Ugi Corporation · NYSE:UGI
Ugi — Investor Day (December 2016)
121 slides from Ugi's investor day presentation, Dec 8, 2016
Slide 1: Investor Day
Investor Day December 8, 2016
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: Management Team
Management Team UGI Corporation Business Unit Management John Walsh - President & CEO Robert Beard – President & CEO, UGI Utilities Kirk Oliver – CFO Daniel Platt – VP Finance & CFO, UGI Utilities Gary Garcia – Treasurer Bradley Hall – President, Energy Services Marie-Dominique Ortiz-Landazabal – VP
Slide 4: Investor Day – Agenda 2016
Investor Day – Agenda 2016 8: 30 John Walsh – Opening Remarks | 20 minutes 8:50 Robert Beard – UGI Utilities | 30 minutes 9:20 Bradley Hall – Energy Services | 30 minutes 9:50 Break | 10 minutes 10:00 3 Breakout Sessions (10:00 / 10:15 / 10:30) | 45 minutes 10:45 Jerry Sheridan – AmeriGas | 30 minut
Slide 5: 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 6: 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 flow since 1999 • Track record of disciplined capital deployment • Our portfolio of growth op
Slide 7: Strong EPS Growth
Strong EPS Growth $2.50 12.0% CAGR Above 6-10% Long-Term Target $2.00 Annual Earnings per Share $1.50 $1.00 $0.50 $0.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E UGI Corporation | 2016 Investor Day EPS for 1999 – 2009 represents GAAP EPS, adjuste
Slide 8: Consistent Dividend Growth
Consistent Dividend Growth 6.4% CAGR $1.00 Above 4% Long-Term Target $0.90 $0.80 Annualized Year-End Dividends per Share $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 UGI Corporation | 2016 Investor Day Divid
Slide 9: UGI Has Consistently Outperformed
UGI Has Consistently Outperformed Total Shareholder Return as of 9/30/16 3-Year Total Return 10-Year Total Return 20-Year Total Return 25% 15% 16% 20% 12% 10% 15% 8% 10% 5% 4% 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 M
Slide 10: Our Mission and Vision
Our Mission and Vision Mission UGI’s mission is to be the preeminent energy distribution company in our targeted markets – natural gas midstream and distribution in the Eastern U.S. and LPG distribution in the U.S. and Europe – by providing a superior range of energy services to our customers. Visio
Slide 11: Our Values
Our Values Safety Integrity Respect Reliability Sustainability Excellence UGI Corporation | 2016 Investor Day 11
Slide 12: Our Strategy: Be the preferred provider in all markets
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 Grow and Deliver Value UGI Corporation | 2016 Investor Day 12
Slide 13: Our Strategy: Capitalize on synergies and leverage strengths
Our Strategy 2 Capitalize on synergies and leverage strengths • Leverage successful programs and services across the corporation • Expand further into midstream • Seek new international markets Grow and Deliver Value UGI Corporation | 2016 Investor Day 13
Slide 14: Our Strategy: Grow earnings through acquisitions, capital projects, organic growth
Our Strategy 3 Grow earnings through acquisitions, capital projects, and organic growth • Organic growth sets the foundation • Invest in adjacent geographies, leveraging our experience and products • Manage risk when investing in new area or product • Focus on cash flow, limit commodity exposure and
Slide 15: Corporate Objectives Guide Business Unit Strategies
Corporate Objectives Guide Business Unit Strategies Strategic Focus • Strong cash flow and low commodity exposure define our businesses • Execute major investments to deliver long-term growth • Focus on new segments that leverage our expertise • Push boundaries prudently Goals underpinned by clear d
Slide 16: 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 17: Free Cash Flow Growth
Free Cash Flow Growth $ 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 18: 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 19: How Are We Positioned Today?
