AmeriGas Propane, Inc., general partner of AmeriGas Partners,
L.P. (NYSE: APU), reported a GAAP net loss attributable to AmeriGas
Partners for the quarter ended June 30, 2017 of $46.8 million,
compared to a GAAP net loss of $33.1 million for the quarter ended
June 30, 2016. Adjusted net loss attributable to AmeriGas
Partners for the quarter ended June 30, 2017 was $28.9 million
compared to an adjusted net loss of $23.6 million in the prior-year
quarter. Adjusted net losses exclude the impact of unrealized gains
and losses on commodity derivative instruments, losses from early
extinguishments of debt, and an environmental accrual related to
the site of a former manufactured gas plant. A reconciliation of
adjusted net loss to GAAP net loss is set forth at the end of this
release.
The Partnership’s adjusted earnings before interest expense,
income taxes, depreciation and amortization (Adjusted EBITDA) was
$58.4 million for the quarter ended June 30, 2017 compared to
$64.6 million in the prior-year quarter.
Temperatures for the quarter, as measured by heating degree
days, were 11.7% warmer than normal and 4.6% warmer than the prior
year; heating degree days for April, which typically account for
the majority of third quarter heating degree days, were 17.1%
warmer than normal and 10.6% warmer than the same period in the
prior year.
Operating and financial highlights for the quarter were as
follows:
- Retail volumes were 3.8% lower than the
prior-year period primarily resulting from very warm weather that
continued well into the spring.
- Unit margins were up slightly from the
prior-year period despite costs that were 28% higher than the same
period last year.
- Operating expenses increased $10.2
million due to approximately $13 million in expense accruals
related to the previously mentioned environmental accrual ($7.5
million) and a settlement with one of AmeriGas' insurance carriers
($5.5 million). The environmental accrual is excluded from Adjusted
EBITDA, but the impact of the insurance settlement is reflected in
Adjusted EBITDA.
- The partnership completed three
acquisitions of retail propane distributors during the
quarter.
Jerry E. Sheridan, president and chief executive officer of
AmeriGas, said, "Although the third quarter is not a peak-weather
period, the pattern of very warm weather continued into the quarter
and had an adverse impact on our results. Our focus on margin
management, expense control, and strong execution in our cylinder
and national accounts programs resulted in a quarter that was
comparable to the prior-year period exclusive of the environmental
accrual and insurance settlement recorded in the quarter. We were
pleased to deliver solid growth in both our cylinder exchange and
national accounts programs, volumes of which were up meaningfully
over the prior year. Both programs are on pace for record years
despite the headwinds caused by weather. We were also pleased to
add three acquisitions during the quarter and to complete the final
step in our balance sheet refinancing efforts, with our long-term
debt maturities now ranging from 2024-2027.”
Based on the results through the first nine months of the year,
and expectations for the fourth quarter, the company now expects
Adjusted EBITDA in the range of $550 million for the fiscal year
ending September 30, 2017.
About AmeriGas
AmeriGas is the nation’s largest retail propane marketer,
serving approximately two million customers in all 50 states from
approximately 1,900 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 fiscal 2017 third quarter
earnings and other current activities at 9:00 AM ET on Thursday,
August 3, 2017. 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 August 3 through 11:59 PM on August 10, 2017. The
replay may be accessed at (855) 859-2056, and internationally at
(404) 537-3406, conference ID 5913522.
Comprehensive information about AmeriGas is available on the
Internet at http://www.amerigas.com.
