UGI Corporation (NYSE: UGI) today reported financial results for
the fiscal quarter ended December 31, 2023.
HIGHLIGHTS
- Q1 GAAP diluted EPS of $0.44 and adjusted diluted EPS of $1.20
compared to GAAP diluted EPS of $(4.54) and adjusted diluted EPS of
$1.14 in the prior-year period.
- Q1 reportable segments earnings before interest expense and
income taxes1 ("EBIT") of $425 million compared to $411 million in
the prior-year period.
- Strong first quarter results despite warmer than normal weather
across our service territories, largely due to a 77% increase in
EBIT from UGI International attributable to the continued exit of
the non-core energy marketing business, higher LPG volumes, and
increased unit margins.
- Available liquidity of approximately $1.5 billion as of
December 31, 2023.
- Received approval from the West Virginia Public Service
Commission for Mountaineer's gas rate case. The settlement
permitted a $13.9 million annual distribution rate increase,
effective January 1, 2024, and a weather normalization adjustment
mechanism effective October 1, 2024.
"Our fiscal first quarter results reflect the strong performance
of UGI International and the natural gas businesses, and
underscores our commitment to our customers, shareholders and
employees," said Mario Longhi, Interim President and Chief
Executive Officer. "As previously anticipated and discussed on our
year-end earnings call, AmeriGas experienced a decline in its
year-over-year financial results. While effort was made to address
the segment's performance, it is clear that there is a need for
renewed focus on execution.
"Our strategic priorities are geared towards delivering reliable
earnings growth, returning cash to shareholders through dividends,
achieving sustainable cost savings, and strengthening the balance
sheet. We have initiated actions to align our cost structure with
the performance of each business, adjusted our capital allocation
priorities, and lowered capital expenditures in the near term.
Diligent execution of these actions should strengthen our core
businesses and better position UGI to deliver sustainable value for
its shareholders."
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, February 1, 2024. Interested parties may listen to the
audio webcast both live and in replay on the Internet at
https://www.ugicorp.com/investors/financial-reports/presentations
or by visiting the company website https://www.ugicorp.com and
clicking on Investors and then Presentations. A replay of the
webcast will be available after the event through to 11:59 PM ET
January 31, 2025.
ABOUT UGI UGI Corporation (NYSE: UGI) is a distributor and
marketer of energy products and services in the US and Europe. UGI
offers safe, reliable, affordable, and sustainable energy solutions
to customers through its subsidiaries, which provide natural gas
transmission and distribution, electric generation and
distribution, midstream services, propane distribution, renewable
natural gas generation, distribution and marketing, and energy
marketing services.
Comprehensive information about UGI Corporation is available on
the Internet at https://www.ugicorp.com.
USE OF NON-GAAP MEASURES Management uses "adjusted net
income attributable to UGI Corporation" and "adjusted diluted
earnings per share," both of which are non-GAAP financial measures,
when evaluating UGI's overall performance. Management believes that
these non-GAAP measures provide meaningful information to investors
about UGI’s performance because they eliminate the impacts of (1)
gains and losses on commodity and certain foreign currency
derivative instruments not associated with current-period
transactions and (2) other significant discrete items that can
affect the comparison of period-over-period results. Volatility in
net income attributable to UGI can occur as a result of gains and
losses on commodity and certain foreign currency derivative
instruments not associated with current-period transactions but
included in earnings in accordance with U.S. generally accepted
accounting principles ("GAAP").
Non-GAAP financial measures are not in accordance with, or an
alternative to, GAAP and should be considered in addition to, and
not as a substitute for, the comparable GAAP measures.
The tables on the last page of this press release reconcile net
income attributable to UGI Corporation, the most directly
comparable GAAP measure, to adjusted net income attributable to UGI
Corporation, and diluted earnings per share, the most comparable
GAAP measure, to adjusted diluted earnings per share, to reflect
the adjustments referred to above.
1 Reportable segments' EBIT represents an aggregate of our
reportable operating segment level EBIT, as determined in
accordance with GAAP.
