Ferrellgas Partners (OTCMKTS:FGPR) said its fiscal third-quarter results reflected stronger margins and operational execution, even as lower propane prices, softer retail volumes and higher operating expenses weighed on earnings.
On the company’s Q3 2026 earnings call, President and CEO Tamria Zertuche said Ferrellgas completed its Class B unit conversion during the quarter, a move she said simplifies the company’s corporate structure and eliminates the Class B distribution obligation. Zertuche said the change allows Ferrellgas to redirect future cash flow toward debt reduction, reinvestment in the business and long-term value creation for Class A holders.
Gross Profit Rises as Costs Fall Faster Than Revenue
Nick Heimer, Ferrellgas’ vice president and controller, said overall gross profit increased $2.2 million, or about 1%, from the prior year. Revenue declined by about $36 million as propane prices at Mont Belvieu fell roughly 16% year over year, but product costs declined by about $38 million, more than offsetting the revenue pressure.
Gallon volumes declined by 2.8 million, or 1%, during the quarter. Retail volumes were down 4.4 million gallons, or 3%, while wholesale volumes increased 1.6 million gallons, or 3%.
Heimer said margin per gallon rose approximately 2%, supported by operational efficiencies, better route productivity, improved delivery execution and the continued use of the company’s telematics platform.
“Overall, it was a quarter where the business performed well at its core,” Heimer said. “Aside from the headwind of some one-time claims liability, gross profits grew, margins expanded. Our cost structure remains competitive.”
Legacy Casualty Claims Drive Earnings Decline
Net earnings decreased $31.1 million to $28 million. Heimer said the primary driver was a $29 million increase in operating expense, largely tied to the resolution of legacy casualty claims. He said management does not expect those costs to recur at the same level in future periods.
Adjusted EBITDA declined $12.7 million, or about 11%, to $102.1 million. Operating expenses increased $16.7 million after adjusting for approximately $12 million related to some of the settlements discussed on the call, partially offset by the improvement in gross profit.
Heimer also pointed to elevated diesel costs as a pressure point for delivery expenses. He said Ferrellgas is addressing the issue through route optimization, improved load planning and efficiency initiatives intended to reduce fuel consumption per gallon delivered.
“This is not a quarter-to-quarter reaction,” Heimer said. “It’s a structural effort to reduce our exposure to diesel volatility over time.”
Customer Retention and Wholesale Expansion Highlighted
Zertuche said Ferrellgas’ retail business continued to improve customer retention, with regained accounts meaningfully higher than the prior year and better will-call service levels. She said those improvements were not dependent on weather, but reflected disciplined execution by customer-facing teams.
On the wholesale side, Zertuche said Blue Rhino, the company’s tank exchange business, spent the quarter preparing for the summer grilling season and potential weather events. She said the business installed more than 1,000 new displays at customer locations across the country and planned the expansion of hundreds more at new sites.
During the question-and-answer portion of the call, Zertuche said retail growth is being supported by autogas and power generation, with more fleet operators moving from diesel to propane due to lower fuel and maintenance costs and a cleaner emissions profile. She also said Blue Rhino is expanding through home delivery, vending and additional retail locations, including a recent win with a large regional convenience store chain in the Eastern United States.
Board Changes and Capital Structure Remain in Focus
Ferrellgas also announced board changes during the quarter. Zertuche said Pamela Breuckmann was appointed chair, citing her role in governance and succession planning. The company also added Andrew Safran to the board after he had advised Ferrellgas for nearly a year. Zertuche said Safran brings more than three decades of investing and private equity experience, including merger and acquisition experience in the propane industry.
Asked about the company’s preferred units following the Class B conversion, Zertuche said Ferrellgas continues to maintain regular dialogue with stakeholders Ares and Prudential and will evaluate options as part of its broader capital structure review.
Heimer also said relisting on a national securities exchange remains part of Ferrellgas’ plan.
“The simple answer is yes,” Heimer said. “Relisting on a national security exchange is absolutely part of the plan. We hope to be in a position to make that happen in the near future.”
Safety and Community Efforts Noted
Michelle Maggi, vice president of corporate affairs, said Ferrellgas continued its partnership with Operation BBQ Relief during the quarter, deploying employee owners to serve meals to families affected by flooding in Milwaukee and tornado damage in Miami County, Kansas. She also cited employee volunteer work at food pantries, veterans and first responder fundraisers, and Earth Day events.
Maggi said the company’s recordable incident rate continues to improve, and its CSA performance improved year over year across several key categories. She also said Ferrellgas’ telematics platform is showing quarter-over-quarter improvement in driver safety indicators, including distracted driving, mobile usage and seat belt compliance.
Zertuche said the company’s focus entering the fourth quarter includes tank set growth, customer base expansion, wholesale location installations, safety performance and continued capital structure improvement.
About Ferrellgas Partners (OTCMKTS:FGPR)
Ferrellgas Partners, L.P. (OTCMKTS:FGPR) is a master limited partnership that operates as the retail propane distribution arm of Ferrellgas, Inc, one of the largest retail propane providers in the United States. Headquartered in Liberty, Missouri, the partnership was formed in 1997 to acquire and manage propane assets and inventory in support of Ferrellgas’s nationwide network.
The company’s primary business activities include the procurement, transportation and distribution of propane to residential, commercial, industrial and agricultural customers.
