Ugi Corporation · NYSE:UGI
Ugi — AGA Financial Forum 2021
53 slides from Ugi's conference presentation, May 19, 2021
Slide 1: AGA Financial Forum
AGA FINANCIAL FORUM MAY 19 - 20, 2021
Slide 2: 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 3: 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 earnings per share, UGI Corporation Free Cash Flow, AmeriGas Free Cash Flow, UGI International Free Cash Flow, UGI Corporation Adjusted Earnings befo
Slide 4: Corporate Overview
Corporate Overview UGI Corporation UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity 2020 Business Mix • 2nd largest regulated gas utility in Pennsylvania1 • Historical rate base CAGR of ~11.4% (2016-20) Natural Gas
Slide 5: A Compelling Value Proposition
A Compelling Value Proposition UGI Corporation Long track record of solid EPS and Diversified operations - superior dividend growth driven by disciplined range of clean and sustainable investments energy solutions for our customers Strong track record of redeploying Leading market positions in our t
Slide 6: History of Meeting EPS and Dividend Commitments
History of Meeting EPS and Dividend Commitments UGI Corporation 3.00 EPS Adjusted Diluted Earnings Per Share1 ($) 2.74 2.67 10-year CAGR2 2.90 7.7% 2.29 2.28 2.02 2.01 2.05 1.61 1.46 1.41 1.25 Dividend 10-year CAGR 7.0% 1.30 1.32 0.87 0.91 0.95 1.00 1.04 0.67 0.69 0.72 0.75 EPS($) 3 3 2010 2011 2012
Slide 7: Cash Flow Stability and Growth
Cash Flow Stability and Growth 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. UGI-US NJR-US Peer 1 SJI-US Peer
Slide 8: YTD FY21 Business Update
1 YTD FY21 Business Update UGI Corporation Key Accomplishments • Entered agreement to purchase Mountaineer Gas Company – largest Gas LDC in West Virginia • Bethlehem LNG plant placed in service; added 70,000Dth/day peaking capacity • UGI Utilities commenced construction on a project to deliver natur
Slide 9: YTD FY21 Results Recap
1 YTD FY21 Results Recap UGI Corporation Each business unit delivered increased EBIT vs. prior year. Adjusted Diluted EPS2 – Comparison with YTD FY20 Adjusted Diluted EPS2 – Segment Split $3.174 $0.08 $0.06 $0.03 $2.733 0.71 $0.21 UGI 0.68 Utilities 0.47 $0.06 Midstream 0.41 & Marketing 0.91 $3.17 0
Slide 10: Increase in FY21 Guidance
Increase in FY21 Guidance UGI Corporation As a result of the strong performance in the first half of the fiscal year despite warmer than normal weather, we increased our FY21 adjusted EPS guidance to a range of $2.90 - $3.001 per share, inclusive of the negative impact from COVID-19 and positive tax
Slide 11: Liquidity Update
Liquidity Update UGI Corporation • Cash Flow from Operating Activities of $646M in 6-months ended March 31, 2021, compared to $562M in prior-year period Available Liquidity • $120M (143%) increase in free cash flow1 in the 6-months ended March 31, 2021, compared to the prior-year period • Strong bal
Slide 12: The Next Opportunity – Renewable Energy Solutions
The Next Opportunity – Renewable Energy Solutions UGI Corporation 2015-19 2020 2021-25 Renewable Solutions team Acquired GHI, Potential Renewable Solutions opportunities of up to $1 which will serve as billion over the next five years at attractive returns Began marketing Bio-LPG in parts of
Slide 13: Our Capital Allocation Strategy Evolution
Our Capital Allocation Strategy Evolution UGI Corporation 2015 2020 2025 2030 2035 Capital Allocation1,2: 20% 15% 15% Global LPG 40% 35% 15% 20% 25% Renewables Natural Gas 60% 65% 65% 65% 60% Our innovation-focused growth drivers align us with our goal of a greener portfolio • CNG • RNG • Bio-Gas (B
Slide 14: FY 2021 - 2024 Cash Deployment
FY 2021 - 2024 Cash Deployment UGI Corporation Cash Flow from Operations Capex Dividends and Net Debt FY 2021-24 and M&A Share Repurchase Reduction $5.0 - $5.6 B $3.7 - $3.9 B $1.2 - $1.3 B $0.1 - $0.4 B • Continuing to build a • Capital plan at Utilities • Meet commitment to • Reduce consolidated r
