Ferrellgas Partners, L.P.

Alan Heitmann - EVP and CFO James Ferrell - Interim President and CEO

T.J. Schultz - RBC Capital Markets Mirek Zak - Citigroup Michael Gyure - Janney

Thank you, Lindsey and good morning, everyone. I am joined this morning by Jim Ferrell, our Chairman of the Board and Interim President and CEO.

Before we get started, I would like to remind all of you that some of the statements made during this call maybe considered forward-looking and that various risk, uncertainties and other factors could cause actual performance to differ materially from anticipated performance. These factors are discussed in our Form 10-Q and other documents filed from time to time with the SEC.

Now with that, I would like to turn the call over to Jim Ferrell for his opening remarks. Jim?

Thanks, Al. good morning, everyone.

I’m still inside my first 100 days on the job but a lot has changed here since I took office. We're back to basics running a strong company and focused on organic growth.

I am providing leadership to the people with this company depends on. My edict is simple, more money in, less money out get on board or off, make choices.

Decisions are being made on behalf of the company and its family of people who carry the load of making it work. My executives committee is made up of top officers from every discipline and we have formed a team that will work together to repair the balance sheet and rebuild the reputation of this great company.

The leadership of Bridger, our midstream, misadventure has been reconstituted into a team of men and women who are aligned with getting our stranded assets caused by the loss of our largest customer and slowdown of drilling back to work. Our main stay retail propane business continues to be focused on customer growth under a veteran powerhouse.

Blue Rhino was beginning to grow rapidly, even our dependable Ferrell North America Division has renewed focus. In other words, we’re back to work.

The internally stated goal is to preserve the company for another 75 years. It's a good place to work and many families depend on how well we turn the ship.

We've always been America's primary propane supplier through our retail Ferrellgas and Blue Rhino tank exchange businesses, customers depends on us. That won't change.

In addition, our midstream business is positioned well and producing fields that will provide opportunities. Preservation and growth for another 75 years means to our people not only a good job but the restoration of the value of their eased op accounts.

For many depends on that in their retirement. I personally am the second largest owner of the units.

The units owned by me combined with the units owned by the ESOP accounts for about 30% of the total common units. I don't think our alignment and the alignment of the employees with the public could be more clear.

We will do what is necessary to restore value. I am committed to pushing the ratio of debt to cash flow down to 4.5 or lower by paying off debt and by building cash flow responsibly.

We are not selling assets to bring in money nor are we doing fancy deals to create an illusion. We're working our way out of our predicament.

Now let me talk a little about the first quarter results. Even though the weather nationwide was an incredible 6% warmer than last year hot fall which incidentally this fall was the warmest on record, the adjusted EBITDA cash flow for our propane business was about the same.

It was in Bridger where we fell short, basically due to the permanent loss of the large customer we’ve talked about. But none of this is worrying me.

I've laid out the goals we are shooting for and I am confident we’re going to be successful. You are all aware that the Board last month unanimously decided to reduce quarterly distribution from $51.25 to $0.10 where will be held until we are well again.

Our phase cash is some $160 million annual, cash that will be used to achieve our goals. If I'm right, we will be back on top in short order that would mean a lot to our employees, our unitholders, our lenders and to me and while it is true that we need some cold weather to make this happen and I amhappy to tell you that the cash registers beginning to reign as I speak, morale is high here.

With that, I am going to turn this back to Al.

Thanks Jim. This morning we announced net loss of $43.5 million for our first fiscal quarter or $0.44 per common unit.

This compares to a net loss of $80.6 million in the prior-year quarter or $0.79 per common unit. As detailed in the earnings release and Form 10-Q which we filed earlier today, our first fiscal quarter 2017 adjusted EBITDA was $29 million compared to $48.9 million in the prior year period reflecting the effect of the Jamex settlement we reached in early September.

While temperatures during the quarter were 35% warmer than normal and 6% warmer than the prior year period, propane sales volumes for the first quarter were $163.2 million gallons, up 1% from the $161.5 million gallons a year ago. Total gross profit for the quarter was $154 million compared to the $181 million in the prior year's first quarter, again this decrease is primarily attributable to the termination of the Jamex contract.

Operating expense for the quarter was $105 million, a decrease of almost $10 million from the prior-year quarter reflecting our ongoing efforts to meaningfully reduce costs across all business segments. Interest expense was $35.4 million, up slightly from the $33.8 million in the prior-year largely due to the new debt incurred the fund growth capital expenditures and the repurchase of common units from Jamex both occurring in the prior-year.

At the end of the first quarter our leverage ratio was 5.81 times lower than the 6.05 time limit allowed under our amended credit facility. And our annualized distributable cash flow was $182 million equating to a DCF coverage ratio of 0.89 times.

Now with that, I would like to turn the call back over to the operator for Q&A.

Great, thanks. Good morning.

I think just, first, on the go-forward plan with midstream, you talk about some stranded assets there. Just if you could discuss the costs right now you have to carry or store some of those stranded assets.

What's currently cash flowing for you at midstream? And then just expand on the comment in the press release about increasing utilization on some of your assets there.

You know, I can probably better answer that at the end of next quarter because what we're doing is we do have for instance a great number of railcars that costs us money. They are being put to work.

We’ve got trucks that need to be put to work, we got terminals that need to be put to work. Somebody, I mean, we - Dan Giannini is going to do what haven’t been done in the last several months.

But we are dragging along cost, there’s no question about that. And its - you know, its hard to know exactly what that’s going to be but that’s all factored in.

