backyard gas grill Fire Up Over 13% YTM With Ferrellgas 2020 Bonds

by:Longzhao BBQ     2019-10-16
backyard gas grill Fire Up Over 13% YTM With Ferrellgas 2020 Bonds
This week, we are again looking at a company that provides basic heating for many rural households in the United States.S.We reviewed Ferrellgas for the first time in September 2015 (NYSE: FGP), again in September 2016, and most recently in May 2017.The company recently released its fiscal results for the third quarter and disclosed a company that continues to make progress despite doubts about nature.Jim Ferrer, one of the founding family members of the company, continues to lead the country's second-largest propane supplier and, under his guidance, the company has once again focused on its core strengths and performed well.Ferrellgas 2020 bonds, £ 8.625, mature in just 34 months and have a yield-to-More than 13% maturity.For investors who are prepared for a seasonal income, these bonds are a good addition to a diversified portfolio.We have marked these bonds as adding weight to our fixed assetsIncome2.Global high-yield portfolio.The latest performance of our managed FX2 portfolio is shown below.Our last review of Ferrellgas Partners was in May 2017, which included the company's second-quarter fiscal performance for the three months ended January 31, 2017.Since then, the company has released its third-quarter fiscal results for the three months ended April 30, 2017.The good news is that Ferrellgas's revenue grew year on year.Gross fiscal revenue for the third quarter was $538.$1 million to $5095 million before-year period.This is good news, especially given that the United States has been 20% warmer in the past winter than usual.In addition to the increase in revenue, Ferrellgas has successfully reduced operating costs as well as general and administrative costs.Operating expenses for the quarter were $104.$7 million to $1151 million, $10 less.4 million or 9%.General and administrative expenses also fell from $12.It was $3 million a year ago and $10 million this quarter, down 18.6%.Despite the challenges that ferrargas has faced over the past few years, which is largely due to the warmer winters in the United States, the company is still increasing revenue and improving operational efficiency, this is an example of solid management.In its 80-Ferrellgas gained significant growth through acquisitions.There are many small regional distributors in the propane distributor space who have secured stable and repetitive business from their customers.Ferrellgas's acquisition of these types of small retailers is a key factor in its growth.The company integrates the newly acquired suppliers into the overall structure of the company, controls costs, and quickly and effectively applies the company's synergies.The company continued the strategy in 2017 and acquired at least three more regional suppliers-two in Tennessee and one in Southern California.These acquisitions are growing immediately for the company, and the newly acquired dealers contribute additional revenue from the date of acquisition.Ferrellgas is the leading car manufacturer in the United States.S.Dealer of related equipment.Headquartered in Overland Park, KS, the company currently has nearly 4,000 employees nationwide.80 in ferrargas-In the past year, the company has developed mainly through acquisitions, which have acquired more than 240 companies.The company also provides oil and gas midstream services to major energy companies in the United States through its two midstream divisions, Sable Environmental mental (acquired in May 2014) and Bridger Logistics (acquired in June 2015.The company also obtains sales from portable tank exchanges of national brands through an independent and cooperative network --Have distribution outlets.Its residential and agricultural customers usually live in rural areas, while its Industrial/Commercial and tank exchange customers usually live in more urban areas.At present, the propane industry consists of several large companies and many small companies, most of which are small regional suppliers.Today, Ferrellgas is the second largest propane distributor in the United States and has operations in all 50 states.In addition to what most people think is backyard barbecues and portable stoves, propane has a wide range of uses.Farmers use propane on irrigation pumps, grain dryers, backup generators and other agricultural equipment.It is an essential fuel for crop drying, flame cultivation, fruit ripening, space and hot water, and food refrigeration.Millions of households across the country also use propane on stoves, water heaters, stoves, outdoor grills, fireplaces, generators and other appliances every day.In rural areas of the country, in essence, the distribution of propane is often geographically monopolized, meaning that there is usually only one distributor in an extended rural area.Ferrellgas takes advantage of this advantage to actively acquire and continue to solicit regional propane suppliers/distributors who may be interested in selling their business.This strategy has been successful, making Ferrellgas the second largest propane distributor in the country.