments - Credit Losses (Topic 326), which requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Ferrellgas is currently evaluating the impact of its pending adoption of this standard on the consolidated financial statements.

FASB Accounting Standard Update No. 2017‑12

In August 2017, the FASB issued ASU 2017‑12, Financial Instruments - Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities, which is intended to improve the financial reporting for hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. This standard became effective for Ferrellgas for its annual reporting period beginning August 1, 2019, including interim periods within that reporting period. Ferrellgas applied ASU No. 2017-12 using a modified retrospective approach for cash flow hedges existing at the date of adoption and prospectively for the presentation and disclosure guidance. The adoption of this standard did not have a material impact on our consolidated financial statements.

 

C. Leases

Ferrellgas determines if an arrangement is a lease or contains a lease at inception. Ferrellgas leases certain transportation and computer equipment and real estate, predominantly through operating leases. Ferrellgas has an immaterial amount of leases in which it is the lessor. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the lease commencement date. Ferrellgas determines the lease term by assuming the exercise of renewal options that are reasonably certain. The lease term is used to determine whether a lease is finance or operating and is

9

used to calculate rent expense. Additionally, the depreciable life of leased assets and leasehold improvements is limited by the expected lease term. Operating lease balances are classified as operating lease right-of-use (“ROU”) assets, and current and long-term operating lease liabilities on Ferrellgas’ condensed consolidated balance sheet. Ferrellgas has an immaterial amount of finance leases that are included in “Other assets, net”, “Other current liabilities”, and “Other liabilities” on its condensed consolidated balance sheet.

 

ROU assets represent Ferrellgas’ right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of Ferrellgas’ leases do not provide an implicit discount rate, Ferrellgas uses its incremental borrowing rate adjusted for the lease term to represent the rate it would have to pay to borrow on a collateralized basis based on the information available at the commencement date in determining the present value of lease payments. Ferrellgas’ lease terms may include options to extend or terminate the lease and it will adjust the life of the lease when it is reasonably certain that it will exercise these options.

 

Ferrellgas has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. Ferrellgas has variable lease components, including lease payments with payment escalation based on the Consumer Price Index, and other variable items, such as common area maintenance and taxes.

 

Key assumptions include the discount rate, the impact of purchase options and renewal options on Ferrellgas’ lease term, as well as the assessment of residual value guarantees.

 

Ferrellgas’ transportation equipment leases generally have purchase options. However, in most circumstances Ferrellgas is not certain if it will exercise the purchase option. As circumstances dictate, it may instead return the existing equipment to the lessor and sign a new lease. Ferrellgas’ transportation equipment leases often contain residual value guarantees, but they are not reflected in Ferrellgas’ lease liabilities as its lease rates are such that residual value guarantees are not expected to be owed at the end of its leases.

 

Ferrellgas’ real estate leases will often have an option to extend the lease, but it is typically not reasonably certain of exercising options to extend. As customer demand changes over time, Ferrellgas typically maintains the ability to move to more advantageous locations, relocate to other leased and owned locations, or discontinue service from particular locations.

 

The following table provides the operating and financing ROU assets and lease liabilities as of October 31, 2019:

 

 

 

 

 

 

 

Leases

 

Classification

 

 

October 31, 2019

Assets

 

 

 

 

 

Operating lease assets

 

Operating lease right-of-use assets

 

$

124,047

Financing lease assets

 

Other assets, net

 

 

5,719

Total leased assets

 

 

 

$

129,766

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current

 

 

 

 

 

Operating

 

Current operating lease liabilities

 

$

33,832

Financing

 

Other current liabilities

 

 

1,817

Noncurrent

 

 

 

 

 

Operating

 

Operating lease liabilities

 

 

88,773

Financing

 

Other liabilities

 

 

3,949

Total leased liabilities

 

 

 

$

128,371

 

10

The following table provides the lease expenses for the three months ended October 31, 2019:

 

 

 

 

 

 

 

Leases Expense

 

Classification

 

For the three months ended October 31, 

 

 

 

 

2019

 

 

 

 

 

 

Operating lease expense

 

Operating expenses - personnel, vehicle, plant and other

 

$

1,741

 

 

Operating expense - equipment lease expense

 

 

7,607

 

 

Cost of sales - propane and other gas liquids sales

 

 

389

 

