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): November 16, 2023
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
500 North Gulph Road , King of Prussia , PA 19406
(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 November 16, 2023, UGI Corporation (the “Company”) issued a press release announcing financial results for the Company for the fiscal quarter and year ended September 30, 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.
In its November 16, 2023 press release, the Company also announced earnings guidance for the fiscal year ending September 30, 2024. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
On November 17, 2023, the Company will hold a live Internet Audio Webcast of its conference call to discuss its financial results for the fiscal quarter and year ended September 30, 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 | ||||||||
| November 17, 2023 | By: | /s/ Sean O'Brien | ||||||
| Name: | Sean O'Brien | |||||||
| Title: | Chief Financial Officer | |||||||
Press ReleaseUGI Reports Fiscal 2023 Results
Issues Fiscal 2024 Guidance
November 16, 2023
VALLEY FORGE, PA - UGI Corporation (NYSE: UGI) reported financial results for the fiscal year ended September 30, 2023 and provided guidance for fiscal year 2024.
HEADLINES
•GAAP net loss of $(1,502) million and adjusted net income of $613 million compared to GAAP net income of $1,073 million and adjusted net income of $626 million in the prior year.
•GAAP diluted (loss) earnings per share (“EPS”) of $(7.16) and adjusted diluted EPS of $2.84 compared to GAAP diluted EPS of $4.97 and adjusted diluted EPS of $2.90 in the prior year.
•Reportable segments earnings before interest expense and income tax1 ("EBIT") of $1,158 million compared to $1,166 million in the prior year.
•Available liquidity of approximately $1.6 billion.
•Issued fiscal 2024 adjusted diluted EPS guidance range of $2.70 - $3.002.
STRATEGIC ACCOMPLISHMENTS
•Record earnings at the Utilities and Midstream & Marketing segments, led by higher gas utility base rates, benefits from the weather normalization adjustment mechanism at the PA Gas Utility, and incremental earnings from the prior year acquisitions of UGI Moraine East and Pennant.
•Deployed a significant level of capital ($563 million) and added ~13,000 residential and commercial heating customers at the Utilities.
•In conjunction with our strategy to improve earnings stability, we divested the energy marketing businesses in the UK and Belgium during the fiscal year. In October 2023, the Company also completed the sale of substantially all of the energy marketing portfolio in France.
•Committed over $500 million to renewable energy projects to date, and completed construction of two previously announced RNG projects in upstate New York, Allen Farms and El-Vi, which have the capacity to produce 140 million cubic feet of RNG annually.
•Paid dividends for the 139th consecutive year, delivering a 10-year compound average growth rate of 7%.
Roger Perreault, President and Chief Executive Officer of UGI Corporation said, “While fiscal 2023 was a challenging year, we were pleased to deliver adjusted diluted EPS of $2.84 which was largely attributable to record earnings in both our Utilities and Midstream & Marketing segments as well as benefits from actions taken to alleviate volume and cost-related pressures in the Global LPG businesses. I would like to recognize our employees for their dedication to safely serving our customers while navigating this dynamic environment.
With fiscal 2024 underway, we are intently focused on the previously announced strategic actions to improve earnings reliability and strengthen the balance sheet. These actions include the re-alignment of our capital allocation plan, measures to reduce and optimize our cost structure, and the strategic review of the LPG businesses. Our priorities for deploying cash are maintaining dividends, strengthening the balance sheet, and investing capital in our regulated utilities. In addition, we continue to assess opportunities for share repurchases and other growth investments in natural gas in the future. We remain confident that UGI has a robust portfolio, with high-quality assets, which supports sustainable long-term value creation for its shareholders."
2024 OUTLOOK
UGI provides an adjusted EPS guidance range of $2.70 - $3.002 per diluted share for the fiscal year ending September 30, 2024. This guidance range assumes normal weather and the current tax regime.
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EARNINGS CALL and WEBCAST
UGI Corporation will hold a live Internet Audio Webcast of its conference call to discuss fiscal 2023 earnings and other current activities at 9:00 AM ET on Friday, November 17, 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 November 16, 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 attributable to UGI can occur as a result of gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions but included in earnings in accordance with U.S. generally accepted accounting principles ("GAAP").
Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures.
Tables on the last page of this press release reconcile net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI Corporation, and diluted earnings per share, the most comparable GAAP measure, to adjusted diluted earnings per share, to reflect the adjustments referred to above.
1Reportable segments' EBIT represents an aggregate of our reportable operating segment level EBIT as determined in accordance with GAAP.
2Because 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 the fiscal year 2024 adjusted diluted earnings per share, a non-GAAP measure, to diluted earnings per share, the most directly comparable GAAP measure, in reliance on the “unreasonable efforts” exception set forth in SEC rules.
USE OF FORWARD-LOOKING STATEMENTS
This press release contains statements, estimates and projections that are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended). Such statements use forward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,” “expect,” “may,” or other similar words and terms of similar meaning, although not all forward-looking statements contain such words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future. Management believes that these are reasonable as of today’s date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management’s control; accordingly, there is no assurance that results will be realized. You should read UGI’s Annual Report on Form 10-K 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
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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 conflict in the Middle East, 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 success of our strategic initiatives and investments intended to advance our business strategy; 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 attract, develop, retain and engage key employees; uncertainties related to global pandemics; the impact of a material impairment of our assets; 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; 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; and our ability to control operating costs and realize cost savings.
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SEGMENT RESULTS ($ in millions, except where otherwise indicated)
Utilities
| For the year ended September 30, | 2023 | 2022 | Increase (Decrease) | |||||||||||||||||||||||
| Revenues | $ | 1,854 | $ | 1,620 | $ | 234 | 14 | % | ||||||||||||||||||
| Total margin (a) | $ | 877 | $ | 801 | $ | 76 | 9 | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 368 | $ | 332 | $ | 36 | 11 | % | ||||||||||||||||||
| Operating income | $ | 357 | $ | 327 | $ | 30 | 9 | % | ||||||||||||||||||
| Earnings before interest expense and income taxes | $ | 365 | $ | 336 | $ | 29 | 9 | % | ||||||||||||||||||
| Natural gas system throughput - billions of cubic feet | ||||||||||||||||||||||||||
| Core market | 96 | 100 | (4) | (4) | % | |||||||||||||||||||||
| Total | 375 | 363 | 12 | 3 | % | |||||||||||||||||||||
| Natural gas heating degree days - % warmer than normal | (11.7) | % | (7.5) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 563 | $ | 562 | $ | 1 | — | % | ||||||||||||||||||
•Temperatures were 12% warmer than normal and 5% warmer than the prior-year period.
