Ugi Corporation · NYSE:UGI
Ugi — Investor Day (October 2012)
148 slides from Ugi's investor day presentation, Oct 17, 2012
Slide 1: 2012 Analyst Day
2012 Analyst Day October 17, 2012 1
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 Lon Greenberg Jerry Sheridan John Walsh Paul Grady Kirk Oliver John Iannarelli Davinder Athwal Brad Hall Simon Bowman Angela Rodriguez Hugh Gallagher Bob Beard Monica Gaudiosi Donald Brown Jessica Milner Neil Murphy Eric Naddeo Reinhard Schödl
Slide 4: Agenda
Agenda 8:30 AM Hugh Gallagher – Introductions 8:35 AM Lon Greenberg – Opening Remarks 9:00 AM Bob Beard – Utilities 9:25 AM Jerry Sheridan – AmeriGas 9:55 AM John Walsh – International Propane Panel Discussion 10:35 AM Break 10:50 AM Brad Hall – Midstream & Marketing 11:30 AM John Walsh – Financial
Slide 5: Lon Greenberg, Chairman & CEO
Lon Greenberg Chairman & CEO October 17, 2012 5
Slide 6: About UGI Corporation
About UGI Corporation UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity. UGI Corporation (NYSE: UGI) Domestic Propane* International Midstream and Utilities Propane Marketing (NYSE: APU) 100+ local brand names *100%
Slide 7: About UGI Corporation
About UGI Corporation UGI operates in 50 states and 16 European countries AmeriGas also operates in Hawaii and Alaska Domestic International Midstream & UGI Utilities Propane Propane Marketing October 17, 2012 7
Slide 8: UGI's Businesses
UGI’s Businesses Similar End Functionally related with Uses (heating, numerous common cooking, commercial Similar customer Margin / applications) attributes pricing mix management (Residential and commercial) Common approach to Common Large number of hedging / risk small dollar management Attributes
Slide 9: UGI's Businesses
UGI’s Businesses Diversification through: Geographies Value chain • Operations across the United States • Operations range from generation, and 16 European countries gathering, storage, transportation, and sale to the end user Customer segments Commodities • Retail end-users • Natural gas • Commerci
Slide 10: Diversified Growth Opportunities
Diversified Growth Opportunities UGI has a variety of initiatives in place to drive growth in all its businesses 15 Bcf gas storage Gas gathering Acquisitions / pipelines Cylinder exchange and Natural gas national peaking accounts Natural gas Energy marketing marketing Organic Incorporate growth Mar
Slide 11: Total Shareholder Return Proposition
Total Shareholder Return Proposition ~ 14% UGI is a balanced growth and income investment 4% dividend growth ~ 10% Reinvestment 4% of Cash dividend 3% - 4% growth ~ 8% EPS growth EPS growth from 4% from projects dividend growth projects 2% - 3% 2% - 3% Base EPS Base EPS Growth Base EPS Growth Growth
Slide 12: The UGI "Virtuous Circle"
The UGI “Virtuous Circle” Income-producing businesses generate cash for growth opportunities and dividends Base business earnings Cash flow Dividends growth Incremental Organic earnings investment growth and M&A October 17, 2012 12
Slide 13: The UGI "Virtuous Circle"
The UGI “Virtuous Circle” Income-producing businesses generate cash for growth opportunities and dividends Cash flow Dividends $250 MM- Base business earnings growth $125 MM- 3-4% $290 MM* $140 MM* Organic investment and M&A1 $125 MM- Incremental earnings growth 3-6% $150 MM* *multi-year average for
Slide 14: Our Track Record
Our Track Record Goals: Capital 4% 6-10% investment and M&A to Generate cash flow to pay for both growth strengthen our Dividend EPS growth position across projects and growth target target dividend units Accomplishments: Heritage 7.3% 13.0% acquisition $125+ MM Shell LPG Dividend EPS growth acquisi
Slide 15: Dividend Performance History
Dividend Performance History UGI has paid uninterrupted 4% dividends for 128 years and Dividend growth target increased its dividend for the past 25 consecutive years 7.3% Dividend growth (10- year CAGR*) *through FY11 October 17, 2012 15
Slide 16: Total Shareholder Return
Total Shareholder Return Total Return CAGR (%)e 3 yr 5 yr 10 yr 300 UGI 12.0 7.6 13.7 S&P 500 Utilities 12.3 2.4 11.3 UGI S&P 400 Midcap 14.3 3.8 10.8 225 S&P 500 13.2 1.1 8.0 Total Return (%) 150 75 - Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-12 Sep-11 UGI S&P 500 S&P 500 U
Slide 17: Fiscal 2013 Guidance
Fiscal 2013 Guidance UGI and APU guidance: $2.45-2.55 $630 -$660 MM UGI Corp Fiscal Year 2013 EPS AmeriGas Partners Fiscal Year 2013 Guidance EBITDA Guidance More details on Fiscal 2013 guidance to follow… October 17, 2012 17
Slide 18: Meeting UGI's growth goals
Meeting UGI’s growth goals 4% Cash dividend generation growth Midstream Investments, Intl./domestic Reinvestment propane acq., of Cash 3% - 4% Utility acq. Auburn II, Storage EPS growth from enhancements, LNG projects expansion, gathering systems, 2% - 3% Commonwealth Utility conversions/growth, Ame
Slide 19: EPS Growth Goals
EPS Growth Goals REINVESTMENT OF $3.25 CASH: 2013 guidance Midstream investments $3.00 Propane acquisitions - Int’l & domestic Utility acquisitions $2.75 PROJECTS: $2.50 Auburn II, Storage enhancements, LNG 2013 guidance expansion, gathering 2013 guidance systems, Commonwealth $2.25 $2.00 BASE GROWT
