UGI Corporation · NYSE:UGI
UGI — Investor Day (December 2018)
129 slides from UGI's investor day presentation, Dec 4, 2018
Slide 1: Investor Day December 4, 2018
INVESTOR DAY DECEMBER 4, 2018
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: 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, Midstream & Marketing Total Margin, UGI International Total Margin, and UGI France and AmeriGas Unit Margins. The
Slide 4: Management Team
Management Team UGI Corporation Business Unit Management John Walsh – President & CEO Robert Beard – Executive VP, Natural Gas and President and CEO, UGI Utilities Ted Jastrzebski – CFO Daniel Platt – CFO, UGI Utilities Monica Gaudiosi – VP, General Counsel & Secretary Joseph Hartz– President, UGI E
Slide 5: Investor Day – Agenda 2018
Investor Day – Agenda 2018 8: 30 John Walsh – Opening Remarks 20 Minutes 8:50 Robert Beard – UGI Utilities 30 Minutes 9:20 Joseph Hartz – Energy Services 30 Minutes 9:50 Break 5 Minutes 9:55 3 Breakout Sessions (9:55 / 10:10 / 10:25) 45 Minutes UGI CORPORATION 5 10:40 Break 5 Minutes 10:45 Roger Per
Slide 6: Corporate Overview
Corporate Overview UGI Corporation is a distributor and marketer of energy products and services including natural gas, propane, butane, and electricity Natural Gas Global LPG 54% of Adjusted EPS1 46% of Adjusted EPS1 UGI CORPORATION 6 Utilities Midstream & AmeriGas Propane UGI International Natural
Slide 7: Strategic Alignment
Strategic Alignment The enhanced leadership structure allows UGI to better support strategic initiatives, accelerate growth, drive efficiencies, and foster best practice sharing across the Company Natural Gas Global LPG Robert Beard Roger Perreault UGI CORPORATION 7
Slide 8: Our Mission and Vision
Our Mission and Vision Mission UGI’s mission is to be the preeminent energy distribution company in our targeted markets – natural gas midstream and distribution in the eastern US and LPG distribution in the US and Europe – by providing a superior range of energy services to our customers UGI CORPOR
Slide 9: 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 Expanded into energy marketing in Europe, established Push boundaries of core business portable LNG, entered Italian market L
Slide 10: Our Strategy
Our Strategy 1 Be the preferred provider in all markets Build businesses of scale 10 UGI CORPORATION Leverage our position as the last link in energy distribution Protect and enhance our brands Grow and Deliver Value
Slide 11: Our Strategy
Our Strategy 2 Capitalize on synergies and leverage strengths Leverage successful programs and services across the corporation 11 UGI CORPORATION Expand further into midstream Seek new international markets Grow and Deliver Value
Slide 12: Our Objectives
Our Objectives 3 Grow earnings through acquisitions, capital projects, and organic growth UGI CORPORATION Organic growth sets the foundation 12 Invest in adjacent geographies, leveraging our experience and products Manage risk when investing in new areas or products Focus on cash flow, limit commodi
Slide 13: Key Takeaways
Key Takeaways Consistently meet or exceed our commitments to shareholders Superior earnings performance UGI CORPORATION 13 Outstanding cash generation Strong track record of disciplined capital deployment Clear path to growth
Slide 14: Outperformance Driven by Cadence of Disciplined Investments
Outperformance Driven by Cadence of Disciplined Investments 2450 Total Shareholder Return CAGR (as of 9/30/18) Manning LNG Project Sunbury Pipeline project 1 Year 5 Year 10 Year 20 Year Finagaz acquisition nearly doubles 1950 UGI Corp 20.9% 19.0% 15.7% 16.8% volume in France Union Dale S&P 500 17.9%
Slide 15: Free Cash Flow Growth
Free Cash Flow Growth 5 Year Total Free Cash Flow: $2.7 Billion ($ in millions) $800 $600 Capital Expenditures: 5-year Average UGI CORPORATION 15 $400 36% 64% $200 Natural Gas LPG $- 2013 2014 2015 2016 2017 2018 Free cash flow is a non-GAAP measure representing net cash from operating activities le
Slide 16: Meeting our Commitments – EPS Growth
Meeting our Commitments – EPS Growth $3.00 $2.95 12.1% Adjusted EPS CAGR Above 6-10% Long Term Target $2.74 $2.75 $2.50 Annual Earnings per Share $2.29 $2.00 $2.02 $2.01 $2.05 UGI CORPORATION 16 $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 $0.36 $0.