•Core market throughput decreased 4% due to warmer weather, partially offset by customer growth.
•Total margin increased $76 million primarily due to the increase in our PA Gas Utility base rates that went into effect at the end of October 2022 and benefits from the weather normalization rider in our PA Gas Utility which largely offset the effects of warmer weather.
•Operating and administrative expenses increased $36 million largely due to an increase in uncollectible accounts expense, contract labor costs and personnel-related expenses.
•Operating income increased $30 million compared to the prior year, largely reflecting the higher total margin, partially offset by higher operating and administrative expenses and higher depreciation expense ($8 million) which reflects the effects of continued distribution system capital expenditure activity.
(a) Total margin represents total revenue less total cost of sales. In the case of the Utilities, total margin is also reduced by certain revenue-related taxes.
Midstream & Marketing
| For the year ended September 30, | 2023 | 2022 | Increase (Decrease) | |||||||||||||||||||||||
| Revenues | $ | 1,847 | $ | 2,326 | $ | (479) | (21) | % | ||||||||||||||||||
| Total margin (a) | $ | 487 | $ | 450 | $ | 37 | 8 | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 133 | $ | 129 | $ | 4 | 3 | % | ||||||||||||||||||
| Operating income | $ | 285 | $ | 246 | $ | 39 | 16 | % | ||||||||||||||||||
| Earnings before interest expense and income taxes | $ | 291 | $ | 269 | $ | 22 | 8 | % | ||||||||||||||||||
| Heating degree days - % (warmer) than normal | (11.0) | % | (8.1) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 130 | $ | 38 | $ | 92 | 242 | % | ||||||||||||||||||
•Temperatures were 11% warmer than normal and 6% warmer than the prior-year period.
•Total margin increased $37 million reflecting increased margins from natural gas gathering and processing activities ($49 million), largely due to the prior year acquisitions of UGI Moraine East and Pennant. These increases were partially offset by lower margin from natural gas marketing activities ($8 million), including the effects of peaking and capacity management activities, where the business benefited from the positive impact of settlement timing of certain multi-year commodity storage hedge contracts in the prior year.
•Operating income increased $39 million compared to the prior year reflecting higher total margin and farm-out revenue, partially offset by higher depreciation and amortization expense ($7 million) and higher operating and administrative expense ($4 million).
•EBIT increased $22 million due to an increase in operating income, partially offset by lower income from equity method investments following the acquisition of the remaining interest in Pennant in the fourth quarter of the prior year.
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UGI International
| For the year ended September 30, | 2023 | 2022 | Increase (Decrease) | |||||||||||||||||||||||
| Revenues | $ | 2,965 | $ | 3,686 | $ | (721) | (20) | % | ||||||||||||||||||
| Total margin (a) | $ | 920 | $ | 935 | $ | (15) | (2) | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 623 | $ | 611 | $ | 12 | 2 | % | ||||||||||||||||||
| Operating income | $ | 215 | $ | 237 | $ | (22) | (9) | % | ||||||||||||||||||
| Earnings before interest expense and income taxes | $ | 234 | $ | 254 | $ | (20) | (8) | % | ||||||||||||||||||
| LPG retail gallons sold (millions) | 729 | 799 | (70) | (9) | % | |||||||||||||||||||||
| Heating degree days - % warmer than normal | (10.5) | % | (2.6) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 129 | $ | 107 | $ | 22 | 21 | % | ||||||||||||||||||
Base-currency results are translated into U.S. dollars based upon exchange rates experienced during the reporting periods. The functional currency of a significant portion of our UGI International results is the euro and, to a much lesser extent, the British pound sterling. During fiscal 2023 and fiscal 2022, the average unweighted euro-to-dollar translation rates were $1.07 and $1.08, respectively, and the average unweighted British pound sterling-to-dollar translation rate were $1.23 and $1.28, respectively.
•Temperatures were 11% warmer than normal and 8% warmer than the prior-year period.
•Retail volume decreased 9% primarily due to the effect of energy conservation efforts across Europe largely due to high global energy prices and the war between Russia and Ukraine, as well as warmer weather.
•Total margin decreased $15 million reflecting lower retail volume and the translation effects of the weaker foreign currencies ($27 million), partially offset by higher LPG unit margins and increased total margin from energy marketing operations ($29 million).
•Operating and administrative expenses increased $12 million reflecting the impact of the global inflationary cost environment, partially offset by lower distribution and personnel-related costs and the translation effects of the weaker foreign currencies ($11 million).
•Operating income decreased $22 million due to lower total margin, higher operating and administrative expenses, and lower gain from asset sales ($11 million), partially offset by increased foreign currency transaction gains ($12 million) and higher income from cylinder deposits ($5 million).
AmeriGas Propane
| For the year ended September 30, | 2023 | 2022 | Increase (Decrease) | |||||||||||||||||||||||
| Revenues | $ | 2,581 | $ | 2,943 | $ | (362) | (12) | % | ||||||||||||||||||
| Total margin (a) | $ | 1,331 | $ | 1,330 | $ | 1 | — | % | ||||||||||||||||||
| Operating and administrative expenses | $ | 950 | $ | 889 | $ | 61 | 7 | % | ||||||||||||||||||
| Operating income / earnings before interest expense and income taxes | $ | 268 | $ | 307 | $ | (39) | (13) | % | ||||||||||||||||||
| Retail gallons sold (millions) | 823 | 888 | (65) | (7) | % | |||||||||||||||||||||
| Heating degree days - % colder (warmer) than normal | 0.5 | % | (0.8) | % | ||||||||||||||||||||||
| Capital expenditures | $ | 134 | $ | 128 | $ | 6 | 5 | % | ||||||||||||||||||
•Retail gallons sold decreased 7% largely due to continued shortage of drivers, which also limited growth, as well as the continuation of customer attrition, and structural conservation.
