Ferrellgas Partners L P: Form 10-Q for the period ended Apr 30, 2026

References and Defined Terms

In this Item 2 of this Quarterly Report on Form 10-Q, unless the context indicates otherwise:

• “us,” “we,” “our,” “ours,” “consolidated,” the “Company” or “Ferrellgas” are references to Ferrellgas Partners, L.P. together with its consolidated subsidiaries, including Ferrellgas, L.P., Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp., except when used in connection with “Class A Units” or “Class B Units,” in which case these terms refer to Ferrellgas Partners, L.P. without its consolidated subsidiaries;
• “Ferrellgas Partners” refers to Ferrellgas Partners, L.P. itself, with its consolidated subsidiaries;
• the “operating partnership” refers to Ferrellgas, L.P., together (except where the context indicates otherwise) with its consolidated subsidiaries, including Ferrellgas Finance Corp.;
• our “general partner” refers to Ferrellgas, Inc.;
• “Ferrell Companies” refers to Ferrell Companies, Inc., the sole shareholder of our general partner;
• “Board of Directors” or “Board” refers to the board of directors of our general partner;
• “GAAP” refers to accounting principles generally accepted in the United States;
• “retail sales” refers to Propane and other gas liquid sales: Retail - Sales to End Users, or the volume of propane sold primarily to our residential, industrial/commercial and agricultural customers;
• “wholesale sales” refers to Propane and other gas liquid sales: Wholesale - Sales to Resellers, or the volume of propane sold primarily to our portable tank exchange customers and bulk propane sold to wholesale customers;
• “other gas sales” refers to Propane and other gas liquid sales: Other Gas Sales, or the volume of bulk propane sold to other third-party propane distributors or marketers and the volume of refined fuel sold;
• “propane sales volume” refers to the volume of propane sold to our retail sales and wholesale sales customers;
• “Class A Units” refers to the Class A Units of Ferrellgas Partners, one of which was issued for every twenty of Ferrellgas Partners’ then-outstanding common units in a 1-for-20 reverse unit split effected on March 30, 2021;
• “Class B Units” refers to the Class B Units of Ferrellgas Partners, which were converted to Class A Units on March 16, 2026;
• “Preferred Units” refers to the Senior Preferred Units of the operating partnership;
• “Unitholders” or “unitholders” refers to holders of Class A Units, holders of Class B Units or holders of Preferred Units, as indicated or as the context requires for each such reference; and
• references to any fiscal year are to the fiscal year ended or ending on July 31 of the applicable year.

Also, the following terms are defined in this Item 2 of this Quarterly Report on Form 10-Q:

• Amended Ferrellgas Partners LPA
• Amended OpCo LPA
• Credit Agreement
• Credit Facility
• Ferrellgas Partners Notes
• OpCo LPA Amendment

Cautionary Note Regarding Forward-looking Statements

Statements included in this report include forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. These statements often use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “position,” “continue,” “estimate,” “expect,” “may,” “will,” or the negative of those terms or other variations of them or comparable terminology. These statements often discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future and are based upon the beliefs and assumptions of our management and on the information currently available to them. In particular, statements, express or implied, concerning our future operating results or financial position or our ability to generate sales, income or cash flow are forward-looking statements.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on any forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially from those expressed in or implied by these forward-looking statements. Many of the factors that will affect our future results are beyond our ability to control or predict. Some of the risk factors that may affect our business, financial condition or results of operations include:

• the effect of weather conditions on the demand for propane;
• the prices of wholesale propane, motor fuel and crude oil;
• disruptions to the supply of propane;
• competition from other industry participants and other energy sources;
• energy efficiency and technology advances;
• significant delays in the collection of accounts or notes receivable;
• customer, counterparty, supplier or vendor defaults;
• changes in demand for, and production of, hydrocarbon products;
• increased trucking and rail regulations;
• inherent operating and litigation risks in gathering, transporting, handling and storing propane;
• our inability to complete acquisitions or to successfully integrate acquired operations;
• costs of complying with, or liabilities imposed under, environmental, health and safety laws;
• the impact of pending and future legal proceedings;
• the interruption, disruption, failure or malfunction of our information technology systems including due to cyber-attack;
• the impact of changes in tax law that could adversely affect the tax treatment of Ferrellgas Partners for federal income tax purposes;
• economic and political instability, particularly in areas of the world tied to the energy industry, including the ongoing conflict between Russia and Ukraine and in the Middle East;
• disruptions in the capital and credit markets, related to the evolving global tariff environment or otherwise; and
• access to available capital to meet our operating and debt-service requirements.

When considering any forward-looking statement, you should also keep in mind the risk factors set forth in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for fiscal 2025 and in any more recent filings with the SEC. Any of these risks could impair our business, financial condition or results of operations. Any such impairment may affect our ability to make distributions to our unitholders or pay interest on the principal of any of our debt securities. In addition, the trading price of our securities could decline as a result of any such impairment.

Except for our ongoing obligations to disclose material information as required by federal securities laws, we undertake no obligation to update any forward-looking statements or risk factors after the date of this Quarterly Report on Form 10-Q.

Overview

Our management’s discussion and analysis of financial condition and results of operations relates to Ferrellgas Partners and the operating partnership.

Ferrellgas Partners is a holding entity that conducts no operations and has two direct subsidiaries, the operating partnership and Ferrellgas Partners Finance Corp. Our activities are primarily conducted through the operating partnership. Ferrellgas Partners and the Preferred Unitholders are the only limited partners of the operating partnership. Ferrellgas, Inc. is the sole general partner of Ferrellgas Partners and the operating partnership and, excluding the economic interests attributable to the Preferred Units, owns an approximate 0.4% general partner economic interest in Ferrellgas Partners and an approximate 1.0% general partner economic interest in the operating partnership, and, therefore, an effective 1.4% general partner economic interest. Excluding the economic interests attributable to the Preferred Units, Ferrellgas Partners owns an approximate 99.0% limited partner interest in the operating partnership. On March 16, 2026, all Class B Units were converted to Class A Units. See Note F “Equity (Deficit)” for more information. For information regarding the economic and other terms of the Preferred Units, see Note E “Preferred units” to our condensed consolidated financial statements included elsewhere herein.

Our general partner performs all management functions for us. The parent company of our general partner, Ferrell Companies, currently beneficially owns approximately 10.0% of our outstanding Class A units. Ferrell Companies is owned 100% by an employee stock ownership trust.

The operating partnership was formed on April 22, 1994, and accounts for substantially all of our consolidated assets, sales and operating earnings.

Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. have nominal assets, do not conduct any operations and have no employees other than officers. Ferrellgas Partners Finance Corp. has served as co-issuer and co-obligor for debt securities of Ferrellgas Partners, while Ferrellgas Finance Corp., a subsidiary of the operating partnership, serves as co-issuer and co-obligor for debt securities of the operating partnership. Accordingly, and due to the reduced disclosure format, a discussion of the results of operations, liquidity and capital resources of Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. is not presented in this section.

The Class A Units of Ferrellgas Partners are traded on the OTC Market under the symbol “FGPR.”

We file annual, quarterly, and current reports and other information with the Securities and Exchange Commission (the “SEC”). You may read and download our SEC filings over the Internet from several commercial document retrieval services as well as at the SEC’s website at www.sec.gov (http://www.sec.gov). Our SEC filings are also available on our website at www.ferrellgas.com (http://www.ferrellgas.com) at no cost as soon as reasonably practicable after our electronic filing or furnishing thereof with the SEC. Please note that any Internet addresses provided in this Quarterly Report on Form 10-Q are for informational purposes only and are not intended to be hyperlinks. Accordingly, no information found and/or provided at such Internet addresses is intended or deemed to be incorporated by reference herein.

The following is a discussion of our historical financial condition and results of operations and should be read in conjunction with our audited historical consolidated financial statements and accompanying notes thereto included in our Annual Report on Form 10-K for fiscal 2025 and in our unaudited historical condensed consolidated financial statements and accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

The discussions set forth in the “Results of Operations” and “Liquidity and Capital Resources” sections generally refer to Ferrellgas Partners and its consolidated subsidiaries.

How We Evaluate Our Operations

We evaluate our overall business performance based primarily on a metric we refer to as “Adjusted EBITDA,” which is not defined by GAAP and should not be considered an alternative to earnings measures defined by GAAP. We do not utilize depreciation, depletion and amortization expense in our key measures because we focus our performance management on cash flow generation and our revenue generating assets have long useful lives. For the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net earnings attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, see the subheading “Non-GAAP Financial Measures” below.

Propane operations and related equipment sales

Based on our propane sales volumes in fiscal 2025, we believe that we are the second largest retail marketer of propane in the United States and a leading national provider of propane by portable tank exchange. We serve residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia and Puerto Rico. Our operations primarily include the retail distribution and sale of propane and related equipment and supplies.

We use information on temperatures to understand how our results of operations are affected by temperatures that are warmer or colder than normal. Normal temperatures computed by us are the average of the last 10 years of information published by AccuWeather. Based on this information we calculate a ratio of actual heating degree days to normal heating degree days. Heating degree days are a general indicator of weather impacting propane usage.

Weather conditions have a significant impact on demand for propane for heating purposes primarily during the months of November through March (the “winter heating season”). Accordingly, the volume of propane used by our customers for this purpose is directly affected by the severity of the winter weather in the regions we serve and can vary substantially from year to year. In any given region, sustained warmer-than-normal temperatures will tend to result in reduced propane usage, while sustained colder-than-normal temperatures will tend to result in greater usage. Although there is a strong correlation between weather and customer usage, general economic conditions in the United States and the wholesale price of propane can have a significant impact on this correlation. Additionally, there is a natural time lag between the onset of cold weather and increased sales to customers. If the United States were to experience a cooling trend, we could expect nationwide demand for propane to increase which could lead to greater sales, income and cash flow. Conversely, if the United States were to experience a continued warming trend, we could expect nationwide demand for propane for heating purposes to decrease which could lead to a reduction in our sales, income and cash flow as well as impact our ability to maintain compliance with our debt covenants.

We employ risk management activities that attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts. We enter into propane sales commitments with a portion of our customers that provide for a contracted price agreement for a specified period of time. These commitments can expose us to product price risk if not immediately hedged with an offsetting propane purchase commitment.

Our open financial derivative propane purchase commitments are designated as hedges primarily for fiscal 2026 and 2027 sales commitments and, as of April 30, 2026, we have experienced net mark-to-market gains of approximately $8.9 million. Because these financial derivative purchase commitments qualify for hedge accounting treatment, the resulting asset, liability and related mark-to-market gains or losses are recorded on the condensed consolidated balance sheets as “Prepaid expenses and other current assets,” “Other assets, net,” “Other current liabilities,” “Other liabilities” and “Accumulated other comprehensive income,” respectively, until settled. Upon settlement, realized gains or losses on these contracts will be reclassified to “Cost of sales-propane and other gas liquid sales” in the condensed consolidated statements of operations as the underlying inventory is sold. These financial derivative purchase commitment net losses are expected to be offset by increased margins on propane sales commitments that qualify for the normal purchase normal sale exception. At April 30, 2026, we estimate 88% of currently open financial derivative purchase commitments, the related propane sales commitments and the resulting gross margin will be realized into earnings during the next twelve months.

Summary Discussion of Results of Operations:

Executive Overview

For the three months ended April 30, 2026 and 2025

During the three months ended April 30, 2026 and 2025, we recognized net earnings attributable to Ferrellgas Partners, L.P. of $28.0 million and $59.1 million, respectively. The $31.1 million decrease was primarily due to an increase of $29.0 million in “Operating expense – personnel, vehicle, plant and other,” which was partially offset by a $2.2 million increase in “Gross margin.”

Distributable cash flow attributable to equity investors decreased to $67.0 million for the three months ended April 30, 2026 compared to $85.6 million for the prior year period, primarily due to a decrease of $12.7 million in Adjusted EBITDA and an increase of $6.5 million in “Net cash interest expense.” The increase in “Net cash Interest expense” consists of a $4.2 million increase in “Interest expense” on our unsecured notes related to the October 2025 refinancing, which was partially offset by a $2.2 million change in amortization costs related to our credit facility.

We had a distributable cash flow shortage of $56.7 million during the three months ended April 30, 2026, compared to a distributable cash flow excess of $68.3 million during the three months ended April 30, 2025. This $125.0 million change was primarily due to the $107.0 million distribution to Class B Unitholders made in March 2026, and the $18.6 million decrease in distributable cash flow attributable to equity investors noted above.

For the nine months ended April 30, 2026 and 2025

During the nine months ended April 30, 2026 and 2025, we recognized net earnings attributable to Ferrellgas Partners, L.P. of $103.3 million and $11.3 million, respectively. The $92.0 million increase was primarily due to a $125.0 million legal accrual recorded in the prior year, which was partially offset by an increase of $30.2 million in “Operating expense – personnel, vehicle, plant and other, and a $10.1 million increase in “Interest expense.”