Slide 20: Performance Measures
Performance Measures 7.3% Dividend growth* Excellent returns at a below-group multiple! 13.0% Earnings growth* 12.8x Forward P/E ratio Versus selected industry group1 at 15.4x *10-year CAGR through FY11 1Industry group includes SJI, WGL, NWN, NJR, ATO, GAS, STR, NFG, EGN October 17, 2012 20
Slide 21: Investment Thesis: FY13-FY15
Investment Thesis: FY13-FY15 Enhanced shareholder return achieved by: Meeting or exceeding Closing the our targets: “information gap” • 4%+ dividend growth • Increased information about • 6% to 10% EPS growth our businesses • Increased investor outreach • Better understanding of how UGI fits into th
Slide 22: Key Takeaways from Today
Key “Takeaways” from Today ü Clear understanding of UGI’s earnings growth goals and achievability ü Clear understanding of each business unit’s key strategic initiatives ü UGI expectations for the sources of future earnings and cash flow UGI is: • a diversified energy company offering balanced growt
Slide 23: Bob Beard, UGI Utilities
Bob Beard UGI Utilities October 17, 2012 23
Slide 24: Agenda
Agenda • Keys to Success • Service Territory • Financial Performance • Customer Growth • Infrastructure Management • Looking Forward October 17, 2012 24
Slide 25: Keys to Success
Keys to Success Operations Focus on fundamentals and safe, efficient operations Growth core heating customers by 1-2% annually in Growth current economic environment Service Remain a leader in customer satisfaction Proactive engagement with our regulatory, legislative, Regulation and municipal stake
Slide 26: Utilities History
Utilities History UGI operates three natural gas utilities and one electric utility – each separately regulated: • UGI Utilities – UGI Gas in operation for over 130 years • Acquired UGI Penn Natural Gas in 2006 • Acquired UGI Central Penn Gas in 2008 • UGI Utilities – Electric (UGI Electric) – since
Slide 27: Service Territory
Service Territory October 17, 2012 27
Slide 28: Service Territory
Service Territory Pennsylvania’s largest gas utility • 45 of the 67 PA counties served • Service provided in 6 of the top 10 PA population centers • Service provided in 709 PA municipalities Wide range of customer opportunities • ~600,000 gas customers adjacent to the Marcellus Shale region • ~60,00
Slide 29: Strong Financial Performance
Strong Financial Performance $ in millions 2007 2008 2009 2010 2011 EBITDA $ 206.0 $ 204.3 $ 220.5 $ 243.0 $ 264.0 D&A (40.9) (41.2) (51.1) (53.5) (52.6) EBIT 165.1 163.1 169.4 189.5 211.4 Interest (42.3) (39.1) (43.9) (42.3) (42.7) Taxes (48.6) (50.0) (46.8) (56.9) (63.5) Net Income $ 74.2 $ 74.0 $
Slide 30: Conservative Financial Management
Conservative Financial Management • Investment-grade credit ratings: A3 / A • Low leverage: Debt-to-total-capitalization under 50% • Favorable debt maturity profile • $40 MM maturing in FY12 – repaid • $133 MM maturing in FY13 – refinancing is largely hedged • Strong liquidity • $300 MM working capi
Slide 31: Focus on Customer Growth
Focus on Customer Growth • In 2012 UGI Gas achieved +1.9% net customer growth Annual Natural Gas Savings over Oil • Focused on customer conversions from oil and other fuels $1,553 $1,485 • Historical growth was from new housing market $922 $860 • Estimate that ~500,000 potential customers in proximi
Slide 32: Historical Growth: Residential
Historical Growth: Residential Annual Residential Gas Customer Additions October 17, 2012 32
Slide 33: Historical Growth: Commercial
Historical Growth: Commercial Commercial Customer Conversions • Record success in commercial conversions in 5,794 2012 4,845 • Launching new fall 4,007 4,095 campaign targeted at small businesses 3,402 2,985 • Multiple large C&I 2,232 conversions in 2012 and 1,719 scheduled for 2013 927 • Increased
Slide 34: Infrastructure Management
Infrastructure Management UGI Pipeline System 15% Cast Iron / Bare Steel 85% Ahead of other PA Utilities: Contemporary 73% avg. • UGI has an aggressive capital replacement plan • 531 miles of cast iron and bare steel pipe replaced in last 10 years October 17, 2012 34
Slide 35: Infrastructure Management
Infrastructure Management • UGI has proposed replacement of all cast iron main within 14 years and all bare steel main within 30 years • We have accelerated our spending and rate of replacement in infrastructure over the last 5 years Replacement Investment ($MM) 71.2 60.3 60.3 50.0 40.5 2009 2010 20
Slide 36: Constructive Regulatory Environment
Constructive Regulatory Environment Proactive communications with regulators • Base rate cases are generally settled in less than 9 months • Distribution System Improvement Charge (DSIC) approved in 2012 provides a quarterly surcharge to recover cost of infrastructure updates o Uses a fully forecast
Slide 37: Looking Forward
Looking Forward We are driving earnings growth through: • Customer growth • Investments in infrastructure • Operational productivity • Continued addition of Marcellus shale gas into our distribution system October 17, 2012 37
Slide 38: Questions?
