UGI Earnings 2020-12-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

ugi-20201231

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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 December 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

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 January 31, 2021, there were 208,553,861 shares of UGI Corporation Common Stock, without par value, outstanding.

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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 December 31 , 2020, September 30, 20 20 and December 31 , 2019			5

Condensed Consolidated Statements of Income for the three months ended December 3 1 , 2020 and 2019			6

Condensed Consolidated Statements of Comprehensive Income for the three months ended December 3 1 , 2020 and 2019			7

Condensed Consolidated Statements of Cash Flows for the t hre e months ended December 3 1 , 2020 and 2019			8

Condensed Consolidated Statements of Changes in Equity for the three months ended December 3 1 , 2020 and 2019			9

Notes to Condensed Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31

Item 3. Quantitative and Qualitative Disclosures About Market Risk			44

Item 4. Controls and Procedures			46

Part II Other Information



Item 1A. Risk Factors			47

Item 6. Exhibits			47

Signatures			49

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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

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

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

HVAC - UGI HVAC Enterprises, Inc., a wholly owned second-tier subsidiary of UGI, which was sold in September 2020

Midstream & Marketing - Reportable segment comprising Energy Services, UGID and, prior to its sale in September 2020, HVAC

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

Pennant - Pennant Midstream, LLC, a Delaware limited liability corporation

PennEast - PennEast Pipeline Company, LLC

UGI - UGI Corporation

UGI Appalachia - UGI Appalachia, LLC, a wholly owned subsidiary of Energy Services

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 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

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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

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

2020 Annual Report - UGI Annual Report on Form 10-K for the fiscal year ended September 30, 2020

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

AFUDC - Allowance for Funds Used During Construction

AOCI - Accumulated Other Comprehensive Income (Loss)

ASC - Accounting Standards Codification

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

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

CDC - Centers for Disease Control and Prevention

CMG Acquisition - Acquisition of Columbia Midstream Group, LLC 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.

COA - Consent Order and Agreement

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

Common Stock - shares of UGI common stock

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

DS - Default service

DSIC - Distribution System Improvement Charge

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

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

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Fiscal 2020 - The fiscal year ended September 30, 2020

Fiscal 2021 - The fiscal year ending September 30, 2021

Fiscal 2022 - The fiscal year ending September 30, 2022

GAAP - U.S. generally accepted accounting principles

GILTI - Global Intangible Low Taxed Income

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

IRC - Internal Revenue Code

IRPA - Interest rate protection agreement

IRS - Internal Revenue Services

IT - Information technology

LNG - Liquefied natural gas

LPG - Liquefied petroleum gas

MDPSC - Maryland Public Service Commission

MGP - Manufactured gas plant

Mountaineer - Mountaineer Gas Company a natural gas distribution company in West Virginia

Mountaineer Acquisition - Pending acquisition of Mountaintop Energy Holdings LLC, indirect parent of Mountaineer, pursuant to a definitive agreement signed on December 29, 2020

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

ROD - Record of Decision

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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

USD - U.S. dollar

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

WHO - World Health Organization

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UGI CORPORATION AND SUBSIDIARIES

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(Millions of dollars)


	December 31, 2020		September 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	416	$	336	$	333
Restricted cash	30		21		96
Accounts receivable (less allowances for doubtful accounts of $46, $42 and $36, respectively)	1,030		652		1,011
Accrued utility revenues	61		14		80
Income taxes receivable	85		80		—
Inventories	279		241		248


Derivative instruments	94		44		28

Prepaid expenses and other current assets	185		155		151
Total current assets	2,180		1,543		1,947
Property, plant and equipment, (less accumulated depreciation of $3,822, $3,698 and $3,490, respectively)	7,054		6,960		6,784
Goodwill	3,564		3,518		3,483
Intangible assets, net	667		677		703
Utility regulatory assets	392		395		386
Derivative instruments	37		38		32


Other assets	831		854		951
Total assets	$	14,725	$	13,985	$	14,286
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	21	$	53	$	28