Slide 17: Meeting our Commitments – Dividend Growth
Meeting our Commitments – Dividend Growth $1.20 6.1% CAGR Above 4% Long-Term Target $1.00 $1.04 $1.00 $0.95 Dividends per Share $0.91 $0.80 $0.87 $0.75 $0.72 UGI CORPORATION $0.60 $0.67 $0.69 17 $0.51 $0.53 $0.40 $0.45 $0.47 $0.49 $0.42 $0.38 $0.34 $0.36 $0.37 $0.32 $0.33 $0.20 $0.00 1998 1999 2000
Slide 18: Clear Path to Growth
Clear Path to Growth UGI’s businesses well-positioned to successfully execute on numerous projects and initiatives in the following areas: • Strong and growing natural gas demand • Utility rate base and customer growth 18 UGI CORPORATION • Marcellus-based infrastructure • National Accounts, Cylinder
Slide 19: A Strong and Stable AmeriGas
A Strong and Stable AmeriGas • Building a strong and stable AmeriGas is a high priority for both the UGI and AmeriGas boards • AmeriGas saw their balance sheet and cash flow metrics strengthen in FY18 with more normal weather; should strengthen again in FY19 UGI CORPORATION • A thorough review of ou
Slide 20: How Have We Executed on Strategy?
How Have We Executed on Strategy? Be the preferred provider in all markets ✓ AmeriGas – largest domestic LPG distribution business ✓ Largest LPG distributor in France, Austria, Belgium, Denmark, Luxembourg, and Hungary ✓ Utilities – 2nd largest gas utility in PA ✓ Energy Services – building a strong
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Slide 22: UGI Utilities Business Overview
UGI UTILITIES Business Overview Regulated gas & electric utilities Most contemporary serving over distribution system in 700,000 Pennsylvania UTILITIES customers 22 Service territories lie within or adjacent 2nd Largest Gas Utility to the gas utility in UGI Utilities (gas, ~642,000 customers) Marcel
Slide 23: Update since 2016 Investor Day
UGI UTILITIES Update since 2016 Investor Day • Added ~30,000 new customers • Installed pipeline to 1,400MW power plant customer • Successfully executed $675MM capital program • ~130 miles of infrastructure replacement UTILITIES 23 • Completed PNG rate case • Completed UGI Electric rate case • Comple
Slide 24: Strategic Advantages
UGI UTILITIES Strategic Advantages • Reduced OSHA injuries and preventable motor vehicle accidents by 40% and 37%, respectively, since FY14 Safety focus • Partnered with DuPont Sustainable Solutions to conduct a safety culture and initiatives assessment • Fully Projected Future Test Year Constructiv
Slide 25: Fiscal Year 2018 Regulatory Highlights
UGI UTILITIES Fiscal Year 2018 Regulatory - Highlights • Received approval for the merger of the three gas utilities • Began collecting DSIC revenue for UGI Gas • Both Gas Utility and Electric Utility eligible to utilize the DSIC UTILITIES mechanism 25 • Completed UGI Electric rate case • First sinc
Slide 26: Key Messages
UGI UTILITIES Key Messages • Geographic proximity to the Marcellus Shale production area • Planned record capital investment • Rate base growth combined with minimal regulatory lag • UN1TE - Multi-year, multi-phase update for the IT portfolio of applications UTILITIES 26 • Customer growth • Peak day
Slide 27: Marcellus Advantage
UGI UTILITIES Marcellus Advantage • Over 90% of UGI Utilities natural gas sourced from the Marcellus Shale • Marcellus natural gas priced at over 29% discount to NYMEX during FY18 • Strong demand for natural gas (conversions, power UTILITIES generation, etc.) 27 • Favorable environment for economic
Slide 28: 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 1,200,000 600,000 MMCF MMCF 1,000,000 500,000 UTILITIES 28 800,000 400,000 600,000 300,000 400,000 200,000 200,000 100,000 0 0 Source: Energy Information Adm
Slide 29: Compressed Natural Gas (CNG)
UGI UTILITIES Compressed Natural Gas (CNG) Plentiful and economical natural gas from the Marcellus also advances adoption of CNG for UGI and its customers • CNG burns more cleanly, reducing emissions by as much as 90% UTILITIES • Completed one UGI CNG station in FY18, second 29 scheduled for FY19 •
Slide 30: Capital Investment Drives Rate Base Growth
UGI UTILITIES Capital Investment Drives Rate Base Growth Capital Investment Rate Base Growth $450 $380-$420/year $3.0 $400 Billions Millions $350 $300 $2.0 $250 $200 UTILITIES 30 $150 $1.0 $100 $50 $0 $0.0 2013 2014 2015 2016 2017 2018 2019P '20 - '22P 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E
Slide 31: Investment Creating Value
Investment Creating Value UGI UTILITIES • Reducing regulatory lag: • Fully Projected Future Test Year • Distribution System Improvement Charge • Additional programs drive growth: UTILITIES 31 • Technology and Economic Development Rider • Growth Extension Tariff • Energy Efficiency & Conservation • E
Slide 32: Financing the Plan
UGI UTILITIES Financing the Plan • Credit ratings allow access to debt • Fitch affirmed A- rating and stable outlook • Moody’s affirmed A2 rating and stable outlook UTILITIES • No plans to issue equity 32 • Constructive regulatory environment
Slide 33: Annual Customer Growth
UGI UTILITIES Annual Customer Growth 258,600 customers added 1999 - 2018 20,000 18,000 16,000 14,000 Annual Customer Additions 12,000 UTILITIES 33 10,000 8,000 6,000 4,000 2,000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 New Homes Conversion
Slide 34: Peak Day Growth
UGI UTILITIES Peak Day Growth 2.5 2.0 1.5 BCF 1.0 UTILITIES 34 0.5 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 PGC Customers Transportation Customers Capacity Reserve Requirement • Peak day demand growth driven by above average customer growth, po