Distributable cash flow attributable to equity investors was $192.6 million and $214.2 million for the nine months ended April 30, 2026 and 2025, respectively. The $21.6 million decrease was primarily due to a $15.5 million increase in “Net cash interest expense,” and a decrease of $10.1 million in Adjusted EBITDA, which was partially offset by a decrease of $4.6 million in “Maintenance capital expenditures”. The increase in “Net cash Interest expense” primarily relates to an increase of $10.1 million in “Interest expense” and a $3.0 million “Loss on extinguishment of debt” which were both related to the October 2025 refinancing transactions. The decrease in “Maintenance capital expenditures” primarily relates to failed sale-leaseback arrangements in the prior year period.

We had a distributable cash flow excess of $34.1 million and $161.9 million during the nine months ended April 30, 2026 and 2025, respectively. This $127.8 million decrease was primarily due to the $107.0 million distribution to Class B Unitholders made in March 2026, and the $21.6 million decrease in distributable cash flow attributable to equity investors noted above.

Consolidated Results of Operations

(amounts in thousands)

49

Non-GAAP Financial Measures

In this Quarterly Report we present the following Non-GAAP financial measures: Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to Class A and B Unitholders, and Distributable cash flow (shortage) excess.

Adjusted EBITDA. Adjusted EBITDA for Ferrellgas Partners is calculated as net earnings attributable to Ferrellgas Partners, L.P., plus the sum of the following: income tax expense, interest expense, depreciation and amortization expense, non-cash employee stock ownership plan compensation charge, loss on extinguishment of debt, loss on asset sales and disposals, other income, net, severance, non-recurring employee benefit policy adjustment, legal fees and settlements related to non-core businesses, legal fees and settlements related to core businesses, acquisition and related costs, Class B Unit conversion costs, compliance costs, business transformation costs, and net earnings (loss) attributable to noncontrolling interest. Management believes the presentation of this measure is relevant and useful because it allows investors to view the partnership’s performance in a manner similar to the method management uses, adjusted for items management believes make it easier to compare its results with other companies that have different financing and capital structures. Adjusted EBITDA, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of Adjusted EBITDA that will not occur on a continuing basis may have associated cash payments. This method of calculating Adjusted EBITDA should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Attributable to Equity Investors. Distributable cash flow attributable to equity investors is calculated as Adjusted EBITDA minus net cash interest expense, maintenance capital expenditures and cash paid for income taxes, plus proceeds from certain asset sales. Management considers distributable cash flow attributable to equity investors a meaningful measure of Ferrellgas’ ability to declare and pay quarterly distributions to equity investors, including holders of the operating partnership’s Preferred Units. Distributable cash flow attributable to equity investors, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow attributable to equity investors that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to equity investors should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow Attributable to Class A and B Unitholders. Distributable cash flow attributable to Class A and B Unitholders is calculated as Distributable cash flow attributable to equity investors minus distributions accrued or paid to Preferred Unitholders and distributable cash flow attributable to general partner and noncontrolling interest. Management considers Distributable cash flow attributable to Class A and B Unitholders a meaningful measure of the partnership’s ability to declare and pay quarterly distributions to Class A and B Unitholders. Distributable cash flow attributable to Class A and B Unitholders, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow attributable to Class A and B Unitholders that will not occur on a continuing basis may have associated cash payments. Distributable cash flow attributable to Class A and B Unitholders should be viewed in conjunction with measurements that are computed in accordance with GAAP.

Distributable Cash Flow (Shortage) Excess. Distributable cash flow (shortage) excess is calculated as Distributable cash flow attributable to Class A and B Unitholders minus Distributions paid to Class A and B Unitholders. Distributable cash flow excess, if any, is retained to establish reserves, to reduce debt, to fund capital expenditures and for other partnership purposes, and any shortage is funded from previously established reserves, cash on hand or borrowings under our Credit Facility. Management considers Distributable cash flow (shortage) excess a meaningful measure of the partnership’s ability to effectuate those purposes. Distributable cash flow (shortage) excess, as management defines it, may not be comparable to similarly titled measurements used by other companies. Items added into our calculation of distributable cash flow (shortage) excess that will not occur on a continuing basis may have associated cash payments. Distributable cash flow (shortage) excess should be viewed in conjunction with measurements that are computed in accordance with GAAP.

The following table reconciles Adjusted EBITDA, Distributable cash flow attributable to equity investors, Distributable cash flow attributable to Class A and B Unitholders and Distributable cash flow (shortage) excess to Net earnings attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, for the three and nine months ended April 30, 2026 and 2025:

(amounts in thousands)

(1) Costs associated with corporate restructuring included in “Operating, general and administrative expense.”

(2) Non-recurring due diligence related to potential acquisition activities, restructuring costs and other adjustments.

(3) Costs related to conversion of Class B Units to Class A Units in March 2026 included in “Operating, general and administrative expense.”

(4) Non-recurring compliance costs included in “Operating, general and administrative expense.”

(5) Non-recurring costs included in “Operating, general and administrative expense” related to business transformation initiatives.

(6) Net cash interest expense is the sum of interest expense less non-cash interest expense and other income, net.

(7) Maintenance capital expenditures include capitalized expenditures for betterment and replacement of property, plant and equipment, and may from time to time include the purchase of assets that are typically leased.

(8) The Company did not pay any distributions to Class A Unitholders during any of the periods in fiscal 2026 or 2025. The Company paid a cash distribution on the Class B Units of $82.32 per Class B Unit, or $107.0 million in the aggregate in March 2026.

Operating Results for the three months ended April 30, 2026 and 2025

The following table summarizes propane sales volumes and Adjusted EBITDA results for the periods indicated:

NM – Not meaningful

(1) Beginning in the first quarter of fiscal 2026, we refined our methodology for determining active customers to better align with business initiatives and internal reporting. The updated approach identifies customers based on invoiced billing activity from all revenue streams including rent, services, fees, and appliance sales, in addition to propane delivery. It also captures unique delivery locations, rather than billing accounts. Management believes this provides a more meaningful measure of customer activity. Prior period amounts have been updated to reflect this change. The revision did not affect any financial metrics.

(2) Gross margin for “Other Gas Sales” is allocated to Gross margin “Retail - Sales to End Users” and “Wholesale - Sales to Resellers” based on the volumes in each respective category.

(3) “Other” primarily includes various customer fee income and to a lesser extent appliance and material sales.

(4) Gross margin from “Propane and other gas liquids sales” represents “Revenues - Propane and other gas liquids sales” less “Cost of sales - Propane and other gas liquids sales” and does not include depreciation and amortization.

(5) “Operating, general and administrative expense” above includes both the “Operating expense – personnel, vehicle, plant and other” and the “General and administrative expense” captions in the condensed consolidated statement of operations.

