UGI Reports First Quarter Fiscal 2024 Results
UGI Corporation (NYSE: UGI) reported strong financial results for the fiscal quarter ended December 31, 2023, with a Q1 GAAP diluted EPS of $0.44 and adjusted diluted EPS of $1.20. The reportable segments earnings before interest expense and income taxes1 (EBIT) was $425 million, showing a 3.4% increase from the prior-year period. The company also achieved a 77% increase in EBIT from UGI International, due to the continued exit of the non-core energy marketing business, higher LPG volumes, and increased unit margins. UGI Corporation maintained a strong liquidity of approximately $1.5 billion as of December 31, 2023, and received approval for a gas rate case in West Virginia, allowing for a $13.9 million annual distribution rate increase. However, AmeriGas experienced a decline in its year-over-year financial results, prompting the need for renewed focus on execution. The company's strategic priorities include delivering reliable earnings growth, returning cash to shareholders through dividends, achieving sustainable cost savings, and strengthening the balance sheet.
Positive
Strong financial results for the fiscal quarter, with a significant increase in EBIT from UGI International
Maintained strong liquidity of approximately $1.5 billion as of December 31, 2023
Received approval for a gas rate case in West Virginia, allowing for a $13.9 million annual distribution rate increase
Negative
Decline in year-over-year financial results for AmeriGas, prompting the need for renewed focus on execution
The reported increase in adjusted diluted EPS from $1.14 to $1.20 indicates a positive trajectory for UGI Corporation's profitability, especially when contrasted with the previous year's GAAP diluted EPS of $(4.54). This improvement is particularly noteworthy given the context of warmer weather, which often leads to reduced demand for energy products. The 77% increase in EBIT from UGI International is a strong signal of effective strategic shifts, namely the exit from non-core energy marketing business and higher LPG volumes with increased unit margins.
UGI's available liquidity of approximately $1.5 billion provides them with a robust financial cushion to manage operations and invest in strategic initiatives. The approval for a $13.9 million annual distribution rate increase by the West Virginia Public Service Commission is a critical development that will likely contribute to the company's revenue stream and financial stability. This rate increase, along with the implementation of a weather normalization adjustment mechanism, can help mitigate the impact of unseasonable weather on earnings, providing a more predictable revenue framework.
The emphasis on returning cash to shareholders through dividends is a significant aspect of UGI's strategic priorities, which can enhance shareholder value and potentially attract income-focused investors. The company's commitment to achieving sustainable cost savings and strengthening the balance sheet by aligning cost structures with business performance, adjusting capital allocation priorities and reducing capital expenditures in the near term, suggests a disciplined approach to financial management. These actions could improve operational efficiency and ultimately lead to a more competitive position in the market.
However, the decline in financial results for AmeriGas raises concerns about the need for improved execution within that segment. The market will likely monitor the effectiveness of UGI's strategies to revitalize AmeriGas's performance closely, as it could significantly impact the company's overall growth and profitability.
UGI's performance in the context of the broader energy sector showcases resilience amid challenging weather conditions, which can be attributed to its diversified business model and international operations. The company's strategic pivot away from non-core businesses and focus on core energy delivery, particularly in the LPG market, suggests an alignment with global energy trends, such as the growing demand for cleaner fuel alternatives.
The rate case approval in West Virginia is a critical regulatory milestone that underscores the importance of regulatory relationships in the energy sector. It reflects the company's ability to negotiate favorable terms that support its operations and growth. The outcome of this rate case could set a precedent for UGI's future regulatory engagements and may influence investor confidence in the company's regulatory strategy.
01/31/2024 - 04:36 PM
VALLEY FORGE, Pa. --(BUSINESS WIRE)--
UGI Corporation (NYSE: UGI) today reported financial results for the fiscal quarter ended December 31, 2023.
HIGHLIGHTS
Q1 GAAP diluted EPS of $0.44 $1.20 $(4.54) $1.14
Q1 reportable segments earnings before interest expense and income taxes1 ("EBIT") of $425 million $411 million
Strong first quarter results despite warmer than normal weather across our service territories, largely due to a 77% increase in EBIT from UGI International attributable to the continued exit of the non-core energy marketing business, higher LPG volumes, and increased unit margins.
