Ugi Corporation · NYSE:UGI
Ugi — Investor Presentation (December 2019)
54 slides from Ugi's investor presentation, December 2019
Slide 1: Fiscal 2020 December/January
Fiscal 2020 December/January
Slide 2: About This Presentation
About This Presentation This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities and Exchange Act of 1934, as amended). Management believes that these are reasonable as of today’s date only. Actual results may
Slide 3: Use of Non-GAAP Measures
Use of Non-GAAP Measures In this presentation, Management uses certain non-GAAP financial measures, including UGI Corporation Adjusted Earnings Per Share, UGI Corporation Free Cash Flow, UGI Corporation Adjusted EBITDA, and UGI France Unit Margins. These financial measures are not in accordance with
Slide 4: Corporate Overview
Corporate Overview
Slide 5: Corporate Overview
Corporate Overview UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity 2019 Adjusted EPS1 2019 Pro Forma Adjusted EPS2 UGI 5 CORPORATION 40% 50% 50% 60% 1Adjusted EPS is a non-GAAP measure. Excludes Corporate & Other $
Slide 6: A Compelling Value Proposition
A Compelling Value Proposition Highest 20-year free cash flow1 as a % of Adjusted EBITDA1 Outstanding cash generation among Multi-Utilities in the S&P Utilities index Commitment FY 1999- Strong track record of disciplined 2019 Actual UGI capital deployment and meeting our Adjusted EPS1 6-10% 10.7% 6
Slide 7: Core Strategic Principles
Core Strategic Principles Distribution and services business, marketing volume Minimize commodity exposure hedged back-to-back, LPG customer volume hedged as service offering Established portable LNG, entered Italian LPG market, Push boundaries of core business expanded midstream platform into SW PA
Slide 8: Strongest Cash Flow Among Sector Peers
Strongest Cash Flow Among Sector Peers 20 Year Free Cash Flow1/ 20 Year Adjusted EBITDA1 S&P Utilities Index - Multi-Utilities 17% 6% 5% 4% 3% UGI 2% 8 CORPORATION -3% -10% -14% -17% -19% UGI Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 (1) UGI Free Cash Flow = Cash Provide
Slide 9: Meeting our Commitments – EPS Growth
Meeting our Commitments – EPS Growth $3.50 10.7% Adjusted EPS CAGR Above 6-10% Long Term Target $3.00 $2.90 $2.74 $2.60 Annual Earnings per Share $2.50 $2.29 $2.28 $2.00 UGI CORPORATION $2.02 $2.01 $2.05 9 $1.50 $1.57 $1.61 $1.46 $1.41 $1.33 $1.26 $1.25 $1.00 $1.18 $1.10 $0.76 $0.77 $0.50 $0.60 $0.4
Slide 10: UGI Increased Dividend by 25%
UGI Increased Dividend by 25% • Two part increase • In total, annualized dividend increased $0.26 from FY18 to FY19 $1.40 7.1% 20-year CAGR 2 $1.30 $1.20 9.4% 10-year CAGR Above 4% Long-Term Target Dividends per Share1 $1.00 $1.04 $1.00 UGI $0.95 10 CORPORATION $0.91 $0.80 $0.87 $0.75 $0.72 $0.60 $0
Slide 11: Outperformance Driven by Cadence of Disciplined Investments
Outperformance Driven by Cadence of Disciplined Investments 2450 Manning LNG Project Sunbury Pipeline project 1950 Total 20-year Shareholder Return CAGR of Finagaz CMG Acquisition acquisition nearly AmeriGas 15.92% doubles volume in France Merger Transaction (as of 9/30/19) Union Dale Pipeline Proje
Slide 12: Cash Engine Drives Future EPS and Dividend Growth
Cash Engine Drives Future EPS and Dividend Growth Base Business $1.1 - $1.4 Billion UGI Dividends Cash from & Regulatory Operations and Share Earnings Growth 55% LPG 45% Nat Gas Repurchase UGI 12 CORPORATION Investment Capital Capital and M&A $150M - $200M Expenditures, Financing Earnings Growth M&A
Slide 13: Capital Allocation Priorities
Capital Allocation Priorities Grow and Deliver Value • Supports commitment to shareholders to grow Adjusted EPS by 6% - 10% annually • Maintain and grow existing business 1.) Capex and Other • Add assets that complement core competencies • Execute on robust capital plan at Utilities UGI • Support pr
Slide 14: UGI’s Growing Cash Flows Support Capital Deployment
