AmeriGas Propane, Inc., general partner of AmeriGas Partners,
L.P. (NYSE: APU), reported GAAP net income attributable to AmeriGas
Partners for the quarter ended December 31, 2016 of $92.0 million,
compared to GAAP net income of $81.0 million for the quarter ended
December 31, 2015. Adjusted net income for the quarter ended
December 31, 2016 was $99.6 million compared to adjusted net income
of $86.5 million in the prior-year quarter. Adjusted net income
excludes the impact of unrealized gains and losses on commodity
derivative instruments and a loss from an early extinguishment of
debt. GAAP net income and adjusted net income for the quarter ended
December 31, 2016 were reduced by a correction of previously
recorded gains on sales of certain fixed assets acquired in
connection with the Heritage acquisition in 2012, and related
depreciation, the net impact of which was a charge of $7.7 million.
A reconciliation of adjusted net income to GAAP net income is set
forth at the end of this release.
The Partnership’s adjusted earnings before interest expense,
income taxes, depreciation and amortization (Adjusted EBITDA) was
$185.1 million for the quarter ended December 31, 2016 compared to
$177.7 million in the prior-year quarter. Adjusted EBITDA in the
quarter ended December 31, 2016 was reduced by $8.8 million in
connection with the previously mentioned charge to correct gains on
sales of certain fixed assets.
Highlights for the quarter ended December 31, 2016 were as
follows:
- Although weather was 7.4% colder than
the prior year, it was 13.9% warmer than normal, as an extremely
warm October and November were partially offset by normal weather
in December.
- Retail volumes increased 10.6 million
gallons, or 3.6%, due to the colder December weather.
- Unit margins were consistent with the
prior-year period.
- Operating expenses decreased $4.1
million, or 1.8%, despite the impact of colder weather and
increased volumes.
- On December 28th, the Partnership
completed a tender offer for $500 million of its 7% notes due 2022
and issued $700 million of 5.5% notes due 2025. Excess proceeds
from the senior note offering were used to repay borrowings under
the operating partnership's revolving credit line.
Jerry E. Sheridan, president and chief executive officer of
AmeriGas, said, “We were pleased with the performance of the
business during the first quarter, especially considering the
extreme variance in weather we experienced. Through the end of
November, weather was 26% warmer than normal and our operating
focus was on efficiency and tight expense controls. The weather
turned quickly and our teams shifted seamlessly into full winter
mode in what was essentially a normal December, giving us momentum
going into the second fiscal quarter. It is most important to
note that this quarter’s operating performance, excluding the
charge to correct previously recorded gains on sales of fixed
assets, also compares favorably to the comparable quarter in fiscal
2015, despite weather that was 11% warmer than the 2015 period.
This solid performance reflects operating expenses that were $20
million lower than the 2015 quarter, demonstrating the strength of
our operating team and the benefits of the technology and tools we
are deploying to help the team drive efficiencies throughout our
operations. Due to the importance of the second quarter to our full
year results, we intend to update our guidance for the 2017 fiscal
year following the completion of our second fiscal quarter ending
March 31, 2017.”
About AmeriGas
AmeriGas is the nation’s largest retail propane marketer,
serving approximately two 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%.
AmeriGas Partners, L.P. will hold a live Internet Audio Webcast
of its conference call to discuss fiscal 2017 first quarter
earnings and other current activities at 9:00 AM ET on Thursday,
February 2, 2017. 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 http://www.amerigas.com under Investor
Relations. A telephonic replay will be available from 12:00 PM
ET on February 2 through 11:59 PM on February 9,
2017. The replay may be accessed at (855) 859-2056, and
internationally at (404) 537-3406, conference ID 5904260.
Comprehensive information about AmeriGas is available on the
Internet at http://www.amerigas.com
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, our ability to successfully
integrate acquisitions and achieve anticipated synergies, and the
interruption, disruption, failure, malfunction, or breach of our
information technology systems, including due to cyber-attack. The
Partnership undertakes no obligation to release revisions to its
forward-looking statements to reflect events or circumstances
occurring after today.