USE OF FORWARD-LOOKING STATEMENTS This press release
contains statements, estimates and projections that are
forward-looking statements (as defined in Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended). Such statements use
forward-looking words such as “believe,” “plan,” “anticipate,”
“continue,” “estimate,” “expect,” “may,” or other similar words and
terms of similar meaning, although not all forward-looking
statements contain such words. These statements discuss plans,
strategies, events or developments that we expect or anticipate
will or may occur in the future. Management believes that these are
reasonable as of today’s date only. Actual results may differ
significantly because of risks and uncertainties that are difficult
to predict and many of which are beyond management’s control;
accordingly, there is no assurance that results will be realized.
You should read UGI’s Annual Report on Form 10-K for a more
extensive list of factors that could affect results. We undertake
no obligation (and expressly disclaim any obligation) to update
publicly any forward-looking statement, whether as a result of new
information or future events, except as required by the federal
securities laws. Among them are adverse weather conditions
(including increasingly uncertain weather patterns due to climate
change) resulting in reduced demand, the seasonal nature of our
business, and disruptions in our operations and supply chain; cost
volatility and availability of energy products, including propane
and other LPG, natural gas, and electricity, as well as the
availability of LPG cylinders, and the capacity to transport
product to our customers; changes in domestic and foreign laws and
regulations, including safety, health, tax, transportation,
consumer protection, data privacy, accounting, and environmental
matters, such as regulatory responses to climate change; the
inability to timely recover costs through utility rate proceedings;
increased customer conservation measures due to high energy prices
and improvements in energy efficiency and technology resulting in
reduced demand; adverse labor relations and our ability to address
existing or potential workforce shortages; the impact of pending
and future legal or regulatory proceedings, inquiries or
investigations; competitive pressures from the same and alternative
energy sources; failure to acquire new customers or retain current
customers, thereby reducing or limiting any increase in revenues;
liability for environmental claims; customer, counterparty,
supplier, or vendor defaults; liability for uninsured claims and
for claims in excess of insurance coverage, including those for
personal injury and property damage arising from explosions, acts
of war, terrorism, natural disasters, pandemics and other
catastrophic events that may result from operating hazards and
risks incidental to generating and distributing electricity and
transporting, storing and distributing natural gas and LPG in all
forms; transmission or distribution system service interruptions;
political, regulatory and economic conditions in the United States,
Europe and other foreign countries, including uncertainties related
to the war between Russia and Ukraine, the European energy crisis,
and foreign currency exchange rate fluctuations (particularly the
euro); credit and capital market conditions, including reduced
access to capital markets and interest rate fluctuations; changes
in commodity market prices resulting in significantly higher cash
collateral requirements; impacts of our indebtedness and the
restrictive covenants in our debt agreements; reduced distributions
from subsidiaries impacting the ability to pay dividends or service
debt; changes in Marcellus and Utica Shale gas production; the
availability, timing and success of our acquisitions, commercial
initiatives and investments to grow our businesses; our ability to
successfully integrate acquired businesses and achieve anticipated
synergies; the interruption, disruption, failure, malfunction, or
breach of our information technology systems, and those of our
third-party vendors or service providers, including due to
cyber-attack; the inability to complete pending or future energy
infrastructure projects; our ability to achieve the operational
benefits and cost efficiencies expected from the completion of
pending and future business transformation initiatives, including
the impact of customer service disruptions resulting in potential
customer loss due to the transformation activities; our ability to
attract, develop, retain and engage key employees; uncertainties
related to global pandemics; the impact of proposed or future tax
legislation; the impact of declines in the stock market or bond
market, and a low interest rate environment, on our pension
liability; our ability to protect our intellectual property; and
our ability to overcome supply chain issues that may result in
delays or shortages in, as well as increased costs of, equipment,
materials or other resources that are critical to our business
operations.
