Ferrellgas Partners, L.P. (Ferrellgas Partners) is primarily engaged in the retail distribution of propane and related equipment sales.
Ferrellgas Partners has two direct subsidiaries, the operating partnership (Ferrellgas, L.P., together with its consolidated subsidiaries, including Ferrellgas Finance Corp.) and Ferrellgas Partners Finance Corp.
The company’s activities are primarily conducted through the operating partnership. Ferrellgas, Inc. is the sole general partner of Ferrellgas Partne...
Ferrellgas Partners, L.P. (Ferrellgas Partners) is primarily engaged in the retail distribution of propane and related equipment sales.
Ferrellgas Partners has two direct subsidiaries, the operating partnership (Ferrellgas, L.P., together with its consolidated subsidiaries, including Ferrellgas Finance Corp.) and Ferrellgas Partners Finance Corp.
The company’s activities are primarily conducted through the operating partnership. Ferrellgas, Inc. is the sole general partner of Ferrellgas Partners. Ferrellgas Partners owns an approximate 99% limited partner interest in the operating partnership.
The company is a leading distributor of propane and related equipment and supplies to customers in the United States. The company is the second largest retail marketer of propane in the United States and a leading national provider of propane by portable tank exchange.
The company serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers. The company’s operations primarily include the distribution and sale of propane and related equipment and supplies in all 50 states, the District of Columbia and Puerto Rico. 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 delivered primarily through a network of partnership-owned distribution outlets and to a lesser extent through independently-owned distribution outlets. The company’s market areas for its residential and agricultural customers are generally rural while the company’s market areas for its industrial/commercial and portable tank exchange customers are generally suburban.
A substantial majority of the company’s gross margin from propane and other gas liquids sales is derived from the distribution and sale of propane and related risk management activities. The company’s gross margin from the retail distribution of propane is primarily based on the cents-per-gallon difference between the sales price the company charges its customers and the company’s costs to purchase and deliver propane to the company’s propane distribution locations.
The company’s retail deliveries of propane are typically transported from its retail propane distribution locations to the company’s customers by its fleet of bulk delivery trucks, which are generally fitted with tanks ranging in size from 2,600 to 3,500 gallons. Propane storage tanks located on the company’s customers’ premises are then filled from these bulk delivery trucks. The company also delivers propane to its industrial/commercial and portable tank exchange customers using the company’s fleet of portable tank and portable tank exchange delivery trucks, truck tractors and portable tank exchange delivery trailers.
As of July 31, 2024, approximately 69% of the company’s residential customers utilize its equipment, while the remainder own their tanks. The company’s rental terms and the fire safety regulations in some states require rented bulk tanks to be filled only by the propane supplier owning the tank.
In addition, the company leases tanks to some of its independent distributors involved with the company’s delivery of propane for portable tank exchanges. The company’s owned and independent distributors provide portable tank exchange customers with a national delivery presence that is generally not available from most of the company’s competitors.
The company utilizes marketing programs targeting both new and existing customers by emphasizing: its efficiency in delivering propane to customers; its employee training and safety programs; its enhanced customer service, facilitated by the company’s technology platform and the company’s 24 hours a day, seven days a week emergency retail customer call support capabilities; and its national distributor network for the company’s commercial and portable tank exchange customers.
Some of the company’s propane distribution locations also conduct the retail sale of propane appliances and related parts and fittings, as well as other retail propane related services and consumer products.
The company’s other activities in the company’s propane operations and related equipment sales segment include the following: the sale of refined fuels, and common carrier services.
Seasonality
Sales and operating profits are concentrated in the company’s second and third fiscal quarters (year ended December 2023), which are during the winter heating season. However, the company’s propane by portable tank exchange business experiences higher volumes in the spring and summer, which include the majority of the grilling season. These volumes add to the company’s operating profits during its first and fourth fiscal quarters due to those counter-seasonal business activities. These sales also provide the company the ability to better utilize its seasonal resources at the company’s propane distribution locations.
Business Strategy
The company’s business strategies are to expand its market share through disciplined acquisitions and organic growth, as accretive opportunities become available; capitalize on the company’s national presence and economies of scale; and utilize the company’s technology platform.
Governmental Regulation - Environmental and Safety Matters
With respect to the sale and distribution of propane, the company is subject to regulations promulgated by the Occupational Safety and Health Administration (‘OSHA’) under its Hazard Communication Standard (‘HCS’), which requires preparation and maintenance of safety data sheets, hazard labeling on products, and other worker protections that must be available and provided to applicable parties.
With respect to the transportation of propane by truck, the company is subject to regulations promulgated under the Federal Motor Carrier Safety Act. These regulations cover the transportation of flammable materials and are administered by the United States Department of Transportation (‘DOT’).
Trademarks and Service Marks
The company markets its goods and services under various trademarks and trade names, which the company owns or has a right to use. Those trademarks and trade names include marks or pending marks before the United States Patent and Trademark Office, such as Ferrellgas, Ferrell North America, Ferrellmeter, and Fuel Life Simply. Other marks include Ferrellgas & Design, SmartFill, and SmartFill & Design. The company’s general partner has an option to purchase for a nominal value the trade names ‘Ferrellgas’ and ‘Ferrell North America’ and the trademark ‘Ferrellmeter’ that it contributed to the company during 1994, if it is removed as the company’s general partner other than ‘for cause’.
The Blue Rhino mark and Blue Rhino’s other trademarks and service marks are an important part of the company’s consistent growth in the tank exchange category. Included in the registered and pending trademarks and service marks are the designations Blue Rhino, Blue Rhino & Design, Rhino Design, Drop, Swap and Go, Grab Life by the Horn, and It’s Not Just Propane. It’s Blue Rhino.
History
Ferrellgas Partners, L.P. was founded in 1939. The company, a publicly traded Delaware limited partnership, was incorporated in 1994.
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