Ugi Corporation · NYSE:UGI
Ugi — American Gas Association Financial Forum 2017
52 slides from Ugi's conference presentation, May 2017
Slide 1: American Gas Association Financial Forum
American Gas Association Financial Forum May 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 Propane 50% of earnings1 50% of earnings1 • Utilities • Domestic Propane UGI Utilities AmeriGas (MLP, own 26%) Natural gas & electric u
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 1999 • 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: How Have We Executed on Strategy?
How Have We Executed on Strategy? • Successfully invested $8.4 billion from 2000-2016 to build our current business portfolio • Dramatically expanded our legacy businesses - Utilities and AmeriGas • Rapidly grew two major business units – Energy Services and UGI International • Strong financial attr
Slide 7: UGI Growth Engine
UGI Growth Engine Income-producing businesses support disciplined growth objectives by generating cash for growth opportunities and dividends Cash Flow Base business $350 MM-$400 MM earnings growth Dividends 3-4% $160 MM-$180 MM Incremental Organic earnings Investment growth and M&A1 3-6% $190 MM- $
Slide 8: How Have We Executed on Strategy?
How Have We Executed on Strategy? • Successfully invested $8.4 billion from 2000-2016 to build our current business portfolio • Dramatically expanded our legacy businesses - Utilities and AmeriGas • Rapidly grew two major business units – Energy Services and UGI International • Strong financial attr
Slide 9: UGI Has Consistently Outperformed
UGI Has Consistently Outperformed Total Shareholder Return as of 4/30/17 1 Year Total Return 3 Year Total Return 5 Year Total Return 30% 25% 30% 20% 20% 20% 15% 10% 10% 10% 5% 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&P 500 Utilities Midcap Utilities Midc
Slide 10: Free Cash Flow Growth
Free Cash Flow Growth1 $ millions 1999-2007: $1,287 2008-2016: $3,351 $800 Acquired Finagaz $600 Acquired Acquired Heritage Central and Shell $400 Penn Gas Propane Acquired Acquired BP 20% Propane of Antargaz Acquired And $200 Columbia remaining 80% Acquired of Antargaz Penn Propane Acquired Natural
Slide 11: 2012 – 2017 Comparison
2012 – 2017 Comparison Adjusted EPS1 $2.50 $ 0.14 $ 0.05 $ 2.22 $ 0.27 $2.00 $ 0.37 $1.50 $ 1.32 $ 0.07 $1.00 $0.50 $- UGI Midstream & YTD 2012 AmeriGas UGI Utilities Corp & other YTD 2017 International Marketing 1Adjusted EPS is a non-GAAP measure. See appendix for reconciliation. UGI Corporation |
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: Business Unit Growth Drives UGI Performance
Business Unit Growth Drives UGI Performance $3.50 $2.85 - $3.152 $3.00 $2.50 $2.30 to $2.451 Adjusted EPS3 $2.00 $1.50 $1.00 $0.50 $0.00 FY17 Guidance FY20 Estimate 1 Guidance provided on October 12, 2016. 2Estimated using long-term EPS guidance of 6-10% from the midpoint of 2017 guidance. 3Adjusted
Slide 14: Energy to do more
OG Energy to do more®
Slide 15: UGI Utilities Business Overview
UGI Utilities Business Overview ~626,000 Service territories Added Gas customers lie within or adjacent to the Marcellus 80,000 ~62,000 shale reserves new customers in the last 5 years Electric customers Pennsylvania’s Most contemporary Constructive distribution system nd 2 Largest regulatory in Pen
Slide 16: UGI Utilities Marcellus Advantage
UGI Utilities Marcellus Advantage • Over 90% of UGI Utilities natural gas sourced from the Marcellus Shale • Marcellus NG priced at over 45% discount to NYMEX during FY16 • Added three power plant customers since 2010 • Combined generation capacity of >2,000 MWs • Fourth scheduled in 2017 (~1,400 MW
Slide 17: UGI Utilities Increasing Capital Investment
UGI Utilities Increasing Capital Investment Capital Spend ($MM) $400 $350 $300 $250 $200 $150 $100 $50 $0 2012 2013 2014 2015 2016 2017B Replacement and Betterment Growth Other Electric IT UGI Corporation | AGA Financial Forum 17