Slide 35: Peak Day Summary
UGI UTILITIES Peak Day Summary Purchased Gas Cost Customers Transportation Customers • Gas Purchased from UGI • Gas purchased from third parties • Distributed through UGI distribution • Distributed through UGI distribution system system UTILITIES • Represents ~60% of peak day • Represents ~40% of pe
Slide 36: Positioned for Continued Growth
UGI UTILITIES Positioned for Continued Growth • Since 2008 UGI converted: • ~82,000 households and businesses • Over 80 large commercial & industrial facilities • Growth Opportunities • ~ 300,000 conversion prospects remain near gas mains UTILITIES • GET Gas program enables growth in underserved are
Slide 37: Summary
UGI UTILITIES Summary • Strong profitable growth due to customer additions (residential and commercial) and rate base growth • Continued focus on operational excellence • Proximity to Marcellus Shale • Low gas cost for customers UTILITIES 37 • Attracting commercial investment • Constructive regulato
Slide 38: Energy Services
1, @ Energy Services
Slide 39: Business Overview
Business Overview Midstream Assets • Nearly 200 miles of pipeline • 15 MMDth of natural gas storage • ~2 MMDth LNG and propane storage used to support liquefaction and vaporization peak shaving Commodity Marketing ENERGY SERVICES 39 • Serving 13,000 residential, commercial, and industrial customers
Slide 40: Update since 2016 Investor Day
Update since 2016 Investor Day • Successful project execution: • Sunbury Pipeline • Manning LNG Liquefaction Plant • Steelton LNG Peak Shaving Plant ENERGY SERVICES • Acquired Texas Creek and Ponderosa gathering systems 40 • Announced further expansion of Auburn Gathering System • Two part expansion
Slide 41: Strategic Advantages
Strategic Advantages Strong and stable commodity Experienced sales team that manages customer marketing business relationships; no speculative trading Many complementary assets including storage, Unique asset portfolio LNG and pipeline capacity ENERGY SERVICES 41 Supply knowledge and market Over 30
Slide 42: Evolution of Marcellus Shale Investments
Evolution of Marcellus Shale Investments 2017-2018 • Acquired Texas Creek and ENERGY SERVICES Ponderosa 42 Gathering 2015-2016 • Initiated Systems construction of Manning and • Announced Steelton LNG Bethlehem LNG 2013 -2014 • Completed 1st facilities • Received FERC phase of Auburn Certificate for
Slide 43: Key Messages
Key Messages • LNG/Peaking business growth • Bethlehem, PA storage and vaporization system • Portable LNG units that can be quickly deployed • Pipeline build out from Marcellus continues • Auburn Expansion ENERGY SERVICES 43 • Texas Creek • PennEast • Commodity marketing territory expansion • New En
Slide 44: Midstream Assets Overview
Midstream Assets 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 Dth/day) • Bethlehem vaporization (70,000 Dth/day) ENERGY SERVICES • Portable LNG vaporization (15,000 Dth/day) 44
Slide 45: LNG Expansion
LNG Expansion ENERGY SERVICES 45 Location: Bethlehem, PA Location: Various Purpose: Vaporization and storage facility Purpose: Portable LNG peak shaving facilities Scope: 70,000 Dth/day of LNG vaporization capacity Scope: Two mobile systems capable of 10,000 Dth/day and 2 million gallons of LNG stor
Slide 46: Midstream – Auburn Expansion
Midstream – Auburn Expansion Current Auburn System System Highlights • Prior to November 1, 2018 system capable of moving 470,000 dth/d to multiple end markets • 46 miles of pipeline connecting to ENERGY SERVICES Tennessee, Transco, and other end- 46 users • Expanded system will be capable of moving
Slide 47: Midstream – Texas Creek
Midstream – Texas Creek System Highlights Texas Creek Gathering System • >60 miles of gathering in Tioga, Lycoming, and Bradford Counties • Compressor stations and dehydration capable of moving >200,000 Dth/d • Delivery to Tennessee and Transco (via ENERGY SERVICES Regency) 47 • Provides producers e
Slide 48: Midstream – PennEast Pipeline
Midstream – PennEast Pipeline System Highlights PennEast Pipeline (Red) • Connecting abundant Marcellus gas supply to high-value southeastern PA and western NJ markets • 120 Mile, 36” diameter, $1.0+ billion interstate pipeline ENERGY SERVICES • Partnership between UGI (project manager), 48 Spectra
Slide 49: Commodity Marketing
Commodity Marketing • Supply natural gas to approximately 36,000 gas customer locations throughout the Eastern U.S. • Successful expansion to New England and North and South Carolina • Target small & medium size businesses ENERGY SERVICES • Focus on long-term contracts and customer retention 49 • No
Slide 50: Cumulative Capital Investment
Cumulative Capital Investment Capital Expenditures ($ in thousands) $1,400,000 $1,200,000 $1,000,000 ENERGY SERVICES $800,000 50 $600,000 $400,000 $200,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Midstream Power Generation Other
Slide 51: Margin Growth Driven by Midstream Expansion
Margin Growth Driven by Midstream Expansion Relatively $350,000 11% colder normal Margin ($ in thousands) than normal weather $300,000 winter 21% warmer than normal winter $250,000 ENERGY SERVICES 51 $200,000 $150,000 $100,000 $50,000 $- 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Commodity Ma
Slide 52: Fee-Based Income Stabilizes Earnings
Fee-Based Income Stabilizes Earnings 2013 Margin1 Anticipated 2022 Margin ENERGY SERVICES 52 44% 39% 61% 56% Fee-Based Margin All Other Margin 1Margin is a non-GAAP measure. Please see appendix for reconciliation.