•Total margin increased $1 million reflecting higher average propane margins including effective margin management efforts, largely offset by lower retail volumes sold.
•Operating and administrative expenses increased $61 million reflecting, among other things, vehicle expenses, staffing, overtime and employee-related costs associated with distribution activity, and advertising expenses.
•Operating income and EBIT decreased $39 million reflecting higher operating and administrative expenses, partially offset by an increase in other income ($21 million) largely related to gains on asset sales.
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REPORT OF EARNINGS - UGI CORPORATION
| (Millions of dollars, except per share) Unaudited | Three Months Ended September 30, | Twelve Months Ended September 30, | ||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Utilities | $ | 210 | $ | 220 | $ | 1,854 | $ | 1,620 | ||||||||||||||||||
| Midstream & Marketing | 261 | 595 | 1,847 | 2,326 | ||||||||||||||||||||||
| UGI International | 529 | 675 | 2,965 | 3,686 | ||||||||||||||||||||||
| AmeriGas Propane | 434 | 520 | 2,581 | 2,943 | ||||||||||||||||||||||
| Corporate & Other (a) | (30) | (76) | (319) | (469) | ||||||||||||||||||||||
| Total revenues | $ | 1,404 | $ | 1,934 | $ | 8,928 | $ | 10,106 | ||||||||||||||||||
| Earnings (loss) before interest expense and income taxes: | ||||||||||||||||||||||||||
| Utilities | $ | (2) | $ | 4 | $ | 365 | $ | 336 | ||||||||||||||||||
| Midstream & Marketing | 38 | 53 | 291 | 269 | ||||||||||||||||||||||
| UGI International | 18 | 26 | 234 | 254 | ||||||||||||||||||||||
| AmeriGas Propane | 28 | 4 | 268 | 307 | ||||||||||||||||||||||
| Total reportable segments | 82 | 87 | 1,158 | 1,166 | ||||||||||||||||||||||
| Corporate & Other (a) | 173 | 268 | (2,616) | 550 | ||||||||||||||||||||||
| Total earnings (loss) before interest expense and income taxes | 255 | 355 | (1,458) | 1,716 | ||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||
| Utilities | (20) | (18) | (82) | (65) | ||||||||||||||||||||||
| Midstream & Marketing | (12) | (10) | (45) | (41) | ||||||||||||||||||||||
| UGI International | (11) | (6) | (37) | (28) | ||||||||||||||||||||||
| AmeriGas Propane | (41) | (40) | (163) | (160) | ||||||||||||||||||||||
| Corporate & Other, net (a) | (14) | (10) | (52) | (35) | ||||||||||||||||||||||
| Total interest expense | (98) | (84) | (379) | (329) | ||||||||||||||||||||||
| Income (loss) before income taxes | 157 | 271 | (1,837) | 1,387 | ||||||||||||||||||||||
| Income tax (expense ) benefit (b) | (26) | (28) | 335 | (313) | ||||||||||||||||||||||
| Net income (loss) including noncontrolling interests | 131 | 243 | (1,502) | 1,074 | ||||||||||||||||||||||
| Add net loss (deduct net income) attributable to noncontrolling interests | — | 1 | — | (1) | ||||||||||||||||||||||
| Net income (loss) attributable to UGI Corporation | $ | 131 | $ | 244 | $ | (1,502) | $ | 1,073 | ||||||||||||||||||
| Earnings (loss) per share attributable to UGI Corporation shareholders: | ||||||||||||||||||||||||||
| Basic | $ | 0.62 | $ | 1.16 | $ | (7.16) | $ | 5.11 | ||||||||||||||||||
| Diluted | $ | 0.61 | $ | 1.13 | $ | (7.16) | $ | 4.97 | ||||||||||||||||||
| Weighted Average common shares outstanding (thousands): | ||||||||||||||||||||||||||
| Basic | 209,767 | 209,765 | 209,806 | 209,940 | ||||||||||||||||||||||
| Diluted | 215,625 | 215,371 | 209,806 | 215,821 | ||||||||||||||||||||||
| Supplemental information: | ||||||||||||||||||||||||||
| Net income (loss) attributable to UGI Corporation: | ||||||||||||||||||||||||||
| Utilities | (15) | (10) | 219 | 206 | ||||||||||||||||||||||
| Midstream & Marketing | 28 | 31 | 193 | 163 | ||||||||||||||||||||||
| UGI International | 22 | 14 | 172 | 175 | ||||||||||||||||||||||
| AmeriGas Propane | $ | (16) | $ | (23) | $ | 71 | $ | 112 | ||||||||||||||||||
| Corporate & Other (a) | 112 | 232 | (2,157) | 417 | ||||||||||||||||||||||
| Total net income (loss) attributable to UGI Corporation | $ | 131 | $ | 244 | $ | (1,502) | $ | 1,073 | ||||||||||||||||||
(a)Corporate & Other includes specific items attributable to our reportable segments that are not included in profit measures used by our chief operating decision maker in assessing our reportable segments' performance or allocating resources. These specific items are shown in the section titled "Non-GAAP Financial Measures - Adjusted Net Income 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 September 30, 2022 includes $20 million of 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.