Questions? October 17, 2012 38
Slide 39: Jerry Sheridan, AmeriGas
Jerry Sheridan AmeriGas October 17, 2012 39
Slide 40: History of AmeriGas
History of AmeriGas • Started in 1959 • 165 acquisitions since 1982 • Cal Gas acquisition in 1987 • Petrolane acquisition in 1993 • IPO as an MLP in 1995 • Columbia acquisition in 2001 • Heritage acquisition in 2012 October 17, 2012 40
Slide 41: History of Heritage Brands
History of Heritage 160 Brands October 17, 2012 41
Slide 42: New AmeriGas Profile
New AmeriGas Profile AmeriGas provides service to all 50 states 8,500+ Employees 2,000 Locations 2+ million Customers 1.2+ billion Propane gallons sold annually 8,000+ Bobtails and service trucks in fleet October 17, 2012 42
Slide 43: Competitive Advantages
Competitive Advantages • Unmatched geographic coverage • Customer density = efficiency • Advantage in acquisitions, serving multi-state customers • Geographic and end-use diversity • Size provides purchasing advantage • Counter-seasonal business (ACE) and non-volumetric revenue streams (AmeriGuard,
Slide 44: The Propane Industry
The Propane Industry Retail Propane Outlook Consumption Trends* Supply • Supply continues to grow in the US as more wet-gas shale 11 production comes on line 10 • Exports rising, bolstered by Asia 9 • Relatively stable wholesale costs 8 expected for the near future 7 6 Historical Retail Demand* 5 •
Slide 45: The Propane Industry
The Propane Industry AmeriGas Conservation New Propane-Heated Study(1) Homes (2) Conservation has been 1%-2%; A nascent housing market recovery lower future propane prices will and commercial expansion will help mitigate price-induced conservation offset structural conservation 525 1.5% annual conse
Slide 46: Strategic Goals
Strategic Goals Strategic Growth AmeriGas Advantage Initiatives • Leverage extensive distribution network National Accounts • Dedicated customer service / billing team • Counter seasonal summer business AmeriGas Cylinder • Nationwide distribution footprint Exchange • Nationwide footprint provides sy
Slide 47: Unmatched Nationwide Footprint
Unmatched Nationwide Footprint Largest player in a fragmented industry with 15% market share Market share (%) 65 60.7 15.1 15 10 8.9 7.2 5 3.2 2.4 0.9 0.8 0.8 0 AmeriGas + Ferrellgas Suburban/ Growmark Cenex MFA Oil United Blossman All Heritage Inergy Co. Propane Gas Inc. Others Gas October 17, 2012
Slide 48: Business Diversification
Business Diversification Customer Base Geography 23% 36% Southwest 24% 47% Commercial/ Industrial Residential Northwest 26% Northeast 27% Southeast 11% Transport 3% 3% Agriculture Motor Fuel Based upon combined AmeriGas and Heritage retail gallons sold October 17, 2012 48 for the 12 month period end
Slide 49: Strategic Growth Opportunities
Strategic Growth Opportunities AmeriGas Cylinder Exchange National Accounts • Counter-seasonal to heating • Leverages national footprint season • Service multiple locations – one bill • Significant scale - 41,000 distribution points • Centralized account management • 13 million cylinders per year •
Slide 50: Unit Margin Management
Unit Margin Management A long track record of exceptional margin management through volatile propane cost environments $1.80 $1.80 $1.60 $1.60 Propane Unit Margins Avg. Mt. Belvieu Cost $1.40 $1.40 $1.20 $1.20 $1.00 $1.00 $0.80 $0.80 $0.60 $0.60 $0.40 $0.40 $0.20 $0.20 $0.00 $0.00 2005 2006 2007 200
Slide 51: Heritage Update
Heritage Update Heritage Propane – 1 year later October 17, 2012 51
Slide 52: Heritage Timeline
Heritage Timeline On target to deliver at least $60 million in net synergies in FY13 Jan Feb Mar Apr May Jun Jul Aug Sept ü$1.55 billion ü $289MM ü Leadership ü New business ü All back üFY 12 HY debt Equity Team model office blends financing offering appointed finalized functions completed down to t
Slide 53: Integration Team Status
Integration Team Status Team Field operations Metro Lift Sales & Marketing • Various teams focused on all National Accounts aspects of the integration Supply & Logistics Real Estate • Managed by an Integration IT SAP Management Office Finance Procurement • All projects on schedule Fee Income Tax HR
Slide 54: Much Has Gone Well
Much Has Gone Well • On pace to achieve at least $60 MM in synergies in FY13 • Implemented comprehensive change management program • Built new leadership team that meshed leaders from both organizations • Successfully merging two different cultures October 17, 2012 54
Slide 55: Acquisition Benefit: Critical Mass
Acquisition Benefit: Critical Mass AmeriGas District Locations Before After Consolidation 4.7% 17.2% 39.0% 44.0% 51.4% 43.8% <1MM Gallons 1-3MM Gallons >3MM Gallons Larger Districts Bring Greater Profitability October 17, 2012 55
Slide 56: Scale Drives Growth
Scale Drives Growth Acquisitions 3% - 4% ACE/National Accounts EBITDA Growth Biggest Sales Force in the Industry Better Segmentation – Really Understand Our Customer Great Customer Service – Delight the Customer October 17, 2012 56
Slide 57: Our Track Record
Our Track Record Goals: ü Maintain strong liquidity 5% 3%-4% ü Sound balance sheet Distribution EBITDA ü Conservative credit Growth Growth metrics Accomplishments: 5.5% 5.6% $525MM Revolving Credit Facility Distribution EBITDA Balance sheet strength growth growth utilized to complete Heritage 2006-2
Slide 58: EBITDA Growth
EBITDA Growth Adjusted EBITDA ($ millions)1 $700 $645 $600 $500 $400 $300 $200 $100 $0 2006 2007 2008 2009 2010 2011 2012 2013 (1) See appendix for reconciliation of historical adjusted EBITDA to Net Income. 2012 and 2013 represent the midpoint of current guidance as disclosed in the press release d
Slide 59: Distribution Growth
Distribution Growth Distributions per unit Distribution Coverage * (excluding special distributions) 1.5 1.4 $3.20 1.4 1.3 1.3 1.3 1.2 $2.96 $2.82 $2.68 0.7 $2.56 $2.44 $2.32 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 2013 (F) (G) * 2012(F) and 2013(G) are based upon the m
Slide 60: Conservative Financial Management
Conservative Financial Management Leverage Ratio* Strong Financial Profile Debt / Adjusted EBITDA • Credit rating: Moody’s Ba2 / Ba3 • Long term debt < 7.0% on avg. 4.9 • Repaid over $230MM in long-term 4.5 debt since acquisition 3.9 3.7 3.7 • No significant maturities until 2019 3.7 3.5 3.2 3.1 • G
Slide 61: Questions?
