Ferrellgas Partners LP (FGP) reported net loss per unit of 22 cents for the first quarter of fiscal 2013, ending October 31, lower than the Zacks Consensus Estimate of a loss of 23 cents. The quarter’s loss was substantially narrower than the prior-year quarter loss of 42 cents.
Total Revenue
Ferrellgas Partners' total revenue of $362.9 million in the quarter was 33% lower than $538.4 million reported in the comparable year-ago period.
The lower wholesale propane price impacted propane and other gas liquids sales, which decreased 34.8% to $335.3 million while Other revenue increased 14% to $27.6 million.
The results were lower than the Zacks Consensus Estimate of $452 million.
Operating Highlights
Ferrellgas Partners' gross profit during the quarter increased 8.8% from the comparable quarter last year to $140.1 million. The 45.6% decline in input costs to $222.8 million led to the expansion in gross margin.
Cost-saving initiatives of the partnership have started to yield positive results. The partnership was able to trim its operating as well as general & admistrative expenses by 3% and 6%, respectively, from the prior-year period.
Financial Highlights
Cash and cash equivalents as of October 31, 2012, were $8.7 million versus $8.4 million as of July 31, 2012.
The partnership's long-term debt as of October 31, 2012, was $1.07 billion, increasing from the year-end level of $1.05 billion as of July 31, 2012.
Peer Comparison
Suburban Propane Partners L.P. (SPH) competes directly with Ferrellgas Partners. Suburban announced a net loss of 91 cents per common units for the fourth quarter of fiscal 2012. The reported loss was wider than the Zacks Consensus Estimate of a loss of 82 cents.
The Zacks Consensus Estimate for the first quarter of fiscal 2013 is currently at $1.35 per unit.
Our View
The partnership continued with its acquisition based growth strategy and completed two buys in the first quarter of the fiscal year. These acquisitions are part of the partnership’s long-term strategy to grow by an aggressive pursuit of well-run propane companies.
The partnership continues to reap the benefits from its cost-saving initiatives. The successful continuation of cost saves would help the partnership to meet its cost-saving target of $20 million for fiscal 2013.
Besides cost reduction and contribution from inorganic sources, we believe the weather during the winter season will be a key factor that will determine the performance of the partnership in the upcoming quarter.
Overland Park, Kansas-based Ferrellgas Partners L.P. is a leading distributor of propane and related equipment in the U.S. The partnership provides propane services to Residential, Industrial, Portable Tank Exchange, Agricultural and Wholesale customers. Ferrellgas Partners retains a short-term Zacks #3 Rank (Hold rating).
FERRELLGAS -LP (FGP): Free Stock Analysis Report
SUBURB PROPANE (SPH): Free Stock Analysis Report
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