UGI Corporation · NYSE:UGI
UGI — Wells Fargo Pipeline, MLP and Utility Symposium 2017
65 slides from UGI's conference presentation, December 2017
Slide 1: Wells Fargo Pipeline, MLP and Utility Symposium
Wells Fargo Pipeline, MLP and Utility Symposium December 2017
Slide 2: About This Presentation
About This Presentation This presentation contains certain forward-looking statements that management believes to be reasonable as of today’s date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management’s
Slide 3: Corporate Overview
Corporate Overview UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity Natural Gas LPG ~50% of earnings1 ~50% of earnings1 • Utilities • Domestic Propane UGI Utilities AmeriGas (MLP, own 26%) Natural gas & electric uti
Slide 4: Key Takeaways
Key Takeaways • We deliver outstanding returns to our shareholders • We are a balanced growth and income investment • 6-10% EPS Growth • 4% Dividend Growth • Excellent cash generation; 11% CAGR of free cash flow1 since 1997 • Track record of disciplined capital deployment • Our portfolio of growth o
Slide 5: Our Strategy
Our Strategy 1 Be the preferred provider in all markets • Build businesses of scale • Leverage our position as the last link in energy distribution • Protect and enhance our brands 2 Capitalize on synergies and leverage strengths • Leverage successful programs and services across the corporation • E
Slide 6: Growth Engine Supports Commitments
Growth Engine Supports Commitments Income-producing businesses support disciplined growth objectives by generating cash for growth opportunities and dividends $700-750 million 3% – 4% Free Cash Flow Base Growth (Maintenance Capex)1 + 60% Propane 40%Nat Gas Organic Investment Dividends & Share 3% – 6
Slide 7: How Have We Executed on Strategy?
How Have We Executed on Strategy? • Successfully invested $9.1 billion from 2000-2017 to build our current business portfolio • Expanded our legacy businesses – Utilities and AmeriGas • Rapidly grew two major business units – Energy Services and UGI International • Strong financial attributes of UGI
Slide 8: UGI Has Consistently Outperformed
UGI Has Consistently Outperformed Total Shareholder Return as of 9/30/17 3 Year Total Return 5 Year Total Return 10 Year Total Return 20 Year Total Return 15% 25% 15% 20% 20% 15% 10% 10% 15% 10% 10% 5% 5% 5% 5% 0% 0% 0% 0% UGI S&P 500 S&P 400 S&P 500 UGI S&P 500 S&P 400 S&P 500 UGI S&P 500 S&P 400 S
Slide 9: Outstanding Free Cash Flow
Outstanding Free Cash Flow Free Cash Flow (Total Capex)1 generated over past three years of $1.4 billion $1.4B 11.4% CAGR $0.8B $0.6B $0.3B $0.2B 3 Years Ended 3 Years Ended 3 Years Ended 3 Years Ended 3 Years Ended 1997 2002 2007 2012 2017 1 Cash Flow from Operations less capital expenditures UGI C
Slide 10: 2018 Guidance
2018 Guidance $2.75 FY 2018 Earnings Guidance Consistent Earnings $2.65 Adjusted EPS of $2.45 – $2.65 Pattern Historically, on average, ~95% of FY Adjusted $2.50 EPS is generated in the first half of the year $2.45 Percentage of UGI Adjusted EPS $2.29 earned by quarter $2.25 Key Drivers Q1 ~35% Re
Slide 11: Strong Track Record and Pipeline of Projects
Strong Track Record and Pipeline of Projects $3.05 - $3.401 • Sunbury Pipeline • PennEast Pipeline • Satellite LNG $2.29 • Peaking demand • ACE growth AmeriGas • National Accounts • 28 AmeriGas acquisitions • AmeriGas acquisitions • Added 8,000 ACE locations • Technology deployment • Added over 12,0
Slide 12: Reducing Weather Dependence
Reducing Weather Dependence Midstream & Marketing Utility • Anticipating over 50% fee-based margin by 2020 • Increasing fixed customer charges in base rate • Increased peak day requirements driving cases opportunities for fixed-fee peaking services • Recovery through reconcilable riders • Pipeline c
Slide 13: Energy to do more
OG Energy to do more®
Slide 14: UGI Utilities Business Overview
