2023 Annual Report
CORPORATE(cid:2)PROFILE
International distributor and marketer of energy products and services, including
natural gas, LPG, electricity and renewable energy solutions, with robust
infrastructure in key markets
FY23 EPS
Business Contribution
Gas 6
l
a
r
u
t
a
N
3 %
29%
Midstream &
Marketing
11%
AmeriGas
Propane
%
7
3
34%
Utilities
26%
UGI
International
G
P
L
G l o bal
Natural Gas
Global LPG
Mission and Values
UGI’s mission is to be the preeminent energy
distribution company in our targeted markets
by providing a superior range of clean and
sustainable energy solutions to our customers.
Safety
Integrity
Respect
Sustainability
Excellence
Reliability
• Second largest regulated gas utility in Pennsylvania1
• Largest regulated gas utility in West Virginia1
• A(cid:2)ractive historical rate base CAGR and ROE
• Strategic midstream assets and energy marketing business
• Significant fee-based income
• Largest retail LPG distributor in the US based on
the volume of propane gallons distributed annually
• Broad geographic footprint with ~1,380 distribution
locations serving customers in all 50 states
• LPG distributor in 17 countries throughout Europe
• Largest LPG distributor in France, Austria, Belgium,
Denmark, Luxembourg, and Hungary
1. Based on total customers
UGI Corporation 2023 Annual Report
2
FY23 Energy Delivered
Natural Gas
Electricity
584 bcf
3.3 bcf
LPG
1.8B gallons
FY23 Capital Expenditures 1
28%
$956M
72%
Natural Gas
Global LPG
A(cid:3)ractive Rate Base Growth
10-Year Rate Base CAGR: ~12%
$3.9B
$1.3B
2013
2014 2015
2016
2017
2018
2019 2020 2021
2022
2023
Strong Track Record of Paying Dividends 2
10-Year Dividend CAGR: 7.2%
18
Countries
10,000+
Employees
2.6+ million
Customers
~19,000
Miles of Gas Mains
~4.6 Bcf/day
Natural Gas Pipeline
Capacity
139 years
Consecutive Paying
Dividends
$0.75
$1.50
2013
2014 2015
2016
2017
2018
2019 2020 2021
2022
2023
1. Does not include acquisitions of business and assets, and other equity investments.
2. Adjusted for stock splits. Dividend figures represent annualized dividends based on the last dividend
issued in that fiscal year.
UGI Corporation 2023 Annual Report
3
TO(cid:2)OUR(cid:2)SHAREHOLDERS(cid:4)
Fiscal 2023 was a year that required disciplined
execution across our portfolio while navigating
continued uncertainty in the macroeconomic
environment and warmer than normal weather
across most of our service territories. Despite
these challenges, we delivered solid results largely
a(cid:2)ributable to record earnings in our Utilities and
Midstream & Marketing segments, and actions taken
to alleviate volume and cost-related pressures in
the Global LPG businesses.
Our diversified portfolio has provided a strong
foundation for consecutively paying dividends over
the past 139 years, increasing dividends in the past
36 consecutive years, and delivering a 10-year EPS
compound annual growth rate (CAGR) of 6% and
dividend CAGR of 7%.
Nevertheless, certain aspects of our business have
navigated operational challenges over the past few
years which have impacted our relative share
performance. This led to the Board of Directors
initiating a strategic review of the LPG businesses,
with a focus on AmeriGas Propane, in order to
continue reducing earnings volatility and strengthen
the balance sheet.
Our 3-R strategy which is to deliver reliable
earnings growth, rebalance the portfolio and invest
in renewables is sound, and we are commi(cid:2)ed to
disciplined focus and execution to strengthen
our core businesses and maximize long-term value
for our shareholders.
Strong execution and
record natural gas results
Year-over-year, we experienced an 8% increase in
earnings before interest and taxes from our natural
gas businesses as we continued to execute on critical
elements of our long-term strategy.
At our regulated utilities:
• Our record earnings were aided by the weather
normalization rider implemented in the fiscal first
quarter and higher gas base rates at our
Pennsylvania Gas Utility.
• We deployed approximately $563M of capital
primarily in infrastructure replacement and
be(cid:2)erment. The team replaced roughly 142 miles
of pipeline and made noteworthy updates to its
infrastructure, including an upgrade to the Auburn
station to increase natural gas capacity as we
accommodate growing customer gas demand.
• Customer additions remain robust with
approximately 13,000 new residential heating
and commercial customers added during the
year, reflecting further growth in the business.
• At Mountaineer, the rate case continues to
progress as expected and on October 6th, the
company filed a joint stipulation and agreement
for se(cid:2)lement, which included a revenue increase
of $13.9 million. We anticipate that the new rates
will go into effect on January 1, 2024.
UGI Corporation 2023 Annual Report
4
At the Midstream & Marketing segment:
• We provide a full suite of midstream services
which includes LNG peaking, pipeline capacity,
storage, and gathering services. In Fiscal 2023, we
also realized incremental earnings from the prior
year acquisitions of UGI Moraine East and Pennant.
• Approximately 86% of our margins are underpinned
by fee-based contracts, which includes take-or-pay
arrangements and minimum volume commitments.
These contracts are with gas and electric utilities,
top tier producers, and other commercial and
industrial customers.
• In addition, we made important progress on the
previously announced renewables commitment,
and were pleased to complete the construction
of two RNG projects in upstate New York, namely
Allen Farms and El-Vi Farms.
Disciplined execution at the
Global LPG businesses
In our Global LPG Businesses, we benefited from
margin management actions taken to alleviate lower
volume and cost-related pressures. These businesses
continue to generate a(cid:2)ractive cash flows that
support actions to return capital to shareholders,
service the balance sheet and make growth
investments in other portions of the business.
At UGI International, we made important progress
in exiting the non-core energy marketing businesses
as we sold our operations in the UK and Belgium
during fiscal 2023. In addition, in October 2023 we
completed the sale of substantially all of the energy
marketing portfolios in France. In completing these
transactions, we have been able to significantly
reduce our exposure to natural gas and power
marketing in Europe, and we anticipate that we will
fully exit this business by the end of calendar 2025.
At AmeriGas, we see a positive trend in some of
our critical operating metrics. Our teams have been
focused on enhancing the customer experience,
and optimizing our systems to enable more efficient
delivery. During the year, we also made investments
in technology and other areas to promote the safety
of our employees and the communities we serve.
Focused on long-term value creation
With Fiscal 2024 now underway, I can share that our
top priorities are to continue reducing operating
expenses across the business, strengthen our
balance sheet, execute on a strategic review of the
LPG businesses, and execute on our growth strategy
for the natural gas businesses.
We are confident in our ability to address these
strategic priorities that will further solidify our
foundation to deliver consistent and reliable results,
and create long-term value for our shareholders.
As we close, the entire Board of Directors wants
to extend their sincere gratitude to our dedicated
employees who safely serve our customers and
advance on our long-term strategy, while navigating
ongoing economic and geopolitical volatility. We are
also appreciative of their tireless work to serve their
local communities through programs such as United
Way, Big Brothers Big Sisters, Reading is Fundamental,
and Habitat for Humanity.
