Ferrellgas Partners, L.P.

Thank you, operator, and welcome to our second quarter 2021 earnings call. Thank you all for joining us.

Before we get started, I'd like to remind all of you that some statements made during this call may be 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 Securities and Exchange Commission.

Additionally, we note that the purpose of this call is to discuss the results of operation for the second fiscal quarter ended January 31, 2021, as required by our senior secured bonds due 2025. Therefore, we will not be discussing or responding to questions regarding our recently announced debt restructuring.

Despite significant economic and operational uncertainties in the U.S. The company produced exceptional results in the second quarter of fiscal '21, leading to an $18.2 million increase in operating income or 18.9% growth over the prior year quarter and continued our strong performance in fiscal 2021.

The gallons of propane sold for the quarter were 285.3 million compared to 305.3 million last year. However, these decreases were partially offset by a continued increase in Blue Rhino tank exchange sales due to increased strategies and marketing and stay-at-home buying trends.

Additionally, Blue Rhino sales locations now exceed 62,500, up over 5,000 from prior year. Margin per gallon for the quarter was $0.09 or $0.11 higher than the prior year quarter, attributable to strategic product placement, sound supply chain logistics strategies and lower wholesale propane prices.

Overall, the increase in margin increases in tank exchange volumes and customer growth were partially offset by decreased retail sales volumes due to right time deliveries and weather that was 2.7% warmer than the prior year quarter and a relatively weaker economy.

This has resulted an increase in gross margin dollars of $9.6 million or 3.6% higher than prior year quarter. Operating expenses decreased $13 million or 10% due to the strategies to deliver gallons more efficiently.

The company has numerous initiatives underway to increase efficiency and profitability. These initiatives helped to produce strong results in the second quarter enabled continued high-performance in the areas of growth and operational expense management.

Strong execution by a leaner and more agile workforce of essential workers is driving high-performance throughout the company, both in the field and in corporate locations as we focus on being a propane only company.

Successful transition of essential workers from a corporate workplace to a technology-centric work from home environment, decreased various general and administrative expenses as well as travel expense throughout the company.

Lastly, our continued commitment to safety serving our over 700,000 customers while adapting to the ever-changing circumstances and new operating protocols to help protect the health and safety of our customers and employees remains our top priority. For the quarter, the net earnings attributable to Ferrellgas Partners, L.P., was $63.3 million or $0.64 per common unit compared to prior year's second quarter net earnings of $48.2 million or $0.49 per common unit.

Adjusted EBITDA, a non-GAAP measure, increased by $19.5 million or 16% compared to prior year quarter. For the second quarter, adjusted EBITDA was $140.9 million compared to $121.4 million in last year's quarter, resulting from the previously discussed initiatives.

As previously announced, the company indefinitely suspended its quarterly cash distribution as a result of not meeting the required fixed charge coverage ratio contained in the senior unsecured notes due 2020. Additionally, we previously announced an historic agreement with the majority bondholders of the senior notes due 2020.

We are very excited about this agreement. It will allow us to continue to satisfy all of our company's obligations to employees, vendors, suppliers and other partners without interruption.

For more information about that agreement, please refer to the Form 8-K filed December 11, 2020.

Additionally, we recently announced our prepackaged Chapter 11 proceeding was confirmed, dependent on the successful execution of our bondholder agreement. We continue to meet the various milestones per this agreement and are moving closer to our planned financial restructuring.

We will continue to release updates as required by the SEC.

Now, before I turn the call back to the moderator, we did receive a series of questions that I will go through here before we conclude the call. First question, can you explain the persistent weakness in the company's retail business and what, if anything, is management looking to do the stabilize results in that part of the business?

Well, I think the weakness is not perfectly understood, we are right timing our deliveries, as we just previously discussed, which is smoothing the volume out over the year. And so the volumes are -- do look different when compared to the prior year, but it's really just -- it's mainly a function of the right time deliveries as well as some impact with weather.

And then there's a question -- the next question is what level of gross CapEx spending is anticipated for the remainder of fiscal year '21? We are looking at $60 million to $80 million of CapEx this year.

That's what we expect at this point. Has the recent sharp increase in steel costs impacted the company's acquisition cost of new propane tanks?

Well, it has. Yes.

How will higher propane prices impact profitability for the balance of 2021? We do not believe that will have an impact with the way that we manage our company.

What was the savings from the lower fuel costs last year? Should we expect some of that to reverse in fiscal year 2021?

We are managing the business appropriately. We are driving fewer miles based on our right time deliveries and our efficiency initiatives.

So we do not believe, we believe we're managing it accordingly based on those initiatives and the environment we're in.

And what does the current environment for M&A look like? We're going remain disciplined buyers going forward.

Do you expect the list for Series A and/or Series B preferreds on a major exchange like the New York stock exchange? The Series B -- Series B units will not be listed and we do expect the Series A could potentially be listed again on the New York stock exchange over time.

That is our expectation over a period of time in the future.

Subject to Board approval, when do you expect the company to be in a position to begin making distributions again on the common units? Is it possible this could occur in 2021, we believe it's highly unlikely that will happen in 2021 as we try to executive the TSA and work through all of those transactions, we need to get that's the first step, and then we just need to operate the company effectively going forward.

Those are the questions that we received ahead of time. Operator, I'll turn it back to you to conclude the call.

But I thank everyone for their time today.