UGI’s Growing Cash Flows Support Capital Deployment ~$5.5B ~$3.5B -$4.0B • Capital plan at Utilities • Organic growth on CMG system • LPG Business ~$1.0B - $1.5B Transformation • Meet commitment to Initiatives shareholders to grow • Natural Gas annual dividend by UGI infrastructure buildout 4% 14 CO
Slide 15: Record Capital Deployment
Record Capital Deployment CAPEX expected to increase to ~$850 million in FY20 -Includes capex associated with LPG business transformation Capital Expenditures: 2019-2023 Capital Expenditures: 2014-2018 $4.5 Billion $2.7 Billion UGI CORPORATION 15 27% 32% 68% 73% Natural Gas LPG Natural Gas LPG
Slide 16: Debt Repayment
Leverage1,2 Debt Repayment 4.7x • UGI’s philosophy to hold debt 4.0x 3.9x at its business units and keep 3.2x capacity at the holdco level for 3.0x 3.1x enterprise-changing investments enabled UGI to FY18A FY19A FY20E FY21E FY22E FY23E UGI CORPORATION use its balance sheet to finance 16 a portion of
Slide 17: Key Investments Drive Earnings
Key Investments Drive Earnings $4.25 $4.051 11%-13% Growth Adjusted EPS $3.75 $3.75 10%-12% Growth UGI 17 CORPORATION $3.25 $2.901 $2.75 $2.60 $2.25 FY 2020 Guidance1 Global LPG Natural Gas FY 2023 Estimate1 1Adjusted EPS is a non-GAAP measure. Because we are unable to predict certain potentially ma
Slide 18: UGI Utilities
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Slide 19: Business Overview
Business Overview UGI UTILITIES Regulated gas & electric utilities Most contemporary serving over distribution system in 715,000 Pennsylvania UTILITIES customers 19 Service territories nd lie within or adjacent 2 Largest Gas Utility to the gas utility in UGI Utilities (gas, ~655,000 customers) Marce
Slide 20: Marcellus Advantage
Marcellus Advantage UGI UTILITIES • Over 90% of UGI Utilities natural gas sourced from the Marcellus Shale • Marcellus natural gas priced at over 15% discount to NYMEX during FY19 • Strong demand for natural gas (conversions, UTILITIES power generation, etc.) 20 • Favorable environment for economic
Slide 21: Marcellus Gas Driving Growth in PA
UGI UTILITIES Marcellus Gas Driving Growth in PA Natural Gas Delivered to PA Natural Gas Delivered to Customers in PA Electric Power Customers 1,400,000 600,000 MMCF MMCF 1,200,000 500,000 UTILITIES 1,000,000 21 400,000 800,000 300,000 600,000 200,000 400,000 100,000 200,000 0 0 Source: Energy Infor
Slide 22: Capital Investment Drives Rate Base Growth
UGI UTILITIES Capital Investment Drives Rate Base Growth $500 Capital Investment $445 - $485/year $4.0 Rate Base Growth Millions $400 $3.0 Rate Base $ Billions $300 $2.0 $200 UTILITIES 22 $1.0 $100 $0.0 $- 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2014 2015 2016 2017 2018 2019 2020P
Slide 23: Customers
UGI UTILITIES Annual Customer Growth ~ 265,000 customers added 2000 - 2019 20,000 Customers 18,000 16,000 14,000 UTILITIES 12,000 23 10,000 8,000 6,000 4,000 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 New Homes Conversions Upgrades Com
Slide 24: Peak Day Growth
UGI UTILITIES Peak Day Growth 2.5 2.0 1.5 BCF 1.0 UTILITIES 24 0.5 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 PGC Customers Transportation Customers Capacity Reserve Requirement • Peak day demand growth driven by above average customer gro
Slide 25: Energy Services
1, @ Energy Services
Slide 26: Business Overview
Business Overview Midstream Assets • LNG Peaking • Total vaporization (360,000 Dth/day) • Total liquefaction (15,000 Dth/day) • Built Pipeline Capacity • Total capacity (~3,925,000 Dth/day) ENERGY SERVICES • Natural Gas Storage 26 • 15 MMdth Commodity Marketing • Serving more than 13,000 residential
Slide 27: Full Suite of Midstream Services in Appalachia Region
Full Suite of Midstream Services in Appalachia Region TL-94&96 Auburn Marshlands TGP Union Dale Texas Creek Transco (Leidy) Ponderosa Pennant Sunbury ENERGY Big Pine 27 SERVICES Mt. Bethel TGP TETCO Penn East (Under Development) Majorsville E. Washington Storage TETCO Gas Processing Power Plant Gibr
