Pennsylvania | 1-1398 | 23-1174060 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
2525 N. 12th Street, Suite 360 P.O. Box 12677 Reading, PA | 19612 | |
(Address of principal executive offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Emerging growth company | ¨ |
99.1 | Press Release of UGI Corporation, the parent of UGI Utilities, Inc., dated January 31, 2018. |
UGI Utilities, Inc. | ||
February 1, 2018 | By: | /s/ G. Gary Garcia |
Name: | G. Gary Garcia | |
Title: | Assistant Treasurer |
EXHIBIT NO. | DESCRIPTION |
Press Release of UGI Corporation, the parent of UGI Utilities, Inc., dated January 31, 2018. |
• | GAAP EPS of $2.07 and adjusted EPS of $1.01 per diluted share compared to GAAP EPS of $1.30 and adjusted EPS of $0.91 per diluted share in the prior year |
• | Weather slightly warmer than normal in all service territories; colder than the prior year in AmeriGas, UGI Utilities, and Midstream & Marketing service territories; warmer than the prior year in UGI International service territory |
• | Received certificate of public necessity and convenience from FERC for PennEast pipeline on January 19, 2018 |
• | Completed construction of Steelton LNG storage and vaporization facility in December |
• | Both the United States and France enacted tax legislation that generated one-time benefits to EPS of $1.04, on a combined basis, in the current quarter that were excluded from adjusted EPS. |
• | For the full year, on a combined basis, these tax law changes are expected to have a net benefit to EPS of $0.15 to $0.25, $0.09 of which was recorded in the first quarter. |
Summary of Q1 Tax Legislation Impacts | 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 |
• | AmeriGas: Cylinder Exchange and National accounts volumes up mid single digits with slightly higher bulk unit margins; weather colder than prior year but largely due to the last week of the quarter |
• | UGI International: Impact of weather that was 7% warmer than the prior year was offset by contributions from the acquisition of DVEP as well as Total's LPG distribution business in Italy (UniverGas), and Finagaz synergies |
• | Midstream & Marketing: Margin growth from Sunbury pipeline, peaking demand and electric generation |
• | UGI Utilities: Added ~3,800 residential and commercial heating customers; margin benefit of PNG rate case; weather 6% colder than prior year |
For the fiscal quarter ended December 31, | 2017 | 2016 | Increase (Decrease) | ||||||||||||
Revenues | $ | 787.3 | $ | 677.2 | $ | 110.1 | 16.3 | % | |||||||
Total margin (a) | $ | 421.2 | $ | 416.5 | $ | 4.7 | 1.1 | % | |||||||
Partnership operating and administrative expenses | $ | 230.3 | $ | 226.8 | $ | 3.5 | 1.5 | % | |||||||
Operating income | $ | 147.9 | $ | 141.9 | $ | 6.0 | 4.2 | % | |||||||
Partnership Adjusted EBITDA | $ | 194.1 | $ | 185.1 | $ | 9.0 | 4.9 | % | |||||||
Retail gallons sold (millions) | 305.0 | 305.7 | (0.7 | ) | (0.2 | )% | |||||||||
Heating degree days - % (warmer) than normal (b) | (1.4 | )% | (10.3 | )% | |||||||||||
Capital expenditures | $ | 23.6 | $ | 26.4 | $ | (2.8 | ) | (10.6 | )% |
• | Retail gallons sold were approximately equal to the prior year. Temperatures were 9.9% colder than the prior year, however they were significantly impacted by the last week of the quarter which was nearly 60% colder than the prior year. Excluding that week, temperatures were 6.6% warmer than normal and 3.8% colder than the prior year. |
• | Total margin increased primarily reflecting slightly higher retail unit margins and higher non-propane margin. |
• | Partnership operating and administrative expenses were slightly higher than the prior year primarily reflecting higher vehicle and outside services expenses. |
