UGI Earnings 2020-03-31

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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



☐	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)



Pennsylvania		23-2668356
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

460 North Gulph Road, King of Prussia, PA 19406

(Address of Principal Executive Offices) (Zip Code)

(610) 337-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
Common Stock, without par value	UGI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

At April 30, 2020, there were 208,267,174 shares of UGI Corporation Common Stock, without par value, outstanding.

Table of Contents

UGI CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS



	Page

Glossary of Terms and Abbreviations	1

Part I Financial Information

Item 1. Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2020, September 30, 2019 and March 31, 2019	6

Condensed Consolidated Statements of Income for the three and six months ended March 31, 2020 and 2019	7

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2020 and 2019	8

Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2020 and 2019	9

Condensed Consolidated Statements of Changes in Equity for the three and six months ended March 31, 2020 and 2019	10

Notes to Condensed Consolidated Financial Statements	11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	42

Item 3. Quantitative and Qualitative Disclosures About Market Risk	60

Item 4. Controls and Procedures	62

Part II Other Information

Item 1A. Risk Factors	63

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	64

Item 6. Exhibits	65

Signatures	67

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS

Terms and abbreviations used in this Form 10-Q are defined below:

UGI Corporation and Related Entities

AmeriGas OLP - AmeriGas Propane, L.P., the principal operating subsidiary of AmeriGas Partners

AmeriGas Partners - AmeriGas Partners, L.P., a Delaware limited partnership and an indirect wholly-owned subsidiary of UGI; also referred to as the “Partnership”

AmeriGas Propane - Reportable segment comprising AmeriGas Propane, Inc. and its subsidiaries, including AmeriGas Partners and AmeriGas OLP

AmeriGas Propane, Inc. - A wholly owned second-tier subsidiary of UGI and the general partner of AmeriGas Partners; also referred to as the “General Partner”

AvantiGas - AvantiGas Limited, an indirect wholly owned subsidiary of UGI International, LLC

Company - UGI and its consolidated subsidiaries collectively

CMG - Columbia Midstream Group, LLC

CPG - UGI Central Penn Gas, Inc., a wholly owned subsidiary of UGI Utilities prior to the Utility Merger

DVEP - DVEP Investeringen B.V., an indirect wholly owned subsidiary of UGI International, LLC

Electric Utility - UGI Utilities’ regulated electric distribution utility

Energy Services - UGI Energy Services, LLC, a wholly owned second-tier subsidiary of UGI

ESFC - Energy Services Funding Corporation, a wholly owned subsidiary of Energy Services

Flaga - Flaga GmbH, an indirect wholly owned subsidiary of UGI International, LLC

Gas Utility - UGI Utilities’ regulated natural gas distribution business, comprising the natural gas utility businesses owned and operated by UGI Utilities and, prior to the Utility Merger, PNG and CPG

General Partner - AmeriGas Propane, Inc., the general partner of AmeriGas Partners

Midstream & Marketing - Reportable segment principally comprising Energy Services and its subsidiaries, including UGID

Partnership - AmeriGas Partners and its consolidated subsidiaries, including AmeriGas OLP

Pennant - Pennant Midstream, LLC

PennEast - PennEast Pipeline Company, LLC

PNG - UGI Penn Natural Gas, Inc., a wholly owned subsidiary of UGI Utilities prior to the Utility Merger

UGI - UGI Corporation

UGI Appalachia - UGI Appalachia, LLC, a wholly owned subsidiary of Energy Services, comprising the natural gas gathering and processing business of CMG and its equity interest in Pennant

UGI Central - The natural gas rate district of CPG subsequent to the Utility Merger

UGI France - UGI France SAS (a Société par actions simplifiée), an indirect wholly owned subsidiary of UGI International, LLC

UGI International - Reportable segment principally comprising UGI’s foreign operations

UGI International, LLC - UGI International, LLC, a wholly owned second-tier subsidiary of UGI

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UGI PennEast, LLC - A wholly owned subsidiary of Energy Services that holds a 20% membership interest in PennEast

UGI Utilities - UGI Utilities, Inc., a wholly owned subsidiary of UGI. Also a reportable segment of UGI comprising UGI Utilities, Inc. and its subsidiaries

UGID - UGI Development Company, a wholly owned subsidiary of Energy Services

UniverGas - UniverGas Italia S.r.l, an indirect wholly owned subsidiary of UGI International, LLC

Other Terms and Abbreviations

2018 UGI International Credit Facilities Agreement - A five-year unsecured Senior Facilities Agreement entered into in October 2018, by UGI International, LLC comprising a €300 million term loan facility and a €300 million revolving credit facility maturing October 2023