Short-term borrowings	568		347		870
Accounts payable	637		475		598
Derivative instruments	43		64		113
Other current liabilities	828		816		782
Total current liabilities	2,097		1,755		2,391
Long-term debt	6,012		5,981		5,828

Deferred income taxes	693		640		563

Derivative instruments	56		59		47
Other noncurrent liabilities	1,421		1,413		1,452
Total liabilities	10,279		9,848		10,281
Commitments and contingencies (Note 7)
Equity:
UGI Corporation stockholders’ equity:
UGI Common Stock, without par value (authorized — 450,000,000 shares; issued — 209,545,847, 209,514,044 and 209,310,342 shares, respectively)	1,419		1,416		1,398
Retained earnings	3,139		2,908		2,798
Accumulated other comprehensive loss	(79)		(147)		(163)
Treasury stock, at cost	(42)		(49)		(37)
Total UGI Corporation stockholders’ equity	4,437		4,128		3,996
Noncontrolling interests	9		9		9
Total equity	4,446		4,137		4,005
Total liabilities and equity	$	14,725	$	13,985	$	14,286

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 December 31,
		2020		2019
Revenues		$	1,932	$	2,007
Costs and expenses:
Cost of sales (excluding depreciation and amortization shown below)		833		1,008
Operating and administrative expenses		489		511


Depreciation and amortization		124		119

Other operating income, net		(16)		(8)
		1,430		1,630
Operating income		502		377
Income from equity investees		7		7


Other non-operating expense, net		(19)		(12)
Interest expense		(78)		(84)
Income before income taxes		412		288
Income tax expense		(109)		(76)


Net income attributable to UGI Corporation		$	303	$	212
Earnings per common share attributable to UGI Corporation stockholders:
Basic		$	1.45	$	1.01
Diluted		$	1.44	$	1.00
Weighted-average common shares outstanding (thousands):
Basic		208,774		209,439
Diluted		209,640		211,258

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 December 31,
		2020		2019
Net income attributable to UGI Corporation		$	303	$	212
Other comprehensive income:
Net gains on derivative instruments (net of tax of $0 and $(2), respectively)		—		6
Reclassifications of net losses on derivative instruments (net of tax of $(2) and $0, respectively)		5		1
Foreign currency adjustments (net of tax of $12 and $7, respectively)		63		47

Other comprehensive income		68		54


Comprehensive income attributable to UGI Corporation		$	371	$	266

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)


	Three Months Ended December 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income attributable to UGI Corporation	$	303	$	212
Adjustments to reconcile net income attributable to UGI Corporation to net cash provided by operating activities:
Depreciation and amortization	124		119
Deferred income tax expense, net	25		5
Provision for uncollectible accounts	8		8

Changes in unrealized gains and losses on derivative instruments	(96)		27


Income from equity investees	(7)		(7)

Other, net	12		(8)
Net change in:
Accounts receivable and accrued utility revenues	(415)		(432)
Inventories	(34)		(16)
Utility deferred fuel and power costs, net of changes in unsettled derivatives	4		5
Accounts payable	187		183
Derivative instruments collateral deposits received	13		20
Other current assets	(43)		(8)
Other current liabilities	70		10
Net cash provided by operating activities	151		118
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment	(187)		(182)
Acquisitions of businesses and assets, net of cash and restricted cash acquired	(12)		—
Other, net	10		6
Net cash used by investing activities	(189)		(176)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends on UGI Common Stock	(69)		(68)

Issuances of long-term debt, net of issuance costs	—		15
Repayments of long-term debt and finance leases	(36)		(31)
Increase in short-term borrowings	165		51
Receivables Facility net borrowings	56		22
Issuances of UGI Common Stock	4		1
Repurchases of UGI Common Stock	—		(23)


Net cash provided (used) by financing activities	120		(33)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	7		9
Cash, cash equivalents and restricted cash increase (decrease)	$	89	$	(82)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash, cash equivalents and restricted cash at end of period	$	446	$	429
Cash, cash equivalents and restricted cash at beginning of period	357		511
Cash, cash equivalents and restricted cash increase (decrease)	$	89	$	(82)

