UGI Corporation · NYSE:UGI
UGI — UBS Winter Infrastructure and Energy Virtual Conference 2021
49 slides from UGI's conference presentation, Jan 12, 2021
Slide 1: UBS Winter Infrastructure and Energy Virtual Conference
UBS WINTER INFRASTRUCTURE AND ENERGY VIRTUAL CONFERENCE JANUARY 12 – 13, 2021
Slide 2: Our Management Team Welcomes You
Our Management Team Welcomes You UGI Corporation Ted Jastrzebski Robert Beard Roger Perreault CFO Executive VP, Natural Gas Executive VP, Global LPG 2
Slide 3: About This Presentation
About This Presentation UGI Corporation This presentation contains statements, estimates and projections that are forward-looking statements (as defined in Section 21E of the Securities and Exchange Act of 1934, as amended). Management believes that these are reasonable as of today’s date only. Actu
Slide 4: Use of Non-GAAP Measures
Use of Non-GAAP Measures UGI Corporation In this presentation, Management uses certain non-GAAP financial measures, including UGI Corporation adjusted earnings per share, UGI Corporation Free Cash Flow, UGI Corporation Adjusted Earnings before interest, taxes, depreciation, and amortization (“EBITDA
Slide 5: Corporate Overview
Corporate Overview UGI Corporation UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity. Financial Growth Stability Strong Presence 7.1% 6.9% 136 years 18 11,300+ EPS Dividend Consecutively paying Countries Employees 10
Slide 6: Growth of Core Businesses and Meeting Commitments
Growth of Core Businesses and Meeting Commitments UGI Corporation Strengthened Maintained Expanding Foundations Momentum RNG Capabilities • Completed acquisitions • EPS / Dividend • Continuing to build our portfolio of Positioned as a complementing our commitments renewable solutions: Differentiated
Slide 7: Well Positioned for Leadership in Renewables
Well Positioned for Leadership in Renewables UGI Corporation Why Renewables? Rapidly growing customer demand Hydrogen RNG Disposal for sale Synergistic opportunities as BIO a producer and distributor of RNG and Bio-LPG Bio H2O Methane HVO Ethanol Strategic assets and proven competencies Residue Prog
Slide 8: The Next Opportunity – Renewable Energy Solutions
The Next Opportunity – Renewable Energy Solutions UGI Corporation 2015-19 2020 2021-25 Renewable Solutions team Acquired GHI, Potential Renewable Solutions which will serve as opportunities of up to $1 billion Began marketing Bio-LPG in parts of Northern Europe a strong over the next five ye
Slide 9: The Foundation of Sustainable Energy Future
The Foundation of Sustainable Energy Future UGI Corporation UGI’s connection to customers, core competencies, and core infrastructure enable UGI to provide renewable energy solutions with minimal disruption to our customers Core competencies: Core infrastructure: Navigating legislative Supply and pr
Slide 10: Our Capital Allocation Strategy Evolution
Our Capital Allocation Strategy Evolution UGI Corporation 2015 2020 2025 2030 2035 Capital Allocation1,2: 20% 15% 15% Global LPG 40% 35% 15% 20% 25% Renewables Natural Gas 60% 65% 65% 65% 60% Our innovation-focused growth drivers align us with our goal of a greener portfolio • CNG • RNG • Bio-Gas (B
Slide 11: 6-10% EPS Growth with a 4-pronged Growth Strategy
6-10% EPS Growth with a 4-pronged Growth Strategy UGI Corporation Robust pipeline of organic, inorganic, and renewable Significant cash generation provides funding source for opportunities provides a stable foundation for the future. ongoing investments and balance sheet management. $4.00 Renew- Bio
