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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2023

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file numbers: 001-11331, 000-50182, 333-06693-02 and 000-50183

Ferrellgas Partners, L.P.

Ferrellgas, L.P.

Ferrellgas Partners Finance Corp.

Ferrellgas Finance Corp.

(Exact name of registrants as specified in their charters)

Delaware

43-1698480

Delaware

43-1698481

Delaware

43-1742520

Delaware

14-1866671

(States or other jurisdictions of incorporation or organization)

(I.R.S. Employer Identification Nos.)

One Liberty Plaza,
Liberty, Missouri

64068

(Address of principal executive office)

(Zip Code)

Registrants’ telephone number, including area code: (816792-1600

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “Large Accelerated Filer,” “Accelerated Filer,” “Smaller Reporting Company,” and “Emerging Growth Company” in Rule 12b-2 of the Exchange Act.

Ferrellgas Partners, L.P.:

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

Ferrellgas, L.P., Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp.:

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Ferrellgas Partners, L.P. and Ferrellgas, L.P.

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp.

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

Ferrellgas Partners, L.P. and Ferrellgas, L.P. Yes  No 

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. Yes  No 

Indicate by check mark whether the registrants have filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Ferrellgas Partners, L.P. and Ferrellgas Partners Finance Corp. Yes  No 

Ferrellgas, L.P. and Ferrellgas Finance Corp. N/A

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

N/A

N/A

N/A

At May 31, 2023, the registrants had Class A Units, Class B Units or shares of common stock outstanding as follows:

Ferrellgas Partners, L.P.

4,857,605

Class A Units

1,300,000

Class B Units

Ferrellgas, L.P.

n/a

n/a

Ferrellgas Partners Finance Corp.

1,000

Common Stock

Ferrellgas Finance Corp.

1,000

Common Stock

Documents Incorporated by Reference: None

EACH OF FERRELLGAS PARTNERS FINANCE CORP. AND FERRELLGAS FINANCE CORP. MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(A) AND (B) OF FORM 10-Q AND ARE THEREFORE, WITH RESPECT TO EACH SUCH REGISTRANT, FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.

Table of Contents

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended April 30, 2023 of Ferrellgas Partners, L.P. together with its consolidated subsidiaries, including Ferrellgas, L.P., Ferrellgas Partners Finance Corp., and Ferrellgas Finance Corp. Unless stated otherwise or the context otherwise requires, references to “Ferrellgas Partners” refers to Ferrellgas Partners, L.P. itself, without its consolidated subsidiaries. References to the “operating partnership” mean Ferrellgas, L.P., together (except where the context indicates otherwise) with its consolidated subsidiaries, including Ferrellgas Finance Corp. The terms “us,” “we,” “our,” “ours,” “consolidated,” the “Company” or “Ferrellgas” refer to Ferrellgas Partners, L.P. together with its consolidated subsidiaries, including Ferrellgas, L.P., Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp., except when used in connection with “Class A Units” or “Class B Units,” in which case these terms refer to Ferrellgas Partners, L.P. without its consolidated subsidiaries.

Ferrellgas Partners is a publicly traded Delaware limited partnership formed in 1994 and is primarily engaged in the retail distribution of propane and related equipment sales. Our Class A Units are traded on the OTC Pink Market under the symbol “FGPR.” The operating partnership was formed on April 22, 1994, and accounts for substantially all of our consolidated assets, sales and operating earnings.

Ferrellgas Partners is a holding entity that conducts no operations and has two direct subsidiaries, the operating partnership and Ferrellgas Partners Finance Corp. Our activities are primarily conducted through the operating partnership. Ferrellgas Partners and the Preferred Unitholders are the only limited partners of the operating partnership. Ferrellgas, Inc. is the sole general partner of Ferrellgas Partners and the operating partnership and, excluding the economic interests attributable to the Class B Units and the Preferred Units, owns an approximate 1% general partner economic interest in each, and, therefore, an effective 2% general partner economic interest in the operating partnership. Excluding the economic interests attributable to the Preferred Units, Ferrellgas Partners owns an approximate 99% limited partner interest in the operating partnership.

