UGI Corporation (NYSE: UGI) today reported financial results for
the fiscal quarter ended March 31, 2024 and announced that its
Board has unanimously decided to conclude the strategic review of
its LPG businesses, which was primarily focused on AmeriGas
Propane.
HIGHLIGHTS
- Q2 GAAP diluted EPS of $2.30 and adjusted diluted EPS of $1.97
compared to GAAP diluted EPS of $0.51 and adjusted diluted EPS of
$1.68 in the prior-year period.
- Year-to-date GAAP diluted EPS of $2.74 and adjusted diluted EPS
of $3.16 compared to GAAP diluted EPS of $(4.02) and adjusted
diluted EPS of $2.82 in the prior-year period.
- Year-to-date reportable segments earnings before interest
expense and income taxes1 ("EBIT") of $1,073 million compared to
$987 million in the prior-year period.
- Strong second quarter results despite warmer than normal
weather across our service territories, led by higher margins from
natural gas marketing activities in our Midstream & Marketing
business and reduced operating expenses across the entity.
- Concludes the strategic review of the LPG businesses and
retains ownership of AmeriGas Propane.
- Repositions UGI to drive a high-performing, customer centered
and results-driven organization, targeting a long-term EPS growth
rate of 4 – 6%.
- Announces the 140th consecutive year of paying dividends and
affirms its commitment to return value to shareholders through
dividend payments.
- Affirms its fiscal 2024 adjusted diluted EPS guidance range of
$2.70 - $3.002 per share.
"We are pleased with the strong fiscal second quarter
performance in the midst of warmer than normal weather across our
service territories," said Mario Longhi, Interim President and
Chief Executive Officer. “Our natural gas businesses delivered the
highest second quarter earnings, reporting a 32% growth over the
prior year. Across our business, we also made important strides in
implementing effective cost control as we strive to improve
operational efficiency. These results reflect the resilience of our
portfolio and the commitment of our team to deliver long-term value
to our shareholders.”
STRATEGIC REVIEW CONCLUSION
After extensive deliberation, the Board has determined that in
the current market the best path forward to maximize shareholder
value is to retain ownership of AmeriGas Propane.
During the review, the company and its financial advisors
evaluated several value creation opportunities including a
potential sale, spin, and joint venture of AmeriGas. While the
company conducted due diligence with multiple strategic and
financial parties, the Board decided that the company should focus
on a restructuring and operational improvement plan for AmeriGas.
The review concluded that disciplined execution of a revised
operational strategy and optimization of UGI’s diverse mix of
strategically located assets best positions the company to create
long-term shareholder value.
Mario Longhi said, “After a comprehensive review process, the
Board agreed that in the current market, the best path forward in
creating shareholder value is to execute on its repositioned
long-term strategy and strengthen the balance sheet. This includes
maintaining an intense focus on customer retention, improved free
cash flow generation, effective cost control and disciplined
capital allocation. Although the process has concluded, we remain
open to all opportunities to optimize our portfolio and unlock
further value for shareholders.”
"For the fiscal year, we are on track to deliver full-year
results within our fiscal 2024 adjusted EPS guidance range. We are
confident that diligent execution on the fundamentals will enable
UGI to build a strong momentum of balanced growth and value
creation.”
EARNINGS CALL AND WEBCAST
UGI Corporation will hold a live Internet Audio Webcast of its
conference call to discuss the quarterly earnings and other current
activities at 9:00 AM ET on Thursday, May 2, 2024. Interested
parties may listen to the audio webcast both live and in replay on
the Internet at
https://www.ugicorp.com/investors/financial-reports/presentations
or by visiting the company website https://www.ugicorp.com and
clicking on Investors and then Presentations. A replay of the
webcast will be available after the event through to 11:59 PM ET
May 1, 2025.
ABOUT UGI
UGI Corporation (NYSE: UGI) is a distributor and marketer of
energy products and services in the US and Europe. UGI offers safe,
reliable, affordable, and sustainable energy solutions to customers
through its subsidiaries, which provide natural gas transmission
and distribution, electric generation and distribution, midstream
services, propane distribution, renewable natural gas generation,
distribution and marketing, and energy marketing services.
Comprehensive information about UGI Corporation is available on
the Internet at https://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. Management believes that these non-GAAP
measures provide meaningful information to investors about UGI’s
performance because they eliminate the impacts 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. Volatility in net income attributable
to 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.
The tables on the last page of this press release 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 Reportable segments' EBIT represents an aggregate of our
reportable operating segment level EBIT, as determined in
accordance with GAAP.
2 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 2024 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.
