On June 19, 2024, Ferrellgas Partners LP (FGPR, Financial) released its 8-K filing detailing the financial results for its third fiscal quarter ended April 30, 2024. Ferrellgas Partners LP operates as a propane distributor, primarily serving residential, industrial, commercial, and agricultural customers across various regions in the United States.
Performance and Challenges
Ferrellgas Partners LP reported a decrease in Adjusted EBITDA by $21.6 million, or 17%, to $104.0 million compared to $125.6 million in the prior year quarter. This decline was primarily driven by a $19.6 million decrease in gross profit, which was attributed to warmer than normal weather and higher medical claims under the company’s self-insured medical plan.
President and CEO Tamria Zertuche commented, “Regarding our retail business, we have taken positive steps over the last four years to create balance across the different customer segments in our business. Our focus has been on growing our weather agnostic customer base, by customer type and geographic location. However, the extended, unseasonably warm heating season negatively impacted demand volumes attributed to the heating segments of our business.”
Financial Achievements
Despite the challenges, Ferrellgas Partners LP managed to achieve several financial milestones. The company recognized net earnings attributable to Ferrellgas Partners LP of $52.8 million, down from $72.4 million in the prior year quarter. The company also made a cash distribution of $99.9 million to holders of Class B units, bringing the total distributions paid to approximately $250.0 million.
Blue Rhino, a segment of Ferrellgas, saw a 19% increase in EBITDA during the third fiscal quarter, driven by higher consumer demand due to warmer weather and increased tank usage in areas affected by electric grid failures. The company also reduced capital expenses by nearly $8.0 million due to supply chain improvements and inventory turn improvements.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Adjusted EBITDA | $104.0 million | $125.6 million |
| Net Earnings | $52.8 million | $72.4 million |
| Revenue | $515.8 million | $587.3 million |
| Gross Profit | $272.3 million | $291.8 million |
Ferrellgas Partners LP reported total revenues of $515.8 million, a decrease from $587.3 million in the prior year period. The cost of product decreased by $52.0 million, partially offsetting the revenue decline. Gross profit decreased by $19.6 million, or 7%, compared to the prior year period.
Analysis
The financial performance of Ferrellgas Partners LP in the third fiscal quarter of 2024 highlights the impact of external factors such as weather conditions and medical claims on the company's profitability. The decrease in propane sales due to warmer weather underscores the importance of diversifying the customer base to mitigate weather-related risks. The company's strategic initiatives, including the expansion of Blue Rhino and investment in technology, are positive steps towards enhancing operational efficiency and customer satisfaction.
Overall, while the company faced significant challenges, its efforts to manage expenses and focus on strategic growth areas demonstrate resilience and a forward-looking approach to sustaining long-term profitability.
Explore the complete 8-K earnings release (here) from Ferrellgas Partners LP for further details.
