UGI Corporation · NYSE:UGI
UGI — AGA – May 2020
58 slides from UGI's conference presentation, May 2020
Slide 1: AGA – May 2020
AGA – May 2020
Slide 2: About This Presentation
About This Presentation This presentation contains statements, estimates and projections which are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended). Management believes that these are reasonable as of today’s date only. Actual results may diff
Slide 3: Use of Non-GAAP Measures
Use of Non-GAAP Measures 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 EBITDA, and UGI France Unit Margins. These financial measures are not in accordance with
Slide 4: Corporate Overview
Corporate Overview
Slide 5: UGI's COVID-19 Response
UGI’s COVID – 19 Response Employees Customers Communities • Implemented working • Provided uninterrupted • Provided critical services from home procedures essential service to our 3 to hundreds of healthcare across the organization for million customers centers and testing over 4,000 employees facil
Slide 6: FY 2020 Guidance Update
FY 2020 Guidance Update • Updated fiscal year 2020 adjusted EPS guidance to a range of $2.45 - $2.551 per share, excluding the COVID-19 impact • COVID-19 pandemic could negatively impact earnings by an additional $0.20 - $0.30 per share • Estimate is uncertain and will depend on future developments
Slide 7: Liquidity Update
Liquidity Update • Total available liquidity as of 3/31/20: $1.2 billion • Natural Gas and Global LPG businesses have access to capital, as available financing capacity is evenly distributed • Lower working capital requirements in Q1 and Q2 as a result of low commodity prices; higher cash generation
Slide 8: Track Record of Generating Strong Cash Flow in Varying Economic Cycles
Track Record of Generating Strong Cash Flow in Varying Economic Cycles Cash Provided by Operating Activities $1,200.0 The Great Recession – worst downturn $1,000.0 since the Great Depression $800.0 UGI CORPORATION 8 $'s in millions $600.0 $400.0 $200.0 $- 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 9: History of Strong Free Cash Flow in Varying Economic Cycles
History of Strong Free Cash Flow in Varying Economic Cycles UGI Corporation Free Cash Flow1 $500.0 The Great $400.0 Recession – worst downturn since the Great Depression UGI CORPORATION $300.0 9 $'s in millions $200.0 $100.0 $- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (1) UGI
Slide 10: Corporate Overview
Corporate Overview UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity 2019 Adjusted EPS1 2019 Pro Forma Adjusted EPS2 UGI CORPORATION 10 40% 50% 50% 60% 1Adjusted EPS is a non-GAAP measure. Excludes Corporate & Other
Slide 11: A Compelling Value Proposition
A Compelling Value Proposition Highest 20-year free cash flow1 as a % of Adjusted EBITDA1 Outstanding cash generation among Multi-Utilities in the S&P Utilities index Commitment FY 1999- Strong track record of disciplined 2019 Actual UGI CORPORATION capital deployment and meeting our Adjusted EPS1 6
Slide 12: Core Strategic Principles
Core Strategic Principles Distribution and services business, marketing volume Minimize commodity exposure hedged back-to-back, LPG customer volume hedged as service offering Established portable LNG, entered Italian LPG market, Push boundaries of core business expanded midstream platform into SW PA
Slide 13: Strongest Cash Flow Among Sector Peers
Strongest Cash Flow Among Sector Peers 20 Year Free Cash Flow1/ 20 Year Adjusted EBITDA1 S&P Utilities Index - Multi-Utilities 17% 6% 5% 4% 3% UGI CORPORATION 2% 13 -3% -10% -14% -17% -19% UGI Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 (1) UGI Free Cash Flow = Cash Provid
Slide 14: Meeting our Commitments – EPS Growth
Meeting our Commitments – EPS Growth $3.00 10.7% Adjusted EPS CAGR Above 6-10% Long Term Target $2.74 $2.551 $2.50 $2.451 Annual Earnings per Share $2.29 $2.28 $2.00 $2.02 $2.01 $2.05 UGI CORPORATION 14 $1.50 $1.57 $1.61 $1.46 $1.41 $1.33 $1.26 $1.25 $1.18 $1.00 $1.10 $0.76 $0.77 $0.50 $0.60 $0.47 $
Slide 15: Meeting our Commitments – Dividend Growth
Meeting our Commitments – Dividend Growth $1.40 10-year CAGR of 7% $1.30 $1.32 $1.20 Above 4% Long-Term Target Dividends per Share1 $1.00 $1.04 $1.00 $0.95 $0.91 UGI CORPORATION $0.80 $0.87 15 $0.75 $0.72 $0.60 $0.67 $0.69 $0.51 $0.53 $0.40 $0.45 $0.47 $0.49 $0.42 $0.38 $0.34 $0.36 $0.37 $0.20 $0.00
