Ferrellgas Partners, L.P.
Q3 2022 Earnings Call Transcript

Published: 10 Jun 2022

[Operator:]

Good day, everyone. Welcome to the Fiscal 2022 Q3 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Jim Ferrell, Chief Executive Officer. Please go ahead, sir.

[James Ferrell:]

Thanks, Alan and welcome everyone to our third quarter fiscal ‘22 earnings call. Thank you for joining us. My name is Jim Ferrell, Chief Executive Officer and President of Ferrellgas. Before we go over the financial results for the quarter, I want to make a couple of points in terms of our performance over the last few months. First of all, I will begin by highlighting the employees of our great company. While we are remote workforce and better for it, I every week contributing on weekly strategy sessions, making our company stronger than ever. Secondly, our successful performance this last quarter despite the challenging economic environment is directly related to the amazing execution by the team of over 4,500 employee owners across the whole country. We believe in investing in our people and results, I believe, speak for themselves. We have continued to build upon the strength of this great clean energy source, we call propane and the good it brings to hundreds of thousands across the country. I will now turn the floor over to our Chief Operating Officer, Tamria Zertuche to go over the financial results for the quarter and then I'll be back after that.

[Tamria Zertuche:]

Thank you, Jim and welcome to our third quarter fiscal year 2022 earnings call. Thank you all for joining us. I'd like to remind all of you that some statements made during this call may be considered forward-looking and that various risks, uncertainties and other factors could cause actual performance to differ materially from anticipated performance. These factors are discussed in our Form 10-K filed last year and other documents filed from time to time with the Securities and Exchange Commission. Additionally, we note that the purpose of this call is to discuss the results of operations for the third fiscal quarter ended April 30, 2022. For the third quarter of 2022, revenues increased $82.8 million, or 15% higher than the same period last year. Gross profit for the quarter also increased $18 million, or 7% compared to the prior year period. Margin per gallon for the quarter increased of $0.11, or

[Operator:]

Ladies and gentlemen, please standby, while reestablish our connection with the speaker. And ma'am, you're reconnecting with the audience.

[Tamria Zertuche:]

Thank you, Alan. Operating expenses as a percentage of total revenue were approximately 1% higher than prior year period due to fuel costs, fleet maintenance costs and proactive wage increases for the retention of our valuable workforce. Cost of sales also had an unfavorable increase of $64.8 million, or 21% compared to prior year period driven by inflationary costs from materials and other commodities. Despite the rise in expenses, the company increased operating income per gallon by $0.01 or 2% higher than prior year period. For the fiscal third quarter, the company reported net earnings attributable to Ferrellgas L.P. of $67.6 million compared to a net loss of $66.8 million in the prior year period, an increase of $13.4 million. Adjusted EBITDA, a non GAAP measure, decreased by $2.1 million, or 2% to $117.1 million in the third fiscal quarter compared to $119.2 million in the prior year period, excluding the impact of approximately $5 million in legal settlements during the third fiscal quarter, adjusted EBITDA would have increased $2.9 million compared to the prior year period. As a leading national provider of propane and environmentally friendly fuel Ferrellgas embraced the celebration of Earth Day under its theme, FerrellFuelsChange. Employee owners throughout the company gave their time and talents during the month of April to initiatives designed to have a positive long-term environmental impact. These ranged from planting trees to hosting battery and plastic recycling drive to multiple community service activities. In addition to previously announced home delivery services and other locations, Blue Rhino continues to expand its home delivery services. New markets include Brooklyn, New York; Miami; Orlando; and Jacksonville, Florida and in the Chicagoland area. In addition to exchange and/or purchase of a ready-to-grill tank at convenient local tank exchange location, residents in these areas can avoid an extra trip to the store and choose to have a Blue Rhino tank delivered to their doorstep. The company also recognized 180 employees across the country with Ferrellgas Flame Awards. The Flame Awards initiate is a peer-to-peer recognition program that celebrates employee achievement in the areas of customer service, safety, innovation and leadership. As an active acquirer of propane marketers, we are pleased to announce the promotions of Richard Mayberry to Vice President of Business Development, and Joseph Figueroa to Vice President of Mergers and Acquisitions. They bring a wealth of industry knowledge and much respect for the hardworking professionals and owners in the propane industry. I will now turn the call back over to Jim.

[James Ferrell:]

Thanks, Tamria. Sorry, you got interrupted there in the middle of it. It's one of the hazards of being caught out of the office or out of where you normally are these days, but Tamria is doing a terrific job of organizing and driving this company forward. So look, for these calls, we encourage the submission of written questions, several have come in. We try to answer them during the call. Some we can't answer be it for various reasons, but the rest I'll try to do now. As we stated in the 10-Q, the Eddystone matter will proceed the trial in segments beginning in September. We are fully prepared to vigorously defend against the Eddystone claims and are confident in our position. There was a question about how we are dealing with inflation. I think our results and Tamria’s explanation of them, says we're doing all we can't. Job market, price of fuel, general inflation and also the consequences of whatever the Federal Reserve is calling to do remain worrisome for everyone on this call, including us. We are 100% focused on being able to weather whatever comes. Will we invest in ESG? We are fully invested in each part. Our Century project is focused on every important social, environmental and governance areas in order to serve well our people and our communities over the next two decades. The world and the United States in particular will be a wash in propane as we know it for generations to come. And since we are a technology enabled logistics company delivering the finest service possible to our customers. We're not going to move away from that discipline. Regarding the search for a CFO that continues and a highly respected executive search firm, was engaged. We'll keep you posted there. Finally, let me leave you with a bit of the optimism that pervades our company. While many companies brag about the job their people are doing, it's a shame we cannot let you see deeper in that how much has changed internally and the pride our people show in measuring up to the new standards, it all adds up to great results. That's the end of my remarks. We're looking forward to seeing you all again at the end of our fiscal year. We will be proud to share our annual results. Thanks again for joining us.

[Operator:]

That does conclude today's conference. We thank everyone again for their participation.