Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - UGI CORP /PA/ | ugimar2017ex991.htm |
| 8-K - 8-K - UGI CORP /PA/ | ugimar2017er8k.htm |
1
Fiscal 2017
Second Quarter Results
John Walsh
President & CEO, UGI
Kirk Oliver
Chief Financial Officer, UGI
Jerry Sheridan
President & CEO, AmeriGas
2
About This Presentation
This presentation contains certain forward-looking statements that management believes to be
reasonable as of today’s date only. Actual results may differ significantly because of risks and uncertainties
that are difficult to predict and many of which are beyond management’s control. You should read UGI’s
Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are
adverse weather conditions, cost volatility and availability of all energy products, including propane,
natural gas, electricity and fuel oil, increased customer conservation measures, the impact of pending and
future legal proceedings, liability for uninsured claims and for claims in excess of insurance coverage,
domestic and international political, regulatory and economic conditions in the United States and in
foreign countries, including the current conflicts in the Middle East, and foreign currency exchange rate
fluctuations (particularly the euro), changes in Marcellus Shale gas production, the availability, timing and
success of our acquisitions, commercial initiatives and investments to grow our business, our ability to
successfully integrate acquired businesses and achieve anticipated synergies, and the interruption,
disruption, failure, malfunction, or breach of our information technology systems, including due to cyber-
attack. UGI undertakes no obligation to release revisions to its forward-looking statements to reflect
events or circumstances occurring after today. In addition, this presentation uses certain non-GAAP
financial measures. Please see the appendix for reconciliations of these measures to the most comparable
GAAP financial measure.
UGI Corporation | Fiscal 2017 Second Quarter Results
3
Second Quarter Recap
John Walsh
President & CEO, UGI
4
Q2 Earnings Recap
• Solid results despite a warmer than normal heating season in all four
of our businesses
• Results reflect our investments in projects that are less dependent on
weather, and focus on operational efficiency
• Expecting full year adjusted EPS to be at the lower end, or slightly
below our guidance range of $2.30 to $2.451, well above FY16
FY17-Q2 FY16-Q2 FY16-Q2 FY17-Q2 FY16-Q2
International AmeriGas
Midstream &
Marketing Gas Utility
colder
warmer
colder
warmer
colder
warmer
colder
warmer
-13.3%
-11.7%
-6.2% -7.4%
-30.0%
-10.7%
-11.7%
-9.7%
5.0%
warmer
3.3%
warmer
1.3%
colder
2.9%
warmer
VERSUS PRIOR
YEAR
FY17-Q2
-10.1%
-14.6%
FY17-Q2 FY16-Q2
warmer
colder
$1.24
$1.31
FY16 - Q2 FY17 - Q2
Adjusted EPS1
UGI Corporation | Fiscal 2017 Second Quarter Results
1 Adjusted Earnings Per Share is a non-GAAP measure. See Appendix for reconciliation. Because we are unable to predict certain potentially
material items affecting diluted earnings per share on a GAAP basis, principally mark-to-market gains and losses on commodity derivative
instruments and Finagaz integration expenses, we cannot reconcile 2017 adjusted diluted earnings per share, a non-GAAP measure, to diluted
earnings per share, the most directly comparable GAAP measure, in reliance on the “unreasonable efforts” exception set forth in SEC rules.