 

General and administrative expense

 

 

266

Total operating lease expense

 

 

 

$

10,003

 

 

 

 

 

 

Short-term expense

 

Operating expenses - personnel, vehicle, plant and other

 

$

1,954

 

 

General and administrative expense

 

 

110

Total short-term expense

 

 

 

$

2,064

 

 

 

 

 

 

Variable lease expense

 

Operating expenses - personnel, vehicle, plant and other

 

$

675

 

 

Operating expense - equipment lease expense

 

 

733

Total variable lease expense

 

 

 

$

1,408

 

 

 

 

 

 

Finance lease expense

 

 

 

 

 

Amortization of leased assets

 

Depreciation and amortization expense

 

$

40

Interest on lease liabilities

 

Interest expense

 

 

42

Total finance lease expense

 

 

 

$

82

 

 

 

 

 

 

Total lease expense

 

 

 

$

13,557

 

Minimum annual payments under existing operating and finance lease liabilities as of October 31, 2019 are as follows:

 

 

 

 

 

 

 

 

 

 

 

Maturities of lease liabilities

 

 

Operating leases

 

 

Finance leases

 

 

Total

2020

 

$

31,711

 

$

1,233

 

$

32,944

2021

 

 

35,187

 

 

1,568

 

 

36,755

2022

 

 

25,864

 

 

1,177

 

 

27,041

2023

 

 

19,938

 

 

893

 

 

20,831

2024

 

 

17,092

 

 

812

 

 

17,904

Thereafter

 

 

34,326

 

 

1,735

 

 

36,061

Total lease payments

 

$

164,118

 

$

7,418

 

$

171,536

Less: Imputed interest

 

 

41,513

 

 

1,652

 

 

43,165

Present value of lease liabilities

 

$

122,605

 

$

5,766

 

$

128,371

 

The following table represents the weighted-average remaining lease term and discount rate as of October 31, 2019:

 

 

 

 

 

 

 

As of October 31, 2019

Lease type

 

Weighted-average remaining lease term (years)

 

Weighted-average discount rate

Operating leases

 

5.7

 

8.2%

Finance leases

 

5.8

 

8.0%

 

Cash flow information is presented below:

 

 

 

 

 

 

For the three months ended October 31, 

 

 

2019

Cash paid for amounts included in the measurement of lease liabilities for operating leases:

 

 

 

Operating cash flows

 

$

11,049

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities for financing leases:

 

 

 

Operating cash flows

 

$

42

Financing cash flows

 

$

28

 

 

11

D.    Supplemental financial statement information

Inventories consist of the following:

 

 

 

 

 

 

 

 

    

October 31, 2019

    

July 31, 2019

Propane gas and related products

 

$

70,067

 

$

66,001

Appliances, parts and supplies, and other

 

 

14,928

 

 

14,453

Inventories

 

$

84,995

 

$

80,454

 

In addition to inventories on hand, Ferrellgas enters into contracts to take delivery of propane for supply procurement purposes with terms that generally do not exceed 36 months. Most of these contracts call for payment based on market prices at the date of delivery. As of October 31, 2019, Ferrellgas had committed, for supply procurement purposes, to deliver approximately 1.3 million gallons of propane at fixed prices, net of contracts to take delivery.

Prepaid expenses and other current assets consist of the following:

 

 

 

 

 

 

 

 

    

October 31, 2019

    

July 31, 2019

Broker margin deposit assets

 

$

33,519

 

$

25,028

Other

 

 

17,063

 

 

17,247

Prepaid expenses and other current assets

 

$

50,582

 

$

42,275

 

Other assets, net consist of the following:

 

 

 

 

 

 

 

 

    

October 31, 2019

    

July 31, 2019

Notes receivable, less current portion

 

$

13,809

 

$

16,216

Other

 

 

61,634

 

 

52,889

Other assets, net

 

$

75,443

 

$

69,105

 

Other current liabilities consist of the following:

 

 

 

 

 

 

 

 

    

October 31, 2019

    

July 31, 2019

Accrued interest

 

$

54,651

 

$

20,484

Customer deposits and advances

 

 

35,625

 

 

24,686

Accrued payroll

 

 

23,918

 

 

17,356

Accrued insurance

 

 

13,980

 

 

18,524

Price risk management liabilities

 

 

19,745