Persistent warmth continues to dominate the western half of the country. Average temperatures (measured by heating degree days) were 25% warmer than normal (based on AccuWeather’s ten-year average) and 26% warmer than the prior year quarter in the western half of the country. Temperatures in other parts of the country, although not as extreme as the west, also had warmer temperatures. Overall, average temperatures for the three months ended April 30, 2026, were 12% warmer than normal and 9% warmer than the prior year quarter. Propane sales volume during the three months ended April 30, 2026 decreased 2.8 million gallons, or 1%, compared to the prior year period. The Company continues to proactively grow business that is not temperature-sensitive, which partially alleviates the impact of weather on its propane sales.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the three months ended April 30, 2026 averaged 15.7% less than the prior year period, while at the Conway, Kansas major supply point prices averaged 15.0% less than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $0.75 and $0.89 per gallon during the three months ended April 30, 2026 and 2025, respectively, while the wholesale market price at Conway, Kansas averaged $0.68 and $0.80 per gallon during the three months ended April 30, 2026 and 2025, respectively.

Revenues

Retail sales decreased $30.2 million, or 8%, compared to the prior year period, largely driven by the decrease in wholesale propane prices noted above. Retail gallons sold decreased 4.4 million gallons, or 3%, compared to the prior year period. The warmer weather in the west drove a 6.1 million decrease in gallons sold, which was partially offset by a 1.7 million increase in gallons sold in the rest of the country.

Wholesale sales decreased $1.6 million, or 1%, while gallons sold increased 1.6 million, or 3%, compared to the prior year quarter. A $4.7 million decrease in reseller and other wholesale sales was partially offset by a $3.1 million increase in tank exchange sales as selling locations increased to over 65,000 locations nationwide. Growth was concentrated in the channels where consumer demand is strongest. Selling locations, gallons, and revenue collectively reflect growth, demonstrating the durability of our wholesale distribution model.

Other gas sales increased $3.8 million compared to the prior year period primarily due to an increase in sales volume.

Other revenues decreased $8.3 million, or 30%, compared to the prior year period. The decrease relates to the presentation of certain transportation costs from a reduction of revenue to cost of product sold made in conjunction with the implementation of new CTRM software. This change does not impact gross profit, operating income or cash flows. We also have a decrease of $0.9 million in appliance sales, partially offset by a $0.7 million increase in miscellaneous revenue.

Gross margin - Propane and other gas liquids sales

Gross margin increased $9.6 million, or 4%, due to an increase of $10.0 million in retail gross margin partially offset by a decrease of $0.4 million, or 1%, in wholesale gross margin. The overall increase was driven by a $37.6 million decrease in cost of product sold, partially offset by a $28.0 million decrease in revenue.

The $10.0 million, or 5%, increase in retail gross margin was primarily driven by an increase of $21.1 million, or 18%, related to residential customers, which was partially offset by a $7.5 million decrease related to industrial commercial customers.

The $0.4 million decrease in wholesale gross margin was driven by a $1.3 million decrease in other wholesale sales, which was partially offset by a $0.9 million increase related to our tank exchange and reseller business.

Margin per gallon for the quarter increased by $0.06 or 5%, compared to the prior year period as we continue to benefit from operational efficiencies as we reduced unproductive deliveries and skipped stops.

Gross margin - other

Gross margin decreased $7.4 million, or 31%, compared to the prior year period, primarily due to the decrease in revenue noted above.

Operating income

We had operating income of $60.1 million and $87.3 million during the three months ended April 30, 2026 and 2025, respectively. The $27.2 million decrease was primarily due to increases of $29.0 million in “Operating expense – personnel, vehicle, plant and other” and $3.2 million in “Depreciation and amortization expense,” partially offset by the $2.2 million increase in gross margin noted above.

The $29.0 million increase in “Operating expense – personnel, vehicle, plant and other” relates to increases of $24.7 million in plant and other, $3.6 million in vehicle expense and $0.7 million in personnel expense. The resolution of legacy casualty claims drove an increase of $24.8 million in legal costs in plant and other. The Company does not expect most of these settlement costs to recur in future periods. The increase in vehicle expense was primarily due to increases of $2.2 million in fuel costs and $1.2 million for repairs and maintenance.

The $3.2 million increase in “Depreciation and amortization expense” relates to increases of $1.9 million in amortization expense, primarily related to the expansion of vending machine leases for our tank exchange business, and $1.3 million in depreciation expense.

Adjusted EBITDA

Adjusted EBITDA decreased $12.7 million, or 11%, to $102.1 million, compared to $114.8 million in the third quarter of the prior year. After adjusting for $12.3 million in non-recurring costs primarily related to settlements, operating expenses increased $16.7 million compared to the prior year period. This increase was partially offset by the $2.2 million increase in gross profit noted above.

Operating Results for the nine months ended April 30, 2026 and 2025

The following table summarizes propane sales volumes and Adjusted EBITDA results for the periods indicated:

NM – Not meaningful

(1) Beginning in the first quarter of fiscal 2026, we refined our methodology for determining active customers to better align with business initiatives and internal reporting. The updated approach identifies customers based on invoiced billing activity from all revenue streams including rent, services, fees, and appliance sales, in addition to propane delivery. It also captures unique delivery locations, rather than billing accounts. Management believes this provides a more meaningful measure of customer activity. Prior period amounts have been updated to reflect this change. The revision did not affect any financial metrics.

(2) Gross margin for “Other Gas Sales” is allocated to Gross margin “Retail - Sales to End Users” and “Wholesale - Sales to Resellers” based on the volumes in each respective category.

(3) “Other” primarily includes various customer fee income and to a lesser extent appliance and material sales.

(4) Gross margin from “Propane and other gas liquids sales” represents “Revenues - Propane and other gas liquids sales” less “Cost of sales - Propane and other gas liquids sales” and does not include depreciation and amortization.

(5) “Operating, general and administrative expense” above includes both the “Operating expense – personnel, vehicle, plant and other” and the “General and administrative expense” captions in the condensed consolidated statement of operations.

Propane sales volumes during the nine months ended April 30, 2026 decreased 23.6 million gallons, or 4%, compared to the prior year period. Above-normal temperatures experienced in the second quarter 2026 continued to be a factor in the third quarter 2026. Average temperatures (measured by heating degree days) were 18% warmer than normal (based on AccuWeather’s ten-year average) and 23% warmer than fiscal 2025 in the western half of the country. Other areas of the country, such as our Northeast and North Central regions, had temperatures that were 13% cooler than the prior year period, which were partially offset by temperatures that were 4% warmer than the prior year period in the midwest and southeast regions.