How Are We Positioned Today? • We are leaders in a range of attractive energy distribution businesses • Natural gas LDCs • Natural gas midstream & marketing; and • LPG distribution • Deep expertise in businesses that share common attributes • Investing in our core businesses and pushing our strategi
Slide 20: Energy to do more
OG Energy to do more®
Slide 21: 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 Electric customers shale reserves new customers in the last 5 years Pennsylvania’s Most contemporary Constructive distribution system nd 2 Largest regulatory in Pen
Slide 22: UGI Utilities Service Area on Top of Marcellus Shale
UGI Utilities Service Area on Top of Marcellus Shale Natural Gas Electric Marcellus Shale Area UGI Corporation: UGI Utilities | 2016 Investor Day 22
Slide 23: 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 24: UGI Utilities 2016 Accomplishments
UGI Utilities 2016 Accomplishments • First quartile emergency response rate • Added ~ 16,000 new customers • Successfully executed over $260 million in capital expenditures • Replaced 66 miles of aged gas main • Completed the first base rate case for UGI Gas in 21 years • Adding $27 million in new m
Slide 25: 2016 UGI Gas Rate Case – Highlights
UGI Utilities 2016 UGI Gas Rate Case – Highlights • Rate case for UGI Gas added $27 million of additional margin beginning in FY17 • Recovery of FY 2017 capital expenditures including technology investments • Eligible for a Distribution System Improvement Charge recovery • Energy Efficiency and Cons
Slide 26: UGI Utilities Strategic Advantages
UGI Utilities Strategic Advantages • Geographic proximity to the Marcellus Shale production area • Provides growth opportunities • Reduces gas cost resulting in lower customer bills • Average 2017 natural gas customer bill 47% below 2008 • Constructive regulatory and legislative environment • Rate b
Slide 27: 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 Natural Gas Electric • Fourth schedul
Slide 28: 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 1,200,000 500,000 450,000 1,000,000 400,000 800,000 350,000 2015: 300,000 439,248 MMCF MMCF MMCF 600,000 250,000 1998-2006 0.3% CAGR 200,000 Residential: -0
Slide 29: Weather Sensitivity
UGI Utilities Weather Sensitivity • Earnings move within a EPS Trend with Weather $0.80 100% relatively narrow band $0.70 80% • The maximum impact of $0.60 60% 40% % Colder (Warmer) weather is not expected to $0.50 EPS 20% exceed +/- 20% of EPS $0.40 0% assuming normal weather $0.30 -20% -40% (based
Slide 30: Increasing Capital Investment
UGI Utilities Increasing Capital Investment Capital Spend ($MM) $400 $350 $300 $250 $200 $150 $100 $50 $0 2012 2013 2014 2015 2016 2017B Replacement and Betterment Growth Other Electric IT UGI Corporation: UGI Utilities | 2016 Investor Day 30
Slide 31: Investment Creating Value
UGI Utilities Investment Creating Value • Reducing regulatory lag: Rate Base ($ 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 32: Project UNITE
UGI Utilities Project UNITE • Up to $90 million project to replace mainframe customer information system (CIS) • System expected to “go-live” in late FY17 • Currently on-time and on-budget • Benefits expected to address comments from customer service surveys • Creation of a customer portal available
Slide 33: 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: UGI Utilities | 2016
Slide 34: Positioned for Continued Growth
UGI Utilities Positioned for Continued Growth • Since 2008 UGI converted: • ~68,000 households and businesses • Over 70 large commercial & industrial facilities • Growth Opportunities • ~ 365,000 conversion prospects remain near gas mains • GET Gas program enables growth in underserved areas • ~$70
Slide 35: Customer Service
UGI Utilities Customer Service UGI was ranked first or second in customer satisfaction in the East among large utilities in the J.D. Power Gas Utility Residential Customer Satisfaction StudySM in each of the last four years. * Disclaimer: These rankings are from the proprietary J.D. Power 2013, 2014
