Ugi Corporation · NYSE:UGI
Ugi — Debt Investor Presentation (July 2019)
63 slides from Ugi's debt investor presentation, Jul 25, 2019
Slide 1: UGI Energy Services Lenders' Presentation $700mm Senior Secured Term Loan B
Exhibit 99.4 UGI Energy Services Lenders’ Presentation $700mm Senior Secured Term Loan B July 2019Exhibit 99.4 UGI Energy Services Lenders’ Presentation $700mm Senior Secured Term Loan B July 2019
Slide 2: Disclaimer
DISCLAIMER About this Presentation This presentation contains certain forward-looking statements that management believes to be reasonable as of today’s date only. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indi
Slide 3: Table of Contents
Table of Contents 1. Transaction Overview 2. Company Overview 3. Key Credit Highlights 4. Syndication Details Appendix 3Table of Contents 1. Transaction Overview 2. Company Overview 3. Key Credit Highlights 4. Syndication Details Appendix 3
Slide 4: Today's Presenters
Today’s Presenters Ted Jastrzebski UGI Corporation Chief Financial Officer Bob Beard UGI Corporation Executive Vice President – Natural Gas Joe Hartz UGI Energy Services, LLC President 4Today’s Presenters Ted Jastrzebski UGI Corporation Chief Financial Officer Bob Beard UGI Corporation Executive Vic
Slide 5: 1. Transaction Overview
1. Transaction Overview 51. Transaction Overview 5
Slide 6: Summary of Transaction
Summary of Transaction • On July 2, 2019, UGI Energy Services, LLC (“UGIES”), a wholly owned subsidiary of UGI Corporation (“UGI”), entered into a definitive agreements to acquire Columbia Midstream Group, LLC (“CMG”) from TC Energy Corporation (“TC Energy”) for $1.275bn (the “Transaction”) • CMG wa
Slide 7: Sources and Uses / Pro Forma Capitalization
Sources and Uses / Pro Forma Capitalization Sources and Uses ($ in millions, unless otherwise noted) ($ in millions, unless otherwise noted) Sources Uses UGIES New Senior Secured TLB $700 Purchase of CMG $1,275 (1) 602 Estimated transaction fees & expenses (including OID) 27 A Contribution from UGI
Slide 8: Key Investment Highlights
Key Investment Highlights Critical midstream infrastructure serving high-demand markets Strategically located in the core regions of the Marcellus & Utica Stable cash flows derived from long-term contracts with substantial take-or-pay component Diverse customer base of high quality, well-capitalized
Slide 9: 2. Company Overview
2. Company Overview 92. Company Overview 9
Slide 10: UGI Corporation
UGI Corporation 10UGI Corporation 10
Slide 11: UGI Corporation Overview
UGI Corporation Overview UGI Corporation is a publicly traded distributor and marketer of energy products and services including natural gas, propane, butane and electricity (1) (1) Enterprise Value: $17.3bn Market Cap: $11.0bn (2) • Assets: Regulated gas & electric utilities serving over 700,000 •
Slide 12: Business Segment Snapshot
Business Segment Snapshot (1) (1) New $550mm Term Loan A UGI Corporation (1) Enterprise Value: $17.3bn New $300mm Revolving Credit Facility Market Cap: $11.0bn LTM PF Revenue: $7.6bn UGI International AmeriGas UGI Utilities UGI Energy Services Ratings: Ba1 / BB+ Ratings: Ba2 / BB Ratings: A2 / A- (M
Slide 13: UGI Corp is Leading Distributor and Marketer of Energy Products
UGI Corp is Leading Distributor and Marketer of Energy Products Outstanding, disciplined growth Strong cash flow profile A leader in its markets • UGI has invested $10.3bn over the last 20 years • Highest Free Cash Flow as a % of EBITDA • AmeriGas is the largest U.S. LPG company, building its curren
Slide 14: UGI Energy Services
UGI Energy Services 14UGI Energy Services 14
Slide 15: Pro Forma UGIES Organizational Structure
Pro Forma UGIES Organizational Structure UGI Corporation UGI Energy Services (1) AmeriGas Propane UGI International LTM PF Margin : $362mm UGI Utilities (1) LTM PF Adj. EBITDA : $252mm Midstream LNG / Peak Shaving Power Generation Commodity Marketing Columbia Midstream Midstream & Storage Group LTM
