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Ferrellgas Partners L.P. Reports Stable Financial Position with Unchanged Goodwill and Debt Levels
Ferrellgas Partners L.P.
Ferrellgas Partners L.P., a publicly traded limited partnership, has reported a stable financial position in its recent quarterly report. The company primarily operates in the retail distribution of propane and related equipment sales. It owns two direct subsidiaries and conducts its activities through the operating partnership. Ferrellgas serves various customer segments in all 50 states, the District of Columbia, and Puerto Rico.
Goodwill Impairment
One noteworthy aspect of Ferrellgas Partners’ financial report is that the company did not incur any impairment loss on goodwill during the period. Goodwill is tested for impairment annually or when changes in circumstances indicate a decrease in its fair value. Ferrellgas has determined that it has one reporting unit for goodwill impairment testing purposes, and its most recent goodwill impairment test did not result in a loss. This indicates that the company’s goodwill value remains unchanged, reflecting the stability of its operations and market position.
Debt Levels
Furthermore, Ferrellgas Partners’ long-term debt remained consistent from the previous fiscal year, totaling $1,482,012 as of April 30, 2023. The company’s long-term debt consists of unsecured senior notes and notes payable, with varying interest rates and maturity dates. The operating partnership also maintains a senior secured revolving credit facility with a borrowing capacity of up to $350.0 million, providing funding for working capital needs. Availability under the credit facility is determined based on the revolving commitment and the Borrowing Base, considering the outstanding borrowings and letters of credit.
Inventory and Current Assets
In terms of inventory, Ferrellgas reported a decrease in propane gas and related product inventory from $96,679 on July 31, 2022, to $76,611 on April 30, 2023. This reduction may be attributed to seasonal fluctuations in demand for propane as a heating fuel. Additionally, the company’s prepaid expenses and other current assets increased from $30,764 on July 31, 2022, to $35,324 on April 30, 2023. These assets mainly consist of broker margin deposit assets and other prepaid expenses.
Current Liabilities
Regarding current liabilities, Ferrellgas Partners’ other current liabilities decreased from $185,805 on July 31, 2022, to $159,054 on April 30, 2023. These liabilities include accrued interest, customer deposits and advances, accrued payroll, accrued insurance, accrued senior preferred units distributions, and other similar obligations. The decrease in other current liabilities may indicate improved financial management and/or settlement of certain obligations during the reporting period.
Shipping and Handling Expenses
Ferrellgas Partners also reported shipping and handling expenses of $86,093 for the three months ended April 30, 2023. These expenses were classified under operating expense categories such as personnel, vehicle, plant, and equipment, depreciation and amortization, and equipment lease expense. Shipping and handling expenses for the nine months ended April 30, 2023, amounted to $240,957. These figures highlight the operational costs associated with the distribution of propane and related products.
Liquidity
In terms of liquidity, Ferrellgas Partners’ cash, cash equivalents, and restricted cash decreased from $158,737 on July 31, 2022, to $104,657 on April 30, 2023. The decrease can be attributed to various cash flow activities during the reporting period, including cash paid for interest and income taxes, as well as non-cash investing and financing activities. Moreover, the company reported certain cash flow and non-cash activities, such as liabilities incurred in connection with acquisitions, changes in accruals for property, plant, and equipment additions, and lease liabilities arising from operating and finance right-of-use assets.
Conclusion
Overall, Ferrellgas Partners L.P. displayed a stable financial position in its quarterly report. With no impairment loss on goodwill and consistent long-term debt levels, the company demonstrates resilience in the propane distribution market. Despite seasonal fluctuations, Ferrellgas continues to serve a diverse range of customers across the United States and aims to maintain its strong position in the industry.
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