Available liquidity of approximately $1.5 billion
Received approval from the West Virginia Public Service Commission for Mountaineer's gas rate case. The settlement permitted a $13.9 million
"Our fiscal first quarter results reflect the strong performance of UGI International and the natural gas businesses, and underscores our commitment to our customers, shareholders and employees," said Mario Longhi, Interim President and Chief Executive Officer. "As previously anticipated and discussed on our year-end earnings call, AmeriGas experienced a decline in its year-over-year financial results. While effort was made to address the segment's performance, it is clear that there is a need for renewed focus on execution.
"Our strategic priorities are geared towards delivering reliable earnings growth, returning cash to shareholders through dividends, achieving sustainable cost savings, and strengthening the balance sheet. We have initiated actions to align our cost structure with the performance of each business, adjusted our capital allocation priorities, and lowered capital expenditures in the near term. Diligent execution of these actions should strengthen our core businesses and better position UGI to deliver sustainable value for its shareholders."
EARNINGS CALL AND WEBCAST
https://www.ugicorp.com/investors/financial-reports/presentations or by visiting the company website https://www.ugicorp.com and clicking on Investors and then Presentations. A replay of the webcast will be available after the event through to 11:59 PM ET January 31, 2025.
ABOUT UGI
Europe . UGI offers safe, reliable, affordable, and sustainable energy solutions to customers through its subsidiaries, which provide natural gas transmission and distribution, electric generation and distribution, midstream services, propane distribution, renewable natural gas generation, distribution and marketing, and energy marketing services.
Comprehensive information about UGI Corporation is available on the Internet at https://www.ugicorp.com .
USE OF NON-GAAP MEASURES
U.S. generally accepted accounting principles ("GAAP").
Non-GAAP financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures.
The tables on the last page of this press release reconcile net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI Corporation, and diluted earnings per share, the most comparable GAAP measure, to adjusted diluted earnings per share, to reflect the adjustments referred to above.
1 Reportable segments' EBIT represents an aggregate of our reportable operating segment level EBIT, as determined in accordance with GAAP.
USE OF FORWARD-LOOKING STATEMENTS
the United States , Europe and other foreign countries, including uncertainties related to the war between Russia and Ukraine , the European energy crisis, and foreign currency exchange rate fluctuations (particularly the euro); credit and capital market conditions, including reduced access to capital markets and interest rate fluctuations; changes in commodity market prices resulting in significantly higher cash collateral requirements; impacts of our indebtedness and the restrictive covenants in our debt agreements; reduced distributions from subsidiaries impacting the ability to pay dividends or service debt; changes in Marcellus and Utica Shale gas production; the availability, timing and success of our acquisitions, commercial initiatives and investments to grow our businesses; our ability to successfully integrate acquired businesses and achieve anticipated synergies; the interruption, disruption, failure, malfunction, or breach of our information technology systems, and those of our third-party vendors or service providers, including due to cyber-attack; the inability to complete pending or future energy infrastructure projects; our ability to achieve the operational benefits and cost efficiencies expected from the completion of pending and future business transformation initiatives, including the impact of customer service disruptions resulting in potential customer loss due to the transformation activities; our ability to attract, develop, retain and engage key employees; uncertainties related to global pandemics; the impact of proposed or future tax legislation; the impact of declines in the stock market or bond market, and a low interest rate environment, on our pension liability; our ability to protect our intellectual property; and our ability to overcome supply chain issues that may result in delays or shortages in, as well as increased costs of, equipment, materials or other resources that are critical to our business operations.
