AmeriGas Reports Second Quarter Results

VALLEY FORGE, Pa.–(BUSINESS WIRE)–AmeriGas Propane, Inc., the general partner of AmeriGas Partners, L.P.
(the “Partnership,” NYSE: APU), today reported financial results for the
fiscal quarter ended March 31, 2019.

HIGHLIGHTS

  • GAAP net income of $219.1 million, compared with $191.8 million in the
    prior-year period; adjusted net income of $203.1 million, compared
    with $222.7 million in the prior-year period
  • Adjusted EBITDA of $290.3 million, compared with $309.5 million in the
    prior-year period
  • AmeriGas expects to be at the low end of its fiscal 2019 Adjusted
    EBITDA guidance range of $610 million – $650 million

Hugh J. Gallagher, president and chief executive officer of AmeriGas,
said, “Overall, AmeriGas experienced weather that was colder than the
prior year, however our results were impacted by warm weather during the
critical heating months in the southeastern U.S. During the quarter, we
remained focused on our growth drivers and built on our history of solid
volume and customer additions in our Cylinder Exchange and National
Accounts programs. Our team did a great job managing expenses throughout
the entire heating season and we continue to look for additional
opportunities to improve efficiencies. AmeriGas remains on pace to
deliver adjusted EBITDA towards the low end of its guidance range.

Lastly, as announced in April, UGI has entered into an agreement to
acquire the common units of AmeriGas owned by the public (the ‘merger
transaction’). The merger transaction will strengthen AmeriGas, provide
our unitholders an opportunity to share in the growth of a large,
diversified energy company, and is a great outcome for our customers,
employees and the communities we serve. The merger transaction, subject
to a unitholder vote, is expected to close in our fiscal fourth quarter.”

KEY DRIVERS OF SECOND QUARTER RESULTS

  • While degree days for the quarter were 4% colder than normal and 5%
    colder than last year, January and February were a combined 17% warmer
    than normal in the southeastern U.S.
  • Retail volumes sold decreased by 4% primarily due to warm weather in
    the southeastern U.S. during critical heating months
  • Our National Accounts and Cylinder Exchange programs continued to show
    solid volume growth, with volumes up over 6% and 7%, respectively,
    from last year

EARNINGS CALL and WEBCAST

AmeriGas Partners, L.P. will hold a live Internet Audio Webcast of its
conference call to discuss second quarter earnings and other current
activities at 9:00 AM ET on Tuesday, May 7, 2019. Interested parties may
listen to the audio webcast both live and in replay on the Internet at http://investors.amerigas.com/investor-relations/events-presentations
or at the company website https://www.amerigas.com
under Investor Relations. A telephonic replay will be available from
2:00 PM ET on May 7th through 11:59 PM on May 14th. The replay may be
accessed at (855) 859-2056, and internationally at 1-404-537-3406,
conference ID 7280626.

ABOUT AMERIGAS

AmeriGas is the nation’s largest retail propane marketer, serving over
1.7 million customers in all 50 states from approximately 1,900
distribution locations. UGI Corporation, through subsidiaries, is the
sole General Partner and owns 26% of the Partnership and the public owns
the remaining 74%. Comprehensive information about AmeriGas is available
on the Internet at https://www.amerigas.com

USE OF NON-GAAP MEASURES

The Partnership’s management uses certain non-GAAP financial measures,
including adjusted total margin, EBITDA, Adjusted EBITDA and adjusted
net income (loss) attributable to AmeriGas Partners, L.P., when
evaluating the Partnership’s overall performance. These financial
measures are not in accordance with, or an alternative to, GAAP and
should be considered in addition to, and not as a substitute for, the
comparable GAAP measures.

Management believes earnings before interest, income taxes, depreciation
and amortization (“EBITDA”), as adjusted for the effects of gains and
losses on commodity derivative instruments not associated with
current-period transactions and other gains and losses that competitors
do not necessarily have (“Adjusted EBITDA”), is a meaningful non-GAAP
financial measure used by investors to (1) compare the Partnership’s
operating performance with that of other companies within the propane
industry and (2) assess the Partnership’s ability to meet loan
covenants. The Partnership’s definition of Adjusted EBITDA may be
different from those used by other companies. Management uses Adjusted
EBITDA to compare year-over-year profitability of the business without
regard to capital structure as well as to compare the relative
performance of the Partnership to that of other master limited
partnerships without regard to their financing methods, capital
structure, income taxes, the effects of gains and losses on commodity
derivative instruments not associated with current-period transactions
or historical cost basis. In view of the omission of interest, income
taxes, depreciation and amortization, gains and losses on commodity
derivative instruments not associated with current-period transactions
and other gains and losses that competitors do not necessarily have from
Adjusted EBITDA, management also assesses the profitability of the
business by comparing net income attributable to AmeriGas Partners, L.P.
for the relevant periods. Management also uses Adjusted EBITDA to assess
the Partnership’s profitability because its parent, UGI Corporation,
uses the Partnership’s Adjusted EBITDA to assess the profitability of
the Partnership, which is one of UGI Corporation’s industry segments.
UGI Corporation discloses the Partnership’s Adjusted EBITDA as the
profitability measure for its domestic propane segment.