Slide 12: Our Natural Gas Strategic Focus
Our Natural Gas Strategic Focus UGI Corporation OUR 12 BUSINESSES
Slide 13: Natural Gas – A Platform for Continued Growth
Natural Gas – A Platform for Continued Growth UGI Corporation Natural Gas - Strategic Advantage Our Natural Gas businesses see continued significant growth driven by our core businesses, and are well positioned to drive a clean energy future. Sustainable Investments: Strategic investments coupled wi
Slide 14: Natural Gas – 3-Pronged Growth Strategy
Natural Gas – 3-Pronged Growth Strategy UGI Corporation Growing the Serving the evolving needs of our Improving our FOUNDATION CUSTOMERS ENVIRONMENT ENSURE RESOURCE KEEP ENERGY AFFORDABLE EXPAND OUR REACH REDUCE CARBON OPTIMIZATION Providing our customers the Ensuring safety FOOTPRINT Leveraging ass
Slide 15: A Strong Foundation for Growth
A Strong Foundation for Growth UGI Corporation ENSURE RESOURCE OPTIMIZATION Rate base growth (FY20-FY24 CAGR Expertise navigating evolving legislative and of 11%+) regulatory landscapes A strong and consistent history of growth, Physically connected to ~740,000 gas and while improving our en
Slide 16: Meeting Customers' Needs – Today and Tomorrow
Meeting Customers’ Needs – Today and Tomorrow UGI Corporation MAKE ENERGY AFFORDABLE Improve access and integrity Annual Customer Growth at UGI Utilities (in ‘000) ~ 675,000 conversion prospects within 1 mile of gas mains GET Gas program enables growth in underserved areas 850 PNG CPG Locally
Slide 17: Contributing to a Cleaner Environment
Contributing to a Cleaner Environment UGI Corporation REDUCE CARBON FOOTPRINT Smart portfolio rebalancing Investment in feedstock infrastructure (RNG project in Idaho) Cleaner sources such as RNG (GHI) Investments advance GHG reduction commitment Divestiture of Conemaugh reduces direct emiss
Slide 18: Key Takeaways – Natural Gas
Key Takeaways – Natural Gas UGI Corporation FOUNDATION CUSTOMERS ENVIRONMENT Strategically located asset Strong customer growth As demand for clean, network and ability to renewable energy navigate an evolving Significant investment continues to grow, we have regulatory environment opportuni
Slide 19: Our Global LPG Strategic Focus
Our Global LPG Strategic Focus UGI Corporation 19
Slide 20: LPG – A Clear Path Forward
LPG – A Clear Path Forward UGI Corporation A Platform: Focus-Develop-Grow strategy provides a clear path to build Global LPG business of the future through organic and inorganic growth strategies Improving selling / Investing in • Enhance our renewable distribution efficiency Bio-LPG powered by anal
Slide 21: Global LPG Vision
Global LPG Vision UGI Corporation FOCUS DEVELOP GROW on LPG beyond LPG way beyond EMBED CONTINUAL MODERNIZE FOR FUTURE BRING NEW MARKET DRIVE BUSINESS EVOLUTION IMPROVEMENT To serve our customers harmoniously, OPPORTUNITIES To expand beyond our To keep us efficient, safe, and digitally, and autonomo
Slide 22: LPG Focus – Culture of Continuous Improvement
LPG Focus – Culture of Continuous Improvement UGI Corporation EMBED CONTINUAL IMPROVEMENT MODERNIZE FOR OUR FUTURE Launched Two Transformation Projects • Re-engineered processes across Global LPG to reduce costs and improve effectiveness FOCUS Operations Excellence Customer Digital Experience • Cont
Slide 23: Global LPG Transformation Benefits
Global LPG Transformation Benefits UGI Corporation Global LPG Transformation Estimated Benefits AmeriGas Identified incremental $20 Million in benefits; expect to AmeriGas UGI International realize $140 Million in permanent annual savings by FY22 o Increasing projected spend by $25 Million €30 o Tot
