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UGI Reports Posts First Quarter Earnings

February 6, 2014

UGI Corp. reported net income attributable to UGI, in accordance with GAAP, of $122.0 million , or $1.05 per diluted share, for the first quarter of fiscal 2014 ended December 31, 2013 , compared to $102.5 million , or $0.90 per diluted share, for the first quarter of fiscal 2013. In a release on February 3 , the Company noted earnings details: UGI Corp. reported adjusted net income attributable to UGI of $123.5 million , or $1.06 per diluted share, for the first quarter of fiscal 2014, compared to $101.2 million , or $0.88 per diluted share, for the prior-year period. The increase in adjusted net income attributable to UGI was primarily the result of colder weather at our domestic business units. Adjusted net income attributable to UGI excludes the impact of mark-to-market changes in Midstream & Marketing's commodity hedging instruments and the retroactive effects of changes in French tax legislation enacted in the first fiscal quarter of 2014. John L. Walsh , president and CEO of UGI, said, "We are very pleased with the strong performance of our businesses this quarter. We benefited not only from a colder-than-normal winter in most of our operating territories, but also from the strategic investments that we've made over the last few years. Our Gas Utility continued to outperform as weather was colder-than-normal and underlying demand strengthened due to the significant number of new customer additions over the past few years. UGI's Midstream & Marketing business performance reflected the contributions from our major capital projects executed in recent years and the colder winter weather that created numerous capacity management opportunities, benefited our electric generation business, and drove increased demand for LNG. AmeriGas saw the benefits of a colder-than-normal winter and the business continues to benefit from the Heritage Propane integration. Additionally, AmeriGas's cylinder exchange and national accounts programs continue to grow faster than anticipated. UGI International experienced warmer-than-normal weather, but this was offset by incremental earnings from the BP Poland acquisition that was completed late last year." Walsh continued, "Based upon our results to date and our assessment of business conditions for the remainder of the fiscal year, we continue to expect to report adjusted earnings in the range of $2.60 to $2.70 per diluted share for fiscal 2014." Weather for the current-year period was 3.8 percent colder than normal and 14.0 percent colder than the prior year. The increase in retail gallons sold primarily reflects the colder- than-normal temperatures, and, to a lesser extent, growth in AmeriGas's national accounts and cylinder exchange programs. Revenues increased primarily due to higher average selling prices, largely the result of higher propane product costs, and higher retail volumes sold. The average wholesale cost of propane at Mont Belvieu, Texas for the current quarter was approximately 35 percent higher than the average cost in the same period last year. Total margin increased due to the increase in retail volumes sold and slightly higher average retail unit margins. Operating and administrative expenses decreased due primarily to the absence of transition expenses incurred in the prior year period associated with Heritage Propane and the impact of synergies from the integration of Heritage Propane . Operating income increased primarily reflecting the higher total margin and lower operating expenses partially offset by higher depreciation and amortization expense ( $2.2 million ). Weather in France was warmer than normal and approximately the same as the prior-year period while weather in Flaga's operating territory was much warmer than normal and warmer than the prior- year period. Retail gallons sold increased reflecting incremental retail gallons associated with the acquisition of BP Poland , acquired by Flaga in September 2013 , partially offset by the effects of the warmer weather. Revenues increased principally reflecting the BP Poland acquisition and greater natural gas marketing revenues at Antargaz ( $18.7 million ). Average wholesale propane prices in Northwest Europe were approximately 15 percent lower than in the prior-year period while average wholesale butane prices were approximately 3 percent lower than the prior-year period. Total margin increased principally reflecting higher total margin at Flaga ( $8.0 million ) due in large part to the effects of the BP Poland acquisition, higher total margin at AvantiGas ( $2.9 million ) reflecting higher average unit margins, and higher natural gas marketing margin at Antargaz . Operating and administrative expenses increased due to higher costs at Antargaz including higher repair and maintenance expenses and expenses associated with BP Poland operations (including $0.4 million of integration costs). Operating income and income before income taxes were slightly lower than the prior-year period due to the higher operating expenses and greater depreciation substantially offset by the higher total margin. The average euro-to-dollar translation rate for the current quarter was approximately $1.36 compared with $1.30 for the prior- year period. Weather during the quarter was colder than normal and 6.9 percent colder than the prior-year period. Total system throughput increased from the prior year due to increased throughput to core market customers. Revenue increased due to higher revenue from core market customers and, to a much lesser extent, higher revenues from large firm delivery service customers on higher throughput. Total margin increased principally reflecting higher core market total margin ( $8.0 million ) and greater large firm delivery service total margin ( $3.2 million ). Operating income increased due to the increase in total margin and, to a much lesser extent, a decrease in operating and administrative expenses which includes, among other things, lower pension and benefits expenses. The increase in income before income taxes reflects the greater operating income and lower interest expense principally reflecting lower average interest rates. Capital expenditures increased primarily due to increased pipeline replacement and system improvement capital expenditure. Revenue increased primarily reflecting higher natural gas revenues ( $42.1 million ) principally from greater natural gas volumes and, to a much lesser extent, higher capacity management revenues ( $6.2 million ) and greater Electric Generation revenues ( $5.9 million ). Total margin increased $12.2 million reflecting higher margin from capacity management, natural gas gathering, Electric Generation and peaking activities partially offset by lower retail power total margin. Operating income and income before income taxes increased due to the previously mentioned increase in total margin partially offset by higher operating and depreciation expenses. Capital expenditures increased due principally to the Auburn II project. Income Taxes Our consolidated effective tax rate for the first fiscal quarter of 2014 was higher than in the prior-year period. The higher consolidated tax rate reflects the effects of new tax legislation in France enacted in December 2013 that, among other things, limits retroactive to fiscal 2013, Antargaz ' ability to deduct for income tax purposes interest expense on certain intercompany debt. Income taxes for the first quarter of fiscal 2014 include $5.7 million related to the retroactive provision of the new French tax law. UGI is a distributor and marketer of energy products and services. Through subsidiaries, UGI operates natural gas and electric utilities in Pennsylvania , distributes propane both domestically and internationally, manages midstream energy and electric generation assets in Pennsylvania , and engages in energy marketing in the Mid-Atlantic region. UGI, through subsidiaries, is the sole General Partner and owns 26 percent of AmeriGas Partners, L.P. , a retail propane distributor. More Information: ((Comments on this story may be sent to ))

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