Our general partner performs all management functions for us. The parent company of our general partner, Ferrell Companies, currently beneficially owns approximately 23.4% of our outstanding Class A Units. Ferrell Companies is owned 100% by an employee stock ownership trust.

We believe that combining the quarterly reports on Form 10-Q for these entities provides the following benefits:

enhances investors’ understanding of Ferrellgas Partners and the operating partnership by enabling investors to view the business as a whole in the same manner that management views and operates the business;
eliminates duplicative disclosure and provides a more streamlined and readable presentation, since a substantial portion of the disclosure applies to both Ferrellgas Partners and the operating partnership; and
creates time and cost efficiencies through the preparation of a combined presentation.

To help investors understand the differences between Ferrellgas Partners and the operating partnership, this report provides separate condensed consolidated financial statements for Ferrellgas Partners and the operating partnership. Noncontrolling interests, Class A Units, Class B Units, shareholders' equity (deficit) and partners' capital (deficit) are the main areas of difference between the condensed consolidated financial statements of Ferrellgas Partners and those of the operating partnership. A single set of notes to condensed consolidated financial statements is presented that includes separate discussions for Ferrellgas Partners and the operating partnership, when applicable. A combined Management's Discussion and Analysis of Financial Condition and Results of Operations section is also included that presents combined information and discrete information related to each entity, as applicable.

In order to highlight the differences between Ferrellgas Partners and the operating partnership, this report includes the following sections that provide separate financial information for Ferrellgas Partners and the operating partnership:

condensed consolidated financial statements; and
certain accompanying notes to condensed consolidated financial statements, which denote “Ferrellgas Partners” and “The operating partnership” in sections where applicable.

2

Table of Contents

FERRELLGAS PARTNERS, L.P.

FERRELLGAS PARTNERS FINANCE CORP.

FERRELLGAS, L.P.

FERRELLGAS FINANCE CORP.

TABLE OF CONTENTS

Page

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS (unaudited)

Ferrellgas Partners, L.P. and Subsidiaries

Condensed Consolidated Balance Sheets – April 30, 2023 and July 31, 2022

4

Condensed Consolidated Statements of Operations – Three and nine months ended April 30, 2023 and 2022

5

Condensed Consolidated Statements of Comprehensive Income – Three and nine months ended April 30, 2023 and 2022

6

Condensed Consolidated Statement of Equity (Deficit) – Three and nine months ended April 30, 2023 and 2022

7

Condensed Consolidated Statements of Cash Flows – Nine months ended April 30, 2023 and 2022

8

Ferrellgas, L.P. and Subsidiaries

Condensed Consolidated Balance Sheets – April 30, 2023 and July 31, 2022

9

Condensed Consolidated Statements of Operations – Three and nine months ended April 30, 2023 and 2022

10

Condensed Consolidated Statements of Comprehensive Income – Three and nine months ended April 30, 2023 and 2022

11

Condensed Consolidated Statement of Partners’ Deficit – Three and nine months ended April 30, 2023 and 2022

12

Condensed Consolidated Statements of Cash Flows – Nine months ended April 30, 2023 and 2022

13

Ferrellgas Partners, L.P. and Subsidiaries and Ferrellgas, L.P. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

14

Ferrellgas Partners Finance Corp.

Condensed Balance Sheets – April 30, 2023 and July 31, 2022

34

Condensed Statements of Operations – Three and nine months ended April 30, 2023 and 2022

35

Condensed Statements of Cash Flows – Nine months ended April 30, 2023 and 2022

36

Notes to Condensed Financial Statements

37

Ferrellgas Finance Corp.

Condensed Balance Sheets – April 30, 2023 and July 31, 2022

38

Condensed Statements of Operations – Three and nine months ended April 30, 2023 and 2022

39

Condensed Statements of Cash Flows – Nine months ended April 30, 2023 and 2022

40

Notes to Condensed Financial Statements

41

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

42

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

59

ITEM 4.