Questions? October 17, 2012 61
Slide 62: International Propane Panel
International Propane Panel • John Walsh, Moderator • Eric Naddeo • Reinhard Schödlbauer • Neil Murphy October 17, 2012 62
Slide 63: Characteristics
Characteristics Customer segments: U.S. Europe Bulk delivery business (250 – 1,000 gallons) √ √ Cylinder exchange √ √ Motor fuel – forklifts √ √ Motor fuel – over the road autogas √ Competitive Landscape U.S. Europe Fragmented market √ Larger share / fewer independent marketers √ Pricing/Margin Mana
Slide 64: UGI's Propane Businesses
UGI’s Propane Businesses Domestic International Brand 100+ local brand names Countries of France, Belgium, Netherlands, Luxembourg, Austria, U.S. Poland, Czech Republic, Hungary, Slovakia, Romania, operation Switzerland, Norway, Sweden, Denmark, Finland, U.K. Approx volume >1.2 billion (retail) >600
Slide 65: European Economic Environment
European Economic Environment Economic outlook GDP Forecasts For UGI European Operations1 • Scandinavia / Central Europe flat %y/y 2013 2014 to modest growth France 0.1% 0.6% • France and UK GDP growth: flat Emerging Europe 2.8% 3.2% • No exposure to Southern Europe U.K. -0.6% 1.4% Fuel consumption
Slide 66: Propane Unit Margins (€/T)
Unit Margin Management Intl. Propane has demonstrated the ability to manage margins in various cost environments – this is a core strength of all of UGI’s Propane businesses Antargaz Margin History 700 € 700 € Propane Unit Margins (€/T) Avg. Platt’s Cost (€/T) 600 € 600 € 500 € 500 € 400 € 400 € 300
Slide 67: UGI Europe Growth Initiatives
UGI Europe Growth Initiatives ORGANIC GROWTH: • Heating Oil to LPG conversions in select countries • Core bulk segment • Penetration of new LPG markets in U.K. • Residential customer growth in Poland • Composite cylinder for specific channels • Commercial bulk business in Poland and Scandinavia • Ex
Slide 68: Eric Naddeo, Antargaz
Eric Naddeo Antargaz October 17, 2012 68
Slide 69: One of the largest LPG Distributors in France
One of the largest LPG Distributors in France Large customer base: • ~200,000 bulk customers • ~300 MM gallons • Over 3 million cylinder customers Cuijk • 24% market share q Gent Diegem q Nannine q q Valenciennes Waime q Le Havre s q Habay Competitive advantages: Courbevoie Bertrange • Independent s
Slide 70: Impact of Shell LPG acquisition
Impact of Shell LPG acquisition Recent Benelux acquisition consolidates Antargaz’s position • Strong position in both cylinder & bulk segments (approx 50 million gallons) • Market leader in Belgium, Luxembourg, significant share in Netherlands • Portfolio of over 35,000 bulk customers and 1,000 cyli
Slide 71: Market Position
Market Position Strong market position combined with steady profitability enables ambitious growth programs Stability of the customer base: • Bulk • Long term contracts • Low churn rate (3%) • Average length of customer relationship: 15 years • Cylinder • Close links with the supermarket chains • Pr
Slide 72: Natural gas
Natural gas A new and promising market: • Antargaz has been authorized by the government • as a new natural gas supplier • the only propane company active on the gas market • Antargaz is focused on the most profitable segment of the market: the 700,000 small and medium C&I consumers • Similar approa
Slide 73: Market position
Market position A track record of increasing market share while maintaining strong margins 25% Butane cylinder €/Ton Gross Margin 1200 24% 23% 1100 22% 21% 1000 20% 900 19% 2007 2008 2009 2010 2011 800 700 25% 600 Propane cylinder 24% 500 400 23% FY07 FY08 FY09 FY10 FY11 FY12 22% Propane Cylinder Bu
Slide 74: Conclusion
Conclusion • A strong, well-known brand • Significant market share of French LPG market • Strong market position in all segments • A focus on innovation and flexibility • Continue to seek new growth opportunities in the LPG and natural gas markets October 17, 2012 74
Slide 75: Reinhard Schödlbauer, Flaga
Reinhard Schödlbauer Flaga October 17, 2012 75
Slide 76: FLAGA Group
FLAGA Group • A leading LPG distributor in Central, Eastern & Northern Europe • Over 200 million retail gallons sold annually • Operating in 11 countries • 900 employees • Headquartered in Vienna, Austria 20% 21% Cylinder Bulk Autogas 59% October 17, 2012 76
Slide 77: FLAGA from a family business to an Industry Leader
