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Business Wire 12-Nov-2018 5:15 PM
Issues 2019 Guidance
UGI Corporation (NYSE:UGI) today reported financial results for the fiscal year ended September 30, 2018.
HIGHLIGHTS
"We are pleased to report record adjusted EPS for the third consecutive year," said John L. Walsh, president and chief executive officer of UGI Corporation. "This year demonstrated our ability to remain focused on long-term objectives without sacrificing on day- to-day execution. We deployed record levels of capital, expanded our Marcellus infrastructure network, continued our strong history of acquisition and integration internationally, achieved record results from our ACE and National Accounts growth programs at AmeriGas, and rolled out technology programs to drive efficiency and enhance the customer experience. Our teams accomplished these goals while meeting the operational demands of cold weather periods domestically and the execution challenges of warm weather abroad. UGI remains well-positioned to meet our commitments to the customers and communities we serve and add significant long-term value for our shareholders."
STRATEGIC ACCOMPLISHMENTS
2019 OUTLOOK
UGI provided an adjusted EPS guidance range of $2.75-$2.95 per diluted share for the fiscal year ending September 30, 2019 1. This guidance range assumes normal weather, based upon a 15-year average, and excludes mark-to-market gains and losses on commodity and certain foreign currency derivative instruments.
EARNINGS CALL and WEBCAST
UGI Corporation will hold a live Internet Audio Webcast of its conference call to discuss fiscal 2018 earnings and other current activities at 9:00 AM ET on Tuesday, November 13, 2018. Interested parties may listen to the audio webcast both live and in replay on the Internet at http://www.ugicorp.com/investor-relations/events-and-presentations/default.aspx or at the company website http://www.ugicorp.com under Investor Relations. A telephonic replay will be available from 12:00 PM ET on November 13 through 11:59 PM ET on November 20. The replay may be accessed at (855) 859-2056, and internationally at 1-404-537-3406, conference ID 8897959.
ABOUT UGI
UGI is a distributor and marketer of energy products and services. Through subsidiaries, UGI operates natural gas and electric utilities in Pennsylvania, distributes propane both domestically and internationally, manages midstream energy and electric generation assets in Pennsylvania, and engages in energy marketing in ten states, the District of Columbia and internationally in France, Belgium, the Netherlands and the UK. UGI, through subsidiaries, is the sole General Partner and owns 26% of AmeriGas Partners, L.P. (NYSE:APU), the nation's largest retail propane distributor.
Comprehensive information about UGI Corporation is available on the Internet at http://www.ugicorp.com.
USE OF NON-GAAP MEASURES
Management uses "adjusted net income attributable to UGI Corporation" 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 Corporation 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 such derivative instruments), losses associated with extinguishments of debt, Finagaz integration expenses, impairments of tradenames and trademarks at AmeriGas, and the remeasurement impact on net deferred tax liabilities from changes in U.S. and French tax rates. 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.
Tables on the last page reconcile net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI Corporation, and diluted earnings per share, the most comparable GAAP measure, to adjusted diluted earnings per share, to reflect the adjustments referred to above.