Management believes the presentation of other non-GAAP financial
measures, comprised of adjusted total margin and adjusted net income
(loss) attributable to AmeriGas Partners, L.P., provide useful
information to investors to more effectively evaluate the
period-over-period results of operations of the Partnership. Management
uses these non-GAAP financial measures because they eliminate the impact
of (1) gains and losses on commodity derivative instruments that are not
associated with current-period transactions and (2) other gains and
losses that competitors do not necessarily have to provide insight into
the comparison of period-over-period profitability to that of other
master limited partnerships.

Reconciliations of adjusted total margin, EBITDA, Adjusted EBITDA and
adjusted net income attributable to AmeriGas Partners, L.P. to the most
directly comparable financial measure calculated and presented in
accordance with GAAP are presented at the end of this press release.

USE OF FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements that
management believes to be reasonable as of today’s date only. Actual
results may differ significantly because of risks and uncertainties that
are difficult to predict and many of which are beyond management’s
control. You should read the Partnership’s Annual Report on Form 10-K
for a more extensive list of factors that could affect results. Among
them are adverse weather conditions, cost volatility and availability of
propane, increased customer conservation measures, the capacity to
transport propane to our market areas, the impact of pending and future
legal proceedings, liability for uninsured claims and for claims in
excess of insurance coverage, political, economic and regulatory
conditions in the U.S. and abroad, the availability, timing and success
of our acquisitions, commercial initiatives and investments to grow our
business, our ability to successfully integrate acquisitions and achieve
anticipated synergies, the interruption, disruption, failure,
malfunction or breach of our information technology systems, including
due to cyber-attack, the failure to realize the anticipated benefits of
the merger transaction, the possible diversion of management time on
issues related to the merger transaction, the risk that the requisite
approvals to complete the merger transaction are not obtained, and the
potential need to address any reviews, investigations or other
proceedings by governmental authorities or unitholder actions. The
Partnership undertakes no obligation to release revisions to its
forward-looking statements to reflect events or circumstances occurring
after today.

 

REPORT OF EARNINGS
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
(Thousands,
except per unit and where otherwise indicated)
(Unaudited)

           
Three Months Ended
March 31,
Six Months Ended
March 31,
Twelve Months Ended
March 31,
2019     2018 2019     2018 2019     2018
Revenues:
Propane $ 899,893 $ 967,789 $ 1,642,793 $ 1,679,253 $ 2,509,334 $ 2,462,929
Other 71,698   72,543   149,011   148,375   277,820   277,368  
971,591   1,040,332   1,791,804   1,827,628   2,787,154   2,740,297  
Costs and expenses:
Cost of sales — propane 399,857 495,644 835,272 839,995 1,210,893 1,149,772
Cost of sales — other 18,229 19,284 39,815 40,278 86,113 82,980
Operating and administrative expenses 249,930 251,449 485,068 481,788 926,344 930,113
Impairment of tradenames and trademarks 75,000
Depreciation and amortization 44,269 45,151 89,978 92,575 183,156 193,457
Other operating income, net (5,358 ) (7,013 ) (11,077 ) (11,650 ) (23,800 ) (21,030 )
706,927   804,515   1,439,056   1,442,986   2,457,706   2,335,292  
Operating income 264,664 235,817 352,748 384,642 329,448 405,005
Loss on extinguishments of debt (4,434 )
Interest expense (42,214 ) (40,995 ) (84,568 ) (81,572 ) (166,121 ) (161,779 )
Income before income taxes 222,450 194,822 268,180 303,070 163,327 238,792
Income tax expense (697 ) (656 ) (1,106 ) (3,034 ) (2,287 ) (3,585 )
Net income including noncontrolling interest 221,753 194,166 267,074 300,036 161,040 235,207
Deduct net income attributable to noncontrolling interest (2,619 ) (2,342 ) (3,454 ) (3,791 ) (3,143 ) (3,945 )
Net income attributable to AmeriGas Partners, L.P. $ 219,134   $ 191,824   $ 263,620   $ 296,245   $ 157,897   $ 231,262  
General partner’s interest in net income attributable to AmeriGas
Partners, L.P.
$ 13,753   $ 13,249   $ 25,529   $ 25,621     $ 47,134   $ 47,629  
Limited partners’ interest in net income attributable to AmeriGas
Partners, L.P.
$ 205,381   $ 178,575   $ 238,091   $ 270,624     $ 110,763   $ 183,633  
Income per limited partner unit (a)
Basic $ 1.59   $ 1.44   $ 2.24   $ 2.41   $ 1.19   $ 1.97  
Diluted $ 1.59   $ 1.44   $ 2.24   $ 2.41   $ 1.19   $ 1.97  
Weighted average limited partner units outstanding:
Basic 93,080   93,035   93,072   93,027   93,065   93,021  
Diluted 93,110   93,074   93,118   93,079   93,114   93,075  
SUPPLEMENTAL INFORMATION:
Retail gallons sold (millions) 383.6 398.5 693.9 703.5 1,071.7 1,082.0
Wholesale gallons sold (millions) 28.3 20.0 50.2 37.0 75.5 56.6
Total margin (b) $ 553,505 $ 525,404 $ 916,717 $ 947,355 $ 1,490,148 $ 1,507,545
Adjusted total margin (c) $ 536,366 $ 556,592 $ 978,080 $ 977,792 $ 1,508,601 $ 1,504,031
EBITDA (c) $ 306,314 $ 278,626 $ 439,272 $ 473,426 $ 509,461 $ 590,083
Adjusted EBITDA (c) $ 290,269 $ 309,499 $ 500,936 $ 503,556 $ 602,890 $ 598,508
Adjusted net income attributable to AmeriGas Partners, L.P. (c) $ 203,089 $ 222,697 $ 325,284 $ 326,375 $ 251,326 $ 239,687
Expenditures for property, plant and equipment:
Maintenance capital expenditures $ 13,692 $ 11,462 $ 29,890 $ 21,567 $ 61,259 $ 44,169
Growth capital expenditures $ 12,139 $ 12,149 $ 26,953 $ 25,629 $ 49,649 $ 47,575
 