SEGMENT RESULTS ($ in millions, except where otherwise
indicated)
Utilities
For the fiscal quarter ended December
31,
2023
2022
Increase (Decrease)
Revenues
$
493
$
592
$
(99
)
(17
)%
Total margin (a)
$
265
$
256
$
9
4
%
Operating and administrative expenses
$
88
$
91
$
(3
)
(3
)%
Operating income
$
134
$
126
$
8
6
%
Earnings before interest expense and
income taxes
$
135
$
128
$
7
5
%
Gas Utility system throughput - billions
of cubic feet
Core market
30
34
(4
)
(12
)%
Total
104
94
10
11
%
Gas Utility heating degree days - %
(warmer) than normal (b)
(11.0
)%
0.2
%
Capital expenditures
$
82
$
117
$
(35
)
(30
)%
- Gas Utility service territory experienced temperatures that
were 11% warmer than normal as well as the prior-year period.
- Core market volumes decreased due to warmer than prior-year
weather partially offset by growth in core market customers.
- Total volumes increased largely due to higher large firm
delivery service and interruptible delivery service volumes.
- Total margin increased $9 million primarily due to the increase
in our PA gas base rates, higher DSIC and IREP benefits, and
continued customer growth. The effect of the warmer weather was
partially offset by the weather normalization adjustment.
- Operating income increased $8 million due to the higher total
margin ($9 million) and lower operating and administrative expenses
($3 million), partially offset by higher depreciation expense ($4
million) from continued distribution system capital expenditure
activity.
Midstream & Marketing
For the fiscal quarter ended December
31,
2023
2022
(Decrease) Increase
Revenues
$
394
$
669
$
(275
)
(41
)%
Total margin (a)
$
155
$
155
$
—
—
%
Operating and administrative expenses
$
31
$
29
$
2
7
%
Operating income
$
99
$
106
$
(7
)
(7
)%
Earnings before interest expense and
income taxes
$
102
$
107
$
(5
)
(5
)%
Heating degree days - % warmer than normal
(b)
(9.4
)%
(1.0
)%
Capital expenditures
$
19
$
11
$
8
73
%
- Temperatures were 9% warmer than normal and 11% warmer than the
prior-year period.
- Total margin was comparable with the prior year period as
higher margins from natural gas marketing activities were offset by
lower margins from renewable energy marketing activities.
- Operating and administrative expenses increased $2 million
largely due to the recovery of an uncollectible account in the
prior year.
UGI International
For the fiscal quarter ended December
31,
2023
2022
(Decrease) Increase
Revenues
$
725
$
877
$
(152
)
(17
)%
Total margin (a)
$
279
$
215
$
64
30
%
Operating and administrative expenses
(a)
$
147
$
143
$
4
3
%
Operating income
$
113
$
56
$
57
102
%
Earnings before interest expense and
income taxes
$
117
$
66
$
51
77
%
LPG retail gallons sold (millions)
214
205
9
4
%
Heating degree days - % warmer than normal
(b)
(12.0
)%
(12.3
)%
Capital expenditures
$
12
$
27
$
(15
)
(56
)%
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 $1.08 and $1.02, respectively, and the average
unweighted British pound sterling-to-dollar translation rates were
approximately $1.24 and $1.17, respectively.
- Temperatures were 12% warmer than normal and 1.5% colder than
the prior-year period.
- Retail volume increased 4% primarily due to colder than
prior-year weather.
- Total margin increased $64 million primarily due to the
continued exist from the non-core energy marketing operations,
higher LPG unit margins and the translation effects of the stronger
foreign currencies (~$15 million).
- Operating and administrative expenses increased $4 million
reflecting the translation effects of the stronger foreign
currencies (~$9 million), partially offset by lower
personnel-related expenses.
- Operating income increased $57 million reflecting increased
total margin, partially offset by higher operating and
administrative expenses and lower foreign currency transaction
gains ($4 million).
AmeriGas Propane
For the fiscal quarter ended December
31,
2023
2022
(Decrease) Increase
Revenues
$
629
$
766
$
(137
)
(18
)%
Total margin (a)
$
346
$
380
$
(34
)
(9
)%
Operating and administrative expenses
$
243
$
235
$
8
3
%
Operating loss/loss before interest
expense and income taxes
$
71
$
110
$
(39
)
(35
)%
Retail gallons sold (millions)
206
236
(30
)
(13
)%
Heating degree days - % (warmer) colder
than normal (b)
(6.4
)%
6.2
%
Capital expenditures
$
20
$
23
$
(3
)
(13
)%
- Temperatures were 6% warmer than normal and 12% warmer than the
prior-year period.