Slide 15: Balance Sheet - Leverage
Balance Sheet - Leverage UGI Corporation Leverage1,2 Debt Maturities ($ Million) • UGI’s philosophy is to hold debt at its business AmeriGas UGI International units and keep capacity at the holding company Midstream & Marketing UGI Utilities level for truly compelling strategic opportunities and pla
Slide 16: Growing Responsibly
Growing Responsibly UGI Corporation UGI is focused on acting in a sustainable and socially responsible way to minimize our impact on the environment and be a good steward to the planet. Goals Status Key Highlights Establish Methane Complete • Established Methane Reduction Targets at our Utilities bu
Slide 17: Natural Gas – Our Businesses
UGI Corporation Natural Gas OUR 17 BUSINESSES
Slide 18: Natural Gas Business Overview
Natural Gas Business Overview UGI Corporation 1 2nd largest regulated gas utility in Pennsylvania2 Strategically positioned Midstream Top decile 11%+ rate base CAGR FY20-FY24 assets and energy marketing business System Throughput Customers System Throughput Customer Locations ~310 BCF ~740,000 500+
Slide 19: UGI Utilities Strategic Advantage
UGI Utilities Strategic Advantage UGI Corporation • Significantly reduced OSHA injuries and preventable motor vehicle accidents since FY14 SAFETY FOCUS • Partnered with DuPont Sustainable Solutions to conduct a safety culture and initiatives assessment CONSTRUCTIVE • Fully Projected Future Test Year
Slide 20: Meeting Customers’ Needs – Today and Tomorrow
Meeting Customers’ Needs – Today and Tomorrow UGI Corporation MAKE ENERGY AFFORDABLE Improve access and integrity Annual Customer Growth at UGI Utilities (in ‘000) ~ 675,000 conversion prospects within 1 mile of gas mains GET Gas program enables growth in underserved areas PNG CPG Locally sour
Slide 21: Capital Investment Drives Rate Base Growth
Capital Investment Drives Rate Base Growth UGI Corporation Capital Investment in UGI Utilities1 Rate Base Growth1 CapEx IT $ 4.0 Electric Other 3.5 Growth Replacement & Betterment $ 500 3.0 2.5 400 $ BILLIONS 2.0 $ Millions 300 1.5 200 1.0 100 0.5 1.3 1.4 1.5 1.6 1.7 2.0 2.2 2.4 2.7 3.0 3.4 3.7 0 -
Slide 22: Annual Customer Additions
Annual Customer Additions UGI Corporation ~255,000 customers added 2001 - 20201 20,000 18,000 16,000 Annual Customer Additions 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 New Homes Conversions Upgr
Slide 23: Peak Day Growth
Peak Day Growth UGI Corporation 2.5 2.0 1.5 BCF 1.0 0.5 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 PGC Customers Transportation Customers Capacity Reserve Requirement • Peak day demand growth driven by above average customer growth
Slide 24: Strengthening Our Rate-Base Growth
Strengthening Our Rate-Base Growth UGI Corporation / • Long runway of infrastructure, system Anticipate MGC rate base to grow by reinforcement and growth capital investment $ 5.0 approximately 10% - 12% CAGR over the opportunities supporting rate base and 4.5 long term; in line with expected rate ba
Slide 25: Mountaineer Acquisition Highlights
Mountaineer Acquisition Highlights UGI Corporation • Be the preferred provider in all markets Aligns with UGI Corp Strategy • Leverage strengths and expertise • Grow earnings through acquisitions, capital projects and organic growth • Opportunity to make investments to support customer growth, ensur
Slide 26: Overview of Mountaineer Gas Company
Overview of Mountaineer Gas Company UGI Corporation Largest LDC in West Virginia, serving ~215,000 customers (90% residential) across 50 of WV’s 55 counties • Fully rate-regulated business with $378 million rate base1 • ~6,000 miles of pipe (25% bare steel) • West Virginia has a constructive regulat
Slide 27: A Strategic Fit
A Strategic Fit UGI Corporation / Rebalancing UGI’s Business Mix Platform for Renewable Energy Future • Growth investment in natural • Infrastructure replacement program gas and renewable solutions will lower methane and other GHG opportunities emissions • Gas LDCs provide stable, long • Assess othe
