Attached files
| file | filename |
|---|---|
| 8-K - 8-K - UGI CORP /PA/ | ugidec2016er8k.htm |
| EX-99.1 - EXHIBIT 99.1 - UGI CORP /PA/ | ugidec2016ex991.htm |
1
Fiscal 2017
First Quarter Results
John Walsh
President & CEO, UGI
Kirk Oliver
Chief Financial Officer, UGI
Jerry Sheridan
President & CEO, AmeriGas
2 UGI Corporation | Fiscal 2017 First Quarter Results
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.
3
First Quarter Recap
John Walsh
President & CEO, UGI
4 UGI Corporation | Fiscal 2017 First Quarter Results
Q1 Earnings Recap
• Record First Quarter
• Higher adjusted net income across all four business units
• Contributions from strategic investments made in recent years
• Impact of weather that was colder than the prior-year period
Adjusted EPS
Adjusted EPS is a non-GAAP measure. See appendix for reconciliation.
42% increase
FY17-Q1 FY16-Q1 FY16-Q1 FY17-Q1 FY16-Q1
International AmeriGas
Midstream &
Marketing Gas Utility
colder
warmer
colder
warmer
colder
warmer
colder
warmer
-13.9%
-19.9%
-0.5%
-17.6%
-30.0%
-10.7%
-6.3%
-25.3%
27.4%
colder
25.4%
colder
20.8%
colder
7.4%
colder
VERSUS PRIOR
YEAR
$0.64
$0.91
FY16-Q1 FY17-Q1
FY17-Q1
-30.0%
-10.7%
FY17-Q1 FY16-Q1
warmer
colder
5
• Sunbury pipeline construction completed and placed into service on
January 1st
• Mechanical completion of Manning LNG facility, will be placed into
service in the current quarter
• Added 4,600 new residential heating and commercial utility customers
• New UGI Gas base rates went into effect on October 19th; Rate case for
UGI Penn Natural Gas filed on January 19th
• National Accounts and Cylinder Exchange volume up; closed on small
acquisition
• Benefits realized from Finagaz acquisition and continued focus on
margin management
Q1 Market Recap
UGI Corporation | Fiscal 2017 First Quarter Results
6
First Quarter Financial Review
Kirk Oliver
Chief Financial Officer, UGI
7 UGI Corporation | Fiscal 2017 First Quarter Results
FY16-Q1 FY17-Q1
Net income attributable to UGI Corporation $114.6 $ 230.7
Net gains on commodity derivative instruments 1,2 (3.6) (52.2)
Net gains on foreign currency derivative instruments 1 - (0.8)
Integration expenses associated with Finagaz1 1.4 5.3
Loss on extinguishment of debt1 - 5.3
Impact from change in French tax rate - (27.4)
Adjusted net income attributable to UGI Corporation $112.4 $160.9
Q1 Adjusted Earnings
FY16-Q1 FY17-Q1
UGI Corporation - Diluted Earnings Per Share (GAAP) $0.65 $1.30
Net gains on commodity derivative instruments2 (0.02) (0.29)
Net gains on foreign currency derivative instruments - (0.01)
Integration expenses associated with Finagaz 0.01 0.03
Loss on extinguishment of debt - 0.03
Impact from change in French tax rate - (0.15)
Adjusted diluted earnings per share $0.64 $0.91
1 Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
2 Includes the effects of rounding.
Adjusted net income and Adjusted diluted earnings per share are non-GAAP measures. See appendix for description.