Slide 36: UGI Utilities Summary
UGI Utilities Summary • Strong profitability growth • Continued focus on operational excellence • Proximity to Marcellus shale • Low gas cost for customers • Attracting commercial investment • Continued growth in residential and commercial customers • Constructive regulatory environment • Timely rec
Slide 37: Energy Services
@ Energy Services
Slide 38: 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 39: 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 40: FY2016 — Pivotal Year
FY2016 — Pivotal Year UGI Energy Services • Solid earnings despite warm winter weather • Strong gas demand and northeastern infrastructure delays continue to make LNG peaking a growth opportunity • Significant progress on PA infrastructure and LNG build-outs • Diversity of capital projects • Success
Slide 41: Commodity Marketing
Commodity Marketing UGI Energy Services • Supply more than 113 BCF to 40,000 gas customer locations throughout the Eastern U.S. • Target small & medium size businesses • Focus on customer additions, long-term contracts and customer retention • Steady growth in volume and geography • No speculative t
Slide 42: Commodity Marketing Margin Growth
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 43: Midstream Assets Overview
Midstream Assets Overview UGI Energy Services UGI Corporation: UGI Energy Services | 2016 Investor Day 43
Slide 44: Midstream — LNG Peaking
Midstream — LNG Peaking UGI Energy Services System Highlights • LNG/Propane air (peaking assets): • 1.35 BCF storage • Fee-based revenue • LNG truck loading facility • Supporting peaking demand for end-users: • LDC peak load • LNG trucking (off-grid end-users) • New facilities in various stages of c
Slide 45: LNG Expansion
UGI Energy Services LNG Expansion Location: Mehoopany, PA (Manning) Location: Steelton, PA Purpose: Liquefaction plant Purpose: Vaporization and storage facility Scope: New 10,000 Dth/day nitrogen cycle LNG Scope: 65,000 Dth/day of LNG vaporization plant with 0.5 million gallons of LNG storage capac
Slide 46: Midstream — Sunbury
UGI Energy Services Midstream — Sunbury System Highlights Sunbury Pipeline (Red) • 35 Mile, 20” intrastate pipeline moving 200,000 dth/d of gas to: • Hummel Station • UGI Utilities • Capex: $160 MM • Current progress: • FERC application filed 7/2015 • Received FERC certificate 4/2016 • Expected in-s
Slide 47: Midstream – PennEast Pipeline
UGI Energy Services Midstream – PennEast Pipeline System Highlights PennEast Pipeline (Red) • Connecting Marcellus gas to southeastern PA and western NJ markets • 118 Mile, 36” diameter, $1.2 bn interstate pipeline • Partnership: UGI (20% equity/project manager) and Spectra, AGL Resources, NJ Resour
Slide 48: Power Generation
Power Generation UGI Energy Services Electricity • Hunlock – 130 MWs; natural gas-fired • Conemaugh – 102 MWs; coal-fired • ~6% share of 1,700 megawatt facility Renewable • 24.5 MWs • 17 locations UGI Corporation: UGI Energy Services | 2016 Investor Day 48
Slide 49: Sustainable Business Growth
Sustainable Business Growth UGI Energy Services Increasing midstream margin drives overall growth 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 50: Cumulative Capital Investment
Cumulative Capital Investment UGI Energy Services $1,200,000 $1,000,000 Capital Expenditures ($ in 000‘s) $800,000 $600,000 $400,000 $200,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 Midstream Power Generation Other UGI Corporation: UGI Energy Services | 2016 Investor Day 50
Slide 51: Increasing Fee-based Income
Increasing Fee-based Income UGI Energy Services 2013 Margin Composition Anticipated 2020 Margin Composition Historical Fee-Based Margin 39% Anticipated Fee-Based Margin 52% 7% 19% 20% 35% 46% 73% Commodity Margin Midstream Margin Generation Margin UGI Corporation: UGI Energy Services | 2016 Investor
Slide 52: Benefits of Pipeline and Peaking Contracts
