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Ferrellgas stock crashes to 52-week low after $629M charge mars earnings


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Ferrellgas stock crashes to 52-week low after $629M charge mars earnings

's stockplummeted after an impairment charge of $628.8 million ballooned its net lossfor the fiscal fourth quarter.

The partnership'soverall net loss was $661.4 million for the quarter. During the year-agoperiod, the company's net loss was $58.8 million. The impairment charge was inthe crude oil logistics segment.

Facedwith building debt, the partnership is considering lowering its quarterlydistribution to help get its leverage ratio down, it said in the earningsrelease Sept. 28. While the distribution for the first fiscal quarter of 2017has not been determined, the partnership may decrease the annual distribution rateto $1 per unit from $2.05 per unit. Any distribution rate reduction will bedetermined quarterly by the board of directors of the partnership's generalpartner.

Investorssold Ferrellgas units in a flurry. The stock finished Sept. 28 down 21.2%, to$13, after setting a 52-week low at $12.45 earlier in the day.

Thecompany also reported a fiscal 2016 net loss attributable to the partnership of$665.4 million, compared to net earnings of $29.6 million during the year-agoperiod. The 2016 fiscal year net loss included impairment charges of $658.1million.

Onthe earnings call, partnership executives pointed out that Jamex Marketing andits client were responsible for 80% of Ferrellgas' crude oil logistics EBITDAin the fiscal year. After Jamex and its supplier could no longer deliverproduct, Ferrellgas reached a settlement, and it does not expect any futurevolumes coming through Jamex.

JamesFerrell, the partnership's founder and newly installed interim CEO, instructed analysts on thecall that propane, the partnership's longtime business, will be Ferrellgas'core focus, and it will re-evaluate its pipeline operations. "Ithink the future looks good, and I can't do anything at all about thepast," Ferrell said. "So we're going to try to make better decisionsthis time. I can say that."

AdjustedEBITDA loss for the three months ended July 31 was $6.7 million, compared to aloss of $558,000 during the corresponding period in 2015. Distributable cashflow attributable to unit holders was $11.8 million, but the company paid out$50.2 million in distributions in the fiscal fourth quarter. Common-unitholders had a $654.8 million interest in the partnership's net loss, or a lossof $6.68 per unit, compared to a loss of $58.2 million, or a loss of 64 centsper unit, a year ago.

Thedebt incurred by the company has increased due to the allocation needed to fundthe Bridger Logistics LLC acquisition, the Jamex settlement and the effects of therecord warm temperatures in fiscal 2016, according to the release.

"[R]ecordtemperatures across the nation continue to have an adverse impact on thepropane sector of our company and low oil prices have seriously damaged ourmidstream sector," Ferrell said in the earnings release. "[W]e aretaking prudent action at this time to preserve capital and improve thecompany's financial position."