5
Q2 Market Recap
UGI Corporation | Fiscal 2017 Second Quarter Results
• Completed construction of $60 million Manning LNG
liquefaction facility
• Gas Utility added 3,400 new residential heating and
commercial customers, year-to-date total of 8,000
• Filed a $21.7 million rate case for our UGI Penn Natural Gas
(PNG) utility
• Increased volumes for ACE and National Accounts despite
warm weather
• UGI International seeing benefits of Finagaz and other
smaller acquisitions
6
Second Quarter Financial Review
Kirk Oliver
Chief Financial Officer, UGI
7
FY16-Q2 FY17-Q2
Net income attributable to UGI Corporation (GAAP) $233.2 $ 219.9
Net losses (gains) on commodity derivative instruments1 (22.4) 3.1
Unrealized losses on foreign currency derivative instruments1 - 0.8
Loss on extinguishment of debt1 - 3.6
Integration expenses associated with Finagaz1 5.4 4.4
Adjusted net income attributable to UGI Corporation $216.2 $231.8
Q2 Adjusted Earnings
FY16-Q2 FY17-Q2
UGI Corporation - Diluted Earnings Per Share (GAAP) $1.33 $1.24
Net losses (gains) on commodity derivative instruments (0.12) 0.02
Unrealized losses on foreign currency derivative instruments2 - 0.01
Loss on extinguishment of debt - 0.02
Integration expenses associated with Finagaz 0.03 0.02
Adjusted diluted earnings per share $1.24 $1.31
1 Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
2 Includes the effects of rounding
($ millions)
UGI Corporation | Fiscal 2017 Second Quarter Results
8
$0.50
$1.50
Q2 FY16 AmeriGas UGI
International
Midstream &
Marketing
UGI Utilities Corp & Other Q2 FY17
$1.24 $(0.02)
$0.06
$0.02 $0.01 $0.00 $1.31
Q2 Results Recap
Solid results across all business units despite warmer than normal temperatures
A
d
ju
st
ed
E
P
S
Adjusted EPS is a non-GAAP measure. See appendix for reconciliation. UGI Corporation | Fiscal 2017 Second Quarter Results
1 Includes ($0.01)
Corporate & Other
$0.22 $0.20
$0.41 $0.47
$0.26 $0.28
$0.36
$0.37
Q2-FY16 Q2-FY17
$1.311
$1.241
AmeriGas
UGI
International
Midstream &
Marketing
UGI Utilities
1.3%
colder
2.9%
warmer
5.0%
warmer
3.3%
warmer
Adjusted EPS
9
FY16-Q2 FY17-Q2
Adjusted EBITDA $295.4
Retail Volume (20.5)
Wholesale and Other Total Margin (1.0)
Operating and Administrative Expenses (1.5)
Other Income and Expense, net (1.2)
Adjusted EBITDA $271.2
• Volume down 6% primarily due to weather
• Total margin decreased primarily reflecting the reduction in retail volumes sold, partially offset by
slightly higher unit margins
• Operating and administrative expenses increased slightly, primarily reflecting higher vehicle fuel
costs that were offset by strong cost management
Financial Results – AmeriGas
FY16-Q2 FY17-Q2
colder
warmer
-13.3%
-11.7%
Weather versus
normal
2.9% warmer
than prior year
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
($ millions)
Total
margin
UGI Corporation | Fiscal 2017 Second Quarter Results
10
FY16-Q2 FY17-Q2
Income Before Taxes $105.0
Total Margin (0.1)
Operating and Administrative Expenses 6.8
Depreciation and Amortization 0.7
Interest Expense 1.7
Other Income and Expense, net 2.1
Income Before Taxes $116.2
Integration Expenses 8.6 6.7
Adjusted Income Before Taxes $113.6 $122.9
• Total margin was flat with the prior year as higher retail sales were offset by slightly lower
average retail bulk and cylinder unit margins
• Operating expenses decreased primarily reflecting lower integration expenses and the
translation effects of weaker currencies
• Other income increased primarily due to the absence of a $2.1 million loss recorded in the prior
year associated with interest rate hedge ineffectiveness.
