UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2023
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: 610 337-1000
Not Applicable
Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| 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)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 3, 2023, UGI Corporation (the “Company”) issued a press release announcing financial results for the Company for the fiscal quarter ended March 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On May 4, 2023, the Company will hold a live Internet Audio Webcast of its conference call to discuss its financial results for the fiscal quarter ended March 31, 2023.
Presentation materials containing certain historical and forward-looking information relating to the Company (the “Presentation Materials”) have been made available on the Company’s website. A copy of the Presentation Materials is furnished as Exhibit 99.2 to this report and is incorporated herein by reference in this Item 7.01. All information in Exhibit 99.2 is presented as of the particular dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided.
In accordance with General Instruction B.2 of Form 8-K, the information in this report, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and will not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in that filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith:
| 99.1 | |||||
| 99.2 | |||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| UGI Corporation | ||||||||
| May 4, 2023 | By: | /s/ Sean P. O'Brien | ||||||
| Name: | Sean P. O'Brien | |||||||
| Title: | Chief Financial Officer | |||||||
Press ReleaseUGI Reports Second Quarter Results and Updates Fiscal 2023 Guidance
May 3, 2023
VALLEY FORGE, PA - UGI Corporation (NYSE: UGI) today reported financial results for the fiscal quarter ended March 31, 2023.
HEADLINES
•Q2 GAAP diluted earnings per share ("EPS") of $0.51 and adjusted diluted EPS of $1.68 compared to GAAP diluted EPS of $4.32 and adjusted diluted EPS of $1.91 in the prior-year period.
•Year-to-date GAAP diluted EPS of $(4.02) and adjusted diluted EPS of $2.82 compared to GAAP diluted EPS of $3.87 and adjusted diluted EPS of $2.84 in the prior-year period.
•Q2 reportable segments earnings before interest expense and income taxes1 ("EBIT") of $576 million compared to $631 million in the prior-year period.
•Available liquidity of approximately $1.9 billion as of March 31, 2023.
•Entered into a joint venture with Archaea Energy to develop a renewable natural gas project in Pennsylvania, bringing our total renewables investment to over $500 million to date.
•Announced the 36th consecutive year of annual dividend increases.
•Updated fiscal 2023 adjusted diluted EPS guidance to a range of $2.75 - $2.902 per share.
Roger Perreault, President and Chief Executive Officer of UGI Corporation said, "Our fiscal second quarter was impacted by warm weather across all of our reportable segments as well as severe weather events in the West. Despite these pressures, our natural gas businesses delivered solid results, largely due to the weather normalization rider at our Pennsylvania (PA) Gas Utility and the fee-based contract structures in place at our Midstream & Marketing business. In the global LPG businesses, margin was impacted by driver shortages and other volume shortfall at AmeriGas, significant energy conservation in Europe, and weather challenges. These headwinds were partially offset by year-over-year benefits in the non-core European energy marketing operations, where we continue to execute on our exit strategy.
“Given the fiscal second quarter results and our year-to-date performance, we expect adjusted diluted EPS for fiscal 2023 to be within a revised guidance range of $2.75 to $2.902. Our teams have implemented several expense control and margin management actions which are expected to provide incremental benefits for the remainder of the fiscal year.
“In addition to the disciplined execution of our strategy, we remain committed to transforming AmeriGas operationally and positioning it for growth. At UGI, we are confident that our diversified business model, strategy, and balance sheet strength provide a solid foundation to support continued earnings and dividend growth. I want to thank our global team for their dedication as they serve our customers and the communities around us."
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KEY DRIVERS OF SECOND QUARTER RESULTS
•AmeriGas: Total margin down $66 million, due to lower retail volume largely resulting from warmer than prior- year weather, particularly in key regions, continued driver shortages, which also limited growth, as well as continuation of customer attrition
•UGI International: Total margin up $21 million, reflecting lower retail LPG volume resulting from the mild winter weather and energy conservation efforts driven by the European geopolitical situation, offset by higher margin from the non-core European energy marketing operations and increased LPG margin
•Midstream & Marketing: EBIT up $15 million, primarily reflecting increased margins from natural gas marketing activities as well as incremental earnings from the UGI Appalachia acquisitions of UGI Moraine East (formerly Stonehenge) and Pennant
•Utilities: EBIT up $11 million, primarily due to higher gas rates in our PA Gas Utility as well as benefits from the weather normalization rider that largely offset the significantly warmer weather
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 4, 2023. 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 3, 2024.
CONTACT INVESTOR RELATIONS
Tel: +1 610-337-1000
Tameka Morris, ext. 6297
Arnab Mukherjee, ext. 7498
Shelly Oates, ext. 3202
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 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.
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 Reportable segments' earnings before interest expense and income taxes 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 2023 adjusted diluted earnings per share, a non-GAAP measure, to diluted earnings per share, the most
2
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 and Quarterly Reports on Form 10-Q 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 a global pandemic, including the duration and/or impact of the COVID-19 pandemic; 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.
