Ferrellgas Partners L.P. (FGP) posted in-line results for the fiscal second quarter of 2010, primarily driven by higher propane sales volumes and lower costs. The partnership reported adjusted earnings of $1.10 per unit for the quarter, meeting the Zacks Consensus Estimate and last year’s earnings of $1.10.

Revenue in the quarter improved 9% to $777.9 million due to increased retail and wholesale propane volumes. Ferrellgas sold 353.7 million gallons of propane during the quarter, up 13% from a year ago, despite warmer weather compared to last year. Retail propane gallon sales increased 9.7%, while wholesale volume climbed more than 23%. Temperatures in Ferrellgas’ service locations were 5% warmer than in the prior year.

Gross profit totaled $248.7 million up from $243.7 million reported in the year-ago period. However, gross margin contracted slightly to 32% from 34% recorded during the year-ago quarter due to higher cost of sales (up 18%).

Apart from the increase in cost of sales, the company reported a decline in its overall operating expenses, both in absolute dollars and cents per gallon delivered, due to its cost controlling efforts. General and administrative expense decreased modestly (down 4%), while equipment lease expense was down sharply (nearly 35%). Operating income was up 11% to $105.6 million from $95.3 million a year ago.

Ferrellgas reported adjusted EBITDA of $130.1 million, up 7% compared to the year-earlier record of $121.6 million.

As of January 31, 2010, Ferrellgas had $25.9 million outstanding of cash and equivalents. Long-term debt at quarter-end totaled $1.1 billion compared to $1.0 billion a year ago. Distributable cash flow increased 12% to $104.3 million from $93.1 million.

Ferrellgas remains focused on executing its strategies and is confident of a potential for organic as well as growth by acquisition. Looking ahead, the company expects the positive momentum of the second-quarter to carry over into the second half of the fiscal year. Management expects this improved performance should lead to a record adjusted EBITDA for fiscal 2010.

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