Ferrellgas Partners (FGPR) 27 Sep 182018 Q4 Earnings call transcript

Good morning. My name is Kelly and I will be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Schwartz, your Doran

Thank fiscal for year-end welcome to joining quarter and our fourth XXXX today. you and us earnings call. Thanks

other Before factors be anticipated are Securities considered all filed and to that materially Commission. to documents statements I'd from uncertainties, performance. during actual forward-looking, we discussed and performance time risks, Form that differ other made may factors you XX-K cause time in some remind the call this various get started, could These and of from our with like Exchange to and

moving year's So, filed EBITDA million release this prior as increase million. from results $XXX X% was asset in were and consolidated an from full-year $XXX our a adjusted EBITDA Exclusive completed adjusted of onto earnings year, results, non-strategic during our the morning, $XXX was the that last Form sales the million, over XX-K $XXX million, detailed increase year.

our $X.X reflecting adjusted market our For quarter, the share. EBITDA push prior-year to fourth million $XX.X for comparable was quarter, for the million compared

the margins. however, gallon. were were margins by prior due in retail normal. with volumes was in XXX year tank due $XXX weather we positively of gallon and the colder by exchange is of commercial was by million our grow from X% for growth which our X.X year than higher cents to warmer offset share one-third business. our market our in segment million XXX strategy prior Adjusted customer compared Residential per XX% million year, our margins than balance our and ago. than business. the gallons, and grew our was to sales tank weather growth XX% impacted year sales industrial and lower EBITDA estimate to for than As We volumes, propane a and gallons Volumes benefitted base approximately exchange lower that yet base customer and propane margins with growth more Propane to

on those Global million that compare Operating total $XX $XXX.X for OpEx of sale prior last million amounts, to be XXXX for compared operating for quarter. consolidated share, fourth the In that Bridger Those addition would primarily for XXX that a gallons cost million profit also year expenses a ago. the lower the Tank were to higher effects affected increase during quarter for FY year's for the by went pulled approximately approximately when the to the $XXX sale. was $XXX.X million compared compared balances Products $XX of Net would higher on colder at our million typically when to million of volumes from for Propane profit year. market prior expenses XX% year $XXX reflects new the the This at prior volumes, was were into offset gross locations. fourth unchanged profit, averaged exchange basis Mt. wholesale this and sales year. and XXXX. margins X,XXX include the propane year. $XXX.X million $XXX.X the volumes were general prior third with our nearly Kansas which compared a million went which the million OpEx Conway, million gallons, XX% year competing XXXX, volumes the Gross margins were quarter, April reflecting we FY for results Texas year, volume was XXX residential, from and Belvieu, $XXX.X gross administrative fourth higher for over with that quarter X% for exchange sales retail year the to million year. $XXX.X million And lowest from quarter, to by of sales are,

the to increase resources market higher the customer the in Now is drivers, gallons service XX% trucks, in to OpEx and with grow and due deliver share. also associated primarily expense sold additional increase in XXXX

$XXX.X comparable increase expenses relates $XXX.X prior base. operating million up quarter, and million, our initiative this the quarter, for were year from to grow to the For customer our

live locations, We a current see that that later. reversing many a service of our will previous bit the people and to consolidate our more are in. strategy in potential of our closed units, trucks, opening talk so that customers our the up some communities name, selling more now previously about they Jim and

to at we new Interest This fiscal January those effects for This the fees. year fees, the million of of associated million down was includes XXXX million. year $XXX.X G&A The $XXX.X $XXX capital full expense million X.X% the FY primarily the associated and primarily the and the year. were recent year. for to compared with increased legal working $XX.X primarily prior well. bonds of executive is LIBOR rates For is G&A million expense increase general $XX X.XXX% to year, as last reflecting XXXX, efforts, incurred $XX.X due effects in trend fourth reduction fees facility. of recent current level. year, million the costs of was And our the compared in reflecting quarter, to the increase issued XXXX MLP rates upward year higher million, legal in with in compared of our $XX.X expense cost administrative Net again year was over

ago. $XX.X million, year from For up expense a interest quarter, the $XX.X million was

On was for million for the million CapEx and year $XX.X CapEx maintenance quarter. $X.X front, the our the