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SEGMENT RESULTS ($ in millions, except where otherwise indicated)
AmeriGas Propane
| For the fiscal quarter ended March 31, | 2023 | 2022 | (Decrease) Increase | |||||||||||||||||||||||
| Revenues | $ | 867 | $ | 1,048 | $ | (181) | (17) | % | ||||||||||||||||||
| Total margin (a) | $ | 437 | $ | 503 | $ | (66) | (13) | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 263 | $ | 240 | $ | 23 | 10 | % | ||||||||||||||||||
| Operating income/earnings before interest expense and income taxes | $ | 138 | $ | 227 | $ | (89) | (39) | % | ||||||||||||||||||
| Retail gallons sold (millions) | 279 | 329 | (50) | (15) | % | |||||||||||||||||||||
| Heating degree days - % (warmer) colder than normal (b) | (4.8) | % | 2.9 | % | ||||||||||||||||||||||
| Capital expenditures | $ | 28 | $ | 36 | $ | (8) | (22) | % | ||||||||||||||||||
•Temperatures were 5% warmer than normal and 7% warmer than the prior-year period.
•Retail gallons sold decreased 15% due to warmer than prior-year weather, continued shortage of drivers, which also limited growth, as well as continuation of customer attrition, along with structural conservation.
•Total margin decreased $66 million largely reflecting the impact of lower retail volumes.
•Operating and administrative expenses increased $23 million reflecting, among other things, higher employee compensation and benefits, overtime and employee-related costs associated with distribution activity, and vehicle expenses.
UGI International
| For the fiscal quarter ended March 31, | 2023 | 2022 | (Decrease) Increase | |||||||||||||||||||||||
| Revenues | $ | 948 | $ | 1,224 | $ | (276) | (23) | % | ||||||||||||||||||
| Total margin (a) | $ | 315 | $ | 294 | $ | 21 | 7 | % | ||||||||||||||||||
| Operating and administrative expenses (a) | $ | 171 | $ | 162 | $ | 9 | 6 | % | ||||||||||||||||||
| Operating income | $ | 120 | $ | 111 | $ | 9 | 8 | % | ||||||||||||||||||
| Earnings before interest expense and income taxes | $ | 128 | $ | 120 | $ | 8 | 7 | % | ||||||||||||||||||
| LPG retail gallons sold (millions) | 222 | 247 | (25) | (10) | % | |||||||||||||||||||||
| Heating degree days - % warmer than normal (b) | (7.0) | % | (5.7) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 30 | $ | 23 | $ | 7 | 30 | % | ||||||||||||||||||
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 2023 and 2022 three-month periods, the average unweighted euro-to-dollar translation rates were approximately $1.07 and $1.12, respectively, and the average unweighted British pound sterling-to-dollar translation rates were approximately $1.22 and $1.34, respectively.
•Temperatures were 7% warmer than normal and 2% warmer than the prior-year period.
•Retail volume decreased 10% primarily due to the effect of energy conservation efforts across Europe largely in part to high global energy prices and the war between Russia and Ukraine, as well as warmer weather.
•Total margin increased $21 million reflecting higher LPG unit margins and increased total margin from energy marketing operations, partially offset by lower retail volume and the translation effects of the weaker foreign currencies ($14 million).
•Operating and administrative expenses increased $9 million reflecting the impact of the global inflationary cost environment on the underlying distribution and personnel-related costs, partially offset by the translation effects of the weaker foreign currencies ($8 million).
•Operating income increased $9 million due to higher total margin, partially offset by higher operating and administrative expenses.
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Midstream & Marketing
| For the fiscal quarter ended March 31, | 2023 | 2022 | (Decrease) Increase | |||||||||||||||||||||||
| Revenues | $ | 638 | $ | 671 | $ | (33) | (5) | % | ||||||||||||||||||
| Total margin (a) | $ | 159 | $ | 131 | $ | 28 | 21 | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 35 | $ | 30 | $ | 5 | 17 | % | ||||||||||||||||||
| Operating income | $ | 103 | $ | 85 | $ | 18 | 21 | % | ||||||||||||||||||
| Earnings before interest expense and income taxes | $ | 105 | $ | 90 | $ | 15 | 17 | % | ||||||||||||||||||
| Heating degree days - % warmer than normal (b) | (18.0) | % | (2.8) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 23 | $ | 10 | $ | 13 | 130 | % | ||||||||||||||||||
•Temperatures were 18% warmer than normal and 17% warmer than the prior-year period.
•Total margin increased $28 million primarily reflecting higher natural gas marketing activities ($11 million), including peaking and capacity management activities, and increased margins from prior-year acquisitions of UGI Moraine East and Pennant ($16 million).
•Operating income increased $18 million reflecting higher total margin, partially offset by higher operating and administrative expense ($5 million) and depreciation and amortization expenses ($4 million).
•Earnings before interest expense and income taxes increased $15 million due to the higher operating income ($18 million), partially offset by lower income from equity method investments following the acquisition of the remaining interest in Pennant.