2019 Annual Report - UGI Annual Report on Form 10-K for the fiscal year ended September 30, 2019

2019 six-month period - Six months ended March 31, 2019

2019 three-month period - Three months ended March 31, 2019

2020 six-month period - Six months ended March 31, 2020

2020 three-month period - Three months ended March 31, 2020

Adjusted LIBOR - A rate derived from LIBOR

AFUDC - Allowance for Funds Used During Construction

AmeriGas Merger - The transaction contemplated by the Merger Agreement pursuant to which AmeriGas Propane Holdings, LLC merged with and into the Partnership on August 21, 2019, with the Partnership surviving as an indirect wholly owned subsidiary of UGI

AOCI - Accumulated Other Comprehensive Income (Loss)

ASC - Accounting Standards Codification

ASC 606 - ASC 606, “Revenue from Contracts with Customers”

ASC 805 - ASC 805, “Business Combinations”

ASC 840 - ASC 840, “Leases”

ASC 842 - ASC 842, “Leases” (effective October 1, 2019)

ASU - Accounting Standards Update

Bcf - Billions of cubic feet

BIE - Pennsylvania Public Utility Commission Bureau of Investigation and Enforcement

CARES Act - Coronavirus Aid, Relief, and Economic Security Act

CMG Acquisition - Acquisition of CMG and Columbia Pennant, LLC on August 1, 2019 pursuant to the CMG Acquisition Agreements

CMG Acquisition Agreements - Agreements related to the CMG Acquisition comprising (1) a purchase and sale agreement related to the CMG acquisition, dated July 2, 2019, by and among Columbia Midstream & Minerals Group, LLC, Energy Services, UGI and TransCanada PipeLine USA Ltd., and (2) a purchase and sale agreement related to the Columbia Pennant, LLC acquisition, dated July 2, 2019, by and among Columbia Midstream & Minerals Group, LLC, Energy Services, and TransCanada PipeLine USA Ltd.

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COA - Consent Order and Agreement

CODM - Chief Operating Decision Maker as defined in ASC 280, “Segment Reporting”

Common Stock - shares of UGI common stock

Common Units - Limited partnership ownership interests in AmeriGas Partners

Core market - Comprises (1) firm residential, commercial and industrial customers to whom UGI Utilities has a statutory obligation to provide service who purchase their natural gas or electricity from UGI Utilities; and (2) residential, commercial and industrial customers to whom UGI Utilities has a statutory obligation to provide service who purchase their natural gas or electricity from others

COVID-19 - A novel strain of coronavirus disease discovered in 2019

DS - Default service

EBITDA - Earnings before interest expense, income taxes, depreciation, and amortization

Eighth Circuit - United States Court of Appeals for the Eighth Circuit

Energy Services Term Loan - A seven-year $700 million senior secured term loan agreement entered into on August 13, 2019, with a group of lenders

Energy Services 2020 Credit Agreement - Third Amended and Restated Credit Agreement entered into on March 6, 2020 by Energy Services, as borrower, providing for borrowings up to $260 million, including a letter of credit subfacility of up to $50 million, scheduled to expire in March 2025

Energy Services Credit Agreement - Second Amended and Restated Credit Agreement entered into by Energy Services, as borrower, providing for borrowings up to $200 million, including a letter of credit subfacility of up to $50 million prior to its replacement by the Energy Services 2020 Credit Agreement

Exchange Act - Securities Exchange Act of 1934, as amended

FASB - Financial Accounting Standards Board

FDIC - Federal Deposit Insurance Corporation

FERC - Federal Energy Regulatory Commission

Fiscal 2019 - The fiscal year ended September 30, 2019

Fiscal 2020 - The fiscal year ending September 30, 2020

Fiscal 2021 - The fiscal year ending September 30, 2021

Fiscal 2022 - The fiscal year ending September 30, 2022

Fiscal 2023 - The fiscal year ending September 30, 2023

Fiscal 2024 - The fiscal year ending September 30, 2024

GAAP - U.S. generally accepted accounting principles

Gwh - Millions of kilowatt hours

Hunlock - Hunlock Station, a 130-megawatt natural gas-fueled electricity generating station located near Wilkes-Barre, Pennsylvania

ICE - Intercontinental Exchange

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IDR - Incentive distribution right