Benefits of Pipeline and Peaking Contracts UGI Energy Services Attributes: • Typically long-term contracts • Contain “Take or Pay” provision • Highly reliable counterparties • Decreases vulnerability to the volatility of commodity market • Generates more certain, predictable and long-term cash flow
Slide 53: Energy Services Strategy
Strategy UGI Energy Services Position UGI as the preeminent integrated natural gas midstream and marketing business within our geographic footprint • Capitalize on the “infrastructure gap” between the Marcellus supply region and Mid-Atlantic markets • Use our distinctive geographic advantage, deep m
Slide 54: 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: UGI Energy Services | 201
Slide 55: Diversified Portfolio – Natural Synergy
Diversified Portfolio – Natural Synergy UGI Energy Services Midstream Supply Commodity (Wholesale/Asset Marketing Management) UGI Corporation: UGI Energy Services | 2016 Investor Day 55
Slide 56: Energy Services Conclusion
Conclusion UGI Energy Services • Fast growing company expanding from its commodity marketing base • Broad pipeline of capital projects • Growing fee-based margin to over 50% by 2020 • Strong track record of project execution • Growth initiatives support an 8-10% annual net income growth rate • Uniqu
Slide 57: Slide 57
Slide 58: 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: AmeriGas | 2016 Investor Day 1 Based on volume of propane gallons di
Slide 59: AmeriGas Business Overview
Business Overview AmeriGas 38% 36% 17% 9% Residential Commercial / Motor Agriculture & Heating & Cooking Industrial Fuel Transport Represents approximate percentages UGI Corporation: AmeriGas | 2016 Investor Day 59
Slide 60: 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 61: 2016 Key Accomplishments
2016 Key Accomplishments AmeriGas • Added 39 accounts and ~2,000 locations in National Accounts Program • Added new ACE business representing ~1 million cylinders • Completed 6 acquisitions adding ~10 million gallons • Continued deployment of new technologies • Increased unit margins by 3.5% • Incre
Slide 62: Unmatched Nationwide Footprint
Unmatched Nationwide Footprint AmeriGas 15% Market Share Storage Field Service Districts Terminals Center UGI Corporation: AmeriGas | 2016 Investor Day 62
Slide 63: Significant Transportation and Logistics Network
Significant Transportation and Logistics Network AmeriGas Most flexible, reliable 12 supply chain coverage Transflow 22 in the retail propane Units Terminals industry 920 PTI Trailers Ability to quickly focus Over 250 flexible truck, rail and Propane trans-loading assets Suppliers(a) 3,400 ~ to area
Slide 64: 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 65: 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: AmeriGas | 2016 Invest
Slide 66: National Accounts Program
National Accounts Program AmeriGas • Over 200MM gallons • Unparalled footprint Serving over (~1,900 distribution locations, 50 states) • Best in class “back office” 40,000 Customer Locations • Largest sales force in the industry • Geographic diversity • Generally less weather sensitive ~2,000 Custom
Slide 67: Cylinder Exchange Program
Cylinder Exchange Program AmeriGas • Counter seasonal due to summer Over 50,000 grilling demand distribution points • Product of convenience • Platform grows as U.S. retailers expand 33 Cylinder • Highly targeted marketing refurbishment programs centers nationwide UGI Corporation: AmeriGas | 2016 In
Slide 68: Growth Through Acquisitions
Growth Through Acquisitions AmeriGas • Hallmark of the Company’s growth history ~ 200 acquisitions since • Highly fragmented market, over 3,500 acquisition opportunities the early 1980s • Dedicated corporate development team with relationship building as a core competency 1987 • Unmatched operationa
Slide 69: 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 Company and customers benefit from low prices Less price-induced conserva