Utilities
| For the fiscal quarter ended March 31, | 2023 | 2022 | Increase | |||||||||||||||||||||||
| Revenues | $ | 774 | $ | 707 | $ | 67 | 9 | % | ||||||||||||||||||
| Total margin (a) | $ | 338 | $ | 317 | $ | 21 | 7 | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 97 | $ | 91 | $ | 6 | 7 | % | ||||||||||||||||||
| Operating income | $ | 203 | $ | 191 | $ | 12 | 6 | % | ||||||||||||||||||
| Earnings before interest expense and income taxes | $ | 205 | $ | 194 | $ | 11 | 6 | % | ||||||||||||||||||
| Gas Utility system throughput - billions of cubic feet | ||||||||||||||||||||||||||
| Core market | 44 | 52 | (8) | (15) | % | |||||||||||||||||||||
| Total | 125 | 123 | 2 | 2 | % | |||||||||||||||||||||
| Gas Utility heating degree days - % warmer than normal (b) | (19.7) | % | (3.4) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 133 | $ | 101 | $ | 32 | 32 | % | ||||||||||||||||||
•Gas Utility service territory experienced temperatures that were 20% warmer than normal and 17% warmer than the prior-year period.
•Core market volumes decreased due to warmer weather, partially offset by customer growth.
•Total margin increased $21 million primarily due to the increase in our PA Gas Utility base rates that went into effect at the end of October 2022 ($19 million), and higher Distribution System Improvement Charge (DSIC) and Infrastructure Replacement and Expansion Program (IREP) benefits. Total margin was impacted by benefits from the weather normalization rider in our PA Gas Utility which largely offset the effects of warmer weather.
•Operating and administrative expenses increased $6 million largely due to an increase in uncollectible accounts expense, contract labor costs, among other things.
•Operating income increased $12 million due to the higher total margin, partially offset by higher operating and administrative expenses and higher depreciation expense from continued distribution system capital expenditure activity.
(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.
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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, | |||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| AmeriGas Propane | $ | 867 | $ | 1,048 | $ | 1,633 | $ | 1,826 | $ | 2,750 | $ | 2,834 | |||||||||||||||||||||||
| UGI International | 948 | 1,224 | 1,825 | 2,273 | 3,238 | 3,390 | |||||||||||||||||||||||||||||
| Midstream & Marketing | 638 | 671 | 1,307 | 1,206 | 2,427 | 1,787 | |||||||||||||||||||||||||||||
| Utilities | 774 | 707 | 1,366 | 1,126 | 1,860 | 1,463 | |||||||||||||||||||||||||||||
| Corporate & Other (a) | (121) | (184) | (266) | (292) | (443) | (401) | |||||||||||||||||||||||||||||
| Total revenues | $ | 3,106 | $ | 3,466 | $ | 5,865 | $ | 6,139 | $ | 9,832 | $ | 9,073 | |||||||||||||||||||||||
| Earnings (loss) before interest expense and income taxes: | |||||||||||||||||||||||||||||||||||
| AmeriGas Propane | $ | 138 | $ | 227 | $ | 248 | $ | 313 | $ | 242 | $ | 318 | |||||||||||||||||||||||
| UGI International | 128 | 120 | 194 | 202 | 246 | 234 | |||||||||||||||||||||||||||||
| Midstream & Marketing | 105 | 90 | 212 | 172 | 309 | 203 | |||||||||||||||||||||||||||||
| Utilities | 205 | 194 | 333 | 292 | 377 | 314 | |||||||||||||||||||||||||||||
| Total reportable segments | 576 | 631 | 987 | 979 | 1,174 | 1,069 | |||||||||||||||||||||||||||||
| Corporate & Other (a) | (319) | 717 | (1,961) | 308 | (1,719) | 1,328 | |||||||||||||||||||||||||||||
| Total earnings (loss) before interest expense and income taxes | 257 | 1,348 | (974) | 1,287 | (545) | 2,397 | |||||||||||||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||||||||||||
| AmeriGas Propane | (39) | (38) | (82) | (79) | (163) | (158) | |||||||||||||||||||||||||||||
| UGI International | (9) | (8) | (16) | (15) | (29) | (29) | |||||||||||||||||||||||||||||
| Midstream & Marketing | (11) | (10) | (22) | (20) | (43) | (41) | |||||||||||||||||||||||||||||
| Utilities | (21) | (16) | (42) | (32) | (75) | (60) | |||||||||||||||||||||||||||||
| Corporate & Other, net (a) | (13) | (10) | (23) | (17) | (41) | (29) | |||||||||||||||||||||||||||||
| Total interest expense | (93) | (82) | (185) | (163) | (351) | (317) | |||||||||||||||||||||||||||||
| Income (loss) before income taxes | 164 | 1,266 | (1,159) | 1,124 | (896) | 2,080 | |||||||||||||||||||||||||||||
| Income tax (benefit) expense (b) | (54) | (332) | 315 | (286) | 288 | (567) | |||||||||||||||||||||||||||||
| Net income (loss) including noncontrolling interests | 110 | 934 | (844) | 838 | (608) | 1,513 | |||||||||||||||||||||||||||||