UGI Utilities Business Overview ~635,000 Service territories Added Gas customers lie within or adjacent to the Marcellus 80,000 ~62,000 shale reserves new customers in the last 5 years Electric customers Pennsylvania’s Most contemporary Constructive distribution system nd 2 Largest regulatory in Pen
Slide 15: UGI Utilities Key Value Drivers
UGI Utilities Key Value Drivers • Strong focus on safety, operations and reliability • Opportunities for growth and aggressive cost management result in 5-7% annual net income growth • Record capital investment • Increasing system reliability • Supporting growth • Growing rate base • Constructive re
Slide 16: UGI Utilities Marcellus Advantage
UGI Utilities Marcellus Advantage • Over 80% of UGI Utilities natural gas sourced from the Marcellus Shale • Added three power plant customers since 2010 • Combined generation capacity of >2,000 MWs • Fourth scheduled in 2018 (~1,400 MWs) • Favorable environment for economic development Natural Gas
Slide 17: Marcellus Gas Driving Growth in PA
UGI Utilities Marcellus Gas Driving Growth in PA Natural Gas Delivered to Consumers in PA PA Natural Gas Deliveries to Electric Power Customers 1,400,000 600,000 2016: 1,200,000 500,656 MMCF 500,000 1,000,000 400,000 800,000 300,000 600,000 1998-2006 0.3% CAGR Residential: -0.7% 200,000 400,000 Non-
Slide 18: Increasing Capital Investment
UGI Utilities Increasing Capital Investment Capital Spend ($MM) $350 $300 $250 $200 $150 $100 $50 $0 2013 2014 2015 2016 2017 2018E Replacement and Betterment Growth Other Electric IT UGI Corporation | Investor Overview 18
Slide 19: Investment Creating Value
UGI Utilities Investment Creating Value Rate Base ($ Billions) • Reducing regulatory lag: • Fully Projected Future Test Year 2.0 1.8 1.6 • Distribution System Improvement Charge 1.4 (DSIC) 1.2 • Nearly 65% of FY18 investment begins 1.0 recovery within 12 months 0.8 0.6 • Additional programs drive gr
Slide 20: Total Customer Growth
UGI Utilities Total Customer Growth 20,000 18,000 16,000 Annual Customer Additions 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 New Homes Conversions Upgrades Commercial UGI Corporation | Investor Overvi
Slide 21: Positioned for Continued Growth
UGI Utilities Positioned for Continued Growth • Added over 14,000 new residential heating and commercial customers in 2017 • Growth Opportunities • ~ 350,000 conversion prospects remain near gas mains • GET Gas program enables growth in underserved areas • ~$55 million 2018 growth capital budget • P
Slide 22: Energy Services
a=) UGI Energy Services
Slide 23: UGI Energy Services Business Overview
Business Overview UGI Energy Services Marketing Midstream Generation 131 241 15 Bcf natural gas Miles of Bcf of marketing in pipeline natural gas 39 LDCs (operating or in storage ~256.5 development) MWs of electric generation capacity ~671,000 ~2 Bcf LNG and propane storage used MWhs in to support l
Slide 24: Key Messages
UGI Energy Services Key Messages • Extending our Marcellus asset network with attractive new capital projects • Broad range of investment opportunities • Increasing fee-based revenue through peaking and pipeline capacity contracts • Strong track record for project execution • Well positioned to serv
Slide 25: Midstream Assets Overview
Midstream Assets Overview UGI Energy Services LNG Peaking: • Temple LNG (205,000 Dth/day vaporization, 1.25 BCF storage) • Manning liquefaction (10,000 Dth/day) • Steelton vaporization (65,000 Dth/day) Pipelines: • Auburn system (470,000 Dth/day) • Sunbury pipeline (200,000 Dth/day) • Union Dale (10
Slide 26: Acquisition of Rockdale Midstream Assets
Acquisition of Rockdale Midstream Assets UGI Energy Services Announced acquisition of midstream assets from Rockdale Marcellus, LLC on 11/1/17 • Midstream system in northern/central Pennsylvania • >60 miles of gathering lines, with dehydration, compression, and multiple interconnects to downstream p