Slide 70: Key Financial Objectives
Key Financial Objectives AmeriGas • 3% - 4% growth in EBITDA1 over the long-term • Distribution growth consistent with EBITDA growth and targeting 1.1x to 1.2x distribution coverage • Maintain or enhance credit metrics targeting leverage ratios in the range of 3.5x – 4.0x • Use access to capital mar
Slide 71: Adjusted EBITDA Growth
Adjusted EBITDA Growth AmeriGas Adjusted EBITDA Per Unit 3.6% CAGR at Midpoint of FY 17 Guidance $8 $7 $6 $5 $4 $3 $2 $1 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Adjusted EBITDA per unit is a non-GAAP measure. See appendix for reconciliation. Because we are unable to predict certain
Slide 72: 12th Consecutive Year of Increasing Distributions
12th 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 UGI Corporation: AmeriGas | 2016 Investor Day 72
Slide 73: 2016 Refinancing Strengthened Balance Sheet
2016 Refinancing Strengthened Balance Sheet AmeriGas Debt Maturity Extended and Coverage Improved BEFORE: Avg. maturity: 4.7 years AFTER: Avg. maturity: 7.7 years Avg. interest rate: 6.73% Avg. interest rate: 6.28% 1,000,000 1,000,000 900,000 900,000 800,000 800,000 700,000 700,000 600,000 600,000 5
Slide 74: Outperformance Over the Long-Term
Outperformance Over the Long-Term AmeriGas 300 CAGR Total Unitholder Return as of 9/30 1 Year 5 Year 10 Year 250 AmeriGas 19.9% 8.9% 12.2% 200 Alerian 12.7% 5.0% 8.9% S&P 500 15.4% 16.3% 7.2% Total Return % 150 100 50 0 -50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AmeriGas S&P 500 Aler
Slide 75: AmeriGas Conclusion
Conclusion AmeriGas • Superior financial performance • Unmatched scale and geographic coverage • Significant growth opportunities • Tested formula for successful acquisitions in fragmented industry • Demonstrated ability to manage margins • Leveraging technology to increase efficiency and customer s
Slide 76: UGI International
UGI INTERNATIONAL AFLAGA
Slide 77: 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: UGI International | 2016 Investor Day 77
Slide 78: UGI International Brands
UGI International UGI International Brands UGI Corporation: UGI International | 2016 Investor Day 78
Slide 79: 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 80: 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 81: 2016 Key Accomplishments
UGI International 2016 Key Accomplishments • Finagaz integration is on track • New UGI International • Integrated cylinder business, IT management structure systems and headquarters • Appointed UGI International CEO • Bulk integration in process and CFO • Acquired over 18.5 million gallons • Realign
Slide 82: 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: UGI International | 2016 Investor Day 82
Slide 83: Step Change in Earnings
UGI International Step Change in Earnings $250 19% CAGR $206.6 $200 2011 – 2016 Operating Income ($ millions) $150 $100 $86.1 $50 $- 2011 2012 2013 2014 2015 2016 UGI Corporation: UGI International | 2016 Investor Day 83
Slide 84: 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: UGI International | 2016 Investor Day Unit margin is a non-GAAP meas
Slide 85: Competitive Advantages
UGI International Competitive Advantages • Strong market position in Europe • Largest LPG distributor in Austria, Denmark, France and Hungary • Significant participant in the Benelux , Czech Republic, Norway, Poland, Slovakia, Sweden & UK • LPG is a core business to UGI • Strong management focus • B
Slide 86: Exceptional LPG Network in France
UGI International Exceptional LPG Network in France Arleux Huppy Valenciennes • Large customer base: Norgal Ressons Le Hoc Saint Marcel Hebecrevon Hauconcourt • ~360,000 bulk customers Le Merlereault Ris Orangis Herrlisheim St Georges Buttavent • Over 5 million cylinder custome
Slide 87: Strategically Located Supply Assets
UGI International Strategically Located Supply Assets Terminals Depots / Railheads / Storage UGI Corporation: UGI International | 2016 Investor Day 87
Slide 88: Strategies: UGI International West