1 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 and certain foreign currency derivative instruments we cannot reconcile fiscal year 2019 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. |
This press release 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), the timing of development of 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. |
SEGMENT RESULTS ($ in millions, except where otherwise indicated) |
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AmeriGas Propane |
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For the year ended September 30, | 2018 | 2017 | Increase (Decrease) | ||||||||||||
Revenues | $ | 2,823.0 | $ | 2,453.5 | $ | 369.5 | 15.1 | % | |||||||
Total margin (a) | $ | 1,508.3 | $ | 1,450.6 | $ | 57.7 | 4.0 | % | |||||||
Partnership operating and administrative expenses | $ | 923.1 | $ | 915.1 | $ | 8.0 | 0.9 | % | |||||||
Impairment of Partnership tradenames and trademarks | $ | 75.0 | $ | — | $ | 75.0 |
N.M. |
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Operating income | $ | 347.2 | $ | 355.3 | $ | (8.1 | ) | (2.3 | )% | ||||||
Partnership Adjusted EBITDA | $ | 605.5 | $ | 551.3 | $ | 54.2 | 9.8 | % | |||||||
Retail gallons sold (millions) | 1,081.3 | 1,046.9 | 34.4 | 3.3 | % | ||||||||||
Heating degree days - % colder (warmer) than normal | 0.3 | % | (11.3 | )% | |||||||||||
Capital expenditures | $ | 101.3 | $ | 98.1 | $ | 3.2 | 3.3 | % | |||||||
N.M. - variance is not meaningful |
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UGI International |
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For the year ended September 30, |
2018 |
2017 | Increase (Decrease) | ||||||||||||
Revenues | $ | 2,683.8 | $ | 1,877.5 | $ | 806.3 | 42.9 | % | |||||||
Total margin (a) | $ | 1,063.7 | $ | 942.2 | $ | 121.5 | 12.9 | % | |||||||
Operating and administrative expenses | $ | 703.2 | $ | 626.2 | $ | 77.0 | 12.3 | % | |||||||
Operating income | $ | 223.1 | $ | 195.7 | $ | 27.4 | 14.0 | % | |||||||
Income before income taxes | $ | 188.8 | $ | 175.0 | $ | 13.8 | 7.9 | % | |||||||
Finagaz integration expenses | $ | 30.5 | $ | 39.9 | $ | (9.4 | ) | (23.6 | )% | ||||||
Adjusted income before income taxes | $ | 219.3 | $ | 214.9 | $ | 4.4 | 2.0 | % | |||||||
LPG retail gallons sold (millions) | 886.3 | 827.9 | 58.4 | 7.1 | % | ||||||||||
Heating degree days - % colder (warmer) than normal | (5.3 | )% | 0.7 | % | |||||||||||
Capital expenditures | $ | 111.4 | $ | 90.3 | $ | 21.1 | 23.4 | % | |||||||
Base-currency results are translated into U.S. dollars based upon exchange rates experienced during the reporting periods. The functional currency of a significant portion of our UGI International results is the euro and, to a much lesser extent, the British pound sterling. Although the British pound sterling and the euro during much of Fiscal 2018 were stronger than during Fiscal 2017, the translation effects of these currencies did not negatively impact UGI International net income due to losses on foreign currency exchange contracts. |
Midstream & Marketing |
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For the year ended September 30, | 2018 | 2017 | Increase (Decrease) | ||||||||||||
Revenues | $ | 1,421.7 | $ | 1,121.2 | $ | 300.5 | 26.8 | % | |||||||
Total margin (a) | $ | 330.9 | $ | 264.5 | $ | 66.4 | 25.1 | % | |||||||
Operating and administrative expenses | $ | 114.0 | $ | 95.6 | $ | 18.4 | 19.2 | % | |||||||
Operating income | $ | 173.9 | $ | 139.2 | $ | 34.7 | 24.9 | % | |||||||
Income before income taxes | $ | 176.3 | $ | 141.4 | $ | 34.9 | 24.7 | % | |||||||
Heating degree days - % (warmer) than normal | (1.5 | )% | (12.1 | )% | |||||||||||