• | Partnership Adjusted EBITDA increased principally reflecting the higher total margin and higher other operating income due to the absence of a prior-year correction of previously recorded gains on sale of assets, partially offset by higher operating expenses. |
For the fiscal quarter ended December 31, | 2017 | 2016 | Increase (Decrease) | ||||||||||||
Revenues | $ | 784.2 | $ | 539.1 | $ | 245.1 | 45.5 | % | |||||||
Total margin (a) | $ | 299.4 | $ | 281.1 | $ | 18.3 | 6.5 | % | |||||||
Operating and administrative expenses | $ | 173.9 | $ | 165.6 | $ | 8.3 | 5.0 | % | |||||||
Operating income | $ | 93.1 | $ | 88.9 | $ | 4.2 | 4.7 | % | |||||||
Income before income taxes | $ | 82.6 | $ | 84.0 | $ | (1.4 | ) | (1.7 | )% | ||||||
Finagaz integration expenses | $ | 1.9 | $ | 8.1 | $ | (6.2 | ) | (76.5 | )% | ||||||
Adjusted income before income taxes | $ | 84.5 | $ | 92.1 | $ | (7.6 | ) | (8.3 | )% | ||||||
LPG retail gallons sold (millions) | 263.6 | 254.2 | 9.4 | 3.7 | % | ||||||||||
Heating degree days - % (warmer) colder than normal (b) | (0.9 | )% | 6.6 | % | |||||||||||
Capital expenditures | $ | 21.7 | $ | 21.5 | $ | 0.2 | 0.9 | % |
• | Total margin increased primarily reflecting the volume associated with acquired operations and the translation effects of a stronger Euro and British Pound Sterling, partially offset by lower volume at our legacy business due to weather that was 7% warmer than the prior year and slightly lower unit margins. |
• | Operating expenses increased primarily due to the effects of currency translation and approximately $10 million of incremental expenses associated with acquired operations, partially offset by Finagaz synergies and lower integration costs. |
• | Operating income increased primarily reflecting the higher total margin, partially offset by the higher operating and administrative expenses and higher depreciation and amortization expense. |
• | Adjusted income before income taxes was lower primarily due to warmer weather and slightly lower unit margins, partially offset by the benefit of acquired operations and Finagaz synergies. |
For the fiscal quarter ended December 31, | 2017 | 2016 | Increase (Decrease) | ||||||||||||
Revenues | $ | 328.0 | $ | 269.8 | $ | 58.2 | 21.6 | % | |||||||
Total margin (a) | $ | 89.0 | $ | 78.0 | $ | 11.0 | 14.1 | % | |||||||
Operating and administrative expenses | $ | 26.7 | $ | 23.0 | $ | 3.7 | 16.1 | % | |||||||
Operating income | $ | 52.3 | $ | 49.7 | $ | 2.6 | 5.2 | % | |||||||
Income before income taxes | $ | 52.6 | $ | 49.1 | $ | 3.5 | 7.1 | % | |||||||
Heating degree days - % (warmer) than normal (b) | (1.1 | )% | (6.8 | )% | |||||||||||
Capital expenditures | $ | 11.3 | $ | 61.5 | $ | (50.2 | ) | (81.6 | )% |
• | Temperatures across Midstream & Marketing's service territory were 1.1% warmer than normal and 6.2% colder than the prior year. |
• | Total margin increased, driven primarily by higher natural gas gathering margin related to the Sunbury pipeline, higher peaking margin due to additional contracts and the impact of colder weather, and higher electric generation margin due to higher volume and unit margins, primarily at our Hunlock generation facility. |
• | Operating income and income before taxes increased primarily reflecting higher total margin, partially offset by higher operating and administrative expenses and higher depreciation expense. |
• | Capital expenditures in the prior year include construction costs associated with the Sunbury pipeline. |
For the fiscal quarter ended December 31, | 2017 | 2016 | Increase | ||||||||||||
Revenues | $ | 323.1 | $ | 261.4 | $ | 61.7 | 23.6 | % | |||||||
Total margin (a) | $ | 170.0 | $ | 150.6 | $ | 19.4 | 12.9 | % | |||||||
Operating and administrative expenses | $ | 54.7 | $ | 52.3 | $ | 2.4 | 4.6 | % | |||||||
Operating income | $ | 96.3 | $ | 82.2 | $ | 14.1 | 17.2 | % | |||||||
Income before income taxes | $ | 85.4 | $ | 72.2 | $ | 13.2 | 18.3 | % | |||||||