USE OF FORWARD-LOOKING STATEMENTS
This press release contains statements, estimates and
projections that are forward-looking statements (as defined in
Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended). Such
statements use forward-looking words such as “believe,” “plan,”
“anticipate,” “continue,” “estimate,” “expect,” “may,” or other
similar words and terms of similar meaning, although not all
forward-looking statements contain such words. These statements
discuss plans, strategies, events or developments that we expect or
anticipate will or may occur in the future. Management believes
that these are 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; accordingly, there is no assurance that results will be
realized. You should read UGI’s Annual Report on Form 10-K for a
more extensive list of factors that could affect results. We
undertake no obligation (and expressly disclaim any obligation) to
update publicly any forward-looking statement, whether as a result
of new information or future events, except as required by the
federal securities laws. Among them are adverse weather conditions
(including increasingly uncertain weather patterns due to climate
change) resulting in reduced demand, the seasonal nature of our
business, and disruptions in our operations and supply chain; cost
volatility and availability of energy products, including propane
and other LPG, natural gas, and electricity, as well as the
availability of LPG cylinders, and the capacity to transport
product to our customers; changes in domestic and foreign laws and
regulations, including safety, health, tax, transportation,
consumer protection, data privacy, accounting, and environmental
matters, such as regulatory responses to climate change; the
inability to timely recover costs through utility rate proceedings;
increased customer conservation measures due to high energy prices
and improvements in energy efficiency and technology resulting in
reduced demand; adverse labor relations and our ability to address
existing or potential workforce shortages; the impact of pending
and future legal or regulatory proceedings, inquiries or
investigations; competitive pressures from the same and alternative
energy sources; failure to acquire new customers or retain current
customers, thereby reducing or limiting any increase in revenues;
liability for environmental claims; customer, counterparty,
supplier, or vendor defaults; liability for uninsured claims and
for claims in excess of insurance coverage, including those for
personal injury and property damage arising from explosions, acts
of war, terrorism, natural disasters, pandemics and other
catastrophic events that may result from operating hazards and
risks incidental to generating and distributing electricity and
transporting, storing and distributing natural gas and LPG in all
forms; transmission or distribution system service interruptions;
political, regulatory and economic conditions in the United States,
Europe and other foreign countries, including uncertainties related
to the war between Russia and Ukraine, the European energy crisis,
and foreign currency exchange rate fluctuations (particularly the
euro); credit and capital market conditions, including reduced
access to capital markets and interest rate fluctuations; changes
in commodity market prices resulting in significantly higher cash
collateral requirements; impacts of our indebtedness and the
restrictive covenants in our debt agreements; reduced distributions
from subsidiaries impacting the ability to pay dividends or service
debt; changes in Marcellus and Utica Shale gas production; the
availability, timing and success of our acquisitions, commercial
initiatives and investments to grow our businesses; our ability to
successfully integrate acquired businesses and achieve anticipated
synergies; the interruption, disruption, failure, malfunction, or
breach of our information technology systems, and those of our
third-party vendors or service providers, including due to
cyber-attack; the inability to complete pending or future energy
infrastructure projects; our ability to achieve the operational
benefits and cost efficiencies expected from the completion of
pending and future business transformation initiatives, including
the impact of customer service disruptions resulting in potential
customer loss due to the transformation activities; our ability to
attract, develop, retain and engage key employees; uncertainties
related to global pandemics; the impact of proposed or future tax
legislation; the impact of declines in the stock market or bond
market, and a low interest rate environment, on our pension
liability; our ability to protect our intellectual property; and
our ability to overcome supply chain issues that may result in
delays or shortages in, as well as increased costs of, equipment,
materials or other resources that are critical to our business
operations.
SEGMENT RESULTS ($ in millions, except where otherwise
indicated)
Utilities
For the fiscal quarter ended March 31,
2024
2023
(Decrease) Increase
Revenues
$
646
$
774
$
(128)
(17) %
Total margin (a)
$
363
$
338
$
25
7 %
Operating and administrative expenses
$
97
$
97
$
—
— %
Operating income
$
225
$
203
$
22
11 %
Earnings before interest expense and
income taxes
$
226
$
205
$
21
10 %
Gas Utility system throughput - billions
of cubic feet
Core market
45
44
1
2 %
Total
121
125
(4)
(3) %
Gas Utility heating degree days - %
(warmer) than normal (b)
(16.4) %
(19.7) %
Capital expenditures
$
91
$
133
$
(42)
(32) %
- Gas Utility service territory experienced temperatures that
were 16% warmer than normal and 5% colder than the prior-year
period.
