UGI CORP /PA/ [UGI] Filings

10-Q 1 ugi-20220331.htm 10-Q ugi-20220331

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, 2022


☐			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
Corporate Units	UGIC	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

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, 2022, there were 209,993,488 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, 2022 , September 30, 2021 and March 31, 20 21			5

Condensed Consolidated Statements of Income for the three and six months ended March 31, 202 2 and 20 21			6

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 202 2 and 20 21			7

Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 202 2 and 20 21			8

Condensed Consolidated Statements of Changes in Equity for the three and six months ended March 31, 202 2 and 20 21			9

Notes to Condensed Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34

Item 3. Quantitative and Qualitative Disclosures About Market Risk			51

Item 4. Controls and Procedures			53

Part II Other Information



Item 1A. Risk Factors			54



Item 6. Exhibits			56

Signatures			58

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

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

Company - UGI and its consolidated subsidiaries collectively

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

Electric Utility - UGI Utilities’ regulated electric distribution utility located in Pennsylvania

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’s regulated natural gas businesses, inclusive of PA Gas Utility and WV Gas Utility

GHI - GHI Energy, LLC, a Houston-based RNG company and indirect wholly owned subsidiary of Energy Services

Midstream & Marketing - Reportable segment comprising Energy Services and UGID

Mountaineer - Mountaineer Gas Company, a natural gas distribution company in West Virginia and an indirect wholly owned subsidiary of Mountaintop Energy Holdings, LLC

Mountaintop Energy Holdings, LLC - Indirect parent company of Mountaineer and wholly owned subsidiary of UGI, acquired on September 1, 2021

PA Gas Utility - UGI Utilities’ regulated natural gas distribution business, primarily located in Pennsylvania

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

Stonehenge - Stonehenge Appalachia, LLC, a midstream natural gas gathering business, which includes 47 miles of pipeline and associated compression assets

UGI - UGI Corporation or, collectively, UGI Corporation and its consolidated subsidiaries

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

UGI Utilities - UGI Utilities, Inc., a wholly owned subsidiary of UGI comprising PA Gas Utility and Electric Utility

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

Table of Contents

Utilities - Reportable segment comprising UGI Utilities and Mountaintop Energy Holdings, LLC

WV Gas Utility - Mountaineer’s regulated natural gas distribution business, located in West Virginia

Other Terms and Abbreviations

2021 Annual Report - UGI Annual Report on Form 10-K for the fiscal year ended September 30, 2021

2021 six-month period - Six months ended March 31, 2021

2021 three-month period - Three months ended March 31, 2021

2022 six-month period - Six months ended March 31, 2022

2022 three-month period - Three months ended March 31, 2022

2024 Purchase Contract - A forward stock purchase contract issued by UGI Corporation as a part of the issuance of Equity Units which obligates holders to purchase a number of shares of UGI common stock from the Company on June 1, 2024

AOCI - Accumulated Other Comprehensive Income (Loss)

ASC - Accounting Standards Codification

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

ASC 980 - ASC 980, “Regulated Operations”

ASU - Accounting Standards Update

Bcf - Billions of cubic feet

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

CDC - Centers for Disease Control and Prevention

COA - Consent Order and Agreement

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

Common Stock - shares of UGI common stock

Convertible Preferred Stock - Preferred stock of UGI titled 0.125% series A cumulative perpetual convertible preferred stock without par value and having a liquidation preference of $1,000 per share

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

DS - Default service

DSIC - Distribution System Improvement Charge

Energy Services Credit Agreement - Third amended and restated credit agreement entered into by Energy Services, as borrower, providing for borrowings up to $260 million, including a letter or credit subfacility of up to $50 million, scheduled to expire in March 2025

Equity Unit - A corporate unit consisting of a 2024 Purchase Contract and 1/10th or 10% undivided interest in one share of Convertible Preferred Stock

Exchange Act - Securities Exchange Act of 1934, as amended

FASB - Financial Accounting Standards Board

FDIC - Federal Deposit Insurance Corporation

Table of Contents

FERC - Federal Energy Regulatory Commission

Fiscal 2019 - The fiscal year ended September 30, 2019

Fiscal 2020 - The fiscal year ended September 30, 2020

Fiscal 2021 - The fiscal year ended September 30, 2021

Fiscal 2022 - The fiscal year ending September 30, 2022

Fiscal 2023 - The fiscal year ending September 30, 2023

GAAP - U.S. generally accepted accounting principles

Gwh - Millions of kilowatt hours

ICE - Intercontinental Exchange

IRPA - Interest rate protection agreement

LNG - Liquefied natural gas

LPG - Liquefied petroleum gas

MDPSC - Maryland Public Service Commission

MGP - Manufactured gas plant

Mountaineer Acquisition - Acquisition of Mountaintop Energy Holdings LLC, which closed on September 1, 2021