Slide 16: Pro Forma UGIES Asset Footprint
Pro Forma UGIES Asset Footprint Storage Marshlands Auburn TGP Union Dale Texas Creek Transco (Leidy) Pennant Ponderosa Sunbury Big Pine Mt. Bethel TGP TETCO Penn East (Under Development) Majorsville E. Washington Storage TETCO Gas Processing Power Plant Gibraltar LNG Peaking Facility TETCO Existing
Slide 17: Appalachian Basin Overview
Appalachian Basin Overview Marcellus and Utica: A Long-Lived Resource Overview Map Located in the heart of a large, resource-rich legacy oil and gas field • Marcellus spans +100,000 sq. miles (60mm acres) Expansive Footprint • Utica extends +170,000 sq. miles (100mm acres) • Marcellus is the most ab
Slide 18: Pro Forma UGIES Midstream Overview
Pro Forma UGIES Midstream Overview Legacy UGIES Midstream & Storage Columbia Midstream Group $89 LTM Margin $113 Contribution ($ in mm) • Six natural gas pipelines and gathering systems across NE • Five natural gas pipelines and one gas processing facility across Key Assets / Pennsylvania serving bo
Slide 19: Pro Forma UGIES Midstream & Storage Asset Summary
Pro Forma UGIES Midstream & Storage Asset Summary Legacy UGIES (Midstream & Storage) Columbia Midstream Group Natural Texas Capacity Big East (2) Sunbury PennEast Auburn Uniondale Ponderosa Marshlands Gas Gibraltar Majorsville Pennant Creek Mgmt. Pine Washington Storage ~600 Capacity (1) (gathering)
Slide 20: Other UGIES Business Overview
Other UGIES Business Overview LNG / Peak Shaving Commodity Marketing Power Generation LTM Margin Contribution ($ in mm) $84 $48 $27 Key Assets / • Two LNG liquefaction plants with up to • Markets and sells natural gas, liquid • Approximately 300 MW of power Description 25,000 Dth/d of capacity fuels
Slide 21: Legacy UGI Energy Services
Legacy UGI Energy Services 21Legacy UGI Energy Services 21
Slide 22: Legacy UGIES Midstream and Storage Asset Summary
Legacy UGIES Midstream and Storage Asset Summary FERC Transmission Trunkline Gathering Infield Gathering Other Natural Gas Capacity Sunbury PennEast Auburn Uniondale Texas Creek Ponderosa Marshlands Storage Management Capacity Services Provided Pipeline Pipeline Gathering Gathering Gathering Gatheri
Slide 23: Sunbury System Summary
Sunbury System Summary System Description • FERC regulated, 35-mile, 20” pipeline with related facilities located in Snyder, Union, Northumberland, Montour, and Lycoming Counties, Pennsylvania • Went in service early 2017, serving Hummel Station, a 1,124 MW natural gas-fired power plant near Shamoki
Slide 24: Overview of Key Gathering Systems
Overview of Key Gathering Systems System Highlights Description • 46 miles of pipeline • Multi-phase, multi-year project located in Northeast System • >620,000 MMBtu/d capacity completed over Pennsylvania Details 4 phases since 2011 • Provides transportation service for natural gas producers linking
Slide 25: PennEast System Summary (Under Development)
PennEast System Summary (Under Development) System Description • ~$1bn project located in Eastern Pennsylvania and Western New Jersey that delivers 1.1 Bcf/d of natural gas (90% subscribed) • 120 mile natural gas pipeline originates in Dallas, PA and terminate near Pennington, NJ • UGIES (operator)
Slide 26: UGIES Historical Margin Breakdown
(1) UGIES Historical Margin Breakdown 11% & 12% colder than 21% & 15% warmer than ($ in mm) normal winter, respectively normal winter, respectively $310 $292 $285 $35 $46 $44 $249 $245 $241 $27 $28 $34 $164 $225 $185 $180 $32 $137 $135 $130 $126 $174 $168 $18 $161 $16 $28 $35 $75 $52 $58 $47 $49 $68
Slide 27: Columbia Midstream Group
Columbia Midstream Group 27Columbia Midstream Group 27
