Investor Presentation - August 2012

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  • 1. Investor PresentationAugust 2012August 2012

2. About This PresentationThis presentation contains forward-looking statements which management believesto be reasonable as of todays date only. Actual results may differ significantlybecause of risks and uncertainties that are difficult to predict and many of which arebeyond managements control. Among them are adverse weather conditions, costvolatility and availability of all energy products, including propane, natural gas,electricity and fuel oil, increased customer conservation measures, the impact ofpending and future legal proceedings, domestic and international political, regulatoryand economic conditions including currency exchange rate fluctuations (particularlythe euro), the timing and development of Marcellus Shale gas production, the timingand success of our acquisitions, commercial initiatives, and investments to grow ourbusiness and our ability to successfully integrate acquired businesses and achieveanticipated synergies. You should read UGIs Annual Report on Form 10-K for amore extensive list of factors that could affect results. UGI undertakes no obligationto release revisions to its forward-looking statements to reflect events orcircumstances occurring after today. August 2012 2 3. Investment HighlightsUGI Corporation is a balanced growth and income investment. Diversified, balanced portfolio of businesses creates multiple revenue streams, synergies, and a natural risk hedge Proven strategy for achieving explicit financial goals through operational excellence, sound investment, and acquisition integration 6% - 10% EPS growth target 4% dividend growth target (payout ratio 35-45%) Significant cash generation offers balanced growth and income through a growing dividend and diversified investment opportunities Generate $100M+ of investible cash annually Uninterrupted dividends for 128 years Dividend increases for 25 consecutive years Pursuing accelerated growth through a combination of organic capital investments and M&A Earnings Growth BalancedDividend Growth13.2% 10-year CAGR growth and income7.3% 10-year CAGRAugust 2012 3 4. About UGI CorporationUGI Corporation is a distributor and marketer of energy products and services. NYSE: UGI Headquarters: Valley Forge, PA Market Cap: $3.4B (as of Aug 9) FY11 Revenue: $6,091 million FY11 Net Income: $232.9 million AmeriGas also operates in Dividend Yield: 3.6% (as of Aug 9) Hawaii and Alaska PropaneGas & ElectricDomesticInternationalMidstream & MarketingUGI UtilitiesAugust 2012 4 5. Related and Complementary BusinessesUGI Corporation as a whole is greater than the sum of its parts. Similar EndUses(heating,cooking, SimilarMargin /commercialcustomerapplications)pricingmixmanagement(Residential andcommercial)Common approach toCommon Largenumber ofhedging / risksmall dollarmanagementAttributes transactionsDistribution /Commonlogisticsbusinessessuppliers (via truck,Leverage (refiners,pipeline, wires)producers) intellectualcapital or physicalassets August 2012 5 6. Diversified Growth OpportunitiesUGI has a variety of initiatives in place to drive growth in all its businesses. 15 Bcf gasHeritagestorageGas gatheringPropane/ pipelines acquisitionCylinder exchange and Natural gasnational peaking accounts Natural gas Energy marketingmarketingOrganicIncorporategrowthMarcellus intoopportunities Utilities supply Shell LPG CustomerUGI CorpacquisitionsconversionsInternational Propane Domestic PropaneMidstream & MarketingUGI Utilities August 20126 7. A Balanced Growth and Income InvestmentUGI Corporation has an established record of dividend and earnings growth. Adjusted EPS1 Growth Dividend Growth$2.40 $1.10$2.20$1.00$2.00$1.80 $0.90$1.60 $0.80$1.40$1.20 $0.70$1.00 $0.60$0.80$0.50$0.60$0.40 $0.402002 20032004 20052006 20072008 20092010 201120052002 2003 2004 20062007 20082009 20102011(1) See reconciliation of Adjusted EPS to GAAP EPS in Appendix 7 August 2012 8. Diversified Cash Flow and Earnings1Cash Generation Earnings Generation $220MM to $275MMDomesticDomesticPropanePropaneUtilities Utilities 20% 26% 29% 31% 15% 23% International International Propane 30% Propane26% Midstream & Midstream &Marketing MarketingCash available for growth after UGI dividends$120MM to $140MM(1) Forecasted multi-year averages 8 August 2012 9. Business UnitsDomestic PropaneInternational PropaneMidstream & Marketing UGI UtilitiesAugust 2012 10. Domestic Propane KEY STATS FINANCIAL OBJECTIVES AmeriGas Partners, L.P. (NYSE: APU) 3% annual EBITDA increase #1 propane distributor in U.S. 5% annual distributions increase 2 million customers Growth opportunities: Leading provider in a highly fragmented AmeriGas cylinder exchangemarket National accounts Bolt-on acquisitionsKEY INITIATIVES Integration of Heritage Propane Drive productivity and efficiency World class safety performance August 201210 11. Domestic Propane: Heritage Acquisition