UGI Corporation (NYSE:UGI) Q4 2020 Earnings Conference Call November 19, 2020 9:00 AM ET Company Participants Alanna Zahora - IR Manager John L. Walsh - President and CEO Ted J. Jastrzebski - CFO Robert F. Beard - EVP, Natural Gas Roger Perreault - EVP, Global LPG Conference Call Participants Shneur Gershuni - UBS Marc Solecitto - Barclays Operator Ladies and gentlemen, thank you for standing by and welcome to the UGI Corporation Fiscal 2020 Earnings Conference Call. At this time, all participants are in a ...

Table of Contents FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Commission file number 1-11071 UGI CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 1-11071 UGI CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdiction ...

Part I Financial Information [Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows, with notes on accounting policies and acquisitions Condensed Consolidated Statements of Income (Three Months Ended Dec 31) | (Millions of dollars, except per share) | 2019 | 2018 | | :--- | :--- | :--- | | **Revenues** | $2,006.6 | $2,200.2 | | **Operating income** | $377.2 | $167.7 | | **Income before income taxes** | $288.1 | $111.9 | | **Net income attributable to UGI Corporation** | $212.0 | $64.2 | | **Diluted Earnings per share** | $1.00 | $0.36 | Condensed Consolidated Balance Sheet Highlights | (Millions of dollars) | Dec 31, 2019 | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | :--- | | **Total current assets** | $1,947.0 | $1,566.2 | $2,242.2 | | **Total assets** | $14,285.7 | $13,346.6 | $12,368.3 | | **Total current liabilities** | $2,391.5 | $2,026.9 | $2,183.1 | | **Total liabilities** | $10,281.1 | $9,519.4 | $8,321.7 | | **Total equity** | $4,004.6 | $3,827.2 | $4,046.6 | - On August 21, 2019, UGI completed the **AmeriGas Merger**, acquiring all outstanding Common Units of AmeriGas Partners, making it a wholly owned subsidiary[33](index=33&type=chunk) - Effective October 1, 2019, the Company adopted the new lease accounting standard (ASC 842), recognizing Right-of-Use (ROU) assets and lease liabilities of **$451.9 million** for operating leases[39](index=39&type=chunk)[40](index=40&type=chunk) - On August 1, 2019, the company completed the acquisition of Columbia Midstream Group (CMG) for **$1.28 billion**, with preliminary allocation including **$613.2 million** in property, plant and equipment, **$250.0 million** in intangible assets, and **$323.9 million** in goodwill[68](index=68&type=chunk)[70](index=70&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes increased GAAP and adjusted net income to lower derivative losses and segment earnings, driven by acquisitions, while discussing liquidity, capital resources, and regulatory filings Reconciliation of GAAP to Adjusted Net Income (Non-GAAP) | (Millions of dollars) | Three Months Ended Dec 31, 2019 | Three Months Ended Dec 31, 2018 | | :--- | :--- | :--- | | **Net income attributable to UGI Corporation (GAAP)** | **$212.0** | **$64.2** | | Net losses on commodity derivative instruments | $10.2 | $81.2 | | Unrealized (gains)/losses on foreign currency derivatives | $11.3 | $(5.8) | | Loss on extinguishments of debt | — | $4.2 | | LPG business transformation expenses | $12.2 | — | | Other adjustments | $0.5 | — | | **Adjusted net income attributable to UGI Corporation (Non-GAAP)** | **$246.2** | **$143.8** | - Fiscal 2020 results reflect the impact of two major strategic transactions from 2019: the acquisition of the public's interest in **AmeriGas Partners** and the acquisition of **Columbia Midstream Group (CMG)**[159](index=159&type=chunk) - The company is executing multi-year Global LPG Business Transformation Initiatives to improve operational efficiencies and enhance customer experience, with expected annual savings of over **$120 million** and **€30 million**, respectively[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) AmeriGas Propane Segment Results (Q1 FY20 vs Q1 FY19) | (Dollars in millions) | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $730.4 | $820.2 | (10.9)% | | Total margin | $441.2 | $441.7 | (0.1)% | | Operating income | $165.3 | $166.6 | (0.8)% | UGI International Segment Results (Q1 FY20 vs Q1 FY19) | (Dollars in millions) | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $651.4 | $710.7 | (8.3)% | | Total margin | $283.0 | $252.1 | 12.3% | | Operating income | $95.8 | $58.3 | 64.3% | - On January 28, 2020, Gas Utility filed a request with the PAPUC to increase its annual base operating revenues by **$74.6 million** to fund system improvements and maintain service reliability[231](index=231&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies primary market risks as commodity price, interest rate, and foreign currency exchange, which are mitigated using derivative instruments for hedging purposes - The company's primary market risk exposures are identified as **(1) commodity price risk**, **(2) interest rate risk**, and **(3) foreign currency exchange rate risk**[237](index=237&type=chunk) - To manage risk, the company uses various derivative instruments, including over-the-counter