Announces $225 million equity commitment from UGI
AmeriGas Propane, Inc., general partner of AmeriGas Partners,
L.P. ("the Partnership," NYSE: APU), today reported financial
results for the fiscal year ended September 30, 2017.
EARNINGS HIGHLIGHTS
- GAAP net income of $162.1 million and
adjusted net income of $198.5 million
- Adjusted EBITDA of $551.3 million, in
line with revised guidance issued in May
"This year presented a challenge as we faced a second
consecutive year of exceedingly warm weather that was 13.5% warmer
than normal," said Jerry E. Sheridan, president and chief executive
officer of AmeriGas. "We met the challenge by implementing our warm
weather plan and maintaining a resolute focus on controlling costs
and retaining balance sheet capacity. We were pleased to be able to
deliver results in line with our revised guidance and I would like
to thank the entire AmeriGas family for their outstanding efforts
in connection with meeting this challenge.”
Sheridan continued, “We made significant progress on our growth
initiatives as reflected in several accomplishments including
increasing our distribution and growing our ACE and National
Accounts programs to record levels. The technology tools we have
deployed in our operations over the past few years ensure that our
business has never been better positioned than it is today."
STRATEGIC ACCOMPLISHMENTS
- Advanced the Partnership's efforts in
deploying industry-leading technology across our operating
footprint that will improve the customer experience and reduce
costs
- Delivered record operating results in
ACE and National Accounts programs
- Completed five tuck-in
acquisitions
- Completed the refinancing of all
long-term debt, reducing our average interest rate by more than 100
basis points
- Increased Partnership distribution for
the 13th consecutive year
EQUITY COMMITMENT FROM UGI
On November 7, the Partnership entered into a $225 million
standby equity commitment agreement ("SECA") with UGI Corporation
for the potential issuance of Class B common units. Key provisions
of the commitment include:
- Commitment period: November 8, 2017
through July 1, 2019
- Minimum issuance of Class B common
units: $50 million
- Distributions: Paid in cash or
additional Class B units
- Conversion: Convertible into AmeriGas
common units at UGI's option in five years and at AmeriGas' option
in six years subject to certain conditions
- IDRs: Not subject to IDRs until
conversion to common units
Although the Partnership does not intend to call on this
facility at the present time, this capital commitment provides
balance sheet flexibility to continue our strategic initiatives
following two historically warm years and underscores the
Partnership's commitment to providing long-term value to its
investors while maintaining a strong balance sheet.
A report on Form 8-K describing the SECA in greater detail will
be filed on November 9, 2017.
2018 OUTLOOK
AmeriGas provided Adjusted EBITDA guidance in the range of $650
- $690 million for the fiscal year ending September 30, 2018.1 This
guidance range assumes normal weather and excludes mark-to-market
gains and losses on commodity derivative instruments. Given recent
trends in weather, the Partnership determined that using an average
of 15 years is a more accurate indicator of normal weather than the
previously used 30-year average, and is moving to this metric in
fiscal 2018. The 15-year average is approximately 3% warmer than
the 30-year average and the impact has been reflected in the
Partnership’s guidance for 2018.
1 See Note on Guidance and Use of Forward Looking Statements
EARNINGS CALL and WEBCAST
AmeriGas Partners, L.P. will hold a live Internet Audio Webcast
of its conference call to discuss fiscal 2017 earnings and other
current activities at 9:00 AM ET on Thursday, November 9, 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 November 9 through 11:59 PM on November 16. The replay may be
accessed at (855) 859-2056, and internationally at 1-404-537-3406,
conference ID 5917897.
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%.
Comprehensive information about AmeriGas is available on the
Internet at http://www.amerigas.com.
NOTE ON GUIDANCE and USE OF FORWARD-LOOKING STATEMENTS
Because we are unable to predict certain potentially material
items affecting net income on a GAAP basis, principally
mark-to-market gains and losses on commodity derivative
instruments, we cannot reconcile 2018 Adjusted EBITDA, a non-GAAP
measure, to net income attribute to AmeriGas Partners, L.P., the
most directly comparable GAAP measure, in reliance on the
“unreasonable efforts” exception set forth in SEC rules.
Adjustments that management can reasonably estimate are provided
below.
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, 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, 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.
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.