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Non-GAAP Financial Measures - Adjusted Net Income Attributable to UGI and Adjusted Diluted Earnings Per Share
(unaudited)
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:
| Fiscal Year Ended September 30, | 2023 | 2022 | |||||||||
| Adjusted net (loss) income attributable to UGI Corporation (millions): | |||||||||||
| Net (loss) income attributable to UGI Corporation | $ | (1,502) | $ | 1,073 | |||||||
| Net losses (gains) on commodity derivative instruments not associated with current-period transactions (net of tax of $(419) and $140, respectively) | 1,225 | (458) | |||||||||
| Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(11) and $14, respectively) | 27 | (36) | |||||||||
| Loss associated with impairment of AmeriGas Propane goodwill (net of tax of $4 and $0, respectively) | 660 | — | |||||||||
| Business transformation expenses (net of tax of $(3) and $(2), respectively) | 7 | 7 | |||||||||
| Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax of $0 and $(1), respectively) | — | 1 | |||||||||
| Impairments of certain equity method investments (net of tax of $0 and $(13), respectively) | — | 22 | |||||||||
| Impact of change in tax law | — | (19) | |||||||||
Loss on extinguishment of debt (net of tax of $(2) and $(3), respectively) | 7 | 8 | |||||||||
Restructuring costs (net of tax of $0 and $(8), respectively) | — | 21 | |||||||||
AmeriGas operations enhancement for growth project (net of tax of $(6) and $(2), respectively) | 18 | 3 | |||||||||
Costs associated with exit of the UGI International energy marketing business (net of tax of $(67) and $(1), respectively) | 181 | 4 | |||||||||
Net gain on sale of UGI headquarters building (net of tax of $4 and $0, respectively) | (10) | — | |||||||||
| Total adjustments (1) (2) | 2,115 | (447) | |||||||||
| Adjusted net income attributable to UGI Corporation | $ | 613 | $ | 626 | |||||||
| Adjusted diluted earnings per share: | |||||||||||
| UGI Corporation (loss) earnings per share - diluted (3) | $ | (7.16) | $ | 4.97 | |||||||
| Net losses (gains) on commodity derivative instruments not associated with current-period transactions | 5.77 | (2.11) | |||||||||
| Unrealized losses (gains) on foreign currency derivative instruments | 0.13 | (0.17) | |||||||||
| Business transformation expenses | 0.03 | 0.03 | |||||||||
| Loss associated with impairment of AmeriGas Propane goodwill | 3.14 | — | |||||||||
| Impairments of certain equity method investments | — | 0.10 | |||||||||
| Impact of change in tax law | — | (0.09) | |||||||||
| Loss on extinguishment of debt | 0.03 | 0.03 | |||||||||
| Restructuring costs | — | 0.10 | |||||||||
| AmeriGas operations enhancement for growth project | 0.09 | 0.02 | |||||||||
| Cost associated with exit of the UGI International energy marketing business | 0.86 | 0.02 | |||||||||
| Net gain on sale of UGI headquarters building | (0.05) | — | |||||||||
| Total adjustments (1) | 10.00 | (2.07) | |||||||||
| Adjusted diluted earnings per share (3) | $ | 2.84 | $ | 2.90 | |||||||
(1)Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income 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.
(2)Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
(3)The loss per share for Fiscal 2023, was determined excluding the effect of 6.13 million dilutive shares as the impact of such shares would have been antidilutive due to the net loss for the period, while the adjusted earnings per share for Fiscal 2023, was determined based upon fully diluted shares of 215.94 million.
7
1 Fiscal 2023 Results & Business Update Ro ge r Pe r re a u l t President and CEO, UGI Corporation S e a n O ’ B r 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 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 conflict in the Middle East, 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 success of our strategic initiatives and investments intended to advance our business strategy; 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 attract, develop, retain and engage key employees; uncertainties related to global pandemics; the impact of a material impairment of our assets; 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; 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; and our ability to control operating costs and realize cost savings.
3 UGI Supplemental Footnotes Management uses “adjusted net income attributable to UGI Corporation”, “adjusted diluted earnings per share (“EPS”)”, “UGI Corporation Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”)”, “AmeriGas Propane Adjusted EBITDA”, “UGI International Adjusted EBITDA”, “AmeriGas Propane Free Cash Flow” and “UGI International Free Cash Flow”, all of which are non-GAAP financial measures, when evaluating UGI's overall performance. Management believes that these non-GAAP measures provide meaningful information to investors about UGI’s performance because they eliminate the impacts of (1) gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions and (2) other significant discrete items that can affect the comparison of period-over-period results. Volatility in net income attributable to UGI can occur as a result of gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions but included in earnings in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. The tables in slides 23 and 24 reconcile adjusted diluted earnings per share (EPS) and adjusted net income attributable to UGI Corporation, respectively, to their most directly comparable GAAP measures. Slides 25, 26 and 27 reconcile UGI Corporation Adjusted EBITDA, AmeriGas Propane Adjusted EBITDA, AmeriGas Propane Free Cash Flow, UGI International Adjusted EBITDA and UGI International Free Cash Flow to their nearest GAAP measures.
4 1 FY23 Year in Review
5 37% 63% FY23 Financial Highlights Adjusted Diluted EPS1 $2.90 $2.84 FY22 FY23 $1,166 $1,158 FY22 FY23 Reportable Segments EBIT2 ($ in Million) Earnings Contribution – Adjusted Diluted EPS1 Natural Gas Global LPG FY23 • FY23 GAAP diluted EPS of ($7.16) vs. $4.97 in FY22 • Record performance at the Utilities largely due to higher gas base rates and the weather normalization adjustment implemented at our PA Gas Utility in Q1 FY23 • Record performance in Midstream & Marketing due to increased margins from natural gas gathering and processing activities, primarily from the prior year acquisitions of UGI Moraine East and Pennant • Increased unit margins in the Global LPG businesses which was partially offset by lower volumes, inflationary pressures and continued investment at AmeriGas 7% 10-Year Dividend Growth (FY13-23) $1.6B Available Liquidity4 6% 10-Year Adjusted EPS CAGR (FY13-23) 11% Rate Base CAGR (FY13-23) 8% Natural Gas EBIT Growth (FY22-23) $511M FY23 Free Cash Flow3 (Global LPG) 1. Adjusted Diluted EPS is a non-GAAP measure. See slide 23 for reconciliation. 2. Reportable Segments EBIT stands for UGI Corporation’s Earnings before interest expense and income taxes excluding EBIT related to Corporate & Other. 3. Free Cash Flow is a non-GAAP measure. See slides 26 and 27 for reconciliation. 4. Defined as cash and cash equivalents and available borrowing capacity on our revolving credit facilities.
6 FY23 Key Accomplishments • Deployed $956 million of capital, with $563 million (59%) largely focused on pipeline replacement and betterment at the Utilities o 142 miles of pipeline replaced • Added ~13,0001 residential and commercial customers at the Utilities • Filed a joint stipulation and agreement for settlement of a base rate case at Mountaineer on October 6, 2023 o Includes a net revenue increase of ~$14 million and new rates expected to take effect January 1, 2024 • Midstream & Marketing margins underpinned by 86% from fee- based contracts, including take-or-pay arrangements and minimum volume commitments • Completed the Allen Farm and EL-Vi RNG projects, with an expected production capacity of ~140 Mmcf • Continued to execute on our commitment to exit the European energy marketing business o Divested the energy marketing business located in the UK and Belgium in FY23 o Divested substantially all of our energy marketing business located in France in October 2023 o Entered into agreements to divest and exit a substantial portion of the portfolio in the Netherlands (closing and exits targeted for Q2 FY24) • Received upgraded ESG Rating Assessment of “AAA” from MSCI • 40,000+ volunteer hours to serve our local communities in programs such as United Way, Big Brothers Big Sisters, Reading Is Fundamental, among others 1. Customer addition includes upgrades.