UGI International Strategies: UGI International West • Integration of two significant businesses in France • Focus on: • Productivity gains • Superior customer service • New segment opportunities for growth • Natural gas marketing • Potential for expansion into other countries UGI Corporation: UGI I
Slide 89: Strategies: UGI International North
UGI International Strategies: UGI International North • UK, Benelux & Nordics • Mature energy markets and industrial applications • Focus on: • Superior customer service • Productivity gains • Increasing market position • New opportunities for growth • Natural gas marketing • Cylinder business UGI C
Slide 90: Strategies: UGI International East
UGI International Strategies: UGI International East • Poland, Austria, Switzerland, Czech Republic, Hungary, Romania & Slovakia • Eastern countries still have organic growth • Markets more mature in Austria and Switzerland • Focus on: • Organic growth of bulk and cylinder LPG • Poised for acquisiti
Slide 91: Growth Opportunities in Poland
UGI International Growth Opportunities in Poland Gdansk • • Market: • Szczecin • Third largest LPG market in Europe Poland • Acquired Shell Gas in FY12 and BP Gas in FY13 Poznan• • Warsaw • Retail demand: ~290 million gallons • Wroclaw • Significant Growth Opportunities: • Krakow • Highest number of
Slide 92: 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 • Opportunities in U.K., Germany and Poland • LNG Distribution • Assessing LNG distributio
Slide 93: Summary & Conclusion
UGI International Summary & Conclusion • Core international segment with strong market share in 16 countries • Strong operational cash flow with minimal required capital expenditures • Track record for acquisition integration and margin management • Clear strategies for growth UGI Corporation: UGI I
Slide 94: Financial Outlook
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Slide 95: 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 96: EPS Growth Exceeding Long-Term Target
EPS Growth Exceeding Long-Term Target $2.25 17-Year CAGR ~12% 5-Year CAGR ~8% $2.05 $2.00 $1.75 Earnings Per Share (EPS) $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $0.00 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Utilities Energy Services International AmeriGa
Slide 97: FY17 Adjusted EPS Guidance of $2.30 – $2.45
FY 17 Adjusted EPS Guidance of $2.30 – $2.45 $2.50 Variance Attributable To: $2.45 • Return to normal weather $2.40 and volatility $2.30 • Full year of FY16 $2.30 acquisitions $2.20 • Continued integration of Finagaz $2.10 • Utility and marketing customer growth • AmeriGas growth in ACE $2.00 $1.90
Slide 98: Business Unit Growth Drives UGI Performance
Business Unit Growth Drives UGI Performance $3.50 $2.85 - $3.151 $3.00 $2.50 $2.30 to $2.45 Adjusted EPS $2.00 $1.50 $1.00 $0.50 $0.00 FY17 Guidance FY20 Estimate 1Estimated using long-term EPS guidance of 6-10% from the midpoint of 2017 guidance. Adjusted EPS is a non-GAAP measure. Because we are u
Slide 99: AmeriGas Significant Contributor to UGI Growth
AmeriGas Significant Contributor to UGI Growth GP Interest in OLP OLP Net Income x 1.01% + GP Interest in MLP (MLP Net Income – IDRs) x 26% + GP IDR Income IDRs (GP Receipt of IDRs in excess of 1%) - Taxes = Net Income Attributable to UGI 3-4% EBITDA Growth + IDRs (2-3% Dividend Growth) = 7-10% UGI
Slide 100: Reducing Weather Dependence
Reducing Weather Dependence Midstream & Marketing Utility • Anticipating over 50% fee-based margin by 2020 • Increasing fixed customer charges in base rate • Increased peak day requirements driving cases opportunities for fixed-fee peaking services • Recovery through reconcilable riders • Pipeline c
Slide 101: Free Cash Flow Enables Strong Dividend Growth
Free Cash Flow Enables Strong Dividend Growth ($ in millions) $700 $600 Significantly Significantly warmer $500 warmer than normal than normal winter $400 winter $300 $200 $100 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Free Cash Flow Dividends & Dis