Gas Utility system throughput - billions of cubic feet | |||||||||||||||
Core market | 25.5 | 23.0 | 2.5 | 10.9 | % | ||||||||||
Total | 69.2 | 66.2 | 3.0 | 4.5 | % | ||||||||||
Gas Utility heating degree days - % (warmer) than normal (b) | (1.9 | )% | (6.3 | )% | |||||||||||
Capital expenditures | $ | 71.7 | $ | 64.1 | $ | 7.6 | 11.9 | % |
• | Gas Utility service territory experienced temperatures that were approximately 1.9% warmer than normal and 6.0% colder than the prior year. |
• | Core market volumes increased due colder weather and customer growth. |
• | Total margin increased primarily reflecting higher margin from Gas Utility core market customers due to higher core market throughput and the higher PNG base rates, and higher large-firm delivery service margin. |
• | Operating and administrative expenses increased over the prior year primarily due to higher distribution, uncollectible accounts, and IT expenses, partially offset by a favorable payroll tax adjustment related to a prior year. |
• | Operating income and income before income taxes increased reflecting the higher total margin, partially offset by the higher operating and administrative expenses and depreciation expenses. |
(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 reduced by revenue-related taxes. |
(b) | Average temperatures based upon heating degree days for all of our business segments presented are now based upon recent 15-year periods as we believe more recent temperatures are a better indication of normal weather. Prior period weather statistics have been restated for AmeriGas Propane, Midstream & Marketing, and UGI International, as appropriate, to conform to these new periods. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
AmeriGas Propane | $ | 787.3 | $ | 677.2 | $ | 2,563.6 | $ | 2,344.9 | |||||||
UGI International | 784.2 | 539.1 | 2,122.6 | 1,829.7 | |||||||||||
Midstream & Marketing | 328.0 | 269.8 | 1,179.4 | 909.5 | |||||||||||
UGI Utilities | 323.1 | 261.4 | 949.3 | 831.9 | |||||||||||
Corporate & Other (a) | (97.4 | ) | (68.0 | ) | (248.5 | ) | (157.4 | ) | |||||||
Total revenues | $ | 2,125.2 | $ | 1,679.5 | $ | 6,566.4 | $ | 5,758.6 | |||||||
Operating income (loss): | |||||||||||||||
AmeriGas Propane | $ | 147.9 | $ | 141.9 | $ | 361.3 | $ | 368.6 | |||||||
UGI International | 93.1 | 88.9 | 199.9 | 210.4 | |||||||||||
Midstream & Marketing | 52.3 | 49.7 | 141.8 | 153.5 | |||||||||||
UGI Utilities | 96.3 | 82.2 | 242.4 | 234.8 | |||||||||||
Corporate & Other (a) | 2.2 | 103.5 | (15.6 | ) | 181.4 | ||||||||||
Total operating income | 391.8 | 466.2 | 929.8 | 1,148.7 | |||||||||||
Income (loss) from equity investees | 1.0 | (0.2 | ) | 5.5 | (0.3 | ) | |||||||||
Loss on extinguishments of debt | — | (33.2 | ) | (26.5 | ) | (82.1 | ) | ||||||||
(Losses) gains on foreign currency contracts, net | (4.8 | ) | 1.3 | (30.0 | ) | 1.3 | |||||||||
Interest expense: | |||||||||||||||
AmeriGas Propane | (40.6 | ) | (40.0 | ) | (160.8 | ) | (163.1 | ) | |||||||
UGI International | (5.6 | ) | (4.8 | ) | (21.4 | ) | (22.7 | ) | |||||||
Midstream & Marketing | (0.9 | ) | (0.6 | ) | (2.4 | ) | (1.9 | ) | |||||||
UGI Utilities | (10.9 | ) | (10.0 | ) | (41.1 | ) | (38.1 | ) | |||||||
Corporate & Other, net (a) | (0.2 | ) | — | (0.6 | ) | (0.6 | ) | ||||||||
Total interest expense | (58.2 | ) | (55.4 | ) | (226.3 | ) | (226.4 | ) | |||||||
Income before income taxes | 329.8 | 378.7 | 652.5 | 841.2 | |||||||||||
Income tax benefit (expense) (b) | 104.4 | (87.8 | ) | 14.6 | (229.4 | ) | |||||||||
Net income including noncontrolling interests | 434.2 | 290.9 | 667.1 | 611.8 | |||||||||||
Deduct net income attributable to noncontrolling interests, principally in AmeriGas Partners, L.P. | (68.3 | ) | (60.2 | ) | (95.3 | ) | (131.0 | ) | |||||||
