Here's What Ferrellgas Partners' Management Had to Say About Its Lousy Quarter

By Tyler CroweMarketsFool.com

Image source: Ferrellgas Partners.

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Last month's announcement that Ferrellgas Partners (NYSE: FGP) had cut ties with its CEO and was planning to cut its payout to shareholders really rocked the company's share price. With so many things happening all at once, clearly the company had a lot of explaining to do during its most recent conference call. Here are five quotes that explain why the company is in its current situation -- and what it plans to do from here.

Why the big writedown?

Ferrellgas Partners really surprised Wall Street last month when the company announced more than $650 million in writedowns related to its crude oil logistics and its water solutions business. These two parts of the business were from the $870 million acquisition of Bridger Logistics in the middle of last year. CFO Alan Heitmann went into the details as to why the company wrote down almost all of this business after just more than a year of owning it.

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A little debt trouble

If buying a business that has turned out to be a dud less than a year in wasn't bad enough, Heitmann also went on to explain that the company is in a little hot water with its debt situation.

Clearly, the troubles of this Bridger acquisition won't end with this writedown, and it may take a while until the company can get its balance sheet back under control. That is especially true if the winter proves to be another warm one.

Righting the ship

As part of the quarterly earnings press release, management announced that it plans to lower its distribution to around the $1 range after they can assess the performance of this first quarter. This raised a few questions -- like "Why wait until next quarter?" Heitmann explained why management wants to wait and why it doesn't have a more definitive number for its new distribution.

Based on this, it seems as though management wasn't fully prepared for the fallout from this blunder and the abrupt departure of former CEO Stephen Wambold. It will likely take a few months for management to get its bearings.

Core is good

Despite all the bad news related to the botched Bridger deal and the tough winter, interim CEO James Ferrell wanted to remind investors and Wall Street analysts that the core of Ferrellgas' business -- propane distribution and retail sales -- is still on solid footing.

The cut he is referring to there is the distribution cut. Basically, he is saying to analysts that it's easy to see what kind of cash generation the company will be able to achieve if it doesn't need to shell out as much to shareholders. That, of course, is going to be a little weather-dependent.

Founder interest in returning to prominence

Wambold's departure left a bit of a void in the C-suite that chairman James Ferrell quickly stepped into. As troubling as the situation looks today, Ferrell wanted to give investors a good reason why he chose to fill the CEO chair instead of someone else. It also doubled as a reason why investors should stick around with this company.

With so much in the air at Ferrellgas Partners, the fact that the one man with the biggest interest in seeing the company succeed has stepped back into the captain's chair is a small glimmer of hope. Now, it's up to Ferrell to prove that he can get his company back on the right track by executing over the next several quarters.

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Tyler Crowe has no position in any stocks mentioned.You can follow himat Fool.comor on Twitter@TylerCroweFool.

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