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 the Partnership’s
Annual Report on Form 10-K 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, liability for uninsured claims and for claims in
excess of insurance coverage, political, economic and regulatory
conditions in the U.S. and abroad, our ability to successfully
integrate acquisitions and achieve anticipated synergies, and the
interruption, disruption, failure, malfunction, or breach of our
information technology systems, including due to cyber-attack. 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
EndedJune 30, Nine Months EndedJune 30, Twelve Months EndedJune 30,
2017 2016 2017 2016 2017 2016 Revenues:
Propane $ 403,954 $ 385,566 $ 1,803,816 $ 1,718,748 $ 2,138,228 $
2,076,188 Other 63,542 61,118 204,506 199,521
263,642 260,317 467,496 446,684
2,008,322 1,918,269 2,401,870 2,336,505
Costs and expenses: Cost of sales - propane 181,047 121,812 762,531
591,355 891,018 729,433 Cost of sales - other 22,367 21,145 60,276
59,173 79,960 81,204 Operating and administrative expenses 227,372
217,154 694,180 686,578 936,388 912,558 Depreciation 35,482 35,668
103,891 110,807 139,889 149,557 Amortization 10,659 10,742 31,873
32,228 42,820 42,839 Other operating income, net (8,294 ) (6,041 )
(10,787 ) (22,079 ) (16,960 ) (30,346 ) 468,633 400,480
1,641,964 1,458,062 2,073,115 1,885,245
Operating (loss) income (1,137 ) 46,204 366,358 460,207
328,755 451,260 Loss on extinguishments of debt (4,434 ) (37,086 )
(59,729 ) (37,086 ) (71,532 ) (37,086 ) Interest expense (40,577 )
(40,838 ) (120,596 ) (122,669 ) (162,022 ) (163,107 ) (Loss) income
before income taxes (46,148 ) (31,720 ) 186,033 300,452 95,201
251,067 Income tax (expense) benefit (646 ) (907 ) (2,129 ) (2,107
) 1,551 (2,527 ) Net (loss) income including noncontrolling
interest (46,794 ) (32,627 ) 183,904 298,345 96,752 248,540 Add net
loss (deduct net income) attributable to noncontrolling interest 42
(442 ) (3,614 ) (4,533 ) (3,290 ) (4,423 ) Net (loss) income
attributable to AmeriGas Partners, L.P. $ (46,752 ) $ (33,069 ) $
180,290 $ 293,812 $ 93,462 $ 244,117
General partner’s interest in net (loss) income attributable to
AmeriGas Partners, L.P. $ 10,862 $ 10,101 $ 34,000
$ 30,663 $ 43,564 $ 38,811
Limited partners’ interest in net (loss) income attributable to
AmeriGas Partners, L.P. $ (57,614 ) $ (43,170 ) $ 146,290 $
263,149 $ 49,898 $ 205,306 (Loss)
income per limited partner unit (a) Basic $ (0.62 ) $ (0.46 ) $
1.56 $ 2.81 $ 0.53 $ 2.19 Diluted $
(0.62 ) $ (0.46 ) $ 1.56 $ 2.80 $ 0.53 $ 2.19
Weighted average limited partner units outstanding: Basic
93,009 92,960 92,993 92,945 92,986
92,939 Diluted 93,009 92,960 93,045
93,019 93,044 93,014 SUPPLEMENTAL
INFORMATION: Retail gallons sold (millions) 195.0 202.8 863.4 883.7
1,045.2 1,077.6 Wholesale gallons sold (millions) 9.0 8.7 38.5 40.0
48.2 52.3 Total margin (b) $ 264,082 $ 303,727 $ 1,185,515 $
1,267,741 $ 1,430,892 $ 1,525,868 Adjusted total margin (c) $
270,048 $ 275,877 $ 1,194,368 $ 1,206,070 $ 1,435,337 $ 1,463,360
EBITDA (c) $ 40,612 $ 55,086 $ 438,779 $ 561,623 $ 436,642 $
602,147 Adjusted EBITDA (c) $ 58,421 $ 64,603 $ 514,740 $ 537,661 $
520,043 $ 577,356 Adjusted net (loss) income attributable to
AmeriGas Partners, L.P. (c) $ (28,943 ) $ (23,552 ) $ 256,251 $
269,850 $ 176,863 $ 219,326 Expenditures for property, plant and
equipment: Maintenance capital expenditures $ 10,422 $ 9,985 $
39,854 $ 36,275 $ 55,683 $ 50,513 Growth capital expenditures $
10,473 $ 8,700 $ 34,657 $ 38,197 $ 46,049 $ 48,110 (a)
Income (loss) 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, 2016. (b) Total
margin represents "Total revenues" less "Cost of sales - propane"
and "Cost of sales - other." (c)
The Partnership’s management uses certain
non-GAAP financial measures, including adjusted total margin,
EBITDA, adjusted EBITDA and adjusted net income (loss) attributable
to AmeriGas Partners, L.P., 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 periods. 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 as the profitability measure for its domestic
propane segment.