CONTROLS AND PROCEDURES

61

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

62

ITEM 1A.

RISK FACTORS

62

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

62

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

62

ITEM 4.

MINE SAFETY DISCLOSURES

62

ITEM 5.

OTHER INFORMATION

62

ITEM 6.

EXHIBITS

63

3

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS (unaudited)

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except unit data)

(unaudited)

    

April 30, 2023

    

July 31, 2022

ASSETS

Current assets:

Cash and cash equivalents (including $11,127 and $11,208 of restricted cash at April 30, 2023 and July 31, 2022, respectively)

$

104,657

$

158,737

Accounts and notes receivable, net

 

199,042

 

150,395

Inventories

 

97,813

 

115,187

Price risk management asset

8,463

43,015

Prepaid expenses and other current assets

 

35,324

 

30,764

Total current assets

 

445,299

 

498,098

 

  

 

  

Property, plant and equipment, net

 

619,285

 

603,148

Goodwill, net

 

257,006

 

257,099

Intangible assets (net of accumulated amortization of $347,423 and $440,121 at April 30, 2023 and July 31, 2022, respectively)

 

108,806

 

97,638

Operating lease right-of-use assets

60,244

72,888

Other assets, net

 

64,713

 

79,244

Total assets

$

1,555,353

$

1,608,115

 

  

 

  

LIABILITIES, MEZZANINE AND EQUITY (DEFICIT)

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

49,791

$

57,586

Broker margin deposit liability

 

6,207

 

32,805

Current portion of long-term debt

2,717

1,792

Current operating lease liabilities

24,150

25,824

Other current liabilities

 

159,054

 

185,805

Total current liabilities

241,919

303,812

 

  

 

  

Long-term debt

 

1,455,209

 

1,450,016

Operating lease liabilities

36,941

47,231

Other liabilities

 

32,076

 

43,518

Contingencies and commitments (Note L)

Mezzanine equity:

Senior preferred units, net of issue discount and offering costs (700,000 units outstanding at April 30, 2023 and July 31, 2022)

651,349

651,349

Equity (Deficit):

 

  

 

  

Limited partner unitholders

 

 

Class A (4,857,605 units outstanding at April 30, 2023 and July 31, 2022)

(1,160,913)

(1,229,823)

Class B (1,300,000 units outstanding at April 30, 2023 and July 31, 2022)

383,012

383,012

General partner unitholder (49,496 units outstanding at April 30, 2023 and July 31, 2022)

 

(70,119)

 

(71,320)

Accumulated other comprehensive (loss) income

 

(7,298)

 

37,907

Total Ferrellgas Partners, L.P. deficit

 

(855,318)

 

(880,224)

Noncontrolling interest

 

(6,823)

 

(7,587)

Total deficit

 

(862,141)

 

(887,811)

Total liabilities, mezzanine and deficit

$

1,555,353

$

1,608,115

See notes to condensed consolidated financial statements.

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Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(unaudited)

For the three months ended April 30, 

For the nine months ended April 30, 

    

2023

    

2022

    

2023

    

2022

Revenues:

Propane and other gas liquids sales

$

559,047

$

622,211

$

1,596,777

$

1,652,419

Other

 

28,300

25,332

 

87,802

 

74,568

Total revenues

 

587,347

 

647,543

 

1,684,579

 

1,726,987

 

 

  

 

  

 

  

Costs and expenses:

 

 

  

 

 

  

Cost of sales - propane and other gas liquids sales

 

291,826

 

362,958

 

852,399

 

966,709

Cost of sales - other

 

3,673

 

3,176

 

12,692

 

10,343

Operating expense - personnel, vehicle, plant and other

 

147,477

 

147,293

 

434,572

 

392,418

Operating expense - equipment lease expense

5,861

5,775

17,471

 

17,487

Depreciation and amortization expense

 

23,753

 

23,067

 

69,453

 

65,306

General and administrative expense

 

16,213

 

10,962

 

54,161

 

39,321

Non-cash employee stock ownership plan compensation charge

 

