UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 3, 2014

UGI Corporation
(Exact name of registrant as specified in its charter)

 

			
 	 	 	
Pennsylvania	1-11071	23-2668356	
(State or other jurisdiction
of incorporation)	(Commission
File Number)	(I.R.S. Employer
Identification No.)	
 	 	 	
460 No. Gulph Road, King of Prussia, Pennsylvania	 	19406	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: 610 337-7000
Not Applicable
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

		
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
Item 2.02 Results of Operations and Financial Condition.
On February 3, 2014 , UGI Corporation (the “Company”) issued a press release announcing financial results for the Company for the fiscal quarter ended December 31, 2013 . A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On February 4, 2014 , the Company held a live Internet Audio Webcast of its conference call to discuss its financial results for the fiscal quarter ended December 31, 2013 .
Presentation materials containing certain historical and forward-looking information relating to the Company (the “Presentation Materials”) have been made available on the Company’s website. A copy of the Presentation Materials is furnished as Exhibit 99.2 to this report and is incorporated herein by reference in this Item 7.01. All information in Exhibit 99.2 is presented as of the particular dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided.
In accordance with General Instruction B.2 of Form 8-K, the information in this report, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and will not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in that filing.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith:

	
		
99.1	Press Release of UGI Corporation dated February 3, 2014.	
99.2	Presentation of UGI Corporation dated February 4, 2014.	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	

 	UGI Corporation	
 	 	 	
February 4, 2014	By:	/s/ Kirk R. Oliver	
 	Name:	Kirk R. Oliver	
 	Title:	Chief Financial Officer	

EXHIBIT INDEX
The Following Exhibits Are Furnished:

	

EXHIBIT
NO.	DESCRIPTION	
99.1	Press Release of UGI Corporation dated February 3, 2014.	
99.2	Presentation of UGI Corporation dated February 4, 2014.	

Exhibit 99.1

	

Contact:	  	610-337-1000	  	For Immediate Release:	
 	  	Simon Bowman, ext. 3645	  	February 3, 2014	
 	  	Shelly Oates, ext. 3202	  	 	
 	  	 	  	 	
UGI Reports Strong First Quarter Earnings, Adjusted Net Income up 22%

VALLEY FORGE, Pa., February 3 - UGI Corporation (NYSE: UGI) today reported net income attributable to UGI, in accordance with GAAP, of $122.0 million, or $1.05 per diluted share, for the first quarter of fiscal 2014 ended December 31, 2013, compared to $102.5 million, or $0.90 per diluted share, for the first quarter of fiscal 2013.

UGI Corporation reported adjusted net income attributable to UGI of $123.5 million, or $1.06 per diluted share, for the first quarter of fiscal 2014, compared to $101.2 million, or $0.88 per diluted share, for the prior-year period. The increase in adjusted net income attributable to UGI was primarily the result of colder weather at our domestic business units. Adjusted net income attributable to UGI excludes the impact of mark-to-market changes in Midstream & Marketing’s commodity hedging instruments and the retroactive effects of changes in French tax legislation enacted in the first fiscal quarter of 2014.

John L. Walsh, president and chief executive officer of UGI, said, “We are very pleased with the strong performance of our businesses this quarter. We benefited not only from a colder-than-normal winter in most of our operating territories, but also from the strategic investments that we’ve made over the last few years. Our Gas Utility continued to outperform as weather was colder-than-normal and underlying demand strengthened due to the significant number of new customer additions over the past few years. UGI’s Midstream & Marketing business performance reflected the contributions from our major capital projects executed in recent years and the colder winter weather that created numerous capacity management opportunities, benefited our electric generation business, and drove increased demand for LNG. AmeriGas saw the benefits of a colder-than-normal winter and the business continues to benefit from the Heritage Propane integration. Additionally, AmeriGas’s cylinder exchange and national accounts programs continue to grow faster than anticipated. UGI International experienced warmer-than-normal weather, but this was offset by incremental earnings from the BP Poland acquisition that was completed late last year.”