Slide 28: UGI Energy Services Strategic Advantages
UGI Energy Services Strategic Advantages UGI Corporation Many complementary assets including storage, LNG and pipeline capacity on UNIQUE ASSET PORTFOLIO owned and third party systems STRATEGICALLY POSITIONED Access to key supply areas in North Central and North East PA and the IN THE MARCELLUS REGI
Slide 29: Our Midstream & Marketing Business Overview
Our Midstream & Marketing Business Overview UGI Corporation Midstream Assets • LNG Peaking • Total vaporization (~360,000 Dth/day) • Total liquefaction (~20,000 Dth/day) • Built Pipeline Capacity • Total capacity (~4,000,000 Dth/day) • Natural Gas Storage • 15,000,000 Dth Commodity Marketing • Servi
Slide 30: Continuing to Build a Strong Midstream Business in the Appalachian Basin
Continuing to Build a Strong Midstream Business in UGI Corporation The Appalachian Basin Pine Run • In February 2021, acquired a 49% equity interest in Pine Run Midstream for $56M • Pine Run Midstream operates 43-miles of dry gas gathering pipeline and compression assets located in Butler and Armstr
Slide 31: Cumulative Capital Investment
Cumulative Capital Investment UGI Corporation Capital deployment spans our entire business focusing on growth projects $1,600,000 $1,400,000 Capital Expenditures ($ in thousands) $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 32: Margin Growth Driven by Midstream Expansion
Margin1 Growth Driven by Midstream Expansion UGI Corporation $ 400 8% warmer weather than 11% colder Relatively normal 350 than normal normal winter weather $20 300 21% warmer $35 than normal Margin ($ in millions) $45 $44 250 winter $25 $34 $28 200 $274 $185 $225 150 $32 $180 $168 $187 $28 $18 $16
Slide 33: Our Natural Gas Business Contribute to a Cleaner Environment
Our Natural Gas Business Contribute to a Cleaner UGI Corporation Environment REDUCE CARBON FOOTPRINT Smart portfolio rebalancing Investment in feedstock infrastructure (RNG project in Idaho) Cleaner sources such as RNG (GHI) Investments advance GHG reduction commitment Divestiture of Conemau
Slide 34: RNG Platforms for Growth
RNG Platforms for Growth UGI Corporation Acquisitions and Partnerships Collaborations • GHI Energy - Growth platform in the California (CA) market • RNG Supply Interconnect Agreement – • A leading RNG marketer in CA primarily focused on providing vehicle • Agreement with Archaea Energy to fleets wit
Slide 35: Opportunities in the RNG Value Chain
Opportunities in the RNG Value Chain UGI Corporation Expanding capabilities in renewable natural gas while leveraging strategic assets. • Potential avenues of RNG production include: Farm waste (e.g., dairy manure digesters) Municipal waste (e.g., wastewater treatment plant digesters) Production
Slide 36: Our Global LPG Strategic Focus
UGI Corporation Our Global LPG Strategic Focus 36
Slide 37: LPG Business Overview
LPG Business Overview UGI Corporation 1 Largest LPG Distributor in the U.S.2 Largest LPG distributor in France, Austria, Belgium, Norway, Denmark, and Luxembourg LPG Volume Customers Free Cash Flow3 LPG Volume Customers Free Cash Flow3 ~1.1 billion retail 1.5+ million $239M ~870 million retail 515,0
Slide 38: Strategic Advantages
Strategic Advantages UGI Corporation SIGNIFICANT GEOGRAPHIC FOOTPRINT Largest LPG distributor in the U.S. and several European countries TRACK RECORD OF MARGIN Business has maintained margin stability through a variety of commodity price MANAGEMENT AND EXPENSE environments MANAGEMENT CONTROL OF SUPP
Slide 39: LPG Focus – Culture of Continuous Improvement
LPG Focus – Culture of Continuous Improvement UGI Corporation EMBED CONTINUAL IMPROVEMENT MODERNIZE FOR OUR FUTURE Launched Two Transformation Projects • Re-engineered processes across Global LPG to reduce costs and improve effectiveness FOCUS Operations Excellence Customer Digital Experience • Cont
Slide 40: Develop and Grow Platform for Renewable Solutions
