Ferrellgas Partners, L.P.

Stephen L. Wambold - CEO and President Alan C.

Heitmann - CFO and Treasurer

Gary Stromberg - Barclays Capital

Thank you, Kevin. Good morning, everyone.

Welcome to the Ferrellgas Partners fiscal 2015 second quarter earnings conference call. I’m Alan Heitmann, Senior Vice President and Chief Financial Officer.

Joining me today is Steve Wambold, President and Chief Executive Officer; and Boyd McGathey, Executive Vice President and Chief Operating Officer. Tod Brown, our Executive Vice President and President of Blue Rhino is taking some well earned time-off this week and was unable to join us on the call today.

Tod will participate in our next quarterly call in early June. Before we get started, I'd like to remind all of you that some statements made during this call maybe considered forward-looking, and that various risks, uncertainties and other factors could cause actual performance to differ materially from anticipated performance.

These factors are discussed in our Form 10-K and other documents filed from time to time with the SEC. So with that out of the way, I’ll turn the call over to Steve Wambold, President and Chief Executive Officer for his opening remarks.

Okay. Thank you, Alan.

My first thought after considering the second quarter was really just what an incredible difference a year made for us. If you look back to the second quarter of fiscal '14, temperatures were 18% colder than the year before and it was 6% colder than normal.

Propane cost at that time had spiked to levels really not seen in recent memory and we were working through a supply shortage and nationwide delivery issues. Fast-forward to this year, however, and temperatures in the second quarter were 9% warmer than a year ago and 4% warmer than normal.

Rather than spiking, propane cost has actually plummeted more than 50% from a year earlier levels and supply issues have been largely nonexistent this fiscal year. As would be expected, propane volumes did decline as a result of the warmer temperatures, however, our retail operations discipline and flexibility kept a tight rein on expenses combined with the reduction in wholesale propane prices, these lower expenses more than offset Mother Nature’s negative impact and the adverse effect on our midstream operations of the drop in oil prices.

Really the bottom line is this; propane margins were strong, expenses were flexed up and down with demand and as such, the partnership posted record second quarter adjusted EBITDA for the second consecutive year. Market leading Blue Rhino also contributed to the record adjusted EBITDA exceeding expectations as volume rose nearly 3% over last year’s levels and once again Blue Rhino posted solid same-store gains across all classes.

As a whole, Ferrellgas’ third quarter is off to a great start. February’s performance was strong reflecting widespread cold temperatures and continued cost discipline.

Given our strong first half performance and the third quarter’s positive weather pattern, we are reiterating our fiscal '15 adjusted EBITDA guidance of 300 million to 320 million, which would once again mark another record year. As a reminder, in fiscal '14, we did report record adjusted EBITDA of $288.1 million.

As a result of the strong DCF performance we’ve had over the past 12 months, we have generated $27 million of excess cash flow to fund acquisitive and organic growth. The acquisition environment does remain attractive and our propane pipeline has grown as we’ve approached the end of our peak heating season.

We do remain committed to exploring accretive complementary acquisitions in both traditional propane and midstream and we’re aggressively but deliberately pursuing some very nice opportunities that fit our model today. So with that, I’ll turn the call over to Alan Heitmann.

Thank you, Steve. As Steve mentioned, strong propane margins and expense controls provide us with another record adjusted EBITDA performance this quarter.

These record results were especially impressive considering they occurred in a quarter when temperatures were 9% warmer than those of the prior year and crude oil prices dropped 44% negatively impacting our midstream operations. Propane margins per gallon improved over the prior year thanks primarily to the drastic drop in wholesale propane prices during the quarter.

Meanwhile, our retail operations team was able to flex our variable expenses down this quarter reflecting the impact warmer temperatures had on our gallon sales. This, together with the lower cost of diesel and gasoline, allowed us to keep our operating expenses below prior year in spite of the additional cost associated with midstream and propane operations we acquired in 2014.

A combination of the increased propane margins per gallon and lower operating expenses resulted in adjusted EBITDA of $136.9 million for the quarter or $600,000 over the record quarter last year. For the trailing 12 months ended January 31, we posted adjusted EBITDA of $297 million and distributable cash flow of $193 million yielding a distributable cash flow coverage of 1.16x.