Walsh continued, “Based upon our results to date and our assessment of business conditions for the remainder of the fiscal year, we continue to expect to report adjusted earnings in the range of $2.60 to $2.70 per diluted share for fiscal 2014.”
Segment Performance (Millions, except where otherwise indicated)
AmeriGas Propane:

																
For the three months ended December 31,	 	2013	 	2012	 	Increase (decrease)	
Revenues	 	$	1,045.8		 	$	871.9		 	$	173.9		 	19.9	 %	
Total margin (a)	 	$	463.1		 	$	422.6		 	$	40.5		 	9.6	 %	
Operating and administrative expenses	 	$	237.6		 	$	243.5		 	$	(5.9	)	 	(2.4	)%	
Partnership EBITDA	 	$	230.2		 	$	185.9		 	$	44.3		 	23.8	 %	
Operating income	 	$	179.7		 	$	137.3		 	$	42.4		 	30.9	 %	
Retail gallons sold	 	374.1		 	350.7		 	23.4		 	6.7	 %	
Degree days - % colder (warmer) than normal	 	3.8	%	 	(9.0	)%	 	 	 	 	
Capital expenditures	 	$	23.3		 	$	26.5		 	$	(3.2	)	 	(12.1	)%	

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UGI reports Strong First Quarter Earnings, Adjusted Net Income up 22%
	  	Page 2	

•	Weather for the current-year period was 3.8% colder than normal and 14.0% colder than the prior year.	
		
•	The increase in retail gallons sold primarily reflects the colder-than-normal temperatures, and, to a lesser extent, growth in AmeriGas’s national accounts and cylinder exchange programs.	
		
•	Revenues increased primarily due to higher average selling prices, largely the result of higher propane product costs, and higher retail volumes sold.	
		
•	The average wholesale cost of propane at Mont Belvieu, Texas for the current quarter was approximately 35% higher than the average cost in the same period last year.	
		
•	Total margin increased due to the increase in retail volumes sold and slightly higher average retail unit margins.	
		
•	Operating and administrative expenses decreased due primarily to the absence of transition expenses incurred in the prior year period associated with Heritage Propane and the impact of synergies from the integration of Heritage Propane.	
		
•	Operating income increased primarily reflecting the higher total margin and lower operating expenses partially offset by higher depreciation and amortization expense ($2.2 million).	
UGI International:

																
For the three months ended December 31,	 	2013	 	2012	 	Increase (decrease)	
Revenues	 	$	718.6		 	$	664.9		 	$	53.7		 	8.1	 %	
Total margin (a)	 	$	204.4		 	$	190.1		 	$	14.3		 	7.5	 %	
Operating and administrative expenses	 	$	126.6		 	$	113.9		 	$	12.7		 	11.2	 %	
Operating income	 	$	56.9		 	$	57.8		 	$	(0.9	)	 	(1.6	)%	
Income before income taxes	 	$	49.2		 	$	50.0		 	$	(0.8	)	 	(1.6	)%	
Retail gallons sold	 	185.1		 	172.8		 	12.3		 	7.1	 %	
Degree days - % (warmer) than normal:	 	 	 	 	 	 	 	 	
Antargaz	 	(7.2	)%	 	(7.7	)%	 	 	 	 	
Flaga	 	(12.9	)%	 	(3.2	)%	 	 	 	 	
Capital expenditures	 	$	14.4		 	$	14.4		 	$	—		 	—	 %	

•	Weather in France was warmer than normal and approximately the same as the prior-year period while weather in Flaga’s operating territory was much warmer than normal and warmer than the prior-year period.	
		
•	Retail gallons sold increased reflecting incremental retail gallons associated with the acquisition of BP Poland, acquired by Flaga in September 2013, partially offset by the effects of the warmer weather.	
		
•	Revenues increased principally reflecting the BP Poland acquisition and greater natural gas marketing revenues at Antargaz ($18.7 million).	
		
•	Average wholesale propane prices in Northwest Europe were approximately 15% lower than in the prior-year period while average wholesale butane prices were approximately 3% lower than the prior-year period.	
		
•	Total margin increased principally reflecting higher total margin at Flaga ($8.0 million) due in large part to the effects of the BP Poland acquisition, higher total margin at AvantiGas ($2.9 million) reflecting higher average unit margins, and higher natural gas marketing margin at Antargaz.	
		
•	Operating and administrative expenses increased due to higher costs at Antargaz including higher repair and maintenance expenses and expenses associated with BP Poland operations (including $0.4 million of integration costs).	
		
•	Operating income and income before income taxes were slightly lower than the prior-year period due to the higher operating expenses and greater depreciation substantially offset by the higher total margin.	
		
•	The average euro-to-dollar translation rate for the current quarter was approximately $1.36 compared with $1.30 for the prior-year period.	