7 FY23 Results Recap 1. Adjusted Diluted EPS is a non-GAAP measure. See Slide 23 for reconciliation. FY23 GAAP diluted EPS of ($7.16) compared to $4.97 in FY22 FY23 Adjusted Diluted EPS1 – Comparison with FY22 Key Drivers Natural Gas businesses • Warmer than prior year weather • Higher total margin • Higher operating expenses • Weather normalization at the PA Gas Utility Corporate & Other • Interest expense Global LPG businesses • Warmer than prior year weather • Lower LPG margins • Higher margins from non-core energy marketing activities • Higher operating expenses • Gain from asset sales • Benefits from foreign tax credit optimization
8 Weather FY22 EBIT FY23 EBIT Total Margin OPEX D&A Other EBIT is defined as Earnings before interest expense and income taxes. Total margin represents total revenue less total cost of sales. In the case of Utilities, the total margin is also reduced by certain revenue-related taxes. OPEX stands for Operating & Administrative Expenses, and D&A stands for Depreciation and Amortization. FY23 Segment Results Recap – Natural Gas FY23 EBIT - Comparison with FY22 ($ in million) Utilities Key Drivers • Higher PA Gas Utility base rates and benefits from the weather normalization adjustment implemented in Q1 FY23 which offset the effect of warmer weather • Increased OPEX reflects, among other things, higher uncollectible accounts expenses, contract labor costs, and personnel-related expenses • Higher depreciation expense reflects the effects of continued distribution system capital expenditure activity 11.7% 4.8% Vs. Normal Vs. PY Increase Decrease WarmerColder Weather Midstream & Marketing Key Drivers FY22 EBIT FY23 EBIT Total Margin OPEX D&A Other • Improved margins primarily reflecting incremental natural gas gathering and processing activities ($49 million), primarily from the prior year acquisitions of UGI Moraine East and Pennant, partially offset by lower margins from natural gas marketing activities ($8 million), including the effects of peaking and capacity management activities • Higher D&A due to additional assets in service, mainly Pennant • Lower other income from equity investees 11.0% 6.0% Vs. Normal Vs. PY
9 Weather FY22 EBIT FY23 EBIT Total Margin OPEX D&A Other • Total retail gallons decreased 9% due to warmer weather and energy conservation measures • Higher LPG unit margin and increased margins from the non-core energy marketing business ($29 million), partially offset by the translation effects of the weaker foreign currencies ($27 million) • Higher OPEX primarily reflects the effects of inflationary increases, partially offset by lower distribution and personnel-related costs and the translation effects of the weaker foreign currencies ($11 million) FY23 Segment Results Recap – Global LPG UGI International Key Drivers 10.5% 8.4% Vs. Normal Vs. PY Increase Decrease WarmerColder Weather• Total retail propane gallons sold decreased 7% due to the effects of driver staffing shortages (which also limited growth), continuing customer attrition and structural conservation • Higher LPG unit margin • Higher OPEX largely due to increased overtime and employee-related costs, vehicle fuel, advertising and uncollectible account expenses • Largely related to gains on sales of fixed assets AmeriGas Propane Key Drivers FY22 EBIT FY23 EBIT Total Margin OPEX D&A Other 0.5% 1.9% Vs. Normal Vs. PY EBIT is defined as Earnings before interest expense and income taxes. Total margin represents total revenue less total cost of sales. OPEX stands for Operating & Administrative Expenses, and D&A stands for Depreciation and Amortization. FY23 EBIT - Comparison with FY22 ($ in million)
10 $0.4 $0.3 $0.3 $0.3 $0.2 $1.3 $0.9 $1.6 $1.5 $1.4 $1.7 $1.2 $1.9 $1.8 $1.6 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Cash and cash equivalents Available Credit Facilities Liquidity and Balance Sheet Update • $1.6 billion in available liquidity1 as of September 30, 2023 • In FY23, completed over $2.6+ billion of long-term debt financing to support our ongoing operations and improve liquidity • As of September 30, 2023, UGI and its subsidiaries were in compliance with all debt covenant requirements • Subsequent to the year-end, we continued with activities that improved financial flexibility: o Amended the AmeriGas credit agreement to right-size the revolver from $600 million to $400 million and decrease the minimum interest coverage ratio2 from 2.75x to 2.5x o Refinanced existing credit agreement at UGI Utilities providing for borrowings up to $375 million 1. Defined as cash and cash equivalents and available borrowing capacity on our revolving credit facilities. 2. AmeriGas interest coverage ratio is calculated as Consolidated EBITDA / Consolidated Interest Expense, as defined in the credit agreement. 3. As of September 30, 2023. Long-term debt with maturities of less than $10 million in a particular year have not been represented in the chart. Available Liquidity ($ in billion)UGI Corporation Long-Term Debt M turities ($ in million)3Available Liquidity ($ in billion) $700 $675 $525 $500 $317 $423 $791 $281 $70 $40 $1,230 $38 $973 $0 $500 $1,000 $1,500 $2,000 $2,500 2024 2025 2026 2027 2028 FY29 - 52 AmeriGas Propane UGI International Midstream & Marketing Utilities UGI Corporation
11 2 FY24 Strategic Priorities & Financial Outlook
12 Our Strategic and Financial Priorities Focused on effectively operating our business portfolio to deliver reliable earnings growth, achieve sustainable cost savings, and strengthen the balance sheet while pursuing a strategic review focused on the LPG business Cost Reduction and Optimization Actions Strengthen the Balance Sheet Strategic Review of the LPG Businesses Continued Growth of the Natural Gas businesses 1 2 3 4 Completed Underway Initiated actions to achieve operational efficiencies and targeted cost savings Achieve ~$70 - $100M of cost savings by FY25 Revised capital allocation outlook and priorities to achieve and sustain optimal capital structure Execute on our strategy to enhance liquidity and reduce leverage at AmeriGas Propane and UGI Corporation Review of strategic alternatives, with a focus on AmeriGas Propane Exit the non-core European energy marketing businesses ▪ UK, Belgium and a majority in France ▪ Netherlands1 Continue investing in our Utility infrastructure to promote safety and reliability while balancing customer affordability Leverage the strategic midstream assets to continue driving earnings and cash flow stability 1. Entered into definitive agreements to divest and exit a substantial portion of our portfolio in the Netherlands which is expected to occur in Q2 FY24.