Slide 27: Sustainable Business Growth
Sustainable Business Growth UGI Energy Services Increasing midstream margin drives overall growth 11% colder 12% than colder $350,000 normal than winter normal 21% 15% winter warmer warmer $300,000 than than normal normal winter winter $250,000 22% warmer Margin1 (in 000s) $200,000 than normal winte
Slide 28: Commodity Marketing
Commodity Marketing UGI Energy Services Consistent, disciplined approach results in steady margin growth through numerous disruptive events $80,000 Polar Vortex 22% warmer 11% colder $70,000 than normal than normal winter winter Total Margin (000s) $60,000 21% warmer than normal $50,000 Katrina/ Com
Slide 29: Increasing Fee-based Income
Increasing Fee-based Income UGI Energy Services 2013 Margin Composition1 Anticipated 2021 Margin Composition Historical Fee-Based Margin 39% Anticipated Fee-Based Margin 56% 6% 19% 18% 35% 46% 76% Commodity Margin Midstream Margin Generation Margin UGI Corporation | Investor Overview 1Margin is a no
Slide 30: Capitalizing on Infrastructure Gap
UGI Energy Services Capitalizing on Infrastructure Gap Well positioned in capacity Participating in infrastructure constrained areas: build-out: • Natural Gas Storage • Sunbury • Auburn • PennEast • Uniondale • LNG Peaking and Trucking • Capacity Management UGI Corporation | Investor Overview 30
Slide 31: Slide 31
Slide 32: AmeriGas Business Overview
Business Overview AmeriGas Largest propane Over distributor in U.S.1 1.8 MM ~1.1 BN Retail gallons sold Customers Over Operations in all 50,000 ~8,100 50 States Cylinder exchange Employees retail locations UGI Corporation | Investor Overview 1 Based on volume of propane gallons distributed annually.
Slide 33: AmeriGas Business Overview
Business Overview AmeriGas 37% 38% 17% 8% Residential Commercial / Motor Agriculture & Heating & Cooking Industrial Fuel Transport UGI Corporation | Investor Overview Represents approximate percentages of retail gallons sold 33
Slide 34: Competitive Advantages
Competitive Advantages AmeriGas • Unmatched geographic coverage across all 50 states • Significant scale enables deployment of technology advancements • Scale enables growth programs (ACE and National Accounts) • Significant transportation and logistics assets • Tested formula for successful acquisi
Slide 35: Recent Key Accomplishments
Recent Key Accomplishments AmeriGas • National Accounts delivered record operating results • Currently serving over 43,000 customer locations • ACE business also delivered record operating results • Volume up over 8% compared to FY16 • Over 50,000 distribution points • Completed 5 acquisitions addin
Slide 36: Unmatched Nationwide Footprint
Unmatched Nationwide Footprint AmeriGas Storage Field Service Districts Terminals Center UGI Corporation | Investor Overview 36
Slide 37: Significant Transportation and Logistics Network
Significant Transportation and Logistics Network AmeriGas Most flexible, reliable supply chain coverage in the retail propane industry 10 Transflow Units 21 Ability to quickly focus flexible truck, rail Terminals and trans-loading assets to areas in need 940 PTI Trailers Over 250 Propane Suppliers(a
Slide 38: Technology Investments Across a Broad Platform
Technology Investments Across a Broad Platform AmeriGas Investments in technology reduce operational costs while improving the customer experience AmeriMobile AmeriGas.com District Tools Networked • Real-time field • Online bill pay • Real-time key performance Call Centers communication • Will-call
Slide 39: Key Financial Objectives
Key Financial Objectives AmeriGas • 3% - 4% growth in EBITDA over the long-term • Enhance credit metrics targeting leverage ratios in the range of 3.5x – 4.0x • Use access to capital markets judiciously - fund all maintenance, growth and acquisition expenditures through internally generated cash flo