 

(a)

Income per limited partner unit is computed in accordance with
accounting guidance regarding the application of the two-class
method for determining earnings per share as it relates to master
limited partnerships. Refer to Note 2 to the consolidated
financial statements included in the AmeriGas Partners, L.P.
Annual Report on Form 10-K for the fiscal year ended September 30,
2018.

(b)

Total margin represents “Total revenues” less “Cost of sales —
propane” and “Cost of sales — other.”

(c)

The Partnership’s management uses certain non-GAAP financial
measures, including adjusted total margin, EBITDA, Adjusted
EBITDA, and adjusted net income attributable to AmeriGas Partners,
L.P.

 
 

GAAP / NON-GAAP RECONCILIATION
(Thousands)
(Unaudited)

           

Three Months Ended
March 31,

Six Months Ended
March 31,
Twelve Months Ended
March 31,
2019     2018 2019     2018 2019     2018
Adjusted total margin:
Total revenues $ 971,591 $ 1,040,332 $ 1,791,804 $ 1,827,628 $ 2,787,154 $ 2,740,297
Cost of sales — propane (399,857 ) (495,644 ) (835,272 ) (839,995 ) (1,210,893 ) (1,149,772 )
Cost of sales — other (18,229 ) (19,284 ) (39,815 ) (40,278 ) (86,113 ) (82,980 )
Total margin 553,505 525,404 916,717 947,355 1,490,148 1,507,545
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions
(17,139 ) 31,188   61,363   30,437   18,453   (3,514 )
Adjusted total margin $ 536,366   $ 556,592   $ 978,080   $ 977,792   $ 1,508,601   $ 1,504,031  
 
Adjusted net income attributable to AmeriGas Partners, L.P.:
Net income attributable to AmeriGas Partners, L.P. $ 219,134 $ 191,824 $ 263,620 $ 296,245 $ 157,897 $ 231,262
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions
(17,139 ) 31,188 61,363 30,437 18,453 (3,514 )
Impairment of Heritage tradenames and trademarks 75,000
Loss on extinguishments of debt 4,434
MGP environmental accrual 7,545
Merger expenses 930 930 930
Noncontrolling interest in net gains (losses) on commodity
derivative instruments not associated with current-period
transactions, impairment of Heritage tradenames and trademarks, MGP
environmental accrual and merger expenses
164   (315 ) (629 ) (307 ) (954 ) (40 )
Adjusted net income attributable to AmeriGas Partners, L.P. $ 203,089   $ 222,697   $ 325,284   $ 326,375   $ 251,326   $ 239,687  
 
EBITDA and Adjusted EBITDA:
Net income attributable to AmeriGas Partners, L.P. $ 219,134 $ 191,824 $ 263,620 $ 296,245 $ 157,897 $ 231,262
Income tax expense 697 656 1,106 3,034 2,287 3,585
Interest expense 42,214 40,995 84,568 81,572 166,121 161,779
Depreciation and amortization 44,269   45,151   89,978   92,575   183,156   193,457  
EBITDA 306,314 278,626 439,272 473,426 509,461 590,083
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions
(17,139 ) 31,188 61,363 30,437 18,453 (3,514 )
Impairment of Heritage tradenames and trademarks 75,000
Loss on extinguishments of debt 4,434
MGP environmental accrual 7,545
Merger expenses 930 930 930
Noncontrolling interest in net gains (losses) on commodity
derivative instruments not associated with current-period
transactions, impairment of Heritage tradenames and trademarks, MGP
environmental accrual and merger expenses
164   (315 ) (629 ) (307 ) (954 ) (40 )
Adjusted EBITDA $ 290,269   $ 309,499   $ 500,936   $ 503,556   $ 602,890   $ 598,508  
 

Contacts

INVESTOR RELATIONS
610-337-1000
Brendan Heck, ext. 6608
Alanna
Zahora, ext. 1004
Shelly Oates, ext. 3202

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