Ferrellgas Partners, L.P. Reports Strong Q2 FY2026 Results and Announces Major Class B Unit Conversion

Financial and Operational Performance Sets Stage for Continued Growth

Key Financial Highlights

• Gross Profit Increases: Gross profit rose by \$3.0 million (1%) to \$350.4 million compared to the prior year, despite a 21.7% decline in average propane prices.
• Revenue and Cost Dynamics: Revenues declined by \$28.4 million (4%) year-over-year, but this was more than offset by a \$31.3 million (10%) reduction in cost of product, demonstrating effective cost management.
• Net Earnings Up: Net earnings attributable to Ferrellgas Partners, L.P. increased by \$3.3 million (3%) to \$102.2 million in Q2 FY2026, up from \$98.8 million in Q2 FY2025.
• Adjusted EBITDA Growth: Adjusted EBITDA, a key non-GAAP metric, increased by \$9.1 million (6%) to \$166.1 million, driven by operational efficiencies, lower general and administrative (G&A) expenses, and reduced operating lease costs.
• Cost Control: G&A expenses fell by \$4.6 million, mainly due to changes in personnel expenses and reduced legal costs. Operating lease expenses dropped by \$1.6 million following the refinancing of several leases into finance leases.

Operational Highlights

• Winter Readiness and Supply Chain Upgrades: The company upgraded its supply infrastructure to enhance inventory visibility and employed predictive analytics, improving planning and execution reliability during the winter season.
• Weather Impact Managed: Despite 16% warmer-than-normal temperatures in the western U.S. (27% warmer than last year), the company leveraged its national footprint to shift resources east, responding to strong demand from severe winter weather events, particularly Winter Storm Fern.
• Retail Segment Growth: Retail gross profit increased by \$7.1 million (3%), driven by operational efficiencies such as a 6% increase in margin per gallon and a 13% rise in operating income per gallon. Tank set installations grew 7.2% across all customer segments, and the residential conversion rate improved by 3.4%.
• Sales and Customer Initiatives: The Customer Service team’s outbound initiatives are expected to generate an additional one million gallons in sales, while the National Sales team secured six new national account customers in the quarter.
• Delivery Efficiency: Over 6,100 Will Call locations (0.9% of the network) were transitioned to Auto Fill, enhancing route density, demand forecasting, and margin performance.
• Safety Improvements: The Total Recordable Incident Rate improved by 10% quarter-over-quarter, reflecting ongoing safety initiatives.
• Wholesale Operations and Capacity Expansion: Investments in drivers, trucks, and new distribution service locations supported demand surges. The company expanded a tank exchange production facility in the south-central region, increasing throughput by 25% during peak demand and enabling record deliveries during Winter Storm Fern.
• Community Support: Ferrellgas donated filled propane tanks to charities across several states during Winter Storm Fern, supporting affected communities during power outages.
• Technology Investments: Increased use of telematics improved real-time visibility, driver safety, fuel efficiency, and fleet productivity.

Capital Structure and Unit Conversion – Price Sensitive Information

• Class B Unit Distribution and Conversion: On March 4, 2026, the Board declared a cash distribution of \$82.32 per Class B Unit (approx. \$107.0 million total), payable March 13, 2026, to Class B Unitholders of record on March 6, 2026.
• Triggering of Class B Conversion Threshold: Upon this distribution, Ferrellgas will meet the “Class B Conversion Threshold” under its partnership agreement.
• Significant Capital Structure Change: The company intends to convert all 1.3 million outstanding Class B Units into 6.5 million Class A Units (conversion ratio 1:5) shortly after the distribution. This is a major equity structure shift and could be highly price sensitive as it increases the number of Class A Units outstanding, impacting future distributions and ownership percentages.

Other Financial and Balance Sheet Details

• Cash and Liquidity: Cash and cash equivalents stood at \$88.4 million as of January 31, 2026.
• Total Assets: \$1.54 billion at January 31, 2026, up from \$1.42 billion at July 31, 2025.
• Leverage: Total debt increased, with short-term borrowings at \$62.5 million and current portion of long-term debt dropping sharply after refinancing/repayment activity.
• Preferred Equity: Senior preferred units outstanding remained at 700,000 (\$651.3 million).
• Deficit Position: The partnership deficit improved from \$(1.03) billion at July 31, 2025, to \$(990.4) million at January 31, 2026, primarily due to improved earnings.

Propane Sales Volumes and Segment Performance

• Total Propane Gallons Sold (Q2 FY2026): 263.95 million gallons (202.34 million retail, 61.61 million wholesale), down from 275.47 million in the prior year period, consistent with warmer weather and softer wholesale demand.
• Margin and Operating Improvements: Despite lower volumes, operational efficiencies drove margin and income per gallon higher.

Forward-Looking Statements and Risks

• Ferrellgas cautions that forward-looking statements in the report are subject to various risks, including weather, price volatility, supply disruptions, competition, economic and political instability, and other factors outlined in the Annual Report on Form 10-K and subsequent SEC filings.

Conclusion: Price Sensitive Developments for Investors

Ferrellgas Partners, L.P. delivered a solid Q2 FY2026, with higher profits and improved margins despite macroeconomic and weather-related challenges. The most significant shareholder development is the announcement of the Class B to Class A Unit conversion, which will substantially increase the number of Class A Units outstanding and could have a material impact on unit price and future distributions. Investors should monitor subsequent communications for further details on the conversion and any changes in distribution policy or capital structure.

Upcoming Events

• A webcast to discuss these results will be held at 8:00 a.m. Central Time (9:00 a.m. Eastern) on March 5, 2026, accessible via the company’s website. Questions can be submitted to [email protected].

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should review the company’s full filings and consult their financial advisors before making investment decisions. All forward-looking statements are subject to risks and uncertainties as disclosed in the company’s SEC filings.

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