Slide 53: Diversified Portfolio – Natural Synergy
Diversified Portfolio – Natural Synergy Midstream ENERGY SERVICES 53 Supply Commodity (Wholesale/Asset Marketing Management)
Slide 54: Conclusion
Conclusion • Built diverse, complementary portfolio of Marcellus-based assets • Provides flexibility to grow in varying market conditions • Prudent expansion of our geographic footprint • Continue to expand our midstream business • Auburn IV, Texas Creek, Ponderosa, PennEast ENERGY SERVICES 54 • Bro
Slide 55: UGI International
Uul INTERNATIONAL
Slide 56: UGI International Overview
UGI International Overview Operations in 17 Countries ~550,000 Total Customers LPG Distribution Energy Marketing INTERNATIONAL ~1 Billion gallons ~28 BCF 56 of LPG sold in FY 2018 of natural gas sold in FY 2018 Largest distributor in France, Austria, Belgium, Denmark, Luxembourg, and Hungary ~5% of
Slide 57: Update since 2016 Investor Day
Update since 2016 Investor Day • Finagaz integration complete (€50MM • New UGI International management synergies) structure • Continued geographic expansion by • Appointed UGI International COO acquiring LPG distribution businesses in • Realigned management into 4 regions Italy and Sweden • Began m
Slide 58: Strategic Advantages
Strategic Advantages Largest LPG distributor in Austria, Denmark, France, Market leader in Europe Hungary, Belgium, and Luxembourg; significant participant in Czech Republic, Norway, Poland, Slovakia, Sweden and UK LPG is a core business to UGI. International business Global LPG continues to benefit
Slide 59: UGI International - 2008
UGI International - 2008 8 Countries INTERNATIONAL LPG Distribution only 59 Total Gallons – 365 million Total Margin - $473 million LPG Distribution 1Total margin is a non-GAAP measure. Please see appendix for reconciliation .
Slide 60: UGI International - 2013
UGI International - 2013 15 Countries LPG Distribution and INTERNATIONAL Natural Gas Marketing 60 Gallons Margin (millions) (millions) 692 $681 $473 365 2008 2013 2008 2013 LPG Distribution LPG Distribution and Energy Marketing 1Total margin is a non-GAAP measure. Please see appendix for reconciliat
Slide 61: UGI International - Today
UGI International - Today 17 Countries LPG Distribution, Natural Gas INTERNATIONAL Marketing, Electricity Marketing 61 Gallons Margin (millions) (millions) 10.7% CAGR 8.4% CAGR 1,013 $1,064 692 $681 365 $473 2008 2013 2018 2008 2013 2018 LPG Distribution LPG Distribution and Energy Marketing 1Total
Slide 62: Key Messages
Key Messages • International segment managed as one company with strong local presence • Track record of successful integration of accretive businesses • Operations focused on goal-based, strategic execution INTERNATIONAL • LPG core focus, energy marketing, acquisitions 62 • Strategies to yield cons
Slide 63: Evolution – Major Acquisitions
Evolution – Major Acquisitions 2017 2017 2015 2011 2017 Italy 2010 2011 Belgium Finland INTERNATIONAL 2001 (20%) 63 Denmark Luxembourg 2004 (100%) 2010 Norway Sweden 1999 2006 Hungary Poland Netherlands Romania United Kingdom 2004 Switzerland 2001 France 1999 Austria 2018: 886MM retail gallons Czech
Slide 64: Clear Vision for Future Growth
Clear Vision for Future Growth Focus on core LPG LPG business Develop Nat Gas and Electricity in INTERNATIONAL Business selected markets and explore 64 Development LNG Expand within and outside Acquisitions our footprint Evaluate LPG in emerging markets
Slide 65: Focus on LPG
Focus on LPG • Achieve organic growth in cylinder business LPG • Strategic alliances with retailers • Investment in service and packaging innovation INTERNATIONAL Business • Grow bulk business 65 Development • Superior customer service • Service-based innovation • Focus on cost efficiencies Acquisit
Slide 66: Develop New Business
Develop New Business • Natural Gas Marketing LPG • Liberalizing natural gas markets in Europe creating opportunity • Marketing business has expanded to four INTERNATIONAL countries: 66 Business • France, Netherlands, Belgium, and the UK Development • Explore small-scale LNG as an alternative fuel so
Slide 67: Grow Strategic Acquisitions and Investments
Grow Strategic Acquisitions and Investments • Continue to evaluate investments in LPG our existing footprint • Evaluate acquisition opportunities INTERNATIONAL outside our footprint 67 Business Development • Margin enhancement through growth in certain midstream markets Acquisitions • Growing scale
Slide 68: Consistent Earnings Growth
Consistent Earnings Growth $250 8.7% CAGR $223.1 2013 – 2018 Operating Income ($ in millions) $200 $147.0 INTERNATIONAL $150 68 $100 $50 $- 2013 2014 2015 2016 2017 2018
Slide 69: Bulk LPG Customer Contracts
Bulk LPG Customer Contracts Contract Types by Volume Formula-based – calculated based on 9% three main indices 57% Stated Price – Change as commodity INTERNATIONAL price changes 69 34% Fixed Price – Set once a year with customers; UGI typically hedges the bulk of volume committed Formula-based State
Slide 70: Track Record of Margin Management
Track Record of Margin Management 1.50 € 1.25 € UGI France € per Gallon 1.00 € INTERNATIONAL 70 0.75 € 0.50 € 0.25 € 0.00 € 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Avg. Platt's Cost LPG Unit Margins Unit margin is a non-GAAP measure. Please see appendix for reconciliation.