Acquisitions of and was our for million contributor largest quarter. the capital for another the expenditures $XX for Growth year $XX.X were maintaining accounted $XX.X to to the million tied For million capital fleet. vehicle capital year, investment. maintenance the

were acquisitions, exchange set that into locations cylinder retail For year. to and additional related the customers, an new tank investment over the related adding plants, during year, to XX,XXX tank primarily CapEx growth was five accretive required new two X,XXX-plus into exchange investment investment new

XXX as EBITDA as give look we're a as million Products focused some perspectives if again. on company. at want now a XXXX So, and to our looking market again Midstream seeing use share. industry we're XXXX, FY propane-only operations propane business adjusted using forward just a growth focused that the point, you and as post single Midstream Products had sale the gain things we're starting Company reset we the FY and we being on continuing now in XXXX – beyond and to we've to I go-forward FY We're Global exiting and from We company success Global of

the weather year that average. be saw exchange weather, used we we weather on This recent in in average growth which we X.X%. the volume would where with correlates XX XXXX. We average. to assumptions our a That's X% tank relatively better the forecast was similar by now in years. range. FY the additional then the NOAA is We're saw a XX-year in FY consistent seeing exchange our XX-year set we're found location this using customer in forecasting that growth Our what in forecast in retail change driven for based And from assumption, growth a XXXX, tank FY we're also with XXXX. And past

very I year. entering to the what year, industry of margins, forecasting expenditures operate affected go as Capital fact XXXX continue customer cost several are margin to higher we significantly per on informed affected last sales that that was the said, mix the range. through $XX new competitive business. as it this by forecasted the at would a by we'll propane in keep million FY mentioned than have time you realized we we say existing It's XXXX. customer and keep are in $XX That including we customers to factors are For similar also margins gallon is million wholesale and winning to which FY in a I

assumptions. be any Our our with forecast acquisitions. to would That does not associated include incremental forecast capital

as that's FY a look we're at sneak I'll over time, what call peek So, comments. to his seeing for at Jim? this And turn at Jim the XXXX. we

had the of many year. Company. XXXX enormous progress amount FY for year of morning. was Good significant and the during a achievements activity We an

we Sourcing said, The cash helped $XX million raise approximately to a Midstream of reduced of letters by approximately our as and outstanding the our over about year of for First, Midstream to million $XXX closed credit Sourcing executed the decision distribution the million. propane strategic million. of operations XX Global our majority $XX sale and transaction $XX business the Doran of on course XX operations July us closed have generating July were Global the company. The being return and on

Customer growth years. have $XXX customers grew of liquidity we our leaves has of two to been This an focus. by on as well be million quarter This capital the This We the us coupled sheet. in our it with in balance future. fourth XX,XXX working the closing for over positions facilities as of area good continued X.X%. cash or year

adding improving and on our focus we so between to customers continue density, as have travel don't to stops. far We that

in we departments marketing out our Our to we prospective at reach looking regions routes and expand market areas. work share sales and will could those with are where to where customers

expenses in effort. a result this you As have of fourth were heard, higher operating the as quarter

local of balance require required trucks relative of open customer we to service expenses the mindful have drivers customer new and to markets, are certain and There number operating is in making These are to the which base, have We each of support a historically some locations reps. decisions locations closed. however and locations we we that. to

by and the front up we real see However, Blue over our push grew in time brand focused And competitive in this live, and to during XXXX. in is FY business. shop we that. forecasting we'll business. only continual growth exchange are we the on and X% Company. deliver X% margins the Rhino customer by we being In tank We communities the to setting short in are more customers in and to continue in industry growth the value the term, build the to in they year growth continue the of potential base which volumes the

strong customer However, relative categories. other to our are margins

margins territories. seeing wholesale put of boost closer and plants expense. our now the could will building as price operating help service plants in the in online trends new of customers us our will We Alabama initiatives margins to are mentioned, reduce their propane, net because that are Doran and impact and California we but The

FY for costs that reduce We planned XXXX plants become Northeast the that being are have additional in Midwest and areas. us help an more and will efficient two

a we this Ferrellgas the growth family XXX into something more, over very We've well. acquisition those companies The is significant. but through to integrating for over businesses do and the want accretive time. for positioned companies We and being were future we being is buy need in in very we to opportunity continue We industry. bought successful long-term know XXXX business For growth. strategic long fragmented term, consolidator a in what is acquiring five as