We thank you for your support and commitment
and look forward to keeping you updated on our
progress in Fiscal 2024.
Frank S. Hermance
Chair of the Board
A(cid:5)er 12 years of service as a director, Frank S. Hermance is retiring from the UGI Corporation Board of Directors,
effective as of our Annual Meeting of Shareholders on January 26, 2024. Frank has served with distinction as a
director of UGI Corporation, UGI Utilities, Inc. and AmeriGas Propane, Inc., including terms as Chairman of
UGI Corporation.
We would like to thank Frank for his many contributions in the boardroom, expertise and dedicated service as a member of
UGI’s Board during the past twelve years. His guidance has been incredibly valuable as we look to best position our Company
for success within the evolving energy industry. While we will miss Frank’s thoughtful perspectives, we wish Frank the best in
his well-deserved retirement.
UGI Corporation 2023 Annual Report
5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-11071
UGI CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania
(State or Other Jurisdiction of
Incorporation or Organization)
23-2668356
(I.R.S. Employer Identification No.)
500 North Gulph Road, King of Prussia, PA 19406
(Address of Principal Executive Offices) (Zip Code)
(610) 337-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:
Common Stock, without par value
Corporate Units
Trading Symbol(s):
UGI
UGIC
Name of each exchange on which registered:
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer
Large accelerated filer
Emerging growth company
Smaller reporting company
Non-accelerated filer
☐
☑
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of UGI Corporation Common Stock held by non-affiliates of the registrant on March 31, 2023 was
$7,252,195,251.
At November 10, 2023, there were 210,899,583 shares of UGI Corporation Common Stock issued and outstanding.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on January 26, 2024 are incorporated by reference into
Part III of this Form 10-K.
TABLE OF CONTENTS
Glossary of Terms and Abbreviations
Forward-Looking Information
PART I:
Items 1. and 2. Business and Properties
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II:
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III:
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV:
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
Index to Financial Statements and Financial Statement Schedules
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F-2
1
GLOSSARY OF TERMS AND ABBREVIATIONS
Terms and abbreviations used in this Form 10-K are defined below:
UGI Corporation and Related Entities
AmeriGas Finance Corp. - A wholly owned subsidiary of AmeriGas Partners
AmeriGas OLP - AmeriGas Propane, L.P., the principal operating subsidiary of AmeriGas Partners
AmeriGas Partners - AmeriGas Partners, L.P., an indirect wholly owned subsidiary of UGI; also referred to, together with its
consolidated subsidiaries, as the “Partnership”
AmeriGas Propane - Reportable segment comprising AmeriGas Propane, Inc. and its subsidiaries, including AmeriGas
Partners and AmeriGas OLP
AmeriGas Propane, Inc. - A wholly owned second-tier subsidiary of UGI and the general partner of AmeriGas Partners; also
referred to as the “General Partner”
AvantiGas - AvantiGas Limited, an indirect wholly owned subsidiary of UGI International, LLC
Company - UGI and its consolidated subsidiaries collectively
DVEP - DVEP Investeringen B.V., an indirect wholly owned subsidiary of UGI International, LLC
Electric Utility - UGI Utilities’ regulated electric distribution utility
Energy Services - UGI Energy Services, LLC, a wholly owned subsidiary of Enterprises
Enterprises - UGI Enterprises, LLC, a wholly owned subsidiary of UGI
ESFC - Energy Services Funding Corporation, a wholly owned subsidiary of Energy Services
Flaga - Flaga GmbH, an indirect wholly owned subsidiary of UGI International, LLC
Gas Utility - UGI’s regulated natural gas businesses, inclusive of PA Gas Utility and WV Gas Utility
General Partner - AmeriGas Propane, Inc., the general partner of AmeriGas Partners
GHI - GHI Energy, LLC, a Houston-based renewable natural gas company and indirect wholly owned subsidiary of Energy
Services
MBL Bioenergy - MBL Bioenergy, LLC
Midstream & Marketing - Reportable segment comprising Energy Services and UGID
Mountaineer - Mountaineer Gas Company, a natural gas distribution company in West Virginia and a wholly owned subsidiary
of Mountaintop Energy Holdings, LLC
Mountaintop Energy Holdings, LLC - Parent company of Mountaineer and wholly owned subsidiary of UGI, acquired on
September 1, 2021
PA Gas Utility - UGI Utilities’ regulated natural gas distribution business, primarily located in Pennsylvania
Partnership - AmeriGas Partners and its consolidated subsidiaries, including AmeriGas OLP; also referred to as “AmeriGas
Partners”
Pennant - Pennant Midstream, LLC, an indirect wholly owned subsidiary of Energy Services
2
PennEast - PennEast Pipeline Company, LLC
Pine Run - Pine Run Gathering, LLC
Stonehenge - Stonehenge Appalachia, LLC, a midstream natural gas gathering business
UGI - UGI Corporation or, collectively, UGI Corporation and its consolidated subsidiaries
UGI Appalachia - UGI Appalachia, LLC, a wholly owned subsidiary of Energy Services
UGI France - UGI France SAS (a Société par actions simplifiée), an indirect wholly owned subsidiary of UGI International,
LLC
UGI International - Reportable segment principally comprising UGI’s foreign operations
UGI International, LLC - UGI International, LLC, a wholly owned subsidiary of Enterprises
UGI Moraine East - UGI Moraine East Gathering LLC, a wholly owned subsidiary comprising the assets acquired in the
Stonehenge Acquisition
UGI Pine Run, LLC - A wholly owned subsidiary of Energy Services that holds a 49% membership interest in Pine Run
Utilities - Reportable segment comprising UGI Utilities and Mountaintop Energy Holdings, LLC
UGI Utilities - UGI Utilities, Inc., a wholly owned subsidiary of UGI comprising PA Gas Utility and Electric Utility
UGID - UGI Development Company, a wholly owned subsidiary of Energy Services
UniverGas - UniverGas Italia S.r.l, an indirect wholly owned subsidiary of UGI International, LLC
WV Gas Utility - Mountaineer’s regulated natural gas distribution business, located in West Virginia
2013 OICP - UGI Corporation 2013 Omnibus Incentive Compensation Plan
Other Terms and Abbreviations
5.625% Senior Notes - An underwritten public offering of $675 million aggregate principal amount of notes due May 2024,
issued by AmeriGas Partners. Pursuant to the tender offer, dated May 22, 2023, AmeriGas Partners, in June 2023, redeemed all
outstanding 5.625% Senior Notes due May 2024 and in so doing was released from the obligations with respect to the indenture
for the 5.625% Senior Notes
9.375% Senior Notes - An underwritten private offering of $500 million aggregate principal amount of notes due May 2028,
co-issued by AmeriGas Partners and AmeriGas Finance Corp.