| (Deduct net income) add net loss attributable to noncontrolling interests | — | (1) | — | (2) | 1 | (2) | |||||||||||||||||||||||||||||
| Net income (loss) attributable to UGI Corporation | $ | 110 | $ | 933 | $ | (844) | $ | 836 | $ | (607) | $ | 1,511 | |||||||||||||||||||||||
| Earnings (loss) per share attributable to UGI shareholders: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.52 | $ | 4.44 | $ | (4.02) | $ | 3.98 | $ | (2.89) | $ | 7.21 | |||||||||||||||||||||||
| Diluted | $ | 0.51 | $ | 4.32 | $ | (4.02) | $ | 3.87 | $ | (2.89) | $ | 7.02 | |||||||||||||||||||||||
| Weighted Average common shares outstanding (thousands): | |||||||||||||||||||||||||||||||||||
| Basic | 209,857 | 210,163 | 209,902 | 209,919 | 209,962 | 209,598 | |||||||||||||||||||||||||||||
| Diluted | 216,120 | 215,928 | 209,902 | 215,936 | 209,962 | 215,216 | |||||||||||||||||||||||||||||
| Supplemental information: | |||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to UGI Corporation: | |||||||||||||||||||||||||||||||||||
| AmeriGas Propane | $ | 73 | $ | 138 | $ | 122 | $ | 172 | $ | 62 | $ | 116 | |||||||||||||||||||||||
| UGI International | 92 | 89 | 137 | 146 | 166 | 176 | |||||||||||||||||||||||||||||
| Midstream & Marketing | 66 | 58 | 143 | 109 | 197 | 117 | |||||||||||||||||||||||||||||
| Utilities | 143 | 134 | 224 | 197 | 233 | 193 | |||||||||||||||||||||||||||||
| Total reportable segments | 374 | 419 | 626 | 624 | 658 | 602 | |||||||||||||||||||||||||||||
| Corporate & Other (a) | (264) | 514 | (1,470) | 212 | (1,265) | 909 | |||||||||||||||||||||||||||||
| Total net income (loss) attributable to UGI Corporation | $ | 110 | $ | 933 | $ | (844) | $ | 836 | $ | (607) | $ | 1,511 | |||||||||||||||||||||||
(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
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Financial Measures - Adjusted Net Income 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:
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| Three Months Ended March 31, | Six Months Ended March 31, | Twelve Months Ended March 31, | ||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
| Adjusted net income attributable to UGI Corporation (millions): | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to UGI Corporation | $ | 110 | $ | 933 | $ | (844) | $ | 836 | $ | (607) | $ | 1,511 | ||||||||||||||||||||||||||
Net losses (gains) on commodity derivative instruments not associated with current-period transactions (net of tax of $(66), $204, $(429), $93, $(382) and $429, respectively) | 235 | (535) | 1,234 | (243) | 1,019 | (1,107) | ||||||||||||||||||||||||||||||||
Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(3), $(1), $(14), $1, $(1) and $4, respectively) | 7 | — | 36 | (4) | 4 | (14) | ||||||||||||||||||||||||||||||||
Loss on extinguishment of debt (net of tax of $0, $0, $0, $(3), $0 and $(3), respectively) | — | — | — | 8 | — | 8 | ||||||||||||||||||||||||||||||||
Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax of $0, $0, $0, $0, $(1) and $(3), respectively) | — | — | — | 1 | — | 9 | ||||||||||||||||||||||||||||||||
Business transformation expenses (net of tax of $0, $0, $(1), $(1), $(2), and $(19), respectively) | 2 | 2 | 3 | 3 | 7 | 50 | ||||||||||||||||||||||||||||||||
Loss on disposal of U.K. energy marketing business (net of tax of $0, $0, $(64), $0, $(64) and $0, respectively) | — | — | 151 | — | 151 | — | ||||||||||||||||||||||||||||||||
| Impact of change in tax law | — | — | — | — | (19) | — | ||||||||||||||||||||||||||||||||
Impairment of customer relationship intangible (net of tax of $0, $0, $0, $0, $0 and $(5), respectively) | — | — | — | — | — | 15 | ||||||||||||||||||||||||||||||||
AmeriGas operations enhancement for growth project (net of tax of $(1), 0, $(3), $0, $(3) and $0, respectively) | 5 | — | 10 | — | 10 | — | ||||||||||||||||||||||||||||||||
Impairment of certain equity method investments and assets (net of tax of $0, $0, $0, $0, $(14) and $0, respectively) | — | — | — | — | 26 | 93 | ||||||||||||||||||||||||||||||||
Restructuring costs (net of tax of $0, $(5), $0, $(5), $(5) and $(5), respectively) | — | 13 | — | 13 | 11 | 13 | ||||||||||||||||||||||||||||||||
Impairment of assets (net of tax of $4, $0, $0, $0, $0 and $0, respectively) | 4 | — | 19 | — | 19 | — | ||||||||||||||||||||||||||||||||
| Total adjustments (1) | 253 | (520) | 1,453 | (222) | 1,228 | (933) | ||||||||||||||||||||||||||||||||
Adjusted net income attributable to UGI Corporation | $ | 363 | $ | 413 | $ | 609 | $ | 614 | $ | 621 | $ | 578 | ||||||||||||||||||||||||||