Slide 24: Develop and Grow Platform for Renewable Solutions
Develop and Grow Platform for Renewable Solutions UGI Corporation BRING NEW MARKET OPPORTUNITIES DRIVE LPG BUSINESS EVOLUTION New Renewable Fuels Tech-enabled Sales Channel Development • “De-fossilize” LPG via acquisitions and • Automatic vending solution supply sources • Home delivery • Business Mo
Slide 25: Key Takeaways – Global LPG
Key Takeaways – Global LPG UGI Corporation FOCUS DEVELOP GROW Transformation programs Molecules in supply chain Continue investing in set the stage for cost will be de-fossilized customer journey, vending, reduction home delivery, and digital Expansion of renewables in interface Evolving e
Slide 26: Our Financial Overview
Our Financial Overview UGI Corporation Our Portfolio 26 Approach
Slide 27: Our Strategic Evolution
Our Strategic Evolution UGI Corporation 2016 2017 2018 2019 2020 20212 2022 and beyond $2.95 Adjusted $2.65 6.8% EPS1 CAGR $2.05 $2.29 $2.74 $2.28 $2.67 2016 – 2020 Breaking Natural Gas Down Silos Global LPG Differentiated Renewable Energy Solutions • Core-competency focus • Strategic oversight - LP
Slide 28: Cash Flow Stability
Cash Flow Stability UGI Corporation Cash flow stability and growth remains a 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. UGI-US NJR-US Peer 1 SJI-US Peer 2 ATO-US Pe
Slide 29: Cash Engine Drives Future EPS and Dividend Growth
Cash Engine Drives Future EPS and Dividend Growth UGI Corporation UGI Dividends, $350M - Share Repurchase, Base Business and $400M Regulatory 3-4% and Debt Earnings Growth $1.2 - $1.6 Billion Repayment Cash Flow from Capital Expenditures Operations and M&A ~55% Global LPG Investment Capital ~45% Nat
Slide 30: Our Cash Deployment
Our Cash Deployment UGI Corporation Cash Flow from Operations Capex Dividends and Net Debt FY 2021-24 and M&A Share Repurchase Reduction $5.0 - $5.6 B $3.7 - $3.9 B $1.2 - $1.3 B $0.1 - $0.4 B • Continuing to build a • Capital plan at Utilities • Meet commitment to • Reduce consolidated resilient co
Slide 31: Sustainable and Growing Cash Flows
Sustainable and Growing Cash Flows UGI Corporation Blueprint for Less Weather Sensitivity • Growing less weather-sensitive business lines: Resilient Cash Growth • Utilities business Sustainable Business Offsetting • LNG peaking services Model Cash Flows Conservation • ACE / NA • Renewable fuels for
Slide 32: Balance Sheet - Leverage
Balance Sheet - Leverage UGI Corporation Leverage1,2,3 Debt Maturities ($ Million) • UGI’s philosophy is to hold debt at its business AmeriGas UGI International units and keep capacity at the holding company Midstream & Marketing UGI Utilities level for truly compelling strategic opportunities UGI C
Slide 33: Achieving our Guidance
Achieving our Guidance UGI Corporation Executing a capital expenditure plan to $2.95 continue creating long-term sustainable shareholder value. Natural Gas, Global $2.67 64% LPG, 36% $2.65 2021E Capital Expenditures: $850 Million FY 2020 FY 2021E Adjusted EPS1 Adjusted EPS2 33 1. Adjusted EPS is a n
Slide 34: History of Meeting EPS and Dividend Commitments
History of Meeting EPS and Dividend Commitments UGI Corporation Long-Term Commitments • EPS Growth: 6 – 10% • Dividend Growth: 4% 2.95 EPS 2.74 2.67 10-year CAGR2 Adjusted Earnings Per Share1 ($) 2.65 7.1% 2.29 2.28 2.02 2.01 2.05 1.61 1.46 1.41 1.25 Dividend 10-year CAGR 6.9% 1.30 1.31 0.87 0.91 0.
