AmeriGas Propane, Inc., general partner of AmeriGas Partners,
L.P. (NYSE: APU), reported a seasonal net loss attributable to
AmeriGas Partners for the third quarter of fiscal 2014 ended June
30, 2014 of $37.8 million compared to a seasonal net loss of $34.6
million for the third quarter of fiscal 2013. The Partnership’s
adjusted earnings before interest expense, income taxes,
depreciation and amortization (Adjusted EBITDA) decreased to $55.1
million for the third quarter of 2014 compared to $69.0 million for
the same period last year.
For the three months ended June 30, 2014, retail propane volumes
sold were 215.6 million gallons compared with retail propane
volumes of 224.7 million gallons in the prior-year period. Weather
for the quarter was 9.3% warmer than normal and 9.7% warmer than in
the prior-year period, according to the National Oceanic and
Atmospheric Administration (NOAA).
Jerry E. Sheridan, chief executive officer of AmeriGas, said,
“Our results for the quarter were in line with our expectations
given the warmer weather. As we had previously stated, last year’s
third quarter results were unusually favorable due to cold spring
weather that followed a relatively warm winter. We continue to make
significant progress with our growth initiatives. Our National
Accounts program experienced a solid quarter with volume up 11%.
AmeriGas Cylinder Exchange, our nationwide cylinder exchange
program, delivered volume growth of 4% during the third quarter. We
continue to make good progress in expanding our exchange program,
with more than 1,000 new distribution locations added this
year.”
Sheridan continued, “Given our results thus far and our current
assessment of business conditions for the remainder of the fiscal
year, we continue to anticipate Adjusted EBITDA for fiscal 2014 to
be in the range of $660 million to $675 million. We are pleased
with the strong performance of the business thus far. Our year to
date Adjusted EBITDA of $617 million is just about equal to our
Adjusted EBITDA for all of last year. At the low end of our
guidance levels, Adjusted EBITDA would be up 7% from last year and
would have nearly doubled from just three years ago.”
Revenues for the quarter increased to $613.2 million from $581.7
million in the prior-year period, reflecting higher average selling
prices, largely due to higher propane product costs, but partially
offset by lower retail volumes sold. The average wholesale cost of
propane at Mont Belvieu, Texas, for the current quarter was
approximately 16% higher than the average cost in the same period
last year. Total margin decreased $6.4 million principally
reflecting lower retail propane total margin of $3.4 million and a
$2.8 million loss on unsettled commodity derivative instruments.
The lower retail propane margin is principally due to the decrease
in volumes sold partially offset by modestly higher average retail
propane unit margins.
Operating and administrative expenses in the prior-year period
included $9.9 million of transition expenses associated with the
integration of Heritage Propane. Excluding the effects of this
expense, operating and administrative expenses increased $10.5
million during the 2014 period principally reflecting higher
payroll and benefits, general insurance, equipment repair and
maintenance and advertising expenses. Operating income decreased
$2.2 million principally reflecting the decrease in margin offset
by lower depreciation expense.
Adjusted EBITDA and total margin are non-GAAP financial
measures. Adjusted EBITDA is defined herein as earnings before
interest expense, income taxes, depreciation and amortization,
unrealized and realized gains and losses on commodity derivative
instruments not associated with current period transactions and
Heritage Propane acquisition and transition expenses. Total
margin represents total revenues less total cost of sales.
Management believes the presentation of these measures provides
useful information to investors to more effectively evaluate the
year-over-year results of operations of the Partnership. These
measures are not comparable to measures used by other entities and
should only be considered in conjunction with net income
attributable to AmeriGas Partners, L.P. A reconciliation of EBITDA
and Adjusted EBITDA to the most comparable GAAP financial measure
is included on the last page of this press release.
About AmeriGas
AmeriGas is the nation’s largest retail propane marketer,
serving over two million customers in all 50 states from over 2,500
distribution locations. UGI Corporation, through subsidiaries, is
the sole General Partner and owns 26% of the Partnership and the
public owns the remaining 74%.
AmeriGas Partners, L.P. will hold a live Internet Audio Webcast
of its conference call to discuss third quarter earnings and other
current activities at 9:00 AM ET on Wednesday, July 30, 2014.
Interested parties may listen to the audio webcast both live and in
replay on the Internet at
http://investors.amerigas.com/investor-relations/events-presentations
or at the company website http://www.amerigas.com under Investor
Relations. A telephonic replay will be available from 12:00 PM ET
on Wednesday, July 30 through 11:59 PM ET on Wednesday, August 6.
The replay may be accessed at 1-855-859-2056, and internationally
at 1-404-537-3406, conference ID 69809906.
