Ugi Corporation · NYSE:UGI
Ugi — Investor Day (June 2021)
54 slides from Ugi's investor day presentation, Jun 21, 2021
Slide 1: Reliable Growth Fueling a Renewable Future
RELIABLE GROWTH FUELING A RENEWABLE FUTURE JUNE 21, 2021
Slide 2: Our Team Welcomes You
Our Team Welcomes You UGI Corporation IR Strategy Roger Perreault Ted Jastrzebski Robert Beard Hugh Gallagher President & CEO - Elect CFO Executive VP, Natural Gas Chief Strategy Officer, Global LPG Matt Dutzman Neil Murphy Brendan Heck Tameka Morris VP – Strategy, Natural Gas VP – Business Developm
Slide 3: About This Presentation
About This Presentation UGI Corporation This presentation contains statements, estimates and projections that are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Management believes that these are reasonable as of today’s date only. Actual r
Slide 4: Use of Non-GAAP Measures
Use of Non-GAAP Measures UGI Corporation In this presentation, Management uses certain non-GAAP financial measures, including UGI Corporation adjusted diluted earnings per share, UGI Corporation Adjusted Earnings before interest, taxes, depreciation, and amortization (“EBITDA”), Midstream & Marketin
Slide 5: Agenda
Agenda UGI Corporation Our Strategy Reliable Earnings Growth IR Strategy Renewable Energy Solutions Converting Strategy to Financials Environmental, Social and Governance Update Q Q&A 5
Slide 6: Our Strategy
UGI Corporation Our Strategy IR Strategy Roger Perreault President and CEO – Elect UGI Corporation 6
Slide 7: UGI: A Compelling Investment Opportunity
UGI: A Compelling Investment Opportunity UGI Corporation • International distributor and marketer of energy products and services, including natural gas, LPG, electricity and renewable solutions, with well- developed infrastructure in key markets • Executing a clear strategy to drive reliable earnin
Slide 8: Focused Growth Strategy
Focused Growth Strategy UGI Corporation Reliable Earnings Growth Renewables Rebalance IR Strategy • Ongoing investments to grow • Significant capital allocation to a • Rebalance our portfolio towards predictable regulated utility, fee- range of renewable energy a 50/50 split between Natural based an
Slide 9: Proven Business Model Driving Value Creation
Proven Business Model Driving Value Creation UGI Corporation 7.0% 7.7% 34 years Dividend 10-year CAGR EPS 10-year CAGR1 Consecutively Increasing Dividends IR Strategy 137 years $1.6B Consecutively Paying Common Available Liquidity2 Dividends $1.1B ~11.4% 3M+ FY20 Cash Flow from Operations Rate Base
Slide 10: Reliable Earnings Growth from our Natural Gas Business
UTILITIES Reliable Earnings Growth from our Natural Gas Business Robert F. Beard Executive Vice President Natural Gas, UGI 10 10
Slide 11: Our Natural Gas Businesses Deliver Stable Earnings Growth
Our Natural Gas Businesses Deliver Stable Earnings UGI Corporation Growth • 2nd largest regulated gas utility in Pennsylvania based on total customers Midstream Assets • Will include largest regulated gas IR Strategy utility in West Virginia after Regulated Gas completion of pending Renewables Mount
Slide 12: Capital Investment Drives Rate Base Growth
Capital Investment Drives Rate Base Growth UGI Corporation $2B in planned capital spend between FY21 – FY241 • Continue to retire aged infrastructure • Strong growth, historically adding an average of 15,000+ heating customers annually2 Capital Investment in UGI Utilities Rate Base Growth at UGI Uti
Slide 13: Mountaineer Gas Company - A Strong Strategic Fit
Mountaineer Gas Company - A Strong Strategic Fit UGI Corporation • Increases UGI’s rate base by ~14% to ~$2.75 billion Current Status • Anticipate 10% - 12% rate base growth CAGR over the long term, similar Strong Rate Base Growth to UGI Utilities • Financing completed • Infrastructure Replacement a
Slide 14: Fee-Based Midstream Income Provides Reliable Earnings
UGI Corporation Fee-Based Midstream Income Provides Reliable Earnings Over the past 10 years, Midstream & Marketing has expanded to become a business of scale, offering both midstream and marketing services in the Appalachian basin and the eastern US. Fee-based income has also grown substantially as