- MORE -

	

UGI reports Strong First Quarter Earnings, Adjusted Net Income up 22%     
	  	Page 3	
 
Gas Utility:

																
For the three months ended December 31,	 	2013	 	2012	 	Increase (decrease)	
Revenues	 	$	271.6		 	$	248.3		 	$	23.3		 	9.4	 %	
Total margin (a)	 	$	136.1		 	$	124.7		 	$	11.4		 	9.1	 %	
Operating and administrative expenses	 	$	38.6		 	$	40.6		 	$	(2.0	)	 	(4.9	)%	
Operating income	 	$	82.1		 	$	69.8		 	$	12.3		 	17.6	 %	
Income before income taxes	 	$	73.7		 	$	60.2		 	$	13.5		 	22.4	 %	
System throughput - billions of cubic feet (“bcf”)	 	 	 	 	 	 	 	 	
Core market	 	24.1		 	21.8		 	2.3		 	10.6	 %	
Total	 	56.7		 	54.0		 	2.7		 	5.0	 %	
Degree days - % colder (warmer) than normal	 	3.0	%	 	(3.6	)%	 	 	 	 	
Capital expenditures	 	$	32.9		 	$	28.5		 	$	4.4		 	15.4	 %	

•	Weather during the quarter was colder than normal and 6.9% colder than the prior-year period.	
		
•	Total system throughput increased from the prior year due to increased throughput to core market customers.	
		
•	Revenue increased due to higher revenue from core market customers and, to a much lesser extent, higher revenues from large firm delivery service customers on higher throughput.	
		
•	Total margin increased principally reflecting higher core market total margin ($8.0 million) and greater large firm delivery service total margin ($3.2 million).	
		
•	Operating income increased due to the increase in total margin and, to a much lesser extent, a decrease in operating and administrative expenses which includes, among other things, lower pension and benefits expenses.	
		
•	The increase in income before income taxes reflects the greater operating income and lower interest expense principally reflecting lower average interest rates.	
		
•	Capital expenditures increased primarily due to increased pipeline replacement and system improvement capital expenditure.	
Midstream & Marketing:

																
For the three months ended December 31,	 	2013	 	2012	 	Increase	
Revenues	 	$	289.0		 	$	241.9		 	$	47.1		 	19.5	%	
Total margin (a)	 	$	55.8		 	$	43.6		 	$	12.2		 	28.0	%	
Operating and administrative expense	 	$	14.2		 	$	13.5		 	$	0.7		 	5.2	%	
Operating income	 	$	36.2		 	$	25.9		 	$	10.3		 	39.8	%	
Income before income taxes	 	$	35.2		 	$	24.9		 	$	10.3		 	41.4	%	
Capital expenditures	 	$	31.0		 	$	20.3		 	$	10.7		 	52.7	%	

•	Revenue increased primarily reflecting higher natural gas revenues ($42.1 million) principally from greater natural gas volumes and, to a much lesser extent, higher capacity management revenues ($6.2 million) and greater Electric Generation revenues ($5.9 million).	
		
•	Total margin increased $12.2 million reflecting higher margin from capacity management, natural gas gathering, Electric Generation and peaking activities partially offset by lower retail power total margin.	
		
•	Operating income and income before income taxes increased due to the previously mentioned increase in total margin partially offset by higher operating and depreciation expenses.	
		
•	Capital expenditures increased due principally to the Auburn II project.	

(a)	Total margin represents total revenues less total cost of sales.	

- MORE -

	

UGI reports Strong First Quarter Earnings, Adjusted Net Income up 22%
	  	Page 4	

Income Taxes
Our consolidated effective tax rate for the first fiscal quarter of 2014 was higher than in the prior-year period. The higher consolidated tax rate reflects the effects of new tax legislation in France enacted in December 2013 that, among other things, limits retroactive to fiscal 2013, Antargaz’ ability to deduct for income tax purposes interest expense on certain intercompany debt. Income taxes for the first quarter of fiscal 2014 include $5.7 million related to the retroactive provision of the new French tax law.

About UGI
UGI is a distributor and marketer of energy products and services. Through subsidiaries, UGI operates natural gas and electric utilities in Pennsylvania, distributes propane both domestically and internationally, manages midstream energy and electric generation assets in Pennsylvania, and engages in energy marketing in the Mid-Atlantic region. UGI, through subsidiaries, is the sole General Partner and owns 26% of AmeriGas Partners, L.P. (NYSE:APU), the nation's largest retail propane distributor.

