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What Hurt Ferrellgas Partners’ Fiscal 3Q16 Earnings?



Adjusted EBITDA increases 12%

On June 8, Ferrellgas Partners (FGP) reported earnings for the quarter ending April 30, 2016. The company reported a YoY (year-over-year) increase in adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of 12%. The increase includes $25.2 million of adjusted EBITDA from Ferrellgas Partners’ Bridger Logistics acquisition completed in June 2015. Excluding this, the company’s adjusted EBITDA declined YoY.

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Warmer temperatures hurt its performance

The above graph shows Ferrellgas Partners’ adjusted EBITDA over the last two years. Warmer winter temperatures and low oil prices impacted its performance in the quarter.

“Like many in our industry, we continue to be impacted by the extremely warm temperatures nationwide, and the downturn in the commodities market, including lower crude oil prices and project delays and cancellations,” said Stephen L. Wambold, president and CEO of Ferrellgas Partners.

He said that “We experienced an average of 18% warmer weather than normal during the quarter, which reduced heating needs across all our geographies and significantly drove down propane segment volumes and revenues. Notwithstanding these operating conditions, we are pleased to have delivered a 12% year-over-year increase in Adjusted EBITDA.”

The EBITDA from Bridger Logistics more than offset the decrease in Ferrellgas Partners’ water solutions and propane segments. Overall, this resulted in positive EBITDA growth.

Propane MLPs

Above-normal temperatures during the 2015–2016 winter season lowered the heating demand. This resulted in lower propane demand in the US. In addition to high winter temperatures, plenty of natural gas supplies and low crude oil prices lowered the propane prices.

Propane demand and prices impact propane distribution MLPs including Ferrellgas Partners, AmeriGas Partners (APU), and Suburban Propane Partners (SPH). To learn more about propane MLPs, read The Future of Propane According to Four MLPs.


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