Slide 15: Compelling Opportunity to Drive Growth in Natural Gas
Compelling Opportunity to Drive Growth in Natural UGI Corporation Gas • Growing regulated business – a platform for significant capital investment and strong return on equity • Regulatory mechanism in place to encourage investment • Continued strong demand for natural gas provides reliable earnings
Slide 16: Reliable Earnings Growth in the Global LPG Business
UTILITIES Reliable Earnings Growth in the Global LPG Business Hugh Gallagher Chief Strategy Officer, Global LPG 16 16
Slide 17: Global LPG Business Overview
Global LPG Business Overview UGI Corporation • Largest LPG distributor in the U.S., France, Austria, Belgium, Norway, Denmark, and Luxembourg1 • Significant geographic and end-use Cylinder diversity IR Strategy • Strong track record of innovative solutions, such as cylinder vending Bulk LPG Renewabl
Slide 18: Investments in High Growth and Weather-Resilient Areas
Investments in High Growth and Weather-Resilient UGI Corporation Areas Business High Growth / Path towards Transformation Less Weather Investments in and Continuous Sensitive Renewables Improvement Business IR Strategy • Margin management: Cost • Investing in high growth and • Leveraging core compet
Slide 19: Strong Margin Management Driving Reliable Earnings
Strong Margin Management Driving Reliable Earnings UGI Corporation Our Global LPG business consistently maintains strong unit margins to provide reliable earnings growth through varying economic cycles. Unit Margins at AmeriGas IR Strategy 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 AmeriGas A
Slide 20: LPG Business Transformation Driving Efficiencies
LPG Business Transformation Driving Efficiencies UGI Corporation Business Transformation Savings Operating process redesign and specialization AmeriGas • Expect to realize $140 Million in permanent annual savings by the Centralized customer relationship management end of FY22 o IR Strategy Total est
Slide 21: Compelling Opportunity to Drive Growth in Global LPG
Compelling Opportunity to Drive Growth in Global LPG UGI Corporation • Strong free cash flow that enables rebalancing • Stabilized earnings profile through disciplined margin management, business transformation initiatives and continuous improvement • Proven growth in our cylinder exchange, IR Strat
Slide 22: Renewables
UTILITIES Renewables Roger Perreault President and CEO – Elect UGI Corporation Matt Dutzman VP – Strategy, Natural Gas Neil Murphy VP – Business Development, Global LPG 22 22
Slide 23: Renewables: A Growth Engine for the Future
Renewables: A Growth Engine for the Future UGI Corporation • Investments in renewable energy solutions provide a pathway to defossilize / decarbonize existing energy solutions through blending >$1 billion • Leverages existing infrastructure and our core Planned investment in Renewable Energy Solutio
Slide 24: A Range of Renewable Energy Solutions
A Range of Renewable Energy Solutions UGI Corporation Providing renewable solutions that are highly compatible with existing infrastructure and customer usage. Renewable Natural Gas (RNG) • Natural gas derived from organic waste, including farm, municipal and industrial waste • A cost competitive re
Slide 25: Renewable Natural Gas Growth Opportunities
Renewable Natural Gas Growth Opportunities UGI Corporation Grow diversified portfolio of Pursue a diversity of Long Term opportunities, including Balances RNG supply projects by Approach incentivized markets (LCFS, price and type (digester, landfill, RINs, other) and long term food waste) and operat
Slide 26: Illustrative Example: From Waste to Renewable Natural Gas
Illustrative Example: From Waste to Renewable UGI Corporation Natural Gas Farm waste Anaerobic digestion RNG injected into pipeline for distribution to end creates biogas from which customer RNG is extracted 26
Slide 27: RNG Investments and Partnerships
RNG Investments and Partnerships UGI Corporation Multiple RNG acquisitions and partnerships in the past 12 months • Investments have broadened the UGI footprint outside of the Mid-Atlantic region to California, Idaho and upstate New York • Work with regulators to develop framework for further adopti