FLAGA from a family business to an Industry Leader 1947 Founded by Adolf Bauer Acquired by UGI Corporation, established footprint in Europe 1999 Establishment of a Subsidiary in Switzerland 2003 Acquisition of BP Czech Gas 2004 Acquisition of PROGAS Austria, establishment 2006 of J/V in SK, PL, HU,
Slide 78: Impact of Shell LPG acquisition
Impact of Shell LPG acquisition October 2011: Acquisition of Scandinavian SHELL LPG businesses - FLAGA / UGI now has a significant presence in Scandinavia Integration update: • Detailed integration plan executed and completed August, 2012 • Headcount reduction ~ 25% • Current status: • Operational m
Slide 79: Growth Opportunities in Poland
Growth Opportunities in Poland Economic data: • GDP growth forecasts: • 2012 - 2.5% • 2013 - 2.5% • 2014 - 3.8% • Debt/GDP around 56%, forecast at 50% in 2014 ~ 38 million pop ~41 million pop Market: ~ 120,000 sq mi ~110,000 sq mi • Third largest LPG market in Europe ~ 1.2 billion gallons • Market c
Slide 80: FLAGA Mid-Term Growth Opportunities
FLAGA Mid-Term Growth Opportunities Mid-Term Opportunities • Increase customer density in our existing markets • Customers conversions from heating oil (Scandinavia) • Organic growth in developing Eastern European markets like Poland and Hungary • “Tuck-in” acquisitions • Expansion into new markets,
Slide 81: Neil Murphy, AvantiGas
Neil Murphy AvantiGas October 17, 2012 81
Slide 82: AvantiGas Overview
AvantiGas Overview • AvantiGas Established October 2011 – Formerly Shell Gas UK (LPG) • Market segments: Aerosol, Agriculture, Commercial, Domestic, Industrial • >130 MM gallons • 42% bulk • 57% wholesale • 1% autogas • 13% Bulk LPG Market share • Strong supply position • Nationwide coverage October
Slide 83: AvantiGas Overview
AvantiGas Overview Both geographic and industry growth opportunities: • New geographies (Northern Ireland, Ireland, Scotland) • Residential bulk expansion • Expansion into new market segments Bulk LPG tonnage 850,000T Other 10% BP 12% Calor 44% AvantiGas 13% Flogas 21% October 17, 2012 83
Slide 84: Future Developments for AvantiGas
Future Developments for AvantiGas • Deliver the acquisition business plan • Pursue segment-specific growth • Leverage Pan-European position of UGI to: • Develop a culture of best practice-sharing • Increase coverage of new geographies • Evaluate cylinder position in UK market • Drive value from uniq
Slide 85: Questions?
Questions? October 17, 2012 85
Slide 86: 15 minute break
15 minute break October 17, 2012 86
Slide 87: Brad Hall, Midstream & Marketing
Brad Hall Midstream & Marketing October 17, 2012
Slide 88: Overview
Overview Lines of Business Marketing Generation Midstream Natural Gas Generation Pipelines and • >100 Bcf • Hunlock: 125 MWs Gathering • > 30,000 locations combined cycle • 33 LDCs • Conemaugh: 102 Storage – 15 Bcf MWs coal-fired • Renewable energy: Peaking Power ~ 17 MWs • 1.25 Bcf LNG Storage • >
Slide 89: Overview
Overview Net Income: FY01 ~$4MM, FY06 ~$31MM, FY11 ~$53MM Marketing Generation Midstream 55% of historical 13% of historical 32% of historical EBIT EBIT EBIT 55% of future <5% of future >40% of future EBIT EBIT EBIT October 17, 2012 89
Slide 90: Commodity Marketing
Commodity Marketing We supply over 100 bcf of gas and over 2 MM MWhrs of power to 40,000 commercial and industrial facilities throughout the Mid-Atlantic region Strategy Target small and medium-size businesses that value our services (hedging, management of energy requirements); we are not a wholesa
Slide 91: Commodity Marketing
Commodity Marketing Consistent, disciplined approach results in steady earnings growth through numerous disruptive events Commodity Marketing Margin 22% warmer than normal $'s in 000's winter $80,000 Commodity spike to Katrina/Rita ~$13/Dth and $70,000 price spikes drop to ~$3/Dth $60,000 TXU (last
Slide 92: Commodity Marketing
Commodity Marketing Drivers: Organic growth / margin management / Strong credit review process / working capital discipline • Targeting organic growth of 5%-7% per year • Historical financial / operational statistics: ($ millions) FY08 FY09 FY10 FY11 FY12 (F) Natural gas margin $ 44.6 $ 45.1 $ 55.6
Slide 93: Electric Generation
Electric Generation Electric generation strategy: • Our electric generation assets are former utility rate plants that have been modestly expanded in recent years • Our generation portfolio: • provides balancing support for our growing retail power marketing business • reduces supplier credit Major
Slide 94: Electric Generation