13 • Electric rates • Operating expense • Interest expense • Current tax regime FY24 Adjusted Diluted EPS Guidance FY24 Guidance 1. Adjusted Diluted EPS is a non-GAAP measure. See Slide 23 for FY23 reconciliation. 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 FY24 adjusted diluted earnings per share, a non-GAAP measure, to diluted earnings per share, the most directly comparable GAAP measure, in reliance on the “unreasonable efforts” exception set forth in SEC rules. 3. The forward-looking information used on this slide is for illustrative purposes only. Actual results may differ substantially from the information presented. $2.84 FY23 Adjusted Diluted EPS $3.00 $2.70 Corporate & Other FY23 Adjusted Diluted EPS1 to FY24 Guidance2,3 Key Assumptions3 • Normal weather • Volume • Customer growth • Gas base rates Natural Gas businesses Global LPG businesses • Normal weather • Volume • Lower margins • Operating expense • Interest expense • Current tax regime • Benefits from foreign tax credit optimization
14 • 4% long-term dividend growth target • Maintain an attractive dividend payout ratio for our business mix • Consider share repurchase as leverage decreases Capital Allocation Outlook and Priorities Dividend Payment and Shareholder Return • Growth and regulatory capital investments in the regulated utilities businesses, which attract a strong return on equity • Anticipate investing $2B+ between FY24 – FY272 • Prioritize consolidated reduction in leverage ratio1 to achieve range of 3.25x – 3.75x2 • Further strengthen consolidated liquidity • Support organic growth in the natural gas businesses through disciplined capital investment while maintaining a healthy balance sheet • Execute committed projects to develop renewable energy solutions that achieve return criteria 1 2 3 Capital Investments at the Utilities Balance Sheet Improvement Investments in Strategic Growth Opportunities 4 1. Total debt over Adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure. 2. The forward-looking information used on this slide is for illustrative purposes only. Actual results may differ substantially from the information presented. 3. Includes acquisitions of business and assets, and other equity investments. 4. Includes growth capital expenditure related to our Midstream & Marketing, UGI International and AmeriGas Propane segments. Capital Allocation – By Category ($ in million) Cash Returned to Shareholders Capital Expenditure3 17% 16% 20% 21% 18% 18% 45% 45% ~$1,100 ~$960 $330 $330 - $335 Renewables Maintenance Capital Growth Capital4 Regulated Utilities (Growth) Capital ~80% of FY24 capital expenditure and investments allocated to Natural Gas and Renewables FY23 FY24E2
15 #1 propane distributor in the US1 Driving Operational Improvements at AmeriGas Propane to Enhance Shareholder Value Flexible and reliable supply chain coverage Strategically centralized and scalable procurement operations Robust fleet management focused on efficient routing and logistics Continued focus on solid cash generation Free Cash Flow2 at AmeriGas Propane AmeriGas Propane in FY24 $1.5 billion generated since 2020 1. Based on the volume of propane gallons distributed annually. 2. Free Cash Flow is a non-GAAP measure. See Slide 26 for reconciliation. Sustained focus on operational improvement to enhance the customer experience Operational efficiencies, cost reduction and optimizing actions Improved demand forecasting and logistics management Disciplined capital deployment and cash flow management
16 Key Takeaways Prioritizing investments in the regulated utilities businesses which provide attractive rates of return Improving the balance sheet and achieving an optimal leverage ratio is a high priority Executing a strategic review focused on the LPG business to unlock and maximize shareholder value Maintaining our strong track record of paying dividends Continuous efforts to maximize employee and customer satisfaction Optimizing our cost structure to create an agile organization
17 Appendix
18 A Diversified Energy Provider Reliable Earnings Growth UGI Corporation is a distributor and marketer of energy products and services, including natural gas, LPG, electricity and renewable energy solutions 141 years 18 countries 10,000+ employees1 4 diversified businesses 2.6+ million customers1 ONE 1. As of September 30, 2023. RenewablesRebalance
19 Our Business Portfolio 1. Does not include Corporate & Other. 2. Adjusted Diluted EPS is a non-GAAP measure. Please see slide 23 for reconciliation. 3. The information is as of September 30, 2023. 4. Based on total customers. 5. DSIC stands for Distribution System Improvement Charge and IREP strands for Infrastructure Replacement and Expansion Program. 6. The forward-looking information used on this slide is for illustrative purposes only. Actual results may differ substantially from the information presented. 7. Based on the volume of propane gallons distributed annually. 8. Free Cash Flow is a non-GAAP measure. See Slides 26 and 27 for reconciliation. Lines of Businesses Segments FY23 Volume FY23 Adjusted Diluted EPS Contribution1,2 • 2nd largest regulated gas utility in Pennsylvania (PA)4 and largest regulated gas utility in West Virginia (WV)4 • Weather normalization at the PA gas utility • Authorized gas ROEs of 10.15% (DSIC)5 in PA and 9.75% (IREP)5 in WV • ~90% of capital recoverable within 12 months • Expected rate base growth of 9%+ (FY23 – 27)6 • Full suite of midstream services and gas marketing on 47 gas utility systems and 20 electric utility systems • Significant strategic assets within the Marcellus Shale / Utica production area • 86% fee-based income, including minimum volume commitments and take or pay arrangements • Largest retail LPG distributor in the US7 • Broad geographic footprint serving all 50 states • Strong track record of attractive unit margins despite fluctuating commodity price environments • $1.5 billion of Free Cash Flow Generation8 since 2020 • LPG distribution in 17 countries in Europe • Largest LPG distributor in France, Austria, Belgium, Denmark and Luxembourg7 • $1.1 billion of Free Cash Flow Generation8 since 2020 • Strategically located supply assets • Exiting non-core energy marketing business Natural Gas Global LPG Utilities Midstream & Marketing UGI International AmeriGas Propane 33% 29% 27% 11% Key Highlights3 ~375 bcf ~295 bcf ~900 million gallons ~940 million gallons