Capital expenditures | $ | 43.1 | $ | 117.5 | $ | (74.4 | ) | (63.3 | )% | ||||||
UGI Utilities |
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For the year ended September 30, | 2018 | 2017 | Increase | |||||||||||
Revenues | $ | 1,092.4 | $ | 887.6 | $ | 204.8 | 23.1 | % | ||||||
Total margin (a) | $ | 564.5 | $ | 515.6 | $ | 48.9 | 9.5 | % | ||||||
Operating and administrative expenses | $ | 244.6 | $ | 223.2 | $ | 21.4 | 9.6 | % | ||||||
Operating income | $ | 237.5 | $ | 228.3 | $ | 9.2 | 4.0 | % | ||||||
Income before income taxes | $ | 194.6 | $ | 188.1 | $ | 6.5 | 3.5 | % | ||||||
Adjusted net income attributable to UGI Corporation | $ | 140.9 | $ | 116.0 | $ | 24.9 | 21.5 | % | ||||||
Gas Utility system throughput - billions of cubic feet | ||||||||||||||
Core market | 80.2 | 70.4 | 9.8 | 13.9 | % | |||||||||
Total | 264.0 | 243.1 | 20.9 | 8.6 | % | |||||||||
Gas Utility Heating degree days - % (warmer) than normal | (2.1 | )% | (11.1 | )% | ||||||||||
Capital expenditures | $ | 338.5 | $ | 317.7 | $ | 20.8 | 6.5 | % | ||||||
(a) | Total margin represents total revenue less total cost of sales and excludes pre-tax gains and losses on commodity derivative instruments not associated with current period transactions. In the case of UGI Utilities, total margin is also reduced by certain revenue-related taxes. | |
REPORT OF EARNINGS - UGI CORPORATION |
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($ millions, except per share)Unaudited |
Three Months EndedSeptember 30, | Twelve Months EndedSeptember 30, | ||||||||||||||
2018 (a) | 2017 | 2018 (a) | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
AmeriGas Propane | $ | 467.0 | $ | 445.2 | $ | 2,823.0 | $ | 2,453.5 | ||||||||
UGI International | 456.4 | 366.4 | 2,683.8 | 1,877.5 | ||||||||||||
Midstream & Marketing | 264.7 | 204.9 | 1,421.7 | 1,121.2 | ||||||||||||
UGI Utilities | 126.1 | 119.6 | 1,092.4 | 887.6 | ||||||||||||
Corporate & Other (b) | (41.1 | ) | (22.2 |
) |
(369.7 | ) | (219.1 | ) | ||||||||
Total revenues | $ | 1,273.1 | $ | 1,113.9 | $ | 7,651.2 | $ | 6,120.7 | ||||||||
Operating income (loss): | ||||||||||||||||
AmeriGas Propane (c) | $ | (12.6 | ) | $ | (18.5 | ) | $ | 347.2 | $ | 355.3 | ||||||
UGI International | (10.8 | ) | (14.7 | ) | 223.1 | 195.7 | ||||||||||
Midstream & Marketing | 6.7 | 4.6 | 173.9 | 139.2 | ||||||||||||
UGI Utilities | 2.2 | 2.0 | 237.5 | 228.3 | ||||||||||||
Corporate & Other (b) | 68.8 | 54.2 | 82.4 | 85.7 | ||||||||||||
Total operating income | 54.3 | 27.6 | 1,064.1 | 1,004.2 | ||||||||||||
Income from equity investees | 1.3 | 1.3 | 4.3 | 4.3 | ||||||||||||
Loss on extinguishments of debt | — | — | — | (59.7 | ) | |||||||||||
Gain (loss) on foreign currency contracts, net | 6.4 | (7.8 | ) | 16.2 | (23.9 | ) | ||||||||||
Interest expense: | ||||||||||||||||
AmeriGas Propane | (41.1 | ) | (39.6 | ) | (163.1 | ) | (160.2 | ) | ||||||||
UGI International | (4.8 | ) | (5.4 | ) | (21.1 | ) | (20.6 | ) | ||||||||
Midstream & Marketing | (0.3 | ) | (0.5 | ) | (2.4 | ) | (2.1 | ) | ||||||||
UGI Utilities | (10.9 | ) | (9.7 | ) | (42.9 | ) | (40.2 | ) | ||||||||
Corporate & Other, net (b) | (0.2 | ) | (0.3 | ) | (0.6 | ) | (0.4 | ) | ||||||||
Total interest expense | (57.3 | ) | (55.5 | ) | (230.1 | ) | (223.5 | ) | ||||||||
Income (loss) before income taxes | 4.7 | (34.4 | ) | 854.5 | 701.4 | |||||||||||
Income tax (expense) benefit (d) | (12.5 | ) | 17.7 | (32.1 | ) | (177.6 | ) | |||||||||
Net (loss) income including noncontrolling interests | (7.8 | ) | (16.7 | ) | 822.4 | 523.8 | ||||||||||
Add net loss (deduct net income) attributable to noncontrolling interests, principally in AmeriGas Partners, L.P. | 32.2 | 21.7 | (103.7 | ) | (87.2 | ) | ||||||||||