($ millions)
8 UGI Corporation | Fiscal 2017 First Quarter Results
FY16-Q1 FY17-Q1
Adjusted EBITDA $177.7
Retail Volume 12.6
Wholesale and Other Total Margin 3.0
Operating and Administrative Expenses 4.1
Other Operating Income (12.3)
Adjusted EBITDA $185.1
• Retail volume increased 3.6% versus prior year as warmer weather in October and
November were offset by colder weather in December
• Operating expenses were down 1.8%, despite the increase in volume, due to
technology driven efficiencies and expense controls
• Reduction in other operating income primarily due to the correction of previously
recorded gains on sales of fixed assets acquired in connection with Heritage
acquisition in 2012
Financial Results – AmeriGas
FY16-Q1 FY17-Q1
colder
warmer
-13.9%
-19.9%
Weather versus
normal
7.4% colder than
prior year
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
($ millions)
9 UGI Corporation | Fiscal 2017 First Quarter Results
FY16-Q1 FY17-Q1
Income Before Taxes $78.5
Total Margin 5.7
Operating and Administrative Expenses (6.0)
Depreciation and Amortization (0.7)
Interest Expense 1.7
Other Operating Income 4.8
Income Before Taxes $84.0
Integration Expenses 2.3 8.1
Adjusted Income Before Taxes $80.8 $92.1
• Higher margin from residential bulk sales driving total margin increase
• Increased bulk volume due to colder weather
• Slightly higher average LPG unit margins
• Increase in operating expenses due to higher Finagaz transition expenses
• Change in other operating income primarily due to absence of prior year loss from
interest rate hedge ineffectiveness
Financial Results – UGI International
Weather versus
normal
FY16-Q1 FY17-Q1
colder
warmer
-0.5%
-17.6%
20.8% colder than
prior year
($ millions)
Adjusted Income Before Taxes is a non-GAAP measure.
10 UGI Corporation | Fiscal 2017 First Quarter Results
FY16-Q1 FY17-Q1
Income Before Taxes $ 42.1
Total Margin 5.6
Operating and Administrative Expenses (0.9)
Depreciation and Amortization (0.6)
Interest Expense 0.2
Other Operating Income 2.7
Income Before Taxes $49.1
• Total margin increase due to higher peaking, natural gas, and capacity management
total margins
• The higher natural gas total margin reflects the effects of higher volumes while the
increase in peaking total margin reflects an increase in demand for peaking services
• Other operating income primarily reflects the allowance for funds used during
construction of Sunbury project
Financial Results – Midstream & Marketing
FY16-Q1 FY17-Q1
colder
warmer
-30.0%
-10.7%
Weather versus
normal
27.4% colder than
prior year
($ millions)
11 UGI Corporation | Fiscal 2017 First Quarter Results
FY16-Q1 FY17-Q1
Income Before Taxes $38.8
Total Margin 29.1
Operating and Administrative Expenses 1.6
Depreciation and Amortization (0.7)
Interest Expense (0.5)
Other Income and Expense, net 3.9
Income Before Taxes $72.2
• While still warmer than normal, weather was 25.4% colder than prior year, resulting
in a 32.2% increase in core market volumes
• Volume increase along with UGI Gas base rate increase contributed to substantial
margin increase
• Operating and administrative expenses decreased slightly, primarily reflecting lower
distribution system expenses
• Other expense decreased due to absence of prior year environmental charges
Financial Results – Utilities
FY16-Q1 FY17-Q1
colder
warmer
-6.3%
-25.3%
Gas Utility
weather versus
normal
25.4% colder than
prior year
($ millions)
12 UGI Corporation | Fiscal 2017 First Quarter Results
$0.00
$1.00
Q1 FY16 AmeriGas UGI
International
Midstream &
Marketing
UGI Utilities Corp & Other Q1 FY17
$0.64 $0.01
$0.11
$0.03
$0.12 $0.00 $0.91
Q1 Results Recap
Strong results across all business units lead to record Q1 results
A
d
ju
st
ed
E
P
S
Adjusted EPS is a non-GAAP measure. See appendix for reconciliation.
A
me
riGa
s
First Quarter Recap
Jerry Sheridan
President & CEO, AmeriGas
14 UGI Corporation | Fiscal 2017 First Quarter Results
• Weather ~14% warmer than normal, 7%
colder than prior year
• Retail volumes increased 3.6% year over year
• Margins stable despite 39% increase in Mt.