Comprehensive information about AmeriGas is available on the
Internet at http://www.amerigas.com.
This press release contains certain forward-looking statements
which management believes to be 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. You should read the Partnership’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. Among
them are adverse weather conditions, cost volatility and
availability of propane, increased customer conservation measures,
the capacity to transport propane to our market areas, the impact
of pending and future legal proceedings, political, economic and
regulatory conditions in the U.S. and abroad, and our ability to
successfully integrate acquisitions and achieve anticipated
synergies. The Partnership undertakes no obligation to release
revisions to its forward-looking statements to reflect events or
circumstances occurring after today.
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES REPORT OF EARNINGS
(Thousands, except per unit and where otherwise indicated)
(Unaudited)
Three Months Ended Nine Months Ended Twelve Months Ended June 30,
June 30, June 30, 2014 2013 2014 2013 2014 2013 Revenues: Propane $
549,976 $ 518,361 $ 2,941,701 $ 2,413,802 $ 3,412,665 $ 2,863,857
Other 63,261 63,358 210,985
220,771 271,991 281,001
613,237 581,719 3,152,686
2,634,573 3,684,656
3,144,858 Costs and expenses: Cost of sales - propane
320,839 283,037 1,750,500 1,306,728 2,015,346 1,554,526 Cost of
sales - other 22,822 22,657 61,336 63,460 86,355 87,569 Operating
and administrative expenses 225,141 224,452 744,007 733,267 954,668
966,870 Depreciation 37,069 41,738 116,925 117,668 158,563 157,300
Amortization 10,788 10,775 32,411 32,825 43,151 43,821 Other
income, net (7,848 ) (7,579 ) (21,534 )
(23,385 ) (30,652 ) (32,975 ) 608,811
575,080 2,683,645 2,230,563
3,227,431 2,777,111 Operating
income 4,426 6,639 469,041 404,010 457,225 367,747 Interest expense
(41,328 ) (41,247 ) (124,964 ) (124,219
) (166,177 ) (163,429 ) (Loss) income before income
taxes (36,902 ) (34,608 ) 344,077 279,791 291,048 204,318 Income
tax expense (benefit) (847 ) 59 (2,204
) (516 ) (3,359 ) (1,441 ) Net (loss) income
(37,749 ) (34,549 ) 341,873 279,275 287,689 202,877
Less: net income attributable to
noncontrolling interest
(12 ) (46 ) (4,633 ) (3,997 )
(4,505 ) (3,602 ) Net (loss) income attributable to AmeriGas
Partners, L.P. $ (37,761 ) $ (34,595 ) $ 337,240 $ 275,278
$ 283,184 $ 199,275
General partner's interest in net (loss)
income attributable to AmeriGas Partners, L.P.
$ 6,155 $ 5,045 $ 20,689 $ 16,648 $
25,540 $ 20,139
Limited partners' interest in net (loss)
income attributable to AmeriGas Partners, L.P.
$ (43,916 ) $ (39,640 ) $ 316,551 $ 258,630 $ 257,644
$ 179,136 (Loss) income per limited
partner unit (a) Basic $ (0.47 ) $ (0.43 ) $ 3.04 $
2.70 $ 2.76 $ 1.92 Diluted $ (0.47 ) $
(0.43 ) $ 3.04 $ 2.70 $ 2.76 $ 1.92
Average limited partner units outstanding: Basic
92,888 92,838 92,873
92,830 92,865 92,824
Diluted 92,888 92,838 92,941
92,904 92,939 92,899
SUPPLEMENTAL INFORMATION: Retail gallons sold
(millions) 215.6 224.7 1,064.6 1,039.8 1,270.0 1,243.0 Wholesale
gallons sold (millions) 10.1 16.6 82.9 81.9 102.8 104.1 EBITDA (b)
$ 52,271 $ 59,106 $ 613,744 $ 550,506 $ 654,434 $ 565,266 Adjusted
EBITDA (b) $ 55,052 $ 68,968 $ 616,525 $ 571,252 $ 663,008 $
605,307 Expenditures for property, plant and equipment: Maintenance
capital expenditures $ 16,581 $ 12,645 $ 46,972 $ 33,992 $ 64,467 $
44,550 Transition capital related to Heritage integration $ - $
4,749 $ - $ 15,730 $ 4,645 $ 28,995 Growth capital expenditures $
12,702 $ 8,905 $ 33,320 $ 31,014 $ 41,502 $ 40,067 (a)
(Loss) income per limited partner unit is
computed in accordance with accounting guidance regarding the
application of the two-class method for determining earnings per
share as it relates to master limited partnerships. Refer to Note 2
to the consolidated financial statements included in the AmeriGas
Partners, L.P. Annual Report on Form 10-K for the fiscal year ended
September 30, 2013.
