Ferrellgas (FGP) Stock Down On Q3 Earnings & Revenue Miss

Ferrellgas Partners LP (NYSE:FGP) reported third-quarter fiscal 2016 adjusted earnings of 19 cents per unit, significantly below the Zacks Consensus Estimate of 47 cents. Quarterly earnings also tumbled 126.3% from 43 cents per unit in the year-ago period.

Lower-than-expected earnings in the reported quarter were due to the impact of warm weather and the increase in interest expense as well as depreciation and amortization expenses related primarily to the Bridger transaction.

Consequently, Ferrellgas lost 5.2% in yesterday’s trading session to close at $17.88.

Total Revenues

In the reported quarter, Ferrellgas Partners’ total revenues came in at $509.5 million, lagging the Zacks Consensus Estimate of $658 million by 22.6%. On a year-over-year basis, the partnership’s top line lagged 4.5%, primarily due to lower sales of propane and other gas liquids because of a much milder winter. The temperature during the quarter was 18% warmer than normal and 21% warmer than the prior-year period.

Sales Decline & Expenses Rise

In the fiscal third quarter, total propane sales volume declined 9.3% year over year to 223.4 million gallons due to lower wholesale and retail sales. Sales decreased due to a milder winter which lowered the demand for propane required for heating purposes.

Operating expenses in the reported quarter were $115.1 million, up 7.7% from the prior-year level. The rise in expenses was primarily due to additional operating expenses associated with the Bridger acquisition.

General and administrative expenses for the quarter under review rose to $12.4 million from $8.3 million in the prior-year period, also as a result of the acquisition.

Interest expenses increased to $34.4 million for the quarter from $23.5 million a year ago, reflecting increased borrowings to fund acquisitions.

Financial Position

Ferrellgas Partners’ cash and cash equivalents were $6.3 million as of Apr 30, 2016, compared with $7.7 million as of Jul 31, 2015.

Long-term debt was $1,960.3 million as of Apr 30, 2016, up from $1,804.4 million as of Jul 31, 2015.

Peer Releases

Sunoco LP (NYSE:SUN) reported first quarter 2016 earnings of 47 cents per unit, lagging the Zacks Consensus Estimate of 56 cents by 16.1%.

Genesis Energy LP (NYSE:GEL) reported first quarter 2016 earnings of 32 cents per unit, beating the Zacks Consensus Estimate of 30 cents by 6.7%.

Global Partners LP (NYSE:GLP) reported first quarter 2016 loss of 21 cents per unit, wider than the Zacks Consensus Estimate of a loss of 12 cents.

Zacks Rank

Ferrellgas Partners currently carries a Zacks Rank #3 (Hold).