Slide 28: Strategic Platform Underpinned by Long-Term Contracts
Strategic Platform Underpinned by Long-Term Contracts Overview of CMG 2019E Contract Profile 2019E Contract Tenor Other Usage Usage • Five recently constructed assets enhance 3% <5 years 4% 3% 6% existing gathering business and expand UGI into processing, treating, and liquids Acreage >10 years dedi
Slide 29: CMG Acquisition Rationale
CMG Acquisition Rationale • Adds significant scale and scope of operations to UGI’s existing natural gas midstream Establishes business in the Appalachian Basin midstream • Expands base of quality business partners and customers platform with substantial scale • Provides UGI with a full suite of mid
Slide 30: Columbia Midstream Group System Summary
Columbia Midstream Group System Summary (1) Big Pine Gibraltar Majorsville East Washington Pennant Gas gathering and Dry gas gathering Dry gas gathering Wet gas gathering Infield gathering Services Provided processing Length 67 25 46 21 82 (miles) Diameter 20, 24 36 16, 20 8, 12, 16 16, 20, 24 (in)
Slide 31: CMG System Summary
CMG System Summary Big Pine System Description Gibraltar System Summary • Big Pine’s base system was completed in 2013 and originally • The Gibraltar system was placed into service in late 2017 to consisted of ~57 miles of dry gas gathering capability transport dry gas through Washington County, PA
Slide 32: CMG System Summary (Cont'd)
CMG System Summary (Cont’d) Majorsville System Description East Washington System Summary • The Majorsville system is located on top of core Marcellus wet gas • East Washington gathering system constructed to service a single drilling activity system producer (Ba2 / BB+) • Provides access to two pro
Slide 33: Pennant System Summary
Pennant System Summary System Description • 47.025% ownership in a JV with Harvest Pipeline, a subsidiary of Hilcorp Energy Company (“Hilcorp”) and Three Rivers Midstream System • Cryogenic gas processing plant (affiliate of Williams) Details • ~240,000 MMBtu/d capacity • CMG is operator of the syst
Slide 34: Columbia Midstream Group Contract Summary
Columbia Midstream Group Contract Summary East (1) Big Pine Gibraltar Majorsville Pennant Washington Take- Take- Contract Take- Acreage Take- Take- Demand / Acreage Interruptible Interruptible or-pay or-pay or-pay dedication or-pay or-pay Usage dedication Type (Gathering) (Processing) Contracted (2)
Slide 35: Columbia Midstream Group Historical Margin
Columbia Midstream Group Historical Margin ($ in mm) $12.4 $10.3 $9.8 $9.8 $8.2 $8.3 $8.1 $7.9 $7.7 $7.7 $7.5 $7.4 $7.0 $6.9 $6.7 $6.6 $6.6 $6.6 $6.3 $6.1 $6.1 $5.9 $5.7 $5.6 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18
Slide 36: UGI Energy Services Pro Forma
UGI Energy Services Pro Forma 36UGI Energy Services Pro Forma 36
Slide 37: Transformative acquisition enhances business portfolio mix and scale
Transformative acquisition enhances business portfolio mix and scale (1) Creates contracted natural gas portfolio of scale Increasing Fee-Based Margin • CMG acquisition rebalances UGI toward highly-contracted 2013A Margin natural gas assets with fee-based margins and take or pay components 61% 39% •
Slide 38: Summary of Growth Projects
Summary of Growth Projects Major Capital Projects • UGIES has identified capital investment opportunities in both legacy Asset Description Net Capex and CMG portfolio at estimated build multiples of 5.0x – 7.0x Long-haul pipeline delivering natural gas to • Growth projects underwritten by attractive
Slide 39: UGIES + CMG Pro Forma Business
UGIES + CMG Pro Forma Business (1) (1)(2) Historical Margin EBITDA ($ in mm) ($ in mm) $304 $413 $362 $104 $322 $292 $285 $113 $77 $241 $83 $252 $234 $310 $222 $249 $245 $212 $55 $91 2014A 2015A 2016A 2017A 2018A 3/31 LTM $175 UGIES CMG Capital Expenditures ($ in mm) $156 $221 $140 $136 $21 $179 $26