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES REPORT OF EARNINGS
(Thousands, except per unit and where otherwise indicated)
(Unaudited) Three Months Ended Twelve Months Ended December
31, December 31, 2016 2015 2016 2015 Revenues:
Propane $ 604,056 $ 573,904 $ 2,083,312 $ 2,373,570 Other 73,110
70,194 261,573 267,058 677,166
644,098 2,344,885 2,640,628 Costs and
expenses: Cost of sales - propane 214,405 227,922 706,325 950,548
Cost of sales - other 20,582 20,867 78,572 85,465 Operating and
administrative expenses 226,802 230,889 924,699 937,521
Depreciation 33,989 38,606 142,188 152,128 Amortization 10,622
10,600 43,197 42,590 Other operating expense (income), net 3,135
(8,907 ) (16,210 ) (30,114 ) 509,535 519,977
1,878,771 2,138,138 Operating income 167,631 124,121
466,114 502,490 Loss on extinguishment of debt (33,151 ) — (82,040
) — Interest expense (40,028 ) (41,025 ) (163,098 ) (162,833 )
Income before income taxes 94,452 83,096 220,976 339,657 Income tax
(expense) benefit (837 ) (910 ) 1,646 (2,938 ) Net income
including noncontrolling interest 93,615 82,186 222,622 336,719
Deduct net income attributable to noncontrolling interest (1,661 )
(1,213 ) (4,657 ) (4,964 ) Net income attributable to AmeriGas
Partners, L.P. $ 91,954 $ 80,973 $ 217,965 $
331,755 General partner’s interest in net income
attributable to AmeriGas Partners, L.P. $ 11,352 $ 9,455
$ 42,124 $ 35,787 Limited partners’
interest in net income attributable to AmeriGas Partners, L.P. $
80,602 $ 71,518 $ 175,841 $ 295,968
Income per limited partner unit (a) Basic $ 0.87 $
0.77 $ 1.81 $ 3.16 Diluted $ 0.87 $
0.77 $ 1.87 $ 3.16 Weighted average limited
partner units outstanding: Basic 92,967 92,922 95,958
92,916 Diluted 93,019 93,004 93,025
92,983 SUPPLEMENTAL INFORMATION: Retail gallons sold
(millions) 305.7 295.1 1,076.1 1,139.2 Wholesale gallons sold
(millions) 13.6 14.9 48.4 55.1 Total margin (b) $ 442,179 $ 395,309
$ 1,559,988 $ 1,604,615 Adjusted total margin (c) $ 416,448 $
400,942 $ 1,462,545 $ 1,519,859 EBITDA (c) $ 177,430 $ 172,114 $
564,802 $ 692,244 Adjusted EBITDA (c) $ 185,110 $ 177,690 $ 550,383
$ 608,344 Adjusted net income attributable to AmeriGas Partners,
L.P. (c) $ 99,634 $ 86,549 $ 203,546 $ 247,855 Expenditures for
property, plant and equipment: Maintenance capital expenditures $
15,379 $ 12,915 $ 54,568 $ 53,217 Growth capital expenditures $
11,002 $ 15,059 $ 45,532 $ 45,836 (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, 2016. (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., 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.
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES REPORT OF
EARNINGS (Thousands, except per unit and where otherwise indicated)
(Unaudited) 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 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. The following tables include
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 for all the periods presented:
Three Months Ended Twelve Months Ended
December 31, December 31, 2016 2015 2016 2015 Adjusted total
margin: Total revenues $ 677,166 $ 644,098 $ 2,344,885 $
2,640,628 Cost of sales - propane (214,405 ) (227,922 ) (706,325 )
(950,548 ) Cost of sales - other (20,582 ) (20,867 ) (78,572 )
(85,465 ) Total margin 442,179 395,309 1,559,988 1,604,615
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions (25,731
) 5,633 (97,443 ) (84,756 ) Adjusted total margin $ 416,448
$ 400,942 $ 1,462,545 $ 1,519,859
Adjusted net income attributable to AmeriGas Partners, L.P.:
Net income attributable to AmeriGas Partners, L.P. $ 91,954 $
80,973 $ 217,965 $ 331,755 (Subtract net gains) add net losses on
commodity derivative instruments not associated with current-period
transactions (25,731 ) 5,633 (97,443 ) (84,756 ) Noncontrolling
interest in net gains (losses) on commodity derivative instruments
not associated with current-period transactions 260 (57 ) 984 856
Loss on extinguishments of debt 33,151 — 82,040
— Adjusted net income attributable to AmeriGas
Partners, L.P. $ 99,634 $ 86,549 $ 203,546 $
247,855 Three Months Ended Twelve Months Ended
December 31, December 31, 2016 2015 2016 2015 EBITDA and Adjusted
EBITDA: Net income attributable to AmeriGas Partners, L.P. $ 91,954
$ 80,973 $ 217,965 $ 331,755 Income tax expense (benefit) 837 910
(1,646 ) 2,938 Interest expense 40,028 41,025 163,098 162,833
Depreciation 33,989 38,606 142,188 152,128 Amortization 10,622
10,600 43,197 42,590 EBITDA 177,430
172,114 564,802 692,244 (Subtract net gains) add net losses on
commodity derivative instruments not associated with current-period
transactions (25,731) 5,633 (97,443 ) (84,756 ) Noncontrolling
interest in net gains (losses) on commodity derivative instruments
not associated with current-period transactions 260 (57 ) 984 856
Loss on extinguishments of debt 33,151 — 82,040
— Adjusted EBITDA $ 185,110 $ 177,690 $
550,383 $ 608,344
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AmeriGas Partners, L.P.Will Ruthrauff, 610-337-7000 ext.
6571Shelly Oates, 610-337-7000 ext. 3202
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