Net income attributable to UGI Corporation | $ | 365.9 | $ | 230.7 | $ | 571.8 | $ | 480.8 | |||||||
Earnings per share attributable to UGI shareholders: | |||||||||||||||
Basic | $ | 2.11 | $ | 1.33 | $ | 3.29 | $ | 2.77 | |||||||
Diluted | $ | 2.07 | $ | 1.30 | $ | 3.23 | $ | 2.72 | |||||||
Weighted Average common shares outstanding (thousands): | |||||||||||||||
Basic | 173,670 | 173,512 | 173,701 | 173,325 | |||||||||||
Diluted | 176,948 | 176,984 | 177,138 | 176,840 | |||||||||||
Supplemental information: | |||||||||||||||
Net income (loss) attributable to UGI Corporation: | |||||||||||||||
AmeriGas Propane | $ | 141.6 | $ | 16.6 | $ | 169.6 | $ | 41.2 | |||||||
UGI International | 61.1 | 88.3 | 131.4 | 153.5 | |||||||||||
Midstream & Marketing | 112.0 | 29.9 | 169.0 | 92.4 | |||||||||||
UGI Utilities | 68.3 | 44.3 | 140.0 | 118.3 | |||||||||||
Corporate & Other (a) | (17.1 | ) | 51.6 | (38.2 | ) | 75.4 | |||||||||
Total net income attributable to UGI Corporation | $ | 365.9 | $ | 230.7 | $ | 571.8 | $ | 480.8 |
(a) | 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. |
(b) | Income tax benefit for the three and twelve months ended December 31, 2017 includes one-time beneficial impact from adjustments to tax-related amounts resulting from the Tax Cuts and Jobs Act ("TCJA") enacted on December 22, 2017 of $166.0 million and one-time beneficial impact of a $17.3 million adjustment to net deferred income tax liabilities in France as a result of the 2018 French Finance Bill approved December 21, 2017. Income tax expense for the three and twelve months ended December 31, 2016 includes the beneficial impact of a $27.4 million adjustment to net deferred income tax liabilities associated with a change in the French tax rate and an income tax settlement refund of $6.7 million, plus interest, in France. |
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Adjusted net income attributable to UGI Corporation: | ||||||||||||||||
Net income attributable to UGI Corporation | $ | 365.9 | $ | 230.7 | $ | 571.8 | $ | 480.8 | ||||||||
Net gains on commodity derivative instruments not associated with current-period transactions (net of tax of $2.1, $33.3, $0.7, and $45.3, respectively) (1)(2) | (4.6 | ) | (52.2 | ) | (3.6 | ) | (78.5 | ) | ||||||||
Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(0.0), $0.4, $(10.3), and $0.4, respectively) (2) | 0.1 | (0.8 | ) | 14.8 | (0.8 | ) | ||||||||||
Loss on extinguishments of debt (net of tax of $(0.0), $(3.4), $(2.7), and $(8.4), respectively) (2) | — | 5.3 | 4.3 | 13.2 | ||||||||||||
Integration expenses associated with Finagaz (net of tax of $(0.7), $(2.8), $(11.6), and $(12.5), respectively) (2) | 1.2 | 5.3 | 22.1 | 21.2 | ||||||||||||
Impact from change in French tax rate | (17.3 | ) | (27.4 | ) | (18.9 | ) | (27.4 | ) | ||||||||
Impact from TCJA | (166.0 | ) | — | (166.0 | ) | — | ||||||||||
Adjusted net income attributable to UGI Corporation | $ | 179.3 | $ | 160.9 | $ | 424.5 | $ | 408.5 | ||||||||
Adjusted diluted earnings per share: | ||||||||||||||||
UGI Corporation earnings per share — diluted | $ | 2.07 | $ | 1.30 | $ | 3.23 | $ | 2.72 | ||||||||
Net gains on commodity derivative instruments not associated with current-period transactions (1) | (0.03 | ) | (0.29 | ) | (0.02 | ) | (0.44 | ) | ||||||||
Unrealized losses (gains) on foreign currency derivative instruments | — | (0.01 | ) | 0.08 | (0.01 | ) | ||||||||||
Loss on extinguishments of debt | — | 0.03 | 0.02 | 0.07 | ||||||||||||
Integration expenses associated with Finagaz (1) | 0.01 | 0.03 | 0.13 | 0.12 | ||||||||||||
Impact from change in French tax rate (1) | (0.10 | ) | (0.15 | ) | (0.10 | ) | (0.15 | ) | ||||||||
Impact from TCJA | (0.94 | ) | — | (0.94 | ) | — | ||||||||||
Adjusted diluted earnings per share | $ | 1.01 | $ | 0.91 | $ | 2.40 | $ | 2.31 |
(2) | Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates. |