Ferrellgas Partners, L.P.

What they do

Ferrellgas distributes propane and related equipment and supplies to residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia and Puerto Rico. Propane is purchased from third parties, moved to distribution locations, then delivered to customer-owned tanks by bulk trucks or to retailers as portable tank exchanges branded Blue Rhino. The partnership itself conducts no operations; activities run through Ferrellgas, L.P. (the operating partnership), with Ferrellgas, Inc. as sole general partner.

Revenue drivers

• Propane and other gas liquids sales — Retail distribution of propane generates revenue and gross margin primarily from the cents-per-gallon spread between customer sales price and the cost to purchase and deliver propane; total revenue was $1.94B in fiscal 2025.
• Residential and industrial/commercial heating — Rural residential and suburban industrial/commercial customers use propane mainly for space heating, water heating, cooking and appliances; about 56% of fiscal 2025 propane sales volume came in the November-March winter-heating season.
• Blue Rhino portable tank exchange — Nationally branded portable tank exchange serving primarily outdoor grilling, delivered through partnership-owned outlets and some independently-owned outlets, with higher volumes in spring and summer.
• Agricultural and wholesale — Agricultural demand comes from crop drying, space heating, irrigation and weed control, while wholesale sales supplement retail volumes; in the fiscal 2026 third quarter wholesale gallons rose 1.6 million (3%) even as retail fell 4.4 million.

Recent performance

For the fiscal 2026 third quarter ended April 30, 2026, revenue fell $36.3 million (about 6%) but gross profit rose $2.2 million (about 1%) as cost of product dropped $38.5 million (about 14%). Gallons sold declined 2.8 million (1%), net earnings attributable to the Company fell $31.1 million (about 53%) to $28.0 million, and Adjusted EBITDA fell $12.7 million (about 11%) to $102.1 million. Operating expense rose $29.0 million, including $24.7 million in plant and other tied mainly to resolution of legacy casualty claims that management does not expect to recur at that level. Weighted average heating degree days ran 12.4% below the ten-year normal and 8.8% warmer than the prior year period, though the North Central region grew volumes 2% and the Southeast grew volumes despite weather 4% warmer than prior year.

Strategy

In March 2026 the Company converted all 1.3 million Class B Units into 6.5 million Class A Units after a final distribution of approximately $107.0 million to Class B Unitholders, simplifying the unit structure and eliminating the Class B distribution obligation. Management says the freed cash flow will go toward debt reduction, operational investment and long-term value creation for Class A Unitholders. The Company also made board changes, appointing Pamela A. Breuckmann Vice-Chair and electing Andrew Safran, and continued operational investments ahead of the winter season. Priorities cited are customer service and retention, margin growth, safety, and capital structure improvements.

Risks

• Weather sensitivity — Warm winters, dry or warm harvest seasons and poor grilling weather reduce propane demand and can materially affect results, as the fiscal 2026 third quarter showed with heating degree days 12.4% below normal.
• Litigation and casualty costs — A $125.0 million litigation settlement drove the fiscal 2025 increase in general and administrative expense, with the final $37.5 million payment due in fiscal 2026, and legacy casualty claim settlements raised plant and other expense by $24.7 million in the fiscal 2026 third quarter.
• Leverage and debt service — Long-term debt was $1.46 billion at April 30, 2026, and fiscal 2025 net cash interest expense rose $7.0 million versus fiscal 2024, pressuring distributable cash flow.
• Margin and commodity price exposure — Gross margin depends on the cents-per-gallon spread between sales prices and propane purchase and delivery costs, and average propane prices based on Mont Belvieu declined 15.7% in the fiscal 2026 third quarter versus the prior year period.

Outlook

CEO Tamria Zertuche said the final months of the heating season are often unpredictable and that the Company enters the road ahead with confidence and a platform built for lasting growth. Management does not expect the legacy casualty settlement costs seen in the fiscal 2026 third quarter to recur at that level in future periods. With the Class B obligation eliminated, stated uses of future cash flow are debt reduction, operational investment and long-term value creation for Class A Unitholders.