UGI Corp. (UGI, Financial) filed Quarterly Report for the period ended 2010-03-31.
Ugi Corp. has a market cap of $2.87 billion; its shares were traded at around $26.37 with a P/E ratio of 11.5 and P/S ratio of 0.5. The dividend yield of Ugi Corp. stocks is 3.1%. Ugi Corp. had an annual average earning growth of 9.7% over the past 10 years. GuruFocus rated Ugi Corp. the business predictability rank of 4-star.UGI is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.
Retail propane revenues increased $42.1 million during the 2010 three-month period reflecting a $71.7 million increase due to higher average retail selling prices and a $29.6 million decrease as a result of the lower retail volumes sold. Wholesale propane revenues increased $22.9 million principally reflecting higher year-over-year wholesale selling prices and, to a much lesser extent, higher low-margin wholesale volumes sold. Average wholesale propane commodity prices at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 85% higher in the 2010 three-month period compared to such prices in the 2009 three-month period. The lower average wholesale prices in the prior-year period followed a precipitous decline in such prices principally during the first quarter of Fiscal 2009. Total cost of sales increased $65.8 million, to $539.7 million, principally reflecting the effects of higher 2010 three-month period propane product costs.
The $13.7 million decrease in EBITDA during the 2010 three-month period reflects in large part the previously mentioned $2.9 million decline in total margin and a $12.2 million loss from the discontinuance of interest rate hedges associated with a previously anticipated issuance of long-term debt. During the three months ended March 31, 2010, the Partnerships management determined that it was likely that it would not issue a previously anticipated $150 million of long-term debt during the summer of 2010. As a result, the Partnership discontinued cash flow hedge accounting treatment for interest rate protection agreements associated with this previously anticipated debt issuance and recorded a $12.2 million loss which is reflected in other expense (income), net on the Condensed Consolidated Statements of Operations (see Financial Condition and Liquidity below).
International Propane euro-based revenues increased 19.7 million or 7.6% principally reflecting higher Antargaz retail gallons sold and higher average selling prices partially offset by the effects of slightly lower wholesale volumes sold. The higher average selling prices reflect the effects of the previously mentioned year-over-year increase in wholesale LPG product costs. In U.S. dollars, revenues increased $47.8 million or 14.1% principally reflecting the effects of the weaker U.S. dollar on euro base-currency revenues. International Propanes euro-based total cost of sales increased to 149.3 million in the 2010 three-month period from 116.1 million in the prior year, an increase of 28.6%, reflecting the higher per-unit LPG commodity costs and the higher retail volume sales. On a U.S. dollar basis, cost of sales increased to $207.3 million from $151.5 million in the prior-year period, an increase of 36.8%, reflecting the higher euro base-currency cost of sales and to a lesser extent the effects of the weaker U.S. dollar.
Gas Utility revenues decreased $97.4 million during the 2010 three-month period principally reflecting a decline in revenues from retail core-market customers partially offset by a $16.0 million increase in low-margin off-system sales. The decrease in retail core-market revenues principally resulted from lower average purchased gas cost (PGC) rates and, to a much lesser extent, lower retail core-market volumes partially offset by the effects of the PNG Gas and CPG Gas base operating revenue increases that became effective August 28, 2009. Under Gas Utilitys PGC recovery mechanisms, Gas Utility records the cost of gas associated with sales to retail core-market customers at amounts included in PGC rates. The difference between actual gas costs and the amounts included in rates is deferred on the balance sheet as a regulatory asset or liability and represents amounts to be collected from or refunded to customers in a future period. As a result of this PGC recovery mechanism, increases or decreases in the cost of gas associated with retail core-market customers have no direct effect on retail core-market margin. Gas Utilitys cost of gas was $291.4 million in the 2010 three-month period compared with $392.9 million in the prior-year period principally reflecting the lower average PGC rates and, to a much lesser extent, the lower retail core-market sales partially offset by the previously mentioned increase in off-system sales.