| Adjusted diluted earnings per share: | ||||||||||||||||||||||||||||||||||||||
| UGI Corporation earnings (loss) per share — diluted (2) | $ | 0.51 | $ | 4.32 | $ | (4.02) | $ | 3.87 | $ | (2.89) | $ | 7.02 | ||||||||||||||||||||||||||
| Net losses (gains) on commodity derivative instruments not associated with current-period transactions | 1.09 | (2.48) | 5.80 | (1.11) | 4.78 | (5.13) | ||||||||||||||||||||||||||||||||
| Unrealized losses (gains) on foreign currency derivative instruments | 0.03 | — | 0.17 | (0.02) | 0.02 | (0.07) | ||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 0.03 | — | 0.04 | ||||||||||||||||||||||||||||||||
| Acquisition and integration expenses associated with the Mountaineer Acquisition | — | — | — | — | — | 0.04 | ||||||||||||||||||||||||||||||||
| Business transformation expenses | 0.01 | 0.01 | 0.01 | 0.01 | 0.03 | 0.23 | ||||||||||||||||||||||||||||||||
| Loss on disposal of U.K. energy marketing business | — | — | 0.72 | — | 0.72 | — | ||||||||||||||||||||||||||||||||
| Impact of change in tax law | — | — | — | — | (0.09) | — | ||||||||||||||||||||||||||||||||
| Impairment of customer relationship intangible | — | — | — | — | — | 0.07 | ||||||||||||||||||||||||||||||||
| AmeriGas operations enhancement for growth project | 0.02 | — | 0.05 | — | 0.05 | — | ||||||||||||||||||||||||||||||||
| Impairment of certain equity method investments and assets | — | — | — | — | 0.12 | 0.43 | ||||||||||||||||||||||||||||||||
| Restructuring costs | — | 0.06 | — | 0.06 | 0.05 | 0.06 | ||||||||||||||||||||||||||||||||
Impairment of assets | 0.02 | — | 0.09 | — | 0.09 | — | ||||||||||||||||||||||||||||||||
| Total adjustments (2) | 1.17 | (2.41) | 6.84 | (1.03) | 5.77 | (4.33) | ||||||||||||||||||||||||||||||||
| Adjusted diluted earnings per share (2) | $ | 1.68 | $ | 1.91 | $ | 2.82 | $ | 2.84 | $ | 2.88 | $ | 2.69 | ||||||||||||||||||||||||||
(1)Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
(2)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.
8
1 1 Second Quarter Fiscal 2023 Results Ro ge r Pe r re a u l t President and CEO, UGI Corporation S e a n P. O ’ Br i e n Chief Financial Officer, UGI Corporation Ro b e r t F. B e a rd Chief Operations Officer, UGI Corporation 1
2 2 About This Presentation This presentation 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 and Quarterly Reports on Form 10-Q 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 a global pandemic, including the duration and/or impact of the COVID-19 pandemic; 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.
3 3 UGI Supplemental Footnotes Management uses “adjusted net income attributable to UGI Corporation” and “adjusted diluted earnings per share (“EPS”)”, 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 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. The tables in slides 17 and 18 reconcile adjusted diluted earnings per share (EPS) and adjusted net income attributable to UGI Corporation, respectively, to their most directly comparable GAAP measures.
4 4 AmeriGas Propane 19% UGI International 22% Midstream & Marketing 23% Utilities 36% YTD FY23 4 1. YTD FY22 and YTD FY23 signify 6 months ended March 31, 2022 and March 31, 2023, respectively. 2. Adjusted diluted EPS is a non-GAAP measure. See Slide 17 for reconciliation. 3. Liquidity as of March 31, 2023. Liquidity is defined as cash and cash equivalents, and available borrowing capacity on our revolving credit facilities. 4. The previous guidance for adjusted diluted EPS provided on November 17, 2022, was $2.85 ––$3.15. 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 2023 adjusted diluted EPS, 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. 5. Excludes Corporate & Other. Q2 and YTD FY231 Highlights $1.68 Q2 FY23 Adjusted Diluted EPS2 7.2% 10-Year Dividend CAGR (2013 – 2023) $1.9B Available Liquidity3 $392M YTD Capital Expenditure Improved earnings reliability o Weather normalization rider in our Pennsylvania (PA) Gas Utility o Significant fee-based contract structures in Midstream & Marketing Proven strategy in creating value for shareholders o 139 years of consecutively paying dividends o 36th consecutive year of annual dividend increases Strong capital investment and attractive organic growth in our regulated utilities o Added 8,000+ residential heating and commercial customers YTD FY23 o Deployed $250 million of capital, YTD FY23, for infrastructure replacement and betterment Revised guidance range primarily due to lower volumes resulting from significant energy conservation in Europe and driver shortages at AmeriGas Propane, partially offset by strong performance at our natural gas businesses YTD Adjusted Diluted EPS by Segment2,5 $2.75 - $2.90 Revised FY23 Adjusted Diluted EPS Guidance4 YTD Adjusted Diluted EPS2 $2.84 $2.82 YTD FY22 YTD FY23 1 1