Our wholesale sales price per gallon partially correlates to the change in the wholesale market price of propane. The wholesale market price at major supply points in Mt. Belvieu, Texas during the nine months ended April 30, 2026 averaged 12.5% less than the prior year period, while at the Conway, Kansas major supply point prices averaged 16.9% less than the prior year period. The wholesale market price at Mt. Belvieu, Texas averaged $0.70 and $0.80 per gallon during the nine months ended April 30, 2026 and 2025, respectively, while the wholesale market price at Conway, Kansas averaged $0.64 and $0.77 per gallon during the nine months ended April 30, 2026 and 2025, respectively.

Revenues

Retail sales decreased $53.0 million, or 5%, compared to the prior year period largely driven by the decrease in wholesale propane prices noted above. Retail gallons sold decreased 9.7 million gallons, or 2%, compared to the prior year period. The third fiscal quarter 2026 saw a continuation of above-average temperatures in the west, which drove a 13.7 million decrease in gallons sold, which was partially offset by a 4.0 million increase in gallons sold in the rest of the country. While retail customers decreased 1% compared to the prior year period contributing to the decrease in sales, the Company’s continued focus on service quality and customer experience resulted in improved retention over the prior year period. Regained accounts increased meaningfully compared to the prior year period, a strong indicator of improving win-back execution, while new location activity showed momentum in the north central and midwest regions.

Wholesale sales decreased $11.7 million, or 3%, compared to the prior year period, largely driven by the decrease in wholesale propane prices noted above. Wholesale gallons sold decreased 13.9 million gallons, or 8%, compared to the prior year period. Results were impacted by a $3.5 million decrease in tank exchange sales, partly attributable to the fiscal 2025 demand driven by Hurricane Helene and Hurricane Milton, which was partially offset by a 2% increase in tank exchange selling locations. So far, fiscal 2026 has not had any significant weather-related events.

Other gas sales decreased $6.1 million, or 31%, compared to the prior year period primarily due to a decrease in sales volume.

Other revenues decreased $2.7 million, or 3%, compared to the prior year period. The decrease was primarily due to a $1.7 million decrease in appliance and part sales and a $1.1 million decrease in miscellaneous revenue.

Gross margin - Propane and other gas liquids sales

Gross margin increased $6.6 million, or 1%, due to an increase of $9.0 million, or 2%, in retail gross margin, which was partially offset by a decrease of $2.4 million, or 1%, in wholesale gross margin. The overall increase was driven by a $77.4 million decrease in cost of product sold, partially offset by a $70.8 million decrease in revenue.

Retail gross margin increased $9.0 million and was primarily driven by an increase of $33.9 million, or 11%, related to residential customers, which was partially offset by a $15.7 million decrease related to industrial commercial customers and hedging activity.

The $2.4 million decrease in wholesale gross margin was primarily related to our tank exchange business.

Margin per gallon for the quarter increased by $0.06, or 5%, compared to the prior year period due to the factors noted above.

Gross margin - other

Gross margin decreased $1.5 million, or 2%, compared to the prior year period, primarily due to the decrease in revenues noted above.

Operating income

We had operating income of $198.1 million and $92.0 million during the nine months ended April 30, 2026 and 2025, respectively. The $106.1 million increase was primarily due to the $125.0 million legal settlement related to fiscal 2025 in “General and administrative expense.” The remaining decrease of $18.9 million relates to an increase of $30.2 million in “Operating expense – personnel, vehicle, plant and other,” partially offset by an additional $7.7 million decrease in “General and administrative expense” and the $5.1 million increase in gross margin described above.

The $30.2 million increase in “Operating expense – personnel, vehicle, plant and other” is comprised of increases of $26.8 million in plant and other and $5.0 million in vehicle expense, which were partially offset by a decrease of $1.6 million in personnel expense.

The $26.8 million increase in plant and other was primarily due to the resolution of legacy casualty claims, which drove an increase of $25.1 million in general liability insurance and legal costs. The Company does not expect most of these settlement costs to recur in future periods.

The increase in vehicle expense was primarily due to increases of $2.1 million for repairs and maintenance and $2.0 million in fuel costs.

The additional decrease of $7.7 million in “General and administrative expense” primarily relates to decreases in information technology costs, due to the completion of several business transformation projects in fiscal 2025, and $3.1 million related to other accruals.

Adjusted EBITDA

Adjusted EBITDA decreased $10.1 million primarily due to an increase of $22.4 million in “Operating expense – personnel, vehicle, plant and other,” after adjusting for $7.8 million in non-recurring costs primarily related to settlements, which was partially offset by a $5.1 million increase in gross margin, a $3.8 million decrease in operating lease expense, and a $3.5 million decrease in “General and administrative expense,” after adjusting for a $129.3 million decrease in EBITDA adjustments, primarily related to the $125.0 million legal settlement noted above that occurred in fiscal 2025.

Liquidity and Capital Resources

General

Our primary sources of liquidity and capital resources are cash flows from operating activities, our Credit Facility and funds received from sales of debt and equity securities. The operating partnership, the general partner and certain of the operating partnership’s subsidiaries as guarantors are parties to a credit agreement dated March 30, 2021, as amended on October 27, 2025 (the “Credit Agreement”), with JPMorgan Chase Bank, N.A. as administrative agent and collateral agent, and the lenders and issuing lenders party thereto from time to time, which provides for a revolving credit facility (the “Credit Facility”), with a maturity date of October 27, 2028, in an aggregate principal amount of up to $350.0 million. An accordion feature allows for increases by up to $50.0 million in the aggregate subject to customary conditions. The Credit Agreement includes a sublimit not to exceed $300.0 million for the issuance of letters of credit. For additional discussion, see Note D “Debt” in the notes to our condensed consolidated financial statements.

As of April 30, 2026, our total liquidity was $219.7 million, which was comprised of $73.4 million in unrestricted cash and $146.3 million of availability under our Credit Facility. These sources of liquidity and short-term capital resources are intended to fund our working capital requirements, acquisitions and capital expenditures. As of April 30, 2026, letters of credit outstanding totaled $116.2 million. Our access to long-term capital resources, to the extent needed to refinance debt or for other purposes, may be affected by our ability to access the capital markets, covenants in our debt agreements and other financial obligations, unforeseen demands on cash, or other events beyond our control.

Our working capital requirements are subject to, among other things, the price of propane, delays in the collection of receivables, volatility in energy commodity prices, liquidity imposed by insurance providers, downgrades in our credit ratings, decreased trade credit, significant acquisitions, the weather, customer retention and purchasing patterns and other changes in the demand for propane. Relatively colder weather or higher propane prices during the winter heating season are factors that could significantly increase our working capital requirements.