Management believes the presentation of
other non-GAAP financial measures, comprised of adjusted total
margin and adjusted net income (loss) attributable to AmeriGas
Partners, L.P., provide useful information to investors to more
effectively evaluate the period-over-period results of operations
of the Partnership. Management uses these non-GAAP
financial measures because they eliminate the impact of (1) gains
and losses on commodity derivative instruments that are not
associated with current-period transactions and (2) other gains and
losses that competitors do not necessarily have to provide insight
into the comparison of period-over-period profitability to that of
other master limited partnerships.
The following tables include
reconciliations of adjusted total margin, EBITDA, adjusted EBITDA
and adjusted net income attributable to AmeriGas Partners, L.P. to
the most directly comparable financial measure calculated and
presented in accordance with GAAP for all the periods
presented:
Three Months EndedJune
30, Nine Months EndedJune 30, Twelve Months EndedJune 30, 2017
2016 2017 2016 2017 2016
Adjusted total
margin: Total revenues $ 467,496 $ 446,684 $ 2,008,322 $
1,918,269 $ 2,401,870 $ 2,336,505 Cost of sales - propane (181,047
) (121,812 ) (762,531 ) (591,355 ) (891,018 ) (729,433 ) Cost of
sales - other (22,367 ) (21,145 ) (60,276 )
(59,173 ) (79,960 ) (81,204 ) Total margin
264,082 303,727 1,185,515 1,267,741 1,430,892 1,525,868 Add net
losses (subtract net gains) on commodity derivative instruments not
associated with current-period transactions 5,966
(27,850 ) 8,853 (61,671 ) 4,445
(62,508 ) Adjusted total margin $ 270,048 $
275,877 $ 1,194,368 $ 1,206,070 $ 1,435,337
$ 1,463,360
Adjusted net income (loss)
attributable to AmeriGas Partners, L.P.: Net (loss) income
attributable to AmeriGas Partners, L.P. $ (46,752 ) $ (33,069 ) $
180,290 $ 293,812 $ 93,462 $ 244,117 Add net losses (subtract net
gains) on commodity derivative instruments not associated with
current-period transactions 5,966 (27,850 ) 8,853 (61,671 ) 4,445
(62,508 ) Loss on extinguishments of debt 4,434 37,086 59,729
37,086 71,532 37,086 MGP environmental remediation accrual 7,545 —
7,545 — 7,545 — Noncontrolling interest in net (losses) gains on
commodity derivative instruments not associated with current-period
transactions and MGP environmental accrual (136 ) 281
(166 ) 623 (121 ) 631
Adjusted net (loss) income attributable to AmeriGas
Partners, L.P. $ (28,943 ) $ (23,552 ) $ 256,251 $ 269,850
$ 176,863 $ 219,326
EBITDA and Adjusted
EBITDA: Net (loss) income attributable to AmeriGas Partners,
L.P. $ (46,752 ) $ (33,069 ) $ 180,290 $ 293,812 $ 93,462 $ 244,117
Income tax expense (benefit) 646 907 2,129 2,107 (1,551 ) 2,527
Interest expense 40,577 40,838 120,596 122,669 162,022 163,107
Depreciation 35,482 35,668 103,891 110,807 139,889 149,557
Amortization 10,659 10,742
31,873 32,228 42,820
42,839 EBITDA 40,612 55,086 438,779 561,623 436,642 602,147
Add net losses (subtract net gains) on commodity derivative
instruments not associated with current-period transactions 5,966
(27,850 ) 8,853 (61,671 ) 4,445 (62,508 ) Loss on extinguishments
of debt 4,434 37,086 59,729 37,086 71,532 37,086 MGP environmental
remediation accrual 7,545 — 7,545 — 7,545 — Noncontrolling interest
in net (losses) gains on commodity derivative instruments not
associated with current-period transactions and MGP environmental
accrual (136 ) 281 (166 ) 623
(121 ) 631 Adjusted EBITDA $ 58,421
$ 64,603 $ 514,740 $ 537,661 $ 520,043
$ 577,356
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 YearEndingSeptember 30,
2017
Adjusted EBITDA (estimate) $ 550,000 Interest expense (estimate)
160,000 Income tax expense (estimate) 2,000 Depreciation (estimate)
138,000 Amortization (estimate) 42,000
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AmeriGas Partners, L.P.Will Ruthrauff, 610-337-7000 ext.
6571Shelly Oates, 610-337-7000 ext. 3202
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