SEGMENT RESULTS ($ in millions, except where otherwise indicated)
Utilities
For the fiscal quarter ended December 31,
2023
2022
Increase (Decrease)
Revenues
$
493
$
592
$
(99
)
(17
)%
Total margin (a)
$
265
$
256
$
9
4
%
Operating and administrative expenses
$
88
$
91
$
(3
)
(3
)%
Operating income
$
134
$
126
$
8
6
%
Earnings before interest expense and income taxes
$
135
$
128
$
7
5
%
Gas Utility system throughput - billions of cubic feet
Core market
30
34
(4
)
(12
)%
Total
104
94
10
11
%
Gas Utility heating degree days - % (warmer) than normal (b)
(11.0
)%
0.2
%
Capital expenditures
$
82
$
117
$
(35
)
(30
)%
Gas Utility service territory experienced temperatures that were 11% warmer than normal as well as the prior-year period.
Core market volumes decreased due to warmer than prior-year weather partially offset by growth in core market customers.
Total volumes increased largely due to higher large firm delivery service and interruptible delivery service volumes.
Total margin increased $9 million
Operating income increased $8 million $9 million $3 million $4 million
Midstream & Marketing
For the fiscal quarter ended December 31,
2023
2022
(Decrease) Increase
Revenues
$
394
$
669
$
(275
)
(41
)%
Total margin (a)
$
155
$
155
$
—
—
%
Operating and administrative expenses
$
31
$
29
$
2
7
%
Operating income
$
99
$
106
$
(7
)
(7
)%
Earnings before interest expense and income taxes
$
102
$
107
$
(5
)
(5
)%
Heating degree days - % warmer than normal (b)
(9.4
)%
(1.0
)%
Capital expenditures
$
19
$
11
$
8
73
%
Temperatures were 9% warmer than normal and 11% warmer than the prior-year period.
Total margin was comparable with the prior year period as higher margins from natural gas marketing activities were offset by lower margins from renewable energy marketing activities.
Operating and administrative expenses increased $2 million
UGI International
For the fiscal quarter ended December 31,
2023
2022
(Decrease) Increase
Revenues
$
725
$
877
$
(152
)
(17
)%
Total margin (a)
$
279
$
215
$
64
30
%
Operating and administrative expenses (a)
$
147
$
143
$
4
3
%
Operating income
$
113
$
56
$
57
102
%
Earnings before interest expense and income taxes
$
117
$
66
$
51
77
%
LPG retail gallons sold (millions)
214
205
9
4
%
Heating degree days - % warmer than normal (b)
(12.0
)%
(12.3
)%
Capital expenditures
$
12
$
27
$
(15
)
(56
)%
UGI International base-currency results are translated into U.S. dollars based upon exchange rates experienced during the reporting periods. Differences in these translation rates affect the comparison of line item amounts presented in the table above. The functional currency of a significant portion of our UGI International results is the euro and, to a much lesser extent, the British pound sterling. During the 2023 and 2022 three-month periods, the average unweighted euro-to-dollar translation rates were approximately $1.08 $1.02 $1.24 $1.17
Temperatures were 12% warmer than normal and 1.5% colder than the prior-year period.
Retail volume increased 4% primarily due to colder than prior-year weather.
Total margin increased $64 million ~$15 million ).
Operating and administrative expenses increased $4 million ~$9 million ), partially offset by lower personnel-related expenses.
Operating income increased $57 million $4 million
AmeriGas Propane
For the fiscal quarter ended December 31,
2023
2022
(Decrease) Increase
Revenues
$
629
$
766
$
(137
)
(18
)%
Total margin (a)
$
346
$
380
$
(34
)
(9
)%
Operating and administrative expenses
$
243
$
235
$
8
3
%
Operating loss/loss before interest expense and income taxes
$
71
$
110
$
(39
)
(35
)%
Retail gallons sold (millions)
206
236
(30
)
(13
)%
Heating degree days - % (warmer) colder than normal (b)
(6.4
)%
6.2
%
Capital expenditures
$
20
$
23
$
(3
)
(13
)%
Temperatures were 6% warmer than normal and 12% warmer than the prior-year period.
Retail gallons sold decreased 13% due to warmer weather and continued customer attrition.
Total margin decreased $34 million
Operating and administrative expenses increased $8 million $5 million $4 million
Operating income decreased $39 million $3 million
(a)
Total margin represents total revenue less total cost of sales. In the case of Utilities, total margin is also reduced by certain revenue-related taxes.