IRPA - Interest rate protection agreement

IT - Information technology

LIBOR - London Inter-bank Offered Rate

LNG - Liquefied natural gas

LPG - Liquefied petroleum gas

MDPSC - Maryland Public Service Commission

Merger Agreement - Agreement and Plan of Merger, dated as of April 1, 2019, among UGI, AmeriGas Propane Holdings, Inc., AmeriGas Propane Holdings, LLC, AmeriGas Partners and AmeriGas Propane

MGP - Manufactured gas plant

NOAA - National Oceanic and Atmospheric Administration

NOL - Net operating loss

NPNS - Normal purchase and normal sale

NYDEC - New York State Department of Environmental Conservation

NYMEX - New York Mercantile Exchange

PADEP - Pennsylvania Department of Environmental Protection

PAPUC - Pennsylvania Public Utility Commission

PGC - Purchased gas costs

PRP - Potentially Responsible Party

Receivables Facility - A receivables purchase facility of Energy Services with an issuer of receivables-backed commercial paper

Retail core-market - Comprises firm residential, commercial and industrial customers to whom UGI Utilities has a statutory obligation to provide service that purchase their natural gas from Gas Utility

ROU - Right-of-use

ROD - Record of Decision

SCAA - Storage Contract Administrative Agreements

SEC - U.S. Securities and Exchange Commission

TCJA - Tax Cuts and Jobs Act

Temporary Rates Order - Order issued by the PAPUC on March 15, 2018, that converted PAPUC approved rates of a defined group of large Pennsylvania public utilities into temporary rates for a period of not more than 12 months while the PAPUC reviewed effects of the TCJA

UGI Corporation Senior Credit Facility - An unsecured senior facilities agreement entered into on August 1, 2019, by UGI comprising (1) a five-year $250 million term loan facility; (2) a three-year $300 million term loan facility; and (3) a five-year $300 million revolving credit facility (including a $10 million sublimit for letters of credit)

UGI International 3.25% Senior Notes - An underwritten private placement of €350 million principal amount of senior unsecured notes due November 1, 2025, issued by UGI International, LLC

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UGI Utilities 3.12% Senior Notes - A private placement of $150 million principal amount of senior unsecured notes due April 2050, issued by UGI Utilities

USD - U.S. dollar

U.S. Pension Plan - Defined benefit pension plan for employees hired prior to January 1, 2009 of UGI, UGI Utilities and certain of UGI’s other domestic wholly owned subsidiaries

Utility Merger - The merger, effective October 1, 2018, of CPG and PNG with and into UGI Utilities

VEBA - Voluntary Employees’ Beneficiary Association

Western Missouri District Court - The United States District Court for the Western District of Missouri

WHO - World Health Organization

Table of Contents

UGI CORPORATION AND SUBSIDIARIES

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(Millions of dollars)



	March 31, 2020			September 30, 2019			March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	297.3		$	447.1		$	492.1
Restricted cash	104.4			63.7			26.3
Accounts receivable (less allowances for doubtful accounts of $39.4, $31.6 and $43.6, respectively)	1,016.3			640.7			1,231.4
Accrued utility revenues	39.4			14.6			52.1
Inventories	179.7			229.9			222.0
Utility regulatory assets	4.0			9.1			1.3
Derivative instruments	37.7			28.9			32.2
Prepaid expenses and other current assets	200.0			132.2			122.6
Total current assets	1,878.8			1,566.2			2,180.0
Property, plant and equipment, at cost (less accumulated depreciation of $3,555.2, $3,385.2 and $3,274.6, respectively)	6,804.6			6,687.8			5,917.0
Goodwill	3,465.5			3,456.4			3,147.8
Intangible assets, net	687.8			708.6			488.3
Utility regulatory assets	386.9			386.5			298.0
Derivative instruments	42.9			43.2			22.8
Other assets	869.0			497.9			297.0
Total assets	$	14,135.5		$	13,346.6		$	12,350.9
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	27.1		$	24.1		$	18.0
Short-term borrowings	653.5			796.3			341.0
Accounts payable	464.7			438.8			652.1
Derivative instruments	185.2			84.9			31.0
Other current liabilities	785.6			682.8			735.2
Total current liabilities	2,116.1			2,026.9			1,777.3
Long-term debt	5,800.2			5,779.9			4,283.8
Deferred income taxes	580.0			541.4			970.8
Derivative instruments	105.8			48.4			16.5
Other noncurrent liabilities	1,443.8			1,122.8			986.5
Total liabilities	10,045.9			9,519.4			8,034.9
Commitments and contingencies (Note 11)
Equity:
UGI Corporation stockholders’ equity:
UGI Common Stock, without par value (authorized — 450,000,000 shares; issued — 209,439,475, 209,304,129 and 174,596,873 shares, respectively)	1,408.6			1,396.9			1,219.0
Retained earnings	2,953.3			2,653.1			2,818.2
Accumulated other comprehensive loss	(229.7		)	(216.6		)	(160.8		)
Treasury stock, at cost	(51.7		)	(15.9		)	(23.4		)
Total UGI Corporation stockholders’ equity

