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AmeriGas Reports Third Quarter Results; Updates Guidance

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AmeriGas Propane, Inc., general partner of AmeriGas Partners, L.P. (the
"Partnership," NYSE: APU), today reported financial results for the
fiscal quarter ended June 30, 2018.

HIGHLIGHTS

  • GAAP net loss of $74.4 million and adjusted net loss of $20.2 million
  • Adjusted EBITDA of $67.2 million, compared with $58.4 million in the
    prior year
  • Updates adjusted EBITDA guidance range of $610 to $620 million for the
    fiscal year ending September 30, 2018

Jerry E. Sheridan, president and chief executive officer of AmeriGas,
said, "We are pleased that the Partnership generated adjusted EBITDA of
$67.2 million, 15% higher than the prior year and our strongest third
quarter since fiscal 2013. This result was driven by higher retail
volume, continued success of our National Accounts program, and expense
control despite increased delivery activity. Although not as critical as
in the first and second quarters, our results benefited from colder
April weather, but were negatively impacted by warmer weather in May and
June when compared to the prior year."

Based on the results of the first nine months of the fiscal year and
expectations for the fourth quarter, the Partnership is updating its
adjusted EBITDA guidance from a range of $625 to $645 million to a range
of $610 to $620 million for the fiscal year ending September 30, 2018.1

KEY DRIVERS OF THIRD QUARTER RESULTS

  • Degree days for the quarter were 10% colder than normal and 21% colder
    than last year. April was 36% colder than normal, but the benefits
    were tempered by significantly warmer weather in May
  • Retail volumes sold increased 4% over prior year due to the colder
    weather in April
  • National Accounts volume increased 11% over prior year
  • Unit margins increased slightly despite Mont Belvieu prices that were
    40% higher than the prior year
  • As previously disclosed, the company recorded a $75 million non-cash
    impairment charge during the third quarter associated with a plan to
    discontinue the use of Heritage tradenames and trademarks (excluded
    from Adjusted EBITDA)
1   See Note on Guidance and Use of Forward-Looking Statements
 

EARNINGS CALL and WEBCAST

AmeriGas Partners, L.P. will hold a live Internet Audio Webcast of its
conference call to discuss fiscal second quarter earnings and other
current activities at 9:00 AM ET on Thursday, August 2, 2018. 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 2nd through 11:59 PM on August 9th. The replay may
be accessed at (855) 859-2056, and internationally at 1-404-537-3406,
conference ID 3385959.

ABOUT AMERIGAS

AmeriGas is the nation's largest retail propane marketer, serving over
1.8 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%. Comprehensive information about AmeriGas is available
on the Internet at http://www.amerigas.com.

NOTE ON GUIDANCE and USE OF FORWARD-LOOKING STATEMENTS

Because we are unable to predict certain potentially material items
affecting net income on a GAAP basis, principally mark-to-market gains
and losses on commodity derivative instruments, we cannot reconcile 2018
Adjusted EBITDA, a non-GAAP measure, to net income attributable to
AmeriGas Partners, L.P., the most directly comparable GAAP measure, in
reliance on the "unreasonable efforts" exception set forth in SEC rules.
Adjustments that management can reasonably estimate are provided below.

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, political, economic and regulatory conditions in the
U.S. and abroad, the availability, timing and success of our
acquisitions, commercial initiatives and investments to grow our
business, 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.

USE OF NON-GAAP MEASURES

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.

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 are presented at the end of this press release.