UGI Corporation will hold a live Internet Audio Webcast of its conference call to discuss first quarter earnings and other current activities at 9:00 AM ET on Tuesday, February 4, 2014. Interested parties may listen to the audio webcast both live and in replay on the Internet at http://www.ugicorp.com/investor-relations/events-and-presentations/default.aspx or at the company website http://www.ugicorp.com under Investor Relations. A telephonic replay will be available from 12:00 PM ET on February 4 through 11:59 pm on February 10. The replay may be accessed at 1-855-859-2056, conference ID 30394005 and International access 1-404-537-3406, conference ID 30394005.

Comprehensive information about UGI Corporation is available on the Internet at http://www.ugicorp.com

This press release 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 control. You should read UGI’s Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are adverse weather conditions, cost volatility and availability of all energy products, including propane, natural gas, electricity and fuel oil, increased customer conservation measures, the impact of pending and future legal proceedings, domestic and international political, regulatory and economic conditions including currency exchange rate fluctuations (particularly the euro), the timing of development of Marcellus Shale gas production, the timing and success of our commercial initiatives and investments to grow our business, and our ability to successfully integrate acquired businesses and achieve anticipated synergies. UGI undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today.

	

C-02	  	###	  	2/3/2014	

UGI CORPORATION
REPORT OF EARNINGS
(Millions of dollars, except per share)
(Unaudited)

																	
 	 	Three Months Ended
December 31,	 	Twelve Months Ended
December 31,	
 	 	2013	 	2012	 	2013	 	2012	
Revenues:	 	 	 	 	 	 	 	 	
AmeriGas Propane	 	$	1,045.8		 	$	871.9		 	$	3,342.7		 	$	3,113.0		
UGI International	 	718.6		 	664.9		 	2,232.9		 	2,092.7		
Gas Utility	 	271.6		 	248.3		 	862.3		 	778.7		
Midstream & Marketing	 	289.0		 	241.9		 	1,084.7		 	856.8		
Corporate & Other (a)	 	(9.1	)	 	(8.3	)	 	(30.7	)	 	12.0		
Total revenues	 	$	2,315.9		 	$	2,018.7		 	$	7,491.9		 	$	6,853.2		
Operating income:	 	 	 	 	 	 	 	 	
AmeriGas Propane	 	$	179.7		 	$	137.3		 	$	436.8		 	$	249.5		
UGI International	 	56.9		 	57.8		 	146.1		 	128.0		
Gas Utility	 	82.1		 	69.8		 	208.8		 	182.7		
Midstream & Marketing	 	36.2		 	25.9		 	100.3		 	69.3		
Corporate & Other (a)	 	8.8		 	3.4		 	8.6		 	37.9		
Total operating income	 	363.7		 	294.2		 	900.6		 	667.4		
Loss from equity investees	 	0.0	 	0.0	 	(0.4	)	 	(0.2	)	
Loss on extinguishments of debt	 	0.0		 	0.0		 	0.0		 	(13.3	)	
Interest expense:	 	 	 	 	 	 	 	 	
AmeriGas Propane	 	(41.6	)	 	(42.4	)	 	(165.8	)	 	(167.4	)	
UGI International	 	(7.7	)	 	(7.7	)	 	(30.4	)	 	(31.1	)	
Gas Utility	 	(8.4	)	 	(9.6	)	 	(36.2	)	 	(39.6	)	
Midstream & Marketing	 	(1.0	)	 	(1.0	)	 	(3.2	)	 	(4.7	)	
Corporate & Other, net (a)	 	(0.6	)	 	(0.8	)	 	(2.5	)	 	(3.1	)	
Total interest expense	 	(59.3	)	 	(61.5	)	 	(238.1	)	 	(245.9	)	
Income before income taxes	 	304.4		 	232.7		 	662.1		 	408.0		
Income tax expense	 	(86.9	)	 	(64.9	)	 	(184.8	)	 	(138.5	)	
Net income	 	217.5		 	167.8		 	477.3		 	269.5		
Deduct net income attributable to noncontrolling interests, principally in AmeriGas Partners, L.P.	 	(95.5	)	 	(65.3	)	 	(179.7	)	 	(31.7	)	
Net income attributable to UGI Corporation	 	$	122.0		 	$	102.5		 	$	297.6		 	$	237.8		
Earnings per share attributable to UGI shareholders:	 	 	 	 	 	 	
Basic	 	$	1.06		 	$	0.91		 	$	2.60		 	$	2.11		
Diluted	 	$	1.05		 	$	0.90		 	$	2.56		 	$	2.09		
Average common shares outstanding (thousands):	 	 	 	 	 	 	 	 	
Basic	 	114,825		 	113,136		 	114,352		 	112,806		
Diluted	 	116,470		 	114,490		 	116,043		 	113,836		
Supplemental information:	 	 	 	 	 	 	 	 	
Net income attributable to UGI Corporation:	 	 	 	 	 	 	
AmeriGas Propane	 	$	25.5		 	$	17.6		 	$	55.4		 	$	21.8		
UGI International	 	27.4		 	35.5		 	74.6		 	69.7		
Gas Utility	 	43.4		 	35.5		 	102.2		 	86.0		
Midstream & Marketing	 	22.0		 	15.0		 	59.5		 	40.4		
Corporate & Other (a)	 	3.7		 	(1.1	)	 	5.9		 	19.9		
Total net income attributable to UGI Corporation	 	$	122.0		 	$	102.5		 	$	297.6		 	$	237.8		
(a) Corporate & Other includes, among other things, the elimination of certain intercompany transactions, changes in the fair values of Midstream & Marketing’s
unsettled commodity derivative instruments and gains and losses on settled commodity derivative instruments not associated with current period transactions and consolidated effective tax rate adjustments.

