Wells Fargo Pipeline, MLP and Utility Symposium December 2017

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Transcription:

Wells Fargo Pipeline, MLP and Utility Symposium December 2017

About This Presentation This presentation 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 AmeriGas s Annual Report on Form 10-K and quarterly reports on Form 10-Q 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 impact of pending and future legal proceedings, liability for uninsured claims and for claims in excess of insurance coverage, political, regulatory and economic conditions in the United States and in foreign countries, the availability, timing and success of our acquisitions, commercial initiatives and investments to grow our business, our ability to successfully integrate acquired businesses and achieve anticipated synergies, and the interruption, disruption, failure, malfunction, or breach of our information technology systems, including due to cyberattack. AmeriGas undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today. In addition, this presentation uses certain non-gaap financial measures. Please see the appendix for reconciliations of these measures to the most comparable GAAP financial measure. 2

Business Overview Largest propane distributor in U.S. 1 Over 1.8 MM Customers ~1.1 BN Retail gallons sold Operations in all 50 States Over 50,000 Cylinder exchange retail locations 1 Based on volume of propane gallons distributed annually. ~8,100 Employees 3

Business Overview 37% Residential Heating & Cooking 38% Commercial / Industrial 17% Motor Fuel 8% Agriculture & Transport Represents approximate percentages of retail gallons sold 4

Competitive Advantages Unmatched geographic coverage across all 50 states Significant scale enables deployment of technology advancements Scale enables growth programs (ACE and National Accounts) Significant transportation and logistics assets Tested formula for successful acquisitions Demonstrated ability to manage margins 5

Recent Key Accomplishments National Accounts delivered record operating results Currently serving over 43,000 customer locations ACE business also delivered record operating results Volume up over 8% compared to FY16 Over 50,000 distribution points Completed 5 acquisitions adding ~6 million gallons in FY17 Increased distribution for 13 th consecutive year in April 2017 Completed refinancing of all long-term debt, lowering rates by more than 100 basis points 6

Unmatched Nationwide Footprint Districts Storage Terminals Field Service Center 7

Significant Transportation and Logistics Network 10 Transflow Units 21 Terminals Most flexible, reliable supply chain coverage in the retail propane industry Over 250 Propane Suppliers (a) ~510 Rail Cars 940 PTI Trailers ~3,100 Bobtail Trucks Ability to quickly focus flexible truck, rail and trans-loading assets to areas in need ~1,900 Distribution Locations (a) Domestic and international suppliers. ~1.8 Million Customers 8

Technology Investments Across a Broad Platform Investments in technology reduce operational costs while improving the customer experience AmeriMobile Real-time field communication AmeriGas.com Online bill pay Will-call orders District Tools Real-time key performance indicators Networked Call Centers Re-route calls based on volume 24/7 Emergency Call Center AmeriGas Partners InvestorOverview 9

Key Financial Objectives 3% - 4% growth in EBITDA over the long-term Enhance credit metrics targeting leverage ratios in the range of 3.5x 4.0x Use access to capital markets judiciously - fund all maintenance, growth and acquisition expenditures through internally generated cash flow Distribution growth in line with EBITDA growth and targeting 1.1x to 1.2x distribution coverage Earnings Before Interest, Taxes, Depreciation, and Amortization ( EBITDA ) is a non-gaap measure. See appendix for reconciliation. 10

Key Drivers of Growth 3-4% Annual EBITDA Growth Acquisitions $5-6 MM Annual EBITDA Addition ACE Cylinder Exchange 2-3% Growth National Accounts 6-7% Growth Structural Conservation offset by: Technology Enhancements Margin Management Customer Retention 11

National Accounts Program Unparalled footprint (~1,900 distribution locations, 50 states) 38 Accounts added in FY17 Best in class back office Largest sales force in the industry Geographic diversity Generally less weather sensitive than residential business Serving over 43,000 Customer Locations 12

Cylinder Exchange Program Counter seasonal due to summer grilling demand Product of convenience Platform grows as U.S. retailers expand Highly targeted marketing programs Over 50,000 distribution points 33 Cylinder refurbishment centers nationwide 13

Growth Through Acquisitions Hallmark of the Company s growth history Highly fragmented market, over 3,500 acquisition opportunities Dedicated corporate development team with relationship building as a core competency Unmatched operational synergy opportunities due to nationwide footprint 11 acquisitions in last two years ~ 200 acquisitions since the early 1980s 1987 1993 2001 2012 14

Propane Unit Margins AmeriGas Unit Margin Management Avg. Mt. Belvieu Cost Propane Unit Margins $1.60 $1.40 $1.20 $1.00 $0.80 Avg. Mt. Belvieu Cost $0.60 $0.40 $0.20 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Track record of unit margin growth in all cost environments Unit margin is a non-gaap measure. See appendix for reconciliation. 15

Adjusted EBITDA Growth Adjusted EBITDA 1 $700 $600 $500 $400 $300 $200 $100 $0 Weather vs. Normal 2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018G (2%) 3% 4% 5% 5% (13%) 1% 10% 0% (12%) (11%) 1 Includes impact of Heritage acquisition completed in 2012. 2 Assumes 15-year normal weather. Adjusted EBITDA is a non-gaap measure. See appendix for reconciliation. 16

13 th Consecutive Year of Increasing Distributions $4.00 Annualized Year-End Distributions Per Unit $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 17

