Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - UGI CORP /PA/ | ugidec2017ex991.htm |
| 8-K - 8-K - UGI CORP /PA/ | ugidec2017er8k.htm |
1
Fiscal 2018
First Quarter Results
John L. Walsh
President & CEO, UGI Corporation
Kirk R. Oliver
Chief Financial Officer, UGI Corporation
Jerry E. Sheridan
President & CEO, AmeriGas Partners
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, continued analysis of recent tax legislation, 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 2018 First Quarter Results
3
John Walsh
President & CEO, UGI
First Quarter
Recap
John L. Walsh
President & CEO, UGI
4
Q1 Earnings Recap
• Adjusted EPS up ~11% versus prior year period
• Tax rate changes in the U.S. and France contributed $0.09, net
Adjusted EPS is a non-GAAP measure. See Appendix for reconciliation.
$0.91
$1.01
Q1 2017 Q1 2018
Adjusted EPS
AmeriGas
UGI
International
Gas
Utility
Midstream &
Marketing
Q1 2018 Weather Versus: Prior Year
9.9% colder
7.0% warmer
6.2% colder 6.0% colder
UGI Corporation | Fiscal 2018 First Quarter Results
Q1 2018 Weather Versus: Normal
AmeriGas
UGI
International
Gas
Utility
Midstream &
Marketing
1.9% warmer1.1% warmer0.9% warmer1.4% warmer
5
Key Accomplishments
UGI Corporation | Fiscal 2018 First Quarter Results
• The PennEast Pipeline received final FERC certificate on January 19th
and we expect construction to begin by the end of 2018
• Strong LNG demand driven by increased peak day demand and
capacity constraints
• Gas Utility added nearly 3,800 new residential heating and
commercial customers in Q1 FY18 and remains on pace with its
infrastructure replacement program
• AmeriGas team utilized its leading distribution network to navigate a
challenging LPG supply environment in late December / early
January
• Contributions from the recent DVEP and UniverGas acquisitions as
well as Finagaz synergies helped to offset the challenging weather
environment in Europe
6
John Walsh
President & CEO, UGI
First Quarter
Financial Review
Kirk R. Oliver
Chief Financial Officer, UGI
7
Q1 2017 Q1 2018
Net income attributable to UGI Corporation (GAAP) $230.7 $365.9
Net gains on commodity derivative instruments1,3 (52.2) (4.6)
Unrealized (gains) losses on foreign currency derivative instruments1 (0.8) 0.1
Integration expenses associated with Finagaz1 5.3 1.2
Loss on extinguishment of debt 1 5.3 -
Impact from change in French tax rate (27.4) (17.3)
Impact from Tax Cuts and Jobs Act - (166.0)
Adjusted net income attributable to UGI Corporation $160.9 $179.3
Q1 Adjusted Earnings
Q1 2017 Q1 2018
UGI Corporation - Diluted Earnings Per Share (GAAP) $1.30 $2.07
Net gains on commodity derivative instruments3 (0.29) (0.03)
Unrealized (gains) losses on foreign currency derivative instruments2 (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) (0.10)
Impact from Tax Cuts and Jobs Act - (0.94)