Slide 40: Significant Capital Investment to Date
Significant Capital Investment to Date UGIES Cumulative Capital Expenditure ($ in mm) $1,247 UGIES has shown sustained commitment to the expansion of $1,137 its midstream business $1,041 $885 $797 $688 $506 $446 $321 $204 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (1) Midstream Power Generati
Slide 41: 3. Key Credit Highlights
3. Key Credit Highlights 413. Key Credit Highlights 41
Slide 42: Key Highlights
Key Highlights Critical midstream infrastructure serving high-demand markets 1 Strategically located in the core regions of the Marcellus & Utica 2 Stable cash flows derived from long-term contracts with substantial take-or-pay component 3 Diverse customer base of high quality, well-capitalized prod
Slide 43: Critical midstream infrastructure serving high-demand markets
Critical midstream infrastructure serving high-demand markets 1 Asset Highlights Pro Forma Asset Footprint • UGIES pipelines serve some of the basin’s Storage Auburn largest public and private oil and gas producers Union Dale Marshlands Texas Creek • Legacy business provides dry gas gathering and st
Slide 44: Critical midstream infrastructure serving high-demand markets
Critical midstream infrastructure serving high-demand markets 1 UGIES assets are located strategically close to low-cost supply and demand centers Low cost supply: Natural gas demand projections • UGIES assets are located in the core region of the (Bcf/d) Appalachian Basin, with volumes supported by
Slide 45: Strategically located in the core regions of the Marcellus & Utica
Strategically located in the core regions of the Marcellus & Utica 2 • UGIES pipelines are located in one of North America’s Active Rig Footprint in Core of Basins most prolific natural gas producing basins • Activity has increased to drive both SW Appalachia & NE Appalachia production • Approximate
Slide 46: Appalachian basin continues to see growth
Appalachian basin continues to see growth 2 New-well Gas Production per Rig Appalachian Natural Gas Production 18 180 35 16 160 30 14 140 25 12 120 20 10 100 8 80 15 6 60 10 4 40 5 2 20 - - - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Producti
Slide 47: Stable cash flows derived from long-term contracts with take-or-pay component
Stable cash flows derived from long-term contracts with take-or-pay component 3 (1) Cash Flow Highlights Pro Forma Take or Pay Margin Expect greater future Pro Forma • UGIES operates a diverse asset portfolio with limited ToP take-or-pay contribution 54% direct commodity exposure from: • Columbia Mi
Slide 48: Diverse customer base of high quality, well-capitalized producers and end users
Diverse customer base of high quality, well-capitalized producers and end users 4 Customer Diversification Pro Forma Customer Profile Allocation • Pro forma for the acquisition, UGIES expands the size and scope of its customers to a variety of producers and end users Producer 41% • Adds 10 increment
Slide 49: Diverse customer base: customer and end user enterprise value
Diverse customer base of high quality, well-capitalized producers and end users 4 Customer & End User Enterprise Value ($ in mm) $264,172 $80,813 $10,678 $5,800 $5,609 $5,196 $4,618 $3,372 CVX EQNR COG SJI NJR RRC CNX SWN UGIES Customers Continue to be Active Across the Basin (Rig count) 10 UGIES sh
Slide 50: Low opening leverage when in comparison to industry peers
5 Low opening leverage when in comparison to industry peers (1) 2019E Total Leverage Credit Rating (Moody’s / S&P): Ba3 / Ba1 / Ba2 / Ba1 / Ba3 / Ba3 / Baa3 / Ba2 / B1 / TBD BB BB+ BB+ BBB- BB- BB- BBB- BB+ BB- 5.6x 4.9x 4.8x 4.7x 4.6x 4.3x 3.9x 3.4x 3.2x 2.8x (2) Peer A Peer B Peer C Peer D Peer E
Slide 51: UGIES Supported by Strong Relationships Across UGI Businesses