2021 IAP - UGI Corporation 2021 Incentive Award Plan
2022 AmeriGas OLP Credit Agreement - Entered into by AmeriGas OLP providing for borrowings of up to $600 million, with
the option to increase to a maximum principal amount of $900 million assuming certain conditions are met, including a letter of
credit subfacility of up to $100 million, scheduled to expire in September 2026. On November 15, 2023, the Company amended
the 2022 AmeriGas OLP Credit agreement reducing the revolver to $400 million
2024 Purchase Contract - A forward stock purchase contract issued by the Company as a part of the issuance of Equity Units
which obligates holders to purchase a number of shares of UGI Common Stock from the Company on June 1, 2024
ABO - Accumulated Benefit Obligation
ACE - AmeriGas Cylinder Exchange
3
AFUDC - Allowance for Funds Used During Construction
AmeriGas OLP Credit Agreement - The second amended and restated credit agreement entered into by AmeriGas OLP
providing for borrowings of up to $600 million, including a letter of credit subfacility of up to $150 million, was paid in full
and terminated concurrently with the execution of the 2022 AmeriGas OLP Credit Agreement
AOCI - Accumulated Other Comprehensive Income (Loss)
ASC - Accounting Standards Codification
ASC 606 - ASC 606, “Revenue from Contracts with Customers”
ASC 820 - ASC 820, “Fair Value Measurement”
ASC 980 - ASC 980, “Regulated Operations”
ASU - Accounting Standards Update
Bcf - Billions of cubic feet
Board of Directors - The board of directors of UGI
Btu - British thermal unit
CERCLA - Comprehensive Environmental Response, Compensation and Liability Act
CFTC - Commodity Futures Trading Commission
COA - Consent Order and Agreement
CODM - Chief Operating Decision Maker as defined in ASC 280, “Segment Reporting”
Common Stock - Shares of UGI common stock
Common Units - Limited partnership ownership interests in AmeriGas Partners
Convertible Preferred Stock - Preferred stock of UGI titled 0.125% series A cumulative perpetual convertible preferred stock
without par value and having a liquidation preference of $1,000 per share
Core market - Comprises (1) firm residential, commercial and industrial customers to whom Utilities has a statutory obligation
to provide service who purchase their natural gas or electricity from Utilities; and (2) residential, commercial and industrial
customers to whom Utilities has a statutory obligation to provide service who purchase their natural gas or electricity from
others
DOT - U.S. Department of Transportation
DSIC - Distribution System Improvement Charge
Energy Services Amended Term Loan Credit Agreement - The first amendment to the Energy Services Term Loan Credit
Agreement, entered into on February 23, 2023, comprising an $800 million variable-rate term loan with a final maturity of
February 2030
Energy Services Term Loan Credit Agreement - A seven-year $700 million variable rate senior secured term loan agreement
entered into on August 13, 2019 by Energy Services and amended on February 23, 2023
EPACT 2005 - Energy Policy Act of 2005
4
ERISA - Employee Retirement Income Security Act of 1974
ERO - Electric Reliability Organization
EU - European Union
Equity Unit Agreements - Collection of agreements governing the rights, privileges and obligations of the holders of the Equity
Units and UGI as issuer of the Equity Units, which were filed with the SEC on Form 8-K on May 25, 2021
Equity Unit - A corporate unit consisting of a 2024 Purchase Contract and 1/10th or 10% undivided interest in one share of
Convertible Preferred Stock
Exchange Act - Securities Exchange Act of 1934, as amended
FDIC - Federal Deposit Insurance Corporation
FERC - Federal Energy Regulatory Commission
FIFO - First-in, first-out inventory valuation method
Fiscal 2020 - The fiscal year ended September 30, 2020
Fiscal 2021 - The fiscal year ended September 30, 2021
Fiscal 2022 - The fiscal year ended September 30, 2022
Fiscal 2023 - The fiscal year ended September 30, 2023
Fiscal 2024 - The fiscal year ending September 30, 2024
Fiscal 2025 - The fiscal year ending September 30, 2025
Fiscal 2026 - The fiscal year ending September 30, 2026
Fiscal 2027 - The fiscal year ending September 30, 2027
Fiscal 2028 - The fiscal year ending September 30, 2028
GAAP - U.S. generally accepted accounting principles
GDPR - General Data Protection Regulation
GHG - Greenhouse gas
GILTI - Global Intangible Low Taxed Income
Gwh - Millions of kilowatt hours
Hunlock - Hunlock Creek Energy Center located near Wilkes-Barre, Pennsylvania, a 174-megawatt natural gas-fueled
electricity generating station
ICE - Intercontinental Exchange
IRC - Internal Revenue Code
IREP - Infrastructure Replacement and Expansion Plan
IRPA - Interest rate protection agreement
5
IRS - Internal Revenue Service
IT - Information technology
LIBOR - London Inter-bank Offered Rate
LNG - Liquefied natural gas
LPG - Liquefied petroleum gas
LTIIP - Long-term infrastructure improvement plans
MD&A - Management’s Discussion and Analysis of Financial Condition and Results of Operations
MDPSC - Maryland Public Service Commission
MGP - Manufactured gas plant
Mountaineer Acquisition - Acquisition of Mountaintop Energy Holdings LLC, which closed on September 1, 2021
Mountaineer 2023 Credit Agreement - Third amendment to the third amended and restated credit agreement entered into by
Mountaineer, as borrower, providing for borrowings up to $150 million, with the option to increase to a maximum principal
amount of $250 million assuming certain conditions are met, including a letter or credit subfacility of up to $20 million,
scheduled to expire in November 2024, with an option to extend the maturity date
NAV - Net asset value
NOAA - National Oceanic and Atmospheric Administration
NOL - Net operating loss
NPNS - Normal purchase and normal sale
NTSB - National Transportation Safety Board
NYDEC - New York State Department of Environmental Conservation
NYMEX - New York Mercantile Exchange
OSHA - Occupational Safety and Health Act
PADEP - Pennsylvania Department of Environmental Protection
PAPUC - Pennsylvania Public Utility Commission
Partnership Agreement - Fourth amended and restated agreement of Limited Partnership of AmeriGas Partners, L.P. dated as
of July 27, 2009, as amended
PBO - Projected benefit obligation
Pennant Acquisition - Energy Services’ Fiscal 2022 acquisition of the remaining 53% equity interest in Pennant
PennEnergy - PennEnergy Resources, LLC
PGA - Purchased gas adjustment
PGC - Purchased gas costs
PJM - PJM Interconnection, LLC
6
PRP - Potentially responsible party
PUHCA 2005 - Public Utility Holding Company Act of 2005
Receivables Facility - A receivables purchase facility of Energy Services with an issuer of receivables-backed commercial
paper
Retail core-market - Comprises firm residential, commercial and industrial customers to whom Utilities has a statutory
obligation to provide service that purchase their natural gas from Utilities
RNG - Renewable natural gas
ROU - Right-of-use
ROD - Record of Decision
SEC - U.S. Securities and Exchange Commission
Series B preferred stock - Preferred stock of UGI titled 0.125% series B cumulative perpetual preferred stock with terms
substantially identical to the Convertible Preferred Stock, except that it will not be convertible
Stonehenge - Stonehenge Energy Resources III, LLC, a portfolio company of Energy Spectrum Partners VIII, L.P.