(b)
Deviation from average heating degree days is determined on a 10-year period utilizing volume-weighted weather data.
REPORT OF EARNINGS – UGI CORPORATION
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Revenues:
Utilities
$
493
$
592
$
1,755
$
1,793
Midstream & Marketing
394
669
1,572
2,460
UGI International
725
877
2,813
3,514
AmeriGas Propane
629
766
2,444
2,931
Corporate & Other (a)
(120
)
(145
)
(294
)
(506
)
Total revenues
$
2,121
$
2,759
$
8,290
$
10,192
Earnings (loss) before interest expense and income taxes:
Utilities
$
135
$
128
$
372
$
366
Midstream & Marketing
102
107
286
294
UGI International
117
66
285
238
AmeriGas Propane
71
110
229
331
Total reportable segments
425
411
1,172
1,229
Corporate & Other (a)
(205
)
(1,642
)
(1,179
)
(683
)
Total earnings (loss) before interest expense and income taxes
220
(1,231
)
(7
)
546
Interest expense:
Utilities
(23
)
(21
)
(84
)
(70
)
Midstream & Marketing
(11
)
(11
)
(45
)
(42
)
UGI International
(11
)
(7
)
(41
)
(28
)
AmeriGas Propane
(41
)
(43
)
(161
)
(162
)
Corporate & Other, net (a)
(14
)
(10
)
(56
)
(38
)
Total interest expense
(100
)
(92
)
(387
)
(340
)
Income (loss) before income taxes
120
(1,323
)
(394
)
206
Income tax (expenses) benefits (b)
(26
)
369
(60
)
10
Net income (loss) attributable to UGI Corporation
$
94
$
(954
)
$
(454
)
$
216
Earnings (loss) per share attributable to UGI shareholders:
Basic
$
0.45
$
(4.54
)
$
(2.16
)
$
1.03
Diluted
$
0.44
$
(4.54
)
$
(2.16
)
$
1.00
Weighted Average common shares outstanding (thousands):
Basic
209,782
209,934
209,778
210,012
Diluted
215,570
209,934
209,778
215,880
Supplemental information:
Net income (loss) attributable to UGI Corporation:
Utilities
$
86
$
81
$
224
$
224
Midstream & Marketing
92
77
208
189
UGI International
83
45
210
163
AmeriGas Propane
16
49
38
127
Total reportable segments
277
252
680
703
Corporate & Other (a)
(183
)
(1,206
)
(1,134
)
(487
)
Total net income (loss) attributable to UGI Corporation
$
94
$
(954
)
$
(454
)
$
216
(a)
Corporate & Other includes specific items attributable to our reportable segments that are not included in profit measures used by our Chief Operating Decision Maker in assessing our reportable segments' performance or allocating resources. These specific items are shown in the section titled "Non-GAAP Financial Measures - Adjusted Net Income (Loss) Attributable to UGI and Adjusted Diluted Earnings Per Share" below. Corporate & Other also includes the elimination of certain intercompany transactions.
(b)
Income tax expense for the twelve months ended December 31, 2022 includes $20 million Pennsylvania corporate income tax rates for future years, signed into law in July 2022.
