Segment Reporting

12 Months Ended

Jul. 31, 2019

Segment Reporting Information [Line Items]

Segment Reporting Disclosure

Q.       Segment reporting

As of July 31, 2019, Ferrellgas has one reportable operating segment: propane operations and related equipment sales. All remaining activities are included in Corporate and other. (See Note C – Acquisitions, dispositions and other significant transactions.)

The chief operating decision maker evaluates the operating segments and allocates resources using an Adjusted EBITDA performance measure which is based on earnings (loss) before income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, asset impairments, loss on asset sales and disposals, other income (expense), net, severance costs, legal fees and settlements related to non-core businesses, unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments, exit costs associated with contracts related to the Midstream dispositions and net earnings (loss) attributable to noncontrolling interests. This performance measure is not a GAAP measure, however the components are computed using amounts that are determined in accordance with GAAP. A reconciliation of this performance measure to net loss attributable to Ferrellgas Partners L.P., which is its nearest comparable GAAP measure, is included in the tables below. In management’s evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reportable segment results do not include such unallocated costs. The accounting policies of the operating segments are otherwise the same as those described in the summary of significant accounting policies in Note B – Summary of significant accounting policies.

Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, plant and equipment, inventories, identifiable intangible assets and goodwill. Cash, certain prepaid assets and other assets are not allocated to segments. Although Ferrellgas can and does identify long-lived assets such as property, plant and equipment and identifiable intangible assets to reportable segments, Ferrellgas does not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges.

The propane operations and related equipment sales segment primarily includes the distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of the United States. Sales from propane distribution are generated principally from transporting propane purchased from third parties to propane distribution locations and then to tanks on customers’ premises or to portable propane tanks delivered to nationwide and local retailers. Sales from portable tank exchanges, nationally branded under the name Blue Rhino, are generated primarily through a network of partnership-owned distribution outlets, and to a lesser extent, through independently-owned distribution outlets.

Until April 2018, Ferrellgas reported two reportable segments: the Propane operations and related equipment sales segment and the Midstream operations segment. During July 2018, Ferrellgas sold substantially all of the midstream operations. As a result of a change in the way management is evaluating results and allocating resources, results of the Midstream operations business are now included in the Corporate and other operations for all periods presented and our only reportable segment is Propane operations and related equipment sales.

Following is a summary of segment information for the years ended July 31, 2019,  2018 and 2017.

	Year ended July 31, 2019
	Propane operations
	and related equipment		Corporate and
	sales		other		Total
Segment revenues	$	1,684,392	$	—	$	1,684,392
Direct costs (1)		1,412,390		41,979		1,454,369
Adjusted EBITDA	$	272,002	$	(41,979)	$	230,023

	Year ended July 31, 2018
	Propane operations
	and related equipment		Corporate and
	sales		other		Total
Segment revenues	$	1,790,823	$	282,319	$	2,073,142
Direct costs (1)		1,514,755		316,468		1,831,223
Adjusted EBITDA	$	276,068	$	(34,149)	$	241,919

	Year ended July 31, 2017
	Propane operations
	and related equipment		Corporate and
	sales		other		Total
Segment revenues	$	1,463,574	$	466,703	$	1,930,277
Direct costs (1)		1,198,150		502,064		1,700,214
Adjusted EBITDA	$	265,424	$	(35,361)	$	230,063

(1) Direct costs are comprised of “cost of sales-propane and other gas liquids sales”, “cost of sales-other”, “cost of sales-midstream operations”, “operating expense”, “general and administrative expense”, and “equipment lease expense” less “severance costs”, “legal fees and settlements related to non-core businesses”, “non-cash stock-based compensation charge”, “asset impairments”, “exit costs associated with contracts - Midstream dispositions”, “multi-employer pension plan withdrawal settlement” and “unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments”.