- Core market volumes increased due to colder than prior-year
weather and growth in core market customers.
- Total margin increased $25 million primarily due to higher gas
and electric base rates, higher DSIC benefits, and continued
customer growth.
- Operating income increased $22 million due to the higher total
margin, partially offset by higher depreciation expense ($4
million) from continued distribution system capital expenditure
activity.
Midstream & Marketing
For the fiscal quarter ended March 31,
2024
2023
(Decrease) Increase
Revenues
$
483
$
638
$
(155)
(24) %
Total margin (a)
$
200
$
159
$
41
26 %
Operating and administrative expenses
$
29
$
35
$
(6)
(17) %
Operating income
$
151
$
103
$
48
47 %
Earnings before interest expense and
income taxes
$
153
$
105
$
48
46 %
Heating degree days - % (warmer) than
normal (b)
(13.4) %
(18.0) %
Capital expenditures
$
33
$
23
$
10
43 %
- Temperatures were 13% warmer than normal and 3% colder than the
prior-year period.
- Total margin increased $41 million primarily reflecting higher
margins from natural gas marketing activities, including the
effects of capacity management and peaking activities.
- Operating and administrative expenses decreased $6 million
largely due to lower employee compensation and benefit, and
maintenance expenses.
- Operating income increased $48 million largely reflecting
higher total margin and reduced operating and administrative
expenses.
UGI International
For the fiscal quarter ended March 31,
2024
2023
(Decrease) Increase
Revenues
$
673
$
948
$
(275)
(29) %
Total margin (a)
$
305
$
315
$
(10)
(3) %
Operating and administrative expenses
(a)
$
155
$
171
$
(16)
(9) %
Operating income
$
124
$
120
$
4
3 %
Earnings before interest expense and
income taxes
$
131
$
128
$
3
2 %
LPG retail gallons sold (millions)
221
222
(1)
— %
Heating degree days - % (warmer) than
normal (b)
(13.2) %
(7.0) %
Capital expenditures
$
19
$
30
$
(11)
(37) %
UGI International base-currency results are translated into U.S.
dollars based upon exchange rates experienced during the reporting
periods. Differences in these translation rates affect the
comparison of line item amounts presented in the table above. 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. During the 2024 and 2023 three-month
periods, the average unweighted euro-to-dollar translation rates
were approximately $1.09 and $1.07, respectively, and the average
unweighted British pound sterling-to-dollar translation rates were
approximately $1.27 and $1.22, respectively.
- Temperatures were 13% warmer than normal and 8% warmer than the
prior-year period.
- Retail volume was comparable to the prior-year period as the
effects of the warmer weather were largely offset by higher autogas
volumes and natural gas to LPG conversion.
- Total margin decreased $10 million primarily due to reduced
margins from the non-core energy marketing operations, partially
offset by higher LPG unit margins and the translation effects of
the stronger foreign currencies (~$5 million).
- Operating and administrative expenses decreased $16 million
reflecting lower personnel-related and maintenance expenses,
partially offset by the translation effects of the stronger foreign
currencies (~$3 million).
- Operating income increased $4 million reflecting lower
operating and administrative expenses ($16 million), largely offset
by reduced total margin and lower foreign currency transaction
gains ($4 million).
AmeriGas Propane
For the fiscal quarter ended March 31,
2024
2023
(Decrease) Increase
Revenues
$
795
$
867
$
(72)
(8) %
Total margin (a)
$
433
$
437
$
(4)
(1) %
Operating and administrative expenses
$
258
$
263
$
(5)
(2) %
Operating income/earnings before interest
expense and income taxes
$
138
$
138
$
—
— %
Retail gallons sold (millions)
261
279
(18)
(6) %
Heating degree days - % (warmer) colder
than normal (b)
(8.6) %
(4.8) %
Capital expenditures
$
24
$
28
$
(4)
(14) %
- Temperatures were 9% warmer than normal and 3% warmer than the
prior-year period.
- Retail gallons sold decreased 6% due to warmer weather and
continued customer attrition.
- Total margin decreased $4 million as the impact of lower
volumes was partially offset by higher LPG unit margins ($19
million).
- Operating and administrative expenses decreased $5 million
reflecting, among other things, lower compensation and advertising
expenses, partially offset by higher vehicle expenses ($4
million).
- Operating income was comparable to the prior year as lower
total margin was offset by reduced operating and administrative
expenses.
(a) Total margin represents total revenue
less total cost of sales. In the case of Utilities, total margin is
also reduced by certain revenue-related taxes.
