Ferrellgas Partners Navigates Weather Impacts in Q3
CapEx for Blue Rhino was reduced by $8 million this fiscal year, and 6,600 new accounts were added.
Ferrellgas Partners reported mixed results in their Third Quarter Fiscal '24 Earnings Conference Call. CEO Tamria Zertuche highlighted the company's strategic initiatives and the resilience of its employees despite challenging weather conditions.
Key Takeaways
- Revenue Drop: Ferrellgas Partners reported a decrease in revenues by $71.6 million due to unseasonal weather affecting gallon sales.
- Gross Profit Increase: Despite the revenue drop, gross profit per gallon increased by 4%.
- EBITDA Decline: Adjusted EBITDA fell by $21.6 million, marking a 17% decrease from the previous year.
- Blue Rhino Growth: Blue Rhino's EBITDA rose by 19%, driven by higher consumer demand and strategic initiatives.
- Operating Expenses: Operating expenses as a percentage of total revenue went up by 2%.
- Debt Refinancing: The company is actively evaluating refinancing options for its debt and has filed its 10-Q.
- Liquidity: Ferrellgas's liquidity stands at approximately $250 million, with a cash balance of $75 million and $180 million available under a $350 million revolver.
- CapEx Reduction: Capital Expenditures (CapEx) for Blue Rhino were reduced by $8 million, with 6,600 new accounts added.
Company Outlook
Ferrellgas is focused on operating efficiently and reducing costs while still considering restructuring the capital structure. The company is investing in safety, training, and customer service technologies to improve performance. Recent acquisitions on the coasts aim to diversify the company's footprint and mitigate weather-related impacts.
Bearish Highlights
- The company experienced a significant drop in revenue due to a decrease in gallons sold, attributed to warmer weather.
- Adjusted EBITDA saw a notable decline compared to the same quarter in the previous year.
Bullish Highlights
- Gross profit per gallon improved, indicating better margin performance.
- Blue Rhino's performance was strong, showing a 19% increase in EBITDA.
- The company has expanded into weather-agnostic areas, reducing future weather-related impacts.
Misses
Despite overall strategic successes, the company missed revenue targets due to the decrease in gallons sold.
Q&A Highlights
- Ferrellgas discussed the positive effects of weather events on propane demand, emphasizing efforts to become more weather agnostic.
- The company addressed its refinancing evaluations for senior notes, aiming to de-risk financially.
- The redemption of Class B shares was discussed, with specifics contingent on timing and distributions.
Throughout the call, Ferrellgas Partners emphasized its commitment to maintaining sufficient liquidity to meet business needs and to continue its pursuit of strategic initiatives. With a focus on margin performance and a proactive approach to managing the capital structure, Ferrellgas aims to navigate market complexities and weather-related challenges.
Transcript Summary
- CEO Tamria Zertuche expressed pride in the company’s employees and highlighted steps taken to manage weather impacts.
- CFO Mike Cole discussed financial results, noting a decrease in revenues and gross profit but an increase in margin per gallon.
- Blue Rhino's EBITDA increased by 19% due to consumer demand and strategic initiatives.
- The company installed over 500 self-service kiosks and implemented various technology upgrades to improve customer service and reduce costs.
Questions Addressed
- OpEx management and telematics technology.
- Non-maintenance CapEx and investment returns.
- Refinancing plans for the ‘26 senior notes and revolver extension.
- Liquidity management given current balances and revolver availability.
- Weather impacts and steps taken to diversify geographically.
Closing Comments
Tamria Zertuche and Mike Cole reiterated Ferrellgas’s focus on strategic initiatives, the importance of employee contributions, and confidence in the company’s future performance.