In October 2025, the operating partnership’s corporate rating was upgraded from B3 to B2 by Moody’s Investors Service (“Moody’s”) and our senior unsecured notes were upgraded from a Caa1 to a B3 rating by Moody’s. In October 2025, the operating partnership’s senior unsecured notes rating was upgraded from a CCC to a B rating by S&P Global Ratings.

Our ability to satisfy our obligations is dependent upon our future performance, which will be subject to prevailing weather, economic, financial and business conditions and other factors, many of which are beyond our control. Due to the seasonality of the retail propane distribution business, a significant portion of our propane operations and related products cash flows from operations is generated during the winter heating season. Our net cash provided by operating activities primarily reflects earnings from our business activities adjusted for depreciation and amortization and changes in our working capital accounts. Historically, we generate significantly lower net cash from operating activities in our first and fourth fiscal quarters as compared to the second and third fiscal quarters due to the seasonality of our propane operations and related equipment sales operations.

During periods of high volatility, our risk management activities may expose us to the risk of counterparty margin calls in amounts greater than we have the capacity to fund. Likewise, our counterparties may not be able to fulfill their margin calls from us or may default on the settlement of positions with us.

We believe that the liquidity available from cash flows from operating activities, unrestricted cash and the Credit Facility will be sufficient to meet our capital expenditure, working capital and letter of credit requirements for the foreseeable future.

Distributable Cash Flow

Distributable cash flow attributable to equity investors is reconciled to net earnings attributable to Ferrellgas Partners, L.P., the most directly comparable GAAP measure, in this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations under the subheading “Non-GAAP Financial Measures” above. A comparison of distributable cash flow attributable to equity investors to cash distributions accrued or paid to equity investors for the twelve months ended April 30, 2026 to the twelve months ended January 31, 2026 is as follows (in thousands):

(1) DCF ratio is calculated as Distributable cash flow attributable to equity investors divided by Cash distributions accrued or paid to equity investors.

For the twelve months ended April 30, 2026, distributable cash flow attributable to equity investors decreased $18.6 million compared to the twelve months ended January 31, 2026 primarily due to a decrease of $12.7 million in Adjusted EBITDA, partially offset by decreases of $6.5 million in “Net cash interest expense” and $0.9 million in “Maintenance capital expenditures.” As of April 30, 2026, the accrued quarterly distribution to Preferred Unitholders was $17.9 million, net of tax. We paid $16.7 million of this distribution to holders, net of tax, on May 15, 2026. The remaining $1.2 million represents Additional Amounts payable to certain holders of Preferred Units, pursuant to the side letters outlined in the OpCo LPA Amendment.

We did not pay any cash distributions to our Class A Unitholders or the general partner during the nine months ended April 30, 2026 and 2025, respectively. In March 2026, we made a final distribution to our Class B Unitholders of approximately $107.0 million. We have made aggregate cash distributions of approximately $357.0 million to our Class B Unitholders since inception of our Class B Units. We subsequently converted all Class B Units to Class A Units on March 16, 2026. See Note F “Equity (Deficit)” in the notes to our condensed consolidated financial statements for more information. Cash reserves, which we utilize to meet future anticipated expenditures, were $122.9 million and $141.3 million for the twelve months ended April 30, 2026 and January 31, 2026, respectively.

Operating Activities

Ferrellgas Partners

Net cash provided by operating activities was $150.7 million and $116.6 million for the nine months ended April 30, 2026 and 2025, respectively. The $34.1 million increase in cash provided by operating activities was primarily due to a $98.1 million increase in operating cash flow and a $28.8 million decrease in requirements for accrued interest, which was offset by a $84.5 million decrease in requirements for other current liabilities, and a $7.4 million outflow associated with other assets and liabilities.

The $98.8 million increase in operating cash flow was driven by a decrease of $132.7 million in “General and administrative expense,” primarily related to a $125.0 million prior year settlement agreement, which was partially offset by an increase of $30.2 million in “Operating expense – personnel, vehicle, plant and other,” primarily related to the resolution of legacy general liability claims. The $84.5 million decrease in net cash requirements for other current liabilities was primarily driven by $75.0 million in litigation settlement payments.

The operating partnership

Net cash provided by operating activities was $150.8 million and $116.7 million for the nine months ended April 30, 2026 and 2025, respectively. The $34.1 million increase in cash provided by operating activities was primarily due to a $99.9 million increase in operating cash flow and a $28.8 million decrease in requirements for accrued interest, which was offset by a $85.1 million decrease in requirements for other current liabilities, and an $8.4 million outflow associated with other assets and liabilities.

The $99.9 million increase in operating cash flow was driven by a decrease of $134.7 million in “General and administrative expense,” primarily related to a $125.0 million prior year settlement agreement, which was partially offset by an increase of $30.2 million in “Operating expense – personnel, vehicle, plant and other,” primarily related to the resolution of legacy general liability claims. The $85.1 million decrease in net cash requirements for other current liabilities was primarily driven by $75.0 million in litigation settlement payments.

Investing Activities

Ferrellgas Partners

Capital Requirements

Our business requires continual investments to upgrade or enhance existing operations and to ensure compliance with safety and environmental regulations. Capital expenditures for our business consist primarily of:

• Maintenance capital expenditures - These capital expenditures include expenditures for betterment and replacement of property, plant and equipment, and may from time to time include the purchase of assets that are typically leased, rather than to generate incremental distributable cash flow. Examples of maintenance capital expenditures include a routine replacement of a worn-out asset or replacement of major vehicle components; and
• Growth capital expenditures - These expenditures are undertaken primarily to generate incremental distributable cash flow. Examples include expenditures for purchases of both bulk and portable propane tanks and other equipment to facilitate expansion of our customer base and operating capacity.

Net cash used in investing activities was $70.4 million and $69.8 million for the nine months ended April 30, 2026 and 2025, respectively. The $0.6 million increase in net cash used in investing activities was primarily due to a decrease of $3.8 million in “Business acquisitions, net of cash acquired.” We had no acquisitions during the nine months ended April 30, 2026 and one acquisition during the nine months ended April 30, 2025. This decrease was partially offset by a $3.6 million increase in “Capital expenditures,” primarily driven by assets related to failed sale-leaseback arrangements.

Due to the mature nature of our operations, we do not anticipate significant fluctuations in maintenance capital expenditures, with the exception of future decisions regarding lease versus buy financing options. However, future fluctuations in growth capital expenditures could occur due to the opportunistic nature of these projects.

The operating partnership

The investing activities discussed above also apply to the operating partnership.