Adjusted diluted earnings per share $0.91 $1.01
1 Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates
2 Includes the effects of rounding
3 Derivative instruments not associated with the current period.
($ millions, except per share amounts)
UGI Corporation | Fiscal 2018 First Quarter Results
8
One-time
benefit
First fiscal
quarter
U.S. Tax Cuts and Jobs Act $0.94 $0.12
French Finance Bill $0.10 $(0.03)
Net Impact $1.04 $0.09
Included in adjusted EPS No Yes
Summary of Q1 Tax Adjustments
Adjusted EPS is a non-GAAP measure. See appendix for reconciliation.UGI Corporation | Fiscal 2018 First Quarter Results
• For the full year, on a combined basis, excluding one-time benefit to EPS,
these tax law changes are expected to have a net benefit to EPS of $0.15 -
$0.25
9
Q1 Results Recap
Adjusted EPS is a non-GAAP measure. See appendix for reconciliation.UGI Corporation | Fiscal 2018 First Quarter Results
AmeriGas $0.12 - $0.01$0.03 $0.16
UGI International 0.38 (0.03) (0.01)(0.03) 0.31
Midstream & Marketing 0.17 - 0.010.03 0.21
UGI Utilities 0.25 - 0.040.05 0.34
Corp & Other (0.01) - (0.01)0.01 (0.01)
Total $0.91 $0.04$0.09 $1.01$(0.03)
Q1 FY17
Adjusted EPS
French Tax
Refunds
Core Business
Operations
French and U.S. Tax
Legislation
Q1 FY18
Adjusted EPS
$0.91 $(0.03)
$0.04
$0.09
$1.01
10
Q1 2017 Q1 2018
Adjusted EBITDA $185.1
Retail Margin 2.6
Wholesale and Other Total Margin 2.1
Partnership Operating and Administrative Expenses (3.5)
Other Income and Expense, net 7.8
Adjusted EBITDA $194.1
Financial Results – AmeriGas
Q1 2017 Q1 2018
colder
warmer
(13.5)%
(10.3)%
Weather versus
normal
9.9% colder than
prior year
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
($ millions)
Total
margin
(1.4)%
UGI Corporation | Fiscal 2018 First Quarter Results
Item Primary Drivers
Volume ↔ Late December cold weather drove sales volume after quarter-end
Total Margin ↑ Slightly higher retail unit margins and higher non-propane total margin
Operating and Admin Expenses ↑ Higher vehicle and outside services expenses
Other Income & Expense ↑ Absence of a prior year correction of gains on sales of fixed assets
11
Q1 2017 Q1 2018
Income Before Taxes $84.0
Total Margin 18.3
Operating and Administrative Expenses (8.3)
Depreciation and Amortization (4.3)
Interest Expense (0.8)
Other Income and Expense, net (6.3)
Income Before Taxes $82.6
Integration Expenses 8.1 1.9
Adjusted Income Before Taxes $92.1 $84.5
Financial Results – UGI International
Weather versus
normal
-6.2%-7.4%
7.0% warmer
than prior year
($ millions)
Adjusted Income Before Taxes is a non-GAAP measure.
Q1 2017 Q1 2018
colder
warmer
6.6%
(0.9)%
UGI Corporation | Fiscal 2018 First Quarter Results
Item Primary Drivers
Volume ↑ Volume from acquisitions offset by warmer weather
Total Margin ↑ Stronger Fx rates; margin from acquisitions
Operating and Admin Expenses ↑ Stronger Fx rates and incremental expenses from acquisitions; partially offset
by Finagaz synergies
Other Income & Expense ↓ Impact of foreign currency hedging contracts
12
Q1 2017 Q1 2018
Income Before Taxes $ 49.1
Total Margin 11.0
Operating and Administrative Expenses (3.7)
Depreciation and Amortization (2.1)
Other Income and Expenses, net (1.7)
Income Before Taxes $52.6
Financial Results –Midstream & Marketing
Q1 2017 Q1 2018
colder
warmer
(6.8)%
(14.5)%
Weather versus
normal
6.2% colder than
prior year
($ millions)
(1.1)%
UGI Corporation | Fiscal 2018 First Quarter Results
Item Primary Drivers
Total Margin ↑ Sunbury pipeline, peaking contracts, impact of colder weather, higher
electricity generation margin
Operating and Admin Expenses ↑ Higher wage and benefit expenses and greater peaking and gathering
activities
Other Income & Expense ↓ Absence of AFUDC income associated with Sunbury partially offset by greater