contracts to hedge **LPG costs**, NYMEX futures to reduce **natural gas price volatility** for its utility, and forward currency contracts to reduce **earnings volatility from foreign operations**[238](index=238&type=chunk)[239](index=239&type=chunk)[250](index=250&type=chunk) Market Risk Sensitivity Analysis (as of Dec 31, 2019) | (Millions of dollars) | Fair Value | Change in Fair Value (from adverse market change) | | :--- | :--- | :--- | | **Commodity price risk** | $(136.7) | $(107.5) | | **Interest rate risk** | $(4.2) | $(22.0) | | **Foreign currency exchange rate risk** | $35.5 | $(41.0) | [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls were effective, noting changes to internal controls due to the adoption of the new lease accounting standard - The CEO and CFO concluded that the Company's disclosure controls and procedures were **effective at the reasonable assurance level** as of the end of the period covered by the report[257](index=257&type=chunk) - A change in internal control over financial reporting occurred during the quarter due to the adoption of the **new lease accounting standard (ASU 2016-02, Topic 842)**, which included implementing new software[258](index=258&type=chunk) Part II Other Information [Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section states no new risk factors are reported and refers readers to the detailed discussion in the company's latest Annual Report on Form 10-K - The report directs readers to carefully consider the risk factors discussed in Part I, "Item 1A. Risk Factors" in the company's **2019 Annual Report**, stating they could materially affect the business[262](index=262&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter, UGI Corporation repurchased 500,000 shares of common stock as part of an ongoing share repurchase program Issuer Purchases of Equity Securities (Quarter Ended Dec 31, 2019) | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Shares Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | | Oct 2019 | — | $0.00 | 6.80 | | Nov 2019 | — | $0.00 | 6.80 | | Dec 2019 | 500,000 | $45.15 | 6.30 | | **Total** | **500,000** | | | [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including credit agreement amendments and CEO/CFO certifications - The exhibits filed with the report include amendments to **credit agreements** for UGI Corporation and AmeriGas Propane, L.P., and **certifications by the CEO and CFO** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[268](index=268&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) Pennsylvania 23-2668356 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 460 North ...

Financial Performance - For the three months ended June 30, 2019, net income attributable to UGI Corporation was $(1.9) million, a decrease of $54.3 million or 103.6% compared to the same period in 2018[241]. - AmeriGas Propane reported a net loss of $(2.3) million for the three months ended June 30, 2019, compared to a loss of $(11.2) million in 2018, reflecting a favorable variance of $8.9 million or 79.5%[241]. - UGI International's net income increased to $14.8 million for the three months ended June 30, 2019, up $8.3 million or 127.7% from $6.5 million in 2018[241]. - UGI Utilities reported a net income of $6.7 million for the three months ended June 30, 2019, a significant increase of $9.7 million or 323.3% compared to a loss of $(3.0) million in 2018[241]. - UGI Corporation reported a net loss attributable to the company of $1.9 million for the three months ended June 30, 2019, compared to a net income of $52.4 million in the same period of 2018[271]. - Adjusted net income attributable to UGI Corporation for the three months ended June 30, 2019, was $23.9 million, a 58.3% increase from $15.1 million in the same period of 2018[245]. - For the nine months ended June 30, 2019, adjusted net income attributable to UGI Corporation was $421.6 million, a decrease of 14.4% from $492.6 million in the same period of 2018[259]. - UGI Corporation's net income attributable for the nine months ended June 30, 2019, was $307.7 million, a decrease from $694.3 million in the same period of 2018, representing a decline of approximately 55.7%[276]. Adjusted Financial Metrics - UGI management uses adjusted net income and adjusted diluted earnings per share as non-GAAP measures to evaluate overall performance, excluding certain gains and losses[228]. - Adjusted net income attributable to UGI Corporation for the same period was $23.9 million, a decrease from $15.1 million in the prior year[271]. - The adjusted diluted earnings per share for UGI Corporation was $0.13, compared to $0.09 in the same quarter of 2018[271]. - Adjusted net income attributable to UGI Corporation for the nine months ended June 30, 2019, was $421.6 million, compared to $492.6 million in the prior year, reflecting a decrease of about 14.4%[276]. - Adjusted diluted earnings per share for the nine months ended June 30, 2019, was $2.38, down from $2.79 in the same period of 2018, indicating a decline of approximately 14.7%[276]. Revenue and Margin Analysis - Revenues for AmeriGas