Financing Activities

Ferrellgas Partners

Net cash used in financing activities was $103.8 million and $61.6 million for the nine months ended April 30, 2026 and 2025, respectively. The $42.2 million increase in cash used in financing activities was primarily due to a $107.0 million distribution to the Company’s Class B Unitholders. The Class B Units were subsequently converted into Class A Units. See above for more information. In October 2025, the partnership issued $650.0 million aggregate principal amount of senior notes due 2031. The net proceeds received of $637.5 million, together with cash on hand, was used to redeem the $650.0 million senior notes due 2026, which is reflected in the proceeds from issuance of long-term debt and payments for settlement and early extinguishment of liabilities. Additionally, we had an increase of $87.5 million in short-term borrowings. The short-term borrowings were drawn for cash management purposes following expenses related to refinancing and litigation settlements. The overall increase was partially offset by an increase of $11.8 million in financing costs, driven by the October 2025 refinancing transaction, and $5.7 million in higher cash payments for the principal portion of lease liabilities.

Letters of credit outstanding at April 30, 2026 and July 31, 2025 totaled $116.2 million and $121.9 million, respectively. The letters of credit were used to secure insurance arrangements, product purchases and commodity hedges. As of April 30, 2026, we had available borrowing capacity under our Credit Facility of $146.3 million. Propane assets subject to lien under the Credit Facility were $400.3 million as of April 30, 2026.

The operating partnership

The financing activities discussed above also apply to the operating partnership.

Distributions

Partnership distributions

The Sixth Amended and Restated Agreement of Limited Partnership of Ferrellgas Partners, L.P. (the “Amended Ferrellgas Partners LPA”) requires Ferrellgas Partners to make quarterly cash distributions of all of its “available cash”. Available cash is defined in the Amended Ferrellgas Partners LPA as, generally, the sum of Ferrellgas Partners’ cash receipts less consolidated cash disbursements and net changes in reserves established by our general partner for future requirements. In general, the amount of Ferrellgas Partners’ available cash depends primarily on whether and the extent to which Ferrellgas Partners receives cash distributions from the operating partnership, as such distributions generally would be Ferrellgas Partners’ only significant cash receipts.

The Fifth Amended and Restated Agreement of Limited Partnership of Ferrellgas, L.P. (the “Amended OpCo LPA”), which amended and restated in its entirety the Fourth Amended and Restated Agreement of Limited Partnership of Ferrellgas L.P., and a First Amendment to the Amended OpCo LPA (the “OpCo LPA Amendment”), sets forth the preferences, rights, privileges and other terms of the Preferred Units.

Pursuant to the Amended Ferrellgas Partners LPA, while any Class B Units remained outstanding, any distributions by Ferrellgas Partners to its partners were to be made such that the ratio of (i) the amount of distributions made to holders of Class B Units to (ii) the amount of distributions made to holders of Class A Units and the general partner was not less than 6:1. All Class B Units were converted into Class A Units on March 16, 2026. For additional information, see Note F “Equity (Deficit)” in the notes to our condensed consolidated financial statements.

Ferrellgas Partners did not declare or pay any distributions to its Class A Unitholders or the general partner during the nine months ended April 30, 2026 and 2025. On March 16, 2026, Ferrellgas Partners made a cash distribution in the aggregate amount of approximately $107.0 million to its Class B Unitholders. See Note F “Equity (Deficit)” in the notes to our condensed consolidated financial statements for additional information. No distributions were paid to Class B Unitholders during the nine months ended April 30, 2025.

Ferrellgas Partners made aggregate cash distributions of approximately $357.0 million to its Class B Unitholders since inception of its Class B Units in fiscal 2022. See Note M “Net (loss) earnings per unitholders’ interest” for additional information.

The ability of Ferrellgas Partners to make cash distributions to its Class A Unitholders is dependent on the receipt by Ferrellgas Partners of cash distributions from the operating partnership. For so long as any Preferred Units remain outstanding, the amount of cash that otherwise would be available for distribution by the operating partnership to Ferrellgas Partners will be reduced by the amount of cash distributions and other payments made by the operating partnership in respect of the Preferred Units, including payments to redeem Preferred Units. Further, the indentures governing the 2026 Notes and the 2029 Notes (together with the 2026 Notes, the “OpCo Notes”), the Credit Agreement and the OpCo LPA Amendment governing the Preferred Units contain covenants that limit the ability of the operating partnership to make distributions to Ferrellgas Partners and therefore effectively limit the ability of Ferrellgas Partners to make distributions to its Class A Unitholders and Class B Unitholders. See Note D “Debt” and Note E “Preferred units” for a discussion of these limitations. In our Annual Report on Form 10-K for fiscal 2025, see also “Risk Factors—Risks Inherent in an Investment in our Class A or Class B Units or our Debt Securities and Other Risks Related to Our Capital Structure and Financing Arrangements—Restrictive covenants in the Indentures, the Credit Agreement and the agreements governing our other future indebtedness and other financial obligations may reduce our operating flexibility and ability to make cash distributions to holders of Class A Units and Class B Units. The Indentures, the Credit Agreement and the OpCo LPA Amendment contain important exceptions to these covenants.”

Preferred unit distributions

Pursuant to the OpCo LPA Amendment, the operating partnership is required to pay to the holders of each Preferred Unit a cumulative, quarterly distribution (the “Quarterly Distribution”) at the Distribution Rate (as defined below) on the unit purchase price of such Preferred Unit, which is $1,000 per unit.

“Distribution Rate” means a rate per annum of (a) 8.956% through March 30, 2026, (b) 9.706% for the four-quarter period ending March 30, 2027, (c) 10.456% for the four-quarter period ending March 30, 2028, and (d) 11.125% for all periods after March 30, 2028, subject to a maximum rate of 11.125% and to other adjustments and exceptions described in the following paragraphs.

The Quarterly Distribution may be paid in cash or, at the election of the operating partnership, “in kind” through the issuance of additional Preferred Units (“PIK Units”) at the quarterly Distribution Rate plus an applicable premium that escalates each year from 75 bps to 300 bps so long as the Preferred Units remain outstanding. In the event the operating partnership fails to make any Quarterly Distribution in cash, such Quarterly Distribution will automatically be paid in PIK Units.

The Distribution Rate on the Preferred Units will increase upon violation of certain protective provisions for the benefit of Preferred Unitholders notwithstanding the cap mentioned above.

On November 15, 2025 and February 17, 2026, $15.4 million of the Quarterly Distribution, net of tax, was paid in cash to holders of Preferred Units. On May 15, 2026, $16.7 million of the Quarterly Distribution, net of tax, was paid in cash to holders of Preferred Units. As of April 30, 2026, the Quarterly Distribution accrued was $17.9 million. The remaining Quarterly Distribution accrual of $1.2 million represents Additional Amounts payable to certain holders of Preferred Units pursuant to the side letters outlined in the OpCo LPA Amendment.