Slide 71: LPG – Serving a Diverse Customer Base
LPG – Serving a Diverse Customer Base FY18 Volume by Segment FY18 Volume by Customer Base 13% 30% 8% INTERNATIONAL 71 38% 17% 62% 8% 24% Bulk Cylinder Autogas Wholesale Commercial & Industrial Residential Agricultural Wholesale (including autogas)
Slide 72: 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 terminals Import terminal - RAILCARS across UGI Terminal - REFINERY Depots / Railheads / Storage Intra-Europe trade • Ownership interests in
Slide 73: Energy Marketing – A Focused Strategy
Energy Marketing – A Focused Strategy FY18 GWh by Energy Type Total (Gas and Power) Volume Split by Segment 9% 1% 32% 19% INTERNATIONAL 73 68% 51% 20% Electricity Natural Gas SME Other Suppliers Government Exchange/Markets Residential Our primary focus is on Small and Medium Enterprises (SME) - Offe
Slide 74: Energy Marketing – Renewable Portfolio
Energy Marketing – Renewable Portfolio • Our Energy Marketing business has a significant position in renewable energy including production through Wind and Solar • Installed 400MW Wind • Installed 70MW solar INTERNATIONAL • Generating power equivalent to 40% of 74 the total power demand of our elect
Slide 75: Summary & Conclusion
Summary & Conclusion • Goal-based operational strategies provide clear path for continued growth • Strong market position in 17 countries under 8 brands throughout Europe • Stable operating performance and limited capital intensity lead to strong cash flow generation INTERNATIONAL • Track record for
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Slide 77: AmeriGas Overview
AmeriGas Overview Largest LPG Distributor in U.S.1 Agriculture & Transport 8% Residential Heating & ~1.1 billion Motor Fuel 18% Cooking 36% 1.7 million retail gallons sold in customers FY18 AMERIGAS Commercial / 77 Industrial 38% Bulk Distribution National Accounts Cylinder Exchange 1mm tanks with 1
Slide 78: Business Overview
Business Overview AMERIGAS 78 38% 36% 18% 8% Commercial / Residential Motor Agriculture Industrial Heating & Cooking Fuel & Transport Represents approximate percentages
Slide 79: Update since 2016 Investor Day
Update since 2016 Investor Day • ACE and National Accounts delivered record results • Completed 7 bolt-on acquisitions • Enhanced technology platform to reduce expenses and improve customer AMERIGAS experience 79 • Completed refinancing of $981 million of senior notes, reducing interest rates and ex
Slide 80: Strategic Advantages
Strategic Advantages Significant transportation and logistics infrastructure Service ensures certainty of supply; deploying tools that are enhancing the customer experience Provides customer, weather, and end-market Geographic coverage diversification Largest distributor of propane in the U.S. enabl
Slide 81: Financial metrics recovering after two warm winters
Financial metrics recovering after two warm winters Warm weather in FY16 and FY17 pressured balance sheet, FY18 returned to more normal conditions Debt/EBITDA Distribution Coverage 6.0 1.2 AMERIGAS 5.0 1.0 81 4.0 0.8 3.0 0.6 2.0 0.4 FY15 FY16 FY17 FY 18 2019E FY15 FY16 FY17 FY18 2019E
Slide 82: No Near-Term Debt Maturities
No Near-Term Debt Maturities FY16 and FY17 refinancings resulted in lower interest costs and financial flexibility $1,000 $900 $800 $ in millions $700 AMERIGAS 82 $600 $500 $400 $300 $200 $100 $- 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 5.625% due May 2024 5.50% due May 2025 5.875% due Augu
Slide 83: Key Messages
Key Messages • Improved customer experience through enhanced technology platform • Track record of margin management AMERIGAS • Continued focus on operational excellence to drive structural cost 83 reductions • Base business growth, ACE, National Accounts, Autogas • Track record of successful acquis
Slide 84: 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 920 PTI assets to areas in AMERIGAS Trailers need 84 Over 250 Propane Suppliers(
Slide 85: Technology to Drive Efficiency
Technology to Drive Efficiency • Efficiency benefits are implemented across a broad platform • Improved distribution efficiency • Miles per stop improved 3% from FY17 and 7% from FY16 • Low fuel deliveries improved 7% from FY17 and 16% from FY16 • Route planning and visualization AMERIGAS 85 • Enhan
Slide 86: Operational Excellence – OPEX Reduction