20 Our Strategy Core Values Safety Respect Integrity Sustainability Excellence Reliability Reliable Earnings Growth Renewables Rebalance • Ongoing investments to grow predictable regulated utility, fee-based and weather resilient volume to enable strong stable returns • Continuous improvements and focused growth across the business • Reduce weather sensitivity • Disciplined capital allocation to committed renewable projects that align with delivering reliable earnings growth • Leverage existing infrastructure and expertise • Prioritize investments in the natural gas line of business • Optimize benefits from operational and geographic diversification
21 Feedstock Production2 (~Mmcf) FY22 FY23 FY24 FY25 New Energy One – Joint Venture (<25%) 250 Cayuga - Spruce Haven 50 Cayuga - Allen Farms 85 Cayuga - El-Vi 55 MBL Bioenergy – Moody 300 Hamilton – Synthica St. Bernard 250 Cayuga – Bergen Farms 150 Cayuga – New Hope View Farms 35 MBL Bioenergy – Brookings & Lakeside 525 Aurum Renewables – Joint Venture (40%) 1,800 Ag-Grid (33% ownership) Renewables Investment Highlights 11 High-quality RNG projects in multiple states Total Commitment $500M Committed ~$250M Invested to date Renewable Natural Gas Projects Committed to Date1 10%+ Targeted Unlevered IRR 1. As of September 30, 2023. 2. 100% of the anticipated production capacity from the RNG projects UGI continues to develop a portfolio of renewables through investment in committed projects Facility completed and in serviceStatus: Feedstock: Dairy Food Landfill Expected completion date
22 ESG Highlights UGI ESG Rating History - MSCI UGI is positioned among top 7%5 of all peers Key ESG Focus Areas “Robust overall governance practices and environmental strategies to manage emissions.” - MSCI 1. Achievement of these goals is in progress. For more information on UGI’s ESG initiatives, please see UGI’s sustainability reports and visit www.ugiesg.com. 2. Diversity represents ethnicity and gender. 3. As defined under the rules of the New York Stock Exchange. 4. As of September 30, 2023. 5. Universe: MSCI ACWI Index constituents, Oil & Gas refining, Marketing, Transportation & Storage. Environmental Social Governance 55% 5-year Scope-1 GHG Emissions Reduction Target (using 2020 as the base year) 25% Targeted spend improvement with diverse Tier I and Tier II suppliers by 2025 (using 2020 as the base year) 50% Board Diversity 90%+ Reduction in fugitive methane emission at UGI Utilities over the 20 years (using 1999 as the base year) Executive compensation linked to safety and diversity & inclusion 5 Years Average Board Tenure 35% Targeted reduction in Total Recordable Injuries by 2025 (using 2017 as the base year) Partnership with the Human Library Organization to help organizations with their diversity, equity, and inclusion efforts 90% Independent Directors and an Independent Board Chair 1 1 1 2,4 3,4 4
23 FY23 Adjusted Diluted Earnings per Share FY23 FY22 Utilities $1.01 $0.95 Midstream & Marketing 0.89 0.76 UGI International 0.80 0.81 AmeriGas Propane 0.33 0.52 Corporate & Other (a) (10.19) 1.93 Earnings per share – diluted (7.16) 4.97 Net losses (gains) on commodity derivative instruments not associated with current-period transactions 5.77 (2.11) Unrealized losses (gains) on foreign currency derivative instruments 0.13 (0.17) Loss associated with impairment of AmeriGas Propane goodwill 3.14 — Loss on extinguishments of debt 0.03 0.03 Business transformation expenses 0.03 0.03 AmeriGas operations enhancement for growth project 0.09 0.02 Impairments of certain equity method investments — 0.10 Restructuring costs — 0.10 Costs associated with exit of the UGI International energy marketing business 0.86 0.02 Net gain on sale of UGI headquarters building (0.05) — Impact of change in tax law — (0.09) Total adjustments (a) 10.00 (2.07) Adjusted earnings per share – diluted $2.84 $2.90 (a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income 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.
24 FY23 Adjusted Net Income (Dollars in Millions) FY23 FY22 Utilities $219 $206 Midstream & Marketing 193 163 UGI International 172 175 AmeriGas Propane 71 112 Corporate & Other (a) (2,157) 417 Net income attributable to UGI Corporation (1,502) 1,073 Net losses (gains) on commodity derivative instruments not associated with current-period transactions (net of tax of $(419) and $140, respectively) 1,225 (458) Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(11) and $14, respectively) 27 (36) Loss associated with impairment of AmeriGas Propane goodwill (net of tax of $4 and $0, respectively) 660 — Loss on extinguishments of debt (net of tax of $(2) and $(3), respectively) 7 8 Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax of $0 and $(1), respectively) — 1 Business transformation expenses (net of tax of $(3) and $(2), respectively) 7 7 AmeriGas operations enhancement for growth project (net of tax of $(6) and $(2), respectively) 18 3 Impairments of certain equity method investments (net of tax of $0 and $(13), respectively) — 22 Restructuring costs (net of tax of $0 and $(8), respectively) — 21 Costs associated with exit of the UGI International energy marketing business (net of tax of $(67) and $(1), respectively) 181 4 Net gain on sale of UGI headquarters building (net of tax of $4 and $0, respectively) (10) — Impact of change in tax law — (19) Total adjustments (a) (b) 2,115 (447) Adjusted net income attributable to UGI Corporation $613 $626 (a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income attributable to UGI Corporation. These adjustments have been excluded from the segment results to align with the measure used by our Chief Operating Decision Maker in assessing segment performance and allocating resources. (b) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