Electric Utilitys kilowatt-hour sales in the 2010 three-month period were 3.8% lower than in the prior year. The decline in sales principally reflects the effects of warmer 2010 three-month period weather on heating-related sales volumes and the continuing effects of the economic recession. Temperatures based upon heating degree days were approximately 4.8% warmer than in the prior-year period. Electric Utility revenues decreased $6.5 million principally as a result of lower default service revenue rates which became effective January 1, 2010 and, to a much lesser extent, the lower sales. Electric Utility decreased its default service rates effective January 1, 2010 pursuant to a January 22, 2009 settlement of its default service rate filing with the PUC. This reduced average costs to a residential general and residential heating customer by nearly 10% and 4%, respectively, over such costs in Fiscal 2009 and also reduced rates to commercial and industrial customers. Under default service rates, Electric Utility is no longer subject to electricity price and congestion cost risk as it is permitted to pass these costs through to its customers using a reconcilable cost recovery mechanism. Differences between actual costs and electric recovery rates are deferred for future recovery from or refund to customers. Beginning January 1, 2010, Electric Utility can no longer recover revenues in excess of actual costs of electricity as was possible under previous Provider of Last resort (POLR) rates in effect prior to January 1, 2010. Electric Utility cost of sales declined to $20.7 million in the 2010 three-month period compared to $24.2 million in the 2009 three-month period principally reflecting the effects of the new cost recovery mechanism on cost of sales and the lower sales volumes.
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Ugi Corp. has a market cap of $2.87 billion; its shares were traded at around $26.37 with a P/E ratio of 11.5 and P/S ratio of 0.5. The dividend yield of Ugi Corp. stocks is 3.1%. Ugi Corp. had an annual average earning growth of 9.7% over the past 10 years. GuruFocus rated Ugi Corp. the business predictability rank of 4-star.UGI is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc, Paul Tudor Jones of The Tudor Group, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
We recorded net income attributable to UGI Corporation of $255.5 million for the 2010 six-month period compared to net income attributable to UGI Corporation of $273.1 million in the prior-year six-month period. Net income attributable to UGI in the current-year six-month period includes the previously mentioned $3.3 million after-tax loss associated with the discontinuance of Partnership interest rate hedges while net income attributable to UGI Corporation in the prior-year six-month period includes an after-tax gain of $10.4 million associated with the Partnerships November 2008 sale of its California LPG storage facility. International Propanes contribution to net income attributable to UGI Corporation was significantly lower in the 2010 six-month period as the prior-years first and second fiscal quarter results reflect unit margins at Antargaz that were significantly higher than normal due to a rapid and sharp decline in LPG commodity costs that occurred as Antargaz entered the Fiscal 2009 winter heating season. The decline in International Propane results in the 2010 six-month period was partially offset however by higher Gas Utility net income, resulting in large part from the August 2009 PNG Gas and CPG Gas base rate increases and lower operating expenses, and greater net income from Energy Services due in large part from higher total natural gas and retail power margin.Retail propane revenues increased $42.1 million during the 2010 three-month period reflecting a $71.7 million increase due to higher average retail selling prices and a $29.6 million decrease as a result of the lower retail volumes sold. Wholesale propane revenues increased $22.9 million principally reflecting higher year-over-year wholesale selling prices and, to a much lesser extent, higher low-margin wholesale volumes sold. Average wholesale propane commodity prices at Mont Belvieu, Texas, one of the major supply points in the U.S., were approximately 85% higher in the 2010 three-month period compared to such prices in the 2009 three-month period. The lower average wholesale prices in the prior-year period followed a precipitous decline in such prices principally during the first quarter of Fiscal 2009. Total cost of sales increased $65.8 million, to $539.7 million, principally reflecting the effects of higher 2010 three-month period propane product costs.