5 5 Q2 FY23 Results Recap Q2 FY23 Adjusted Diluted EPS1 – Segment Split 1. Adjusted diluted EPS is a non-GAAP measure. See Slide 17 for reconciliation. 2. Includes $(0.02) Corporate & Other. 3. Includes $(0.06) Corporate & Other. Q2 FY23 Adjusted Diluted EPS1 – Comparison with Q2 FY22 $0.64 $0.34 $0.41 $0.43 $0.26 $0.31 $0.62 $0.66 Q2 FY22 Q2 FY23 Utilities Midstream & Marketing UGI International AmeriGas Propane $1.683 $1.912 Q2 FY23 GAAP Diluted EPS of $0.51 compared to $4.32 in Q2 FY22
6 6 Q2 FY23 Results Recap Q2 FY23 vs Q2 FY22 Key DriversQ2 FY23 EBIT1 - Comparison with Q2 FY22 AmeriGas Propane UGI International Midstream & Marketing Utilities Q2 FY22 EBIT Q2 FY23 EBIT Q2 FY22 EBIT Q2 FY23 EBIT Total Margin2 Operating & Admin. Expenses (Opex) Depreciation & Amortization (D&A) Other Income and Expense, net (Other) Q2 FY22 EBIT Q2 FY23 EBIT Q2 FY22 EBIT Q2 FY23 EBIT Opex D&A Other Total Margin2 Opex D&A Other Opex D&A Other Opex D&A Other AmeriGas Propane • Warm weather in key regions and severe weather events in the West • Driver shortages and customer attrition • Higher operating and administrative costs UGI International • Weather and significant energy conservation • Favorable energy marketing margin, while exiting the business Midstream & Marketing • Higher margins from natural gas marketing activities • Incremental earnings from UGI Moraine East and Pennant assets Utilities • Weather normalization at the PA Gas Utility • Warmer weather across our service territories • Higher gas base rates in PA 1. EBIT defined as Earnings before interest expense and income taxes. 2. 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. Total Margin2 Total Margin2 Total Margin2
7 7 $2.82 $2.75 YTD FY23 Adjusted Diluted EPS FY23 Adjusted Diluted EPS Guidance FY23 Revised Outlook Based on our fiscal year-to-date performance, UGI expects to deliver adjusted diluted EPS1 between a revised FY23 guidance range of $2.75 - $2.902. $2.90 1. Adjusted diluted EPS is a non-GAAP measure. Please see page 17 for reconciliation. 2. The previous guidance for adjusted diluted EPS provided on November 17, 2022, was $2.85 ––$3.15. 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 2023 adjusted diluted EPS, 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. 3. 2H is defined as second half. The forward-looking information used on this slide is for illustrative purposes only. 1 2 YTD Key Drivers • Weather normalization rider and higher base rates at our PA Gas Utility • Favorable margins from natural gas marketing activities and the fee-based contract structures • Incremental earnings from recent acquisitions of UGI Moraine East and Pennant • Higher LPG unit margins • Favorable margins from the non-core European energy marketing business • Warm weather in most of our service territories and severe weather events in the West (US) • Energy conservation in Europe • Effect of driver shortages and customer loss at AmeriGas Propane • Cost inflation FY23 Guidance 2H FY23 Key Assumptions3 2H FY23 Key Actions3 AmeriGas Propane: Continued volume pressures UGI International: Effect of energy conservation offset by energy marketing margins Utilities volumes and margin Midstream & Marketing margin Cost Inflation Manage expenses Margin management Operational efficiencies Attract and retain drivers
8 8 $0.7 $0.7 $0.4 $0.3 $0.3 1.2 $1.4 $1.3 $0.9 $1.6 $1.9 $2.1 $1.7 $1.2 $1.9 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Available Liquidity ($ in billion) Cash and cash equivalents Available Credit Facilities Liquidity Update • Strong liquidity position with $1.9B in available liquidity1 as of March 31, 2023 • Refinanced ~$1.7B in debt agreements, which added ~$220M in available credit facilities, during the quarter • UGI provided capital contributions of ~$31M as an equity cure2 and an irrevocable letter of support to AmeriGas 1. Defined as cash and cash equivalents, and available borrowing capacity on our revolving credit facilities. 2. The AmeriGas Credit Agreement permits UGI (or a subsidiary of UGI) to fund capital contributions as an equity cure to eliminate any EBITDA (as defined in the AmeriGas Credit Agreement) shortfalls that would otherwise result in non-compliance with AmeriGas’ financial covenants set forth in such Credit Agreement.