We’re assuming we’re not going to have those costs restored. And I am going to guess we're talking probably somewhere I mean between $1 million and $2 million somewhere in that.

But it's not going to show up anywhere. It sits in the mix.

Okay. Previously you guys had, I think, guided midstream or talked about, when Bridger was intact, of $100 million a year.

And then I think without Jamex it was that you'd lost 80% of that. So, is the thinking now that you're just not putting any credit on midstream go forward?

Is that fair?

What do you mean by credit? What you mean - that is we’re not going to produce anything or what do you mean?

Is there cash flow from midstream as you look ahead into FY16.

Yes, there’s a good cash flow. And that’s is not going to be a $100 million.

I mean we love to be able to role that back and I mean, lot of…

Right. You talked about 80% of that going away.

So, is the $20 million still there?

Well, I would guess so, yes. I mean, we’re you got to remember this quarter we’re cleaning up and you’re seeing a lot of there, we clean up a lot of stuff.

Now we’ve been very happy with what’s going on there. And I think you’ll probably have somewhere around $15 million, $20 million.

I mean, I’ll give you better answer in three months, how is that. You are going to ask it again.

So I’ll get ready next month.

Okay. Fair enough.

So I think you’re getting it right, okay. You know what - we lost this estimate what you’re going to do.

We got to hit 80% hit to $100 million cash flow.

No, I understand. I appreciate that.

I think if we could just get more color on, you talked about you have to pay for some of the railcars that are stranded, just more color on what it's costing you there. And the go-forward plan to deal with that would be helpful.

T.J., just to be clear when we publicly disclose that 80% of the of the Bridger cash flow is going to be affected by the Jamex, the storage cost for the railcars is factored into that 80% composition just to be clear. That’s all there.

That’s not an incremental expense and we’re well aware of it and if the - what we’re trying to do, we are trying to save money. You can’t save your way to success but we’re trying to save money, put assets back to work and we’re trying to grow the business.

So we’re in a good feel. I mean, I am not worried about it.

It's just not going to be what we thought. What we paid for the damn thing.

Understood.

That’s why we test distribution.

Understood. I appreciate that.

Just moving on, I think you said you're not looking at asset sales. But are there scenarios that you would consider asset sales if they are needed to meet certain debt covenants?

And does that comment relate to both propane and midstream assets?

Yes, they are related to everything. I'll tell you what we are trying to do which we are.

We’re going to make everything work. We’re going to make everything work, we are going to make everything better and I don't need anybody thinking that and it's true, I'm not just saying this.

But their hard work is going to get sold off. It is not - I mean, we are not doing that, we may even become - we are lot more aggressive today than we were couple of months ago.

So internally, organically and that's the way it's going to be. We are going to turn this into a real midstream into a real business, its happening.

So we've got and the profane business is exceptionally strong. So not worried about any of this.

I don’t like the bump in the roads, so I might be doing something different today, we haven’t falling off in a ditch but we are coming out of the ditch.

Got it, understood. Just lastly, on the Jamex settlement, there was a payment plan for that settlement amount.

Has Jamex been paying for the terms of that settlement agreement?

They’re current, right now with every payment.

Okay. Thank you.

Hi. Thanks for taking my call.

I just had one quick one. Are there any ongoing legal issues related to that prior Eddy bridge rail terminal contract or any potential liabilities that could potentially be related to that in the future?

Can you comment on that?

You know, we are not a party to that arbitration and we really don’t have any obligation at Eddystone, not involve.

Okay. All right.

That's all I have. Thank you.

Can you just talk a little bit about your expectation maybe through the second quarter here as far as trying to get efficiencies out of the receivables or inventory and what you're thinking there as far as cash flow specifically this quarter?

I mean, as far as the efficiencies with the receivable as you know we've got the AR securitization facility that allows us to borrow against that. But we've taken advantage of the price.

We feel like we're in a good position with the cold weather that's coming. We feel we are in good position from a balance sheet standpoint and a working capital standpoint.

Okay, great. Thank you.

Yes, this is Charlie in for Jeremy. Just generally I wanted to ask about that 9% OpEx reduction.

What's going on there? How much more can we expect?

Obviously that was pretty good reduction year over year, so just trying to get a better idea there.

No, we‘ve looked at and continue to look at every segment in our company to try to find ways to be more efficient. We’re not going to stop for Q1, we are going to continue on and that's the best thing I can say about OpEx.

We're always looking for ways to be more efficient and drive more savings.

Okay. On a few other calls some management teams have talked about distinguishing between certain reduction plans, whether it's variable cost reductions or fixed cost reductions.

I just wasn't sure if there was any sort of program there tailored to that or if anything is working against volumes, would hinder that. Any sense there.

Can we expect continued, maybe not as substantial as this quarter, but see more OpEx reduction over the next couple quarters?

You can expect that we will continue in every quarter going forward to find ways to make ourselves more efficient.

No stone being left unturned let me say this is the way - that's the way we are today both for income and outcome.

Okay, great. Thank you very much.

Okay. I appreciate everyone joining the call today.

And before we disconnect, we’d like to turn the call back over to Jim Ferrell for one closing thought.

Well, I just have one thought this is unscripted, and I don’t like scripts anyway. But there may be employees and certainly some officers listening to this call and maybe some Board members.

It’s the people and the company who make this place work. And I want to tell all of you how much I appreciate the response to my leadership and from my perspective we're moving forward on the same page, and I want you to understand it not just me it's all of you too.

So, thank you very much.