Financial Results – UGI International
Weather versus
normal
-6.2% -7.4%
1.3% colder than
prior year
($ millions)
Adjusted Income Before Taxes is a non-GAAP measure. UGI Corporation | Fiscal 2017 Second Quarter Results
FY16-Q2 FY17-Q2
colder
warmer
-7.4%
-6.2
11
FY16-Q2 FY17-Q2
Income Before Taxes $ 77.3
Total Margin 4.8
Operating and Administrative Expenses (0.4)
Depreciation and Amortization (1.1)
Interest Expense (0.2)
Other Income and Expenses, net 3.4
Income Before Taxes $83.8
• Despite warmer temperatures, total margin increased principally reflecting an increased demand
for peaking services, higher prices for pipeline capacity, and slightly higher natural gas marketing
margin
• These margin increases were partially offset by lower electric generation margin due to lower
generation volumes
• Operating expenses increased slightly due to higher wages and benefits partially offset by electricity
generation operating and maintenance expenses
• Other income increased primarily due to income from allowance for funds used during construction
(AFUDC) related to the PennEast and Sunbury pipeline projects
Financial Results – Midstream & Marketing
FY16-Q2 FY17-Q2
colder
warmer
-10.1%
-14.6%
Weather versus
normal
5.0% warmer
than prior year
($ millions)
UGI Corporation | Fiscal 2017 Second Quarter Results
12
FY16-Q2 FY17-Q2
Income Before Taxes $105.2
Total Margin 11.0
Operating and Administrative Expenses (8.7)
Depreciation and Amortization (0.7)
Interest Expense (1.0)
Other Income and Expense, net 0.3
Income Before Taxes $106.1
Financial Results – Utilities
FY16-Q2 FY17-Q2
colder
warmer
-11.7%
-9.7%
Gas Utility
weather versus
normal
3.3% warmer
than prior year
($ millions)
• Core market throughput was flat year-over-year while total throughput increased 13.5% due to
higher large firm delivery service volumes associated with a new natural gas-fired generation facility
• Total margin increased primarily reflecting higher UGI Gas base rates and higher large firm delivery
service margin
• Operating and administrative expenses were higher than the prior year largely due to a prior-year
one-time expense credit related to IT development costs previously expensed.
UGI Corporation | Fiscal 2017 Second Quarter Results
13
2012 – 2017 Comparison
UGI Corporation | Fiscal 2017 Second Quarter Results
$ 1.32 $ 0.07
$ 0.37
$ 0.27
$ 0.14 $ 0.05 $ 2.22
YTD 2012 AmeriGas
UGI
International
Midstream &
Marketing
UGI Utilities Corp & other YTD 2017
$2.50
$2.00
$1.50
$1.00
$0.50
$-
Adjusted EPS
Adjusted EPS is a non-GAAP measure. See appendix for reconciliation.
A
me
riGa
s
Second Quarter Recap
Jerry Sheridan
President & CEO, AmeriGas
15
• The quarter ended 13% warmer than normal
and 3% warmer than last year
• 2nd warmest Q2 on record
• Retail volume sold in the quarter was 363
million gallons, 6% below last year
• Unit margins up 2% despite increased
propane costs
• Operating expenses essentially flat despite
23% increase in diesel fuel prices
• Revising fiscal year guidance EBITDA guidance
range to $550 million to $580 million
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
Q2 Earnings Recap
$295.4
$271.2
FY16 - Q2 FY17 - Q2
Adjusted EBITDA1
UGI Corporation | Fiscal 2017 Second Quarter Results
16
Growth Initiatives
UGI Corporation | Fiscal 2017 Second Quarter Results
Cylinder Exchange
• Modest increase in volume despite the
warmer weather
• Over 1,250 new locations year-to-date
National Accounts
• Volume up 5% primarily due to new
accounts
Acquisitions
• Completed two small scale acquisitions and
anticipate closing on 3 additional deals in the
next few months
17 UGI Corporation | Fiscal 2017 Second Quarter Results
Refinancing
• Issued $525 million of 5.75% notes due May 2027
• Tendered for $378 million of 7.00% May 2022 notes
• Redeeming remaining $102.5 million of 7.00% May 2022 notes
• Completes refinancing of all long-term debt
• No significant debt maturities until 2024
• Average interest rates have been reduced by over 100 basis points
Distribution
• 1% increase distribution to $3.80 annually
• 13th consecutive year increasing distribution
