Ugi Corporation · NYSE:UGI
Ugi — Investor Day (December 2021)
56 slides from Ugi's investor day presentation, Dec 2, 2021
Slide 1: Sustainable Value Creation
Sustainable Value Creation December 2, 2021
Slide 2: Our Team Welcomes You
Our Team Welcomes You Roger Perreault Ted Jastrzebski Robert Beard President & CEO CFO EVP, Natural Gas, Global Engineering & Construction and Procurement 2
Slide 3: About This Presentation
About This Presentation 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 November 23rd, 2021. Actual results may dif
Slide 4: Use of Non-GAAP Measures
Use of Non-GAAP Measures 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 & Marketing Total Margin, U
Slide 5: Agenda
Agenda Strategic Overview 6 Investing in Regulated Utilities 16 Leveraging & Expanding our Midstream Assets 21 LPG Fueling Investments & Reliable Earnings Growth 26 Continuous Improvement Promoting Resiliency 31 Investing in Renewable Energy Solutions 35 Sustainable Value Creation 40 Q Q&A 5
Slide 6: Strategic Overview
STRATEGIC OVERVIEW Roger Perreault President & CEO
Slide 7: A Diversified Energy Provider
A Diversified Energy Provider UGI Corporation is a distributor and marketer of energy 139 years products and services, including natural gas, LPG, electricity and renewable energy solutions 18 countries 3 million+ customers 11,000+ employees 4 diversified businesses ONE 7
Slide 8: Executing on our Strategy
Executing on our Strategy At UGI, we believe that safe, reliable, affordable and sustainable energy solutions are a necessity for our customers and Reliable Earnings Vision communities. We strive to deliver this fundamental need through Growth best-in-class safety, operations, products and services
Slide 9: UGI: Investment Value Proposition
UGI: Investment Value Proposition Delivering on long term commitments: 6 – 10 % EPS growth and 4% dividend growth Balanced growth and income investment 7.7% Adjusted Diluted EPS 2011 - 21 CAGR1 Disciplined capital deployment 11%+ rate base CAGR (2016 - 21) Strong cash generation; Cash Flow from Oper
Slide 10: CEO quote on energy demand
“Our global economy is demanding environmentally responsible and affordable energy solutions to meet growing consumption needs. This demand can only be met by a range of energy solutions, including natural gas and LPG, that are also safe, reliable and environmentally responsible. Built on a strong h
Slide 11: Global Energy Consumption Trends
Global Energy Consumption Trends Consumption trends highlight the need for all energy sources. Global primary energy consumption by energy source (2010 - 2050) OECD energy consumption by region (quadrillion British thermal units) (quadrillion British thermal units) Source: U.S. Energy Information Ad
Slide 12: UGI is Well-Positioned to Meet the Growing Energy Demand
UGI is Well-Positioned to Meet the Growing Energy Demand Natural Gas o Affordable and reliable o Fundamental to energy transition Compressed Natural Gas o Partnering with customers on their decarbonization journey Providing Safe, Renewables o Energy solutions for all stakeholders Reliable, Affordabl
Slide 13: Sustainable Value Creation
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance • Record Capital Investment • Continued Investment • Strategically Investing in • Strong Partnerships Investing in Advantaged for Supply Regulated Renewable • Focus on Innovation • Customer Growth and Utilities Energy Solut
Slide 14: FY2022-25 Financial Outlook
FY2022 - 25 Financial Outlook $3.75 - 4.25 $5.3 - 5.5B 10 - 11%+ FY2025E Adjusted Diluted EPS1 FY2022 - 25E Capital Expenditure2 FY2022 - 25E Rate base CAGR2 Committed to continued delivery of strong sustainable shareholder value 1. Because we are unable to predict certain potentially material items
Slide 15: Our Key Messages Today
Our Key Messages Today Disciplined capital deployment delivering reliable earnings growth while rebalancing our portfolio Reliable Earnings Growth Differentiated strategic assets facilitating renewable energy investments and growth Robust pipeline of investment opportunities insuring delivery
Slide 16: Sustainable Value Creation: Regulated Utilities
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance • Record Capital Investment • Strategically Investing in Investing in Advantaged for Supply Regulated Renewable • Customer Growth and Utilities Energy Solutions Affordability Sustainable Value Bob Beard EVP, Natural Gas, Gl