Slide 16: Outperformance Driven by Cadence of Disciplined Investments
Outperformance Driven by Cadence of Disciplined Investments 2450 Manning LNG Project Sunbury Pipeline project 1950 Total 20-year Shareholder Return CAGR of 15.92% Finagaz acquisition CMG Acquisition nearly doubles (as of 9/30/19) volume in France AmeriGas Merger Transaction Union Dale Pipeline Proje
Slide 17: Cash Engine Drives Future EPS and Dividend Growth
Cash Engine Drives Future EPS and Dividend Growth Base Business & $1.1 - $1.4 Billion UGI Dividends Cash from Operations Regulatory 55% LPG and Share 45% Nat Gas Earnings Growth Repurchase UGI CORPORATION 17 Investment Capital Capital and M&A $150M - $200M Expenditures, M&A Financing Earnings Growth
Slide 18: Capital Allocation Priorities
Capital Allocation Priorities Grow and Deliver Value • Supports commitment to shareholders to grow Adjusted EPS by 6% - 10% annually • Maintain and grow existing business 1.) Capex and Other • Add assets that complement core competencies • Execute on robust capital plan at Utilities • Support produc
Slide 19: UGI's Growing Cash Flows Support Capital Deployment
UGI’s Growing Cash Flows Support Capital Deployment ~$5.5B ~$3.5B -$4.0B • Capital plan at Utilities • Organic growth on CMG system • LPG Business ~$1.0B - $1.5B Transformation • Meet commitment to Initiatives shareholders to grow • Natural Gas annual dividend by UGI CORPORATION infrastructure build
Slide 20: Record Capital Deployment
Record Capital Deployment CAPEX spend in FY20 ~$730 million -Includes capex associated with LPG business transformation Capital Expenditures: 2019-2023 Capital Expenditures: 2014-2018 $4.3 Billion $2.7 Billion UGI CORPORATION 20 27% 32% 68% 73% Natural Gas LPG Natural Gas LPG
Slide 21: Debt Repayment
Debt Repayment Leverage1,2 4.7x • UGI’s philosophy to hold debt at 4.0x 3.9x its business units and keep 3.2x capacity at the holdco level for 3.0x 3.1x enterprise-changing investments enabled UGI to use its balance FY18A FY19A FY20E FY21E FY22E FY23E UGI CORPORATION sheet to finance a portion of th
Slide 22: Utilities
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Slide 23: UGI Utilities Business Overview
Business Overview UGI UTILITIES Regulated gas & electric utilities Most contemporary serving over distribution system in 715,000 Pennsylvania UTILITIES customers 23 Service territories lie within or adjacent 2nd Largest Gas Utility to the gas utility in UGI Utilities (gas, ~655,000 customers) Marcel
Slide 24: Marcellus Advantage
UGI UTILITIES Marcellus Advantage • Over 90% of UGI Utilities natural gas sourced from the Marcellus Shale • Marcellus natural gas priced at over 15% discount to NYMEX during FY19 • Strong demand for natural gas (conversions, power UTILITIES generation, etc.) 24 • Favorable environment for economic
Slide 25: Marcellus Gas Driving Growth in PA
UGI UTILITIES Marcellus Gas Driving Growth in PA Natural Gas Delivered to Customers in PA Natural Gas Delivered to Electric PA Power Customers 1,400,000 600,000 MMCF MMCF 1,200,000 500,000 UTILITIES 1,000,000 25 400,000 800,000 300,000 600,000 200,000 400,000 100,000 200,000 0 0 Source: Energy Infor
Slide 26: Capital Investment Drives Rate Base Growth
UGI UTILITIES Capital Investment Drives Rate Base Growth $500 Capital Investment $445 - $485/year $4.0 Rate Base Growth Millions $400 $3.0 Rate Base $ Billions $300 $2.0 $200 UTILITIES 26 $1.0 $100 $0.0 $- 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2014 2015 2016 2017 2018 2019 2020P
Slide 27: Annual Customer Growth
UGI UTILITIES Annual Customer Growth ~ 265,000 customers added 2000 - 2019 20,000 Customers 18,000 16,000 14,000 UTILITIES 12,000 27 10,000 8,000 6,000 4,000 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 New Homes Conversions Upgrades Com
Slide 28: Peak Day Growth
UGI UTILITIES Peak Day Growth 2.5 2.0 1.5 BCF 1.0 UTILITIES 28 0.5 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 PGC Customers Transportation Customers Capacity Reserve Requirement • Peak day demand growth driven by above average customer gro
Slide 29: Energy Services
1, @ Energy Services
Slide 30: Energy Services Business Overview
