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 November 12, 2018. |
UGI Utilities, Inc. | ||
November 13, 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 November 12, 2018. |
• | GAAP EPS of $4.06 per diluted share and adjusted EPS of $2.74 per diluted share |
• | Fiscal 2018 GAAP EPS results include $1.00 of deferred tax remeasurements associated with the Tax Cuts and Jobs Act ("TCJA") and tax legislation in France and $0.20 of current year impact associated with such tax legislation. Adjusted results exclude the $1.00 impact |
• | Normal weather domestically, warmer-than-normal weather internationally |
• | Issued adjusted diluted EPS guidance of $2.75 - $2.95 for the fiscal year ending September 30, 2019 |
• | UGI Utilities spent a record $340 million of capital, added over 14,000 residential and commercial heating customers, filed a base rate request for the Electric Division (approved, and effective on October 27, 2018), received regulatory approval for the merger of the three natural gas utilities, completed the design phase and began the build of UNITE Phase 2, its Accounting System replacement. |
• | Midstream & Marketing acquired the Texas Creek midstream and Endless Mountain gas gathering systems, completed the Steelton LNG storage and vaporization unit, received the Final Environmental Impact Statement from the FERC for the PennEast pipeline, and acquired a 44 megawatt natural gas turbine adding capacity to the Hunlock site. |
• | UGI International completed the Finagaz integration on time and achieved higher-than-expected synergies, integrated LPG distribution businesses in Sweden and in Italy and an energy marketer ("DVEP") in the Netherlands, centralized European supply, continued to build-out a new cylinder distribution model, and launched a natural gas marketing business in the U.K. |
• | AmeriGas achieved record volumes from ACE and National Accounts programs, continued to reduce distribution costs and optimize delivery routing, launched AmeriMobile platform for service business, and deployed technology-enabled solutions to enhance the customer experience. |
• | UGI Corporation increased its dividend for the 31st consecutive year. |
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 | ||||||||
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 | % |
• | Retail gallons sold increased 3%, primarily due to weather that was near normal and 13% colder than Fiscal 2017. |
• | Total margin increased $58 million primarily reflecting higher retail volumes sold ($57 million), and slightly higher non-propane total margin ($1 million). |
• | Partnership operating and administrative expenses increased $8 million (including the effects of an $8 million MGP accrual in Fiscal 2017) largely reflecting higher compensation and benefits costs associated with increased activity ($20 million), higher vehicle expenses ($11 million), and higher outside services expense ($6 million). These increases in operating expenses were partially offset by lower general insurance and self-insured casualty and liability expense, lower provision for uncollectible accounts and lower travel and entertainment expenses. |
• | Partnership Adjusted EBITDA increased $54 million principally reflecting the higher total adjusted margin and higher other operating income partially offset by the higher operating and administrative expense. |
• | Recorded a $75 million non-cash impairment charge in Fiscal 2018 associated with a plan to discontinue the use of Heritage tradenames and trademarks. |
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 | % |
• | Total retail LPG gallons sold increased due to the October 2017 acquisition of UniverGas. Our existing businesses' retail volumes were slightly lower than Fiscal 2017 reflecting temperatures that were 6% warmer than the prior year. |
• | Total margin increased $122 million in Fiscal 2018 due to translation effects of the stronger euro and British pound sterling (approximately $80 million) and $58 million of incremental margin from UniverGas and DVEP. |
• | Operating and administrative expenses increased $77 million in Fiscal 2018 principally reflecting the translation effects of the stronger euro and British pound sterling on local currency expenses (approximately $45 million) and $39 million of incremental expenses from UniverGas and DVEP. Our existing businesses' local currency operating and administrative expenses were slightly lower than the prior year. |
• | Operating income increased $27 million reflecting the increased total margin offset by the higher operating and administrative expenses and higher depreciation and amortization expenses. |
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 | )% |
• | Total margin increased $66 million due to higher total margin from midstream assets, principally the result of higher natural gas gathering, capacity management and peaking total margin, and higher electricity generation total margin. |
• | Operating and administrative expenses increased $18 million reflecting higher compensation and benefits expense and higher expenses associated with greater peaking, LNG, and gas gathering activities. |
• | Operating income increased $35 million primarily due to the higher total margin ($66 million), partially offset by higher operating and administrative expenses ($17 million), higher depreciation expense ($8 million), and a decrease in other operating income ($5 million) primarily due to the absence of AFUDC income associated with the Sunbury Pipeline project that was recorded in Fiscal 2017. |
• | The $35 million increase in income before income taxes reflects higher operating income and slightly higher AFUDC income associated with the PennEast pipeline equity investment partially offset by slightly higher interest expense. |
• | Capital expenditures decreased $74 million largely reflecting the completion of the Sunbury Pipeline and Manning LNG facility in the prior year and lower expenditures on the Steelton LNG facility in Fiscal 2018. |
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 | % |
• | Gas Utility core market throughput increased 14% reflecting temperatures that were 10% colder than the prior year and growth in the number of core market customers. |
• | Total margin increased $49 million principally reflecting higher total margin from Gas Utility core market throughput ($45 million), an increase in PNG base rates effective October 20, 2017 ($9 million), and higher large firm delivery service total margin ($16 million). Total margin was reduced by $23 million as a result of the PA PUC's May 17, 2018 Order regarding the effects of the TCJA but had no impact on net income which reflects an associated decrease in income taxes. |
• | Operating and administrative expenses increased $21 million primarily reflecting higher uncollectible accounts ($10 million), higher contractor and outside services ($5 million), higher IT maintenance and consulting ($4 million) and higher compensation and benefits ($3 million) expenses. |
• | Net Income attributable to UGI corporation increased primarily due to the higher total margin excluding the impact of the PA PUC's May 17, 2018 Order partially offset by the higher operating and administrative expenses, greater depreciation and amortization expenses and lower other income. |
($ millions, except per share) Unaudited | Three Months Ended September 30, | Twelve Months Ended September 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. |
Fiscal Year Ended September 30, 2018 | AmeriGas Propane | UGI International | Midstream & Marketing | UGI Utilities | 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 | AmeriGas Propane | UGI International | Midstream & Marketing | UGI Utilities | 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. |