Slide 35: Mountaineer Acquisition
Mountaineer Acquisition UGI Corporation 35
Slide 36: Mountaineer Acquisition Highlights
Mountaineer Acquisition Highlights UGI Corporation • Be the preferred provider in all markets Aligns with UGI Corp Strategy • Leverage strengths and expertise • Grow earnings through acquisitions, capital projects and organic growth • Opportunity to make investments to support customer growth, ensur
Slide 37: A Strategic Fit / Rebalancing UGI's Business Mix
A Strategic Fit / UGI Corporation Rebalancing UGI’s Business Mix Platform for Renewable Energy Future • Growth investment in natural • Infrastructure replacement program gas and renewable solutions will lower methane and other GHG opportunities emissions • Gas LDCs provide stable, long • Assess othe
Slide 38: Transaction Summary
Transaction Summary UGI Corporation • On December 29, 2020, UGI entered into a definitive agreement to acquire Transaction Mountaineer Gas Company (“Mountaineer”) and Purchase Price • Enterprise Value of $540 million including the assumption of Mountaineer’s long- term debt ($140 million) • Enterpri
Slide 39: Overview of Mountaineer Gas Company
Overview of Mountaineer Gas Company UGI Corporation Largest LDC in West Virginia, serving ~215,000 customers (90% residential) across 50 of WV’s 55 counties • Fully rate-regulated business with $378 million rate base1 • ~6,000 miles of pipe (25% bare steel) • West Virginia has a constructive regulat
Slide 40: Strengthening Our Rate-Base Growth
Strengthening Our Rate-Base Growth / UGI Corporation • Strong existing stand-alone rate base at UGI Anticipate MGC rate base to grow by Utilities projected to grow at a CAGR stronger 4.5 approximately 10% - 12% CAGR over the than its historical growth rate long term; in line with expected rate base
Slide 41: Overview of Utilities Businesses
Overview of Utilities Businesses / UGI Corporation UGI Utilities + UGI Utilities MGC Total Employees 1,700 2,170 Total Customers 740,000 955,000 Miles of Gas Mains 12,300 18,200 Net Leverage1,2 Capital Expenditures1 $348M $403M Gas Bill as % of Median Inc.2 < 2.0% < 2.0% UGI Utility Service Area Rat
Slide 42: Key Takeaways
Key Takeaways UGI Corporation 42
Slide 43: Key Takeaways
Key Takeaways UGI Corporation We continue to remain well-positioned to deliver on our long-term commitments to shareholders of 6-10% annual EPS growth and 4% dividend growth and position UGI as a leader of a renewable energy future. We will continue to: We will accelerate: • Build a more weather
Slide 44: Appendix
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Slide 45: UGI Corp Adjusted Net Income and Adjusted Earnings Per Share
UGI Corp Adjusted Net Income and Adjusted Earnings Per Share UGI Corporation (Millions of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net income attrib
Slide 46: UGI Corporation Free Cash Flow
UGI Corporation Free Cash Flow UGI Corporation ($ in millions) Year Ended September 30, 2011 2012 2013 2014 2015 Net Cash Provided By Operating Activities $555 $708 $802 $1,005 $1,164 Less: Expenditures for property, plant, and equipment (361) (339) (486) (457) (491) Less: Dividends (114) (119) (126
Slide 47: UGI International Margins
UGI International Margins UGI Corporation ($ in millions) Year Ended September 30, 2000 2020 Total Revenues $51 $2,127 Total Cost of Sales (30) (1,191) Total Margin $21 $936 47
Slide 48: Midstream & Marketing Margins
Midstream & Marketing Margins UGI Corporation ($ in millions) Year Ended September 30, 2000 2020 Total Revenues $147 $1,247 Total Cost of Sales 141 (892) Total Margin $6 $355 48
Slide 49: UGI Corporation Adjusted EBITDA and Leverage Ratio
UGI Corporation Adjusted EBITDA and Leverage Ratio UGI Corporation ($ in millions) Year Ended September 30, 2019 2020 Net income including noncontrolling interests $308 $532 Income taxes 93 135 Interest expense 258 322 Depreciation and amortization 448 484 EBITDA 1,107 1,473 Unrealized losses (gains
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