Ferrellgas Partners Beats Estimates

Ferrellgas Partners L.P. (FGP) posted better than expected results for the first quarter of 2010, primarily driven by higher propane sales and lower costs. The partnership recorded a net loss of 22 cents per unit for the quarter, better than a net loss of 32 cents estimated by Zacks Consensus. Ferrellgas sold 179.5 million gallons of propane during the quarter, up 4.3% from a year ago. 

However, revenues declined 27% to $352.1 million due to lower wholesale propane costs. Gross profit in the quarter was practically unchanged from last year, while gross margin expanded to 41% from 30% recorded during the year-ago quarter due to lower cost of sales (down 38%). 

Operating income came down to $6.3 million from $9.2 million a year ago, largely driven by higher general and administrative expenses (up 51%) and stock-based compensation charges (up 18%) partially offset by equipment lease expenses (down 30%). Ferrellgas reported adjusted EBITDA of $33.2 million compared to the exceptionally strong, year-earlier record of $35.2 million. 

Ferrellgas remains focused on executing its strategies and is confident of a potential for organic as well as inorganic growth. As of Oct 31, 2009, Ferrellgas had $174.5 million outstanding under its $448.0 million credit facility, which matures on Apr 22, 2010. During the quarter, Ferrellgas completed an offering of 1.1 million common units representing limited partner interests. The $20.0 million proceeds of the offering were used to reduce borrowings under its credit facility.

Read the full analyst report on FGP