(b) Earnings before interest expense, income taxes,
depreciation and amortization ("EBITDA") should not be considered
as an alternative to net income (loss) attributable to AmeriGas
Partners, L.P. (as an indicator of operating performance) and is
not a measure of performance or financial condition under
accounting principles generally accepted in the United States
("GAAP"). Management believes EBITDA is a meaningful non-GAAP
financial measure used by investors to (1) compare the
Partnership's operating performance with that of other companies
within the propane industry, and (2) assess the Partnership's
ability to meet loan covenants. The Partnership's definition of
EBITDA may be different from those used by other companies.
Management uses EBITDA to compare
year-over-year profitability of the business without regard to
capital structure as well as to compare the relative performance of
the Partnership to that of other master limited partnerships
without regard to their financing methods, capital structure,
income taxes or historical cost basis. In view of the omission of
interest, income taxes, depreciation and amortization from EBITDA,
management also assesses the profitability of the business by
comparing net income attributable to AmeriGas Partners, L.P. for
the relevant periods.
Management also uses EBITDA to assess the
Partnership's profitability because its parent, UGI Corporation,
uses EBITDA to assess the profitability of the Partnership, which
is one of UGI Corporation's reportable segments. UGI Corporation
discloses the Partnership's EBITDA in its disclosure about
reportable segments as the profitability measure for its domestic
propane segment. EBITDA in the twelve months ended June 30, 2014
includes transition expenses of $5,793 associated with the Heritage
Propane acquisition. EBITDA in the three, nine and twelve months
ended June 30, 2013 includes acquisition and transition expenses of
$9,862, $20,746 and $40,041, respectively, associated with the
Heritage Propane acquisition.
The following table includes reconciliations of net
income attributable to AmeriGas Partners, L.P. to EBITDA and
Adjusted EBITDA (1) for all periods presented: Three
Months Ended Nine Months Ended Twelve Months Ended
June 30, June 30, June 30, 2014 2013 2014 2013 2014
2013 Net (loss) income attributable to AmeriGas
Partners, L.P. $ (37,761 ) $ (34,595 ) $ 337,240 $ 275,278 $
283,184 $ 199,275 Income tax expense (benefit) 847 (59 ) 2,204 516
3,359 1,441 Interest expense 41,328 41,247 124,964 124,219 166,177
163,429 Depreciation 37,069 41,738 116,925 117,668 158,563 157,300
Amortization 10,788 10,775
32,411 32,825 43,151 43,821 EBITDA $ 52,271 $
59,106 $ 613,744 $ 550,506 $ 654,434 $ 565,266 Heritage Propane
acquisition and transition expenses - 9,862 - 20,746 5,793 40,041
Net losses on commodity derivative instruments entered into
beginning April 1, 2014, not associated with current period
transactions 2,781 - 2,781
- 2,781 - Adjusted EBITDA (1) $ 55,052
$ 68,968 $ 616,525 $ 571,252 $ 663,008 $ 605,307 The
following table includes a reconciliation of forecasted net income
attributable to AmeriGas Partners, L.P. to forecasted Adjusted
EBITDA for the fiscal year ending September 30, 2014:
Forecast Fiscal Year Ending September 30, 2014 Net income
attributable to AmeriGas Partners, L.P. (estimate) $ 292,000
Interest expense (estimate) 166,000 Income tax expense (estimate)
3,000 Depreciation (estimate) 160,000 Amortization (estimate)
43,000
Net losses on commodity derivative
instruments entered into beginning April 1, 2014, not associated
with current period transactions
3,000 Adjusted EBITDA $ 667,000 (1) Adjusted EBITDA
is a non-GAAP financial measure. Management believes the
presentation of this measure provides useful information to
investors to more effectively evaluate the year-over-year results
of operations of the Partnership. Management uses Adjusted EBITDA
to exclude from AmeriGas Partners' EBITDA unrealized and realized
gains and losses on commodity derivative instruments entered into
beginning April 1, 2014, not associated with current period
transactions and other gains and losses that competitors do not
necessarily have to provide additional insight into the comparison
of year-over-year profitability to that of other master limited
partnerships. AmeriGas Propane accounts for gains and losses on its
commodity derivative instruments in earnings as a component of cost
of sales. This measure is not comparable to measures used by other
entities and should only be considered in conjunction with net
income (loss) attributable to AmeriGas Partners, L.P. for the
relevant periods.
AmeriGas Partners, L.P.Daniel Platt, 610-337-7000 ext.
1029Shelly Oates, 610-337-7000 ext. 3202
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