(continued)

UGI CORPORATION
REPORT OF EARNINGS
(Millions of dollars, except per share)
(Unaudited)
(continued)

Non-GAAP Financial Measures - Adjusted Net Income Attributable to UGI and Adjusted Diluted Earnings Per Share

Management uses "adjusted net income attributable to UGI" and "adjusted diluted earnings per share," both of which are non-GAAP financial measures, when evaluating UGI's overall performance. Adjusted net income attributable to UGI is net income attributable to UGI excluding (i) changes in the fair values of Midstream & Marketing's unsettled commodity derivative instruments as well as gains and losses on settled commodity derivative instruments not associated with current period transactions and (ii) those items that management regards as highly unusual in nature and not expected to recur. Midstream & Marketing accounts for commodity derivative instruments at fair value with changes in fair value included in earnings as a component of cost of sales or revenues. Volatility in net income at UGI can occur as a result of changes in the fair values of Midstream & Marketing's unsettled commodity derivative instruments as well as timing differences between the settlement of commodity derivative instruments and the income statement impact of the purchase or sale of the associated commodity.

Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. Management believes that these non-GAAP measures provide meaningful information to investors about UGI's performance because they eliminate the impact of (i) changes in the fair values of Midstream & Marketing's unsettled commodity derivative instruments as well as gains and losses on settled commodity derivative instruments not associated with current period transactions that are required, under GAAP, to be recorded in current period earnings but are economic hedges of the related commodity transactions and (ii) those items that management regards as highly unusual in nature and not expected to recur.

The following table reconciles consolidated net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI, and reconciles diluted earnings per share, the most comparable GAAP measure, to adjusted diluted earnings per share, to reflect the adjustments referred to above:

																		
 	 	 	Three Months Ended	 	Twelve Months Ended	
 	 	 	December 31,	 	December 31,	
 	 	 	2013	 	2012	 	2013	 	2012	
Adjusted net income attributable to UGI Corporation:	 	 	 	 	 	 	 	
 	Net income attributable to UGI Corporation	 	 	 	 	 	 	 	
 	Adjust: Net unrealized (gains) losses on Midstream &	$	122.0		 	$	102.5		 	$	297.6		 	$	237.8		
 	 	 Marketing's unsettled commodity derivative instruments	 	 	 	 	 	 	 	
 	Adjust: Net (gains) losses on certain Midstream	(3.0	)	 	1.1		 	(4.2	)	 	(14.8	)	
 	 	& Marketing settled commodity derivative instruments	 	 	 	 	 	 	 	
 	Adjust: Retroactive impact of change in French	(1.2	)	 	(2.4	)	 	(3.0	)	 	(4.8	)	
 	 	tax law	 	 	 	 	 	 	 	
 	Adjusted net income attributable to UGI Corporation	5.7		 	0.0		 	5.7		 	0.0		
 	 	 	$	123.5		 	$	101.2		 	$	296.1		 	$	218.2		
 	 	 	 	 	 	 	 	 	 	
 	 	 	Three Months Ended	 	Twelve Months Ended	
 	 	 	December 31,	 	December 31,	
 	 	 	2013	 	2012	 	2013	 	2012	
 	 	 	 	 	 	 	 	 	 	