Operational Excellence – OPEX Reduction • Operational excellence offsets inflation and conservation • Expected to continue as we increase our strategic use of technology and continue to enhance our operating model $1,040.00 Operating Expenses (normal weather) AMERIGAS 86 $1,020.00 $1,000.00 $ in mil
Slide 87: National Accounts Program
National Accounts Program • Roughly 50% less weather sensitive than base business Delivering to over • Customer-focused solution 50,000 AMERIGAS • Best in class back office Customer Locations 87 • Turnkey installation options • Unparalleled footprint • Leverage AmeriGas scale 21% Volume increase • 1
Slide 88: Autogas Growth
Autogas Growth • Propane autogas continues to expand and provide new growth opportunities • Gallons increased 13% vs. last AMERIGAS year 88 • Schools districts are deploying propane buses to displace diesel • Additional OEMs entered school bus segment in 2018
Slide 89: Cylinder Exchange Program - Footprint
Cylinder Exchange Program - Footprint • 59,000 total locations • 57,000 retail locations • 2,000 patio heat and restaurant locations AMERIGAS • Added nearly 5,000 locations 89 over the past two years • Volume has increased ~12% over the past two years
Slide 90: Cylinder Exchange Program – Key Attributes
Cylinder Exchange Program – Key Attributes • Product of Convenience • Industry leader in automated vending • Developing home delivery concept AMERIGAS in FY19 90 • Continue to optimize distribution • National footprint • 35 cylinder processing facilities • Completed infrastructure upgrades to suppor
Slide 91: Acquisition Opportunities
Acquisition Opportunities • Completed over 200 acquisitions since the early 1980s • 7 acquisitions in the last two years • Roll-up story continues to offer growth opportunities • Unmatched operational synergy opportunities due to AMERIGAS nationwide footprint 91 • Highly fragmented market • Corporat
Slide 92: Exceptional Customer Experience
Exceptional Customer Experience AmeriGas has the following enhancements planned for FY19 Complete refresh of the “My AmeriGas” customer on-line interface 1 5 Streamline AMERIGAS Go Paperless- online sign-up 92 transition to process EDocs online 2 4 3 Automated order by Implementation of phone and pa
Slide 93: Driving Unit Margin Growth in All Cost Environments
Driving Unit Margin Growth in All Cost Environments Avg. Mt. Belvieu Cost Propane Unit Margins $1.60 $1.40 Avg. Mt. Belvieu Cost $1.20 Propane Unit Margins $1.00 AMERIGAS 93 $0.80 $0.60 $0.40 $0.20 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Unit margin is a non-GAAP measure. See ap
Slide 94: Outperformance Over the Long-Term
Outperformance Over the Long-Term 300 Total Shareholder Return CAGR (as of 9/30/18) 3 Year 5 Year 10 Year 250 AmeriGas 7.15% 6.73% 10.94% Alerian MLP Index 4.42% (2.72%) 9.10% 200 Total Unitholder Return % AMERIGAS 150 94 100 50 0 -50 AmeriGas Alerian
Slide 95: Summary & Conclusion
Summary & Conclusion • AmeriGas balance sheet remains a priority • SECA in place through July 1, 2019 should we experience another warm winter • Long term balance sheet strengthening process is underway • Focus on operational excellence AMERIGAS • Leverage best-in-class transportation and logistics
Slide 96: Financial Outlook
FINANCIAL So OUTLOOK Mull)
Slide 97: Key Takeaways
Key Takeaways • UGI is a balanced growth & income investment • Positioned to build on our history of strong earnings and cash flow growth • Utilities – record capital deployment and customer growth • Energy Services – well-positioned to enhance footprint in the Marcellus Shale • AmeriGas – ACE, Nati
Slide 98: EPS Growth Exceeding Long-Term Target
EPS Growth Exceeding Long-Term Target $3.00 $2.74 20-Year CAGR~12.1% $2.50 $2.00 $1.88 UGI CORPORATION $1.50 98 $1.00 $0.90 $0.50 $0.28 $0.00 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 AmeriGas International Energy Services Utilities Adju
Slide 99: Cash Flow & Dividends
Cash Flow & Dividends $700 ($ in millions) $600 Free Cash Flow CAGR - 10.9% $500 UGI CORPORATION $400 99 $300 $200 $100 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Free Cash Flow Dividends & Distributions Free cash flow is a non-GAAP measure
Slide 100: Cash Engine Drives Future EPS and Dividend Growth
Cash Engine Drives Future EPS and Dividend Growth Distributions on $1.1 - $1.4 Billion AmeriGas Public Base Business & Cash from Operations Units, 50% Propane Regulatory 50% Nat Gas UGI Dividends Earnings Growth and Share Repurchase UGI CORPORATION 100 Investment Capital Capital and M&A $150M - $200