Slide 17: Regulated Utilities Business
Regulated Utilities Business Key Highlights • 2nd largest regulated gas utility in Pennsylvania • Largest regulated gas utility in West Virginia • $3+ billion rate base1 • Authorized gas ROE’s of 10.2% (DSIC) and 9.75% at UGI Utilities, Inc. and Mountaineer Gas Company, respectively • Record capital
Slide 18: Capital Investment Drives Rate Base Growth
Capital Investment Drives Rate Base Growth • Record capital spend to retire aged infrastructure and expand our systems drive reliable earnings growth and rebalancing of our portfolio • Minimal regulatory lag with ~90% of capital recoverable within 12 months Capital Investment (~$2.3B between FY2022
Slide 19: Pipeline Replacement & Betterment Opportunity
Pipeline Replacement & Betterment Opportunity • Commitment to replace cast iron by 2027 and bare steel by Pipeline Replacement & Betterment Opportunity 2041 at PA Utilities with ~1,100 miles remaining • Replaced 78 miles in FY2021 UGI Utilities, Inc. Mountaineer Gas • Constructive regulatory environ
Slide 20: Customer Growth & Affordability
Customer Growth & Affordability Total Number of Gas Utility Customers Sustained Growth ~886,000 250,000+ • Strong customer PA gas utility growth, historically adding an average of conversion prospects 15,000+ heating customers annually within 150 feet of PA over last 10 years ~575,000 gas utility ma
Slide 21: Sustainable Value Creation: Midstream Assets
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance Investing in Investing in Regulated Renewable Utilities Energy Solutions Sustainable Value Creation • Strategic Asset Buildout Continuous • Fee-based Contracts Leveraging & Improvement • Leveraging Expanding our Promoting I
Slide 22: Midstream & Marketing Business
Midstream & Marketing Business Key Highlights • Full suite of midstream services • Commodity Marketing • LNG Peaking • Pipeline Capacity • Storage • Gathering services • 42,000+ customer locations • Marketing gas on 46 gas utility systems and 20 electric utility systems in 14 states • Significant fe
Slide 23: Fee-Based Income Provides Earnings Stability
Fee-Based Income Provides Earnings Stability Midstream & Marketing offers services in the Appalachian basin and the eastern US with significant fee-based income. Total Margin1 ($Million) Midstream & Marketing Fee-Based Margins (2021) • Our Midstream & Marketing ~11% CAGR business provides stable ear
Slide 24: Strategic Midstream Capabilities
Strategic Midstream Capabilities Strong capabilities across the value chain • LNG Peaking • Total vaporization (~360,000 Dth/day) • Total liquefaction (~22,500 Dth/day) • Pipeline Capacity • Total capacity (~4,000,000 Dth/day) • Natural Gas Storage • 15,000,000 Dth The FY2021 acquisition of Pine Run
Slide 25: Commodity Marketing
Commodity Marketing 1 Strong experience in managing margins across economic cycles Hedging strategy • Aggregated fixed price sales are backed with fixed price 2 financial or physical purchases • No speculative trading 3 Cost advantage with Marcellus and Utica supply Customer diversity 4 • ~12,600 cu
Slide 26: Sustainable Value Creation: LPG Fueling Reliable Earnings Growth
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance Investing in Investing in Regulated Renewable Utilities Energy Solutions Sustainable Value Creation Continuous Leveraging & Improvement Expanding our Promoting Midstream Assets Resiliency LPG Fueling Investments & Reliable
Slide 27: Global LPG Business
Global LPG Business Key Highlights • Robust transportation and logistics infrastructure provides flexibility and supply reliability • #1 propane distributor in the US • A leading provider in multiple territories of the 17 countries served in Europe • Track record of margin management and disciplined
Slide 28: Leveraging Our Supply Infrastructure
Leveraging Our Supply Infrastructure Robust, flexible and reliable supply chain coverage to meet customer needs and support expansion into renewable energy solutions. AmeriGas: Best-in-class network of supply assets that provide the UGI International: Strategically located supply ability to quickly
Slide 29: LPG Businesses Provide Reliable Earnings Growth