Electric Generation Drivers: Capacity payments / forward strip / gas prices • Electric Generation is not expected to be a significant source of earnings growth going forward • Net income contribution: • FY08: ~ $15MM • FY10: ~ $7MM • FY12 (fcst): ~ ($1MM) • Future: ~ $4MM-$8MM – about $.03 to $.06 p
Slide 95: Natural Gas Peaking
Natural Gas Peaking A customized, low-cost alternative to firm pipeline capacity designed to serve a Utility’s needs on the coldest days of winter • Works like an insurance contract – utilities pay to have the asset ready for utilization • Utilities reduce costs by using the cheaper peaking service
Slide 96: Ancillary LNG Opportunities
Ancillary LNG Opportunities In July, UGI started supplying drill rigs in the Marcellus with LNG • LNG displaces diesel in field compressors • Active discussions with producers representing over 1 Bcf/yr of potential demand • Very low cost liquefaction creates a competitive advantage Other opportunit
Slide 97: Midstream
Midstream UGI footprint and the Marcellus Shale Erie Potter Warren McKean Tioga Bradford Susquehanna Crawford Wayne Forest Wyoming Venango Elk Cameron Sullivan Mercer Lycoming Pike Clinton Clarion Jefferson Luzerne Lawrence Monroe Clearfield Union Butler Centre Carbon Armstrong North Umberland Beave
Slide 98: Midstream Strategy
Midstream Strategy Leverage UGI’s geographic position/demand, assets, and intellectual capital to build a significant midstream business in the Marcellus • Link supply to markets by leveraging UGI’s existing pipeline infrastructure • Build new capacity from prolific Marcellus areas to market centers
Slide 99: Midstream Storage Assets
Midstream Storage Assets ~ 15 Bcf in North-Central PA Dominion Transmission Tennessee Pipeline • Tioga : 11 Bcf; 184,000 dth/day • Meeker : 3 Bcf; 30,000 dth/day • Wharton: 1 Bcf; 10,000 dth/day • FERC regulated – Market- based rates • Future plans include the addition of • Investment: $10MM - $12MM
Slide 100: Pipelines and Gathering: Auburn I
Pipelines and Gathering: Auburn I • 9 miles of existing 12” pipeline • Runs north to Tennessee Interstate Pipeline • Capacity 120,000 Dth/day • Investment: ~ $16 million • Announced: September 2010 • At full capacity: February 2012 • Anchor Shipper: Citrus Energy Corporation 100 100 October 17, 2012
Slide 101: Pipelines and Gathering: Auburn II
Pipelines and Gathering: Auburn II • 28 miles 24”/12” pipeline • Will run south to Transco and UGI PNG • Capacity 380,000 Dth/day • Investment: ~ $160 million • Announced: October 2011 • Current status: permitting, zoning and right of way acquisition phases • Expected in-service: winter FY14 • Shipp
Slide 102: Pipelines: Commonwealth
Pipelines: Commonwealth • Begins at MARC I and ends at the Eagle interconnect near Downington, PA • Includes interconnection with UGI’s Temple LNG facility • Approximately 800MMcf / day • UGI and a subsidiary of WGL have executed precedent agreements • Working to sign precedent agreements with addit
Slide 103: Midstream
Midstream Drivers: Timely project completions / ROEs = expected returns • Targeting growth of 15%-20% primarily due to new projects • Historical financial and operating information: ($ millions) FY08 FY09 FY10 FY11 FY12 (F) Peaking margin $ 18.4 $ 22.8 $ 22.5 $ 27.2 $ 29.0 Capacity management margin
Slide 104: Questions?
Questions? U Cy F CORPORATION
Slide 105: John Walsh, President & COO
John Walsh President & COO October 17, 2012 105
Slide 106: What you have heard so far…
What you have heard so far… UGI Corporation is a balanced growth and income investment AmeriGas Utilities • Significant scale drives 3% to 4% • Strong service territory EBITDA growth • Organic customer growth through • Diversified by end use and conversions geography • Low risk, A-rated Utility busi
Slide 107: Total Shareholder Return Proposition
Total Shareholder Return Proposition ~ 14% UGI is a balanced growth and income investment 4% dividend growth ~ 10% Reinvestment 4% of Cash dividend 3% - 4% growth ~ 8% EPS growth EPS growth from 4% from projects dividend growth projects 2% - 3% 2% - 3% Base EPS Base EPS Growth Base EPS Growth Growth
Slide 108: Dividend Growth
Dividend Growth ü Consistently at or in excess of 4% (>7% 10-year CAGR) ü Significant excess cash generation $1.10 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 2003 2004 2005 2006 2007 2008 2009 2010 2012 2011 *through FY11 October 17, 2012 108
Slide 109: EPS: Where will the growth come from?