 
REPORT OF EARNINGS
AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
(Thousands, except per unit and where otherwise indicated)
(Unaudited)
 
  Three Months Ended
June 30,
  Nine Months Ended
June 30,
  Twelve Months Ended
June 30,
2018   2017 2018   2017 2018   2017
Revenues:
Propane $ 461,875 $ 403,954 $ 2,141,128 $ 1,803,816 $ 2,520,850 $ 2,138,228
Other   66,528     63,542     214,903     204,506     280,354     263,642  
  528,403     467,496     2,356,031     2,008,322     2,801,204     2,401,870  
Costs and expenses:
Cost of sales — propane 199,652 181,047 1,039,647 762,531 1,168,377 891,018
Cost of sales — other 24,492 22,367 64,770 60,276 85,105 79,960
Operating and administrative expenses 222,358 227,372 704,146 694,180 925,099 936,388
Impairment of tradenames and trademarks 75,000 75,000 75,000
Depreciation 36,005 35,482 109,400 103,891 153,250 139,889
Amortization 10,388 10,659 29,568 31,873 40,459 42,820
Other operating income, net   (5,793 )   (8,294 )   (17,443 )   (10,787 )   (18,529 )   (16,960 )
  562,102     468,633     2,005,088     1,641,964     2,428,761     2,073,115  
Operating (loss) income (33,699 ) (1,137 ) 350,943 366,358 372,443 328,755
Loss on extinguishments of debt (4,434 ) (59,729 ) (71,532 )
Interest expense   (40,449 )   (40,577 )   (122,021 )   (120,596 )   (161,651 )   (162,022 )
(Loss) income before income taxes (74,148 ) (46,148 ) 228,922 186,033 210,792 95,201
Income tax (expense) benefit   (624 )   (646 )   (3,658 )   (2,129 )   (3,563 )   1,551  
Net (loss) income including noncontrolling interest (74,772 ) (46,794 ) 225,264 183,904 207,229 96,752
Add net loss (deduct net income) attributable to noncontrolling
interest
  376     42     (3,415 )   (3,614 )   (3,611 )   (3,290 )
Net (loss) income attributable to AmeriGas Partners, L.P. $ (74,396 ) $ (46,752 ) $ 221,849   $ 180,290   $ 203,618   $ 93,462  
General partner's interest in net (loss) income attributable to
AmeriGas Partners, L.P.
$ 10,587   $ 10,862   $ 36,208   $ 34,000   $ 47,354   $ 43,564  
Limited partners' interest in net (loss) income attributable to
AmeriGas Partners, L.P.
$ (84,983 ) $ (57,614 ) $ 185,641   $ 146,290   $ 156,264   $ 49,898  
(Loss) income per limited partner unit (a)
Basic $ (0.91 ) $ (0.62 ) $ 2.00   $ 1.56   $ 1.68   $ 0.53  
Diluted $ (0.91 ) $ (0.62 ) $ 1.99   $ 1.56   $ 1.68   $ 0.53  
Weighted average limited partner units outstanding:
Basic   93,042     93,009     93,031     92,993     93,028     92,986  
Diluted   93,042     93,009     93,082     93,045     93,081     93,044  
SUPPLEMENTAL INFORMATION:
Retail gallons sold (millions) 202.0 195.0 905.5 863.4 1,089.0 1,045.2
Wholesale gallons sold (millions) 12.1 9.0 49.1 38.5 59.7 48.2
Total margin (b) $ 304,259 $ 264,082 $ 1,251,614 $ 1,185,515 $ 1,547,722 $ 1,430,892
Adjusted total margin (c) $ 283,959 $ 270,048 $ 1,261,751 $ 1,194,368 $ 1,517,944 $ 1,435,337
EBITDA (c) $ 13,070 $ 40,612 $ 486,496 $ 438,779 $ 562,541 $ 436,642
Adjusted EBITDA (c) $ 67,217 $ 58,421 $ 570,773 $ 514,740 $ 607,307 $ 520,043
Adjusted net (loss) income attributable to AmeriGas Partners, L.P.
(c)
$ (20,249 ) $ (28,943 ) $ 306,126 $ 256,251 $ 248,384 $ 176,863
Expenditures for property, plant and equipment:
Maintenance capital expenditures $ 13,775 $ 10,422 $ 35,342 $ 39,854 $ 47,522 $ 55,683
Growth capital expenditures $ 11,922 $ 10,473 $ 37,551 $ 34,657 $ 49,024 $ 46,049
 
(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, 2017.
(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 attributable to AmeriGas Partners, L.P.
 