Stonehenge Acquisition - Acquisition of Stonehenge Appalachia, LLC, which closed January 27, 2022
Stock Unit - Unit awards that entitle the grantee to shares of UGI Common Stock or cash subject to service conditions
TCJA - Tax Cuts and Jobs Act
Term SOFR - Secured Overnight Financing Rate
TSR - Total Shareholder Return
U.K. - United Kingdom
U.S. - United States of America
UGI comparator group - The Russell Midcap Utility Index, excluding telecommunications companies, and beginning in Fiscal
2021, a custom UGI performance peer group
UGI Corporation Credit Facility Agreement - An amended and restated unsecured senior credit facilities agreement entered
into by UGI Corporation on May 4, 2021 (the “2021 UGI Corporation Senior Credit Facility”), comprising (1) a $250 million
term loan facility maturing in August 2024, (2) a $300 million term loan facility maturing in May 2025, (3) a $300 million
delayed draw term loan facility maturing in May 2025, and (4) a $300 million revolving credit facility maturing in August 2024
(including a $10 million sublimit for letters of credit). On May 12, 2023, the Company entered into the second amendment to
the UGI Corporation Credit Agreement to replace the reference rate from LIBOR with Term SOFR. On September 20, 2023,
the Company entered into the third amendment that, among other things, extended the maturity date of (1) the $250 million
term loan facility and (2) the $300 million revolving credit facility to May 2025.
UGI Energy Services Credit Agreement - A five-year senior secured revolving credit agreement entered into by Energy
Services on March 6, 2020, providing for borrowings up to $260 million, including a letter of credit subfacility of up to $50
million, scheduled to expire in March 2025. On May 12, 2023, Energy Services entered into the second amendment to the UGI
Energy Services Credit Agreement to replace the reference rate from LIBOR with Term SOFR.
UGI International 2023 Credit Facilities Agreement - A five-year unsecured senior facilities agreement entered into in March
2023 comprising a €300 million variable-rate term loan facility and a €500 million multicurrency revolving credit facility
scheduled to expire in March 2028.
7
UGI International 3.25% Senior Notes - An underwritten private placement of €350 million principal amount of senior
unsecured notes originally due November 1, 2025, issued by UGI International, LLC. The UGI International 3.25% Senior
Notes were repaid in December 2021.
UGI International Credit Facilities Agreement - A five-year unsecured senior facilities agreement entered into in October
2018, by UGI International, LLC comprising a €300 million term loan facility and a €300 million revolving credit facility,
scheduled to expire in October 2023, repaid in full and terminated concurrently with the execution of the UGI International
2023 Credit Facilities Agreement.
UGI Performance Units - Unit awards that entitle the grantee to shares of UGI Common Stock or cash subject to service and
market performance conditions
UGI Utilities 2023 Credit Agreement - An unsecured revolving credit agreement entered into by UGI Utilities on November 9,
2023, providing for borrowings up to $375 million, including a letter of credit subfacility of up to $50 million and a $38 million
sublimit for swingline loans, set to mature November 2024, including an automatic extension to November 9, 2028 upon receipt
of authorization from the PAPUC
UGI Utilities Credit Agreement - A five-year unsecured revolving credit agreement entered into by UGI Utilities on June 27,
2019, providing for borrowings up to $350 million, including a letter of credit subfacility of up to $100 million, scheduled to
expire in June 2024. On December 13, 2022, UGI Utilities entered into an amendment to UGI Utilities Credit Agreement,
providing for borrowings up to $425 million and to replace the reference rate from LIBOR with Term SOFR, repaid in full and
terminated concurrently with the execution of the UGI Utilities 2023 Credit Agreement
USD - U.S. dollar
U.S. Pension Plans - Consists of (1) a defined benefit pension plan for employees hired prior to January 1, 2009 of UGI, UGI
Utilities and certain of UGI’s other domestic wholly owned subsidiaries; and (2) a defined benefit pension plan for employees
of Mountaineer hired prior to January 1, 2023.
VEBA - Voluntary Employees’ Beneficiary Association
WVPSC - Public Service Commission of West Virginia
8
FORWARD-LOOKING INFORMATION
Information contained in this Annual Report on Form 10-K contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements use forward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,” “expect,” “may,” or other
similar words and terms of similar meaning, although not all forward-looking statements contain such words. These statements
discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future. All forward-
looking statements made in this Report rely upon the safe harbor protections provided under the Private Securities Litigation
Reform Act of 1995.
A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.
We believe that we have chosen these assumptions or bases in good faith and that they are reasonable. However, we caution
you against relying on any forward-looking statement as these statements are subject to risks and uncertainties that may cause
actual results to vary from assumed facts or bases, and the differences between actual results and assumed facts or bases can be
material, depending on the circumstances. When considering forward-looking statements, you should keep in mind our Risk
Factors included in Item 1A herein and the following important factors that could affect our future results and could cause those
results to differ materially from those expressed in our forward-looking statements: (1) weather conditions, including
increasingly uncertain weather patterns due to climate change, resulting in reduced demand, the seasonal nature of our business,
and disruptions in our operations and supply chain; (2) cost volatility and availability of energy products, including propane and
other LPG, electricity, and natural gas, as well as the availability of LPG cylinders, and the capacity to transport product to our
customers; (3) changes in domestic and foreign laws and regulations, including safety, health, tax, transportation, consumer
protection, data privacy, accounting, and environmental matters, such as regulatory responses to climate change; (4) inability to
timely recover costs through utility rate proceedings; (5) the impact of pending and future legal or regulatory proceedings,
inquiries or investigations; (6) competitive pressures from the same and alternative energy sources; (7) failure to acquire new
customers or retain current customers thereby reducing or limiting any increase in revenues; (8) liability for environmental
claims; (9) increased customer conservation measures due to high energy prices and improvements in energy efficiency and
technology resulting in reduced demand; (10) adverse labor relations and our ability to address existing or potential workforce
shortages; (11) customer, counterparty, supplier, or vendor defaults; (12) liability for uninsured claims and for claims in excess
of insurance coverage, including those for personal injury and property damage arising from explosions, acts of war, terrorism,
natural disasters, pandemics, and other catastrophic events that may result from operating hazards and risks incidental to
generating and distributing electricity and transporting, storing and distributing natural gas and LPG in all forms; (13)
transmission or distribution system service interruptions; (14) political, regulatory and economic conditions in the United
States, Europe and other foreign countries, including uncertainties related to the war between Russia and Ukraine, the conflict
in the Middle East, the European energy crisis, and foreign currency exchange rate fluctuations, particularly the euro; (15)
credit and capital market conditions, including reduced access to capital markets and interest rate fluctuations; (16) changes in
commodity market prices resulting in significantly higher cash collateral requirements; (17) impacts of our indebtedness and the
restrictive covenants in our debt agreements; (18) reduced distributions from subsidiaries impacting the ability to pay dividends
or service debt; (19) changes in Marcellus and Utica Shale gas production; (20) the success of our strategic initiatives and
investments that are intended to advance our business strategy; (21) our ability to successfully integrate acquired businesses and
achieve anticipated synergies; (22) the interruption, disruption, failure, malfunction, or breach of our information technology
systems, and those of our third-party vendors or service providers, including due to cyber attack; (23) the inability to complete
pending or future energy infrastructure projects; (24) our ability to attract, develop, retain and engage key employees; (25)
uncertainties related to global pandemics; (26) the impact of a material impairment of our assets; (27) the impact of proposed or
future tax legislation; (28) the impact of declines in the stock market or bond market, and a low interest rate environment, on
our pension liability; (29) our ability to protect our intellectual property; (30) our ability to overcome supply chain issues that
may result in delays or shortages in, as well as increased costs of, equipment, materials or other resources that are critical to our
business operations; and (31) our ability to control operating costs and realize cost savings.