Slide 40: Key Drivers of Growth
Key Drivers of Growth AmeriGas 3-4% Annual EBITDA Growth Acquisitions $5-6 MM Annual EBITDA Addition ACE Cylinder Exchange National Accounts 2-3% Growth 6-7% Growth Structural Conservation offset by: Technology Enhancements Margin Management Customer Retention UGI Corporation | Investor Overview 40
Slide 41: National Accounts Program
National Accounts Program AmeriGas • Unparalled footprint (~1,900 distribution locations, 50 Serving over states) • 38 Accounts added in FY17 43,000 Customer Locations • Best in class “back office” • Largest sales force in the industry • Geographic diversity • Generally less weather sensitive than r
Slide 42: Cylinder Exchange Program
Cylinder Exchange Program AmeriGas • Counter seasonal due to summer grilling demand Over 50,000 • Product of convenience distribution points • Platform grows as U.S. retailers expand 33 • Highly targeted marketing Cylinder programs refurbishment centers nationwide UGI Corporation | Investor Overview
Slide 43: Growth Through Acquisitions
Growth Through Acquisitions AmeriGas • Hallmark of the Company’s growth history ~ 200 • Highly fragmented market, over 3,500 acquisitions since acquisition opportunities the early 1980s • Dedicated corporate development team with relationship building as a core competency 1987 • Unmatched operationa
Slide 44: Unit Margin Management
Unit Margin Management AmeriGas Avg. Mt. Belvieu Cost Propane Unit Margins $1.60 $1.40 Avg. Mt. Belvieu Cost $1.20 Propane Unit Margins $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Track record of unit margin growth in all cost environments UGI Corp
Slide 45: Adjusted EBITDA Growth
Adjusted EBITDA Growth AmeriGas Adjusted EBITDA1 $700 $600 $500 $400 $300 $200 $100 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018G Weather vs. Normal 2 (2%) 3% 4% 5% 5% (13%) 1% 10% 0% (12%) (11%) 1 Includes impact of Heritage acquisition completed in 2012. 2 Assumes 15-year normal
Slide 46: 13th Consecutive Year of Increasing Distributions
13th Consecutive Year of Increasing Distributions AmeriGas Annualized Year-End Distributions Per Unit $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 UGI Corporation | Investor Overview 46
Slide 47: Refinancing Strengthened Balance Sheet
Refinancing Strengthened Balance Sheet AmeriGas Debt Maturity Extended and Coverage Improved BEFORE: Avg. maturity: 4.7 years AFTER: Avg. maturity: 8.7 years Avg. interest rate: 6.73% Avg. interest rate: 5.65% ($ in millions) ($ in millions) $1,000 $1,000 $900 $900 $800 $800 $700 $700 $600 $600 $500
Slide 48: Outperformance Over the Long-Term
Outperformance Over the Long-Term AmeriGas 200 CAGR Total Unitholder Return as of 9/30/17 150 1 Year 3 Year 5 Year 10 Year AmeriGas 6.8% 7.9% 8.9% 10.4% Alerian -3.7% -12.9 -0.5% 6.4% 100 S&P 500 18.6% 10.8% 14.2% 7.4% Total Return % 50 AmeriGas Alerian S&P 500 0 -50 UGI Corporation | Investor Overv
Slide 49: UGI International
UGI INTERNATIONAL AFLAGA
Slide 50: UGI International Business Overview
UGI International Business Overview Over ~500,000 ~38,000 18.5 million Customers Retail outlets selling Cylinders in circulation LPG cylinders Operations in Nearly 17 Countries ~3,000 828 million Employees retail gallons sold in FY17 15 Languages UGI Corporation | Investor Overview 50
Slide 51: UGI International Timeline
UGI International UGI International Timeline 2017 27 transactions since 1999 2017 2015 2011 2017 Italy 2010 2011 Belgium 2017: Finland 2001 (20%) 2004 (100%) Luxembourg 828mm gallons 2010 Denmark Norway Sweden 2006 Hungary $0.88 1999 Poland Netherlands Romania United Kingdom 2004 Switzerland 2001 Fr
Slide 52: Key Messages
UGI International Key Messages • International segment managed as one company with strong local presence • Successful ability to identify and integrate quality assets • Strong operational cash flow • Track record for margin management • Growth and integration strategies yield 5% to 8% earnings growt
