UGI (US:UGI)2019-08-06 20:15Financial 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].