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those
expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse
effects on future results. Any forward-looking statement speaks only as of the date on which such statement is made. We
undertake no obligation (and expressly disclaim any obligation) to update publicly any forward-looking statement whether as a
result of new information or future events except as required by the federal securities laws.
PART I:
ITEMS 1. AND 2. BUSINESS AND PROPERTIES
CORPORATE OVERVIEW
UGI Corporation is a holding company that, through subsidiaries and affiliates, distributes, stores, transports and markets
energy products and related services. In the U.S., we own and operate (1) a retail propane marketing and distribution business,
(2) natural gas and electric distribution utilities, and (3) energy marketing (including RNG), midstream infrastructure, storage,
natural gas gathering and processing, natural gas production, electricity generation and energy services businesses. In Europe,
9
we market and distribute propane and other LPG, and market other energy products and services. Our subsidiaries and affiliates
operate principally in the following four business segments:
• AmeriGas Propane
• UGI International
• Midstream & Marketing
• Utilities
The AmeriGas Propane segment consists of the propane distribution business of AmeriGas Partners, an indirect wholly owned
subsidiary of UGI. The Partnership conducts its domestic propane distribution business through its principal operating
subsidiary, AmeriGas OLP, and is the nation’s largest retail propane distributor based on the volume of propane gallons
distributed annually. The general partner of AmeriGas Partners is our wholly owned subsidiary, AmeriGas Propane, Inc.
The UGI International segment consists of LPG distribution businesses conducted by our subsidiaries and affiliates in Austria,
Belgium, the Czech Republic, Denmark, Finland, France, Hungary, Italy, Luxembourg, the Netherlands, Norway, Poland,
Romania, Slovakia, Sweden, Switzerland and the United Kingdom. Based on reported market volumes for 2022, which is the
most recent information available, UGI International believes that it is the largest distributor of LPG in France, Austria,
Belgium, Denmark and Luxembourg and one of the largest distributors of LPG in Norway, Poland, the Czech Republic,
Slovakia, the Netherlands, Sweden and Switzerland. During Fiscal 2023, we made significant progress on our strategic
decision to exit the energy marketing business at UGI International. In Fiscal 2023, we divested of our energy marketing
business in the United Kingdom and Belgium. On October 1, 2023, we divested substantially all of our energy marketing
business in France. We also continue to make significant progress on the wind-down of our energy marketing business in the
Netherlands. See Note 5 for additional information regarding the UGI International energy marketing businesses.
The Midstream & Marketing segment consists of energy-related businesses conducted by our indirect, wholly owned
subsidiary, Energy Services. These businesses (i) conduct energy marketing, including RNG, in the Mid-Atlantic region of the
United States and California, (ii) own and operate natural gas liquefaction, storage and vaporization facilities and propane-air
mixing assets, (iii) manage natural gas pipeline and storage contracts, (iv) develop, own and operate pipelines, gathering
infrastructure and gas storage facilities in the Marcellus and Utica Shale regions of Pennsylvania, eastern Ohio, and the
panhandle of West Virginia, (v) own electricity generation facilities, and (vi) develop, own and operate RNG production
facilities. Energy Services and its subsidiaries’ storage, LNG and portions of its midstream transmission operations are subject
to regulation by the FERC.
The Utilities segment consists of the regulated natural gas (PA Gas Utility) and electric (Electric Utility) distribution businesses
of our wholly owned subsidiary, UGI Utilities, and the regulated natural gas distribution business of our indirect, wholly owned
subsidiary, Mountaineer. PA Gas Utility serves customers in eastern and central Pennsylvania and in portions of one Maryland
county, and Mountaineer serves customers in West Virginia. Electric Utility serves customers in portions of Luzerne and
Wyoming counties in northeastern Pennsylvania. PA Gas Utility is subject to regulation by the PAPUC and FERC and, with
respect to its customers in Maryland, the MDPSC. Mountaineer is subject to regulation by the WVPSC and FERC. Electric
Utility is subject to regulation by the PAPUC and FERC.
Business Strategy
Our business strategy is to grow the Company by focusing on our core competencies of distributing, storing, transporting and
marketing energy products and services. We utilize our core competencies from our existing diversified businesses and our
international experience, extensive asset base and access to customers to accelerate both organic growth and growth through
acquisitions in our existing businesses, as well as in related and complementary businesses.
In August 2023, the Company announced the commencement of a strategic review with a focus on our LPG businesses to
unlock and maximize shareholder value. See Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations for additional information. We continue to focus on advancing our strategy of: (1) providing reliable
earnings growth; (2) rebalancing our portfolio, with an emphasis on natural gas and renewable energy solutions; and (3)
investing in renewable energy solutions. The following discussion highlights some of our key accomplishments in these areas
during Fiscal 2023.
Reliable Earnings Growth
We are committed to consistently growing our earnings and plan to continue this growth through robust investments in our
regulated utilities businesses, generating significant fee-based income in our Midstream and Marketing operations, optimizing
our cost structure and effectively managing our global LPG businesses, which generate significant free cash flow. We strive to
10
be the preferred provider in all markets we serve and remain focused on making continuous improvements and focusing on
growth across our businesses.
At our Utilities segment, we continue to deliver attractive earnings growth through capital investments and customer additions,
while taking actions to reduce earnings volatility. In Fiscal 2023, PA Gas Utility connected more than 1,460 new commercial
and industrial customers and added more than 11,100 residential heating customers. Beginning on November 1, 2022, PA Gas
Utility was authorized to implement a weather normalization adjustment rider as a five-year pilot program which we expect to
result in reduced earnings volatility and stabilize our customers’ distribution charges. In September 2023, our Electric Utility
received PAPUC approval for an $8.5 million annual base distribution rate increase beginning in October 2023. On October 6,
2023, Mountaineer filed a joint stipulation and agreement for settlement of the base rate case proceeding that Mountaineer had
initiated in March of 2023 with the WVPSC. The settlement is subject to approval by the WVPSC and is expected to result in a
net revenue increase of approximately $13.9 million and an overall increase in total revenues of 4.16% for Mountaineer. See
Note 9 to Consolidated Financial Statements for additional information.