- Retail gallons sold decreased 13% due to warmer weather and
continued customer attrition.
- Total margin decreased $34 million primarily due to the impact
of lower volumes.
- Operating and administrative expenses increased $8 million
largely reflecting higher employee compensation and benefits ($5
million), as the business increased its delivery capacity, and
increased vehicle fuel and maintenance expenses ($4 million).
- Operating income decreased $39 million reflecting lower total
margin and higher operating and administrative expenses, partially
offset by higher other income ($3 million) largely attributable to
gain on asset sales.
(a)
Total margin represents total revenue less
total cost of sales. In the case of Utilities, total margin is also
reduced by certain revenue-related taxes.
(b)
Deviation from average heating degree days
is determined on a 10-year period utilizing volume-weighted weather
data.
REPORT OF EARNINGS – UGI CORPORATION (Millions of dollars,
except per share) (Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Revenues:
Utilities
$
493
$
592
$
1,755
$
1,793
Midstream & Marketing
394
669
1,572
2,460
UGI International
725
877
2,813
3,514
AmeriGas Propane
629
766
2,444
2,931
Corporate & Other (a)
(120
)
(145
)
(294
)
(506
)
Total revenues
$
2,121
$
2,759
$
8,290
$
10,192
Earnings (loss) before interest expense
and income taxes:
Utilities
$
135
$
128
$
372
$
366
Midstream & Marketing
102
107
286
294
UGI International
117
66
285
238
AmeriGas Propane
71
110
229
331
Total reportable segments
425
411
1,172
1,229
Corporate & Other (a)
(205
)
(1,642
)
(1,179
)
(683
)
Total earnings (loss) before interest
expense and income taxes
220
(1,231
)
(7
)
546
Interest expense:
Utilities
(23
)
(21
)
(84
)
(70
)
Midstream & Marketing
(11
)
(11
)
(45
)
(42
)
UGI International
(11
)
(7
)
(41
)
(28
)
AmeriGas Propane
(41
)
(43
)
(161
)
(162
)
Corporate & Other, net (a)
(14
)
(10
)
(56
)
(38
)
Total interest expense
(100
)
(92
)
(387
)
(340
)
Income (loss) before income taxes
120
(1,323
)
(394
)
206
Income tax (expenses) benefits (b)
(26
)
369
(60
)
10
Net income (loss) attributable to UGI
Corporation
$
94
$
(954
)
$
(454
)
$
216
Earnings (loss) per share attributable to
UGI shareholders:
Basic
$
0.45
$
(4.54
)
$
(2.16
)
$
1.03
Diluted
$
0.44
$
(4.54
)
$
(2.16
)
$
1.00
Weighted Average common shares outstanding
(thousands):
Basic
209,782
209,934
209,778
210,012
Diluted
215,570
209,934
209,778
215,880
Supplemental information:
Net income (loss) attributable to UGI
Corporation:
Utilities
$
86
$
81
$
224
$
224
Midstream & Marketing
92
77
208
189
UGI International
83
45
210
163
AmeriGas Propane
16
49
38
127
Total reportable segments
277
252
680
703
Corporate & Other (a)
(183
)
(1,206
)
(1,134
)
(487
)
Total net income (loss) attributable to
UGI Corporation
$
94
$
(954
)
$
(454
)
$
216
(a)
Corporate & Other includes specific
items attributable to our reportable segments that are not included
in profit measures used by our Chief Operating Decision Maker in
assessing our reportable segments' performance or allocating
resources. These specific items are shown in the section titled
"Non-GAAP Financial Measures - Adjusted Net Income (Loss)
Attributable to UGI and Adjusted Diluted Earnings Per Share" below.
Corporate & Other also includes the elimination of certain
intercompany transactions.
(b)
Income tax expense for the twelve months
ended December 31, 2022 includes $20 million income tax benefit
from adjustments as a result of the changes in the Pennsylvania
corporate income tax rates for future years, signed into law in
July 2022.