767

 

776

 

2,212

 

2,436

Loss (gain) on asset sales and disposals

 

958

 

1,299

 

2,928

 

(6,566)

 

 

  

 

  

 

  

Operating income

 

96,819

 

92,237

 

238,691

 

239,533

Interest expense

 

(24,297)

 

(23,965)

 

(72,483)

 

(74,499)

Other income, net

 

852

 

99

 

1,865

 

4,406

Earnings before income taxes

 

73,374

 

68,371

 

168,073

 

169,440

Income tax expense

 

367

 

248

 

888

 

825

Net earnings

 

73,007

 

68,123

 

167,185

 

168,615

Net earnings attributable to noncontrolling interest

 

580

 

537

 

1,203

 

1,230

Net earnings attributable to Ferrellgas Partners, L.P.

$

72,427

$

67,586

$

165,982

$

167,385

Class A unitholders' interest in net earnings (Note M)

$

6,115

$

7,336

$

16,608

$

16,668

Basic and diluted net earnings per Class A Unit (Note M)

$

1.26

$

1.51

$

3.42

$

3.43

See notes to condensed consolidated financial statements.

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Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

For the three months ended April 30, 

For the nine months ended April 30, 

    

2023

    

2022

    

2023

    

2022

Net earnings

$

73,007

$

68,123

$

167,185

$

168,615

Other comprehensive income (loss):

Change in value of risk management derivatives

 

(10,621)

 

29,355

 

(53,044)

 

84,427

Reclassification of losses (gains) on derivatives to earnings, net

 

13,450

 

(44,145)

 

7,378

 

(96,965)

Other comprehensive income (loss):

 

2,829

 

(14,790)

 

(45,666)

 

(12,538)

Comprehensive income

 

75,836

 

53,333

 

121,519

 

156,077

Comprehensive (income) loss attributable to noncontrolling interest

 

(609)

 

148

 

(742)

 

126

Comprehensive income attributable to Ferrellgas Partners, L.P.

$

75,227

$

53,481

$

120,777

$

156,203

See notes to condensed consolidated financial statements.

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Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY (DEFICIT)

(in thousands)

(unaudited)

    

    

    

    

    

Number of units

Accumulated

Total Ferrellgas

    

General

    

General

other

Partners, L.P.

Class A

Class B

partner

Class A

Class B

partner

comprehensive

partners'

Non-controlling

Total partners'

    

unitholders 

    

unitholders

unitholder

    

unitholders

    

unitholders

unitholder

    

income (loss)

    

deficit

    

interest

    

deficit

Balance at July 31, 2022

 

4,857.6

 

1,300.0

49.5

$

(1,229,823)

$

383,012

$

(71,320)

$

37,907

$

(880,224)

$

(7,587)

$

(887,811)

Contributions in connection with non-cash ESOP compensation charges

 

 

 

709

 

 

7

 

 

716

 

7

 

723

Net earnings allocated to preferred units

 

 

(16,088)

 

 

(163)

 

 

(16,251)

 

 

(16,251)

Net loss

 

 

 

(4,500)

 

 

(45)

 

 

(4,545)

 

(212)

 

(4,757)

Other comprehensive loss

 

 

 

 

 

 

(48,478)

 

(48,478)

 

(495)

 

(48,973)

Balance at October 31, 2022

4,857.6

1,300.0

49.5

(1,249,702)

383,012

(71,521)

(10,571)

(948,782)

(8,287)

(957,069)

Contributions in connection with non-cash ESOP compensation charges

707

7

714

8

722

Net earnings allocated to preferred units

(16,060)

(162)

(16,222)

(16,222)

Net earnings

97,119

981

98,100

835

98,935

Other comprehensive income

473

473

5

478

Balance at January 31, 2023

 

4,857.6

 

1,300.0

49.5

(1,167,936)

383,012

(70,695)

(10,098)

(865,717)

(7,439)

(873,156)

Contributions in connection with non-cash ESOP compensation charges

752

8

760

7

767

Distributions to Class B unitholders

(49,998)