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 December 31,
		2020		2019
Common stock, without par value
Balance, beginning of period		$	1,416	$	1,397
Common Stock issued in connection with employee and director plans, net of tax withheld		1		—


Equity-based compensation expense		2		2
Other		—		(1)



Balance, end of period		$	1,419	$	1,398
Retained earnings
Balance, beginning of period		$	2,908	$	2,653



Losses on common stock transactions in connection with employee and director plans		(3)		—
Net income attributable to UGI Corporation		303		212
Cash dividends on UGI Common Stock ($0.33, and $0.325, respectively)		(69)		(68)
Other		—		1
Balance, end of period		$	3,139	$	2,798
Accumulated other comprehensive income (loss)
Balance, beginning of period		$	(147)	$	(217)

Net gains on derivative instruments		—		6
Reclassification of net losses on derivative instruments		5		1


Foreign currency adjustments		63		47
Balance, end of period		$	(79)	$	(163)
Treasury stock
Balance, beginning of period		$	(49)	$	(16)
Common Stock issued in connection with employee and director plans, net of tax withheld		7		2

Repurchases of UGI Common Stock		—		(23)


Balance, end of period		$	(42)	$	(37)
Total UGI stockholders’ equity		$	4,437	$	3,996
Noncontrolling interests
Balance, beginning of period		$	9	$	10








Other		—		(1)
Balance, end of period		$	9	$	9
Total equity		$	4,446	$	4,005

See accompanying notes to condensed consolidated financial statements.

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UGI CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(Currency in millions, except per share amounts and where indicated otherwise)

Note 1 — Nature of Operations

UGI is a holding company that, through subsidiaries and affiliates, distributes, stores, transports and markets energy products and related services. In the United States, we own and operate (1) a retail propane marketing and distribution business; (2) natural gas and electric distribution utilities; and (3) an energy marketing, midstream infrastructure, storage, natural gas gathering and processing, natural gas production, electricity generation and energy services businesses. In Europe, we market and distribute propane and other LPG and market other energy products and services.

We conduct a domestic propane marketing and distribution business through AmeriGas Partners. AmeriGas Partners conducts a national propane distribution business through its principal operating subsidiary, AmeriGas OLP.

UGI International, through subsidiaries and affiliates, conducts (1) an LPG distribution business throughout much of Europe and (2) an energy marketing business in France, Belgium, the Netherlands and the United Kingdom. These businesses are conducted principally through our subsidiaries, UGI France, Flaga, AvantiGas, DVEP and UniverGas.

Energy Services conducts, directly and through subsidiaries, energy marketing, including renewable natural gas, midstream transmission, LNG storage, natural gas gathering and processing, natural gas production, electricity generation and energy services businesses primarily in the Mid-Atlantic region of the U.S., eastern Ohio and the panhandle of West Virginia. UGID owns electricity generation facilities principally located in Pennsylvania. Energy Services and its subsidiaries’ storage, LNG and portions of its midstream transmission operations are subject to regulation by the FERC.

UGI Utilities directly owns and operates Gas Utility, a natural gas distribution utility business in eastern and central Pennsylvania and in a portion of one Maryland county. Gas Utility is subject to regulation by the PAPUC, the FERC, and, with respect to a small service territory in one Maryland county, the MDPSC. UGI Utilities also owns and operates Electric Utility, an electric distribution utility located in northeastern Pennsylvania. Electric Utility is subject to regulation by the PAPUC and the FERC.

Pending Acquisition of Mountaineer Gas Company

On December 29, 2020, UGI Corporation signed a definitive agreement to acquire Mountaineer, the largest natural gas distribution company in West Virginia for a preliminary purchase price of $540, which includes the assumption of approximately $140 of debt. Mountaineer serves nearly 215,000 customers across 50 of the state’s 55 counties. The pending acquisition is subject to customary regulatory and other closing conditions, including approval by the Public Service Commission of West Virginia and federal antitrust clearance, and is expected to close in the second half of calendar year 2021. UGI currently expects to finance the pending acquisition through the issuance of debt and/or equity-linked securities and existing liquidity.

