VALLEY FORGE, PA — UGI Corporation (NYSE: UGI) disclosed financial results for the fiscal quarter ended December 31, 2021.
- Q1 GAAP diluted earnings per share (“EPS”) of $(0.46) and adjusted diluted EPS of $0.93 compared to GAAP diluted EPS of $1.44 and adjusted diluted EPS of $1.18 in the prior-year period.
- Results reflect the impact of all-time record warm weather in the U.S. in December and significant increases and volatility in commodity prices on LPG and energy marketing margins in Europe, partially offset by incremental contribution from strategic investments in the natural gas businesses.
- Received a rating upgrade to “AA” in the MSCI ESG rating assessment in December 2021.
- Obtained regulatory approval for the intended joint venture with SHV Energy and announced a 15-year agreement with Vertimass to utilize their catalytic technology to produce renewable fuels.
- Completed the previously announced acquisition of Stonehenge on January 27, 2022.
- Filed a gas base rate case for UGI Utilities for an overall distribution rate increase of approximately $83 million and a request for a weather normalization adjustment mechanism with the PA Public Utility Commission on January 28, 2022.
Roger Perreault, President and Chief Executive Officer of UGI Corporation, stated “This quarter, we navigated the challenging macro-economic environment that provided rising cost inflation and a tight labor market. With this backdrop, UGI reported lower first quarter 2022 adjusted results, which were impacted by unfavorable weather in the U.S. as the country experienced the warmest December on record. AmeriGas reported lower volumes due to weather, the impact of customer service challenges from the prior year after establishing the new operating business model, and the effect of higher commodity prices on customer usage. We also saw significantly higher and unprecedented volatility in commodity prices in Europe that had a negative impact on average LPG unit and energy marketing margins at UGI International. Our natural gas businesses delivered strong results, despite the warmer weather, due to incremental earnings from Mountaineer and higher margin from renewable energy marketing activities.
“Consistent with our past practice, we do not discuss adjusted EPS guidance until the completion of the second fiscal quarter. However, we remain focused on executing our strategy in order to achieve our long-term EPS growth commitment of 6 – 10%. We have developed a robust plan to leverage our proven capabilities of focused margin and expense management and expect increased benefits as fiscal 2022 progresses due to ongoing expense control and other actions to recover the Q1 shortfall. In addition, there is still a significant portion of the heating season ahead and we are encouraged that January was colder than normal in the U.S.
“We continue to advance on our strategy to further invest in renewables and rebalance our business in order to deliver reliable earnings growth. The Stonehenge acquisition that closed in January 2022 represents an important step in both our rebalancing and reliability efforts. This investment is in some of the most prolific production areas in the Appalachian Basin, is immediately accretive to earnings and has stable cash flows underpinned by a long-term contract with minimum volume commitments.
“In December 2021, we were pleased to receive regulatory approval of the intended joint venture with SHV Energy to produce rDME. In addition, we have announced several partnerships related to renewables, with the most recent being a partnership with Vertimass to produce and distribute renewable energy solutions within the U.S. and Europe. Our continued efforts to advance our ESG programs and activities were recognized with the upgrade to “AA” by MSCI.”
KEY DRIVERS OF FIRST QUARTER RESULTS
- AmeriGas: Lower total margin due to 13% decline in retail volume; higher average LPG unit margins due to effective margin management
- UGI International: Retail volume up 6% on weather that was 6.6% colder than the prior-year period; lower LPG and energy marketing margin with the significant increases and volatility in commodity prices
- Midstream & Marketing: Higher total margin reflecting increased margin from renewable energy marketing activities and capacity management
- Utilities: Higher earnings before interest expense and income taxes1 (“EBIT”) largely driven by incremental earnings from Mountaineer, higher gas base rates and implementation of a Distribution System Improvement Charge (DSIC) at UGI Utilities
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