The $13.7 million decrease in EBITDA during the 2010 three-month period reflects in large part the previously mentioned $2.9 million decline in total margin and a $12.2 million loss from the discontinuance of interest rate hedges associated with a previously anticipated issuance of long-term debt. During the three months ended March 31, 2010, the Partnerships management determined that it was likely that it would not issue a previously anticipated $150 million of long-term debt during the summer of 2010. As a result, the Partnership discontinued cash flow hedge accounting treatment for interest rate protection agreements associated with this previously anticipated debt issuance and recorded a $12.2 million loss which is reflected in other expense (income), net on the Condensed Consolidated Statements of Operations (see Financial Condition and Liquidity below).
International Propane euro-based revenues increased 19.7 million or 7.6% principally reflecting higher Antargaz retail gallons sold and higher average selling prices partially offset by the effects of slightly lower wholesale volumes sold. The higher average selling prices reflect the effects of the previously mentioned year-over-year increase in wholesale LPG product costs. In U.S. dollars, revenues increased $47.8 million or 14.1% principally reflecting the effects of the weaker U.S. dollar on euro base-currency revenues. International Propanes euro-based total cost of sales increased to 149.3 million in the 2010 three-month period from 116.1 million in the prior year, an increase of 28.6%, reflecting the higher per-unit LPG commodity costs and the higher retail volume sales. On a U.S. dollar basis, cost of sales increased to $207.3 million from $151.5 million in the prior-year period, an increase of 36.8%, reflecting the higher euro base-currency cost of sales and to a lesser extent the effects of the weaker U.S. dollar.
Gas Utility revenues decreased $97.4 million during the 2010 three-month period principally reflecting a decline in revenues from retail core-market customers partially offset by a $16.0 million increase in low-margin off-system sales. The decrease in retail core-market revenues principally resulted from lower average purchased gas cost (PGC) rates and, to a much lesser extent, lower retail core-market volumes partially offset by the effects of the PNG Gas and CPG Gas base operating revenue increases that became effective August 28, 2009. Under Gas Utilitys PGC recovery mechanisms, Gas Utility records the cost of gas associated with sales to retail core-market customers at amounts included in PGC rates. The difference between actual gas costs and the amounts included in rates is deferred on the balance sheet as a regulatory asset or liability and represents amounts to be collected from or refunded to customers in a future period. As a result of this PGC recovery mechanism, increases or decreases in the cost of gas associated with retail core-market customers have no direct effect on retail core-market margin. Gas Utilitys cost of gas was $291.4 million in the 2010 three-month period compared with $392.9 million in the prior-year period principally reflecting the lower average PGC rates and, to a much lesser extent, the lower retail core-market sales partially offset by the previously mentioned increase in off-system sales.
Electric Utilitys kilowatt-hour sales in the 2010 three-month period were 3.8% lower than in the prior year. The decline in sales principally reflects the effects of warmer 2010 three-month period weather on heating-related sales volumes and the continuing effects of the economic recession. Temperatures based upon heating degree days were approximately 4.8% warmer than in the prior-year period. Electric Utility revenues decreased $6.5 million principally as a result of lower default service revenue rates which became effective January 1, 2010 and, to a much lesser extent, the lower sales. Electric Utility decreased its default service rates effective January 1, 2010 pursuant to a January 22, 2009 settlement of its default service rate filing with the PUC. This reduced average costs to a residential general and residential heating customer by nearly 10% and 4%, respectively, over such costs in Fiscal 2009 and also reduced rates to commercial and industrial customers. Under default service rates, Electric Utility is no longer subject to electricity price and congestion cost risk as it is permitted to pass these costs through to its customers using a reconcilable cost recovery mechanism. Differences between actual costs and electric recovery rates are deferred for future recovery from or refund to customers. Beginning January 1, 2010, Electric Utility can no longer recover revenues in excess of actual costs of electricity as was possible under previous Provider of Last resort (POLR) rates in effect prior to January 1, 2010. Electric Utility cost of sales declined to $20.7 million in the 2010 three-month period compared to $24.2 million in the 2009 three-month period principally reflecting the effects of the new cost recovery mechanism on cost of sales and the lower sales volumes.
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