REPORT OF EARNINGS
AMERIGAS PARTNERS, L.P. AND
SUBSIDIARIES
(Thousands, except per unit and where
otherwise indicated)
(Unaudited)
Three Months EndedSeptember 30,
Twelve Months EndedSeptember 30, 2017
2016 2017 2016 Revenues: Propane $
379,722 $ 334,412 $ 2,183,538 $ 2,053,160 Other 65,451
59,136 269,957 258,657 445,173 393,548
2,453,495 2,311,817 Costs and expenses: Cost
of sales – propane 128,730 128,487 891,261 719,842 Cost of sales –
other 20,335 19,684 80,611 78,857 Operating and administrative
expenses 220,953 242,208 915,133 928,786 Depreciation 43,850 35,998
147,741 146,805 Amortization 10,891 10,947 42,764 43,175 Other
operating income, net (1,086 ) (6,173 ) (11,873 ) (28,252 ) 423,673
431,151 2,065,637 1,889,213 Operating
income (loss) 21,500 (37,603 ) 387,858 422,604 Loss on
extinguishments of debt — (11,803 ) (59,729 ) (48,889 ) Interest
expense (39,630 ) (41,426 ) (160,226 ) (164,095 ) (Loss) income
before income taxes (18,130 ) (90,832 ) 167,903 209,620 Income tax
benefit (expense) 95 3,680 (2,034 ) 1,573 Net
(loss) income including noncontrolling interest (18,035 ) (87,152 )
165,869 211,193 (Deduct net income) add net loss attributable to
noncontrolling interest (196 ) 324 (3,810 ) (4,209 ) Net
(loss) income attributable to AmeriGas Partners, L.P. $ (18,231 ) $
(86,828 ) $ 162,059 $ 206,984 General partner’s
interest in net income attributable to AmeriGas Partners, L.P. $
11,146 $ 9,564 $ 45,146 $ 40,227
Limited partners’ interest in net (loss) income attributable to
AmeriGas Partners, L.P. $ (29,377 ) $ (96,392 ) $ 116,913 $
166,757 Income (loss) per limited partner unit (a) Basic $
(0.32 ) $ (1.04 ) $ 1.25 $ 1.77 Diluted $ (0.32 ) $
(1.04 ) $ 1.25 $ 1.77 Weighted-average limited
partner units outstanding: Basic 93,011 92,962 92,996
92,949 Diluted 93,011 92,962 93,050
93,023 SUPPLEMENTAL INFORMATION: Retail gallons sold
(millions) 183.5 181.8 1,046.9 1,065.5 Wholesale gallons sold
(millions) 10.6 9.7 49.1 49.7 Total margin (b) $ 296,108 $ 245,377
$ 1,481,623 $ 1,513,118 Adjusted total margin (c) $ 256,193 $
240,969 $ 1,450,561 $ 1,447,039 EBITDA (c) $ 76,045 $ (2,137 ) $
514,824 $ 559,486 Adjusted EBITDA (c) $ 36,533 $ 5,302 $ 551,274 $
542,963 Adjusted net (loss) income attributable to AmeriGas
Partners, L.P. (c) $ (57,743 ) $ (79,389 ) $ 198,509 $ 190,461
Expenditures for property, plant and equipment: Maintenance capital
expenditures $ 12,180 $ 15,829 $ 52,034 $ 52,104 Growth capital
expenditures $ 11,473 $ 11,392 $ 46,130 $ 49,589 (a)
Income (loss) 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.
GAAP / NON-GAAP RECONCILIATION
(Thousands)
(Unaudited)
Three Months EndedSeptember 30,
Twelve Months EndedSeptember 30, 2017 2016
2017 2016 Adjusted total margin: Total revenues $
445,173 $ 393,548 $ 2,453,495 $ 2,311,817 Cost of sales – propane
(128,730 ) (128,487 ) (891,261 ) (719,842 ) Cost of sales – other
(20,335 ) (19,684 ) (80,611 ) (78,857 ) Total margin 296,108
245,377 1,481,623 1,513,118 Subtract net gains on commodity
derivative instruments not associated with current-period
transactions (39,915 ) (4,408 ) (31,062 ) (66,079 ) Adjusted total
margin $ 256,193 $ 240,969 $ 1,450,561 $
1,447,039 Adjusted net income (loss) attributable to
AmeriGas Partners, L.P.: Net (loss) income attributable to AmeriGas
Partners, L.P. $ (18,231 ) $ (86,828 ) $ 162,059 $ 206,984 Subtract
net gains on commodity derivative instruments not associated with
current-period transactions (39,915 ) (4,408 ) (31,062 ) (66,079 )
Noncontrolling interest in net gains on commodity derivative
instruments not associated with current-period transactions 403 44
238 667 Loss on extinguishments of debt — 11,803 59,729 48,889 MGP
environmental accrual — — 7,545 —
Adjusted net (loss) income attributable to AmeriGas Partners, L.P.
$ (57,743 ) $ (79,389 ) $ 198,509 $ 190,461
Three Months EndedSeptember 30,
Twelve Months EndedSeptember 30, 2017 2016
2017 2016 EBITDA and Adjusted EBITDA: Net (loss)
income attributable to AmeriGas Partners, L.P. $ (18,231 ) $
(86,828 ) $ 162,059 $ 206,984 Income tax (benefit) expense (95 )
(3,680 ) 2,034 (1,573 ) Interest expense 39,630 41,426 160,226
164,095 Depreciation 43,850 35,998 147,741 146,805 Amortization
10,891 10,947 42,764 43,175 EBITDA
76,045 (2,137 ) 514,824 559,486 Subtract net gains on commodity
derivative instruments not associated with current-period
transactions (39,915 ) (4,408 ) (31,062 ) (66,079 ) Noncontrolling
interest in net gains on commodity derivative instruments not
associated with current-period transactions 403 44 238 667 Loss on
extinguishments of debt — 11,803 59,729 48,889 MGP environmental
accrual — — 7,545 — Adjusted EBITDA $
36,533 $ 5,302 $ 551,274 $ 542,963
The following table includes a quantification of interest
expense, income tax expense, depreciation and amortization included
in the calculation of forecasted Adjusted EBITDA guidance range for
the fiscal year ending September 30, 2018:
Forecast Fiscal Year EndingSeptember 30,
2018
(Low End) (High End) Adjusted EBITDA (estimate) $
650,000 $ 690,000 Interest expense (estimate) 161,000 159,000
Income tax expense (estimate) 3,500 3,500 Depreciation (estimate)
139,000 139,000 Amortization (estimate) 43,000 43,000
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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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