Slide 101: Strong Cash Flow Supports Significant Natural Gas Investment
Strong Cash Flow Supports Significant Natural Gas Investment $1,200 $1.1 Billion in Cash Flow from Operations in FY18 $1,000 9% CAGR in Cash Flow from Operations UGI Free Cash Flow(1) $800 ($ in millions) UGI CORPORATION 4X Increase in 101 Natural Gas $600 Natural Gas Capex Investment $400 Distribut
Slide 102: Strongest Free Cash Flow Among Sector Peers
Strongest Free Cash Flow Among Sector Peers 18% 10 Year UGI Free Cash Flow(1) / 10 Year EBITDA S&P Utilities Index – Multi-Utilities 11% 9% 6% 4% UGI CORPORATION 2% 102 -4% -13% -22% -24% -24% 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 Pr
Slide 103: FY19 Adjusted EPS Guidance of $2.75 - $2.95
FY 19 Adjusted EPS Guidance of $2.75 - $2.95 $3.00 $2.95 $2.74 Key Drivers $2.75 $2.50 ✓Normal weather based on 15-year average ✓Record capital deployment and UGI CORPORATION customer additions 103 $2.00 ✓Full year of Texas Creek, Ponderosa, Steelton and LNG peaking $1.50 ✓Continued growth in Intern
Slide 104: Business Unit Growth Drives UGI Performance
Business Unit Growth Drives UGI Performance $4.00 $3.801 7%-9% Growth $3.50 UGI CORPORATION 8%-10% Growth $3.40 104 $3.00 $2.95 $2.75 $2.50 FY 2019 Guidance Liquified Petroleum Gas Natural Gas FY 2022 Estimate 1Estimated using long-term EPS guidance range of 6-10% from the midpoint of 2019 guidance.
Slide 105: ROIC Increasing even as UGI plans Record Capital Deployment
ROIC Increasing even as UGI plans Record Capital Deployment • 2019 Capex: $770 million • Increase of over $100 million (17%) vs. FY18 12.0% 10.0% UGI CORPORATION 105 8.0% 6.0% 4.0% 2.0% 0.0% 2014 2015 2016 2017 2018 2019 Bud UGI Corporation ROIC UGI Corporation WACC See appendix for definitions of R
Slide 106: Record Capital Deployment
Record Capital Deployment CAPEX expected to increase to ~$900 million in FY20 Midstream & Marketing Utilities • Expanding Marcellus-based footprint • Record capital investment • Pipelines, LNG infrastructure, natural gas • Gradually increase infrastructure gathering replacement and building and grou
Slide 107: Capex for Marcellus-based infrastructure increasing
Capex for Marcellus-based infrastructure increasing Total Capital Expenditures: 2018-2022 Total Capital Expenditures: 2013-2017 $3.7 Billion $2.6 Billion 30% UGI CORPORATION 107 36% 64% 70% Natural Gas LPG Natural Gas LPG
Slide 108: Strategic Alignment – Leveraging Internal Synergies
Strategic Alignment – Leveraging Internal Synergies Enterprise-wide Across Business Units • HR Information System • Supply management • Shared services (Treasury, IR, UGI CORPORATION 108 • SAP ERP Infrastructure reporting) • Digital customer self-service • IT Infrastructure / Security • Logistics an
Slide 109: ESG Efforts Across UGI
ESG Efforts Across UGI UGI CORPORATION 109 Commitment to our Communities • In October 2017 UGI Utilities procured a 5-year, $125 million term loan • The deal was led by PNC, and included a number of local, community banks • Diversified UGI’s portfolio of financial firms • Provided a platform to inve
Slide 110: Balance Sheet Strength
Balance Sheet Strength • Over $1.6B of available liquidity • Provides capacity for strategic transactions • Focus on financial integrity • Each business unit self-funds growth UGI CORPORATION • No debt at UGI Corporation 110 • No plans to raise equity to fund record capital spend • UGI has not issue
Slide 111: UGI International Financing
UGI International Financing • UGI International in October refinanced its existing capital structure with: • €350mm 3.25% senior notes due 2025 • €300mm term loan maturing 2023 • €300mm revolving credit facility maturing 2023 UGI CORPORATION 111 • Proceeds used to repay existing debt at the subsidia
Slide 112: AmeriGas – Balance Sheet Management
AmeriGas – Balance Sheet Management • AmeriGas has taken advantage of strong credit markets and historically low interest rates • Refinanced nearly all of long-term debt • Extended weighted average maturity (6.9 years); first notes due 2024 • Average interest rate 5.68% UGI CORPORATION 112 • In June
Slide 113: No Significant Near-Term Maturities
No Significant Near-Term Maturities Long-Term Debt Maturities by Year $1,200 ($ in millions) $1,000 $800 $600 UGI CORPORATION 113 $400 $200 $- 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029-2046 Utilities LTD International LTD AmeriGas Revolving Credit Facility Maturities: • UGI Utilities $4