Propane in the three months ended June 30, 2019, were $478.7 million, a decrease of $49.7 million or 9.4% compared to $528.4 million in the prior year[281]. - Total margin for AmeriGas Propane decreased by $15.5 million to $268.4 million in the three months ended June 30, 2019, down 5.5% from $283.9 million in the same period of 2018[281]. - UGI International revenues decreased by $47.0 million, reflecting the translation effects of a weaker euro and British pound sterling, lower average LPG selling prices, and slightly lower retail volumes sold[295]. - UGI International total margin decreased by $11.2 million, largely due to the translation effects of the weaker euro and British pound sterling on local currency total margin[296]. - UGI Utilities revenues increased by $4.0 million, with total margin rising by $15.7 million, reflecting improved operational performance[306]. - UGI Utilities total margin increased by $15.7 million, but decreased by $7.0 million when excluding the prior year's $22.7 million revenue reduction due to tax savings[312]. Acquisition and Merger Activities - The Proposed Merger with AmeriGas Partners is expected to close in the fourth quarter of Fiscal 2019, with cash consideration of approximately $530 million and the issuance of about 34.6 million shares of UGI common stock[232]. - The CMG Acquisition was completed on August 1, 2019, for approximately $1.275 billion in cash, aimed at expanding UGI's midstream natural gas gathering and processing assets[236]. - UGI funded the CMG Acquisition with $600 million of borrowings under its Senior Credit Facility and cash on hand, with plans for longer-term funding[237]. - The company does not expect the CMG Acquisition to have a material impact on its Fiscal 2019 financial statements[238]. Tax and Regulatory Impacts - The enactment of the TCJA reduced the U.S. federal income tax rate from 35% to 21%, impacting UGI's financial results for the fiscal periods[229]. - UGI Utilities' nine-month net income reflects the credit to customers under the PAPUC's order for tax savings resulting from the TCJA[265]. - UGI Utilities' effective income tax rate for the 2019 three-month period was 21%, down from 24.5% in the prior year[315]. - The effective income tax rate for the 2019 nine-month period was 21%, down from 24.5% in the prior year[350]. Operational Performance - UGI Utilities operating income increased by $16.0 million, a 363.6% increase compared to the prior year, driven by lower operating and administrative expenses[306]. - Gas Utility core market volumes decreased by 2.4 bcf (21.1%) due to significantly warmer weather, despite growth in the number of core market customers[307]. - Average temperatures during the 2019 three-month period were 10.8% colder than normal, impacting retail LPG volumes sold[293]. Debt and Cash Flow Management - UGI's cash and cash equivalents totaled $533.7 million at June 30, 2019, up from $452.6 million at September 30, 2018, representing an increase of approximately 17.9%[355]. - Total debt as of June 30, 2019, was $4,689.3 million, compared to $4,590.2 million as of September 30, 2018, indicating a year-over-year increase of about 2.2%[356]. - Consolidated interest expense increased to $181.7 million in the 2019 nine-month period, compared to $172.8 million in the prior year, mainly due to higher short-term interest expense and long-term debt outstanding[349]. - Cash flow from operating activities was $924.6 million for the nine months ended June 30, 2019, slightly down from $926.8 million in the prior year[379]. - Cash used in investing activities was $563.5 million, with $510.2 million allocated for property, plant, and equipment, up from $394.2 million in the previous year[380]. Derivative Instruments and Market Risks - The company experienced net losses on commodity derivative instruments not associated with current-period transactions amounting to $25.0 million, net of tax[271]. - UGI Corporation's financial results reflect significant volatility due to changes in unrealized gains and losses on unsettled commodity and foreign currency derivative instruments[269]. - The fair value of unsettled commodity price risk sensitive derivative instruments was a loss of $50.7 million as of June 30, 2019[399]. - A hypothetical 10% adverse change in market prices could decrease fair value by approximately $97.9 million[399]. - The fair value of unsettled foreign currency exchange rate risk sensitive derivative instruments was a gain of $24.3 million as of June 30, 2019, with a hypothetical 10% adverse change resulting in a decrease of approximately $42.0 million[406].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR (Exact name of registrant as specified in its charter) Pennsylvania 23-2668356 (State or other jurisdiction of incorporation or organization) 460 North Gulph Road, King of Prussia, PA 19406 (Address of principal executive offices) (Zip Code) (610) 337-1000 (Registrant's te ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 1-11071 UGI CORPORATION (Exact name of registrant as specified in its charter) (State or other jurisdict ...