Slide 28: UGIES Historical Margin Breakdown
UGIES Historical Margin1 Breakdown 11% & 12% colder than normal 21% & 15% warmer than normal winter, respectively winter, respectively $310 $293 $285 $35 $46 $257 $44 $241 $245 $25 $28 $34 ENERGY 28 SERVICES $165 $225 $32 $185 $180 $135 $138 $131 $187 $18 $168 $28 $16 $161 $52 $75 $47 $58 $60 $68 $5
Slide 29: Cumulative Capital Investment
Cumulative Capital Investment Capital Expenditures ($ in thousands) $1,600,000 $1,400,000 $1,200,000 $1,000,000 ENERGY 29 SERVICES $800,000 $600,000 $400,000 $200,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Midstream Power Generation Other
Slide 30: Fee-Based Income Stabilizes Earnings
Fee-Based Income Stabilizes Earnings 2013 Margin1 Anticipated 2023 Margin1 19% ENERGY 39% 30 SERVICES 61% 81% Fee-Based Margin All Other Margin Fee-Based Margin All Other Margin 1Revenue less Cost of Sales
Slide 31: International
Uul INTERNATIONAL
Slide 32: UGI International Overview
UGI International Overview Operations in 17 Countries Over 615,000 Total Customers LPG Distribution Over 960 million gallons INTERNATIONAL 32 of LPG sold in FY 2019 Leader distributor in France, Austria, Belgium, Denmark, Luxembourg, and Hungary Over 19 million cylinders in circulation Over 527,000
Slide 33: Business Transformation Initiative
Business Transformation Initiative • Identified over €30 million of permanent annual savings and operational efficiencies that will be implemented by the end of FY22 • Establishment of 2 Centers of Excellence • Commercial Excellence – continuous improvement to customer experience INTERNATIONAL 33 •
Slide 34: Evolution – Major Acquisitions
Evolution – Major Acquisitions 2017 2017 2015 2011 2017Italy 2010 2011 Belgium Finland INTERNATIONAL 2001 (20%) 34 Denmark Luxembourg 2004 (100%) 2010 Norway Sweden 1999 2006 Hungary Poland Netherlands Romania United Kingdom 2004Switzerland 2001France 1999 Austria 2019: Over 832MM retail gallons Cze
Slide 35: Track Record of Margin Management
Track Record of Margin Management 1.50 € 1.25 € UGI France € per Gallon 1.00 € INTERNATIONAL 35 0.75 € 0.50 € 0.25 € 0.00 € 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Avg. Platt's Cost UGI France Unit Margins 1 1Unit margin is a non-GAAP measure. Please see appendix for reconciliati
Slide 36: Strategically located LPG Supply Assets Provide Flexibility
Strategically located LPG Supply Assets Provide Flexibility • UGI stores LPG at Import terminal - SEA Import terminal - PIPELINE various storage facilities Import terminal - RAILCARS and terminals across UGI Terminal - REFINERY Depots / Railheads / Storage Intra-Europe trade • Ownership interests fl
Slide 37: AmeriGas
Slide 38: AmeriGas Overview
AmeriGas Overview Largest Propane Distributor in U.S.1 Agriculture & Transport 8% Residential Heating & ~1.1 billion Motor Fuel 18% Cooking 35% 1.6 million retail gallons sold customers in FY19 AMERIGAS 38 Commercial / Industrial 39% Bulk Distribution National Accounts Cylinder Exchange 1mm tanks wi
Slide 39: Business Transformation Initiative
Business Transformation Initiative • Identified over $120 million of permanent annual savings and operational efficiencies that will be implemented by the end of FY22 • Acceleration of Pace and Scale of Initiatives • Customer Digital Experience • Customer Relationship Management AMERIGAS • Operation
Slide 40: National Accounts Program
National Accounts Program • Roughly 50% less weather sensitive than base business Delivering to nearly • Customer-focused solution • Best in class back office 52,000 Customer Locations AMERIGAS • Turnkey installation options 40 • Unparalleled footprint • Leverage AmeriGas scale 44% Volume increase •
Slide 41: Cylinder Exchange Program – Key Attributes
Cylinder Exchange Program – Key Attributes • Product of Convenience • Industry leader in automated vending • Home delivery pilot went live in summer of FY19 • Continue to optimize distribution • National footprint AMERIGAS 41 • Expansion with major retailer and large convenience store chain • Roll-o