Our Midstream and Marketing business continues to provide stable earnings, which is underpinned by fee-based contracts from
customers. This fee-based income is derived from fixed-fee peaking, storage and gathering, and fixed rate, variable volume
gathering and marketing transactions. In Fiscal 2023, over 85% of Midstream and Marketing’s total margin was fee-based. In
addition, Midstream and Marketing continued expanding in the renewable energy space, which we believe will contribute to
our future earnings growth. For more information on these transactions, see “Investment in Renewable Energy” below.
During Fiscal 2023, we made technology and other investments to promote the safety of our employees and the communities
we serve. For example, we continued (i) installing cameras in our delivery and service vehicles to facilitate in-cab coaching
capabilities, among other functionality, and (ii) installing fall protection towers on rail terminals that are designed to prevent
employees from falling during the process of offloading propane into bulk storage.
During Fiscal 2023, we made significant progress on our strategic decision to exit the energy marketing business at UGI
International. We divested of our energy marketing businesses in the United Kingdom and Belgium during Fiscal 2023 and
divested substantially all of our energy marketing business in France on October 1, 2023. In addition, we continue to make
progress on the wind-down of our energy marketing business in the Netherlands.
Rebalancing Our Portfolio
We are committed to rebalancing our portfolio through both organic growth and investment in natural gas and renewable
energy solutions.
In Fiscal 2023, we executed our rebalancing strategy by prioritizing our capital investment in the natural gas businesses. At the
Utilities, we continued to execute our infrastructure replacement and system betterment program, with record capital
expenditures in Fiscal 2023 and additional expenditures expected in the coming years. Our PA Gas Utility remains on schedule
to achieve its goal of replacing the cast iron portions of its gas mains by March 2027 and the bare steel portion of its gas mains
by September 2041. We believe that the replacement of aging infrastructure results in increased contributions to rate base
growth and also reduces emissions while improving operational efficiency and distribution system integrity.
Investment in Renewable Energy
We are pursuing investments in several renewable energy areas, including RNG, bio-LPG and renewable dimethyl ether. Our
natural gas businesses are exploring RNG opportunities involving both distribution and RNG feedstock infrastructure, and our
LPG businesses are developing bio-LPG sources to augment our existing bio-LPG source in Sweden. We believe that UGI is
well-positioned to develop investment opportunities in these emerging markets due to our competencies in project development,
project execution, gas transportation and storage, and energy marketing.
We expect to utilize our existing natural gas and LPG distribution infrastructure to deliver RNG and bio-LPG to the customers
we serve. In most cases, these renewable solutions can be delivered to our customers with no additional local infrastructure,
incremental investments by our customers, or community disruption related to infrastructure buildout.
In Fiscal 2023, we completed the following transactions:
•
•
In November 2022, Energy Services announced a project that will modify an existing anaerobic biogas facility to
generate RNG. The project is expected to be completed in the second half of 2024 and, once completed, is expected to
produce approximately 35 million cubic feet of RNG annually.
In January 2023, Energy Services announced that it entered into an agreement to invest $150 million in two RNG
projects currently under development in South Dakota. One project is expected to generate approximately 300 million
cubic feet of RNG annually once completed in calendar year 2024 and the other project is expected to generate
approximately 225 million cubic feet of RNG annually once completed in calendar year 2024.
11
•
In February 2023, Energy Services entered into a joint venture to develop an RNG project at the Commonwealth
Environmental Systems landfill in Pennsylvania. Once complete, the project is expected to have the capacity to
produce approximately 5,000 MMBtu per day of pipeline-quality RNG.
These projects provide a range of benefits, including reducing our carbon footprint while also addressing increased customer
demand for low carbon energy sources.
Environmental Strategy
We believe that corporate sustainability is critical to our overall business success and we are committed to growing the
Company in an environmentally responsible way. UGI’s environmental strategy is focused on three main areas: reducing our
emissions; reducing our customers’ emissions affordably, reliably, and responsibly; and investing in renewable solutions. To
support our strategy, we have made the following environmental commitments discussed below while also committing to
continue to grow our earnings per share and dividends.
•
Scope 1 Emissions Reduction Commitment – Reduce Scope 1 GHG emissions by 55% by 2025 (using Fiscal 2020 as
a baseline). Our Scope 1 emissions reduction target does not include emissions from the Mountaineer Acquisition,
which closed in September 2021. The target also excluded the Stonehenge Acquisition and only accounts for our
ownership interest in Pennant at the time we set the target. The emissions from the Pine Run acquisition were included
in the baseline 2020 number as this investment contributed to our goal. The 2020 base number also takes a five year
emissions average from the Hunlock generation facility to account for year-over-year differences in run time.
• Methane Emissions Reduction Commitment – 92% reduction by 2030, and 95% reduction by 2040.
•
Pipeline Replacement and Betterment Commitment – Replace all cast iron pipelines by 2027 and all bare steel by
2041. Our pipeline replacement and betterment activities better enable us to achieve our emissions reductions goals.
We report our progress on the environmental goals and commitments annually in our Sustainability Reports, including our
Scope 1, 2 and 3 emissions, air quality impact, and water management efforts. Our Scope 3 emissions stem primarily from the
extraction (upstream) and combustion (downstream) of the molecules we distribute, and from our supply chain. Our
Sustainability Reports may be accessed on our website under “ESG - Resources - Sustainability Reports.” Information
published in our Sustainability Reports is not incorporated by reference in this Report.
In formulating our environmental strategy, our management and Board of Directors consider certain risks and uncertainties that
may materially impact our financial condition and results of operations. For more information on these risks and uncertainties,
see “Risk Factors - The potential effects of climate change may affect our business, operations, supply chain and customers,
which could adversely impact our financial condition and results of operations.”
Corporate Information
UGI was incorporated in Pennsylvania in 1991. The Company is not subject to regulation by the PAPUC but, following
completion of the Mountaineer Acquisition, is a regulated “holding company” under PUHCA 2005. PUHCA 2005 and the
implementing regulations of FERC give FERC access to certain holding company books and records and impose certain
accounting, record-keeping, and reporting requirements on holding companies. PUHCA 2005 also provides state utility
regulatory commissions with access to holding company books and records in certain circumstances.
Our executive offices are located at 500 North Gulph Road, King of Prussia, Pennsylvania 19406, and our telephone number is
(610) 337-1000. In this Report, the terms “Company” and “UGI,” as well as the terms “our,” “we,” “us,” and “its” are
sometimes used as abbreviated references to UGI Corporation or, collectively, UGI Corporation and its consolidated
subsidiaries. For further information on the meaning of certain terms used in this Report, see “Glossary of Terms and
Abbreviations.”