Net income attributable to UGI Corporation | $ | 24.4 | $ | 5.0 | $ | 718.7 | $ | 436.6 | ||||||||
Earnings per share attributable to UGI shareholders: | ||||||||||||||||
Basic | $ | 0.14 | $ | 0.03 | $ | 4.13 | $ | 2.51 | ||||||||
Diluted | $ | 0.14 | $ | 0.03 | $ | 4.06 | $ | 2.46 | ||||||||
Weighted Average common shares outstanding (thousands): | ||||||||||||||||
Basic | 174,391 | 173,769 | 173,908 | 173,662 | ||||||||||||
Diluted | 177,506 | 177,175 | 176,905 | 177,159 | ||||||||||||
Supplemental information: | ||||||||||||||||
Net income (loss) attributable to UGI Corporation: | ||||||||||||||||
AmeriGas Propane | $ | (5.5 | ) | $ | (2.6 | ) | $ | 174.7 | $ | 44.6 | ||||||
UGI International | (6.4 | ) | (7.0 | ) | 138.6 | 158.6 | ||||||||||
Midstream & Marketing | 2.4 | 3.8 | 196.8 | 86.9 | ||||||||||||
UGI Utilities | (5.6 | ) | (4.1 | ) | 148.9 | 116.0 | ||||||||||
Corporate & Other (b) | 39.5 | 14.9 | 59.7 | 30.5 | ||||||||||||
Total net income attributable to UGI Corporation | $ | 24.4 | $ | 5.0 | $ | 718.7 | $ | 436.6 | ||||||||
(a) | Results for the three and twelve months ended September 30, 2018, include the impacts of the TCJA in the U.S. | |
(b) | Corporate & Other includes, among other things, net gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions and the elimination of certain intercompany transactions. | |
(c) | AmeriGas operating income for the twelve months ended September 30, 2018 includes an impairment charge of $75.0 million as a result of a plan to discontinue use of Heritage tradenames and trademarks. | |
(d) | Income tax expense for the three months and twelve months ended September 30, 2018 includes (1) (expenses) benefits from adjustments to tax-related amounts resulting from the TCJA enacted on December 22, 2017 of $(5.8) million and $166.3 million, respectively, and (2) (expenses) benefits from adjustments to net deferred income tax liabilities in France as a result of tax legislation in France of $(1.4) million and $12.1 million, respectively. Income tax expense for the three and twelve months ended September 30, 2017 includes (1) benefits from adjustments to net deferred income tax liabilities in France as a result of tax legislation in France of $1.6 million and $29.0 million, respectively and (2) a $7.6 million decrease in foreign tax credit valuation allowance. Income tax expense for the twelve months ended September 30, 2017 also includes an income tax settlement refund of $6.7 million, plus interest, in France. | |
Non-GAAP Financial Measures - Adjusted Net Income Attributable to UGI and Adjusted Diluted Earnings Per Share |
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(unaudited) |
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Fiscal Year Ended September 30, 2018 |
AmeriGasPropane |
UGIInternational |
Midstream&Marketing |
UGIUtilities |
Corporate&Other |
Total | ||||||||||||||||||
Adjusted net income attributable to UGI Corporation (millions): | ||||||||||||||||||||||||
Net income attributable to UGI Corporation | $ | 174.7 | $ | 138.6 | $ | 196.8 | $ | 148.9 | $ | 59.7 | $ | 718.7 | ||||||||||||
Net gains on commodity derivative instruments not associated with current-period transactions (net of tax of $26.7) (a) | — | — | — | — | (68.1 | ) | (68.1 | ) | ||||||||||||||||
Unrealized gains on foreign currency derivative instruments (net of tax of $9.3) (a) | — | — | — | — | (19.6 | ) | (19.6 | ) | ||||||||||||||||
Integration expenses associated with Finagaz (net of tax of $(12.0)) (a) | — | 18.5 | — | — | — | 18.5 | ||||||||||||||||||
Impairment of Partnership tradenames and trademarks (net of tax of $(5.8)) (a) | 14.5 | — | — | — | — | 14.5 | ||||||||||||||||||
