FERRELLGAS PARTNERS FINANCE CORP

FERRELLGAS PARTNERS FINANCE CORP Annual Review – 2023 Performance

Let’s cut through the noise and see how Ferrellgas, America’s #2 propane company, fared this year. No jargon—just what investors need to know.

---

1. The Big Picture

Ferrellgas sells propane for homes, farms, and grills. This year was tough: they flipped from a $110M profit last year to a $15.6M loss, largely due to a $125M legal settlement (like an unexpected bill). Their core business—propane tank exchanges at grocery stores—remains strong, but growth is stagnant.

---

2. Financial Health Check

• Revenue: Flat for another year. Propane sales aren’t growing.
• Profits: Lost $15.6M vs. a $110M profit last year. Note: The company didn’t share "Adjusted EBITDA" (their preferred cash profit metric), so it’s hard to gauge underlying performance.
• Debt: Still wrestling with $1.5 billion in debt (no progress update this year).
• Cash Flow: Positive, but 90% of their price-lock contracts expire within a year—less financial predictability ahead.

---

3. Wins vs. Challenges

What Worked:

• Still dominates portable propane tank exchanges (those blue tanks you see everywhere).
• Locked in propane prices for 2026-2027 sales, hedging against future price spikes.

What Didn’t:

• $125M legal settlement wiped out profits.
• Mild weather reduced demand: 3% fewer “heating days” (cold days that drive sales) vs. historical averages.
• Lost $0.1M on propane price bets (minor, but highlights hedging risks).

---

4. Key Risks to Watch

• Weather Dependency: Sales live or die by cold winters.
• Propane Price Swings: Their hedging contracts could backfire if prices drop.
• Green Energy Shift: Propane demand may slowly decline as homes/businesses adopt electric/solar alternatives.

---

5. Competitive Edge

They’re smaller than giants like Suburban Propane but own a niche: portable tank exchanges (convenient for grilling). This gives them steady (but not growing) revenue.

---

6. What’s Next for 2024?

• Debt Focus: Prioritizing repayments to stabilize finances.
• Weather Watch: A colder winter could boost sales 3-5%.
• Legal Relief: The $125M settlement is a one-time hit—profits should rebound next year if nothing else goes wrong.

---

7. Long-Term Concerns

• Rural Reliance: 36% of rural U.S. households use propane for heat, but this shrinks 1-2% yearly.
• Hedging Gamble: Locked-in prices for 2026-2027 could hurt if propane gets cheaper.

---

Investor Takeaways

The Good: Ferrellgas has a stable niche (tank exchanges), and next year’s profits will likely improve without the legal penalty.
The Bad: Flat sales, massive debt, and reliance on cold weather make this a high-risk bet.
The Unknown: The company shared limited details on debt reduction or growth plans—transparency is lacking.

Bottom Line: Only for risk-tolerant investors who believe propane will stay relevant. Think of it like a "fixer-upper" stock: potential upside exists, but major structural issues (debt, weather risks, green energy trends) could derail progress.

---

Always do your own research—this is a starting point, not financial advice! 😊