Following is a reconciliation of Net loss attributable to Ferrellgas Partners, L.P. to the total segment performance measures of EBITDA and Adjusted EBITDA:

	Year ended July 31,
	2019		2018		2017
Net loss attributable to Ferrellgas Partners, L.P.	$	(64,247)	$	(254,581)	$	(54,207)
Income tax expense (benefit)		323		(2,678)		(1,143)
Interest expense		177,619		168,467		152,485
Depreciation and amortization expense		78,846		101,795		103,351
EBITDA		192,541		13,003		200,486
Non-cash employee stock ownership plan compensation charge		5,693		13,859		15,088
Non-cash stock-based compensation charge		—		—		3,298
Asset impairments		—		10,005		—
Loss on asset sales and disposals		10,968		187,399		14,457
Other income, net		(369)		(928)		(1,474)
Severance costs		1,600		1,663		1,959
Legal fees and settlements related to non-core businesses		18,364		6,065		—
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments		—		1,293		(3,457)
Multi-employer pension plan withdrawal settlement		1,524		—		—
Exit costs associated with contracts - Midstream dispositions		—		11,804		—
Net loss attributable to noncontrolling interest		(298)		(2,244)		(294)
Adjusted EBITDA	$	230,023	$	241,919	$	230,063

Following are total assets by segment:

Assets	July 31, 2019		July 31, 2018
Propane operations and related equipment sales	$	1,223,790	$	1,196,084
Corporate and other		39,169		167,197
Total consolidated assets	$	1,262,959	$	1,363,281

Following are capital expenditures by segment (unaudited):

	Year ended July 31, 2019
	Propane operations and
	related equipment sales		Corporate and other		Total
Capital expenditures:
Maintenance	$	44,439	$	2,614	$	47,053
Growth		56,145		—		56,145
Total	$	100,584	$	2,614	$	103,198

	Year ended July 31, 2018
	Propane operations and
	related equipment sales		Corporate and other		Total
Capital expenditures:
Maintenance	$	23,979	$	3,584	$	27,563
Growth		51,229		1,255		52,484
Total	$	75,208	$	4,839	$	80,047

	Year ended July 31, 2017
	Propane operations and
	related equipment sales		Corporate and other		Total
Capital expenditures:
Maintenance	$	13,330	$	3,808	$	17,138
Growth		28,912		315		29,227
Total	$	42,242	$	4,123	$	46,365

Ferrellgas, L.P. [Member]

Segment Reporting Information [Line Items]

Segment Reporting Disclosure

P.     Segment reporting

As of July 31, 2019, Ferrellgas, L.P. has one reportable operating segment: propane operations and related equipment sales. All remaining activities are included in Corporate and other. (See Note C – Acquisitions, dispositions and other significant transactions.)

The chief operating decision maker evaluates the operating segments and allocates resources using an Adjusted EBITDA performance measure which is based on earnings (loss) before income tax expense (benefit), interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, non-cash stock-based compensation charge, asset impairments, loss on asset sales and disposals, other income (expense), net, severance costs, legal fees and settlements related to non-core businesses, unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments and exit costs associated with contracts related to the Midstream dispositions. This performance measure is not a GAAP measure, however, the components are computed using amounts that are determined in accordance with GAAP. A reconciliation of this performance measure to net earnings, which is its nearest comparable GAAP measure, is included in the tables below. In management’s evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reportable segment results do not include such unallocated costs. The accounting policies of the operating segments are otherwise the same as those described in the summary of significant accounting policies in Note B – Summary of significant accounting policies.

Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, plant and equipment, inventories, identifiable intangible assets and goodwill. Cash, certain prepaid assets and other assets are not allocated to segments. Although Ferrellgas, L.P. can and does identify long-lived assets such as property, plant and equipment and identifiable intangible assets to reportable segments, Ferrellgas, L.P. does not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges.

The propane operations and related equipment sales segment primarily includes the distribution and sale of propane and related equipment and supplies with concentrations in the Midwest, Southeast, Southwest and Northwest regions of the United States. Sales from propane distribution are generated principally from transporting propane purchased from third parties to propane distribution locations and then to tanks on customers’ premises or to portable propane tanks delivered to nationwide and local retailers. Sales from portable tank exchanges, nationally branded under the name Blue Rhino, are generated primarily through a network of partnership-owned distribution outlets, and to a lesser extent, through independently-owned distribution outlets.