Now with two very solid quarters under our belt together with strong February results, we are reiterating our full year adjusted EBITDA guidance of $300 million to $320 million for fiscal 2015. This guidance suggests another record financial performance is possible for Ferrellgas in 2015.

The combination of lower wholesale propane prices and record results have produced an added benefit of borrowing capacity on our line of credit, which currently exceeds 360 million plus providing us ample liquidity for future operational and growth capital needs. Propane gallon sales for the second quarter were 297 million gallons, down from 343 million gallons a year ago.

This decrease is primarily due to the nationwide temperatures that were 4% warmer than normal and 9% warmer than the prior year. Although negatively impacted by the recent drop in crude oil, prices were appeased at our midstream operations processed 5 million barrels of water in the quarter, which is right in line with our expectations.

Total gross profit for the quarter was $265 million reflecting a $0.08 increase in the margin per gallon achieved in fiscal 2014 but also reflective of the lower propane sales volumes due to warmer temperatures. In the fiscal quarter, the average wholesale price of propane at Mont Belvieu dropped 53% when compared to the first quarter of 2014, providing us this opportunity to increase our gross margin per gallon.

The gross profit generated from our midstream operations was $5 million. And while this is below our expectations, the unfavorable variance is primarily tied to the price of crude oil which decreased 44% in the quarter.

Operating expense for the quarter was 107 million, down from the second quarter of 2014 with operational efficiencies from the propane operations and lower cost of fuel offsetting the incremental expenses associated with both midstream and propane acquisitions. General and administrative expenses for the quarter of 11 million were also down slightly from the prior year due to the timing of performance-based incentives.

Equipment lease expense for the quarter was 6 million compared to 4 million in the second quarter of fiscal 2014. This decrease is part of a planned program to update our truck fleet in order to best manage the overall cost transportation.

Finally, interest expense for the quarter was 24 million, up from 22 million in the year ago quarter due primarily to the issuance of new debt to fund acquisitions. As mentioned before, all of this results in adjusted EBITDA for the trailing 12 months of $297 million up from the record set at the end of fiscal 2014 of $288 million.

Distributable cash flow for the trailing 12 months was $193 million, up from the $190 million achieved in fiscal 2014. We’re very proud of our second quarter results and we look forward to another record-breaking year in fiscal 2015 as we continue to build upon our past successes.

This concludes my comments on the financial performance of the partnership. At this time, I’ll turn the call back over to our moderator so we can address any questions there maybe from the analyst group.

Hi. Good morning.

Good morning.

Just a question on the midstream business. Can you just tell us what you’re seeing in terms of activity levels?

And then remind us concentration risks, I seem to recall one customer made up a pretty good chunk of your revenues in that business.

Sure. So when you talk about activity, are you referring to growth or current operations or what are you aiming at?

I think I’m just trying to reconcile unchanged EBITDA guidance coupled with the midstream business where EBITDA dropped to $2 million for the quarter, and I think I remember expectations of being somewhere in the $25 million to $30 million for the year. So I guess really the question is what trajectory is that business on for the rest of the year?

Do you think you can get to that $25 million or $30 million EBITDA number?

Okay. I’ll answer from a macro level and if you need some additional detail, I’ll let Al speak up.

But no, we will not hit what we had assumed we would hit. Clearly, with crude oil dropping by 50%, I think that’s probably the trajectory we should anticipate on EBITDA as well for that particular segment.

The good news is the drop in the cost of propane more than offset that. And then of course there are other ancillary issues like fuel costs and those obviously have benefited our operating expense.

So, I guess you could say the natural hedge existed in the other part of the business, which comprises 98% of the total gross margin today. What other questions did you have?

Just customer concentration risks in the Texas business.

Yes. I would say that we have one large customer there that comprises about 40% of the total business.

That mix has changed in roughly nine months since we’ve been affiliated with that segment and that’s – I think when we purchased the business, it was closer to maybe a 50% spread but we’ve diversified it slightly.

Okay. That’s all I have.

Thank you.

Thank you.

Okay. I want to thank everyone for your time and your participation today.

We look forward to updating you again in the next quarter in about 90 days. Thank you.