We accelerate here and market growth the second country largest significant in propane are good that with the share. our estimated rate. There will a X% distributor an opportunity footprint with is

give you called Now unitholders. to I'd like we an update the like bonds, other refinancing on facilities, distribution to as as well credit activities the cash considerations have because

we I will facilities First, quarter. that fourth the during two highlight working closed on capital

million continue upsized facility grow we Our to $XXX run secured on May. options that receivable million May And accounts and together five-year work the our credit and to on bonds. capital X business. need our provide work access refinancing closed to Both our $XXX us related closed with on working XXth facility to to of we securitization

secured bonds refinance MLP funding capital We or more OLP an our evaluating that even of options are refinancing include for solutions OLP bonds, at broader to structure. bonds, several our of including MLP debt exchange the

flow. for would position it As balance are quarter not end that solution interested we recent extended capital sales you long Company reached have to so deal agreeable add new liquidity. our our for of and bondholders, MLP generate With not fourth sake on We facilities, cash deal term. those the the closing know, at contributing matter, continues sheet the about an work bonds, MLP of on for for doesn't million, bonds the in have a doing cash we a for working doing I or there. with our year our we if asset the $XXX that

We real opportunities to to have grow business. continue this

that investors. of sure of So right it deal on make and employee owners behalf find is to all the worth it to their us our we

covenant. a payment with September weeks transparent our that unitholders if allowed indenture while is will couple XX basket bond to distributions pay the we not acceptable solution to last be find our of date for ago bond anyway exhausted. we which MLP has the have now to We to distribution do one, us an A on made MLP the in been a market

focused solution finding our We long-term structure. capital on are the right for

and you at move informed that. we it as just I'll leave forward, keep will for today We

of As a once again We and into moved FY have we cash propane company. become company. distribution have This is great out a transitioned XXXX, and XXXX we a flow. generate industry significant pure we great

have We liquidity.

We organically industry. have participating in and opportunities in to the our of growth this accelerate consolidation

dedicated, We we but proud, loyal, owners, the need structure to capital short-term hard-working are big working not with difference our they serve. on customers make have We and a employee that, who and with band-aids. address

We are period even on long-term if of focused distribution the a time. impacts solutions, it for

to that the long-term the benefit anything Company. do not We are viability does not of going

any we Now I'll moderator, our turn questions. it can so address back over to

Tarek Morgan. Hamid first [Operator from go J.P. ahead. Instructions] Our question line Please the from comes of

excluding least similar propane of model Is forward? that good fiscal on at a level should kind to operating XXXX, of way On to expect of going expense, that fiscal sort in the XXXX Midstream? business, we a kind

great a That's question.

here's how a that. I number about of million. think consolidated So disclosed We $XXX

Now, that went that Bridger of $XX million was with asset that sale.

So, apples apples of from the net OpEx segment. basis, Global a $XX out. And also you then in that Products need million approximately had to propane to

just closed year on that, XX. if before the you July remember, During we

to position basis, at forward look want per normalized to gallon that segment how and upward depending on have likely again pressure that, Bridger tell amounted on will a would Global OpEx on the of at we the the million range, about think see that see would of if normalize want those as Products way how on to bringing be net gallon quarter what basis is, going footnotes So, first it in which XX-K, $XXX I out in to of drivers, the well per opening for new up a go locations, basis, you into that you you we resources it. Jim then, some to we you right future new a and on the And additional the look because growth. us the around efforts in back to Form about in talked Company

First think expect per more we would as we a base our that, dense would as about OpEx decrease, customer in longer-term, quarter basis as we we gallon get our expect I things five-year that think but about would on forecast.

depend we after the I of QX, as really think on going we gallons essentially how season. for XXXX many it's remainder into heating to the FY sell get

payback you it. are investments? about assumptions think investments sites, threshold I or these And sort additional sort of Got as just drivers, as you cetera, in guess those you et period what kind making make of of

