AmeriGas Partners, L.P. (APU)

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AmeriGas Partners LP (APU)

Q4 2018 Earnings Conference Call

November 13, 2018, 09:00 AM ET


Brendan Heck - Manager, IR

Ted Jastrzebski - CFO, UGI Corporation

Hugh Gallagher - President and CEO

John Walsh - President and CEO UGI


Chris Sighinolfi - Jefferies

Ben Brownlow - Raymond James



Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the UGI Corporation and AmeriGas Fourth Quarter 2018 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. [Operator Instructions]. Thank you.

Brendan Heck, Manager of Investor Relations, you may begin your conference.

Brendan Heck

Thanks Heidi. Good morning, everyone, and thank you for joining us. With me today are Ted Jastrzebski, CFO of UGI Corporation; Hugh Gallagher, President and CEO of AmeriGas Propane and John Walsh, President and CEO of UGI.

Before we begin, let me remind you that our comments today include certain forward-looking statements, which 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. Please read our earnings release and our annual report on Form 10-K for extensive list of factors that could affect results. We assume no duty to update or revise forward-looking statements to reflect events or circumstances that are different from expectations.

We'll also describe our business using certain non-GAAP financial measures. Reconciliations of these measures to the comparable GAAP measures are available in the appendix of our presentation.

Now let me turn the call over to John.

John Walsh

Thanks, Brendan. Good morning, and welcome to our call. I hope that you've all had the opportunity to review our press releases reporting full year results for UGI and AmeriGas.

I'll comment briefly on major achievements of the course of fiscal '18 and then turn it over to Ted who'll provide more detail and UGI's financial performance. Hugh will cover AmeriGas' this fiscal '18 performance and fiscal '19 outlook. And I'll conclude by reviewing our fiscal '19 guidance and progress on our strategic projects.

We're pleased to once again report record earnings per share for UGI. Our full year GAAP EPS was $4.06 while our adjusted EPS was $2.74. Our adjusted EPS was roughly 20% above the prior record adjusted EPS of $2.29, which we achieved last year. Both years have been adjusted for the mark-to-market valuation of unsettled hedges and other items that Ted will cover later on the call.

The outstanding results delivered in fiscal '18 were enabled by UGI's strong foundation for growth. This foundation is built on our commitment to identifying and developing investments that align with our core business strategies. Our consistent superior performance demonstrates the resiliency of our businesses and our determinations to deliver on the performance commitments we made to our shareholders.

We're also a beneficiary of the positive impact from tax reform. Although I should note that fiscal '18 adjusted EPS would have established a new record for the company, even if the benefit of tax reform was excluded. We were extremely pleased with the progress made in fiscal '18 on our primary strategic initiatives, such as the build out of our LNG network in the Mid-Atlantic and the continued expansion of our European footprint.

Fiscal '18 was also noteworthy for the progress made in executing critical elements of our long-term strategies that will provide the foundation for growth over the next decade. In addition to the progress on our LNG network and our European footprint, we acquired productive midstream assets in the Marcellus, significantly expanded our gas and power marketing activities in Europe, grew ACE and National Accounts in AmeriGas and deployed record levels of capital in our utilities business.

I'd like to briefly comment on our few key fiscal '18 achievements. The midstream and marketing team had another outstanding year, as we strengthen our position as a major midstream operator in Central and Eastern Marcellus, with access to capacity constraint markets in the Mid-Atlantic, and New England.

We completed the steels in Pennsylvania LNG storage facility and announced another new LNG storage facility for Bethlehem, Pennsylvania. These investments add critical storage and delivery capacity to our LNG network as we strive to meet the rapidly increasing demand for LNG peaking services. We acquired the Texas Creek gathering systems in North-central Pennsylvania and we're expanding that network as drilling activity increases. The PennEast project received its final FERC Certificate in 2018 and is moving through the state level permitting process.

The PennEast team is currently working through the details to gain access to well land parcels along the route, in order to submit its final detailed surveys for permits. PennEast expects to begin construction on the project in late 2019. I'll comment further on PennEast later in the call and share our perspective on the future outlook for pipeline capacity expansion.

Our utilities team had a very productive year. The utility deployed a record $340 million of capital as we added new customers, replace gas distribution infrastructure and upgraded our critical accounting systems. We added over 14,000 new residential heating and commercial customers and continue to execute our extensive infrastructure replacement and upgrade program. We also received approval to merge our three gas utilities and successfully concluded the first rate case filing for our electric utility in over 20 years.

Read the rest of this transcript on seekingalpha.com