9 9 • Issue our first Task Force on Climate-Related Financial Disclosures (TCFD) report • Distribute our annual ESG report, highlighting our progress against established targets • UGI International: Continue executing exit plans for the non-core energy marketing business • AmeriGas Propane: Focus on driving volume and market share growth, and operational excellence • Drive continuous improvement, operational excellence and cost control • Pursue cost recovery through request filed on March 6th with the West Virginia Public Service Commission to: o Increase gas distribution rates by ~$20 million o Implement a weather normalization rider • Execute on the infrastructure replacement and betterment program at our regulated utilities • Progress on our renewable energy projects • Further strengthen our balance sheet and de-leverage the business • Safety continues to be our top priority • Gain momentum on key operating metrics and sustain focus on the customer’s experience • Continue to invest in our people 2H FY23 Key Priorities 9 We maintain focus on our 3-R strategy2 and long-term financial commitments 1. 2H defined as second half. The forward-looking information used on this slide is for illustrative purposes only. 2. 3-R strategy which is to deliver reliable earnings growth, invest in renewables and re-balance our portfolio. See 10-K for the fiscal year 2022 for more details. Operational excellence Capital allocation and discipline Regulatory recovery Global LPG businesses Sustainability 1
10 10 A Differentiated and Resilient Portfolio Our diversified core business is well-positioned to meet our long-term financial commitments of 6-10% EPS growth and 4% dividend growth, and to continue creating shareholder value Essential solutions that meet consumers’ basic needs Large customer base Robust supply and distribution network Global presence providing geographically diverse earnings stream Substantial addressable markets Constructive regulatory environments Reliable Earnings Growth Renewables Rebalance
11 11 Q & A Q
12 12 Appendix
13 13 Financial Results – AmeriGas Propane (Millions of dollars) Q2 FY22 Q2 FY23 Earnings Before Interest Expense & Income Taxes $227 Total Margin1 (66) Operating and Administrative Expenses (23) Depreciation and Amortization (1) Other Income and Expense, net 1 Earnings Before Interest Expense & Income Taxes $138 Total Volume ↓ Retail gallons sold decreased 15% due to weather, the effect of driver shortages, which also limited growth, customer attrition and structural conservation Total Margin ↓ Decrease largely attributable to the lower retail propane volumes sold ($69 million), partially offset by higher average retail margins ($4 million) Operating and Admin Expenses ↑ Reflects, among other things, higher salaries and benefits expenses, higher overtime and contractor-related costs associated with distribution activity and higher vehicle expenses Weather versus normal 6.8% warmer than prior year Warmer 2.9% Q2 FY22 Q2 FY23 (4.8%)Primary Drivers Q2 FY23 EBIT - Comparison with Q2 FY22 1. Total margin represents total revenues less total cost of sales.
14 14 Warmer (5.7%) Q2 FY22 (Millions of dollars) Q2 FY22 Q2 FY23 Earnings Before Interest Expense & Income Taxes $120 Total Margin1 21 Operating and Administrative Expenses (9) Depreciation and Amortization 1 Other Income and Expense, net (5) Earnings Before Interest Expense & Income Taxes $128 Total Volume ↓ 10% decrease in LPG retail gallons largely attributable to lower consumption, principally from residential customers, primarily resulting from the European conservation measures due in large part to high global energy prices and the war between Russia and Ukraine, and warmer weather Total Margin ↑ Increase primarily reflects higher average unit margins from our LPG business attributable to strong margin management efforts and higher total margin from our natural gas energy marketing business, partially offset by the translation effects of weaker foreign currencies (~$14 million) and the lower LPG retail volumes Operating and Admin Expenses ↑ Primarily reflects inflationary effects on distribution activities and personnel-related costs Financial Results – UGI International Weather versus normal 1.6% warmer than prior year Q2 FY23 (7.0%) Primary Drivers Q2 FY23 EBIT - Comparison with Q2 FY22 1. Total margin represents total revenues less total cost of sales.
15 15 Financial Results – Midstream & Marketing Weather versus normal 17.0% warmer than prior year Warmer (2.8%) Q2 FY22 Q2 FY23 (18.0%) (Millions of dollars) Q2 FY22 Q2 FY23 Earnings Before Interest Expense & Income Taxes $90 Total Margin1 28 Operating and Administrative Expenses (5) Depreciation and Amortization (4) Other Income and Expense, net (4) Earnings Before Interest Expense & Income Taxes $105 Primary Drivers Total Margin ↑ Increase largely reflecting higher margins from natural gas marketing activities ($11 million), including the effects of peaking and capacity management activities, and incremental natural gas gathering and processing activities ($16 million), primarily from the prior year acquisitions of UGI Moraine East and Pennant Other Income and Expense, net↓ Lower income from equity method investments following the acquisition of the remaining 53% ownership interest in Pennant during 4Q FY22 Q2 FY23 EBIT - Comparison with Q2 FY22 1. Total margin represents total revenues less total cost of sales.
16 16 Volume ↓ Decrease in Gas Utility core market volumes largely related to the significantly warmer weather partially offset by growth in the core market customers Total Margin ↑ Primarily reflecting higher Gas Utility total margin ($23 million), mainly reflecting the effects of the increase in base rates and weather normalization adjustments for PA Gas Utility that went into effect during the first quarter of FY23 Operating and Admin Expenses ↑ Reflects, among other things, higher uncollectible accounts expenses and contract labor costs Financial Results – Utilities (Millions of dollars) Q2 FY22 Q2 FY23 Earnings Before Interest Expense & Income Taxes $194 Total Margin1 21 Operating and Administrative Expenses (6) Depreciation (1) Other Income and Expense, net (3) Earnings Before Interest Expense & Income Taxes $205 Weather versus normal 17.0% warmer than prior year Warmer (3.4%) Q2 FY22 Q2 FY23 (19.7%) Primary Drivers Q2 FY23 EBIT - Comparison with Q2 FY22 1. Total margin represents total revenues less total cost of sales. In the case of Utilities, total margin is also reduced by certain revenue-related taxes.
