AGA Financial
Forum
May 17, 2024
About This Presentation
This presentation contains statements, estimates and projections that are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended). Such statements use forward-looking words such as "believe," "plan," "anticipate," "continue," "estimate," "expect," "may," or other similar words and terms of similar meaning, although not all forward-looking statements contain such words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future. Management believes that these are 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 control; accordingly, there is no assurance that results will be realized. You should read UGI's Annual Report on Form 10-K for a more extensive list of factors that could affect results. We undertake no obligation (and expressly disclaim any obligation) to update publicly any forward-looking statement, whether as a result of new information or future events, except as required by the federal securities laws. Among them are adverse weather conditions (including increasingly uncertain weather patterns due to climate change) resulting in reduced demand, the seasonal nature of our business, and disruptions in our operations and supply chain; cost volatility and availability of energy products, including propane and other LPG, natural gas, and electricity, as well as the availability of LPG cylinders, and the capacity to transport product to our customers; changes in domestic and foreign laws and regulations, including safety, health, tax, transportation, consumer protection, data privacy, accounting, and environmental matters, such as regulatory responses to climate change; the inability to timely recover costs through utility rate proceedings; increased customer conservation measures due to high energy prices and improvements in energy efficiency and technology resulting in reduced demand; adverse labor relations and our ability to address existing or potential workforce shortages; the impact of pending and future legal or regulatory proceedings, inquiries or investigations; competitive pressures from the same and alternative energy sources; failure to acquire new customers or retain current customers, thereby reducing or limiting any increase in revenues; liability for environmental claims; customer, counterparty, supplier, or vendor defaults; liability for uninsured claims and for claims in excess of insurance coverage, including those for personal injury and property damage arising from explosions, acts of war, terrorism, natural disasters, pandemics and other catastrophic events that may result from operating hazards and risks incidental to generating and distributing electricity and transporting, storing and distributing natural gas and LPG in all forms; transmission or distribution system service interruptions; political, regulatory and economic conditions in the United States, Europe and other foreign countries, including uncertainties related to the war between Russia and Ukraine, the conflict in the Middle East, 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 success of our strategic initiatives and investments intended to advance our business strategy; 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 a material impairment of our assets; 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; 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; and our ability to control operating costs and realize cost savings.
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UGI Supplemental Footnotes
Management uses "adjusted net income attributable to UGI Corporation", "adjusted diluted earnings per share ("EPS")", "UGI Corporation Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA")", and "UGI Energy Services Margin", all of which are non-GAAP financial measures, when evaluating UGI's overall performance. Management believes that these non-GAAP measures provide meaningful information to investors about UGI's performance because they eliminate the impacts of (1) gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions and (2) other significant discrete items that can affect the comparison of period-over-period results. Volatility in net income attributable to UGI can occur as a result of gains and losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions but included in earnings in accordance with 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 in the Appendix reconcile adjusted diluted earnings per share (EPS), adjusted net income attributable to UGI Corporation and UGI Corporation Adjusted EBITDA, and UGI Energy Services Margin to their nearest GAAP measures.
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Agenda
Strategic | Our Natural | Our Global | |
Overview and | Financial | ||
Gas | LPG | ||
Business | Overview | ||
Businesses | Businesses | ||
Update | |||
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A Diversified Energy Provider
UGI Corporation is a distributor and marketer of energy products and services,
including natural gas, LPG, electricity and renewable energy solutions
17
countries
Safety | Respect | Integrity |
Core Values
Sustainability ExcellenceReliability
1. As of September 30, 2023.
142 | 140 |
years of providing | consecutive years |
energy | of paying dividends |
2.6+ million | 10,000+ |
customers1 | employees1 |
UGI's mission is to be the preeminent | |
Our | energy distribution company in our |
targeted markets by providing a superior | |
Mission | |
range of clean and sustainable energy | |
solutions to our customers. | |
5 |
Our Businesses
Natural Gas | Global LPG | ||
Growth | 34% | Cash Generation | |
YTD1 FY24 | |||
Regulated Utilities | Adj. Diluted | UGI International | |
66% | EPS | ||
• Leading regulated utilities in constructive | • | Leading market positions | |
regulatory environments | • Strategically located supply assets | ||
• Strong rate base growth and attractive return on | • Strong track record of margin stability and free | ||
equity | cash flow generation |
- Weather normalization riders to promote earnings reliability
- Attractive capital investment runway with minimal regulatory lag
Midstream & Marketing
- Full suite of midstream services
- Scalable infrastructure to meet increasing demand
- Significant fee-based income promotes earnings
stability | 1 |
Targeted 25%
Adj. Diluted
EPS
75%+
AmeriGas Propane
- Largest retail LPG distributor in the US2 with broad geographic footprint serving all 50 states
- Significant supply and transportation network across the nation
- Consistent free cash flow generation
1. YTD FY24 signifies six months ended March 31, 2024. 2. Based on the volume of propane gallons distributed annually.
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Our Strategy to Maximize Shareholder Value
Maximize value for our | |||||
shareholders | |||||
Sustainably grow earnings | |||||
through strong execution | |||||
Capitalize on our market | and disciplined capital | ||||
leading positions and | allocation | ||||
Operate a high-performing, | optimize our strategic | ||||
assets | |||||
customer-centric and results- | |||||
driven organization | |||||
Safety | Respect | Integrity | Sustainability | Excellence | Reliability |
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Shareholder Value Proposition
International energy distributor with an attractive business mix and leading position in key markets
Building a culture of continuous improvement to drive cost competitiveness and sustainable cost savings
Focused on prudent capital allocation while investing in growth and maintaining a strong balance sheet and financial flexibility
Committed to returning cash to shareholders through dividends
Relentless focus on customers experience
75%+
Targeted
Earnings from
the Natural Gas
Businesses1
9%+
Targeted Rate Base Growth1
4 - 6%
Targeted Long-
Term EPS
Growth Rate1
1. The forward-looking information used on this slide is for illustrative purposes only. Actual numbers may differ substantially from the figures presented.
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Our Dividend Commitment
Strong history of returning cash to shareholders in the form of dividends
Committed to returning value to shareholders through dividend payments
10 Year CAGR: 6% | ||||||||||||||
140 years | ($) | $1.38 | $1.44 | $1.50 | $1.50 | |||||||||
Share1 | $1.30 | $1.32 | ||||||||||||
$1.00 | $1.04 | |||||||||||||
Consecutively Paying | Per | $0.87 | $0.91 | $0.95 | ||||||||||
Dividends | ||||||||||||||
Dividends | ||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024E |
FY24 - 262 | FY27 and Beyond2 |
With our focus on strengthening the balance | Anticipate returning to a targeted 4% long- |
sheet, we expect to keep dividends flat in the | term dividend growth rate |
near-term |
1. Adjusted for stock splits. Dividend figures represent annualized dividends based on the last dividend issued in that fiscal year. 2. The forward-looking information used on this slide is for illustrative purposes only. Actual numbers may differ substantially from the figures presented.
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Strategic Actions to Drive Long-Term Shareholder Value
Pursue portfolio optimization and growth
Stabilize and optimize the domestic propane business
Create efficiencies and an optimal cost structure
Drive balance sheet improvement
Pursue opportunities to optimize our portfolio and drive reliable earnings growth in the base business
Execute on an operational turnaround plan at AmeriGas Propane
Continuous focus on operational efficiencies to improve cost agility and deliver sustainable cost savings
Enhance our capital structure and credit metrics to provide greater financial flexibility
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Disclaimer
UGI Corporation published this content on 17 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 May 2024 12:38:04 UTC.