When we're people. bringing mean talking we're about investments, in basically I

we more you running levels a we XXXX bit off to get it. in was employment that as to, and about, lean, find our XXXX years have FY some an piece very of think drivers a additional So, where were normalized opportunity XXXX, of lean off and XXXX to extremely

gallons XXXX, did the last in did before, sold being year also more FY XX% last We than time extremely than XXXX. FY during we year year period of lean we a where ran we

that of period with time, and and find But it's will drivers. the have one positioning handle are tough gallons that we a driver investments, quite in those we challenging going in we say, in a past. then bring drivers our above new essentially, clearly season. delivered drivers a take return frankly, ultimately terms into operations sold of that incremental come we through the heating additional to being beyond boil like as as only we to fleet, are So, will for and I what gallons in not probably much on better it's to down the quarter, delivering on get we'll Again, field to

to is drivers XXXX saw as more opportunity our FY add being to gallons a for we something again to have an So, to certainly us and payroll positive position beyond. in delivered

Ferrell. Jim is This

Let me add one thing.

a are driven to going we that. expect, something if money. by return with us we're making give And we a have We doesn't had that problem

very watched every carefully. money. gallons that's delivering more anything. more or We're the being making here. into start not way it's selling So, conversation into we We're And

can look second maybe of talk liens little likely the on Fair enough. you the just just sort of would to mix you in us of think how a that where about bit help to versus just about even it, of of And cos kind expect like, you hold versus kind weigh and of sort terms sort general refinancing? broader just do refinancing, cash the

third To we we I'd talked at MLP quarter fiscal bonds So, on frame find here's point, how time of end working Jim's that solution last we've maturity. anything the on since call, haven't the that yet. obviously the is to a up, next been in the to the announced that

not a financing to to find So structure able date. on or have been solution an we agreeable that

hard we the positively the extent positioning that term. long to date to – Company in avoid December, in with the continue you with the that we one been Company though today of are in able to we that. working agreeable longer interested into Clearly don't want What short-term We're be owner-employees the structure, are want Company that detail particular there interested term. distribution on in here, calendar, positively in on not want to one I through finding avoid in the that band-aid we've What the run solution but are you behalf distribution I that we us we ESOP. again find is out term. the to There are the to of but a the our a solutions avoid the investors long-term not and our disruption and for have help for those. on positions that's to we evaluate, an tell would might short even we We is the we of in obviously if that problem that mindful the

a of you have our point, for that don't works in investors look the that and like employees Company our might at a found this So, structure and structure what haven't terms for but as get we a priority. continue want but want things positively to to term we date, long for to Company the position look it, at to before done we December the

it. Fair Got for Thanks enough. questions. taking the

question the Please Your from of comes Gregg go of line Bank next ahead. Brody from America.

the CapEx prepared $XX really But you gave, were you guys $XX to million guidance and Good expansion million, maintenance could helpful. and thanks out They the that capital? between break morning for remarks.

$X CapEx the maintenance maintain to Roughly of million million trucks that buying $XX had fleet. our We was with in fleet in FY XXXX. Yes. associated of

to FY going to are more We back return leasing in XXXX.

So, that haircut I'd now, say will million be million between maintenance and growth. $XX probably on the that and be and would the somewhere based in forecast $XX the assumptions balance right

And is that how that? growth capital, flexible

about As tank we exchange largest think capital our it, of tied it, is that chunk to, the business.

we those to cages add and they need tanks are cages as new as they locations, new support placed. So,

of a That's are seeing new want locations to as in to allocate. market win want put customer we share. business for things new CapEx from. business the have that in We returns That's growth there. work. tanks good returning on to opportunities side and the we to us good or see past, retail growth at we maximize growth our seeing to continued that, the install our that opportunity we capital grow as where we there. have We We're capital tanks Again, really we

capital to. wanted what were is new we any I flexibility if could if are our I we for guess in see, We plants delay from there also plants. those planning two

a it. We with plans return do as, the that this no Midwest. against add two exchange again, in to plants, in We tank use one to one capital point, very new a of Northeast, those good profile at view good the have

the now So and moving throughout that with our of timing forward the plan FY deploying capital XXXX. capital with associated right we're here