Adjusted diluted earnings per share:	 	 	 	 	 	 	 	
 	UGI Corporation earnings per share - diluted	$	1.05		 	$	0.90		 	$	2.56		 	$	2.09		
 	Adjust: Net unrealized (gains) losses on Midstream &	 	 	 	 	 	 	 	
 	 	 Marketing's unsettled commodity derivative instruments	(0.03	)	 	0.01		 	(0.04	)	 	(0.13	)	
 	Adjust: Net (gains) losses on certain Midstream &	 	 	 	 	 	 	 	
 	 	Marketing settled commodity derivative instruments (1)	(0.01	)	 	(0.03	)	 	(0.02	)	 	(0.04	)	
 	Adjust: Retroactive impact of change in French	 	 	 	 	 	 	 	
 	 	tax law	0.05		 	0.0	 	0.05		 	0.0	
 	Adjusted diluted earnings per share	$	1.06		 	$	0.88		 	$	2.55		 	$	1.92		
 	(1) Includes the impact of rounding.	 	 	 	 	 	 	

February 4, 2014 2014 Q1 Earnings Conference Call February 4, 2014

 

February 4, 2014 2 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 control. You should read UGI’s Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are adverse weather conditions, cost volatility and availability of all energy products, including propane, natural gas, electricity and fuel oil, increased customer conservation measures, the impact of pending and future legal proceedings, domestic and international political, regulatory and economic conditions including currency exchange rate fluctuations (particularly the euro), the timing of development of Marcellus Shale gas production, the timing and success of our commercial initiatives and investments to grow our business, and our ability to successfully integrate acquired businesses and achieve anticipated synergies. UGI undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today. About This Presentation

 

February 4, 2014 John Walsh President & CEO, UGI Kirk Oliver Chief Financial Officer, UGI Jerry Sheridan President & CEO, AmeriGas

 

February 4, 2014 4 2014 Q1 Results $0.90 $1.05 $0.80 $0.85 $0.90 $0.95 $1.00 $1.05 $1.10 2 0 1 3 2 0 1 4 GAAP EPS 17% increase in EPS, fully diluted

 

February 4, 2014 5 2014 Q1 Results $0.88 $1.06 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 $1.05 $1.10 2 0 1 3 2 0 1 4 Adjusted EPS* * See reconciliation in appendix 21% increase in Adjusted EPS

 

February 4, 2014 6 Operating Performance & Strategic Milestones Strategic Milestones • Auburn II pipeline placed into service • Gas Utility new customer additions exceeded the record levels set in Q1 of FY13 • Successful integration of the BP Poland acquisition Unprecedented demand for natural gas • Demand from residential, commercial, industrial and municipal users • Strong demand benefits both our Gas Utility and Marketing business • Increased need for Marcellus infrastructure Adjusted net income up 22% reflects colder weather and strong operational performance

 

February 4, 2014 7 2014 Q1 Results $0.88 $1.06 $0.70 $0.75 $0.80 $0.85 $0.90 $0.95 $1.00 $1.05 $1.10 2 0 1 3 2 0 1 4 Adjusted EPS* * See reconciliation in appendix 21% increase in Adjusted EPS

 

February 4, 2014 8 Weather vs Normal 3.8% -9.0% -7.2% -7.7% -12.9% -3.2% 3.0% -3.6% -20% -10% 0% 10% 20% 2014 Q1 2013 Q1 AmeriGas Antargaz Flaga Utility (W A R M E R ) COL D E R (W A R M E R )

 

February 4, 2014 9 AmeriGas VOLUME  Colder weather  ACE and National Accounts MARGIN  Slightly higher unit margins OPEX  No transition expenses versus prior-year period  Synergies Total Margin 179.7 24.7 18.4 (2.6) 4.1 (2.2) $100 $120 $140 $160 $180 $200 2 0 1 3 Q 1 V o lu m e U n it Mar gi n s A nc ill ar y sa les/ serv ic e s O p ex & O th e r D & A 2 0 1 4 Q 1 Operating Income, $ MM 137.3 * Opex includes all operating expenses, net of miscellaneous income. Total Margin represents total revenues less total cost of sales.

 

February 4, 2014 10 UGI International VOLUME  BP Poland acquisition  Warmer weather MARGIN  BP Poland acquisition OPEX  Flaga (BP Poland) and Antargaz (repair and maintenance expense) 12.2 2.1 (13.2) (2.0) 0.1 $10 $20 $30 $40 $50 $60 $70 2 0 1 3 Q 1 LPG V o lu m e U n it Mar gi n s O p ex & O th e r D & A In t. ex p e n se 2 0 1 4 Q 1 Income Before Taxes, $ MM Total Margin * Opex includes all operating expenses, net of miscellaneous income. Total Margin represents total revenues less total cost of sales. 49.2 50.0

 

February 4, 2014 11 Gas Utility MARGIN  Colder weather  Conversions from heating oil OPEX  Lower pension and benefits expense INTEREST  Lower average interest rates Total Margin 60.2 73.7 8.0 3.4 1.7 (0.8) 1.2 $20 $30 $40 $50 $60 $70 $80 2 0 1 3 Q 1 C o re M ar ket M ar gi n Ot h er Mar gi n O p ex & O th e r D & A Int. ex p e n se 2 0 1 4 Q 1 Income Before Taxes, $ MM * Opex includes all operating expenses, net of miscellaneous income. Total Margin represents total revenues less total cost of sales.