Slide 28: Renewable Dimethylether (rDME) Production Pathways
UGI Corporation Renewable Dimethylether (rDME) Production Pathways rDME supports defossilization of the LPG portfolio with a flexible approach that can be blended to achieve net carbon neutrality in each jurisdiction. • rDME can be produced through various processes depending on the energy source •
Slide 29: Recent Collaborations in Global LPG
Recent Collaborations in Global LPG UGI Corporation Collaborations to Accelerate the Transition of the LPG Industry to a Sustainable Future. • Collaboration to advance the production and use of rDME • Anticipate the development of up to 6 production plants within the next 5 years • Targeting a total
Slide 30: Converting Strategy to Financials
UTILITIES Converting Strategy to Financials Ted J. Jastrzebski Chief Financial Officer, UGI 30 30
Slide 31: Clear Financial Objectives to Continue Delivering Shareholder Value
Clear Financial Objectives to Continue Delivering UGI Corporation Shareholder Value • UGI is a balanced growth and income investment • Excellent cash generation; FY20 cash flow from operations of $1.1B • Well positioned to deliver consistent earnings growth through: Reliable • Record capital deploym
Slide 32: Business Unit Growth Drives UGI Performance
Business Unit Growth Drives UGI Performance UGI Corporation $4.00 $3.50 $3.00 IR Strategy $2.90 FY 2021E FY 2024E Adjusted Diluted EPS1 Adjusted Diluted EPS1 Well positioned to achieve guidance based on the Significant cash generation provides funding source strong performance in the first half of t
Slide 33: Cash Flow Stability
Cash Flow Stability UGI Corporation Cash flow stability and growth remains a key differentiator for UGI. Focus on liquidity provides resilience against macro risks as well as flexibility in our capital project execution and operational process innovation. $1,164 $1,085 $1,078 $1,102 $1,005 $970 $964
Slide 34: Balance Sheet - Leverage
Balance Sheet - Leverage UGI Corporation Leverage1,2 Debt Maturities ($ Million) • UGI’s philosophy is to hold debt at its business AmeriGas UGI International units and keep capacity at the holding company level for strategic opportunities Midstream & Marketing UGI Utilities UGI Corp • Plans to achi
Slide 35: Strategic Capital Allocation
Strategic Capital Allocation UGI Corporation Cash Flow from Operations Capex Cash Returned to Net Debt FY 2021-24 and M&A Shareholders 1 Reduction $5.0 - $5.6 B $3.7 - $3.9 B IR Strategy $1.2 - $1.3 B $0.1 - $0.4 B • Continuing to build a • Capital plan at Utilities • Meet commitment to • Reduce con
Slide 36: Cash Engine Drives Rebalancing
Cash Engine Drives Rebalancing UGI Corporation FY21 – 24 Sources and Uses of Cash1 • Our businesses are expected to generate ~$5.0 - $5.6 Billion in Cash Flow from Operations between FY21-24 that drive growth investments and the achievement of long-term financial commitments Natural Gas Global & IR
Slide 37: Diverse Businesses Fueling Long-Term Growth
Diverse Businesses Fueling Long-Term Growth UGI Corporation FY20 Contribution1 Targeted Contribution2 by Business by Business Rebalancing our Rebalanced Natural Global Natural Portfolio Global Portfolio Gas LPG Gas LPG 41% Higher 50% IR Strategy 59% 50% Renewables Contribution Renewables • Organic G
Slide 38: History of Value Creation and Shareholder Return
History of Value Creation and Shareholder Return UGI Corporation Dividend 10-year CAGR5 Adjusted Diluted Earnings Per Share1 ($) 7.0% 3.00 2.74 2.67 2.90 2.29 2.28 IR Strategy 2.02 2.01 2.05 1.61 1.41 1.25 1.30 1.32 0.87 0.91 0.95 1.00 1.04 0.69 0.72 0.75 4 2011 2012 2013 2014 2015 2016 2017 2018 20
Slide 39: Environmental, Social and Governance
UGI Corporation Environmental, Social and Governance IR Strategy Brendan Heck VP, ESG 39
Slide 40: Our ESG Journey
Our ESG Journey UGI Corporation Current Focus Areas Going Forward UGI aims to deliver on its economic, • “S” Leadership • Operations and social, and environmental goals as a disclosures focused on direct outcome of its strong execution • Executive compensation linked to safety and several frameworks
Slide 41: Commitment to the Environment