Maintaining A Strong Balance Sheet
18
Conclusion and Q&A
John Walsh
President & CEO, UGI
19
Clear Path to Growth
• Sunbury pipeline providing service to UGI and will
begin serving power generation facility in August
• Receive Final Environmental Impact Statement for
PennEast last month; continue to target end of
2018 for in-service
• LNG projects remain core focus
• Manning liquefaction on-line
• Steelton vaporization and storage on-stream by end
of the year
MIDSTREAM & MARKETING
INTERNATIONAL
• Organic growth across service territory and
effective expense controls
• Performance of Finagaz acquisition has been
outstanding
UGI UTILITIES
• Company awaiting final order from PA PUC
authorizing an increase to the DSIC cap from 5.0%
to 7.5% for PNG and CPG
• Reduces regulatory lag
• PNG rate case in process
• Deploying record amounts of capital
• Capital deployed will exceed $1.1 billion over next
four years
AMERIGAS
• Continuing to invest in customer service tools to
enhance the customer experience and efficiency
• Refinancing complete at attractive rates
UGI Corporation | Fiscal 2017 Second Quarter Results
20
APPENDIX
21
• Management uses "adjusted net income attributable to UGI" and "adjusted diluted earnings per share," both of which are non-GAAP
financial measures, when evaluating UGI's overall performance. For the periods presented, adjusted net income attributable to UGI is net
income attributable to UGI Corporation after excluding net after-tax gains and losses on commodity and certain foreign currency derivative
instruments not associated with current period transactions (principally comprising changes in unrealized gains and losses on derivative
instruments), Finagaz integration expenses, losses associated with extinguishments of debt and the impact on net deferred tax liabilities
from a change in French corporate income tax rate. Volatility in net income at UGI can occur as a result of gains and losses on commodity
and certain foreign currency derivative instruments not associated with current period transactions but included in earnings in accordance
with U.S. generally accepted accounting principles ("GAAP").
• Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a
substitute for, the comparable GAAP measures. Management believes that these non-GAAP measures provide meaningful information to
investors about UGI’s performance because they eliminate the impact of (1) gains and losses on commodity and certain foreign currency
derivative instruments not associated with current-period transactions and (2) other significant discrete items that can affect the
comparison of period-over-period results.
• The following table reconciles net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net
income attributable to UGI Corporation, and reconciles diluted earnings per share, the most comparable GAAP measure, to adjusted
diluted earnings per share, to reflect the adjustments referred to above:
UGI Supplemental Footnotes
UGI Corporation | Fiscal 2017 Second Quarter Results
22
UGI Adjusted Net Income and EPS
UGI Corporation | Fiscal 2017 Second Quarter Results
Three Months Ended March 31, 2017 Total
AmeriGas
Propane
UGI
International
Midstream &
Marketing
UGI Utilities
Corporate &
Other
Adjusted net income attributable to UGI Corporation:
Net income (loss) attributable to UGI Corporation 219.9$ $ 32.0 $ 79.3 $ 50.2 $ 65.1 $ (6.7)
Net losses (gains) on commodity derivative instruments not associated with current period
transactions (net of tax of $1.5)(a)
3.1 - - - - 3.1
Unrealized losses on foreign currency derivative instruments (net of tax of $(0.5))(a) 0.8 - - - - 0.8
Loss on extinguishment of debt (net of tax of $2.3) (a) 3.6 3.6 - - - -
Integration expenses associated with Finagaz (net of tax of $(2.3))(a) 4.4 - 4.4 - - -
Adjusted net income (loss) attributable to UGI Corporation 231.8$ 35.6$ 83.7$ 50.2$ 65.1$ (2.8)$
Adjusted diluted earnings per share:
UGI Corporation earnings (loss) per share - diluted 1.24$ $ 0.18 $ 0.45 $ 0.28 $ 0.37 $ (0.04)
Net losses (gains) on commodity derivative instruments not associated with current period
