AmeriGas Partners, L.P. (NYSE: APU) today announced a revision
to its full year earnings guidance. For the year ended September
30, 2016, we expect net income attributable to AmeriGas Partners,
L.P. to be in the range of $205 million and Adjusted EBITDA to be
in the range of $540 million. The Adjusted EBITDA guidance is below
the previous guidance range of $575 million to $600 million. The
decrease in the earnings guidance is primarily due to an increase
in reserves associated with litigation and general liability
matters. In addition, weather was 47% warmer than normal during the
month of September, the effects of which were not included in
previous guidance. Set forth in the table that follows this news
release is a reconciliation of forecasted net income attributable
to AmeriGas Partners, L.P. to forecasted Adjusted EBITDA for the
fiscal year ended September 30, 2016, as well as information about
why management believes Adjusted EBITDA provides useful information
to investors about the Partnership’s results of operations.
In late September 2016, the Florida Second District Court of
Appeals affirmed an $18 million judgment against AmeriGas in a
class action proceeding commenced in November of 2005. Prior to the
appellate court’s decision, we believed that the likelihood of the
appellate court affirming the lower court’s judgment was remote. As
a result of this adverse development, as well as adjustments to
general liability reserves identified late in fiscal 2016, AmeriGas
increased its reserves for these matters by approximately $30
million.
Jerry E. Sheridan, president and chief executive officer of
AmeriGas, commented, “We are announcing reduced earnings guidance
for fiscal 2016 primarily due to the timing and magnitude of the
litigation and general liability reserve adjustments. With regard
to the Florida appeals court ruling, we are disappointed with the
decision but continue to believe we have valid arguments and are
exploring our options for further appeal.”
Sheridan continued, “We remain pleased with the progress we have
made on our key strategic objectives despite the headwinds brought
about by the extremely warm year. This progress will ensure that we
start fiscal 2017 in a strong position. Assuming normal weather
patterns, we expect to report Adjusted EBITDA of $660 million to
$700 million for fiscal 2017 for the Partnership and its
subsidiaries on a consolidated basis. We look forward to discussing
our final results for fiscal 2016, as well as our guidance for
fiscal 2017 during our upcoming earnings call on November
10th.”
Because we are unable to predict certain potentially material
items affecting net income on a GAAP basis, principally
mark-to-market gains and losses on commodity derivative
instruments, we cannot reconcile 2017 Adjusted EBITDA, a non-GAAP
measure, to net income attribute to AmeriGas Partners, L.P., the
most directly comparable GAAP measure, in reliance on the
“unreasonable efforts” exception set forth in SEC rules.
Adjustments that management can reasonably estimate are provided
below.
About AmeriGas Partners
AmeriGas Partners is the nation’s largest retail propane
marketer, serving approximately two million customers in all 50
states from approximately 2,000 distribution locations. UGI
Corporation, through subsidiaries, is the sole General Partner and
owns 26% of AmeriGas Partners and the public owns the remaining
74%.
This press release contains certain forward-looking statements
that 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 AmeriGas Partners’
Annual Report on Form 10-K, as amended, 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. AmeriGas Partners
undertakes no obligation to release revisions to its
forward-looking statements to reflect events or circumstances
occurring after today.
Non-GAAP Financial Measures – EBITDA
and Adjusted EBITDA
The Partnership’s management uses certain non-GAAP financial
measures, including EBITDA and Adjusted EBITDA when evaluating the
Partnership’s overall performance. These 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.
Management believes earnings before interest, income taxes,
depreciation and amortization (“EBITDA”), as adjusted for the
effects of gains and losses on commodity derivative instruments not
associated with current-period transactions and other gains and
losses that competitors do not necessarily have ("Adjusted
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 Adjusted EBITDA may be
different from those used by other companies. Management uses
Adjusted 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, the effects of gains and losses on
commodity derivative instruments not associated with current-period
transactions or historical cost basis. In view of the omission of
interest, income taxes, depreciation and amortization, gains and
losses on commodity derivative instruments not associated with
current-period transactions and other gains and losses that
competitors do not necessarily have from Adjusted EBITDA,
management also assesses the profitability of the business by
comparing net income attributable to AmeriGas Partners, L.P. for
the relevant years. Management also uses Adjusted EBITDA to assess
the Partnership’s profitability because its parent, UGI
Corporation, uses the Partnership’s Adjusted EBITDA to assess the
profitability of the Partnership which is one of UGI Corporation’s
industry segments. UGI Corporation discloses the Partnership’s
Adjusted EBITDA in its disclosure about industry segments as the
profitability measure for its domestic propane segment.
The following table includes a reconciliation of forecasted net
income attributable to AmeriGas Partners, L.P. to forecasted
Adjusted EBITDA for the fiscal year ended September 30, 2016 and is
subject to change based on the finalization of management’s
financial close procedures:
Forecast Fiscal Year Ended
September 30, 2016
(Thousands)
(Unaudited)
Net income attributable to AmeriGas Partners, L.P.
(estimate) $ 205,000 Interest expense (estimate) 164,000 Income tax
expense (estimate) (2,000) Depreciation (estimate) 147,000
Amortization (estimate) 43,000 EBITDA (estimate) 557,000
Net gains on commodity derivative instruments (estimate) $
(66,000) Loss on extinguishment of debt (estimate) 49,000
Adjusted EBITDA (estimate) $ 540,000
The following table includes a quantification of interest
expense, income tax expense, depreciation and amortization included
in the calculation of forecasted Adjusted EBITDA guidance range for
the fiscal year ending September 30, 2017:
Forecast Fiscal Year Ending
September 30, 2017
(Thousands)
(Low End) (High End) Adjusted EBITDA (estimate) $ 660,000 $
700,000 Interest expense (estimate) 160,000 159,000 Income tax
expense (estimate) 3,000 3,000 Depreciation (estimate) 141,000
141,000 Amortization (estimate) 43,000 43,000
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version on businesswire.com: http://www.businesswire.com/news/home/20161012006368/en/
AmeriGas Partners, L.P.Will Ruthrauff, 610-337-7000 ext.
6571Shelly Oates, 610-337-7000 ext. 3202
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