Commitment to the Environment UGI Corporation Our Commitments Committed to reducing Scope I emissions by 55% by 2025 using 2020 as the base year.1 IR Strategy Plan to invest ~$2.5B to reduce UGI and customer emissions over this time and sell non-core assets such as Conemaugh • Pipeline Replacement &
Slide 42: Enhancing a Culture of Social Responsibility
Enhancing a Culture of Social Responsibility UGI Corporation Our Commitments • 35% Reduction in Total Recordable United Way Injuries by 20251,3 Big Brothers • 50% Reduction in Accountable Vehicle Big Sisters Safety Incidents (AVI) by 20252,3 IR Strategy Belonging, Veteran Employee Inclusion, Diversi
Slide 43: Our Business is Built on Strong Governance
Our Business is Built on Strong Governance UGI Corporation UGI falls in the top decile of Governance scores as per Institutional Shareholder Services 64 Active and Engaged Board of Directors Publication of ESG Report Average Age of Directors 5.53 IR Strategy Average Tenure1 Diverse Board of Director
Slide 44: Key Takeaways
UGI Corporation Key Takeaways IR Strategy Roger Perreault President and CEO – Elect UGI Corporation 44
Slide 45: Key Takeaways: From Strategy to Execution
Key Takeaways: From Strategy to Execution UGI Corporation • Strategy of providing reliable earnings growth, investing in renewable energy solutions and rebalancing our portfolio remains unchanged • Recent announcements and financial performance Reliable Earnings demonstrate continued execution of ou
Slide 46: Appendix
46 IR Strategy UGI Corporation Appendix
Slide 47: Our Vision and Mission
Our Vision and Mission UGI Corporation At UGI, we believe that safe, reliable, affordable, and sustainable energy solutions are a necessity for our customers and communities. We strive to deliver this Vision fundamental need through best-in-class safety, operations, IR Strategy products, and service
Slide 48: Key Facts – Natural Gas
Key Facts – Natural Gas 1 UGI Corporation Utilities Customer Customer Customers Locations Base ~740,000 45,000+ System Pipeline Storage Strong Throughput Capacity Capacity Midstream IR Strategy Assets 0.5+ TCF ~4 BCF/day ~15 BCF Distribution Collaborations Collaborative Growth • Marketing on 43 loca
Slide 49: Key Facts – Global LPG
1 Key Facts – Global LPG UGI Corporation Broad Customer Customers Bulk Customers Base 515K+ 1.5M+ Cash Free Cash Flow2 Free Cash Flow2 Generation Capability $239M $164M IR Strategy Strong LPG Customer3 LPG Customer3 Customer C&I: 41% C&I: 48% Relationships Residential: 33% Residential: 19% Locations
Slide 50: UGI Corp Adjusted Net Income and Adjusted Diluted Earnings Per Share
UGI Corp Adjusted Net Income and Adjusted Diluted UGI Corporation Earnings Per Share (Millions of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net incom
Slide 51: Free Cash Flow for the LPG Businesses
Free Cash Flow for the LPG Businesses UGI Corporation ($ in millions) AmeriGas Year Ended September 30 2020 Net Cash Provided by Operating Activities $374 Less: Expenditures for property, plant and equipment (135) IR Strategy Free Cash Flow $239 UGI International Year Ended September 30 2020 Net Cas
Slide 52: Midstream & Marketing Total Margins
Midstream & Marketing Total Margins UGI Corporation ($ in millions) Year Ended September 30, 2010 2020 Total Revenues $1,223 $1,247 Total Cost of Sales (1,055) (892) Margin - Midstream & Marketing $167 $355 IR Strategy Less: HVAC 32 21 UGIES Margin $135 $334 Margin Breakdown: Commodity Marketing $60
Slide 53: UGI Corporation Adjusted EBITDA and Leverage Ratio
UGI Corporation Adjusted EBITDA and Leverage Ratio UGI Corporation ($ in millions) Twelve Months Year Ended September 30, Six Months Ended March 31, Ended March 31, 2019 2020 2020 2021 2021 Net income including noncontrolling interests $308 $532 $438 $792 $886 Income taxes 93 135 149 241 227 Interes
Slide 54: Notes to ESG Commitments
Notes to ESG Commitments UGI Corporation Committed to reducing Scope I emissions by 55% by 2025 using 2020 as the base year 1. Scope 1 emissions reduction target does not include emissions from the Mountaineer acquisition, which is expected to close in 2021. The emissions from the Pine Run acquisiti