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investor-relations
 
Investor Relations

AmeriGas Partners Reports Fiscal 2017 Third Quarter Earnings

08/02/2017

VALLEY FORGE, Pa.--(BUSINESS WIRE)-- AmeriGas Propane, Inc., general partner of AmeriGas Partners, L.P. (NYSE: APU), reported a GAAP net loss attributable to AmeriGas Partners for the quarter ended June 30, 2017 of $46.8 million, compared to a GAAP net loss of $33.1 million for the quarter ended June 30, 2016. Adjusted net loss attributable to AmeriGas Partners for the quarter ended June 30, 2017 was $28.9 million compared to an adjusted net loss of $23.6 million in the prior-year quarter. Adjusted net losses exclude the impact of unrealized gains and losses on commodity derivative instruments, losses from early extinguishments of debt, and an environmental accrual related to the site of a former manufactured gas plant. A reconciliation of adjusted net loss to GAAP net loss 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 $58.4 million for the quarter ended June 30, 2017 compared to $64.6 million in the prior-year quarter.

Temperatures for the quarter, as measured by heating degree days, were 11.7% warmer than normal and 4.6% warmer than the prior year; heating degree days for April, which typically account for the majority of third quarter heating degree days, were 17.1% warmer than normal and 10.6% warmer than the same period in the prior year.

Operating and financial highlights for the quarter were as follows:

  • Retail volumes were 3.8% lower than the prior-year period primarily resulting from very warm weather that continued well into the spring.
  • Unit margins were up slightly from the prior-year period despite costs that were 28% higher than the same period last year.
  • Operating expenses increased $10.2 million due to approximately $13 million in expense accruals related to the previously mentioned environmental accrual ($7.5 million) and a settlement with one of AmeriGas' insurance carriers ($5.5 million). The environmental accrual is excluded from Adjusted EBITDA, but the impact of the insurance settlement is reflected in Adjusted EBITDA.
  • The partnership completed three acquisitions of retail propane distributors during the quarter.

Jerry E. Sheridan, president and chief executive officer of AmeriGas, said, "Although the third quarter is not a peak-weather period, the pattern of very warm weather continued into the quarter and had an adverse impact on our results. Our focus on margin management, expense control, and strong execution in our cylinder and national accounts programs resulted in a quarter that was comparable to the prior-year period exclusive of the environmental accrual and insurance settlement recorded in the quarter. We were pleased to deliver solid growth in both our cylinder exchange and national accounts programs, volumes of which were up meaningfully over the prior year. Both programs are on pace for record years despite the headwinds caused by weather. We were also pleased to add three acquisitions during the quarter and to complete the final step in our balance sheet refinancing efforts, with our long-term debt maturities now ranging from 2024-2027.”

Based on the results through the first nine months of the year, and expectations for the fourth quarter, the company now expects Adjusted EBITDA in the range of $550 million for the fiscal year ending September 30, 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 third quarter earnings and other current activities at 9:00 AM ET on Thursday, August 3, 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 August 3 through 11:59 PM on August 10, 2017. The replay may be accessed at (855) 859-2056, and internationally at (404) 537-3406, conference ID 5913522.

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
June 30,
Nine Months Ended
June 30,
Twelve Months Ended
June 30,
2017   2016 2017   2016 2017   2016
Revenues:
Propane $ 403,954 $ 385,566 $ 1,803,816 $ 1,718,748 $ 2,138,228 $ 2,076,188
Other 63,542   61,118   204,506   199,521   263,642   260,317  
467,496   446,684   2,008,322   1,918,269   2,401,870   2,336,505  
Costs and expenses:
Cost of sales - propane 181,047 121,812 762,531 591,355 891,018 729,433
Cost of sales - other 22,367 21,145 60,276 59,173 79,960 81,204
Operating and administrative expenses 227,372 217,154 694,180 686,578 936,388 912,558
Depreciation 35,482 35,668 103,891 110,807 139,889 149,557
Amortization 10,659 10,742 31,873 32,228 42,820 42,839
Other operating income, net (8,294 ) (6,041 ) (10,787 ) (22,079 ) (16,960 ) (30,346 )
468,633   400,480   1,641,964   1,458,062   2,073,115   1,885,245  
Operating (loss) income (1,137 ) 46,204 366,358 460,207 328,755 451,260
Loss on extinguishments of debt (4,434 ) (37,086 ) (59,729 ) (37,086 ) (71,532 ) (37,086 )
Interest expense (40,577 ) (40,838 ) (120,596 ) (122,669 ) (162,022 ) (163,107 )
(Loss) income before income taxes (46,148 ) (31,720 ) 186,033 300,452 95,201 251,067
Income tax (expense) benefit (646 ) (907 ) (2,129 ) (2,107 ) 1,551   (2,527 )
Net (loss) income including noncontrolling interest (46,794 ) (32,627 ) 183,904 298,345 96,752 248,540
Add net loss (deduct net income) attributable to noncontrolling interest 42   (442 ) (3,614 ) (4,533 ) (3,290 ) (4,423 )
Net (loss) income attributable to AmeriGas Partners, L.P. $ (46,752 ) $ (33,069 ) $ 180,290   $ 293,812   $ 93,462   $ 244,117  
General partner’s interest in net (loss) income attributable to AmeriGas Partners, L.P. $ 10,862   $ 10,101   $ 34,000   $ 30,663     $ 43,564   $ 38,811  
Limited partners’ interest in net (loss) income attributable to AmeriGas Partners, L.P. $ (57,614 ) $ (43,170 ) $ 146,290   $ 263,149     $ 49,898   $ 205,306  
(Loss) income per limited partner unit (a)
Basic $ (0.62 ) $ (0.46 ) $ 1.56   $ 2.81   $ 0.53   $ 2.19  
Diluted $ (0.62 ) $ (0.46 ) $ 1.56   $ 2.80   $ 0.53   $ 2.19  
Weighted average limited partner units outstanding:
Basic 93,009   92,960   92,993   92,945   92,986   92,939  
Diluted 93,009   92,960   93,045   93,019   93,044   93,014  
SUPPLEMENTAL INFORMATION:
Retail gallons sold (millions) 195.0 202.8 863.4 883.7 1,045.2 1,077.6
Wholesale gallons sold (millions) 9.0 8.7 38.5 40.0 48.2 52.3
Total margin (b) $ 264,082 $ 303,727 $ 1,185,515 $ 1,267,741 $ 1,430,892 $ 1,525,868
Adjusted total margin (c) $ 270,048 $ 275,877 $ 1,194,368 $ 1,206,070 $ 1,435,337 $ 1,463,360
EBITDA (c) $ 40,612 $ 55,086 $ 438,779 $ 561,623 $ 436,642 $ 602,147
Adjusted EBITDA (c) $ 58,421 $ 64,603 $ 514,740 $ 537,661 $ 520,043 $ 577,356
Adjusted net (loss) income attributable to AmeriGas Partners, L.P. (c) $ (28,943 ) $ (23,552 ) $ 256,251 $ 269,850 $ 176,863 $ 219,326
Expenditures for property, plant and equipment:
Maintenance capital expenditures $ 10,422 $ 9,985 $ 39,854 $ 36,275 $ 55,683 $ 50,513
Growth capital expenditures $ 10,473 $ 8,700 $ 34,657 $ 38,197 $ 46,049 $ 48,110
(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 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.