(b) Deviation from average heating degree
days is determined on a 10-year period utilizing volume-weighted
weather data.
REPORT OF EARNINGS – UGI CORPORATION
(Millions of dollars, except per
share)
(Unaudited)
Three Months Ended
March 31,
Six Months Ended
March 31,
Twelve Months Ended
March 31,
2024
2023
2024
2023
2024
2023
Revenues:
Utilities
$
646
$
774
$
1,139
$
1,366
$
1,627
$
1,860
Midstream & Marketing
483
638
877
1,307
1,417
2,427
UGI International
673
948
1,398
1,825
2,538
3,238
AmeriGas Propane
795
867
1,424
1,633
2,372
2,750
Corporate & Other (a)
(130)
(121)
(250)
(266)
(303)
(443)
Total revenues
$
2,467
$
3,106
$
4,588
$
5,865
$
7,651
$
9,832
Earnings (loss) before interest expense
and income taxes:
Utilities
226
205
$
361
$
333
$
393
$
377
Midstream & Marketing
153
105
255
212
334
309
UGI International
131
128
248
194
288
246
AmeriGas Propane
138
138
209
248
229
242
Total reportable segments
648
576
1,073
987
1,244
1,174
Corporate & Other (a)
81
(319)
(124)
(1,961)
(779)
(1,719)
Total earnings (loss) before interest
expense and income taxes
729
257
949
(974)
465
(545)
Interest expense:
Utilities
(24)
(21)
(47)
(42)
(87)
(75)
Midstream & Marketing
(9)
(11)
(20)
(22)
(43)
(43)
UGI International
(11)
(9)
(22)
(16)
(43)
(29)
AmeriGas Propane
(40)
(39)
(81)
(82)
(162)
(163)
Corporate & Other, net (a)
(16)
(13)
(30)
(23)
(59)
(41)
Total interest expense
(100)
(93)
(200)
(185)
(394)
(351)
Income (loss) before income taxes
629
164
749
(1,159)
71
(896)
Income tax (expenses) benefits (b)
(133)
(54)
(159)
315
(139)
288
Net Income (loss) including noncontrolling
interests
496
110
590
(844)
(68)
(608)
Add net loss attributable to
noncontrolling interests
—
—
—
—
—
1
Net income (loss) attributable to UGI
Corporation
$
496
$
110
$
590
$
(844)
$
(68)
$
(607)
Earnings (loss) per share attributable to
UGI shareholders:
Basic
$
2.36
$
0.52
$
2.81
$
(4.02)
$
(0.32)
$
(2.89)
Diluted
$
2.30
$
0.51
$
2.74
$
(4.02)
$
(0.32)
$
(2.89)
Weighted Average common shares outstanding
(thousands):
Basic
209,826
209,857
209,789
209,902
210,347
209,962
Diluted
215,245
216,120
215,393
209,902
210,347
209,962
Supplemental information:
Net income (loss) attributable to UGI
Corporation:
Utilities
$
155
$
143
$
241
$
224
$
236
$
233
Midstream & Marketing
120
66
212
143
262
197
UGI International
91
92
174
137
209
166
AmeriGas Propane
37
73
53
122
2
62
Total reportable segments
403
374
680
626
709
658
Corporate & Other (a)
93
(264)
(90)
(1,470)
(777)
(1,265)
Total net income (loss) attributable to
UGI Corporation
$
496
$
110
$
590
$
(844)
$
(68)
$
(607)
(a) Corporate & Other includes
specific items attributable to our reportable segments that are not
included in profit measures used by our Chief Operating Decision
Maker in assessing our reportable segments' performance or
allocating resources. These specific items are shown in the section
titled "Non-GAAP Financial Measures - Adjusted Net Income (Loss)
Attributable to UGI and Adjusted Diluted Earnings Per Share" below.
Corporate & Other also includes the elimination of certain
intercompany transactions.
(b) Income tax expense for the twelve
months ended March 31, 2023 includes a $20 million income tax
benefit from adjustments as a result of the changes in the
Pennsylvania corporate income tax rates for future years, signed
into law in July 2022.
Non-GAAP Financial Measures - Adjusted
Net Income Attributable to UGI and Adjusted Diluted Earnings Per
Share.