AFUDC income from PennEast
13
Q1 2017 Q1 2018
Income Before Taxes $72.2
Total Margin 19.4
Operating and Administrative Expenses (2.4)
Depreciation and Amortization (3.0)
Interest Expense (0.9)
Other Income and Expense, net 0.1
Income Before Taxes $85.4
Financial Results – Utilities
Q1 2017 Q1 2018
colder
warmer
(1.9)%(6.3)%
Gas Utility
weather versus
normal
6.0% colder than
prior year
($ millions)
UGI Corporation | Fiscal 2018 First Quarter Results
Item Primary Drivers
Volume ↑ Core market throughput due to colder weather and customer growth
Total Margin ↑ Core market throughput, increase in PNG base rates, higher large firm delivery
service total margin
Operating and Admin Expenses ↑ Higher distribution, uncollectible accounts, and IT expenses, partially offset by
a favorable payroll adjustment associated with prior years
Depreciation and Amortization ↑ Increased capital expenditure activity
14
A
m
eriG
as
Jerry Sheridan
President & CEO,
AmeriGas
AmeriGas
First Quarter Recap
Jerry E. Sheridan
President & CEO, AmeriGas
15
-1.4%
-6.6%
-10.3% -10.1%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
Q1 Q1 Excluding last week of December
FY18 FY17
• Volume flat due to fairly uneven weather
throughout the quarter
• Impact of late-December weather
experienced after quarter-end
• 9.9% colder versus prior year; 3.8%
colder excluding last week of
December
• Unit margins up ~$0.01 despite average
costs at Mt. Belvieu that are 64% higher
than prior year
Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation.
AmeriGas Q1 2018 Earnings Recap
$551.2
Q1 2017 Q1 2018
Adjusted EBITDA
($ in millions)
$185.1
$194.1
Weather (% of 15-year normal)
UGI Corporation | Fiscal 2018 First Quarter Results
16
Transport Fleet Responds to Ensure Security of Supply
$551.2
Northeast Southeast
UGI Corporation | Fiscal 2018 First Quarter Results
• Each green dot is an AmeriGas transport truck
• We moved significant transport assets eastward to keep service levels high
17
Growth Initiatives
Cylinder Exchange
• Demand remains high
• Volume was up 9% vs. Q1 2017
National Accounts
• Added 11 new customers in Q1
• Volume was up 7% vs. Q1 2017
Acquisitions
• No acquisitions in the quarter
• Pipeline remains strong
UGI Corporation | Fiscal 2018 First Quarter Results
18
Conclusion
and Q&A
John L. Walsh
President & CEO, UGI
19
Key Growth Drivers
• The extreme cold weather in the eastern U.S. in late December /early
January highlights need for continued investment in Nat Gas infrastructure
• PennEast will deliver incremental new pipeline capacity to areas in need
• Seeking opportunities to expand our existing midstream system
• Texas Creek gathering system and Manning LNG performing well
• Adding Steelton LNG storage and vaporization unit in second quarter
• Utility deploying record levels of capital
• AmeriGas entered the second quarter with momentum from colder weather
at the end of the first quarter; ACE and National Accounts growth remains
strong
• International’s recent acquisitions adding to earnings; Finagaz integration to
conclude in FY18
UGI Corporation | Fiscal 2018 First Quarter Results
20
Q&A
21
APPENDIX
22
• 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 and U.S. tax reform legislation. 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 tables on the following slides reconcile 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 2018 First Quarter Results
23
UGI Adjusted Net Income and EPS
UGI Corporation | Fiscal 2018 First Quarter Results
Quarter Ended December 31, 2017
Adjusted net income attributable to UGI
Corporation:
Net income attributable to UGI Corporation $ 365.9 $ 141.6 $ 61.1 $ 112.0 $ 68.3 $ (17.1)
Net gains on commodity derivative instruments not