25 Non-GAAP Reconciliation: UGI Corporation Adjusted EBITDA and Leverage ($ in millions) Year Ended September 30, 2020 2021 2022 2023 Net income including noncontrolling interests $532 $1,467 $1,073 (1,502) Income taxes 135 522 313 (335) Interest expense 322 310 329 379 Depreciation and amortization 484 502 518 532 EBITDA 1,473 2,801 2,233 (926) Unrealized losses (gains) on commodity derivative instruments (117) (1,390) (598) 1,644 Unrealized (gains) losses on foreign currency derivative instruments 36 (8) (50) 38 Loss on extinguishments of debt - - 11 9 AmeriGas Merger expenses - - - - Acquisition and integration expenses associated with the CMG Acquisition 2 1 - - Acquisition and integration expenses associated with the Mountaineer Acquisition - 14 2 - Business transformation expenses 62 101 9 10 Impairments of certain equity method investments and assets - 93 35 - Impairment of customer relationship intangible - 20 - - Loss on disposals of Conemaugh and HVAC 54 - - - Restructuring costs - - 29 - Loss associated with impairment of AmeriGas Propane goodwill - - - 656 Costs associated with exit of the UGI International energy marketing business - - 5 248 Net gain on sale of UGI headquarters building - - - (14) AmeriGas operations enhancement for growth project - - 5 24 Adjusted EBITDA $1,510 $1,632 $1,681 $1,689 Total Debt $6,381 $6,816 $7,000 $7,249 Leverage 4.2x 4.2x 4.2x 4.3x
26 Non-GAAP Reconciliation: AmeriGas Propane Adjusted EBITDA and Free Cash Flow ($ in millions) Year Ended September 30, Adjusted EBITDA Reconci l iation: 2020 2021 2022 2023 Net income (loss) attr ibutable to AmeriGas Partners, L.P. $236 $337 ($38) ($616) Income tax 2 2 2 - Interest expense 164 159 160 163 Depreciation & Amortization 178 173 177 177 EBITDA $580 $671 $301 ($276) Net (gains) losses on commodity derivative instruments not associated with current-period transactions (72) (167) 185 16 Business transformation expenses 44 54 - - Restructuring Costs - - 16 - Impairment of goodwill - - - 650 Loss on extinguishments of debt - - - 9 AmeriGas performance enhancement - - 5 24 Adjusted EBITDA $552 $558 $507 $423 Year Ended September 30, Free Cash Flow Reconci l iation: 2020 2021 2022 2023 Adjusted EBITDA $552 $558 $507 $423 Less: Capital Expenditures (135) (130) (128) (134) Free Cash Flow $417 $428 $379 $289
27 Non-GAAP Reconciliation: UGI International Adjusted EBITDA and Free Cash Flow ($ in millions) Year Ended September 30, Adjusted EBITDA Reconci l iation: 2020 2021 2022 2023 Net income (loss) attr ibutable to UGI International , LLC $137 $979 $808 ($1,076) Net income attributable to noncontrolling interests - - 1 - Income tax 37 331 250 (406) Interest expense 31 27 28 37 Depreciation & Amortization 125 134 117 116 EBITDA $330 $1,471 $1,204 ($1,329) Net (gains) losses on commodity derivative instruments not associated with current-period transactions - (1,065) (808) 1,399 Unrealized losses (gains) on foreign currency derivative instruments 36 (8) (50) 38 Loss on extinguishments of debt - - 11 - Business transformation expenses 18 33 - - Impairment of customer relationship intangible - 20 - Restructuring Costs - - 9 - Loss associated with disposal of energy marketing business - - 5 243 Adjusted EBITDA $384 $451 $371 $351 Year Ended September 30, Free Cash Flow Reconci l iation: 2020 2021 2022 2023 Adjusted EBITDA $384 $451 $371 $351 Less: Capital Expenditures (89) (107) (107) (129) Free Cash Flow $295 $344 $264 $222
28 Total Uti l i ties Midstream & Marketing UGI International AmeriGas Propane Corp & Other Revenues $8,928 $1,854 $1,847 $2,965 $2,581 ($319) Cost of sales (6,937) (953) (1,360) (2,045) (1,250) (1,329) Total margin 1,991 901 487 920 1,331 (1,648) Operating and administrative expenses (2,158) (392) (133) (623) (950) (60) Depreciation and amortization (532) (152) (86) (116) (177) (1) Impairment of goodwill (656) - - - - (656) Loss on disposal of UGI International energy marketing business (221) - - - - (221) Other non-operating (expense) income, net 132 - 17 34 64 17 Operating (loss) income (1,444) 357 285 215 268 (2,569) Income (loss) from equity investees 2 - 6 (4) - - Loss on extinguishments of debt (9) - - - - (9) Other non-operating income, net (7) 8 - 23 - (38) (Loss) earnings before income taxes and interest expense (1,458) 365 291 234 268 (2,616) Interest expense (379) (82) (45) (37) (163) (52) (Loss) income before income taxes (1,837) 283 246 197 105 (2,668) Income tax benefit (expense) 335 (64) (53) (25) (34) 511 Net (loss) income attr ibutable to UGI Corporation $(1,502) $219 $193 $172 $71 $(2,157) FY23 Segment Reconciliation (GAAP) ($ 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
29 Notes to ESG Commitments 35% Reduction in Total Recordable Injuries by 2025 1. Scope 1 emissions reduction target did not include emissions from the Mountaineer acquisition, which closed in September 2021. The target also excluded the Moraine East acquisition and only accounted for our ownership interest in the Pennant system at the time we set the target. UGI now owns 100% of Pennant. The emissions from our ownership interest in the Pine Run acquisition, announced in February 2021, were included in the baseline 2020 number. The 2020 baseline number also takes a 5-year emissions average from the Hunlock power generation facility to account for year-over-year differences in run time. 1. All domestic UGI companies use the Occupational Safety and Health Administration (“OSHA”) definition for TRIs. TRIs represents the number of work-related recordable injuries or illnesses requiring medical treatment beyond first aid, per 200,000 hours. 2. UGI International reports rates in accordance with the Industrial Management System guidelines. A TRI represents a work-related recordable injury to an employee or hired staff that requires medical treatment beyond first aid, as well as those that cause death, or days away from work. Committed to reducing Scope I emissions by 55% by 2025 using 2020 as the base year
30 Investor Relations: Tameka Morris 610-456-6297 morrista@ugicorp.com Arnab Mukherjee 610-768-7498 mukherjeea@ugicorp.com