Issues Fiscal 2024 Guidance
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.
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.
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.
1 Reportable segments' EBIT represents an aggregate of our
reportable operating segment level EBIT as determined in accordance
with GAAP.
2 Because we are unable to predict certain potentially material
items affecting diluted earnings per share on a GAAP basis,
principally mark-to-market gains and losses on commodity and
certain foreign currency derivative instruments we cannot reconcile
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 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.
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.
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.
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.
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.
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CONTACT INVESTOR RELATIONS Tel: +1 610-337-1000 Tameka
Morris, ext. 6297 Arnab Mukherjee, ext. 7498 Shelly Oates, ext.
3202
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