Ferrellgas Partners, L.P.

Welcome to the Ferrell Gas Partners LP Q4 2025 earnings conference call. I would like to turn this call over to Michelle Magai. Go ahead, Michelle.

Thank you, Josh. Good morning, everyone. Thank you for joining us today for our fourth quarter earnings conference call. I'm Michelle Magai, Vice President, Corporate Affairs, the company's investor relations contact. With me today is Tamria Zertucci, our President and Chief Executive Officer at and Nick Hymer, Feral Gases Controller. Today's call includes prepared remarks where Tamria and Nick will go over our fourth quarter and full year results for fiscal 2025. Please note this call may contain forward-looking statements as determined by federal securities laws. For this purpose, any statement made during this call that are not statements of historical facts may be deemed forward-looking statements. These statements may be affected by important factors set forth in our filing with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from the results discussed in any forward-looking statement. We undertake no obligation to publicly update any forward-looking statement except to the extent required by law. Please refer to the 8K earnings release to find disclosures and reconciliations of non-GAAP financial measures that may be referenced on today's call. This morning's conference call is being webcast and is also available for replay via our website. With that, I will turn the call over to Tamria.

Thank you, Michelle. Welcome to our fourth quarter fiscal 2025 earnings call. Our vision is to be the propane logistics company most admired for its people, its partnerships, and its performance. We strive to achieve this by growing our business safely through operational excellence and consolidation. This vision is supported by our core values, which guides how we operate, how we grow our business, and how we show up for our customers, our communities, and each other. You see the results of our strategy in our financial performance our leadership team, and all of our employees, truly the best in the industry, continue to deliver consistent results, overcoming headwinds, and embracing opportunities. The results of our employee owners' unwavering attention to operational execution over the past few years has continued to produce overall benefit to the company. Adjusted EBITDA for the company increased $13.3 million compared to prior year reflecting improved route planning, disciplined cost control, and enhanced service efficiency. As we became more efficient, we also became more consistent, and that consistency helped increase customer retention. Fuel spend decreased by $4.5 million, thanks in part to our telematics technology, which continues to reduce idling and improve our fleet performance. Company volumes increased by more than 20 million gallons compared to prior year because of targeted growth strategies and delivery optimization. Year over year, our high-performing retail teams are executing exceptionally, focusing on controllable metrics like customer retention, margin expansion, and expense savings, all of which are driving sustainable growth. For the wholesale team, sales were up 41.6 million or 8% for the full year. This team has also worked diligently to design and implement a new commodity risk trading and management software. Blue Rhino continues to grow and win new customers while also improving fill rates, strengthening its capacity replenishment, and making smart infrastructure investments that will boost productivity in the future. We advanced our vending initiatives to make propane purchases faster and more convenient for consumers at over 2,000 Blue Rhino locations nationwide. This reduces the transaction time, and we use next-generation automated kiosks. Finally, extreme weather continues to offer Blue Rhino opportunities to serve our customers when other energy sources are limited or fail. Feral Gas's community impact is also growing. Our nationwide presence paired with our employee owners' expertise, we use our technology to give us the ability to rapidly assist communities across the country. We believe strongly in giving back to the communities that we serve. We do this through the Feral Gas Century Project Initiative. That's why we're proud to share that in FY25, We donated over 3,000 coats to children in need through our partnership with Operation Warm. We helped Operation Barbecue Relief serve more than 1.5 million meals to people who were impacted by natural disasters. We do this by donating the propane that powers OBR grills and smokers. We supported more than 200 local events, sponsorships, and charities across the country. And that local support, it did include ongoing Hurricane Chalene recovery efforts in North Carolina, as well as supporting veterans and first responders. Giving back, it's not just what we do. It's who we are. And it reflects the teamwork and ownership that defines FerroGas. FerroGas was recognized through one of its employees as Technology Leader of the Year. This was by Samsara. and part of their Connected Operations Awards. We were also recognized by the National Propane Gas Association's Annual Safety Awards through one of our safety leaders. Our employees are shining examples of the talent and dedication that truly fuels our success and delivers on our promise to our customers. Fiscal 25 performance reflects our team's continued focus on disciplined execution and operational excellence. We also have been successfully navigating external headwinds such as tariffs and supply chain challenges through our careful planning and proactive sourcing strategies. These achievements to date define who we are at Ferrell Gas, and I'm confident in future success. We are prepared and ready for fiscal 26. With that, let's turn to our fourth quarter and full year operational highlights. Nick?