associated with current-period transactions (net of tax of
$2.1) (a)
Unrealized losses on foreign currency derivative
instruments (net of tax of $(0.0)) (a)
Integration expenses associated with Finagaz (net of tax of
$(0.7)) (a)
Impact from change in French tax rate
Impact from Tax Cuts and Jobs Act (166.0) (113.1) 9.3 (74.3) (8.1) 20.2
Adjusted net income (loss) attributable to UGI Corporation $ 179.3 $ 28.5 $ 54.3 $ 37.7 $ 60.2 $ (1.4)
Adjusted di luted earnings per share:
UGI Corporation earnings per share - diluted $ 2.07 $ 0.80 $ 0.35 $ 0.63 $ 0.39 $ (0.10)
Net gains on commodity derivative instruments not
associated with current-period transactions
Unrealized losses on foreign currency derivative
instruments
Integration expenses associated with Finagaz
Impact from change in French tax rate
Impact from Tax Cuts and Jobs Act
Adjusted diluted earnings (loss) per share $ 1.01 $ 0.16 $ 0.31 $ 0.21 $ 0.34 $ (0.01)
(a) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
AmeriGas
Propane
Total UGI Uti l ities
Corporate &
Other
UGI
International
Midstream &
Marketing
0.1
(4.6) — — — — (4.6)
0.1 — — — —
—1.2 — 1.2 — —
(17.3) — (17.3) — — —
(0.03) (0.03) — — — —
—
— — — — — —
0.01 — 0.01 — —
0.12
(0.10) — (0.10) — — —
(0.94) (0.64) 0.05 (0.42) (0.05)
24
UGI Adjusted Net Income and EPS
UGI Corporation | Fiscal 2018 First Quarter Results
Quarter Ended December 31, 2016
Adjusted net income attributable to UGI
Corporation:
Net income attributable to UGI Corporation $ 230.7 $ 16.6 $ 88.3 $ 29.9 $ 44.3 $ 51.6
Net gains on commodity derivative instruments not
associated with current-period transactions (net of tax of
$33.3) (a) (b)
Unrealized gains on foreign currency derivative
instruments (net of tax of $0.4) (a)
(0.8) — — — — (0.8)
Loss on extinguishments of debt (net of tax of $(3.4)) (a)
Integration expenses associated with Finagaz (net of tax
of $(2.8)) (a)
Impact from change in French tax rate (27.4) (27.4)
Adjusted net income (loss) attributable to UGI
Corporation
$ 160.9 $ 21.9 $ 66.2 $ 29.9 $ 44.3 $ (1.4)
Adjusted di luted earnings per share:
Net income attributable to UGI Corporation $ 1.30 $ 0.09 $ 0.50 $ 0.17 $ 0.25 $ 0.29
Net gains on commodity derivative instruments not
associated with current-period transactions
Unrealized gains on foreign currency derivative
instruments (b)
Loss on extinguishments of debt
Integration expenses associated with Finagaz 0.03 —
Impact from change in French tax rate (0.15) (0.15)
Adjusted diluted earnings (loss) per share $ 0.91 $ 0.12 $ 0.38 $ 0.17 $ 0.25 $ (0.01)
(a) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
(b) Includes the effects of rounding.
Total
AmeriGas
Propane
UGI
International
Midstream
&
Marketing
UGI Uti l ities
Corporate
& Other
—
(52.2) — — — — (52.2)
5.3 5.3 — — —
5.3 — 5.3 — — —
(0.29) (0.29) — — — —
(0.01)
0.03 0.03 — — —
(0.01) — — — —
— — — 0.03
—
25
• 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 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 2018 First Quarter Results
26
AmeriGas EBITDA and Adjusted EBITDA
UGI Corporation | Fiscal 2018 First Quarter Results
(Mil l ions of dol lars)
EBITDA and Adjusted EBITDA
Net income attributable to AmeriGas Partners $ 104.4 $ 92.0
Income tax expense
Interest expense
Depreciation
Amortization
BITD 194.8 177.4
Subtract net gains on commodity derivative instruments not
associated with current-period transactions
Loss on extinguishments of debt - 33.2
Noncontrolling interest in net gains on commodity derivative
instruments not associated with current-period transactions
Adjusted EBITDA $ 194.1 $ 185.1
Quarter Ended December 31,
9.6 10.6
(0.7) (25.7)
2017 2016
2.4 0.8
- 0.2
40.6 40.0
37.8 34.0
27
Investor Relations:
Will Ruthrauff
610-456-6571
ruthrauffw@ugicorp.com
Brendan Heck
610-456-6608
heckb@ugicorp.com