Ferrellgas Partners, L.P. (FGP) reported loss per unit of 58 cents in the fourth quarter of 2010. The partnership’s loss in the quarter exceeded the Zacks Consensus Estimate of 54 cents, mainly due to lower propane sales in the quarter.
However, Ferrellgas posted a profit of 47 cents per share for the full year 2010, below the Zacks Consensus Estimate of 73 cents and the year-ago period earnings of 79 cents.
Though the current quarter volumes were disappointing due to a seasonally slow quarter, propane volumes have shown consistent improvement in the last three quarters boosting full year results. In the quarter the propane gas sales decreased 5% to 141.7 million gallons from 149.5 million gallons in the comparable period last year. Propane sales volumes for the full year 2010 increased 5% to 922.5 million gallons from 874.8 million gallons last year.
Operating Highlights
Ferrellgas Partners’ total revenue of $353.8 million in the quarter was 13% higher than $312.7 million reported in the comparable year-ago period. The year-over-year growth was mainly due to a $28.9 million improvement in propane and other gas liquids sales and a $12.3 million increase in other revenue.
For the fiscal year 2010, the partnership’s revenues improved 1.4% to 2.1 billion compared to $2.07 billion in fiscal 2009.
Ferrellgas Partners’ gross profit in the quarter was essentially flat from the comparable year-ago period. In the quarter, adjusted EBITDA rose 23% year over year to $15.0 million, driven by a balance of improved margins and reduced operating expenses.
Operating expense in the quarter declined 3% to $101.0 million. Equipment lease expense also decreased to $3.3 million from $4.0 million. Offsetting these, general and administrative expenses in the quarter rose 23% to $14.8 million, reflecting performance-based incentives and the non-cash impact of stock option issuances from the parent company of the partnership’s general partner.
The partnership’s operating loss was $14.5 compared with $15.4 million in the same period last year. Interest expenses increased $6.0 million from the year-ago period. Ferrellgas Partners’ net loss increased to $40.1 million from $34.7 million in the year-ago period, primarily due to increased interest expense.
Financial Highlights
Cash and cash equivalents at year-end 2010 were $11.4 million versus $7.1 million at the end of fiscal 2009. The partnership’s long-term debt as of July 31, 2010 was $1.1 billion compared to $1.0 billion as of July 31, 2009.
Outlook
Ferrellgas Partners has stepped into 2011 with a positive feedback from its Blue Rhino branded propane sales, which carries forward the fourth quarter momentum into August and September. Looking forward, the partnership aims to achieve profitable growth, both organically and through acquisitions, while efficiently containing costs.
Ferrellgas currently has a short term Zacks #3 Rank. We retain our long term Neutral rating on the stock.
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