Price	50.45	EPS	2
Shares	190	P/E	22
MCap	9,581	P/FCF	9
Net Debt	5,293	EBIT	524
TEV	14,874	TEV/EBIT	28
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-07
10-Q	2019-12-31	Filed 2020-02-06
10-K	2019-09-30	Filed 2019-11-26
10-Q	2019-06-30	Filed 2019-08-06
10-Q	2019-03-31	Filed 2019-05-08
10-Q	2018-12-31	Filed 2019-02-07
10-K	2018-09-30	Filed 2018-11-20
10-Q	2018-06-30	Filed 2018-08-07
10-Q	2018-03-31	Filed 2018-05-08
10-Q	2017-12-31	Filed 2018-02-06
10-K	2017-09-30	Filed 2017-11-21
10-Q	2017-06-30	Filed 2017-08-04
10-Q	2017-03-31	Filed 2017-05-05
10-Q	2016-12-31	Filed 2017-02-03
10-K	2016-09-30	Filed 2016-11-22
10-Q	2016-06-30	Filed 2016-08-05
10-Q	2016-03-31	Filed 2016-05-06
10-Q	2015-12-31	Filed 2016-02-05
10-K	2015-09-30	Filed 2015-11-30
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-Q	2014-12-31	Filed 2015-02-06
10-K	2014-09-30	Filed 2014-11-28
10-Q	2014-06-30	Filed 2014-08-07
10-Q	2014-03-31	Filed 2014-05-09
10-Q	2013-12-31	Filed 2014-02-07
10-K	2013-09-30	Filed 2013-12-16
10-Q	2013-06-30	Filed 2013-08-02
10-Q	2013-03-31	Filed 2013-05-15
10-Q	2012-12-31	Filed 2013-02-08
10-K	2012-09-30	Filed 2012-11-21
10-Q	2012-06-30	Filed 2012-08-08
10-Q	2012-03-31	Filed 2012-05-04
10-Q	2011-12-31	Filed 2012-02-03
10-K	2011-09-30	Filed 2011-11-21
10-Q	2011-06-30	Filed 2011-08-05
10-Q	2011-03-31	Filed 2011-05-06
10-Q	2010-12-31	Filed 2011-02-04
10-K	2010-09-30	Filed 2010-11-19
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-07
10-Q	2009-12-31	Filed 2010-02-05

8-K	2020-06-10
8-K	2020-05-06
8-K	2020-04-20
8-K	2020-03-26
8-K	2020-03-19
8-K	2020-03-06
8-K	2020-03-03
8-K	2020-02-05
8-K	2020-01-22
8-K	2019-12-12
8-K	2019-12-11
8-K	2019-11-21
8-K	2019-11-11
8-K	2019-10-25
8-K	2019-09-05
8-K	2019-08-21
8-K	2019-08-13
8-K	2019-08-07
8-K	2019-08-05
8-K	2019-08-01
8-K	2019-07-31
8-K	2019-07-25
8-K	2019-07-18
8-K	2019-07-17
8-K	2019-07-02
8-K	2019-06-05
8-K	2019-05-21
8-K	2019-05-06
8-K	2019-05-06
8-K	2019-04-01
8-K	2019-02-05
8-K	2019-01-30
8-K	2019-01-17
8-K	2018-12-21
8-K	2018-12-04
8-K	2018-11-12
8-K	2018-10-26
8-K	2018-10-25
8-K	2018-10-18
8-K	2018-10-15
8-K	2018-09-21
8-K	2018-09-14
8-K	2018-08-01
8-K	2018-05-02
8-K	2018-03-22
8-K	2018-03-05
8-K	2018-02-23
8-K	2018-02-06
8-K	2018-01-31
8-K	2018-01-25

EX-10.1	ex101formofnqso.htm
EX-10.2	ex102formofperformance.htm
EX-10.3	ex103formofnqsonon-emp.htm
EX-10.4	ex104formofstockunitgr.htm
EX-31.1	ugicorpq23312020ex311.htm
EX-31.2	ugicorpq23312020ex312.htm
EX-32	ugicorpq23312020ex32.htm

UGI 10Q Quarterly Report

UGI Earnings 2020-03-31