UGI Corporation's CEO Discusses F3Q12 Results - Earnings Call Transcript

UGI Corporation (AFSI)

Q3 2012 Earnings Call

August 7, 2012, 04:00 pm ET

Executives

Hugh Gallagher - Treasurer

John Walsh - President & COO

Jerry Sheridan - President & CEO, AmeriGas

Lon Greenberg - Chairman & CEO

Analysts

Darren Horowitz - Raymond James

Chris Sighinolfi - UBS

Yves Siegel - Neuberger Berman

Presentation

Operator

Good day ladies and gentlemen, and welcome to the UGI and AmeriGas third quarter fiscal year 2012 earnings conference and live audio webcast. At this time, all participants are in a listen-only mode and later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) And as a reminder, this call is being recorded.

I would now like to introduce your host for today’s conference, Mr. Hugh Gallagher, the Treasurer. Sir you may begin.

Hugh Gallagher

Thanks Stephanie. Good afternoon everyone and thank you for joining us. As we begin, let me remind you that our comments today will include certain forward-looking statements, which the management of UGI and AmeriGas believe 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 our annual reports on Form 10-K for a more extensive list of factors that could affect results, but among them are: adverse weather conditions; cost volatility and availability of all energy products; increased customer conservation measures; the impact of pending and future legal proceedings; domestic and international political, regulatory and economic conditions; currency exchange rate fluctuations; the timing and development of Marcellus Shale gas production; the timing and success of our commercial initiatives and investments to grow our businesses and our ability to successfully integrate acquired businesses including Heritage Propane and achieve anticipated synergies.

UGI and AmeriGas undertake no obligation to release revisions to their forward-looking statements to reflect events or circumstances occurring after today. In addition, our remarks will reference certain non-GAAP financial measures that management believes provide useful information to investors to more effectively evaluate the year-over-year results of operations of the company. These non-GAAP financial measures are not comparable to measures used by the company and should be considered in conjunction with other performance measures such as cash flow from operating activities.

With me today are John Walsh, President and COO of UGI; Jerry Sheridan, President and CEO of AmeriGas and your host, Chairman and CEO of UGI Corporation, Lon Greenberg. Lon?

Lon Greenberg

Thanks, Hugh. Let me also welcome all of you to our call. I trust you have had the opportunity to review our press releases reporting our third quarter results. Hugh will provide you with some more detail on our financial results later in his comments.

Although UGI’s earnings for the quarter adjusted for acquisition and transition expenses were improved over the prior year by $0.03 a share, our financial performance was not at levels we are capable of achieving due principally to the very warm spring weather we encountered in our business units.

Rolling 12 month records for warmth continue to be set this quarter, in fact only Michael Phelps has set more records this past year than the winter has. Yet our earnings improved as I noted due to better performance in our overseas and our utilities businesses.

I will add that all of our operating units made strides forward in carrying out their strategic plans during the quarter especially noteworthy is the progress AmeriGas made in its Heritage integration process that Jerry will describe later. John will also comment on some of the progress made at our other business units this quarter. Following remarks by Hugh, John and Jerry, I will return for some closing comments.

At this point I will turn it over to Hugh.

Hugh Gallagher

Thanks Lon. As Lon mentioned in his opening remarks, we were pleased with the results for the quarter given the warm spring weather. We are also pleased with the progress made in advancing our strategic initiatives across all of our business units and John and Jerry will prove more color on this progress in their portion of the presentation.

But first let me give the quick summary of operations and liquidity for the quarter. UGI reported a seasonal net loss of $6.3 million or $0.06 per share for the quarter compared to a loss of $7.2 million or $0.06 per share for the third quarter of 2011. The results for the current quarter include the acquisitions and transition costs of $3.4 million or $0.03 per share related to the Heritage Propane acquisitions at AmeriGas and the Shell acquisition at UGI’s international propane business. Excluding these items the seasonal net loss for the quarter would have been about $2.9 million or $0.03 per share, a solid improvement over the prior year quarter.

Year-to-date June earnings per share was $1.89 on a GAAP basis which includes $0.10 per share from the loss on extinguishment of debt and transition expenses already incurred. We continue to expect to report GAAP earnings in the range of $1.65 to $1.75 per share for the full fiscal year ending September 30, 2012. This means that we expect to incur a seasonal loss during the fourth quarter in the range of $0.10 to $0.20 per share and we also expect to incur an additional $0.04 per share in acquisition and transition costs during the quarter.

Now I’ll turn to each business unit’s results for the quarter. AmeriGas’ results were significantly impacted by extremely warm weather that persisted from Q2 into April and May. This warm weather and a greater seasonal loss associated with the Heritage acquisition were the primary drivers of AmeriGas’ lower earnings for the quarter.

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