Note 2 — Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with the rules and regulations of the SEC. They include all adjustments that we consider necessary for a fair statement of the results for the interim periods presented. Such adjustments consisted only of normal recurring items unless otherwise disclosed. The September 30, 2020, Condensed Consolidated Balance Sheet was derived from audited financial statements but does not include all footnote disclosures from the annual financial statements.

These financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2020 Annual Report. Due to the seasonal nature of our businesses, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.

Equity Method Investments. We account for privately held equity securities of entities without readily determinable fair values in which we do not have control, but have significant influence over operating and financial policies, under the equity method. Our equity method investments are primarily comprised of PennEast and Pennant.

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UGI CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(Currency in millions, except per share amounts and where indicated otherwise)

UGI PennEast, LLC and four other members comprising wholly owned subsidiaries of Southern Company, New Jersey Resources, South Jersey Industries, and Enbridge, Inc., each hold a 20% membership interest in PennEast. In September 2019, a panel of the U.S. Court of Appeals for the Third Circuit ruled that New Jersey’s Eleventh Amendment immunity barred PennEast from bringing an eminent domain lawsuit in federal court, under the Natural Gas Act, against New Jersey or its agencies. The Third Circuit subsequently denied PennEast’s petition for rehearing en banc. PennEast also filed a petition for declaratory order with the FERC regarding interpretation of the Natural Gas Act; the FERC issued an order favorable to PennEast’s position on January 30, 2020. PennEast filed a petition for a writ of certiorari to seek U.S. Supreme Court review of the Third Circuit decision on February 18, 2020. On June 29, 2020, the U.S. Supreme Court invited the U.S. Solicitor General to file a brief in the case expressing the views of the U.S. On December 9, 2020, the U.S. Solicitor General filed a brief supporting PennEast’s petition for a writ of certiorari. On February 3, 2021, the U.S. Supreme Court issued an order granting PennEast’s petition for a writ of certiorari. The case will be set for argument in the April 2021 argument session. The ultimate outcome of these matters cannot be determined at this time, and could result in delays, additional costs, or the inability to move forward with the project, resulting in an impairment of all or a portion of our investment in PennEast.

Restricted Cash. Restricted cash principally represents those cash balances in our commodity futures brokerage accounts that are restricted from withdrawal. The following table provides a reconciliation of the total cash, cash equivalents and restricted cash reported on the Condensed Consolidated Balance Sheets to the corresponding amounts reported on the Condensed Consolidated Statements of Cash Flows.


	December 31, 2020		December 31, 2019		September 30, 2020		September 30, 2019
Cash and cash equivalents	$	416	$	333	$	336	$	447
Restricted cash	30		96		21		64
Cash, cash equivalents and restricted cash	$	446	$	429	$	357	$	511

Earnings Per Common Share. Basic earnings per share attributable to UGI stockholders reflect the weighted-average number of common shares outstanding. Diluted earnings per share attributable to UGI stockholders include the effects of dilutive stock options and common stock awards.

Shares used in computing basic and diluted earnings per share are as follows:


	Three Months Ended December 31,
		2020	2019
Denominator (thousands of shares):
Weighted-average common shares outstanding — basic		208,774	209,439
Incremental shares issuable for stock options and awards (a)		866	1,819
Weighted-average common shares outstanding — diluted		209,640	211,258

(a)For the three months ended December 31, 2020 and 2019, there were 6,000 and 3,499 shares, respectively, associated with outstanding stock option awards that were excluded from the computation of diluted earnings per share above because their effect was antidilutive.

Derivative Instruments. Derivative instruments are reported on the Condensed Consolidated Balance Sheets at their fair values, unless the NPNS exception is elected. The accounting for changes in fair value depends upon the purpose of the derivative instrument, whether it is subject to regulatory ratemaking mechanisms or if it qualifies and is designated as a hedge for accounting purposes.