Impact from December 2017 French Finance Bills | — | (12.1 | ) | — | — | — | (12.1 | ) | ||||||||||||||||
Remeasurement impact from TCJA | (112.9 | ) | 8.1 | (70.1 | ) | (8.0 | ) | 16.6 | (166.3 | ) | ||||||||||||||
Adjusted net income (loss) attributable to UGI Corporation | $ | 76.3 | $ | 153.1 | $ | 126.7 | $ | 140.9 | $ | (11.4 | ) | $ | 485.6 | |||||||||||
Adjusted diluted earnings per share: | ||||||||||||||||||||||||
UGI Corporation earnings per share – diluted | $ | 0.99 | $ | 0.78 | $ | 1.11 | $ | 0.84 | $ | 0.34 | $ | 4.06 | ||||||||||||
Net gains on commodity derivative instruments not associated with current-period transactions (b) | — | — | — | — | (0.39 | ) | (0.39 | ) | ||||||||||||||||
Unrealized gains on foreign currency derivative instruments | — | — | — | — | (0.11 | ) | (0.11 | ) | ||||||||||||||||
Integration expenses associated with Finagaz | — | 0.10 | — | — | — | 0.10 | ||||||||||||||||||
Impairment of Partnership tradenames and trademarks | 0.08 | — | — | — | — | 0.08 | ||||||||||||||||||
Impact from December 2017 French Finance Bills | — | (0.07 | ) | — | — | — | (0.07 | ) | ||||||||||||||||
Remeasurement impact from TCJA (b) | (0.64 | ) | 0.06 | (0.39 | ) | (0.04 | ) | 0.08 | (0.93 | ) | ||||||||||||||
Adjusted diluted earnings (loss) per share | $ | 0.43 | $ | 0.87 | $ | 0.72 | $ | 0.80 | $ | (0.08 | ) | $ | 2.74 | |||||||||||
Fiscal Year Ended September 30, 2017 |
AmeriGasPropane |
UGIInternational |
Midstream&Marketing |
UGIUtilities |
Corporate&Other |
Total | ||||||||||||||||||
Adjusted net income attributable to UGI Corporation (millions): | ||||||||||||||||||||||||
Net income attributable to UGI Corporation | $ | 44.6 | $ | 158.6 | $ | 86.9 | $ | 116.0 | $ | 30.5 | $ | 436.6 | ||||||||||||
Net gains on commodity derivative instruments not associated with current-period transactions (net of tax of $31.9) (a) | — | — | — | — | (51.2 | ) | (51.2 | ) | ||||||||||||||||
Unrealized losses on foreign currency derivative instruments (net of tax of $(9.9)) (a) | — | — | — | — | 13.9 | 13.9 | ||||||||||||||||||
Loss on extinguishments of debt (net of tax of $(6.1)) (a) | 9.6 | — | — | — | — | 9.6 | ||||||||||||||||||
Integration expenses associated with Finagaz (net of tax of $(13.7)) (a) | — | 26.2 | — | — | — | 26.2 | ||||||||||||||||||
Impact from December 2016 French Finance Bills | — | (29.0 | ) | — | — | — | (29.0 | ) | ||||||||||||||||
Adjusted net income (loss) attributable to UGI Corporation | $ | 54.2 | $ | 155.8 | $ | 86.9 | $ | 116.0 | $ | (6.8 | ) | $ | 406.1 | |||||||||||
Adjusted diluted earnings per share: | ||||||||||||||||||||||||
UGI Corporation earnings per share – diluted | $ | 0.25 | $ | 0.89 | $ | 0.49 | $ | 0.66 | $ | 0.17 | $ | 2.46 | ||||||||||||
Net gains on commodity derivative instruments not associated with current-period transactions | — | — | — | — | (0.29 | ) | (0.29 | ) | ||||||||||||||||
Unrealized losses on foreign currency derivative instruments | — | — | — | — | 0.08 | 0.08 | ||||||||||||||||||
Loss on extinguishments of debt | 0.05 | — | — | — | — | 0.05 | ||||||||||||||||||
Integration expenses associated with Finagaz | — | 0.15 | — | — | — | 0.15 | ||||||||||||||||||
Impact from December 2016 French Finance Bills | — | (0.16 | ) | — | — | — | (0.16 | ) | ||||||||||||||||
Adjusted diluted earnings (loss) per share | $ | 0.30 | $ | 0.88 | $ | 0.49 | $ | 0.66 | $ | (0.04 | ) | $ | 2.29 | |||||||||||
(a) | Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates. | |
(b) | Includes the effects of rounding. | |
View source version on businesswire.com: https://www.businesswire.com/news/home/20181112005787/en/