The following tables reconcile net income attributable to UGI
Corporation, the most directly comparable GAAP measure, to adjusted
net income attributable to UGI Corporation, and reconcile diluted
earnings per share, the most comparable GAAP measure, to adjusted
diluted earnings per share, to reflect the adjustments referred to
previously:
Three Months Ended March 31,
Six Months Ended March 31,
Twelve Months Ended March 31,
2024
2023
2024
2023
2024
2023
Adjusted net income (loss) attributable
to UGI Corporation (millions):
Net income (loss) attributable to UGI
Corporation
$
496
$
110
$
590
$
(844)
$
(68)
$
(607)
Net (gains) losses on commodity derivative
instruments not associated with current-period transactions (net of
tax of $19, $(66), $1, $(429), $11 and $(382), respectively)
(110)
235
(33)
1,234
(42)
1,019
Unrealized (gains) losses on foreign
currency derivative instruments (net of tax of $0, $(3), $(6),
$(14), $(3) and $(1), respectively)
(1)
7
13
36
4
4
Loss associated with impairment of
AmeriGas Propane goodwill (net of tax of $0, $0, $0, $0, $4, and
$0, respectively)
—
—
—
—
660
—
Loss on extinguishment of debt (net of tax
of $0, $0, $0, $0, $(2) and $0, respectively)
—
—
—
—
7
—
Impairment of certain equity method
investments (net of tax of $0, $0, $0, $0, $0 and $(13),
respectively)
—
—
—
—
—
22
Business transformation expenses (net of
tax of $0, $0, $0, $(1), $(2), and $(2), respectively)
—
2
—
3
4
7
Costs associated with exit of the UGI
International energy marketing business (net of tax of $(1), $4,
$(14), $(64), $(17) and $(65), respectively)
1
4
66
170
77
174
Impact of change in tax law
—
—
—
—
—
(19)
AmeriGas operations enhancement for growth
project (net of tax of $(1), $(1), $(3), $(3), $(6) and $(3),
respectively)
5
5
10
10
18
10
Restructuring costs (net of tax of $(9),
$0, $(10), $0, $(10) and $(5), respectively)
27
—
30
—
30
11
Net gain on sale of UGI headquarters
building (net of tax of $0, $0, $0, $0, $4 and $0,
respectively)
—
—
—
—
(10)
—
Impairment of assets (net of tax of $(2),
$0, (2), $0, $(2) and $0, respectively)
5
—
5
—
5
—
Total adjustments (1)
(73)
253
91
1,453
753
1,228
Adjusted net income attributable to UGI
Corporation
$
423
$
363
$
681
$
609
$
685
$
621
Adjusted diluted earnings per
share:
UGI Corporation earnings (loss) per share
— diluted (2)
$
2.30
$
0.51
$
2.74
$
(4.02)
$
(0.32)
$
(2.89)
Net (gains) losses on commodity derivative
instruments not associated with current-period transactions
(0.50)
1.09
(0.16)
5.80
(0.29)
4.78
Unrealized losses (gains) on foreign
currency derivative instruments
—
0.03
0.06
0.17
0.02
0.02
Loss associated with impairment of
AmeriGas Propane goodwill
—
—
—
—
3.14
—
Loss on extinguishment of debt
—
—
—
—
0.03
—
Impairment of certain equity method
investments
—
—
—
—
—
0.10
Business transformation expenses
—
0.01
—
0.01
0.02
0.03
Costs associated with the exit of the UGI
International energy marketing business
—
0.02
0.31
0.81
0.37
0.83
Impact of change in tax law
—
—
—
—
—
(0.09)
AmeriGas operations enhancement for growth
project
0.02
0.02
0.05
0.05
0.09
0.05
Restructuring costs
0.13
—
0.14
—
0.14
0.05
Net gain on sale of UGI headquarters
building
—
—
—
—
(0.05)
—
Impairment of assets
0.02
—
0.02
—
0.02
—
Total adjustments (2)
(0.33)
1.17
0.42
6.84
3.49
5.77
Adjusted diluted earnings per share
(2)
$
1.97
$
1.68
$
3.16
$
2.82
$
3.17
$
2.88
(1)
Income taxes associated with pre-tax
adjustments determined using statutory business unit tax rates.
(2)
The loss per share for the twelve months
ended March 31, 2024, was determined excluding the effect of 5.76
million dilutive shares as the impact of such shares would have
been antidilutive to the net loss for the period. Adjusted earnings
per share for the twelve months ended March 31, 2024, was
determined based upon fully diluted shares of 216.11 million. The
loss per share for the six and twelve months ended March 31, 2023,
was determined excluding the effect of 6.35 million dilutive shares
and 5.99 million dilutive shares, respectively, as the impact of
such shares would have been antidilutive to the net loss for the
period. Adjusted earnings per share for the six and twelve months
ended March 31, 2023, was determined based upon fully diluted
shares of 216.25 million and 215.95 million, respectively.
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