Slide 53: Serving a Diverse Customer Base
UGI International Serving a Diverse Customer Base FY17 Volume by Segment FY17 Volume by Segment 4% 4% 4% 5% 21% Commercial & Industrial Bulk Residential Cylinder Agricultural Auto Gas 32% Autogas Aerosol 75% 55% UGI Corporation | Investor Overview 53
Slide 54: Track Record of Margin Management
UGI International Track Record of Margin Management 1.50 € 1.25 € UGI France € per Gallon 1.00 € 0.75 € 0.50 € 0.25 € 0.00 € 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Avg. Platt's Cost LPG Unit Margins UGI Corporation | Investor Overview Unit margin is a non-GAAP measure. See appen
Slide 55: Growth Beyond LPG
UGI International Growth Beyond LPG • Natural Gas Marketing • Grown business from scratch over last five years • Leverage sales force and best practices to double the existing business over the next five years • Recently announced acquisition of Dutch energy marketer DVEP • Expected to be $0.02 accr
Slide 56: Key Messages
Key Messages • UGI is a balanced growth and income investment • Five Year EPS CAGR of 13% • Five Year Dividend CAGR of 7% • Outstanding cash generation • Anticipated $700 – 750 million of annual cash flow generated, after maintenance capex • Track record of disciplined capital deployment • 15% total
Slide 57: Appendix
APPENDIX
Slide 58: Strong EPS and Dividend Growth
Strong EPS and Dividend Growth $3.00 $1.20 6.0% CAGR 12.0% CAGR Above 4% Long-Term Target Above 6-10% Long-Term Target $2.50 $1.00 Annualized Year-End Dividends per Share Annual Earnings per Share $2.00 $0.80 $1.50 $0.60 $1.00 $0.40 $0.50 $0.20 $0.00 $0.00 2018E 1999 2000 2001 2002 2003 2004 2005 20
Slide 59: UGI Corporation Adjusted Earnings Per Share
UGI Corporation Adjusted Earnings Per Share Year Ended September 30, (Million of dollars, except per share amounts) 2010 2011 2012 2013 2014 2015 2016 2017 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corporation $ 251.8 $ 245.4 $ 210.2
Slide 60: UGI Corporation 2017 Adjusted EPS by Segment
UGI Corporation 2017 Adjusted EPS by Segment AmeriGas UGI Midstream & Corporate & Year Ended September 3 0 , 2 0 1 7 Total UGI Utilities P ropane International Marketing O ther Adjusted net inc ome attributable to UGI Corporation: Net income attributable to UGI Corporation $ 436.6 $ 44.6 $ 158.6 $ 8
Slide 61: UGI Corporation Free Cash Flow
UGI Corporation ($ in millions) Free Cash Flow 3 Years 3 Years 3 Years Year Ended September 30, 1995 1996 1997 Ended 1 9 9 7 2000 2001 2002 Ended 2 0 0 2 2005 2006 2007 Ended 2 0 0 7 ($ in millions) Cash Flow from Operations 76.8 111.2 172.0 360.0 132.7 203.5 247.5 583.7 437.7 279.4 456.2 1,173.3 Le
Slide 62: UGI Energy Services Total Margin
UGI Energy Services Total Margin UGI Energy Services ($ in millions) Year Ended September 30, 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total Revenues $ 90.4 $ 150.7 $ 409.2 $ 380.6 $ 714.5 $ 1,025.4 $ 1,420.2 $ 1,486.5 $ 1,409.8 $ 1,696.4 $ 1,309
Slide 63: AmeriGas Adjusted EBITDA
AmeriGas Adjusted EBITDA ($ in millions) Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net income attributable to AmeriGas Partners, L.P. (a) $ 91.2 $ 190.8 $ 158.0 $ 224.6 $ 165.2 $ 138.5 $ 11.0 $ 221.2 $ 289.9 $ 211.2 $ 207.0 $ 162.1 Income tax expense 0.2 0.
Slide 64: AmeriGas Unit Margin
AmeriGas Unit Margin ($ in thousands, except per unit amounts) Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Propane revenues $ 1,953,714 $ 2,096,080 $ 2,624,672 $ 2,091,890 $ 2,158,800 $ 2,360,439 $ 2,677,631 $ 2,884,766 $ 3,440,868 $ 2,612,401 $ 2,053,160 $ 2
Slide 65: UGI France Unit Margins
UGI International UGI France (thousands) Unit Margins Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 LPG revenues $ 881,900 $ 796,653 $ 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 LPG cost of sa
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