The Company’s corporate website can be found at www.ugicorp.com. Information on our website, including the information
published in our Sustainability Reports, is not incorporated by reference in this Report. The Company makes available free of
charge at this website (under the “Investors - Financial Reports - SEC Filings and Proxies” caption) copies of its reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, including its Annual Reports on Form 10-K, its Quarterly
Reports on Form 10-Q, and its Current Reports on Form 8-K. The Company’s Principles of Corporate Governance, Code of
Business Conduct and Ethics, and Supplier Code of Business Conduct and Ethics are available on the Company’s website under
the caption “Company - Leadership and Governance - Governance Documents.” The charters of the Audit, Corporate
Governance, Compensation and Management Development, and Safety, Environmental and Regulatory Compliance
Committees of the Board of Directors are available on the Company’s website under the caption “Company - Leadership and
Governance - Committees & Charters.” All of these documents are also available free of charge by writing to Director,
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Investor Relations, UGI Corporation, P.O. Box 858, Valley Forge, PA 19482.
Products, Services and Marketing
AMERIGAS PROPANE
Our domestic propane distribution business is conducted through AmeriGas Propane. AmeriGas Propane serves nearly 1.2
million customers in all 50 states from approximately 1,380 propane distribution locations. Typically, propane distribution
locations are in suburban and rural areas where natural gas is not readily available. Our local offices generally consist of
operations facilities and propane storage. As part of its overall transportation and distribution infrastructure, AmeriGas Propane
operates as an interstate carrier in all states throughout the continental U.S.
AmeriGas Propane sells propane primarily to residential, commercial/industrial, motor fuel, agricultural and wholesale
customers. AmeriGas Propane distributed approximately 940 million gallons of propane in Fiscal 2023. Approximately 88%
of AmeriGas Propane’s Fiscal 2023 sales (based on gallons sold) was to retail accounts and approximately 12% was to
wholesale accounts. Sales to residential customers in Fiscal 2023 represented approximately 30% of retail gallons sold;
commercial/industrial customers 41%; motor fuel customers 21%; and agricultural customers 3%. Transport gallons, which are
large-scale deliveries to retail customers other than residential, accounted for approximately 5% of Fiscal 2023 retail gallons.
With the exception of one customer representing 5.1% of AmeriGas Propane’s consolidated revenues, no other single customer
represents more than 5% of AmeriGas Propane’s consolidated revenues.
The ACE program continued to be an important element of AmeriGas Propane’s business in Fiscal 2023. At September 30,
2023, ACE cylinders were available at over 48,000 retail locations throughout the U.S. Sales of our ACE cylinders to retailers
are included in commercial/industrial sales. The ACE program enables consumers to purchase or exchange propane cylinders
at various retail locations such as home centers, gas stations, mass merchandisers and grocery and convenience stores. In
addition, our Cynch propane home delivery service was available in 24 cities as of September 30, 2023. We also supply
retailers with large propane tanks to enable them to replenish customers’ propane cylinders directly at the retailers’ locations.
Residential and commercial customers use propane primarily for home heating, water heating and cooking purposes.
Commercial users include hotels, restaurants, churches, warehouses and retail stores. Industrial customers use propane to fire
furnaces, as a cutting gas and in other process applications. Other industrial customers are large-scale heating accounts and
local gas utility customers that use propane as a supplemental fuel to meet peak load deliverability requirements. As a motor
fuel, propane is burned in internal combustion engines that power school buses and other over-the-road vehicles, forklifts and
stationary engines. Agricultural uses include tobacco curing, chicken brooding, crop drying and orchard heating. In its
wholesale operations, AmeriGas Propane principally sells propane to large industrial end-users and other propane distributors.
Retail deliveries of propane are usually made to customers by means of bobtail and rack trucks. Propane is pumped from the
bobtail truck, which generally holds 2,400 to 3,000 gallons of propane, into a stationary storage tank on the customer’s
premises. AmeriGas Propane owns most of these storage tanks and leases them to its customers. The capacity of these tanks
ranges from approximately 120 gallons to approximately 1,200 gallons. AmeriGas Propane also delivers propane in portable
cylinders, including ACE and motor fuel cylinders. Some of these deliveries are made to the customer’s location where
cylinders are either picked up or replenished in place.
During Fiscal 2023, we made technology and other investments to promote the safety of our employees and the communities
we serve. For example, we continued (i) installing cameras in our delivery and service vehicles to facilitate in-cab coaching
capabilities, among other functionality, and (ii) installing fall protection towers on rail terminals that are designed to prevent
employees from falling during the process of offloading propane into bulk storage.
Propane Supply and Storage
The U.S. propane market has approximately 190 domestic and international sources of supply, including the spot market.
Supplies of propane from AmeriGas Propane’s sources historically have been readily available. In recent years, certain
geographies experienced varying levels of reduced propane availability as a result of transportation issues within the supply
chain. In response to these supply and transportation challenges, AmeriGas Propane utilized a combination of increased
regional storage as well as rail and transport supply from different origins to offset localized supply/demand imbalances.
In addition to these factors, the availability and pricing of propane supply has historically been dependent upon, among other
things, the severity of winter weather, the price and availability of competing fuels such as natural gas and crude oil, and the
13
amount and availability of exported supply and, to a much lesser extent, imported supply. For more information on risks
relating to our supply chain, see “Risk Factors - Risks Relating to Our Supply Chain and Our Ability to Obtain Adequate
Quantities of LPG.”
During Fiscal 2023, approximately 97% of AmeriGas Propane’s propane supply was purchased under supply agreements with
terms of one to three years. Although no assurance can be given that supplies of propane will be readily available in the future,
management currently expects to be able to secure adequate supplies during Fiscal 2024. If supply from major sources were
interrupted, however, the cost of procuring replacement supplies and transporting those supplies from alternative locations
might be materially higher and, at least on a short-term basis, margins could be adversely affected. In Fiscal 2023, AmeriGas
Propane derived approximately 14% of its propane supply from Enterprise Products Operating LLC and approximately 11% of
its propane supply from Targa Liquids Marketing and Trade LLC. No other single supplier provided more than 10% of
AmeriGas Propane’s total propane supply in Fiscal 2023. In certain geographic areas, however, a single supplier provides more
than 50% of AmeriGas Propane’s requirements. Disruptions in supply in these areas could also have an adverse impact on
AmeriGas Propane’s margins.
AmeriGas Propane’s supply contracts typically provide for pricing based upon (i) index formulas using the current prices
established at a major storage point such as Mont Belvieu, Texas, or Conway, Kansas, or (ii) posted prices at the time of
delivery. In addition, some agreements provide maximum and minimum seasonal purchase volume guidelines. The percentage
of contract purchases, and the amount of supply contracted for at fixed prices, will vary from year to year. AmeriGas Propane
uses a number of interstate pipelines, as well as railroad tank cars, delivery trucks and barges, to transport propane from
suppliers to storage and distribution facilities. AmeriGas Propane stores propane at various storage facilities and terminals
located in strategic areas across the U.S.