Slide 102: Historical Dividend Growth Exceeds 4%
Historical Dividend Growth Exceeds 4% $1.00 15% $0.90 Increase $0.80 25% $0.70 Increase Annualized Year-end Dividend per Share $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 UGI Corporation | 2016 Investor Day 102
Slide 103: Improved ROIC in Period of Record Capital Deployment
Improved ROIC in Period of Record Capital Deployment Exceeds Cost of Capital 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2012 2013 2014 2015 2016 2017 Bud UGI Corporation ROIC UGI Corporation WACC UGI Corporation | 2016 Investor Day See appendix for definitions of ROIC and WACC. 103
Slide 104: Balance Sheet Strength Provides Foundation for Growth
Balance Sheet Strength Provides Foundation for Growth • Focus on financial integrity • Disciplined adherence to financial hurdles • Conservative financing • Each business unit self-funds growth • No debt at UGI Corporation • Over $1.3B of available liquidity • Minimal near term financing needs • UGI
Slide 105: Limited Near Term Financing Needs
Limited Near Term Financing Needs Long-Term Debt Maturities by Year $700 (excluding AmeriGas) $600 $500 $400 $300 $200 $100 $- 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2033-2044 Utilities LTD International LTD Revolving Credit Facility Maturities: • UGI Utilities $300M – 2020 • Energy Servi
Slide 106: 2017 Outlook
2017 Outlook • Adjusted Earnings Per Share of $2.30 - $2.45 • Organic growth • Impact of strategic investments • Return to normal weather and volatility • Impact of currency mitigated by 3-year hedging program • Line-of-sight to Key growth opportunities: • Sunbury Pipeline in service and progression
Slide 107: Conclusion and Q&A
Conclusion and Q&A LROSBS CV |
Slide 108: Summary
Summary • Exceptional track record for delivering balanced growth & income for our shareholders • Strong diversified cash generation • Balance sheet very strong with substantial capacity to fund growth investments • Disciplined capital stewardship • Portfolio of growth opportunities has never been s
Slide 109: Appendix
APPENDIX
Slide 110: Definitions
Definitions Free Cash Flow – Cash provided by operations less capital expenditures Return on Invested Capital (ROIC) – Trailing twelve months operating income reduced by taxes using the effective tax rate (NOPAT) divided by a twelve-month average of total capitalization (total equity plus total debt
Slide 111: AmeriGas Leverage Ratios
Leverage Ratios AmeriGas Debt / Adjusted EBITDA Adjusted EBITDA / Interest 5.0x 5.0x 4.0x 4.0x 3.0x 3.0x 2.0x 2.0x 1.0x 1.0x 0.0x 0.0x FY12 FY13 FY14 FY15 FY16 FY17 FY12 FY13 FY14 FY15 FY16 FY17 2017 metrics based on midpoint of guidance. Adjusted EBITDA is a non-GAAP measure. See appendix for recon
Slide 112: Commonality with AmeriGas
UGI International Commonality with AmeriGas Customer Segments AmeriGas International Bulk delivery business (250 – 1,000 gallons) X X Cylinder exchange X X Motor fuel – forklifts X X Motor fuel – over the road autogas X Competitive Advantages AmeriGas International Scale X X “Hub and spoke” truck-ba
Slide 113: 2016 AmeriGas Adjusted Net Income Attributable to UGI
2016 AmeriGas Adjusted Net Income Attributable to UGI GP Interest in OLP $350.6MM x 1.01% = $3.5MM (a) OLP Net Income x 1.01% (a) Net Income attributable to non-controlling interest of $4.2M less 1.01% of $66.1M gains from commodity instruments not associated with current + period transactions. GP I
Slide 114: 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 115: 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 116: 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 117: 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 118: 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 119: 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 120: 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 121: 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