of growth retail X.X%. mentioned you And expectations

or think, pushed but fiscal looking growth in in exchange, it then capital numbers up think provided is for XXXX you've year. I You're I that at helping is don't likely it year spending growth and And the you number. of historical terms or or XXXX to Does it mentioned last thereafter? you're show investment tank in a

effect work, you're effect and full in you're Yes, in capital year. a to the you're I year always time it think have following putting year putting to going partial the a then any year

this be We exchange into will see building we're second the that example, the tank they fully in right for are that side this year. year. they won't now, stage the plants half planning clearly constructed on until The of

we in being good savings selling plants heating would ready cost burn, get the season it XXXX, miles that fully those to to drive as side XXXX. going on reducing move more customer the number any makes with the Tank really but we the of that or FY forward of amount from see and felt here in the sense construction So the that FY now is we we be that's for season. closer right residential clearly diesel to

I the of So the in here course we're year. And you'd the adding of exchanges, think of the really throughout tank effects current that new see more customers year.

think So, and I place again would full-year or locations say some at locations, effects cage that effect that this new tanks I you'll year. we as more year exchanging start next of those with see selling

what place XXXX. up as the here of Some in tank we're year, going we get exchange Remember, FY FY year. in locations X,XXX were last of enter year to in XXXX we put full into this effect we

year you'll benefits in think effects, in some partial FY XXXX, So, will FY effects see XXXX. will year but full there be be I there

increase, that that look first the Just from the is? at mentioned how OpEx how in you as much the represents you quarter, some initiatives, or I can expect much growth you quantify

XXXX – positioning new again XXXX. range. FY FY million of half certainly on adding year throughout OpEx the drivers the have So, really but Again, OpEx, year-over-year I is to and second we apples, ourselves of FY ramping in been normalized FY in XXXX XXXX think for apples growth for the $XXX up

up take extent going in being mean roughly you of additional on that that to is $XX OpEx we will are million a at said, – effect QX. that be year-over-year. see some look we So, on if effect QX, The I

full of about an around in FY going entry we rate into we heating of exit you QX. FY that number off gallons barometer that a measure that is of be that's XXXX really But the and FY rate could field the the to think getting QX OpEx XXXX. use into maybe in the deliver measured of going the as So season

is if it? right, about volumes, workers way And temporary more is this that think hiring there's the to

a it, be would yes. of part That

for my numbers other expect going G&A in question is expenses mentioned this been what is quarter. and to well? just the that played good legal a run we selling last year last legal forward, you you, the Just year expenses for there point the past your assets G&A should those some in post have At as rate decline and what

variance spending we an cases have in larger think XXXX, in don't FY I throughout little potentially which where would a than we're I be anticipate Form trickle we'll answer lot about less into one right discovery a consistent get XXXX. in FY XXXX. It can. anticipate working will with of that to speed I phase. run FY But will to continues FY as a that here have will updates you time of Lawyers But that rate cases, quickly be don't that try that XXXX, some case these it a form phase. on of can the be for push as a XX-K. during as something be of through we would a as Eddystone lot we certainly there the somewhat of the would terms disclosure to talking FY as about lot Eddystone. and hard we're I that you would of but resolution We a ultimately think now. continue up XXXX, time towards spend have discovery the

Appreciate the you Great. it. for guys. Thank time,

time. are back closing call no this over I for there questions turn And to further Mr. Schwartz now comments. the Doran would at

lot amended Products, and well-positioned everybody balance facilities, Global you, for having thank like call Okay, an or access think a on very acquisitions opportunity credit today. We're bolt-on forward. Midstream about thank significant again also we upside the industry for is continue extended that's with liquidity renewed our density, our and continue our accretive focused opportunity of customer you we feel growth to market exited rate capital sheet, Ferrellgas the of and the as working with future a in with growth. our share, on to Again, to see going and amount to fragmented joining to exited accelerate and

they opportunities good have are we focused the we a engaged, in on they take feel base, them, they hard, about front we feel the at Company. now of we're can employee are great and where working and So where are right

in So, in the other able future but and interest today as we company are a and you the move optimistic loop we through we things activities your keep of about year, being as to to key grow propane-only we'll on continue such Company. your refinancing our appreciate as time the

This concludes today's conference call.

disconnect. now may You