transactions
0.02 - - - - 0.02
Unrealized losses on foreign currency derivative instruments (b) 0.01 - - - - 0.01
Loss on extinguishment of debt 0.02 0.02 - - - -
Integration expenses associated with Finagaz 0.02 - 0.02 - - -
Adjusted diluted earnings (loss) per share 1.31$ $ 0.20 $ 0.47 $ 0.28 $ 0.37 $ (0.01)
Three Months Ended March 31, 2016 Total
AmeriGas
Propane
UGI
International
Midstream &
Marketing
UGI Utilities
Corporate &
Other
Adjusted net income attributable to UGI Corporation:
Net income attributable to UGI Corporation 233.2$ $ 39.3 $ 66.7 $ 45.8 $ 63.2 $ 18.2
Net gains on commodity derivative instruments not associated with current period transactions (net
of tax of $12.9) (a)
(22.4) - - - - (22.4)
Integration expenses associated with Finagaz (net of tax of $(3.2)) (a) 5.4 - 5.4 - - -
Adjusted net income (loss) attributable to UGI Corporation 216.2$ 39.3$ 72.1$ 45.8$ 63.2$ (4.2)$
Adjusted diluted earnings per share:
UGI Corporation earnings per share - diluted 1.33$ $ 0.22 $ 0.38 $ 0.26 $ 0.36 $ 0.11
Net gains on commodity derivative instruments not associated with current period transactions (b) (0.12) - - - - (0.12)
Integration expenses associated with Finagaz 0.03 - 0.03 - - -
Adjusted diluted earnings (loss) per share 1.24$ $ 0.22 $ 0.41 $ 0.26 $ 0.36 $ (0.01)
(a) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
(b) Includes effects of rounding.
23
UGI Adjusted Net Income and EPS
UGI Corporation | Fiscal 2017 Second Quarter Results
Six Months Ended March 31, 2017 Total
AmeriGas
Propane
UGI
International
Midstream &
Marketing
UGI Utilities
Corporate &
Other
Adjusted net income attributable to UGI Corporation:
Net income attributable to UGI Corporation 450.6$ $ 48.6 $ 167.6 $ 80.1 $ 109.4 $ 44.9
Net gains on commodity derivative instruments not associated with current period transactions (net
of tax of $34.8) (a)
(49.1) - - - - (49.1)
Loss on extinguishments of debt (net of tax of $(5.7)) (a) 8.9 8.9 - - - -
Integration expenses associated with Finagaz (net of tax of $(5.1))(a) 9.7 - 9.7 - - -
Impact from change in French tax rate (27.4) - (27.4) - - -
Adjusted net income (loss) attributable to UGI Corporation 392.7$ 57.5$ 149.9$ 80.1$ 109.4$ (4.2)$
Adjusted diluted earnings per share:
UGI Corporation earnings per share - diluted 2.55$ $ 0.27 $ 0.95 $ 0.45 $ 0.62 $ 0.26
Net gains on commodity derivative instruments not associated with current period transactions (0.28) - - - - (0.28)
Loss on extinguishments of debt 0.05 0.05 - - - -
Integration expenses associated with Finagaz 0.05 - 0.05 - - -
Impact from change in French tax rate (0.15) - (0.15) - - -
Adjusted diluted earnings (loss) per share 2.22$ $ 0.32 $ 0.85 $ 0.45 $ 0.62 $ (0.02)
Six Months Ended March 31, 2012 Total
AmeriGas
Propane
UGI
International
Midstream &
Marketing
UGI Utilities
Corporate &
Other
Adjusted net income attributable to UGI Corporation:
Net income (loss) attributable to UGI Corporation 211.1$ $ 37.7 $ 81.1 $ 30.0 $ 81.6 $ (19.3)
Net losses on commodity derivative instruments not associated with current period transactions (net
of taxes of ($5.5)) (a)
7.8 - - - - 7.8
Loss on extinguishments of debt (net of tax of $1.5) (a) 2.1 2.1 - - - -
Integration expenses associated with Heritage (net of tax of $1.6) (a) 2.1 2.1 - - - -
Adjusted net income (loss) attributable to UGI Corporation 223.1$ 41.9$ 81.1$ 30.0$ 81.6$ (11.5)$
Adjusted diluted earnings per share:
UGI Corporation earnings per share - diluted 1.24$ $ 0.22 $ 0.48 $ 0.18 $ 0.48 $ (0.12)
Net losses on commodity derivative instruments not associated with current period transactions 0.05 - - - - 0.05
Loss on extinguishments of debt 0.01 0.01 - - - -
Integration expenses associated with Heritage 0.01 0.01 - - - -
Adjusted diluted earnings (loss) per share 1.31$ $ 0.25 $ 0.48 $ 0.18 $ 0.48 $ (0.07)
(a) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
24
• The enclosed supplemental information contains a reconciliation of earnings before interest expense, income taxes,
depreciation and amortization ("EBITDA") and Adjusted EBITDA to Net Income.
