Ugi Corporation · NYSE:UGI
Ugi — Debt Investor Presentation (October 2018)
30 slides from Ugi's debt investor presentation, Oct 15, 2018
Slide 1: This presentation does not constitute an offer to sell or a solicitation of an
This presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. This presentation contains certain forward-looking statements that managemen
Slide 2: II. UGI International Overview
II. UGI International Overview Private and Confidential
Slide 3: UGI International Snapshot
• Operations in 17 countries under 8 brands throughout Europe Leading market position in France, Denmark, Austria, Hungary, Czech Republic, Slovakia, and Benelux Strong brand recognition - Market Leader • • UGI International’s customer base primarily consists of residential, commercial, industrial,
Slide 4: LPG Distribution and Energy Marketing
LPG Distribution1 Energy Marketing Bulk (67%) Cylinders (19%) Wholesale (11%) Autogas (3%) Natural Gas Electricity • Depending on customers’ volume, demand and the timing of deliveries, UGI International’s offices across Europe can arrange and accommodate larger-scale wholesale LPG deliveries • Powe
Slide 5: History of UGI International: Building a European Leader
2017 2017 energy marketing 2015 2011 2017 Italy 2010 2011 Belgium Finland Luxembourg Norway Sweden Netherlands United Kingdom 2001 (20%) 2004 (100%) 2010 Denmark 2006 Hungary Poland Romania 1999 2004 Switzerland France 2001 Austria Czech Republic Slovakia 1999 11 1999: ~44mm retail gallons 2017: ~82
Slide 6: A Balanced Portfolio: LPG Distribution in Europe vs. U.S.
• Customers use LPG for space heating, cooking, water heating, generation, manufacturing and aerosol propellant motor fuel, leisure activities, crop drying, irrigation, construction, power LPG Distribution in Europe vs. U.S LPG Sales Volume Commonalities Differences 3% • Serve bulk and cylinder busi
Slide 7: Bulk Products and Customers
Products / Customers Residential: underground & above-ground tanks, providing energy for: Bulk Footprint • • • Single family homes Apartment buildings and town houses Residential developments Non-residential: underground & above-ground tanks, providing energy for: • • • • Construction & industrial b
Slide 8: Cylinder Products and Customers
Products / Customers LPG sold in different sized steel and composite cylinders, which provide a safe, portable and eco-friendly source of energy. • Residential: Principal end-users of cylinders • Non-residential: Cylinder Footprint • • • • • • Construction & industrial businesses Hotels Restaurants
Slide 9: Brands: Finagaz, Antargaz, Kosan Gas
• For more than 40 years, Finagaz has been servicing its customers’ everyday energy needs Business was acquired in 2015 and integrated in UGI’s Antargaz business in France Sells LPG in cylinders, and in small, medium and large bulk tanks to residential, commercial, agricultural and autogas customer
Slide 10: Supply, Storage and Logistics
Russia is maximizing • Europe is a net propane importer Almost half of the propane comes from the North Sea Region close to Norway and the UK Waterborne imports are rising, putting pressure on the port infrastructure UGI stores LPG at various storage facilities and terminals located across Europe. U
Slide 11: Diverse Supplier Base
• Diverse Supplier Base • • UGI holds supply contracts with more than 50 different suppliers. UGI has contracts with major oil and gas trading companies (including Total Raffinage France, SHV, GUNVOR and SIBUR and refineries (including Stanlow and Mosmorran) to meet its LPG supply requirements throu
Slide 12: M&A in Mature LPG Markets: Clear Visibility into Growth Opportunities
LPG Consumption for Energy Purposes1 Nordics 800 K tons Germany 1.7 MM tons Italy 3.2 MM tons Spain 1.5 MM tons Expand within and outside UGI’s footprint • Seek to increase/optimize market share in existing footprint • • Pursue opportunities to capture additional synergies and cost efficiencies Targ
Slide 13: Opportunity Beyond LPG
Retail Energy Marketing Grew business from ground up beginning in 2012 Leveraging sales force and best practices with goal to double the existing business Acquired Dutch energy marketer DVEP in 2017 UGI International is leveraging the market expertise of UGI Corporation’s Midstream and Marketing bus
Slide 14: IV. Credit Highlights
IV. Credit Highlights Private and Confidential
Slide 15: Key Credit Highlights