Refinancing Strengthened Balance Sheet Debt Maturity Extended and Coverage Improved BEFORE: $1,000 Avg. maturity: 4.7 years Avg. interest rate: 6.73% ($ in millions) AFTER: $1,000 Avg. maturity: 8.7 years Avg. interest rate: 5.65% ($ in millions) $900 $900 $800 $800 $700 $700 $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $- 2017 2019 2020 2021 2022 2023 2024 2025 2026 2027 $- 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 6.25% due May 2019 6.75% due May 2020 5.625% due May 2024 5.500% due May 2025 6.50% due May 2021 7.00% due May 2022 5.875% due Aug 2026 5.75% due May 2027 18

Standby Equity Commitment Agreement Entered into a standby equity commitment agreement with UGI Corporation Provides AmeriGas with ability to issue Class B common units to UGI in exchange for cash o $50 million minimum draws o Up to $225 million in total o Draws available through July 1, 2019 Class B units pay distribution based on a stated yield o o 130 basis points over common yield Payable in cash or Class B units Class B units are excluded from the IDR waterfall Provides balance sheet flexibility to continue with strategic growth investments should company experience another significantly warmer-than-normal winter Do not currently have plans to draw on this commitment

Total Return % AmeriGas Outperformance Over the Long-Term 200 CAGR Total Unitholder Return as of 9/30/17 150 1 Year 3 Year 5 Year 10 Year AmeriGas 6.8% 7.9% 8.9% 10.4% Alerian -3.7% -12.9-0.5% 6.4% 100 S&P 500 18.6% 10.8% 14.2% 7.4% 50 AmeriGas Alerian S&P 500 0-50 20

Conclusion Superior total returns Unmatched scale and geographic coverage Significant growth opportunities Tested formula for successful acquisitions in fragmented industry Demonstrated ability to manage margins Leveraging technology to increase efficiency and customer service Cash flow supports improving leverage and distribution metrics 21

APPENDIX

AmeriGas Unit Margin ($ in thousands, except per unit amounts) Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Propane revenues $ 1,953,714 $ 2,096,080 $ 2,624,672 $ 2,091,890 $ 2,158,800 $ 2,360,439 $ 2,677,631 $ 2,884,766 $ 3,440,868 $ 2,612,401 $ 2,053,160 $ 2,183,538 Propane cost of sales (1,277,306) (1,365,071) (1,836,917) (1,254,332) (1,340,615) (1,546,161) (1,642,658) (1,571,574) (2,034,592) (1,301,167) (719,842) (891,261) Adjustment for Commodity Mark-to-Market (gain) loss - - - - - - - - 9,496 47,841 (66,079) (31,062) Total adjusted propane margin $ 676,408 $ 731,009 $ 787,755 $ 837,558 $ 818,185 $ 814,278 $ 1,034,973 $ 1,313,192 $ 1,415,772 $ 1,359,075 $ 1,267,239 $ 1,261,215 Total Retail and Wholesale Gallons Sold 1,094,900 1,124,100 1,104,400 1,047,900 1,022,600 999,000 1,123,100 1,347,000 1,369,000 1,238,700 1,115,222 1,096,000 Average Adjusted Propane Margin per Gallon $ 0.62 $ 0.65 $ 0.71 $ 0.80 $ 0.80 $ 0.82 $ 0.92 $ 0.97 $ 1.03 $ 1.10 $ 1.14 $ 1.15 23

AmeriGas Adjusted EBITDA - Historical ($ in millions) Year Ended September 30, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net income attributable to AmeriGas Partners, L.P. (a) $ 91.2 $ 190.8 $ 158.0 $ 224.6 $ 165.2 $ 138.5 $ 11.0 $ 221.2 $ 289.9 $ 211.2 $ 207.0 $ 162.1 Income tax expense 0.2 0.8 1.7 2.6 3.3 0.4 2.0 1.7 2.6 2.9 (1.6) 2.0 Interest expense 74.1 71.5 72.9 70.3 65.1 63.5 142.6 165.4 165.6 162.8 164.1 160.2 Depreciation and amortization 72.5 75.6 80.4 83.8 87.4 94.7 169.1 202.9 197.2 194.9 190.0 190.5 EBITDA $ 237.9 $ 338.7 $ 313.0 $ 381.4 $ 321.0 $ 297.1 $ 324.7 $ 591.2 $ 655.3 $ 571.8 $ 559.5 $ 514.8 Add back: Loss on extinguishment of debt 17.1 - - - - 38.1 13.3 - - - 48.9 59.7 Exclude: Acquisition and Transition Costs - - - - - - 46.2 26.5 - - - - Exclude: Hedge Mark to market impact - - - - - - - - 9.5 47.8 (66.1) (31.1) Exclude: Gain on sale of storage facilities - (46.1) - (39.9) - - - - - - - - Add back: Loss on termination of interest rate hedges - - - - 12.2 - - - - - - - Add back: Litigation Reserve adjustment - - - - 7.0 - - - - - - - MGP Environmental accrual - - - - - - - - - - - 7.5 Noncontrolling Interest in net gains (Losses) on commodity derivative instruments not associated with current-period transactions and Heritage transition expenses - - - - - - - (0.3) (0.1) (0.4) 0.7 0.4 Heritage Pro Forma EBITDA - - - - - - 82.5 - - - - - Adjusted EBITDA $ 255.0 $ 292.6 $ 313.0 $ 341.5 $ 340.2 $ 335.2 $ 466.7 $ 617.4 $ 664.7 $ 619.2 $ 543.0 $ 551.3 24