NOAA - National Oceanic and Atmospheric Administration

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

Purchase Contracts - Forward stock purchase contracts issued by UGI Corporation in May 2021, which obligate holders to purchase a number of shares of UGI common stock from the Company on June 1, 2024

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 Utilities has a statutory obligation to provide service that purchase their natural gas from Utilities

RNG - Renewable natural gas

ROD - Record of Decision

SEC - U.S. Securities and Exchange Commission

Stonehenge Acquisition - Acquisition of Stonehenge Appalachia, LLC, which closed January 27, 2022

Table of Contents

UGI Corporation Senior Credit Facility - An amended unsecured senior facilities agreement entered into on May 4, 2021, by UGI comprising (1) a $250 million term loan due August 2024; (2) a $300 million term loan due May 2025; (3) a $215 million term loan due May 2025 and (3) a five-year $300 million revolving credit facility (including a $10 million sublimit for letters of credit)

UGI International 2.50% Senior Notes - An underwritten private placement of €400 million principal amount of senior unsecured notes due December 1, 2029, issued by UGI International, LLC

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

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, scheduled to expire in October 2023

U.S. - United States of America

USD - U.S. dollar

WHO - World Health Organization

WVPSC - Public Service Commission of West Virginia

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UGI CORPORATION AND SUBSIDIARIES

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(Millions of dollars)


	March 31, 2022		September 30, 2021		March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	718	$	855	$	444
Restricted cash	55		22		28
Accounts receivable (less allowances for doubtful accounts of $70, $53 and $52, respectively)	1,690		880		1,183
Accrued utility revenues	77		15		32
Income taxes receivable	128		128		127
Inventories	398		469		268


Derivative instruments	877		665		127

Prepaid expenses and other current assets	211		236		175
Total current assets	4,154		3,270		2,384
Property, plant and equipment, (less accumulated depreciation of $4,117, $3,950 and $3,869, respectively)	7,812		7,558		7,020
Goodwill	3,722		3,770		3,524
Intangible assets, net	545		583		640
Utility regulatory assets	372		373		392
Derivative instruments	340		338		61


Other assets	832		831		924
Total assets	$	17,777	$	16,723	$	14,945
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	130	$	110	$	51

Short-term borrowings	447		367		340
Accounts payable	915		837		627


Derivative instruments	69		60		42
Other current liabilities	938		923		832
Total current liabilities	2,499		2,297		1,892
Long-term debt	6,390		6,339		5,953

Deferred income taxes	1,306		1,137		833

Derivative instruments	40		38		46
Other noncurrent liabilities	1,332		1,381		1,393
Total liabilities	11,567		11,192		10,117
Commitments and contingencies (Note 9)
Equity:
UGI Corporation stockholders’ equity:
Preferred stock, without par value (authorized – 5,000,000 shares; issued – 220,000, 220,000 and 0 Series A shares, respectively)	161		213		—
UGI Common Stock, without par value (authorized — 450,000,000 shares; issued — 210,127,957, 209,843,296 and 209,636,619 shares, respectively)	1,465		1,394		1,428
Retained earnings	4,757		4,081		3,557
Accumulated other comprehensive loss	(178)		(140)		(126)
Treasury stock, at cost	(5)		(26)		(40)
Total UGI Corporation stockholders’ equity	6,200		5,522		4,819
Noncontrolling interests	10		9		9
Total equity	6,210		5,531		4,828
Total liabilities and equity	$	17,777	$	16,723	$	14,945

See accompanying notes to condensed consolidated financial statements.