(Source: LPGasMagazine.com-Ferrellgas acquired Bridger Logistics in 2015 and entered midstream oil and gas services.This ultimately led to the cancellation of a significant impairment charge at the same time as a key contract by Ferrellgas last year.Today, Ferrellgas continues to adhere to its commitment to Bridger Logistics.Jim Ferrer, chairman of Ferrellgas, said at a recent earnings call that at the Permian Basin (Texas), bridger was "probably the largest trucker ", but it also recognizes the fierce competition in this field.He also reiterated his support for the Bridger management team as they worked hard to put idle assets into work.Interest insurance is particularly important for corporate bondholders because it shows the company's ability to pay interest on bonds when payment is due.Ferrellgas's most recent quarterly results (three months ended April 30, 2017) earned $71 in operating income.9 million (nothing moreDepreciation and amortization of cash ).The company spent $39 on interest this quarter.Interest guarantee of 9 million 1.Xferrelllgas also continues to pay its unit quarterly.The company recently announced a cash allocation of $0 for the third quarter.10 Public units each.While these allocations do not affect bondholders, bondholders should be encouraged because such dividend levels provide additional cash buffers if there is a quarterly fluctuation in the company's cash flow.The risk of default for bondholders is directly related to ferrellgas's ability to grow the company and increase revenue, although winter in the United States is warmerS.After the past few years.On the positive side, despite the warmer winter weather, total revenue has increased in the last quarter.Another positive factor is the increasing efficiency of the company, as evidenced by its reduced spending.The company also provides solid interest insurance for its bondholders, along with an ongoing quarterly distribution, which is an additional cash buffer for bondholders if operating cash flow is reduced enough.Excellent 13 + % yield considering these factors-to-The maturity of these bonds in June 2020 seems to exceed the identified risks.Due to changes in seasonal temperatures, revenue sources for ferrellgas sales and distribution of propane vary throughout the year.Demand for winter (heating for residential and commercial buildings) has increased.As a result, the company has higher revenues in the second and third Fiscal Quarters (peak winter periods.One of Ferrelgas's ways to increase these revenues over the rest of the year is to sell portable cans to exchange propane through its Blue Rhino division.These sales provided increased operating profit in the first and fourth fiscal quarters of the company because of itsSeasonal Business activitiesIn general, bond prices rise when interest rates fall, and vice versa.This effect is more obvious for lower Coupe, longerTerm debt instruments.Any fixed income securities sold or redeemed before maturity may have gains and losses.Bonds with higher yields typically have a lower credit rating, if any, and therefore involve a higher level of risk and may not be suitable for all investors.During the winter months, heating needs for many rural households across the country remain dependent on propane gas.While ferrellgas's income reflects this seasonality, it remains a critical need for families and farms that rely on propane during the winter months.Jim Ferrer has been in charge of the company for the past year, which is also a positive factor for the company.Under his guidance, the company has improved operational efficiency, as evidenced by the cost reduction in the most recent quarter.The company's 2020 bonds are currently sold for less than 90, indicating that the current yield on maturity is more than 13%.For investors who can enjoy the basic services provided by Ferrellgas, these bonds offer huge cash flow and high yield on maturity.So we use these bonds as an additional weight target for our FX2 high yield fixed income portfolio.Issuer: LPCoupon, Ferrellgas Partners: 8.625% due date: 6/15/2020 rating: Caa2/CCC + payment: half-year price: 89.75 production to maturity :~ 13.07% disclosure: Durig Capital and certain customers may hold positions in Ferrellgas 2020 bonds.Please note that all yield and price indicators are shown from the beginning of our study.Our report is by no means an offer to buy or sell any securities.We are not a broker/distributor and the report is intended to be distributed to our customers.Due to our institutional associations, we often get better revenue/price execution for our clients than originally shown in our report.We welcome inquiries from other consultants who may also be interested in the possibility of higher returns for our work and retail customers.Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.This article was written by myself and expressed my views.I was not compensated.I have no business relationship with any stock company mentioned in this article.
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