Until April 2018, Ferrellgas, L.P. reported two reportable segments: Propane operations and related equipment sales segment and Midstream operations segment. During July 2018, Ferrellgas, L.P. sold substantially all of the midstream operations. As a result of a change in the way management is evaluating results and allocating resources, results of the Midstream operations business are now included in the Corporate and other operations for all periods presented and our only reportable segment is Propane operations and related equipment sales.

Following is a summary of segment information for the years ended July 31, 2019,  2018 and 2017.

	Year ended July 31, 2019
	Propane operations
	and related equipment		Corporate and
	sales		other		Total
Segment revenues	$	1,684,392	$	—	$	1,684,392
Direct costs (1)		1,412,299		41,056		1,454,355
Adjusted EBITDA	$	272,093	$	(41,056)	$	230,037

	Year ended July 31, 2018
	Propane operations
	and related equipment		Corporate and
	sales		other		Total
Segment revenues	$	1,790,823	$	282,319	$	2,073,142
Direct costs (1)		1,514,755		316,331		1,831,086
Adjusted EBITDA	$	276,068	$	(34,012)	$	242,056

	Year ended July 31, 2017
	Propane operations
	and related equipment		Corporate and
	sales		other		Total
Segment revenues	$	1,463,574	$	466,703	$	1,930,277
Direct costs (1)		1,198,150		501,925		1,700,075
Adjusted EBITDA	$	265,424	$	(35,222)	$	230,202

(1) Direct costs are comprised of “cost of sales-propane and other gas liquids sales”, “cost of sales-other”, “cost of sales-midstream operations”, “operating expense”, “general and administrative expense”, and “equipment lease expense” less “severance costs”, “legal fees and settlements related to non-core businesses”, “non-cash stock-based compensation charge”, “asset impairments”, “exit costs associated with contracts - Midstream dispositions”, “multi-employer pension plan withdrawal settlement” and “unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments”.

Following is a reconciliation of Ferrellgas, L.P.’s net loss to the total segment performance measures of EBITDA and Adjusted EBITDA:

	Year ended July 31,
	2019		2018		2017
Net loss	$	(29,517)	$	(222,146)	$	(29,059)
Income tax expense (benefit)		293		(2,699)		(1,149)
Interest expense		142,635		133,946		127,188
Depreciation and amortization expense		78,846		101,795		103,351
EBITDA		192,257		10,896		200,331
Non-cash employee stock ownership plan compensation charge		5,693		13,859		15,088
Non-cash stock-based compensation charge		—		—		3,298
Asset impairments		—		10,005		—
Loss on asset sales and disposals		10,968		187,399		14,457
Other income, net		(369)		(928)		(1,474)
Severance costs		1,600		1,663		1,959
Legal fees and settlements related to non-core businesses		18,364		6,065		—
Unrealized (non-cash) losses (gains) on changes in fair value of derivatives not designated as hedging instruments		—		1,293		(3,457)
Multi-employer pension plan withdrawal settlement		1,524		—		—
Exit costs associated with contracts - Midstream dispositions		—		11,804		—
Adjusted EBITDA	$	230,037	$	242,056	$	230,202

Following are total assets by segment:

	July 31, 2019		July 31, 2018
Assets
Propane operations and related equipment sales	$	1,223,790	$	1,196,084
Corporate and other		39,043		167,162
Total consolidated assets	$	1,262,833	$	1,363,246

Following are capital expenditures by segment (unaudited):

	Year ended July 31, 2019
	Propane operations and
	related equipment sales		Corporate and other		Total
Capital expenditures:
Maintenance	$	44,439	$	2,614	$	47,053
Growth		56,145		—		56,145
Total	$	100,584	$	2,614	$	103,198

	Year ended July 31, 2018
	Propane operations and
	related equipment sales		Corporate and other		Total
Capital expenditures:
Maintenance	$	23,979	$	3,584	$	27,563
Growth		51,229		1,255		52,484
Total	$	75,208	$	4,839	$	80,047

	Year Ended July 31, 2017
	Propane operations and
	related equipment sales		Corporate and other		Total
Capital expenditures:
Maintenance	$	13,330	$	3,808	$	17,138
Growth		28,912		315		29,227
Total	$	42,242	$	4,123	$	46,365