Ferrellgas Partners (USOTC:FGPR) reported a fiscal third-quarter loss despite posting higher gross profit, as elevated operating expenses weighed heavily on the company’s bottom line.
For the quarter ended April 30, 2026, the propane distributor recorded a loss of $11.54 per Class A Unit, compared with earnings of $1.26 per unit in the same period a year earlier.
Revenue Declines as Sales Volumes Ease
Quarterly revenue fell 6% year over year to $524.6 million, down from $560.8 million in the prior-year period.
The decline reflected softer propane demand, with total gallons sold slipping 1% during the quarter. Retail propane volumes decreased 3%, although part of that weakness was offset by a 3% increase in wholesale sales.
Management noted that unusually warm weather conditions continued to affect demand across its operating footprint.
Gross Profit Improves Despite Lower Revenue
Although revenue declined, gross profit increased by $2.2 million, or 1%, to $291.4 million.
The improvement was largely driven by lower propane supply costs, which more than compensated for reduced sales volumes and revenue.
The result highlights the company’s ability to preserve margins despite challenging market conditions.
Operating Expense Surge Hits Bottom Line
Net earnings attributable to Ferrellgas fell by $31.1 million year over year to $28.0 million.
The primary factor behind the decline was a sharp increase in operating expenses, which rose by approximately $29.0 million during the quarter.
According to the company, $24.7 million of that increase was linked to the settlement of legacy casualty claims.
Management indicated that these costs were unusual in nature and are not expected to recur at a similar level in future periods.
Adjusted EBITDA Moves Lower
Adjusted EBITDA declined 11% to $102.1 million, compared with $114.8 million in the corresponding quarter last year.
The decrease reflected a combination of weaker sales volumes, weather-related demand pressures and higher operating costs.
Class B Unit Conversion Completed
During the quarter, Ferrellgas finalized the conversion of all 1.3 million outstanding Class B Units into 6.5 million Class A Units.
The conversion followed a final distribution of approximately $107.0 million paid to Class B unitholders in March 2026.
The move simplifies the company’s capital structure and completes a process that had been underway for several years.
Management Highlights Operational Execution
President and Chief Executive Officer Tamria Zertuche praised employees for navigating a difficult operating environment.
“Our employee-owners delivered another strong quarter, and we couldn’t be more proud of what this team accomplished,” Zertuche said.
“Navigating that uncertainty while maintaining an unwavering focus on customer service and retention, margin growth, and safety is no small feat.”
Warm Weather Continues to Impact Demand
Weather conditions remained a headwind during the quarter.
Weighted average heating degree days were 12.4% below the ten-year average and 8.8% warmer than the same period last year, reducing demand for propane used in heating applications.
The warmer-than-normal temperatures contributed to weaker retail sales volumes across several markets.
Blue Rhino Expansion Continues
Ferrellgas continued to expand its Blue Rhino propane exchange business during the quarter.
The segment added 1,496 net new retail locations, increasing its nationwide footprint to more than 65,000 selling locations.
The ongoing expansion underscores the company’s focus on growing its distribution network and strengthening its presence in the retail propane market.