Thanks, Tamarita. As Tamria mentioned, FerroGas had a strong fiscal 2025. For the fourth fiscal quarter, adjusted EBITDA, a non-GAAP financial measure, decreased $10.5 million or 31% to $23.1 million compared to $33.6 million in the prior year quarter. The decline was primarily driven by increases of $8.6 million in general administrative expense and $5.8 million in operating expense, partially offset by a 2.8 million increase in gross profit. The $5.8 million increase in operating expense was primarily due to higher plant and other costs of 6.7 million and vehicle expenses of 1 million, partially offset by a 1.9 million decrease in personnel costs. The 4.2 million increase in general and administrative expense was driven by the timing of adjustments to incentive accruals in the fourth quarter of 2024. Gross profit increased 1%, reflecting a 1% increase in revenues, while cost of product remained unchanged. For fiscal 2025, adjusted EBITDA increased $13.3 million, or 4%, to $330.7 million, compared to $317.4 million in fiscal 2024. The increase was supported by a $39.7 million increase in gross profit and a $2.9 million decrease in lease expense, partially offset by increases of $24.7 million in operating expense and $4.5 million in general and administrative expense after related EBITDA adjustments. Gross profit increased $39.7 million, or 4%, over $1 billion in fiscal 2025. The growth was driven by a 101.2 million or 6% increase in revenues, partially offset by a 61.5 million or 7% increase in cost of product, primarily due to higher propane pricing. After EBITDA adjustments of 4.5 million for legal fees and settlements related to the core business, operating expense increased $24.7 million, driven by a $17.9 million in plant and other costs and $8.5 million in personnel costs, partially offset by a $1.7 million decrease in vehicle expenses. After EBITDA adjustments of $123.7 million, primarily related to the $125 million Eddystone litigation settlement, General and administrative expenses increased $4.5 million. Interest expense increased $9.8 million, primarily due to $4.4 million in amortization of debt issuance costs related to amendments to the company's revolving credit facility, $3.4 million in letters of credit fees, and $1.1 million in other interest charges. The company recognized a net loss attributable to Ferro Gas Partners LP of $26.8 million and $20.8 million in the fourth fiscal quarter of fiscal 2025 and 2024 respectively. We recognized a net loss attributable to Ferro Gas Partners LP of $15.6 million in fiscal 2025 compared to net earnings attributable to Ferro Gas Partners LP of $110.2 million in fiscal 2024. These changes related to the factors noted previously. Margin per gallon increased 4% and 1% in the fourth fiscal quarter and fiscal 2025, respectively, compared to the prior year period. Back to you, Tamria.

Thank you, Nick. For fiscal 2025, feral gas employee owners delivered a record year, with gross profit tapping $1 billion, the highest in the company's history. That performance continues a solid five-year trend. averaging about $960 million in gross profit annually. A big part of what's driving this success is our investment in telematics technology and, of course, the expertise of our employee owners. Together, they're helping us serve customers more efficiently, controlling costs, and improving overall performance. So in closing, I would like to thank our more than 4,000 employee owners. You make Ferrel Gas successful. Your passion for the customer, your commitment to safety, and your belief in our shared purpose is what moves this company forward every day. Fiscal 2025 was a record year for FerroGas, and we are entering fiscal 2026 stronger and more unified than ever. Together, we are building the most admired propane logistics company in the industry. Thank you for joining our call today. We appreciate your interest in FerroGas. Now I would like to address just a couple questions that came ahead of our call via the investorrelationsatferralgas.com email address. The first is – well, a couple questions around the operations side. First is, how does the company think about current and future consolidation and strategic growth opportunities in today's environments? That's a good question. So consolidation through M&A is something that Ferrogas does extremely well. We have added 10 acquisitions in the last four years, and we really continue to seek out well-run businesses that fit our M&A profile. There are also several growing segments for propane in general, such as temp heat and power generation for infrastructure. In fact, the MPGA just released a white paper on the specific topic of this growing segment. Next question is around – actually, Nick addressed this in the call today, but I'll just highlight it since there was a question around expenses in Q4. The modest increase, really mostly attributable to an inflationary environment, was primarily driven by plant, property, equipment, parts expense. We typically utilize this somewhat slower period of Q4 to invest in maintaining our facilities and our vehicles. restocking and overall preparation ahead of the busy storm season and heating season. We have received questions about our revolving credit facility and the senior notes due in 2026. On those topics, we refer you to the Form 8K and press release that were issued this morning. I will now hand the call back to our moderator. Josh? Thank you.

This concludes the conference. Thank you for your participation. You may now disconnect.