Slide 42: Significant Transportation & Logistics Network
Significant Transportation & Logistics Network Most flexible, reliable supply chain 12 Transflow 22 coverage in the retail Ability to quickly Units Terminals propane industry focus flexible truck, rail and trans- 900 PTI loading assets to AMERIGAS Trailers areas in need 42 Over 250 Propane Suppliers
Slide 43: Summary
Summary • Proven track record of exceeding our commitments to our shareholders • 6% - 10% long-term annual Adjusted EPS growth • 4% annual dividend growth • Well-positioned to build on our momentum • Strong and growing natural gas demand • Utility rate base and customer growth UGI CORPORATION • LPG
Slide 44: Appendix
Appendix §
Slide 45: UGI Corporation Adjusted EPS
UGI Corporation Adjusted EPS (Millions of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Non-GAAP Reconciliation: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corporation $ 251.8 $ 245.4 $ 210.2 $ 2
Slide 46: UGI Corporation Free Cash Flow
UGI Corporation Free Cash Flow ($ in millions) Year Ended September 30, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net Cash Provided By Operating Activities $ 132.7 $ 203.5 $ 247.5 $ 249.1 $ 260.7 $ 437.7 $ 279.4 $ 456.2 $ 464.4 $ 665.0 Less: Expenditures for property, plant, and equipment (7
Slide 47: UGI Energy Services Historical Margin
UGI Energy Services Historical Margin ($ in millions) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Revenues - Midstream & Marketing $ 1,222.6 $ 1,155.9 $ 942.2 $ 1,122.8 $ 1,473.7 $ 1,181.4 $ 876.6 $ 1,121.2 $ 1,421.7 $ 1,534.9 Total Cost of Sales - Midstream & Ma
Slide 48: UGI Corporation Adjusted EBITDA
UGI Corporation Adjusted EBITDA ($ in millions) UGI 48 CORPORATION
Slide 49: UGI France Unit Margins
UGI France Unit Margins ($ & € in thousands, except unit margin) Year Ended September 30, 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LPG revenues $ 1,062,561 $ 837,676 $ 887,067 $ 1,050,628 $ 1,083,666 $ 1,244,753 $ 1,169,610 $ 942,511 $ 1,160,013 $ 1,144,939 $ 1,349,884 $ 1,218,105
Slide 50: CMG: The Acquired Assets
CMG: The Acquired Assets Initial Length Diameter Capacity System Asset Type In-service (miles) (in) (‘000 MMBtu/d) Big Pine Dry gas gathering 2013 67 20, 24 ~425 East Washington Infield gathering 2015 21 8, 12, 16 ~300 Gibraltar Dry gas gathering 2017 25 36 ~1,000 UGI CORPORATION Majorsville Wet gas
Slide 51: UGI Energy Services: Critical Midstream Infrastructure Serving High-Demand Markets
UGI Energy Services: Critical Midstream Infrastructure Serving High-Demand Markets Low cost supply: Natural Gas Demand Projections Our assets are located in the core region of the Appalachian Basin, with volumes supported by a long-lived, low-cost resources 140 Production from the Appalachian re
Slide 52: Strategic Platform Underpinned by Long-Term Contracts
Strategic Platform Underpinned by Long-Term Contracts High quality assets with long-term fee-based 2019 Revenue Breakdown by contract tenor and contracts in one of North America’s most prolific profile shale basins Contract Tenor Five recently-constructed assets enhance our Usage existing gatherin
Slide 53: Midstream Asset Overview
Midstream Asset Overview LNG Peaking: • Temple LNG (205,000 Dth/day vaporization, 1.25 MMdth storage) • Manning liquefaction (10,000 to 15,000 Dth/day) • Steelton vaporization (65,000 to 70,000 Dth/day) • Bethlehem vaporization (65,000 to 70,000 Dth/day) • Portable LNG vaporization • In-service (15,
Slide 54: Midstream – PennEast Pipeline
Midstream – PennEast Pipeline System Highlights: PennEast Pipeline (Red) • 120-mile natural gas pipeline from Luzerne County, Pennsylvania to the Trenton-Woodbury interconnection in New Jersey • Affiliates of all members plan to be customers of the pipeline under 15-year contracts PennEast Update: •