EPS: Where will the growth come from? $3.10 $2.80 $2.50 $2.20 $1.90 $1.60 $1.30 $1.00 2013 guidance 2014 2015 October 17, 2012 109
Slide 110: EPS Growth: 6% to 10%
EPS Growth: 6% to 10% REINVESTMENT OF $3.25 CASH: 2013 guidance Midstream investments $3.00 Propane acquisitions - Int’l & domestic Utility acquisitions $2.75 PROJECTS: $2.50 Auburn II, Storage enhancements, LNG 2013 guidance expansion, gathering 2013 guidance systems, Commonwealth $2.25 $2.00 BASE
Slide 111: Composition of Base Growth
Composition of Base Growth* .01 .09-.11 .02-.03 .04-.05 .01-.02 .01-.02 Utilities AmeriGas Generation Base growth target International Midstream & BASE GROWTH of 3% to 4%: Marketing Utility conversions/growth, AmeriGas EBITDA growth, Midstream & Marketing organic growth, natural gas marketing in Fra
Slide 112: Looking Forward: FY13 Guidance
Looking Forward: FY13 Guidance .03-.04 2.45-2.55 09-.11 .02-.03 FY12 Transition & Debt Ext. 2.35 FY12 Approx. Weather Impact FY12 Guidance* FY12 Normalized Base Growth Generation Projects (Auburn I, FY 13 Guidance* EPS (Estimate) (Hunlock) Storage) *As disclosed in the press release dated Oct 16, 20
Slide 113: Looking Forward: Growth beyond FY13
Looking Forward: Growth beyond FY13 $2.75 .07-.10 .04-.06 .09-.11 .03 .04-.06 $2.50 $2.25 $2.00 FY13 APU FY13 Base Growth Projects Reinvested FY 14 Guidance** transition (Auburn II, cash costs Storage, Marcellus) **As disclosed in the press release dated Oct 16, 2012 October 17, 2012 113
Slide 114: Cash available for reinvestment
Cash available for reinvestment Business Unit Cash Generation* $250MM to $290MM FY12 FY13 FY14 FY15 Cash Generated by business units $ 250.0 $ 270.0 $ 290.0 Less: UGI Dividends paid (125.0) (130.0) (136.0) Cash generated for reinvestment 125.0 140.0 154.0 Less: est. cash to be used in projects (75.0
Slide 115: 6% to 10% EPS Growth Goals
6% to 10% EPS Growth Goals $3.05 10% target $3.00 $2.95 $2.90 $2.85 $2.80 6% target $2.75 $2.70 $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 115
Slide 116: Base Growth
Base Growth $3.05 10% target $3.00 $2.95 $2.90 $2.85 $2.80 6% target $2.75 $2.70 Base Growth $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 116
Slide 117: Base + Projects
Base + Projects $3.05 10% target $3.00 $2.95 $2.90 $2.85 Base+Projects $2.80 6% target $2.75 $2.70 Base Growth $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 117
Slide 118: Stock Repurchase
Stock Repurchase $3.05 10% target $3.00 $2.95 Stock repurchase $2.90 $2.85 Base+Projects $2.80 6% target $2.75 $2.70 Base Growth $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 118
Slide 119: Reinvestment @ 8%
Reinvestment @ 8% $3.05 10% target $3.00 +8% ROE $2.95 Stock repurchase $2.90 $2.85 Base+Projects $2.80 6% target $2.75 $2.70 Base Growth $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 119
Slide 120: Reinvestment @ 10%
Reinvestment @ 10% $3.05 10% target $3.00 +10% ROE +8% ROE $2.95 Stock repurchase $2.90 $2.85 Base+Projects $2.80 6% target $2.75 $2.70 Base Growth $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 120
Slide 121: Reinvestment @ 12%
Reinvestment @ 12% $3.05 10% target +12% ROE $3.00 +10% ROE +8% ROE $2.95 Stock repurchase $2.90 $2.85 Base+Projects $2.80 6% target $2.75 $2.70 Base Growth $2.65 $2.60 $2.55 $2.50 2013 2014 2015 October 17, 2012 121
Slide 122: Looking Forward: EPS
Base Growth Looking Forward: EPS Expected EPS Contribution 6% to 10% growth targets by business unit $3.05 (forecasted multi-year average) $3.00 $2.95 $2.90 19% 35% Domestic Utilities $2.85 Propane $2.80 Int’l Propane $2.75 23% 23% $2.70 Midstream & $2.65 Marketing $2.60 $2.55 BaseGrowth Base growth
Slide 123: Meeting UGI's growth goals
Meeting UGI’s growth goals 4% Cash dividend generation growth Midstream Investments, Intl./domestic Reinvestment propane acq., of Cash 3% - 4% Utility acq. Auburn II, Storage EPS growth from enhancements, LNG projects expansion, gathering systems, 2% - 3% Commonwealth Utility conversions/growth, Ame
Slide 124: Questions? Investor Relations Contacts
Questions? Investor Relations Contacts: 610-337-7000 Hugh Gallagher (x1029) [email protected] Simon Bowman (x3645) [email protected] October 17, 2012 124
Slide 125: Lon Greenberg, Chairman & CEO
Lon Greenberg Chairman & CEO October 17, 2012 125
Slide 126: Agenda
Agenda Concluding remarks Questions and Issues we often hear about our businesses Q&A Session Lunch! October 17, 2012 126
Slide 127: UGI's Businesses
UGI’s Businesses Diversification through: Geographies Value chain • Operations across the United States • Operations range from generation, and 16 European countries gathering, storage, transportation, and sale to the end user Customer segments Commodities • Retail end-users • Natural gas • Commerci
Slide 128: Total Shareholder Return Proposition
Total Shareholder Return Proposition ~ 14% UGI is a balanced growth and income investment 4% dividend growth ~ 10% Reinvestment 4% of Cash dividend 3% - 4% growth ~ 8% EPS growth EPS growth from 4% from projects dividend growth projects 2% - 3% 2% - 3% Base EPS Base EPS Growth Base EPS Growth Growth
Slide 129: The UGI "Virtuous Circle"
The UGI “Virtuous Circle” Income-producing businesses generate cash for growth opportunities and dividends Cash flow Dividends $250 MM- Base business earnings growth $125 MM- 3-4% $290 MM* $140 MM* Organic investment and M&A1 $125 MM- Incremental earnings growth 3-6% $150 MM* *multi-year average for