17 17 Q2 and YTD FY23 Adjusted Diluted EPS \ Q2 FY23 Q2 FY22 YTD FY23 YTD FY22 AmeriGas Propane $0.34 $0.64 $0.56 $0.80 UGI International 0.43 0.41 0.64 0.68 Midstream & Marketing 0.31 0.26 0.66 0.50 Utilities 0.66 0.62 1.04 0.91 Corporate & Other (a) (1.23) 2.39 (6.92) 0.98 Earnings (loss) per share – diluted (b) 0.51 4.32 (4.02) 3.87 Net losses (gains) on commodity derivative instruments not associated with current-period transactions (b) 1.09 (2.48) 5.80 (1.11) Unrealized losses (gains) on foreign currency derivative instruments 0.03 - 0.17 (0.02) Loss on extinguishment of debt - - - 0.03 Business transformation expenses 0.01 0.01 0.01 0.01 AmeriGas operations enhancement for growth project 0.02 - 0.05 - Restructuring costs - 0.06 - 0.06 Loss on disposal of U.K. energy marketing business - - 0.72 - Impairment of assets 0.02 - 0.09 - Total adjustments (a) 1.17 (2.41) 6.84 (1.03) Adjusted diluted earnings per share (b) $1.68 $1.91 $2.82 $2.84 (a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income (loss) attributable to UGI Corporation. These adjustments have been excluded from the segment results to align with the measure used by our Chief Operating Decision Maker in assessing segment performance and allocating resources. (b) The loss per share for the six months ended March 31, 2023, was determined excluding the effect of 6.35 million dilutive shares, as the impact of such shares would have been antidilutive to the net loss for the period. Adjusted earnings per share for the six months ended March 31, 2023, was determined based upon fully dilutive shares of 216.25 million.
18 18 Q2 and YTD FY23 Adjusted Net Income ($ in Million) Q2 FY23 Q2 FY22 YTD FY23 YTD FY22 AmeriGas Propane $73 $138 $122 $172 UGI International 92 89 137 146 Midstream & Marketing 66 58 143 109 Utilities 143 134 224 197 Corporate & Other (a) (264) 514 (1,470) 212 Net loss attributable to UGI Corporation 110 933 (844) 836 Net losses (gains) on commodity derivative instruments not associated with current-period transactions (net of tax of $(66), $204, $(429) and $93, respectively) 235 (535) 1,234 (243) Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(3), $(1), $(14), and $1, respectively) 7 - 36 (4) Loss on extinguishments of debt (net of tax of $0, $0, $0 and $(3), respectively) - - - 8 Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax of $0, $0, $0 and $0, respectively) - - - 1 Business transformation expenses (net of tax of $0, $0, $(1) and $(1), respectively) 2 2 3 3 AmeriGas operations enhancement for growth project (net of tax of $(1), $0, $(3) and $0, respectively) 5 - 10 - Restructuring costs (net of tax of $0, $(5), $0 and $(5), respectively) - 13 - 13 Loss on disposal of U.K. energy marketing business (net of tax of $0, $0, $(64) and $0, respectively) - - 151 - Impairment of assets (net of tax of $4, $0, $0, and $0, respectively) 4 - 19 - Total adjustments (a) (b) 253 (520) 1,453 (222) Adjusted net income attributable to UGI Corporation $363 $413 $609 $614 (a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income (loss) attributable to UGI Corporation. These adjustments have been excluded from the segment results to align with the measure used by our Chief Operating Decision Maker in assessing segment performance and allocating resources. (b) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
19 19 Q2 FY23 Segment Reconciliation (GAAP) ($ in Million) 1. For US GAAP purposes, certain revenue-related taxes within our Utilities segment are included in “Operating and administrative expenses” above. Such costs reduce margin for Management’s Results of Operations reported in our periodic filings. 1 1 Total AmeriGas Propane UGI International Midstream & Marketing Utilities Corp & Other Revenues $3,106 $867 $948 $638 $774 $(121) Cost of sales (2,148) (430) (633) (479) (426) (180) Total margin 958 437 315 159 348 (301) Operating and administrative expenses (587) (263) (171) (35) (107) (11) Depreciation and amortization (132) (45) (28) (22) (37) - Other operating income (expense), net 16 9 4 1 (1) 3 Operating income (loss) 255 138 120 103 203 (309) (Loss) income from equity investees - - (2) 2 - - Other non-operating income (expense), net 2 - 10 - 2 (10) Earnings (loss) before income taxes and interest expense 257 138 128 105 205 (319) Interest expense (93) (39) (9) (11) (21) (13) Income (loss) before income taxes 164 99 119 94 184 (332) Income tax (expense) benefit (54) (26) (27) (28) (41) 68 Net income (loss) attributable to UGI Corporation $110 $73 $92 $66 $143 $(264)
20 20 Investor Relations: Tameka Morris 610-456-6297 morrista@ugicorp.com Arnab Mukherjee 610-768-7498 mukherjeea@ugicorp.com