 

February 4, 2014 12 Midstream & Marketing MARGIN  Higher peaking, capacity management, and gas marketing margin  Higher electric generation margin  Lower power marketing margins 24.9 (2.9) 4.8 10.3 (0.8) (1.1) 0.0 $0 $5 $10 $15 $20 $25 $30 $35 $40 2 0 1 3 Q 1 M ar ketin g Ge n erati o n M id st re am/ot h e r O p ex & O th e r D & A In t. Ex p e n se 2 0 1 4 Q 1 Income Before Taxes, $ MM 35.2 Total Margin * Total Margin represents total revenues less total cost of sales.

 

February 4, 2014 13 Liquidity and Guidance • Share repurchase program announced last week • FY14 Adjusted EPS guidance remains $2.60-$2.70 Total AmeriGas UGI Intl Utilities Midstream Corporate & Other Cash on Hand $418.1 $30.3 $173.3 $13.0 $9.0 $192.6 Revolving Credit Facilities $525.0 $134.7 $300.0 $240.0 NA Accounts Receivable Facility NA NA NA 60.9 NA Drawn on Facilities 208.8 9.1 73.5 124.5 NA Letters of Credit 64.7 44.7 2.0 0.0 NA Available Facilities $251.5 $80.9 $224.5 $176.4 Available Liquidity $281.8 $254.1 $237.5 $185.4 Excluding cash residing at operating subsidiaries, UGI had $183.5 million of cash at 12/31/13 compared with $101.2 million at 12/31/12.

 

February 4, 2014 Jerry Sheridan CEO of AmeriGas

 

February 4, 2014 15 Q1 Adjusted EBITDA $193.3 $230.2 $170 $180 $190 $200 $210 $220 $230 $240 2 0 1 3 Q 1 2 0 1 4 Q 1 Adjusted EBITDA*, $ Millions * See appendix for Adjusted EBITDA reconciliation

 

February 4, 2014 16 Operational Update Operations • Volume increased 7% versus last year’s first quarter on weather that was 14% colder than last year • Volume in December was up 19% from last year on 22% colder weather • Operating expenses were $5.9 million below last year; Excluding transition expenses, operating expenses declined $0.5 million • Wholesale prices at Mt Belvieu are approximately 35% higher than the average cost this time last year • Our supply/logistics groups have taken extraordinary measures to secure and deliver propane to all residential and commercial customers • Although costs rose quickly during the quarter, margins were modestly higher than in the prior-year period and we continue to actively manage costs in a challenging environment

 

February 4, 2014 17 Operational Update Growth Initiatives • AmeriGas Cylinder Exchange (ACE): Volume growth of 9.8% from the prior-year quarter, 2,900 new outlets added • National Accounts: Volume increased 6 million gallons from the prior- year quarter and benefitted from both new accounts and the cold weather • Acquisitions: Closed one small acquisition in Virginia Outlook • FY14 Adjusted EBITDA guidance remains $645 million - $675 million

 

February 4, 2014 John Walsh President & CEO

 

February 4, 2014 19 Operational Update AmeriGas • Adjusted EBITDA up 19% on volume growth, unit margin management, and expense control • Strong performance at both ACE and National Accounts as well UGI International • Warmer weather than expected, offset by benefits of BP Poland acquisition Gas Utility • Capex level has increased ~ 40% since FY12 • Customer additions running ~ 10% above Q1 of FY13

 

February 4, 2014 20 Operational Update Midstream & Marketing • Strong performance from LNG business (both peaking and transport) as well as our midstream business • Auburn II placed into commercial service Recent Developments • Meeting service challenges is critically important during extreme weather periods • Teams across UGI and AmeriGas did an outstanding job meeting these challenges • Scale, combined with commitment, enabled us to maintain very high service levels during this challenging period

 

February 4, 2014 Q&A

 

February 4, 2014 Appendix

 