Business Overview Midstream Assets • LNG Peaking • Total vaporization (360,000 Dth/day) • Total liquefaction (15,000 Dth/day) • Built Pipeline Capacity • Total capacity (~3,925,000 Dth/day) ENERGY SERVICES • Natural Gas Storage 30 • 15 MMdth Commodity Marketing • Serving more than 13,000 residential
Slide 31: Full Suite of Midstream Services in Appalachia Region
Full Suite of Midstream Services in Appalachia Region TL-94&96 Auburn Marshlands TGP Union Dale Texas Creek Transco (Leidy) Ponderosa Pennant Sunbury ENERGY SERVICES Big Pine 31 Mt. Bethel TGP TETCO Penn East (Under Development) Majorsville E. Washington Storage TETCO Gas Processing Power Plant Gibr
Slide 32: UGIES Historical Margin Breakdown
UGIES Historical Margin1 Breakdown 11% & 12% colder than normal 21% & 15% warmer than normal winter, respectively winter, respectively $310 $293 $285 $35 $46 $257 $44 $241 $245 $25 $28 $34 ENERGY SERVICES 32 $165 $225 $32 $185 $180 $135 $138 $131 $187 $18 $168 $28 $16 $161 $52 $75 $47 $58 $60 $68 $5
Slide 33: Cumulative Capital Investment
Cumulative Capital Investment Capital Expenditures ($ in thousands) $1,600,000 $1,400,000 $1,200,000 $1,000,000 ENERGY SERVICES 33 $800,000 $600,000 $400,000 $200,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Midstream Power Generation Other
Slide 34: Fee-Based Income Stabilizes Earnings
Fee-Based Income Stabilizes Earnings 2013 Margin1 Anticipated 2023 Margin1 19% 39% ENERGY SERVICES 34 61% 81% Fee-Based Margin All Other Margin Fee-Based Margin All Other Margin 1Revenue less Cost of Sales
Slide 35: Midstream – PennEast Pipeline
Midstream – PennEast Pipeline System Highlights: PennEast Pipeline (Red) • 120-mile natural gas pipeline from Luzerne County, Pennsylvania to the Trenton-Woodbury interconnection in New Jersey • Phase 1 – entirely in Pennsylvania; 68 miles; target completion November 2021 • Phase 2 – remainder of PA
Slide 36: International
Uul INTERNATIONAL
Slide 37: UGI International Overview
UGI International Overview Operations in 17 Countries Over 615,000 Total Customers LPG Distribution Over 960 million gallons INTERNATIONAL 37 of LPG sold in FY 2019 Leader distributor in France, Austria, Belgium, Denmark, Luxembourg, and Hungary Over 19 million cylinders in circulation Over 527,000
Slide 38: Business Transformation Initiative
Business Transformation Initiative • Identified over €30 million of permanent annual savings and operational efficiencies that will be implemented by the end of FY22 • Establishment of 2 Centers of Excellence • Commercial Excellence – continuous improvement to customer experience INTERNATIONAL 38 •
Slide 39: Evolution – Major Acquisitions
Evolution – Major Acquisitions 2017 2017 2015 2011 2017 Italy 2010 2011 Belgium Finland INTERNATIONAL 2001 (20%) 39 Denmark Luxembourg 2004 (100%) 2010 Norway Sweden 1999 2006 Hungary Poland Netherlands Romania United Kingdom 2004 Switzerland 2001 France 1999 Austria 2019: Over 832MM retail gallons
Slide 40: Track Record of Margin Management
Track Record of Margin Management 1.50 € 1.25 € UGI France € per Gallon 1.00 € INTERNATIONAL 40 0.75 € 0.50 € 0.25 € 0.00 € 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Avg. Platt's Cost UGI France Unit Margins 1 1Unit margin is a non-GAAP measure. Please see appendix for reconciliati
Slide 41: Strategically Located LPG Supply Assets Provide Flexibility
Strategically located LPG Supply Assets Provide Flexibility • UGI stores LPG at various Import terminal - SEA Import terminal - PIPELINE storage facilities and Import terminal - RAILCARS terminals across UGI Terminal - REFINERY Depots / Railheads / Storage Intra-Europe trade • Ownership interests in
Slide 42: AmeriGas
Slide 43: AmeriGas Overview
AmeriGas Overview Largest Propane Distributor in U.S.1 Agriculture & Transport Residential Heating & ~1.1 billion Motor Fuel 18% Cooking 35% 1.6 million retail gallons sold in customers FY19 AMERIGAS 43 Commercial / Industrial Bulk Distribution National Accounts Cylinder Exchange 1mm tanks with 120
Slide 44: Business Transformation Initiative
Business Transformation Initiative • Identified over $120 million of permanent annual savings and operational efficiencies that will be implemented by the end of FY22 • Acceleration of Pace and Scale of Initiatives • Customer Digital Experience • Customer Relationship Management AMERIGAS • Operation