Belvieu price of propane
• Focus on cost controls; operating expenses
down ~$4 million
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
Q1 Earnings Recap
$177.7 $185.1
FY16-Q1 FY17-Q1
Adjusted EBITDA
($ millions)
15 UGI Corporation | Fiscal 2017 First Quarter Results
Comparison of FY15-Q1 vs. FY17-Q1
-2.9%
-13.9%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
FY17-Q1 FY15-Q1
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
Comparable Results… …despite 11% warmer weather
$188.5 $185.1
FY15-Q1 FY17-Q1
Adjusted EBITDA
($ millions)
FY17:
• 35 million gallons (10%) lower volume
• Includes $8.8 million charge to correct an error
• Reflects $20 million lower operating expenses
16 UGI Corporation | Fiscal 2017 First Quarter Results
Cylinder Exchange
• Delivered volume 13% higher than last year
• Same store sales growth up 4%
National Accounts
• Volume increased 17% due to colder weather in
December and new accounts
Refinancing of 2022 Notes
• Completed a tender offer for $500MM of 7% notes due
2022 and issued $700MM of 5.5% notes due 2025
Quarter Accomplishments
17 UGI Corporation | Fiscal 2017 First Quarter Results
Conclusion and Q&A
John Walsh
President & CEO, UGI
18 UGI Corporation | Fiscal 2017 First Quarter Results
Clear Path to Growth
• Addition of Sunbury and Manning LNG strengthens
portfolio
• Expect FERC Environmental Impact Statement by
mid-April
• LNG is core element of midstream strategy
• Record levels of peaking demand
• LNG projects add storage, vaporization, and
fueling facilities
MIDSTREAM & MARKETING
INTERNATIONAL
• Continue to seek expansion through acquisition
and organic growth
• Finagaz integration remains on track
UGI UTILITIES
• Record levels of capital expenditures
• Support growth and infrastructure
replacement
• Will exceed $1.1 billion over next four years
• 40-50% reduction in customers’ average bills
compared to their peak in 2008/2009
AMERIGAS
• Continuing to deploy enhanced distribution, logistics,
and customer service tools to enhance the customer
experience and efficiency
• M&A pipeline remains strong
19
APPENDIX
20 UGI Corporation | Fiscal 2017 First Quarter Results
• 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
21 UGI Corporation | Fiscal 2017 First Quarter Results
UGI Adjusted Net Income and EPS
(Million of dollars, except per share amounts) FY17 FY16
NON-GAAP RECONCILIATION:
Adjusted net income attr ibutable to UGI Corporation:
Net income attributable to UGI Corporation 230.7$ 114.6$
Net gains on commodity derivative instruments not associated with current period transactions (net of tax of $33.3 and $1.5, respectively) (a) (b) (52.2) (3.6)
Unrealized gains on foreign currency derivative instruments (net of tax of $0.4) (b) (0.8) -
Integration expenses associated with Finagaz (net of tax of $(2.8) and $(0.9), respectively) (b) 5.3 1.4
Loss on extinguishment of debt (net of tax of $(3.4)) (b) 5.3 -
Impact from change in French tax rate (27.4)
Adjusted net income attr ibutable to UGI Corporation 160.9$ 112.4$
Adjusted earnings per common share attr ibutable to UGI stockholders: FY17 FY16
UGI Corporation earnings per share - diluted 1.30$ 0.65$
Net gains on commodity derivative instruments not associated with current period transactions (0.29) (0.02)
Unrealized gains on foreign currency derivative instruments (a) (0.01) -
Integration expenses associated with Finagaz 0.03 0.01
Loss on extinguishment of debt 0.03 -
Impact from change in French tax rate (0.15)
Adjusted di luted earnings per share 0.91$ 0.64$
Three Months Ended
December 31,
Three Months Ended
December 31,
(a) Includes impact of rounding.
(b) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
22 UGI Corporation | Fiscal 2017 First Quarter Results
• 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
23 UGI Corporation | Fiscal 2017 First Quarter Results
AmeriGas Adjusted EBITDA
(Millions of dollars)
EBITDA and Adjusted EBITDA: FY17 FY16 FY15
Net income attributable to AmeriGas Partners 92.0$ 81.0$ (39.6)$
Income tax expense (a) 0.8 0.9 0.9
Interest expense 40.0 41.0 41.0
Depreciation 34.0 38.6 38.7
Amortization 10.6 10.6 10.7
EBI DA 177.4 172.1 51.7
(Subtract net gains) add net losses on commodity derivative instruments not associated with current-period transactions (25.7) 5.6 138.2
Add loss on extinguishment of debt 33.2 - -
Noncontrolling interest in net gains (losses) on commodity derivative instruments not associated with current-period transactions (a) 0.2 - (1.4)
Adjusted EBITDA 185.1$ 177.7$ 188.5$
(a) Includes the impact of rounding.
Three Months Ended December 31,
24
Investor Relations:
Will Ruthrauff
610-456-6571
ruthrauffw@ugicorp.com