On November 15, 2024, February 15, 2025, and May 15, 2025, $15.4 million of the Quarterly Distribution, net of tax, was paid in cash to holders of Preferred Units. As of April 30, 2025, the Quarterly Distribution accrued was $17.0 million. The remaining Quarterly Distribution accrual of $1.6 million represents Additional Amounts payable to certain holders of Preferred Units pursuant to the side letters.

Preferred unit tax distributions

For any quarter in which the operating partnership makes a Quarterly Distribution in PIK Units in lieu of cash, it shall make a subsequent cash tax distribution for such quarter in an amount equal to the (i) the lesser of (x) 25% and (y) the highest combined federal, state and local tax rate applicable for corporations organized in New York, multiplied by (ii) the excess (if any) of (A) one-fourth (1/4th) of the estimated taxable income to be allocated to the holders of Preferred Units for the year in which the Quarterly Tax Payment Date (which refers to certain specified dates that next follow a Quarterly Distribution date on which PIK Units were issued) occurs, over (B) any cash paid on the Quarterly Distribution date immediately preceding the Quarterly Tax Payment Date on which a quarterly tax amount would otherwise be paid (such amount, the “Tax Distribution”). Tax Distributions are treated as advances against, and reduce, future cash distributions for any reason, including payments in redemption of Preferred Units or PIK Units, or payments to the holders in their capacity as such pursuant to any side letter or other agreement.

Disclosures about Effects of Transactions with Related Parties

We have no employees and are managed and controlled by our general partner. Pursuant to our partnership agreements, our general partner is entitled to reimbursement for all direct and indirect expenses incurred or payments it makes on our behalf, and all other necessary or appropriate expenses allocable to us or otherwise reasonably incurred by our general partner in connection with operating our business. These reimbursable costs, which totaled $267.5 million for the nine months ended April 30, 2026, include operating expenses such as compensation and benefits paid to employees of our general partner who perform services on our behalf as well as related general and administrative expenses.

During the nine months ended April 30, 2026 and 2025, the operating partnership paid distributions to Ferrellgas Partners as described above.

Material Cash Requirements

As of April 30, 2026, there have been no material changes to our material cash requirements from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Material Cash Requirements” in our Annual Report on Form 10-K for fiscal 2025, except for the October 2025 refinancing transaction disclosed in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2025. For additional information regarding our debt obligations, see Note D “Debt” to our condensed consolidated financial statements.

The operating partnership

The contractual obligations discussed above also apply to the operating partnership.

We did not enter into any risk management trading activities during the nine months ended April 30, 2026. Our remaining market risk sensitive instruments and positions have been determined to be “other than trading.”

Commodity price risk management

Our risk management activities primarily attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts.

Our risk management strategy involves taking positions in the forward or financial markets that are equal and opposite to our positions in the physical products market in order to minimize the risk of financial loss from an adverse price change. This risk management strategy is successful when our gains or losses in the physical product markets are offset by our losses or gains in the forward or financial markets. Our propane related financial derivatives are designated as cash flow hedges.

Our risk management activities include the use of financial derivative instruments including, but not limited to, futures, swaps, and options to seek protection from adverse price movements and to minimize potential losses. We enter into these financial derivative instruments with brokers who are clearing members with the Intercontinental Exchange or the Chicago Mercantile Exchange and, to a lesser extent, directly with third parties in the over-the-counter market. We also enter into forward propane purchase and sales contracts with counterparties. These forward contracts qualify for the normal purchase normal sales exception within GAAP guidance and are therefore not recorded on our financial statements until settled.

Risk Policy and Sensitivity Analysis

Market risks associated with energy commodities are monitored daily by senior management for compliance with our commodity risk management policy. This policy includes an aggregate dollar loss limit and limits on the term of various contracts. We also utilize volume limits for various energy commodities and review our positions daily where we remain exposed to market risk, so as to manage exposures to changing market prices.

We have prepared a sensitivity analysis to estimate the exposure to market risk of our energy commodity positions. Forward contracts, futures, swaps and options outstanding as of April 30, 2026 and July 31, 2025 that were used in our risk management activities were analyzed assuming a hypothetical 10% adverse change in prices for the delivery month for all energy commodities. The potential loss in future earnings from these positions due to a 10% adverse movement in market prices of the underlying energy commodities was estimated at $0.8 million and $12.4 million as of April 30, 2026 and July 31, 2025, respectively. The preceding hypothetical analysis is limited because changes in prices may or may not equal 10%, thus actual results may differ. Our sensitivity analysis does not include the anticipated transactions associated with these transactions, which we anticipate will be 100% effective.

Credit risk

We maintain credit policies with regard to our counterparties that we believe significantly reduce overall credit risk. These policies include evaluating and monitoring our counterparties’ financial condition (including credit ratings), and entering into agreements with counterparties that govern credit guidelines.

Our other counterparties principally consist of major energy companies that are suppliers, marketers, wholesalers, retailers and end users; and major U.S. financial institutions. The overall impact due to certain changes in economic, regulatory and other events may impact our overall exposure to credit risk, either positively or negatively in that counterparties may be similarly impacted. Based on our policies, exposures, credit and other reserves, management does not anticipate a material adverse effect on financial position or results of operations as a result of counterparty performance.

Interest rate risk

We had short-term borrowings of $87.5 million under our Credit Facility as of April 30, 2026. We had variable rate indebtedness outstanding related to our letters of credit under our Credit Facility of $116.2 million and $121.9 million as of April 30, 2026 and July 31, 2025, respectively. Our results of operations, cash flows and financial condition could be materially adversely affected by significant increases in interest rates to the extent that we have variable rate indebtedness (including any disbursements or payments related to letters of credit) outstanding under our Credit Facility.

Critical accounting estimates

Our critical accounting estimates are disclosed under “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Form 10-K for fiscal 2025. During the nine months ended April 30, 2026, no modifications were made to these critical accounting estimates.

An evaluation was performed by the management of Ferrellgas Partners, L.P., Ferrellgas, L.P., Ferrellgas Partners Finance Corp., and Ferrellgas Finance Corp., with the participation of the principal executive officer and principal financial officer of our general partner, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, were effective as of April 30, 2026.

The management of Ferrellgas Partners, L.P., Ferrellgas, L.P., Ferrellgas Partners Finance Corp., and Ferrellgas Finance Corp. does not expect that our disclosure controls and procedures will prevent all errors and all fraud. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Based on the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the above mentioned partnerships and corporations have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and the principal executive officer and principal financial officer of our general partner have concluded, as of April 30, 2026, that our disclosure controls and procedures are effective in achieving that level of reasonable assurance.

During the most recent fiscal quarter ended April 30, 2026, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for fiscal 2025 and in our subsequent SEC filings.