 

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
June 30,
Nine Months Ended
June 30,
Twelve Months Ended
June 30,
2017   2016 2017   2016 2017   2016
Adjusted total margin:
Total revenues $ 467,496 $ 446,684 $ 2,008,322 $ 1,918,269 $ 2,401,870 $ 2,336,505
Cost of sales - propane (181,047 ) (121,812 ) (762,531 ) (591,355 ) (891,018 ) (729,433 )
Cost of sales - other   (22,367 )   (21,145 )   (60,276 )   (59,173 )   (79,960 )   (81,204 )
Total margin 264,082 303,727 1,185,515 1,267,741 1,430,892 1,525,868
Add net losses (subtract net gains) on commodity derivative instruments not associated with current-period transactions   5,966     (27,850 )   8,853     (61,671 )   4,445     (62,508 )
Adjusted total margin $ 270,048   $ 275,877   $ 1,194,368   $ 1,206,070   $ 1,435,337   $ 1,463,360  
 
Adjusted net income (loss) attributable to AmeriGas Partners, L.P.:
Net (loss) income attributable to AmeriGas Partners, L.P. $ (46,752 ) $ (33,069 ) $ 180,290 $ 293,812 $ 93,462 $ 244,117
Add net losses (subtract net gains) on commodity derivative instruments not associated with current-period transactions 5,966 (27,850 ) 8,853 (61,671 ) 4,445 (62,508 )
Loss on extinguishments of debt 4,434 37,086 59,729 37,086 71,532 37,086
MGP environmental remediation accrual 7,545 7,545 7,545
Noncontrolling interest in net (losses) gains on commodity derivative instruments not associated with current-period transactions and MGP environmental accrual   (136 )   281     (166 )   623     (121 )   631  
Adjusted net (loss) income attributable to AmeriGas Partners, L.P. $ (28,943 ) $ (23,552 ) $ 256,251   $ 269,850   $ 176,863   $ 219,326  
EBITDA and Adjusted EBITDA:
Net (loss) income attributable to AmeriGas Partners, L.P. $ (46,752 ) $ (33,069 ) $ 180,290 $ 293,812 $ 93,462 $ 244,117
Income tax expense (benefit) 646 907 2,129 2,107 (1,551 ) 2,527
Interest expense 40,577 40,838 120,596 122,669 162,022 163,107
Depreciation 35,482 35,668 103,891 110,807 139,889 149,557
Amortization   10,659     10,742     31,873     32,228     42,820     42,839  
EBITDA 40,612 55,086 438,779 561,623 436,642 602,147
Add net losses (subtract net gains) on commodity derivative instruments not associated with current-period transactions 5,966 (27,850 ) 8,853 (61,671 ) 4,445 (62,508 )
Loss on extinguishments of debt 4,434 37,086 59,729 37,086 71,532 37,086
MGP environmental remediation accrual 7,545 7,545 7,545
Noncontrolling interest in net (losses) gains on commodity derivative instruments not associated with current-period transactions and MGP environmental accrual   (136 )   281     (166 )   623     (121 )   631  
Adjusted EBITDA $ 58,421   $ 64,603   $ 514,740   $ 537,661   $ 520,043   $ 577,356  
 

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, 2017:

           

Forecast Fiscal Year
Ending
September 30, 2017

Adjusted EBITDA (estimate) $ 550,000
Interest expense (estimate) 160,000
Income tax expense (estimate) 2,000
Depreciation (estimate) 138,000
Amortization (estimate) 42,000
 

Source: AmeriGas Partners, L.P.

AmeriGas Partners, L.P.

Will Ruthrauff, 610-337-7000 ext. 6571

Shelly Oates, 610-337-7000 ext. 3202

 

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