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UGI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(Millions of dollars, except per share amounts)


	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021
Revenues	$	3,466	$	2,581	$	6,139	$	4,513
Costs and expenses:
Cost of sales (excluding depreciation and amortization shown below)	1,470		1,274		3,590		2,107
Operating and administrative expenses	553		515		1,067		1,004


Depreciation and amortization	128		126		257		250

Other operating income, net	(17)		(5)		(39)		(21)
	2,134		1,910		4,875		3,340
Operating income	1,332		671		1,264		1,173
Income from equity investees	5		10		13		17
Loss on extinguishment of debt	—		—		(11)		—

Other non-operating income (expense), net	11		18		21		(1)
Interest expense	(82)		(78)		(163)		(156)
Income before income taxes	1,266		621		1,124		1,033
Income tax expense	(332)		(132)		(286)		(241)
Net income including noncontrolling interests	934		489		838		792
Deduct net income attributable to noncontrolling interests	(1)		—		(2)		—
Net income attributable to UGI Corporation	$	933	$	489	$	836	$	792
Earnings per common share attributable to UGI Corporation stockholders:
Basic	$	4.44	$	2.34	$	3.98	$	3.79
Diluted	$	4.32	$	2.33	$	3.87	$	3.77
Weighted-average common shares outstanding (thousands):
Basic	210,163		208,930		209,919		208,849
Diluted	215,928		210,092		215,936		209,863

See accompanying notes to condensed consolidated financial statements.

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UGI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(Millions of dollars)


	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021
Net income including noncontrolling interests	$	934	$	489	$	838	$	792
Other comprehensive income (loss):
Net gains on derivative instruments (net of tax of $(12), $(2), $(14) and $(2), respectively)	24		4		34		4
Reclassifications of net losses on derivative instruments (net of tax of $(1), $(2), $(3) and $(4), respectively)	6		4		10		9
Foreign currency adjustments (net of tax of $(9), $(10), $(13) and $2, respectively)	(53)		(56)		(85)		7
Benefit plans (net of tax of $0, $0, $(1) and $0, respectively)	1		1		3		1
Other comprehensive (loss) income	(22)		(47)		(38)		21
Comprehensive income including noncontrolling interests	912		442		800		813
Deduct comprehensive income attributable to noncontrolling interests	(1)		—		(2)		—
Comprehensive income attributable to UGI Corporation	$	911	$	442	$	798	$	813

See accompanying notes to condensed consolidated financial statements.

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UGI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(Millions of dollars)


	Six Months Ended March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interest	$	838	$	792
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	257		250
Deferred income tax expense, net	160		191
Provision for uncollectible accounts	33		19

Changes in unrealized gains and losses on derivative instruments	(341)		(185)

Loss on extinguishment of debt	11		—
Income from equity investees	(13)		(17)

Other, net	15		32
Net change in:
Accounts receivable and accrued utility revenues	(943)		(573)
Income taxes receivable	—		(47)
Inventories	64		(27)
Utility deferred fuel and power costs, net of changes in unsettled derivatives	—		(6)
Accounts payable	106		181
Derivative instruments collateral deposits received	138		44
Other current assets	38		(29)
Other current liabilities	37		21
Net cash provided by operating activities	400		646
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(355)		(304)
Acquisitions of businesses and assets, net of cash and restricted cash acquired	(188)		(12)
Investments in equity method investees	(10)		(61)
Other, net	38		20
Net cash used by investing activities	(515)		(357)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends on UGI Common Stock	(145)		(138)

Issuances of long-term debt, net of issuance costs	644		30
Repayments of long-term debt and finance leases, including redemption premiums	(552)		(65)
Increase (decrease) in short-term borrowings	80		(5)
Receivables Facility net repayments	—		(2)

Payments on Purchase Contracts	(8)		—
Issuances of UGI Common Stock	6		6



Net cash provided (used) by financing activities	25		(174)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(14)		—
Cash, cash equivalents and restricted cash (decrease) increase	$	(104)	$	115
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash, cash equivalents and restricted cash at end of period	$	773	$	472
Cash, cash equivalents and restricted cash at beginning of period	877		357
Cash, cash equivalents and restricted cash (decrease) increase	$	(104)	$	115

See accompanying notes to condensed consolidated financial statements.

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UGI CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited)

(Millions of dollars, except per share amounts)


	Three Months Ended March 31,				Six Months Ended March 31,
	2022		2021		2022		2021
Preferred stock, without par value
Balance, beginning of period	$	214	$	—	$	213	$	—
Other	(53)		—		(52)		—
Balance, end of period	$	161	$	—	$	161	$	—
Common stock, without par value
Balance, beginning of period	$	1,402	$	1,419	$	1,394	$	1,416
Common Stock issued in connection with employee and director plans, net of tax withheld	3		2		8		3
Equity-based compensation expense	7		7		10		9

Other	53		—		53		—

Balance, end of period	$	1,465	$	1,428

UGI CORP /PA/ [UGI] Filings

UGI CORP /PA/ [UGIC] Filings