 
GAAP / NON-GAAP RECONCILIATION
(Thousands)
(Unaudited)
 
  Three Months Ended
June 30,
  Nine Months Ended
June 30,
  Twelve Months Ended
June 30,
2018   2017 2018   2017 2018   2017
Adjusted total margin:
Total revenues $ 528,403 $ 467,496 $ 2,356,031 $ 2,008,322 $ 2,801,204 $ 2,401,870
Cost of sales — propane (199,652 ) (181,047 ) (1,039,647 ) (762,531 ) (1,168,377 ) (891,018 )
Cost of sales — other   (24,492 )   (22,367 )   (64,770 )   (60,276 )   (85,105 )   (79,960 )
Total margin 304,259 264,082 1,251,614 1,185,515 1,547,722 1,430,892
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions
  (20,300 )   5,966     10,137     8,853     (29,778 )   4,445  
Adjusted total margin $ 283,959   $ 270,048   $ 1,261,751   $ 1,194,368   $ 1,517,944   $ 1,435,337  
 
Adjusted net income (loss) attributable to AmeriGas Partners,
L.P.:
Net (loss) income attributable to AmeriGas Partners, L.P. $ (74,396 ) $ (46,752 ) $ 221,849 $ 180,290 $ 203,618 $ 93,462
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions
(20,300 ) 5,966 10,137 8,853 (29,778 ) 4,445
Impairment of Heritage tradenames and trademarks 75,000 75,000 75,000
Loss on extinguishments of debt 4,434 59,729 71,532
MGP environmental accrual 7,545 7,545 7,545
Noncontrolling interest in net gains (losses) on commodity
derivative instruments not associated with current-period
transactions, impairment of Heritage tradenames and trademarks and
MGP environmental accrual
  (553 )   (136 )   (860 )   (166 )   (456 )   (121 )
Adjusted net (loss) income attributable to AmeriGas Partners, L.P. $ (20,249 ) $ (28,943 ) $ 306,126   $ 256,251   $ 248,384   $ 176,863  
 
Three Months Ended
June 30,
Nine Months Ended
June 30,
Twelve Months Ended
June 30,
2018 2017 2018 2017 2018 2017
EBITDA and Adjusted EBITDA:
Net (loss) income attributable to AmeriGas Partners, L.P. $ (74,396 ) $ (46,752 ) $ 221,849 $ 180,290 $ 203,618 $ 93,462
Income tax expense (benefit) 624 646 3,658 2,129 3,563 (1,551 )
Interest expense 40,449 40,577 122,021 120,596 161,651 162,022
Depreciation 36,005 35,482 109,400 103,891 153,250 139,889
Amortization   10,388     10,659     29,568     31,873     40,459     42,820  
EBITDA 13,070 40,612 486,496 438,779 562,541 436,642
(Subtract net gains) add net losses on commodity derivative
instruments not associated with current-period transactions
(20,300 ) 5,966 10,137 8,853 (29,778 ) 4,445
Impairment of Heritage tradenames and trademarks 75,000 75,000 75,000
Loss on extinguishments of debt 4,434 59,729 71,532
MGP environmental accrual 7,545 7,545 7,545
Noncontrolling interest in net gains (losses) on commodity
derivative instruments not associated with current-period
transactions, impairment of Heritage tradenames and trademarks and
MGP environmental accrual
  (553 )   (136 )   (860 )   (166 )   (456 )   (121 )
Adjusted EBITDA $ 67,217   $ 58,421   $ 570,773   $ 514,740   $ 607,307   $ 520,043  
 

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, 2018:

 
Forecast Fiscal Year Ending
September 30, 2018
(Low End)   (High End)
Adjusted EBITDA (estimate) $ 610,000 $ 620,000
Interest expense (estimate) 162,000 162,000
Income tax expense (estimate) 3,500 3,500
Depreciation (estimate) 149,000 149,000
Amortization (estimate) 40,000 40,000
 

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