6 UGIES Supported by Strong Relationships Across UGI Businesses UGIES is a key strategic priority for UGI and benefits from the support of both the corporate entity (1) and other UGI businesses, together a ~$17bn company • UGIES has been a critical driver of growth for UGI Corp and is a focus of UGI
Slide 52: Strategic relationship with UGI family of companies
6 Strategic relationship with UGI family of companies Base Business & UGI Dividends Regulatory and Share Earnings Growth Repurchase $1.1bn - $1.4bn Cash from Operations Investment Capital Capital and M&A Earnings Expenditures, M&A Growth & Other $150mm - $200mm Financing CMG acquisition illustrates
Slide 53: Experienced Management with Proven Track Record
Experienced Management with Proven Track Record 7 • Oversees all operations of UGIES including Human Resources, Sales and Marketing, Finance, Business Development, Gas Joe Hartz Supply, Customer Scheduling, Information Technology, Plant Operations, Construction and Engineering UGIES • Has been with
Slide 54: Management has Successfully Built an Appalachian Business
Management has Successfully Built an Appalachian Business 7 • Acquired Columbia Midstream 2019 Group, strategically creating st • Completed 1 phase of pan-Appalachia G&P system Auburn expansion • Announced Union Dale lateral, PennEast Pipeline project, and Temple liquefaction expansion 2013 -2014 •
Slide 55: 4. Syndication Details
4. Syndication Details 554. Syndication Details 55
Slide 56: Senior Secured Term Loan B
Senior Secured Term Loan B Borrower: • UGI Energy Services, LLC (“UGIES” or the “Company”) Facility: • $700 million Senior Secured Term Loan B (the “TLB”) Tenor: • 7 years (2026) • Net proceeds will be used to finance the purchase of Columbia Midstream Group, LLC (the “Target”) and associated transa
Slide 57: Preliminary Financing Timeline
Preliminary Financing Timeline July 2019 August 2019 S M T W T F S S M T W T F S 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 29 30 31 Bank holiday Key date nd • Announce definitive agre
Slide 58: Appendix
Qeeélgy Services a Appendix
Slide 59: Senior Secured Revolving Credit Facility
Senior Secured Revolving Credit Facility Borrower: • UGI Energy Services, LLC (“UGIES” or the “Company”) • $200 million Revolving Credit Facility (reduced from $240 million) Facility: • JPMorgan Chase Bank, N.A. Administrative Agent: Joint Lead Arrangers: • JPMorgan Chase Bank, N.A., PNC Capital Mar
Slide 60: Non-GAAP Reconciliations (UGI Corporation Adjusted Earnings Per Share)
Non-GAAP Reconciliations (UGI Corporation Adjusted Earnings Per Share) (Millions of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 Non-GAAP Reconciliation: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Co
Slide 61: Non-GAAP Reconciliations (UGI Corporation Free Cash Flow)
Non-GAAP Reconciliations (UGI Corporation Free Cash Flow) (Millions of dollars, except otherwise noted) Year Ended September 30, 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Net Cash Provided by Operating Activities $178.5 $141.9 $132.7 $203.5 $247.5 $249.1 $260.7 $437.7 $279.4 $456.2 $464
Slide 62: Non-GAAP Reconciliations (UGI Energy Services Margin)
Non-GAAP Reconciliations (UGI Energy Services Margin) (Millions of dollars, except otherwise noted) Year Ended September 30, 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM 3/31/19 Total Revenues - Midstream & Marketing $1,309.5 $1,222.6 $1,155.9 $942.2 $1,122.8 $1,473.7 $1,181.4 $876.6 $1,121
Slide 63: Non-GAAP Reconciliations (UGI Energy Services EBITDA)
Non-GAAP Reconciliations (UGI Energy Services EBITDA) (Millions of dollars, except otherwise noted) Year Ended September 30, 2014 2015 2016 2017 2018 LTM 3/31/19 Net Income - Midstream & Marketing $ 116.7 $ 107.5 $ 87.1 $ 86.9 $ 196.8 $ 77.3 Income tax expense (benefit) 77.2 73.0 57.5 54.5 ( 20.5) 3