• EBITDA and Adjusted EBITDA are not measures of performance or financial condition under accounting principles
generally accepted in the United States ("GAAP"). Management believes EBITDA and Adjusted EBITDA are meaningful
non-GAAP financial measures used by investors to compare the Partnership's operating performance with that of other
companies within the propane industry. The Partnership's definitions of EBITDA and Adjusted EBITDA may be different
from those used by other companies.
• EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss) attributable to AmeriGas
Partners, L.P. Management uses EBITDA to compare year-over-year profitability of the business without regard to capital
structure as well as to compare the relative performance of the Partnership to that of other master limited partnerships
without regard to their financing methods, capital structure, income taxes or historical cost basis. Management uses
Adjusted EBITDA to exclude from AmeriGas Partners’ EBITDA gains and losses that competitors do not necessarily have to
provide additional insight into the comparison of year-over-year profitability to that of other master limited partnerships.
In view of the omission of interest, income taxes, depreciation and amortization, gains and losses on commodity
derivative instruments not associated with current-period transactions, and other gains and losses that competitors do
not necessarily have from Adjusted EBITDA, management also assesses the profitability of the business by comparing net
income attributable to AmeriGas Partners, L.P. for the relevant periods. Management also uses Adjusted EBITDA to
assess the Partnership's profitability because its parent, UGI Corporation, uses the Partnership's Adjusted EBITDA to
assess the profitability of the Partnership, which is one of UGI Corporation’s business segments. UGI Corporation
discloses the Partnership's Adjusted EBITDA as the profitability measure for its domestic propane segment.
AmeriGas Supplemental Footnotes
UGI Corporation | Fiscal 2017 Second Quarter Results
25
AmeriGas EBITDA and Adjusted EBITDA
UGI Corporation | Fiscal 2017 Second Quarter Results
EBITDA and Adjusted EBITDA: FY16-Q2 FY17-Q2
Net income attributable to AmeriGas Partners, L.P. 245.9$ 135.1$
Income tax expense 0.3 0.6
Interest expense 40.8 40.0
Depreciation 36.5 34.4
Amortization 10.9 10.6
EBITDA 334.4 220.7
Add net losses (subtract net gains) on commodity derivative instruments not
associated with current-period transactions
(39.5) 28.6
Loss on extinguishment of debt - 22.1
Noncontrolling interest in net (losses) gains on commodity derivative instruments not
associated with current-period transactions (a)
0.5 (0.2)
Adjusted EBITDA 295.4$ 271.2$
Forecast Fiscal Year Ending
September 30, 2017
(Low End) (High End)
Adjusted EBITDA (estimate) $ 550,000 $ 580,000
Interest expense (estimate) 157,000 157,000
Income tax expense (estimate) 3,000 3,000
Depreciation (estimate) 139,000 139,000
Amortization (estimate) 43,000 43,000
Three Months Ended March 31,
26
Investor Relations:
Will Ruthrauff
610-456-6571
ruthrauffw@ugicorp.com