Slide 114: FY2019 Outlook
FY2019 Outlook • Our guidance for FY19 is $2.75 - $2.95 • Assumes normal weather • Continue to execute new investments and growth initiatives across businesses • Investments in Marcellus infrastructure UGI CORPORATION • Record capital deployment at the Utility; first full year as one Gas Utility 114
Slide 115: Conclusion & Q&A
Conclusion & Q&A
Slide 116: Summary
Summary • Proven track record of exceeding our commitments to our shareholders • Well-positioned to build on our momentum • Strong and growing natural gas demand • Utility rate base and customer growth • Marcellus-based infrastructure UGI CORPORATION • National Accounts, Cylinder Exchange 116 • M&A
Slide 117: Outperformance Driven by Cadence of Disciplined Investments
Outperformance Driven by Cadence of Disciplined Investments 2450 Total Shareholder Return CAGR (as of 9/30/18) Manning LNG Project Sunbury Pipeline project 1 Year 5 Year 10 Year 20 Year Finagaz acquisition nearly doubles 1950 UGI Corp 20.9% 19.0% 15.7% 16.8% volume in France Union Dale S&P 500 17.9%
Slide 118: Appendix
APPENDIX
Slide 119: Definitions
Definitions Return on Invested Capital (ROIC) – Trailing twelve months operating income reduced by taxes using the effective tax rate (NOPAT) divided by a twelve- month average of total capitalization (total equity plus total debt) less cash with the exception of FY19 which uses forecasted NOPAT div
Slide 120: 2018 AmeriGas Net Income Attributable to UGI
2018 AmeriGas Net Income Attributable to UGI GP Interest in OLP APU Statement of Operations: $3.5MM • Result is approximate Net income attributable to noncontrolling interest due to rounding and + + GP Interest in MLP one time $190.5MM x 1% APU Statement of Operations: Net income attributable to Ame
Slide 121: Foreign Exchange Hedging Strategy
Foreign Exchange Hedging Strategy We hedge up to 90% of expected pre-tax earnings. The goal is to smooth Program considerations earnings translation by layering currency hedges on a rolling annual basis. • We hedge the following currency pairs • EUR to USD • GBP to USD • Hedging is accomplished UGI
Slide 122: UGI Corporation Adjusted Earnings Per Share
UGI Corporation Adjusted Earnings Per Share (Million of dollars, except per share amounts) Year Ended September 30, 2010 2011 2012 2013 2014 2015 2016 2017 2018 NON-GAAP RECONCILIATION: Adjusted net income attributable to UGI Corporation: Net income attributable to UGI Corporation $ 251.8 $ 245.4 $
Slide 123: 2018 UGI Corporation Adjusted EPS by Segment
2018 UGI Corporation Adjusted EPS by Segment UGI CORPORATION 123
Slide 124: UGI Corporation Free Cash Flow
UGI Corporation Free Cash Flow ($ in millions) Year Ended September 30, 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Net Cash Provided By Operating Activities $ 178.5 $ 141.9 $ 132.7 $ 203.5 $ 247.5 $ 249.1 $ 260.7 $ 437.7 $ 279.4 $ 456.2 $ 464.4 Less: Expenditures for property, plant, and
Slide 125: Midstream & Marketing Total Margin
Midstream & Marketing Total Margin ($ in millions) Year Ended September 30, 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Revenues $ 1,409.8 $ 1,696.4 $ 1,309.5 $ 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 Total Cost of Sales (1,282.3) (1,
Slide 126: AmeriGas Unit Margins
AmeriGas Unit Margins ($ in thousands) Year Ended September 30, 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Propane revenues $ 2,624,672 $ 2,091,890 $ 2,158,800 $ 2,360,439 $ 2,677,631 $ 2,884,766 $ 3,440,868 $ 2,612,401 $ 2,053,160 $ 2,183,538 $ 2,545,794 Propane cost of sales (1,836,917
Slide 127: UGI International Total Margin
UGI International Total Margin ($ in millions) UGI CORPORATION 127 Margin excludes commodity derivative mark-to-market adjustments
Slide 128: UGI France Unit Margins
UGI France Unit Margins ($ in thousands) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 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 LPG cost of sales (615,944) (362,425) (465,867) (649,824) (650,30
Slide 129: 2018 Cash Flow Drives EPS and Dividend Growth
2018 Cash Flow Drives EPS and Dividend Growth Distributions on $1.1 Billion Cash from Operations AmeriGas Public Base Business & Units Regulatory 45% Propane 55% Nat Gas Earnings Growth UGI Dividends and Share UGI CORPORATION Repurchase 129 Investment Capital and M&A $32M Capital Earnings Growth Fin