Slide 130: Our Track Record
Our Track Record Goals: Capital 4% 6-10% investment and M&A to Generate cash flow to pay for both growth strengthen our Dividend EPS growth position across projects and growth target target dividend units Accomplishments: Heritage 7.3% 13.0% acquisition $125+ MM Shell LPG Dividend EPS growth acquisi
Slide 131: Total Shareholder Return
Total Shareholder Return Total Return CAGR (%)e 3 yr 5 yr 10 yr 300 UGI 12.0 7.6 13.7 S&P 500 Utilities 12.3 2.4 11.3 UGI S&P 400 Midcap 14.3 3.8 10.8 225 S&P 500 13.2 1.1 8.0 Total Return (%) 150 75 - Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-12 Sep-11 UGI S&P 500 S&P 500 U
Slide 132: Key Takeaways from Today
Key “Takeaways” from Today ü Clear understanding of UGI’s earnings growth goals and achievability ü Clear understanding of each business unit’s key strategic initiatives ü UGI expectations for the sources of future earnings and cash flow UGI is: • a diversified energy company offering balanced growt
Slide 133: Agenda
Agenda Concluding remarks Questions and Issues we often hear about our businesses Q&A Session Lunch! October 17, 2012 133
Slide 134: Questions: Natural gas vs. heating oil
Questions True or False: Natural gas is making significant inroads on areas traditionally served by heating oil. True Natural gas is less expensive and more convenient for consumers • Most conversions take place within 75-100 feet from the main • A significant number of heating oil customers remain
Slide 135: Questions: Natural gas vs. propane
Questions True or False: Natural gas is also making significant inroads on areas traditionally served by propane. False Natural gas conversions typically extend only 75-100 feet from the main – most propane users are outside of this reach • AmeriGas estimates that it loses less than 3,000 customers
Slide 136: Questions: Energy marketing exposure
Questions Question: Does UGI Energy Services’ marketing business have significant energy exposure? Answer: No UGI Energy Services’ energy marketing business adheres to a fulfillment business model • Volumes are hedged when a price commitment is made by a customer • UGI does not employ any traders or
Slide 137: Questions: UGI is hard to model
Questions Issue: UGI is hard to model. Answer: We are working hard to provide additional information to simplify the process We recognize that some parts of our business (Utilities, AmeriGas, International Propane) are more straightforward while others (Energy Services) have more difficult component
Slide 138: Questions?
Questions? October 17, 2012 138
Slide 139: Bon Appétit!
Bon Appétit! October 17, 2012 139
Slide 140: Takeaways
Takeaways: ü Clear understanding of UGI’s earnings growth goals and achievability ü Clear understanding of each business unit’s key strategic initiatives ü UGI expectations for the sources of future earnings and cash flow UGI is: • a diversified energy company offering balanced growth and income • 6
Slide 141: Appendix
Appendix October 17, 2012 141
Slide 142: UGI Corporation EPS Reconciliation
UGI Corporation EPS Reconciliation UGI Reconciliation of Adjusted EPS to GAAP EPS Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 GAAP Net Income $ 75.5 $ 98.9 $ 111.6 $ 187.5 $ 176.2 $ 204.3 $ 215.5 $ 258.5 $ 261.0 $ 232.9 Adjustments: Loss on early extinguishment of debt at AmeriGas $ (0.2)
Slide 143: AmeriGas Partners EBITDA Reconciliation
AmeriGas Partners EBITDA Reconciliation AmeriGas Partners, L.P. Reconciliation of Adjusted EBITDA (millions of dollars) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net income attributable to AmeriGas Partners, L.P. 1 55.4 72.0 $ 91.8 $ 60.8 $ 91.1 $ 190.8 $ 158.0 $ 224.6 $ 165.3 $ 138.5 Income
Slide 144: AmeriGas Partners Cash Flow Reconciliation
AmeriGas Partners Cash Flow Reconciliation AmeriGas Partners, L.P. Historical Distributable Cash Flow Reconciliation Year Ended September 30, ($ in millions) 2006 2007 2008 2009 2010 2011 Net Cash Provided by Operating Activities $ 179.5 $ 207.1 $ 180.2 $ 367.5 $ 218.8 $ 188.9 Exclude the impact of
Slide 145: AmeriGas Supplemental Information: Footnotes
AmeriGas Supplemental Information: Footnotes v The enclosed supplemental information contains a reconciliation of Earnings before interest expense, income taxes, depreciation and amortization ("EBITDA"), Adjusted EBITDA to Net Income and Distributable Cash Flow to Cash Flow from Operations. v EBITDA
Slide 146: Midstream & Marketing: Income Statements
Midstream & Marketing: Income Statements Year Ended September 30, (millions of dollars) 2006 2007 2008 2009 2010 2011 Revenues $ 1,414.3 $ 1,336.1 $ 1,619.5 $ 1,224.7 $ 1,145.9 $ 1,059.7 Cost of sales (1,328.2) (1,235.2) (1,495.4) (1,098.5) (1,010.7) (920.0) Total Margin 86.1 100.9 124.1 126.2 135.2
Slide 147: International Propane: Income Statements
International Propane: Income Statements Year Ended September 30, (millions of dollars, except where otherwise indicated) 2006 2007 2008 2009 2010 2011 Revenues $ 945.5 $ 800.4 $ 1,124.8 $ 955.3 $ 1,059.5 $ 1,488.7 Cost of sales (517.2) (388.6) (651.9) (429.5) (582.1) (970.8) Total Margin 428.3 411.
Slide 148: Investor Relations
Investor Relations: 610-337-7000 Hugh Gallagher (x1029) [email protected] Simon Bowman (x3645) [email protected] October 17, 2012 148