Slide 18: UGI Utilities Investment Creating Value
UGI Utilities Investment Creating Value • Reducing regulatory lag: Rate Base ($ Billions) • Fully Projected Future Test Year 2.0 • Distribution System Improvement Charge 1.8 1.6 • Nearly 90% of FY17 investment begins 1.4 recovery within 12 months 1.2 • Additional programs drive growth 1.0 0.8 • Tech
Slide 19: Energy Services
a=) UGI Energy Services
Slide 20: UGI Energy Services Business Overview
Business Overview UGI Energy Services Marketing Midstream Generation 113 200 15 Bcf natural gas Miles of Bcf of marketing in pipeline natural gas ~256.5 36 LDCs systems storage MWs of electric generation capacity ~626,000 1.35 Bcf LNG storage, MWhs in vaporization and 20 EDCs liquefaction capacity f
Slide 21: UGI Energy Services 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 22: 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 23: Sustainable Business Growth
Sustainable Business Growth UGI Energy Services Increasing midstream margin drives overall growth1 11% 12% colder than colder $350,000 normal than winter normal 21% winter warmer $300,000 than normal winter $250,000 22% warmer Margin (in 000s) $200,000 than normal winter $150,000 $100,000 $50,000 $-
Slide 24: Slide 24
Slide 25: AmeriGas Business Overview
Business Overview AmeriGas Largest propane distributor in U.S.1 ~1.9 MM ~1.1 BN 15% Market Share Customers Retail gallons sold Operations in all ~54,000 ~8,300 50 States Cylinder exchange retail locations Employees UGI Corporation | AGA Financial Forum 1 Based on volume of propane gallons distribute
Slide 26: AmeriGas Competitive Advantages
Competitive Advantages AmeriGas • Unmatched geographic coverage across all 50 states • Significant scale enables deployment of technology advancements • Significant transportation and logistics assets • Tested formula for successful acquisitions • Demonstrated ability to manage margins • Growing cas
Slide 27: Unmatched Nationwide Footprint
Unmatched Nationwide Footprint AmeriGas 15% Market Share Storage Field Service Districts Terminals Center UGI Corporation | AGA Financial Forum 27
Slide 28: 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 29: 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 | AGA Financial Forum 2
Slide 30: Outperformance Over the Long Term
Outperformance Over the Long Term AmeriGas 200 10 Year 150 CAGR AmeriGas: 9.8% AmeriGas Alerian: 6.3% Alerian 100 S&P 500: 7.1% S&P 500 50 0 -50 UGI Corporation | AGA Financial Forum 30
Slide 31: UGI International
UGI INTERNATIONAL AFLAGA
Slide 32: UGI International Business Overview
UGI International Business Overview ~19 million ~500,000 ~65,000 Cylinders in circulation Customers Propane distribution locations Operations in Over 16 Countries ~2,755 820 million Employees retail gallons sold in FY16 14 Languages UGI Corporation | AGA Financial Forum 32
Slide 33: UGI International Timeline
UGI International UGI International Timeline 2016 Retail Gallons Sold: 821MM Operating Income: $206.6MM 2001 Finagaz Retail Gallons Sold: 74MM1 Acquisition in France Operating Income : $0.8MM Shell Acquisitions in Poland, the UK and the Nordics Antargaz Acquisition in France Flaga Acquisition in Aus
Slide 34: UGI International 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 35: Serving a Diverse Customer Base
UGI International Serving a Diverse Customer Base FY16 Volume by Segment FY16 Volume by Segment 8% 4% 5% 11% 22% Commercial & Industrial Bulk Residential Cylinder Agricultural Auto Gas Autogas Aerosol 29% 70% 50% UGI Corporation | AGA Financial Forum 35
Slide 36: Key Takeaways
Key Takeaways • UGI is a balanced growth & income investment • Positioned to deliver strong earnings and cash flow growth • Utilities – customer growth and infrastructure investment • Energy Services – capitalizing on infrastructure gap and unique Marcellus asset portfolio • AmeriGas – ACE, National