LPG Businesses Provide Reliable Earnings Growth Areas of Focus Demonstrated Growth Effective margin management National Volume Increase (CAGR Accounts 7.4% FY2016 – 21) Growth Streamlined delivery channels Cylinder Volume Increase (CAGR Operational excellence Exchange 6.4% FY2016 – 21) Growth (US) C
Slide 30: Strong Margin Management Driving Reliable Earnings
Strong Margin Management Driving Reliable Earnings Our Global LPG business consistently maintains strong unit margins to provide reliable earnings growth through varying economic cycles. Unit Margins at AmeriGas 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Avg Retail Unit Margin AmeriGas Avg Co
Slide 31: Sustainable Value Creation: Continuous Improvement
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance Investing in Investing in Regulated Renewable Utilities Energy Solutions Sustainable Value Creation • Business Continuous Transformation Leveraging & Improvement • Continuously Driving Expanding our Promoting Midstream Asse
Slide 32: LPG Business Transformation
LPG Business Transformation FY2022 LPG Business Transformation Benefit1 AmeriGas $ and € in Million Identified incremental $10 Million in benefits; expected to realize $150 Million in permanent annual savings by the end $150 of FY2022 o Increasing projected spend by $20 Million o Total estimated cos
Slide 33: Driving Efficiency and Improving the Customer Experience
Driving Efficiency and Improving the Customer Experience Spearheaded by a strong business transformation program, our Global LPG business is poised for stronger margins, better customer service and increased weather resilience. Reliable Earnings Growth Process Efficiency Selling Efficiency Transport
Slide 34: Our Continuous Improvement Journey
Our Continuous Improvement Journey FY2020 – 21 FY2022 and Beyond On track to realize yearly savings of $15+ million Established Centers of from support functions Excellence transformation • Embarked on support functions transformation journey to • Economies of scale and scope streamline selected cor
Slide 35: Sustainable Value Creation: Renewable Energy Solutions
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance • Continued Investment Investing in Investing in • Strong Partnerships Regulated Renewable • Focus on Innovation Utilities Energy Solutions Sustainable Value Roger Perreault President & CEO Creation Continuous Leveraging &
Slide 36: Renewables: Our Growth Engine for the Future
Renewables: Our Growth Engine for the Future Investment Priorities • Investments in renewable energy solutions $1 - 1.25B • Leverage existing infrastructure and our core Projected investment competencies in renewable energy • Achieve carbon emission reduction goals solutions (FY2021 - 25) • Particip
Slide 37: Our Sustainability Journey
Our Sustainability Journey 2022 and 2015 - 19 2020 2021 beyond Entered renewable Completed strategic Expanded renewables Progressing renewables energy marketing transactions footprint capabilities • Wind and solar • GHI acquisition – • RNG partnerships • RNG Pilot Program • Bio-LPG RNG growth • Bio-
Slide 38: Establishing a Broad Renewables Footprint
Establishing a Broad Renewables Footprint RNG GHI (California) New Energy One (Idaho) Archaea (Pennsylvania) Leading RNG Marketer focused on Utility-scale RNG production from on- The largest1 interconnection with an catering to vehicle fleets side dairy waste feedstock RNG producer MBL Bioenergy (So
Slide 39: Case Study: Idaho RNG Program
Case Study: Idaho RNG Program • Extremely low Carbon Intensity Asset Overview Aligns with UGI score of negative(-) 200 (landfill Corp Strategy • Dairy Digester commissioned in 2012 near Twin Falls, Idaho gas ~ CI of +40 for comparison) • 6 concrete digesters • RNG production of ~250 million • Curren
Slide 40: Sustainable Value Creation: Financial Overview
Sustainable Value Creation Reliable Earnings Growth | Renewables | Rebalance Investing in Leveraging & Regulated Expanding our Utilities Midstream Assets Sustainable Value Creation Ted Jastrzebski CFO, UGI Corporation LPG Fueling Investing in Investments & Renewable Reliable Earnings Energy Solution
Slide 41: Our Core Financial Strengths
Our Core Financial Strengths Sustainable Earnings Growth Excellent Track Record of Cash Generation Balanced Growth and Strong Balance Sheet Position Income Investment Strong Dividend Growth 41