(49,998)

(49,998)

Net earnings allocated to Class B units

(49,998)

49,998

Net earnings allocated to preferred units

(15,434)

(156)

(15,590)

(15,590)

Net earnings

71,703

724

72,427

580

73,007

Other comprehensive income

2,800

2,800

29

2,829

Balance at April 30, 2023

 

4,857.6

 

1,300.0

49.5

$

(1,160,913)

$

383,012

$

(70,119)

$

(7,298)

$

(855,318)

$

(6,823)

$

(862,141)

 

 

 

 

 

 

 

 

    

Number of units

     

    

    

Accumulated

    

Total Ferrellgas

    

    

    

General

General

other

Partners, L.P.

Class A

Class B

partner

Class A

    

Class B

partner

comprehensive

partners’

Non-controlling

Total partners’

    

unitholders

    

unitholders

unitholder

    

unitholders

    

unitholders

    

unitholder

    

income

    

deficit

    

interest

    

deficit

Balance at July 31, 2021

 

4,857.6

 

1,300.0

49.5

$

(1,214,813)

$

383,012

$

(72,178)

$

88,866

$

(815,113)

$

(7,966)

$

(823,079)

Contributions in connection with non-cash ESOP compensation charges

 

 

 

892

 

8

 

 

900

 

9

 

909

Distributions to Class B unitholders

 

 

(49,998)

 

 

 

(49,998)

 

 

(49,998)

Net earnings allocated to preferred units

 

 

 

(16,835)

 

(170)

 

 

(17,005)

 

 

(17,005)

Net loss

 

 

 

(8,520)

 

(86)

 

 

(8,606)

 

(254)

 

(8,860)

Other comprehensive income

 

 

 

 

 

49,813

 

49,813

 

509

 

50,322

Balance at October 31, 2021

 

4,857.6

 

1,300.0

49.5

(1,239,276)

333,014

(72,426)

138,679

(840,009)

(7,702)

(847,711)

Contributions in connection with non-cash ESOP compensation charges

 

736

7

743

8

751

Net earnings allocated to preferred units

(16,154)

(163)

(16,317)

(16,317)

Net earnings

 

57,323

49,998

1,084

108,405

947

109,352

Other comprehensive loss

 

(47,583)

(47,583)

(487)

(48,070)

Balance at January 31, 2022

4,857.6

 

1,300.0

49.5

(1,197,371)

383,012

(71,498)

91,096

(794,761)

(7,234)

(801,995)

Contributions in connection with non-cash ESOP compensation charges

 

759

9

768

8

776

Net earnings allocated to preferred units

 

(15,558)

(157)

(15,715)

(15,715)

Net earnings

66,911

675

67,586

537

68,123

Other comprehensive loss

 

(14,642)

(14,642)

(148)

(14,790)

Balance at April 30, 2022

 

4,857.6

 

1,300.0

49.5

$

(1,145,259)

$

383,012

$

(70,971)

$

76,454

$

(756,764)

$

(6,837)

$

(763,601)

See notes to condensed consolidated financial statements.

7

Table of Contents

FERRELLGAS PARTNERS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the nine months ended April 30, 

    

2023

    

2022

Cash flows from operating activities:

  

  

Net earnings

$

167,185

$

168,615

Reconciliation of net earnings to net cash provided by operating activities:

 

  

 

  

Depreciation and amortization expense

 

69,453

 

65,306

Non-cash employee stock ownership plan compensation charge

 

2,212

 

2,436

Loss (gain) on asset sales and disposals

 

2,928

 

(6,566)

Provision for expected credit losses

 

909

 

1,456

Other

 

6,050

 

5,593

Changes in operating assets and liabilities, net of effects from business acquisitions:

 

 

  

Accounts and notes receivable

 

(49,556)

 

(89,133)

Inventories

 

17,374

 

(12,175)

Prepaid expenses and other current assets

 

(4,560)

 

3,731

Accounts payable

 

(8,126)

 

32,758

Accrued interest expense

 

(22,366)