Develop and Grow Platform for Renewable Solutions UGI Corporation BRING NEW MARKET OPPORTUNITIES DRIVE LPG BUSINESS EVOLUTION New Renewable Fuels Tech-enabled Sales Channel Development • “De-fossilize” LPG via acquisitions and • Automatic vending solution supply sources • Home delivery • Business Mo
Slide 41: Global LPG Transformation Benefits
Global LPG Transformation Benefits UGI Corporation Global LPG Transformation Estimated Benefits AmeriGas Expect to realize $140 Million in permanent annual savings o Centralized customer engagement services by FY22 center o Total estimated cost to implement: ~$200 Million o Enhanced customer managem
Slide 42: Strengthening our Renewables Portfolio
Strengthening our Renewables Portfolio UGI Corporation Strong strides in renewables Building a strong renewable portfolio 2021 - 2025 2015 - 2020 Recent Strides in 2021 • Began marketing Bio-LPG in • Exclusive rights to Ekobenz’s bioLPG supply in Poland – Available for parts of Northern Europe marke
Slide 43: Collaboration to Advance Production and Use of rDME
Collaboration to Advance Production and Use of rDME UGI Corporation Intent to Create a Joint Venture to Accelerate the Transition of the LPG Industry to a Sustainable Future. Project Details rDME Explained • Collaboration with SHV Energy to accelerate • A safe, clean-burning, sustainable fuel renewa
Slide 44: Key Takeaways
UGI Corporation Key Takeaways 44
Slide 45: Key Takeaways
Key Takeaways UGI Corporation We remain well-positioned to deliver on our long-term commitments to shareholders of 6-10% annual EPS growth and 4% dividend growth and position UGI as a leader of a renewable energy future. We continue to: We are accelerating: • Build a more weather-resilient busin
Slide 46: Appendix
46 UGI Corporation Appendix
Slide 47: UGI Corp Adjusted Net Income and Adjusted Earnings Per Share
UGI Corp Adjusted Net Income and Adjusted Earnings Per Share UGI Corporation (Millions of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net income attrib
Slide 48: UGI Corporation Free Cash Flow
UGI Corporation Free Cash Flow UGI Corporation ($ in millions) Year Ended September 30, 2011 2012 2013 2014 2015 Net Cash Provided By Operating Activities $555 $708 $802 $1,005 $1,164 Less: Expenditures for property, plant, and equipment (361) (339) (486) (457) (491) Less: Dividends (114) (119) (126
Slide 49: Free Cash Flow for the LPG Businesses
Free Cash Flow for the LPG Businesses UGI Corporation ($ in millions) Year Ended September 30, 2020 AmeriGas UGI International Net Cash Provided by Operating Activities $374 $253 Less: Expenditures for property, plant and equipment (135) (89) Free Cash Flow $239 $164 49
Slide 50: Midstream & Marketing Total Margins
Midstream & Marketing Total Margins UGI Corporation ($ in millions) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Revenues $1,223 $1,155.9 $942.2 $1,122.8 $1,473.7 $1,181 $877 $1,121 $1,422 $1,535 $1,247 Total Cost of Sales (1,055) (987) (780) (927) (1,150) (8
Slide 51: UGI Corporation Adjusted EBITDA and Leverage Ratio
UGI Corporation Adjusted EBITDA and Leverage Ratio UGI Corporation ($ in millions) Twelve Months Year Ended September 30, Six Months Ended Mar 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 Interest
Slide 52: YTD FY21 Adjusted Diluted Earnings per Share
YTD FY21 Adjusted Diluted Earnings per Share UGI Corporation Six Months Ended March 31, 2021 2020 AmeriGas Propane $1.07 $1.01 UGI International 0.91 0.70 Midstream & Marketing 0.47 0.41 UGI Utilities 0.71 0.68 Corporate & Other (a) 0.61 (0.72) Earnings per share – diluted 3.77 2.08 Net (gains) loss
Slide 53: UGI Corporation by Segment
UGI Corporation by Segment UGI Corporation ($ in millions) UGI Midstream & Moun 1 Year Ended September 30, 2020 Total AmeriGas International Marketing UGI Utilities Gas Co Operating income (loss) $983 $1,000 $373 $241 $140 $229 Income from equity investees 27 - - 27 - income, net Other non-operating