Slide 45: National Accounts Program
National Accounts Program • Roughly 50% less weather sensitive than base business Delivering to nearly • Customer-focused solution • Best in class back office 52,000 Customer Locations AMERIGAS • Turnkey installation options 45 • Unparalleled footprint • Leverage AmeriGas scale 44% Volume increase •
Slide 46: Cylinder Exchange Program – Key Attributes
Cylinder Exchange Program – Key Attributes • Product of Convenience • Industry leader in automated vending • Home delivery pilot went live in summer of FY19 • Continue to optimize distribution • National footprint AMERIGAS 46 • Expansion with major retailer and large convenience store chain • Roll-o
Slide 47: Significant Transportation & Logistics Network
Significant Transportation & Logistics Network Most flexible, reliable supply chain coverage 12 Ability to quickly Transflow 22 in the retail propane Units Terminals industry focus flexible truck, rail and trans-loading 900 PTI assets to areas in AMERIGAS Trailers need 47 Over 250 Propane Suppliers(
Slide 48: Summary
Summary • Proven track record of exceeding our commitments to our shareholders • 6% - 10% long-term annual Adjusted EPS growth • 4% annual dividend growth • Well-positioned to build on our momentum • Strong and growing natural gas demand • Utility rate base and customer growth UGI CORPORATION • LPG
Slide 49: Appendix
Appendix
Slide 50: UGI Corporation Adjusted EPS
UGI Corporation Adjusted EPS (Millions of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Non-GAAP Reconciliation: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corporation $ 251.8 $ 245.4 $ 210.2 $ 2
Slide 51: UGI Corporation Free Cash Flow
UGI Corporation Free Cash Flow ($ in millions) Year Ended September 30, 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net Cash Provided By Operating Activities $ 132.7 $ 203.5 $ 247.5 $ 249.1 $ 260.7 $ 437.7 $ 279.4 $ 456.2 $ 464.4 $ 665.0 Less: Expenditures for property, plant, and equipment (7
Slide 52: UGI Energy Services Historical Margin
UGI Energy Services Historical Margin ($ in millions) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Revenues - Midstream & Marketing $ 1,222.6 $ 1,155.9 $ 942.2 $ 1,122.8 $ 1,473.7 $ 1,181.4 $ 876.6 $ 1,121.2 $ 1,421.7 $ 1,534.9 Total Cost of Sales - Midstream & Ma
Slide 53: UGI Corporation Adjusted EBITDA
UGI Corporation Adjusted EBITDA ($ in millions) UGI CORPORATION 53
Slide 54: UGI France Unit Margins
UGI France Unit Margins ($ & € in thousands, except unit margin) Year Ended September 30, 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LPG revenues $ 1,062,561 $ 837,676 $ 887,067 $ 1,050,628 $ 1,083,666 $ 1,244,753 $ 1,169,610 $ 942,511 $ 1,160,013 $ 1,144,939 $ 1,349,884 $ 1,218,105
Slide 55: CMG: The Acquired Assets
CMG: The Acquired Assets Initial Length Diameter Capacity System Asset Type In-service (miles) (in) (‘000 MMBtu/d) Big Pine Dry gas gathering 2013 67 20, 24 ~425 East Washington Infield gathering 2015 21 8, 12, 16 ~300 Gibraltar Dry gas gathering 2017 25 36 ~1,000 55 UGI CORPORATION Majorsville Wet
Slide 56: UGI Energy Services: Critical Midstream Infrastructure Serving High-Demand Markets
UGI Energy Services: Critical Midstream Infrastructure Serving High- Demand Markets Low cost supply: Natural Gas Demand Projections ▪ Our assets are located in the core region of the Appalachian Basin, with volumes supported by a long-lived, low-cost resources 140 ▪ Production from the Appalachian r
Slide 57: Strategic Platform Underpinned by Long-Term Contracts
Strategic Platform Underpinned by Long-Term Contracts High quality assets with long-term fee-based contracts in 2019 Revenue Breakdown by contract tenor and profile one of North America’s most prolific shale basins Contract Tenor ▪ Five recently-constructed assets enhance our Usage existing gatherin
Slide 58: Midstream Asset Overview
Midstream Asset Overview LNG Peaking: • Temple LNG (205,000 Dth/day vaporization, 1.25 MMdth storage) • Manning liquefaction (10,000 to 15,000 Dth/day) • Steelton vaporization (65,000 to 70,000 Dth/day) • Bethlehem vaporization (65,000 to 70,000 Dth/day) • Portable LNG vaporization • In-service (15,