Non-GAAP Financial Measures - Adjusted Net Income Attributable to UGI and Adjusted Diluted Earnings Per Share
The following tables reconcile net income attributable to UGI Corporation, the most directly comparable GAAP measure, to adjusted net income attributable to UGI Corporation, and reconcile diluted earnings per share, the most comparable GAAP measure, to adjusted diluted earnings per share, to reflect the adjustments referred to previously:
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2023
2022
2023
2022
Adjusted net income (loss) attributable to UGI Corporation (millions):
Net income (loss) attributable to UGI Corporation
$
94
$
(954
)
$
(454
)
$
216
Net losses on commodity derivative instruments not associated with current-period transactions (net of tax of $(18) $(363) $(74) $(112)
77
999
303
249
Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(6) $(11) $(6) $1
14
29
12
(3
)
Loss associated with impairment of AmeriGas Propane goodwill (net of tax of $0 $0 $4 $0
—
—
660
—
Loss on extinguishment of debt (net of tax of $0 $0 $(2) $0
—
—
7
—
Business transformation expenses (net of tax of $0 $(1) $(2) $(2)
—
1
6
7
Costs associated with exit of the UGI International energy marketing business (net of tax of $(13) $(68) $(12) $(69)
65
166
80
170
Impact of change in tax law
—
—
—
(19
)
AmeriGas operations enhancement for growth project (net of tax of $(2) $(2) $(6) $(4)
5
5
18
8
Impairment of certain equity method investments (net of tax of $0 $0 $0 $(13)
—
—
—
22
Restructuring costs (net of tax of $(1) $0 $(1) $(8)
3
—
3
21
Net gain on sale of UGI headquarters building (net of tax of $0 $0 $4 $0
—
—
(10
)
—
Total adjustments (1)
164
1,200
1,079
455
Adjusted net income attributable to UGI Corporation
$
258
$
246
$
625
$
671
Adjusted diluted earnings per share:
UGI Corporation earnings (loss) per share — diluted (2)
$
0.44
$
(4.54
)
$
(2.16
)
$
1.00
Net losses on commodity derivative instruments not associated with current-period transactions
0.37
4.73
1.36
1.15
Unrealized losses (gains) on foreign currency derivative instruments
0.06
0.14
0.06
(0.01
)
Loss associated with impairment of AmeriGas Propane goodwill
—
—
3.15
—
Loss on extinguishment of debt
—
—
0.03
—
Business transformation expenses
—
—
0.03
0.03
Costs associated with the exit of the UGI International energy marketing business
0.30
0.79
0.38
0.79
Impact of change in tax law
—
—
—
(0.09
)
AmeriGas operations enhancement for growth project
0.02
0.02
0.09
0.03
Impairment of certain equity method investments
—
—
—
0.10
Restructuring costs
0.01
—
0.01
0.10
Net gain on sale of UGI headquarters building
—
—
(0.05
)
—
Total adjustments (2)
0.76
5.68
5.06
2.10
Adjusted diluted earnings per share (2)
$
1.20
$
1.14
$
2.90
$
3.10
(1)
Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
(2)
The loss per share for the twelve months ended December 31, 2023, was determined excluding the effect of 5.97 million dilutive shares as the impact of such shares would have been antidilutive to the net loss for the period. Adjusted earnings per share for the twelve months ended December 31, 2023, was determined based upon fully diluted shares of 215.75 million. The loss per share for the three months ended December 31, 2022, was determined excluding the effect of 6.43 million dilutive shares as the impact of such shares would have been antidilutive to the net loss for the period. Adjusted earnings per share for the three months ended December 31, 2022, were determined based upon fully diluted shares of 216.37 million.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240131179207/en/
INVESTOR RELATIONS
Source: UGI Corporation
What was UGI Corporation's Q1 GAAP diluted EPS?
UGI Corporation's Q1 GAAP diluted EPS was $0.44.
What was UGI Corporation's Q1 adjusted diluted EPS?
UGI Corporation's Q1 adjusted diluted EPS was $1.20.
What was the reportable segments earnings before interest expense and income taxes1 (EBIT)?
The reportable segments earnings before interest expense and income taxes1 (EBIT) was $425 million, showing a 3.4% increase from the prior-year period.
What was the reason behind the 77% increase in EBIT from UGI International?
The increase in EBIT from UGI International was due to the continued exit of the non-core energy marketing business, higher LPG volumes, and increased unit margins.
What was UGI Corporation's liquidity as of December 31, 2023?
UGI Corporation maintained a strong liquidity of approximately $1.5 billion as of December 31, 2023.
What approval did UGI Corporation receive from the West Virginia Public Service Commission?
UGI Corporation received approval for a gas rate case in West Virginia, allowing for a $13.9 million annual distribution rate increase.
What prompted the need for renewed focus on execution at AmeriGas?
A decline in year-over-year financial results prompted the need for renewed focus on execution at AmeriGas.