Slide 37: Appendix
APPENDIX
Slide 38: Strong EPS and Dividend Growth
Strong EPS and Dividend Growth $2.50 12.0% CAGR $1.00 6.4% CAGR Above 6-10% Long-Term Target Above 4% Long-Term Target Annualized dividends per share $2.00 Annual earnings per share $0.75 $1.50 $0.50 $1.00 $0.50 $0.25 $0.00 $0.00 2017E 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Slide 39: Currency Hedging Program
Currency Hedging Program We hedge up to 90% of expected pre-tax earnings. The goal is to smooth Program considerations earnings translation by layering currency hedges on a rolling annual basis. • We hedge the following currency pairs • EUR to USD • GBP to USD • Hedging is accomplished Up to 90% of
Slide 40: UGI Utilities 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 New Homes Conversions Upgrades Commercial UGI Corporation | AGA Financial Forum
Slide 41: Commodity Marketing
Commodity Marketing UGI Energy Services Consistent, disciplined approach results in steady margin growth through numerous disruptive events $80,000 Polar Vortex 11% colder $70,000 22% warmer than normal than normal winter 21% warmer Total Margin (000s) $60,000 winter than normal Commodity $50,000 Ka
Slide 42: UGI Energy Services Total Margin
UGI Energy Services Total Margin UGI Energy Services ($ in millions) Year Ended September 30, 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 $ 1,309.5 $
Slide 43: 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 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1 Announced April 24, 2017, payable May 18, 2017 to unitholders of record May 10,
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 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Track record of unit margin growth in all cost environments UGI Corporati
Slide 45: AmeriGas Adjusted EBITDA
AmeriGas Adjusted EBITDA AmeriGas ($ in millions) Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 Income tax expense 0.2 0.8 1.
Slide 46: AmeriGas Unit Margin
AmeriGas Unit Margin AmeriGas ($ in thousands, except per unit amounts) Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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
Slide 47: 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 Avg. Platt's Cost LPG Unit Margins UGI Corporation | AGA Financial Forum Unit margin is a non-GAAP measure. See appendix
Slide 48: 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 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 LPG cost of sales (478,400) (38
Slide 49: UGI Corporation Adjusted Earnings Per Share
UGI Corporation Adjusted Earnings Per Share Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corporation $ 251.8 $ 245.4 $ 210.2 $ 278.1 $ 337.2 $ 281.0 $ 364.7 Net (gains) losses
Slide 50: UGI Corporation 2016 Adjusted EPS by Segment
UGI Corporation 2016 Adjusted EPS by Segment AmeriGas Midstream & UGI Corporate & Total Propane UGI Utilities Marketing International Other Adjusted diluted earnings per share: UGI Corporation earnings per share - diluted $ 2.08 $ 0.25 $ 0.55 $ 0.50 $ 0.64 $ 0.14 Net gains on commodity derivative in
Slide 51: UGI Corporation Free Cash Flow
UGI Corporation ($ in millions) Free Cash Flow Year Ended September 30, 1999 2000 2001 2002 2003 2004 2005 2006 2007 Net Cash Provided By Operating Activities $ 141.9 $ 132.7 $ 203.5 $ 247.5 $ 249.1 $ 260.7 $ 437.7 $ 279.4 $ 456.2 Less: Expenditures for property, plant, and equipment (70.2) (71.0) (
Slide 52: UGI Adjusted Net Income and EPS
UGI Adjusted ($ in millions) Net Income and EPS AmeriGas UGI Midstream & Corporate & Six Months Ended March 31, 2017 Total UGI Utilities Propane International Marketing Other Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corporation $ 450.6 $ 48.6 $ 167.6 $ 80.1