Update Targeting a minimum of $50 million total synergies by fiscal 20131 Creates a stronger, more diversified, propane company Extends AmeriGass geographic coverage Tangible benefits to shareholders: AmeriGas increased its distribution by 5% at its board meeting inApril, which resulted in an annualized distribution rate of $3.20 per limitedunit This followed the 3% distribution increase after the closing of the HeritagePropane acquisition in January Integration progress ahead of schedule due to warm weather(1) Synergies are net of customer attrition and exclude transition expenses August 201211 12. International PropaneKEY STATS FINANCIAL OBJECTIVES Over 700 million gallons balanced Cash generation from mature Westernacross cylinder, bulk, autogas, and European marketswholesale segments Earnings growth from developing Serving Central European marketsFrance, Scandinavia, Austria, UK, and Deliver benefits of Shell acquisitionmost of Central Europe Recent 140 million Shell LPGacquisition in October 2011 KEY INITIATIVES Completion of Shell LPG integration Organic growth opportunities: Centralized piped networks Customer conversions (oil topropane) Pursue bolt-on acquisitionsAugust 2012 12 13. UGI Utilities KEY STATS FINANCIAL OBJECTIVES Largest gas utility in PA; nearly 600,000 Growth of core customer basecustomers and 173 Bcf gas throughput Manage expenses consistent with a Small electric utility with 60,000 distribution companycustomers, integrated with gas utility Periodic rate cases as appropriateoperations Modernized infrastructure (84% of gasmains of plastic or coated steel) KEY INITIATIVES Customer conversions (primarily fuel oilto natural gas) Accelerate infrastructure replacement Integration of Marcellus Shaleproduction into supply plan August 201213 14. UGI Utilities: Customer ConversionsHeating Sources in 4.9M PA Homes1Gas Conversions/Upgrades Other 4.6% Gas Utility grows core heating Electricity19.5%customer base by 1% to 2%annuallyFuelUtility gas Average over 10,000 newOil/Kerosene53.0% 19.4%heating customers each year Utility connected 10,500Bottled, tankresidential customers in FY11, or LP gas3.5% Utility will add a record numberof new gas heating customersNew Customer Additions14,000this year primarily through 12,000FY12 Forecastconversions from heating oil10,000 8,000 6,000 4,000 2,000 0 New Home Construction Conversions/Upgrades(1) Source: U.S. Census Bureau, 2010August 2012 14(2) Other heat sources include coal, wood, solar, and no fuel 15. Midstream & MarketingKEY STATS OBJECTIVES Marketing: Optimizing returns using a broad base Gas: 125 Bcf, 30,000+ locationsof assets in our Mid-Atlantic footprint Power: 2MM MWhr/8,000 locations Link Marcellus producers to Midstream assets: attractive gas markets Auburn I gathering system Investments in deliverability and Nat gas peaking assetsinfrastructure 14.7 Bcf storage in NE PA Build position as a leading gas/power Electric generation: 125 MW combined marketercycle gas, 102 MW coal-fired, 11 MWlandfill, 6.5 MW solar KEY INITIATIVES Hunlock restart in Q3 of FY12 1.0 Bcf LNG storage in service in Q4 ofFY12 Auburn II and Commonwealth Pipelines August 2012 15 16. Auburn Pipeline ProjectsAuburn I (orange) 9 mile pipeline to deliver Marcellus gasnorth to Tennessee Interstate Pipeline Announced: September 2010 Came online at full capacity in Feb, 2012 Investment: approximately $16 million Volumes transported: 120,000 Dth/dAuburn II (red) 30 mile pipeline to extend Auburn southto Transco Pipeline Announced: October 2011 Targeted completion date: Late 2013 Investment: approximately $150 million Capacity: 200,000 to 300,000 Dth/dAugust 201216 17. Commonwealth Pipeline Joint Development Agreement withaffiliates of Inergy and WGL 200-mile FERC-regulated interstatepipeline Connect markets inPhiladelphia, Baltimore, andWashington, D.C. metro areas toMarcellus shale gas Will cross and interconnect withseveral interstate pipelines, resultingin even greater supply diversity Capacity: 800,000 Dth/d Approximate cost is $1.0billion, funded equally by thesponsors Currently negotiating precedentagreements with target customersAugust 2012 17 18. Diversified Growth Opportunities Earnings contribution Integration period Capital investment 2012 20132014 2015 2016PropaneIntl Shell LPG AcquisitionsPropaneDom Heritage acquisition 15 Bcf gas storage LNG Expansion Midstream & Marketing Auburn I pipeline Auburn II pipeline Commonwealth pipeline Hunlock plant Utilities Conversions from oil to natural gasAugust 201218 19. Focus on Risk ManagementAbility to Invest Wisely Investments consistent with our vision Active business development teams in each business unit Investment parameters set in advance to exceed WACCCommodity Prices Hedge all known commodity price commitments Hedge currency risk of propane costs Limit credit risk and supplier risk across counterparties Tight control of working capitalRegulatory Changes A management team accustomed to working withregu