Slide 42: Creating Long-Term Value
Creating Long-Term Value $3.25 Adjusted Diluted $3.05 6 - 10% Long-term EPS Earnings Per Growth Target Share1,3($) $1.25 $1.61 $2.02 $2.01 $2.05 $2.29 $2.74 $2.28 $2.67 $2.96 4 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E 137 years Consecutively Paying Dividend Per Common Dividends Share3
Slide 43: Strong Cash Generation Capability
Strong Cash Generation Capability Cash flow generation remains 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. $1,481 $1,164 $1,085 $1,078 $1,102 $1,005 $970 $964 UGI Ca
Slide 44: FY2022 Guidance Recap
FY2022 Guidance Recap Strong history leading to the present A proven approach leading to the future • Strong core business • Pipeline replacement and $3.25 • Expanding geographic boundaries: betterment at UGI Utilities • Mountaineer acquisition • Utilities customer growth in PA and • Midstream growt
Slide 45: FY2025 Financial Outlook
FY2025 Financial Outlook Adjusted Diluted EPS Growth Drivers $4.25 $3.75 $2.96 $1B+ Renewables LPG Business Investment $2.3B Utilities Transformation Continued investment Savings Innovation Mountaineer Margin Integration Management Asset Weather Optimization Resilience Corporate Fu
Slide 46: FY2022-25 Cash Deployment Plan
FY2022 – 25 Cash Deployment Plan Sources of Cash ($ in Billion)1 Uses of Cash ($ in Billion)1 7 Cash Flow from Operations 6 ~$6.0 - 6.3B 5 ~$3.1 • • Consistent cash generation Optimal capital structure 4 $5.3 – 5.5B Capital Allocation Plan • Process improvement FY2022 – 25 • Optimal shareholder retu
Slide 47: FY2022-25 Capital Allocation Plan
FY2022 – 25 Capital Allocation Plan FY2022 – 25 Growth and Regulatory Capital Plan1 ($5.3 – 5.5B) 5 4 80%+ of growth and Renewables ~$3.1 27% 3 regulatory capital investments in Natural Gas 2 and Renewables ~$1.4 1 Midstream 0 ~$0.9 Regulated 13% Sales Business Maintenance Capex Regulatory Capital G
Slide 48: Financial Stability
Financial Stability Leverage1,2 Debt Maturities4 ($ Million) AmeriGas UGI International Midstream & Marketing UGI Utilities 4.7x UGI Corp 4.2x 4.2x 3.9x $ 2,500 3.3x 2,000 1,500 FY19 FY20 FY213 FY22E FY25E 1,000 • UGI’s philosophy is to hold debt at its business units and keep capacity at the holdin
Slide 49: Summary
Summary Reliable Earnings Growth | Renewables | Rebalance 6% - 10% 4% EPS Growth Target Dividend Growth Target 10 - 11%+ ~9% Sustainable Rate Base Growth Cash flow from Operations 2022 - 20251 Growth 2022 - 20251 Value Creation Differentiated Advancing Towards Strategic Assets ESG Leadership SAFETY
Slide 50: Q&A
Q&A Roger Perreault Ted Jastrzebski Robert Beard Tameka Morris President & CEO CFO EVP, Natural Gas, Global Director, Investor Relations Engineering & Construction and Procurement 50
Slide 51: Appendix
Appendix 51
Slide 52: Adjusted Net Income and Adjusted Diluted EPS Reconciliations
Adjusted Net Income and Adjusted Diluted EPS Reconciliations (Millions of dollars, except per share amounts) Year Ended September 30, 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corpora
Slide 53: UGI Corp Free Cash Flow
UGI Corp Free Cash Flow ($ in millions) Year Ended September 30, 2011 2012 2013 2014 2015 Net Cash Provided By Operating Activities $555 $708 $802 $1,005 $1,164 Less: Expenditures for property, plant, and equipment (361) (339) (486) (457) (491) Less: Dividends (114) (119) (126) (136) (154) Free Cash
Slide 54: Free Cash Flow for the Global LPG Businesses
Free Cash Flow for the Global LPG Businesses ($ in millions) Year Ended September 30, 2019 2020 2021 AmeriGas Cash flow from Operations $415 $374 $268 Less: Capital Expenditure (107) (135) (130) Free Cash Flow $308 $239 $138 UGI International Cash flow from Operations $283 $253 $643 Less: Capital Ex
Slide 55: Midstream & Marketing Total Margins
Midstream & Marketing Total Margins ($ in millions) Year Ended September 30, 2011 2021 Total Revenues $1,156 $1,406 Total Cost of Sales (987) (1,033) Margin - Midstream & Marketing $169 $373 Less: HVAC 32 - UGIES Margin $137 $373 55
Slide 56: UGI Corporation Adjusted EBITDA and Leverage
UGI Corporation Adjusted EBITDA and Leverage ($ in millions) Year Ended September 30, 2019 2020 2021 Net income including noncontrolling interests $308 $532 $1,467 Income taxes 93 135 522 Interest expense 258 322 310 Depreciation and amortization 448 484 502 EBITDA 1,107 1,473 2,801 Unrealized losse