February 4, 2014 23 UGI Supplemental Information: Footnotes  Management uses "adjusted net income attributable to UGI" and "adjusted diluted earnings per share," both of which are non-GAAP financial measures, when evaluating UGI's overall performance. Adjusted net income attributable to UGI is net income attributable to UGI excluding (i) changes in the fair values of Midstream & Marketing's unsettled commodity derivative instruments as well as gains and losses on settled commodity derivative instruments not associated with current period transactions and (ii) those items that management regards as highly unusual in nature and not expected to recur. Midstream & Marketing accounts for commodity derivative instruments at fair value with changes in fair value included in earnings as a component of cost of sales or revenues. Volatility in net income at UGI can occur as a result of changes in the fair values of Midstream & Marketing's unsettled commodity derivative instruments as well as timing differences between the settlement of commodity derivative instruments and the income statement impact of the purchase or sale of the associated commodity.  Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures. Management believes that these non- GAAP measures provide meaningful information to investors about UGI's performance because they eliminate the impact of (i) changes in the fair values of Midstream & Marketing's unsettled commodity derivative instruments as well as gains and losses on settled commodity derivative instruments not associated with current period transactions that are required, under GAAP, to be recorded in current period earnings but are economic hedges of the related commodity transactions and (ii) those items that management regards as highly unusual in nature and not expected to recur.  The following table reconciles consolidated net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI, and reconciles diluted earnings per share, the most comparable GAAP measure, to adjusted diluted earnings per share, to reflect the adjustments referred to above:

 

February 4, 2014 24 Adjusted EPS to GAAP EPS Reconciliation Three Months Ended Twelve Months Ended December 31, December 31, 2013 2012 2013 2012 Adjusted diluted earnings per share: UGI Corporation earnings per share - diluted 1.05$ 0.90$ 2.56$ 2.09$ Adjust: Net unrealized (gains) losses on Midstream & Marketing's unsettled commodity derivative instruments (0.03) 0.01 (0.04) (0.13) A just: Net (gains) losses on certain Midstream & Marketing settled commodity derivative instruments (1) (0.01) (0.03) (0.02) (0.04) Adjust: Retroactive impact of change in French tax law 0.05 0.0 0.05 0.0 Adjusted diluted earnings per share 1.06$ 0.88$ 2.55$ 1.92$ (1) Includes the impact of rounding.

 

February 4, 2014 25 AmeriGas Supplemental Information: Footnotes  The enclosed supplemental information contains a reconciliation of earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA to Net Income.  EBITDA and Adjusted EBITDA are not measures of performance or financial condition under accounting principles generally accepted in the United States ("GAAP"). Management believes EBITDA and Adjusted EBITDA are meaningful non-GAAP financial measures used by investors to compare the Partnership's operating performance with that of other companies within the propane industry. The Partnership's definitions of EBITDA and Adjusted EBITDA may be different from those used by other companies.  EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss) attributable to AmeriGas Partners, L.P. Management uses EBITDA to compare year-over-year profitability of the business without regard to capital structure as well as to compare the relative performance of the Partnership to that of other master limited partnerships without regard to their financing methods, capital structure, income taxes or historical cost basis. Management uses Adjusted EBITDA to exclude from AmeriGas Partners’ EBITDA gains and losses that competitors do not necessarily have to provide additional insight into the comparison of year-over-year profitability to that of other master limited partnerships. In view of the omission of interest, income taxes, depreciation and amortization from EBITDA and Adjusted EBITDA, management also assesses the profitability of the business by comparing net income attributable to AmeriGas Partners, L.P. for the relevant years. Management also uses EBITDA to assess the Partnership's profitability because its parent, UGI Corporation, uses the Partnership's EBITDA to assess the profitability of the Partnership, which is one of UGI Corporation’s industry segments. UGI Corporation discloses the Partnership's EBITDA in its disclosures about its industry segments as the profitability measure for its domestic propane segment.

 

February 4, 2014 26 AmeriGas Partners EBITDA Reconciliation 2013 2012 Net income attributable to AmeriGas Partners, L.P. 134,898$ 96,665$ Income tax expense 1,431 627 Interest xpense 41,590 41,196 Depreciation 41,503 38,323 Amortization 10,819 11,028 EBITDA 230,241$ 187,839$ Heritage Propane acquisition and transition expense - 5,488 Loss on extinguishments of debt - - Adjusted EBITDA (1) 230,241$ 193,327$ December 31, Three Months Ended

 

February 4, 2014 Investor Relations: 610-337-1000 Simon Bowman (x3645) bowmans@ugicorp.com