Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon. My name is Jeanette and I will be your conference facilitator. At this time I would like to welcome everyone to the Ferrellgas Partners first-quarter earnings conference call. All lines have been placed on mute prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (OPERATOR INSTRUCTIONS) Mr. Kevin Kelly, you may begin your conference.
KEVIN KELLY, SVP & CFO, FERRELLGAS PARTNERS, L.P.: Thank you and good afternoon, everyone, and welcome to the Ferrellgas Partners LP conference call for the first quarter ended October 31, 2004. I'm Kevin Kelly, Chief Financial Officer of Ferrellgas; and with me today is Jim Ferrell, our Chairman, President, and Chief Executive Officer.
I will begin the call with comments on our financial performance for the quarter; and then I will turn the call over to Mr. Ferrell, who will address our current operating environment; and then we will open up the call for questions from our analyst group.
Before I get started, as always I need to point out that some of the statements made during this call are considered forward-looking. A variety of risks and uncertainties and other factors could cause our actual performance to differ materially from anticipated performance. These factors are discussed in our Form 10-K and other documents that we file with the SEC.
Let me begin by discussing our financial performance for the first quarter ended October 31. Propane gallon sales for the first quarter rose by approximately 5 percent to 185 million gallons, reflecting the positive contribution from our April 2004 acquisition of the Blue Rhino operations. As we move from the grilling season into the heating season, we reflect on a very successful 6 months of performance from the Blue Rhino operations, and we look forward to benefiting from their continued organic growth for many years to come.
These increased propane gallon sales were partially offset by the performance from our retail operations due to the lack of sustained cold temperatures this fall that helped kick off our winter heating season, and by some of our customers choosing to defer their traditional fall propane purchase due to the high wholesale cost of propane currently.
Degree days for the first quarter were 13 percent warmer than normal. Most of this was seen in October and it was the reason for the delay in the kickoff of the gallon sales.
The average cost of propane for the quarter was about 86 cents a gallon compared to 63 cents a gallon in the previous year's quarter. It reached a peak of about 97 cents a gallon during the quarter. For the quarter, these prices increased 18 cents a gallon on average since our fourth quarter.
So we have been in a rapidly increasing wholesale product price environment during most of the first quarter. Typically, when we are in those types of environments, our margins have been negatively impacted for the short term until our customer prices can be increased. Likewise when the wholesale propane prices decline, our margins have increased in the short term because our customer prices have tended to change less rapidly than the wholesale price. As a result, the rising wholesale cost environment this quarter put pressure on our margins.
Our adjusted EBITDA for the quarter was $10 million. This was down from $12.3 million for the same quarter last year. The contribution from the Blue Rhino acquisition this quarter was offset by the …