Certain of our derivative instruments qualify and are designated as cash flow hedges. For cash flow hedges, changes in the fair values of the derivative instruments are recorded in AOCI, to the extent effective at offsetting changes in the hedged item, until earnings are affected by the hedged item. We discontinue cash flow hedge accounting if occurrence of the forecasted transaction is determined to be no longer probable. Hedge accounting is also discontinued for derivatives that cease to be highly effective. We do not designate our commodity and certain foreign currency derivative instruments as hedges under GAAP. Changes in the fair values of these derivative instruments are reflected in net income. Gains and losses on substantially all of

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UGI CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(Currency in millions, except per share amounts and where indicated otherwise)

the commodity derivative instruments used by UGI Utilities are included in regulatory assets or liabilities because it is probable such gains or losses will be recoverable from, or refundable to, customers. From time to time, we also enter into net investment hedges. Gains and losses on net investment hedges that relate to our foreign operations are included in the cumulative translation adjustment component in AOCI until such foreign net investment is substantially sold or liquidated.

Cash flows from derivative instruments, other than certain cross-currency swaps and net investment hedges, if any, are included in cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. Cash flows from the interest portion of our cross-currency hedges, if any, are included in cash flows from operating activities while cash flows from the currency portion of such hedges, if any, are included in cash flows from financing activities. Cash flows from net investment hedges, if any, are included in cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows.

For a more detailed description of the derivative instruments we use, our accounting for derivatives, our objectives for using them and other information, see Note 10.

Use of Estimates. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and costs. These estimates are based on management’s knowledge of current events, historical experience and various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may be different from these estimates and assumptions.

Reclassifications. Certain prior-period amounts have been reclassified to conform to the current-period presentation.

Note 3 — Accounting Changes

New Accounting Standard Adopted in Fiscal 2021

Credit Losses. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” This ASU, as subsequently amended, requires entities to estimate lifetime expected credit losses for financial instruments not measured at fair value through net income, including trade and other receivables, net investments in leases, financial receivables, debt securities, and other financial instruments, which may result in earlier recognition of credit losses. Further, the new current expected credit loss model may affect how entities estimate their allowance for losses related to receivables that are current with respect to their payment terms. Effective October 1, 2020, the Company adopted this ASU, as updated, using a modified retrospective transition approach. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

Accounting Standard Not Yet Adopted

Income Taxes. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by eliminating certain exceptions within the existing guidance for recognizing deferred taxes for equity method investments, performing intraperiod allocations and calculating income taxes in interim periods. Further, this ASU clarifies existing guidance related to, among other things, recognizing deferred taxes for goodwill and allocated taxes to members of a consolidated group. This new guidance is effective for the Company for interim and annual periods beginning October 1, 2021 (Fiscal 2022). Early adoption is permitted. The Company is in the process of assessing the impact on its financial statements from the adoption of the new guidance and determining the period in which the new guidance will be adopted.

Note 4 — Revenue from Contracts with Customers

The Company recognizes revenue when control of promised goods or services is transferred to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. See Note 4 in the Company’s 2020 Annual Report for additional information on our revenues from contracts with customers.

Table of Contents

UGI CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(Currency in millions, except per share amounts and where indicated otherwise)

Revenue Disaggregation

The following tables present our disaggregated revenues by reportable segment:



Three Months Ended December 31, 2020	Total		Eliminations (a)		AmeriGas Propane		UGI International		Midstream & Marketing		UGI Utilities		Corporate & Other
Revenues from contracts with customers:
Utility:
Core Market:
Residential	$	165	$	—	$	—	$	—	$	—	$	165	$	—
Commercial & Industrial	60		—		—		—		—		60		—
Large delivery service	40		—		—		—		—		40

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	2020-12-31	Filed 2021-02-04
10-K	2020-09-30	Filed 2020-11-20
10-Q	2020-06-30	Filed 2020-08-04
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	2020-11-20
8-K	2020-11-18
8-K	2020-10-23
8-K	2020-08-03
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

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EX-31.2	ugicorpq112312020ex312.htm
EX-32	ugicorpq112312020ex32.htm

UGI 10Q Quarterly Report

UGI Earnings 2020-12-31