Non-GAAP Financial Measures - Adjusted
Net Income Attributable to UGI and Adjusted Diluted Earnings Per
Share
The following tables reconcile net income attributable to UGI
Corporation, the most directly comparable GAAP measure, to adjusted
net income attributable to UGI Corporation, and reconcile diluted
earnings per share, the most comparable GAAP measure, to adjusted
diluted earnings per share, to reflect the adjustments referred to
previously:
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Adjusted net income (loss) attributable
to UGI Corporation (millions):
Net income (loss) attributable to UGI
Corporation
$
94
$
(954
)
$
(454
)
$
216
Net losses on commodity derivative
instruments not associated with current-period transactions (net of
tax of $(18), $(363), $(74) and $(112), respectively)
77
999
303
249
Unrealized losses (gains) on foreign
currency derivative instruments (net of tax of $(6), $(11), $(6)
and $1, respectively)
14
29
12
(3
)
Loss associated with impairment of
AmeriGas Propane goodwill (net of tax of $0, $0, $4, and $0,
respectively)
—
—
660
—
Loss on extinguishment of debt (net of tax
of $0, $0, $(2) and $0, respectively)
—
—
7
—
Business transformation expenses (net of
tax of $0, $(1), $(2), and $(2), respectively)
—
1
6
7
Costs associated with exit of the UGI
International energy marketing business (net of tax of $(13),
$(68), $(12) and $(69), respectively)
65
166
80
170
Impact of change in tax law
—
—
—
(19
)
AmeriGas operations enhancement for growth
project (net of tax of $(2), $(2), $(6) and $(4), respectively)
5
5
18
8
Impairment of certain equity method
investments (net of tax of $0, $0, $0 and $(13), respectively)
—
—
—
22
Restructuring costs (net of tax of $(1),
$0, $(1) and $(8), respectively)
3
—
3
21
Net gain on sale of UGI headquarters
building (net of tax of $0, $0, $4 and $0, respectively)
—
—
(10
)
—
Total adjustments (1)
164
1,200
1,079
455
Adjusted net income attributable to UGI
Corporation
$
258
$
246
$
625
$
671
Adjusted diluted earnings per
share:
UGI Corporation earnings (loss) per share
— diluted (2)
$
0.44
$
(4.54
)
$
(2.16
)
$
1.00
Net losses on commodity derivative
instruments not associated with current-period transactions
0.37
4.73
1.36
1.15
Unrealized losses (gains) on foreign
currency derivative instruments
0.06
0.14
0.06
(0.01
)
Loss associated with impairment of
AmeriGas Propane goodwill
—
—
3.15
—
Loss on extinguishment of debt
—
—
0.03
—
Business transformation expenses
—
—
0.03
0.03
Costs associated with the exit of the UGI
International energy marketing business
0.30
0.79
0.38
0.79
Impact of change in tax law
—
—
—
(0.09
)
AmeriGas operations enhancement for growth
project
0.02
0.02
0.09
0.03
Impairment of certain equity method
investments
—
—
—
0.10
Restructuring costs
0.01
—
0.01
0.10
Net gain on sale of UGI headquarters
building
—
—
(0.05
)
—
Total adjustments (2)
0.76
5.68
5.06
2.10
Adjusted diluted earnings per share
(2)
$
1.20
$
1.14
$
2.90
$
3.10
(1)
Income taxes associated with pre-tax
adjustments determined using statutory business unit tax rates.
(2)
The loss per share for the twelve months
ended December 31, 2023, was determined excluding the effect of
5.97 million dilutive shares as the impact of such shares would
have been antidilutive to the net loss for the period. Adjusted
earnings per share for the twelve months ended December 31, 2023,
was determined based upon fully diluted shares of 215.75 million.
The loss per share for the three months ended December 31, 2022,
was determined excluding the effect of 6.43 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 three
months ended December 31, 2022, were determined based upon fully
diluted shares of 216.37 million.
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INVESTOR RELATIONS Tel: +1 610-337-1000 Tameka Morris, ext. 6297
Arnab Mukherjee, ext. 7498 Shelly Oates, ext. 3202
UGI (NYSE:UGI)
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