UGI Reports Strong Third Quarter Results and Increases Fiscal 2020 Guidance

UGI Corporation

VALLEY FORGE, PA — UGI Corporation (NYSE: UGI) recently reported financial results for the fiscal quarter ended June 30, 2020.

HEADLINES

  • Q3 GAAP EPS of $0.41 and adjusted EPS of $0.08 per diluted share compared to GAAP EPS of $(0.01) and adjusted EPS of $0.13 per diluted share in the prior-year period; year-to-date GAAP EPS of $2.49 and adjusted EPS of $2.81 per diluted share compared to GAAP EPS of $1.73 and adjusted EPS of $2.38 per diluted share in the prior-year period.
  • Q3 reportable segments earnings before interest expense and income taxes1 (“EBIT”) of $80.4 million compared to $52.6 million in the prior-year period.
  • Colder-than-normal weather experienced by UGI’s domestic businesses and disciplined expense management partially offset the negative earnings impact of the COVID-19 pandemic driven primarily by decreased demand from commercial customers.
  • On August 3, 2020, UGI Utilities filed a joint petition seeking Pennsylvania Public Utility Commission approval of a settlement of its rate case filed in January 2020. Pending approval, the settlement would permit a two-step, $20 million annual distribution rate increase beginning January 1, 2021 and future rate recovery of defined COVID-19 related costs.
  • As of June 30, 2020, UGI Corporation had available liquidity of $1.6 billion compared to $1.2 billion in the quarter ended March 31, 2020.
  • Increased Fiscal 2020 adjusted EPS guidance to a range of $2.45 – $2.552 per share due to strong third quarter performance and tax benefits, inclusive of the anticipated negative impact of the COVID-19 pandemic. The tax benefits are expected to contribute an incremental $0.10 per share to the updated EPS guidance range.

ESG HIGHLIGHTS

  • On June 25, 2020, UGI released its second ESG report and announced ambitious targets at UGI Utilities to reduce operational fugitive methane emissions by 92% and reduce greenhouse gas emissions by over 8 million metric tons by 2030.
  • On July 9, 2020, UGI Energy Services, LLC acquired GHI Energy, a Houston-based renewable natural gas company, further expanding UGI’s renewable portfolio for future growth.
  • On July 21, 2020, UGI Energy Services, LLC entered into an agreement to sell its 5.97% ownership interest in the Conemaugh coal-fired generation station. In Fiscal 2019, emissions from Conemaugh accounted for over 30% of UGI Corporation’s total Scope I (direct) emissions.
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“We are pleased to deliver very strong third quarter results despite the challenges that the COVID-19 pandemic placed on our operations,” said John L. Walsh, President and Chief Executive Officer of UGI Corporation. “Before I comment on our earnings, it is important to note that many of our customers, employees, and communities are facing unprecedented challenges as the world struggles with both a global pandemic and the fight to end systemic racism. The pandemic changed the way we do business, but we adjusted quickly to safeguard the health and safety of our employees, customers, and communities. We remain focused on taking all precautions and continue to do our part in the fight against COVID-19. We also remain committed to being a positive force in addressing the impact of systemic racism in our society.

“Throughout our history, UGI has been guided by its core values. The events of the past few months have highlighted two of these core values, respect and integrity. In our recently published ESG report, we were proud to announce that in addition to our current community support in critical areas such as childhood literacy, health and wellness for families, food insecurity, and emergency services, UGI will commit additional funds and company resources in 2020 to partner organizations in our communities to combat racial inequality and systemic racism. We recognize our critical responsibility to the communities we serve and remain committed to being a trusted partner for all of our stakeholders.

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“UGI delivered adjusted earnings per share of $0.08 in the quarter and demonstrated the resiliency of our businesses. The very solid quarter was driven by higher volumes as a result of colder weather in the U.S., sharply higher sales from AmeriGas’ cylinder exchange program, disciplined expense management, and continued contributions from our growth drivers and recent investments. These factors offset some of the headwinds from the COVID-19 pandemic. As a result of the strong third quarter performance, we are increasing our fiscal 2020 guidance to a range of $2.45 – $2.55 per share, inclusive of the negative impact from COVID-19 and positive tax benefits from the CARES Act and other tax law changes.

“Our businesses continued to make progress on our key initiatives. AmeriGas and UGI International remain on pace to deliver $30 million and €5 million, respectively, in savings from the LPG transformation initiatives. Earlier today UGI Utilities filed a settlement agreement that would increase our base rates by $20 million. UGI Appalachia continues to deliver volume growth versus the prior year. Within the past few weeks, UGI Energy Services announced two important transactions, the GHI renewable natural gas acquisition and the Conemaugh divestiture, that position us to be a leading provider of energy solutions that meet the environmental and social needs of our customers and communities.

“Lastly, we want to reiterate that the health, well-being and safety of our employees, customers, and communities remains our top priority,” Mr. Walsh concluded.

KEY DRIVERS OF THIRD QUARTER RESULTS

  • AmeriGas: Retail volume decreased 3.2% despite weather that was 14.5% colder than the prior year largely a result of the negative impact from the COVID-19 pandemic on commercial and motor fuel volumes, including National Accounts, partially offset by Cylinder Exchange volumes that increased nearly 30.0%; lower operating and administrative expenses due to disciplined expense management and progress on the LPG transformation initiatives; Q3 FY20 EBIT of $18.8 million compared to a loss before interest expense and income tax of $1.2 million in the prior-year period
  • UGI International: Retail volume decreased 22.0% largely as a result of weather that was 20.8% warmer than the prior year, the impacts of COVID-19 principally on retail and wholesale volumes, and the termination of a low margin autogas contract in Italy. These volume losses were partially offset by higher average LPG unit margins, disciplined expense management and progress on the LPG transformation initiatives; Q3 FY20 EBIT of $20.3 million compared to $28.7 million in the prior-year period
  • Midstream & Marketing: Higher natural gas gathering margin attributable to UGI Appalachia; lower retail commodity margin largely related to lower volumes attributable to COVID-19; Q3 FY20 EBIT of $20.4 million compared to $4.3 million in the prior-year period
  • UGI Utilities: Core market volumes increased 27.8% due to weather that was 54.4% colder than the prior-year period; Q3 FY20 EBIT of $20.9 million compared to $20.8 million in the prior-year period
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UGI Corporation is a distributor and marketer of energy products and services.

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