1 2 3 4 5 6 7 25 Experienced Management Team Strong Parent Support Mechanisms for Stable Margins History of Solid Growth and Unit Margin Stability Serving a Diverse Customer Base Mixed Product Portfolio with Recognized Brands Market Leading Positions KEY CREDIT HIGHLIGHTS
Slide 16: Market Leading Position
Norway Market size: 183KT Sweden Market size: 346KT Denmark Market size: 54KT Benelux Market size: 515KT Czech Republic Market size: 133KT UK Market size: 1073KT Slovakia Market size: 55KT France Market size: 1769 KT West North East and Central Austria Hungary Market size: 174 KT Market size: 80 KT
Slide 17: Mixed Product Portfolio with Recognized Brands
LPG for Consumers Bulk Gas Cylinder Gas Autogas LPG for Business Bulk Gas Cylinder Gas Autogas Wholesale 27 2. MIXED PRODUCT PORTFOLIO WITH RECOGNIZED BRANDS
Slide 18: Serving a Diverse Customer Base
Agriculture Large market off-season Autogas Market demand is government policy dependent Aerosol Growth expected in UK and across Europe Commercial & Industrial Stable Market which contributes more of the volume Energy Marketing New growth opportunities in the natural gas and electric sectors Reside
Slide 19: Mechanisms for Stable Margins
Propane Costs North and West European propane prices are associated with Hedging for LPG & F/X UGI International has a propane and commodities hedging strategy to protect margins for fixed price customers UGI International has both a EUR/USD and GBP/USD hedging • • CIF ARA prices. ARA Antwerp – a po
Slide 20: Strong Parent Support: UGI Corporation Business Overview
Business Overview UGI Corporation is a holding company that, through subsidiaries and affiliates, distributes, stores, transports and markets energy products and related services, in the United States and Internationally. It is comprised of AmeriGas Propane (Ba2/BB), UGI International, Midstream & M
Slide 21: V. Financial Overview
V. Financial Overview Private and Confidential
Slide 22: Summary Financial Performance
Revenue Gross Profit & Margin ($ in millions) ($ in millions) $1,132.9 $2,593.8 2015 2016 Gross Profit 2017 Gross Margin LTM June 2018 2015 2016 2017 LTM June 2018 Free Cash Flow1 & Conversion2 Adjusted EBITDA & Margin ($ in millions) $271.7 $256.3 $346.6 $338.4 2015 2016 Free Cash Flow 2017 FCF Con
Slide 23: Financial Performance Commentary
• Revenue increased from $1,788.7 million in Fiscal Year 2015 to $2,593.8 million in LTM June 30, 2018, a CAGR of 14.5%, driven by: LPG volumes have increased significantly in recent years, primarily driven by acquisitions, most recently UniverGas in Italy - COGS % of revenue 1,135.3 63.5% 866.1 46.
Slide 24: Conclusion
MARKET LEADING POSITIONS HIGHLY EXPERIENCED & COMMITTED MANAGEMENT TEAM MIXED PRODUCT PORTFOLIO WITH RECOGNIZED BRANDS STABLE MARGINS AND STRONG FCF GENERATION SERVING A DIVERSE CUSTOMER BASE TRACK RECORD OF INTEGRATING ACQUISITIONS FAVORABLE MARKET DYNAMICS 36 CONCLUSION
Slide 25: VI. Appendix
VI. Appendix Private and Confidential
Slide 26: Historical Income Statements
Revenue 1,789 1,862 1,878 1,511 2,227 2,594 - COGS 1,135 866 916 756 1,301 1,461 Gross Profit - Other Opex - D&A 653 500 86 996 647 112 961 637 121 755 474 87 927 554 107 1,133 718 141 -/+ Other (2) 7 (2) (2) - (1) Operating Income 69 230 205 196 266 275 Other non-operating (expense) income (includi
Slide 27: Historical Balance Sheets
Cas h and Equivalents Res tricted Cas h Accounts Receivable Inventories Derivatives Ins trum ents Prepaid Expens es and Other Current As s ets 358 - 233 67 16 11 361 1 300 84 34 38 246 1 399 81 58 29 Total Current Assets Net PP&E Goodwill Other Long-Term As s ets 685 1,101 817 224 818 1,128 926 286
Slide 28: Historical Cash Flows
Net Income D&A Deferred Tax Benefit Change in Working Capital Other Operating Cas h Flows 22 86 (19) 38 51 129 112 (6) 30 1 152 121 (36) (51) 17 146 87 (30) (53) 34 182 107 (7) (65) (48) 189 141 (13) (63) (66) Cash Flow From Operations Capex Acquis itions , net Other Inves ting Activities 179 (88) (
Slide 29: Adj. EBITDA Reconciliation
Net Income Attributable to UGI International + Net income attributable to noncontrolling interests + Income Tax + Interest Expense 22 - 10 35 129 - 77 24 152 - 9 21 146 - 19 15 185 (2) 77 16 191 (2) 67 22 + Depreciation & Amortization 86 112 121 87 107 141 EBITDA +/-on commodity derivative instrumen
Slide 30: Adj. EBITDA Reconciliation
ApJ. EBITDA RECONCILIATION ‘Adj. EBITDA Reconciliatior ‘9M June 9MJune LTM June 2015A 2016A 2017A_30, 2017 30, 201830, 2018 ‘Net Income Attributable to UGI International m2 129 «4162 «(14818519 + Net income attributable to noncontroling interests - fe - 2) 2) + Income Tax 0 7 9 19 7 o7 + Interest Ex