FERRELLGAS PARTNERS L P
Key Highlights
- Ferrellgas is America’s #2 propane supplier with operations in all 50 states
- $125 million legal settlement impacted profits
- Expanded renewable propane projects to attract eco-conscious customers
Financial Analysis
FERRELLGAS PARTNERS L.P. Annual Report Summary
Your plain-English guide to their year
What Happened This Year?
Ferrellgas (America’s #2 propane supplier) had a tough year, swinging from a $110 million profit last year to a $15.6 million loss. Two main culprits:
- A $125 million legal settlement (like a surprise bill from a lawsuit)
- Warmer winters = fewer customers needing propane for heat
They still dominate propane tank exchanges (those blue tanks at gas stations) and serve all 50 states.
Financial Health Check
- Revenue: The company didn’t provide specific revenue figures, focusing instead on operational cash flow metrics.
- Debt: Still high but manageable thanks to steady demand for propane.
- Cash Flow: Their focus on "Adjusted EBITDA" (daily cash flow) suggests they prioritize short-term operations over long-term investments.
- Bright Spot: 90% of their propane price hedges (insurance against price swings) will pay off within a year.
Think of it like a food truck: Makes enough daily cash to keep rolling, but one big repair (or legal bill) hurts.
Wins vs. Mistakes
✅ Wins:
- Still #1 in propane tank exchanges
- Expanded renewable propane projects (eco-friendly fuel)
- Smart hedging protected against energy market chaos
❌ Mistakes:
- That $125M legal settlement crushed profits
- Warm weather reduced heating demand
- Tiny ($0.1M) loss on current propane bets
Big Risks to Watch
- Weather: A 10% colder winter = $$$. A 10% warmer winter = trouble.
- Propane Prices: Their hedging helps but isn’t perfect.
- Electric Competition: More homes/businesses switching to heat pumps/solar.
How They Compare to Competitors
- Competitors: Suburban Propane, AmeriGas (all face similar weather/price challenges).
- Edge: Ferrellgas is bigger (#2 nationally) and leads in tank exchanges.
- Reality Check: The entire propane industry is slow-growth – think "steady utility," not "tech moonshot."
What’s Next?
- 2026/2027 Bets: Locked in propane prices for future sales – smart if prices rise, risky if they fall.
- Make-or-Break: Next winter’s weather and avoiding new legal issues.
Market Trends
🔥 Opportunity: Renewable propane could attract eco-conscious customers.
⚠️ Threat: Governments pushing electric heating incentives. Propane is fossil fuel – not exactly trendy.
Bottom Line for Investors
This wasn’t a disaster – just bad luck:
- The $125M legal fee was a one-time gut punch
- Operations stayed stable otherwise
- Still paying dividends (key for income investors)
Consider Ferrellgas if you want:
- A potential rebound play (if next winter is cold)
- Steady dividends from an essential-but-boring business
- Exposure to energy without volatile oil prices
Avoid if:
- You dislike weather-dependent stocks
- Prefer companies with clear growth stories
- Worry about long-term fossil fuel decline
Final thought: Like a backyard firepit – useful in winter, ignored in summer, but always there when you need it. 🔥🛢️
Disclosure: Ferrellgas provided limited details about revenue and long-term strategy in their annual report. Investors may want to ask why.
Risk Factors
- Weather dependency (10% colder/warmer winter significantly impacts revenue)
- Volatility in propane prices despite hedging strategies
- Growing competition from electric heating alternatives (heat pumps, solar)
Why This Matters
The significant $15.6 million loss, a stark contrast to last year's $110 million profit, is the headline. However, investors should look beyond this top-line figure. The primary driver was a one-time $125 million legal settlement, which, while painful, suggests operational stability might be better than the net income implies. This indicates that the core business, despite facing challenges like warmer winters, is not fundamentally broken. For income investors, the continued payment of dividends is a critical signal that management views this as an isolated event and maintains confidence in future cash flow generation.
Ferrellgas's expansion into renewable propane projects is a forward-looking move that could attract eco-conscious customers and mitigate long-term fossil fuel decline risks. Their smart hedging strategies also demonstrate a proactive approach to managing energy market volatility, providing a layer of protection against price swings. However, the company remains highly susceptible to weather patterns, making next winter's temperatures a crucial determinant of their financial performance. Investors must weigh the potential for a rebound driven by colder weather against the inherent risks of a slow-growth, weather-dependent industry facing increasing competition from electric alternatives.
What Usually Happens Next
Following this annual report, investors should closely monitor Ferrellgas's quarterly earnings calls and subsequent filings for updates, particularly regarding the impact of the upcoming winter season. Given the company's heavy reliance on weather, any early indicators or forecasts for colder temperatures will be crucial. Attention should also be paid to their Adjusted EBITDA figures, as this metric is their preferred measure of daily cash flow and will provide a clearer picture of operational health, separate from one-time charges. Any further legal developments or significant changes in their debt management strategy will also be key watch points.
Beyond immediate operational results, investors should track the progress of Ferrellgas's renewable propane projects. Success in this area could provide a much-needed growth vector in an otherwise mature industry. Additionally, the effectiveness of their 2026/2027 propane price hedges will become clearer as those periods approach, impacting future profitability. On a broader scale, keep an eye on government policies and incentives related to electric heating, as these could accelerate the long-term decline in propane demand. Observing how competitors like Suburban Propane and AmeriGas navigate similar challenges will also offer valuable insights into the overall industry trajectory.
Financial Metrics
Learn More
Document Information
SEC Filing
View Original DocumentAnalysis Processed
October 16, 2025 at 08:54 AM
This AI-generated analysis is for informational purposes only and does not constitute financial or investment advice. Always consult with qualified professionals and conduct your own research before making investment decisions.