Because AmeriGas Propane’s profitability is sensitive to changes in wholesale propane costs, AmeriGas Propane generally
seeks to pass on increases in the cost of propane to customers. There is no assurance, however, that AmeriGas Propane will
always be able to pass on product cost increases fully, or keep pace with such increases, particularly when product costs rise
rapidly. Product cost increases can be triggered by periods of severe cold weather, supply interruptions, increases in the prices
of base commodities, such as crude oil and natural gas, or other unforeseen events. AmeriGas Propane has supply acquisition
and product cost risk management practices to reduce the effect of volatility on selling prices. These practices currently include
the use of summer storage, forward purchases and derivative commodity instruments, such as propane price swaps. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Disclosures.”
The following graph shows the average prices of propane on the propane spot market during the last five fiscal years at Mont
Belvieu, Texas, and Conway, Kansas, both major storage areas.
Average Propane Spot Market Prices
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General Industry Information
Propane is separated from crude oil during the refining process and also extracted from natural gas or oil wellhead gas at
processing plants. Propane is normally transported and stored in a liquid state under moderate pressure or refrigeration for
economy and ease of handling in shipping and distribution. When the pressure is released or the temperature is increased, it is
usable as a flammable gas. Propane is colorless and odorless; an odorant is added to allow for its detection. Propane is
considered a clean alternative fuel under the Clean Air Act Amendments of 1990.
Competition
Propane competes with other sources of energy, some of which are less costly for equivalent energy value. Propane distributors
compete for customers with suppliers of electricity, fuel oil and natural gas, principally on the basis of price, service,
availability and portability. Electricity is generally more expensive than propane on a Btu equivalent basis, but the convenience
and efficiency of electricity make it an attractive energy source for consumers and developers of new homes. Fuel oil, which is
also a major competitor of propane, is a less environmentally attractive energy source. Furnaces and appliances that burn
propane will not operate on fuel oil, and vice versa, and, therefore, a conversion from one fuel to the other requires the
installation of new equipment. Propane serves as an alternative to natural gas in rural and suburban areas where natural gas is
unavailable or portability of product is required. Natural gas is generally a significantly less expensive source of energy than
propane, although in areas where natural gas is available, propane is used for certain industrial and commercial applications and
as a standby fuel during interruptions in natural gas service. The gradual expansion of the nation’s natural gas distribution
systems has resulted in the availability of natural gas in some areas that previously depended upon propane. However, natural
gas pipelines are not present in many areas of the country where propane is sold for heating and cooking purposes.
For motor fuel customers, propane competes with gasoline, diesel fuel, electric batteries, fuel cells and, in certain applications,
LNG and compressed natural gas. Wholesale propane distribution is a highly competitive, low margin business. Propane sales
to other retail distributors and large-volume, direct-shipment industrial end-users are price sensitive and frequently involve a
competitive bidding process.
Retail propane industry volumes have been flat for several years and no or modest growth in total demand is foreseen in the
next several years. Therefore, AmeriGas Propane’s ability to grow within the industry is dependent on the success of its sales
and marketing programs designed to attract and retain customers, the success of business transformation initiatives, its ability to
achieve internal growth, which includes the continuation of ACE, Cynch and National Accounts (through which multi-location
propane users enter into a single AmeriGas Propane supply agreement rather than agreements with multiple suppliers), and its
ability to acquire other retail distributors. The failure of AmeriGas Propane to retain and grow its customer base would have an
adverse effect on its long-term results.
The domestic propane retail distribution business is highly competitive. AmeriGas Propane competes in this business with
other large propane marketers, including other full-service marketers, and thousands of small independent operators. Some
farm cooperatives, rural electric cooperatives and fuel oil distributors include propane distribution in their businesses and
AmeriGas Propane competes with them as well. The ability to compete effectively depends on providing high quality customer
service, maintaining competitive retail prices and controlling operating expenses. AmeriGas Propane also offers customers
various payment and service options, including guaranteed price programs, fixed price arrangements and pricing arrangements
based on published propane prices at specified terminals.
In Fiscal 2023, AmeriGas Propane’s retail propane sales totaled approximately 820 million gallons. Based on the most recent
annual survey by the Propane Education & Research Council, 2022 domestic retail propane sales (annual sales for other than
chemical uses) in the U.S. totaled approximately 9.8 billion gallons. Based on LP-GAS magazine rankings, 2022 sales volume
of the ten largest propane distribution companies (including AmeriGas Propane) represented approximately 32% of domestic
retail propane sales.
Properties
As of September 30, 2023, AmeriGas Propane owned approximately 87% of its nearly 525 local offices throughout the country.
The transportation of propane requires specialized equipment. The trucks and railroad tank cars utilized for this purpose carry
specialized steel tanks that maintain the propane in a liquefied state. As of September 30, 2023, the Partnership operated a
transportation fleet with the following assets:
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Approximate Quantity & Equipment Type
850
320
650
2,460
285
2,910
Trailers
Tractors
Railroad tank cars
Bobtail trucks
Rack trucks
Service and delivery trucks
% Owned
66%
1%
0%
4%
9%
11%
% Leased
34%
99%
100%
96%
91%
89%
Other assets owned at September 30, 2023 included approximately 909,000 stationary storage tanks with typical capacities of
more than 120 gallons, approximately 4.7 million portable propane cylinders with typical capacities of 1 to 120 gallons, 21
terminals and 11 transflow units.
Trade Names, Trade and Service Marks
AmeriGas Propane markets propane and other services principally under the “AmeriGas®,” “America’s Propane Company®,”
and “Cynch®” trade names and related service marks. AmeriGas Propane owns, directly or indirectly, all the right, title and
interest in the “AmeriGas” name and related trade and service marks. AmeriGas Polska Sp. z.o.o. has an exclusive, royalty-free
license from AmeriGas Propane to use the “AmeriGas®” name and related service marks in Poland and Germany and with
respect thereto on the Internet. The term of the license is in perpetuity.
Seasonality
Because many customers use propane for heating purposes, AmeriGas Propane’s retail sales volume is seasonal. During Fiscal
2023, approximately 63% of the Partnership’s retail sales volume occurred, and substantially all of AmeriGas Propane’s
operating income was earned, during the peak heating season from October through March. As a result of this seasonality,
revenues are typically higher in AmeriGas Propane’s first and second fiscal quarters (October 1 through March 31). Cash
receipts are generally greatest during the second and third fiscal quarters when customers pay for propane purchased during the
winter heating season. For more information on the risks associated with the seasonality of our business, see “Risk Factors -
Our business is seasonal and decreases in the demand for our energy products and services because of warmer-than-normal
heating season weather or unfavorable weather conditions may adversely affect our results of operations.”
Sales volume for AmeriGas Propane traditionally fluctuates from year-to-year in response to variations in weather, prices,
competition, customer mix and other factors, such as conservation efforts and general economic conditions. For information on
national weather statistics, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Government Regulation
AmeriGas Propane is subject to various federal, state and local environmental, health, data privacy, safety and transportation
laws and regulations governing the storage, distribution and transportation of propane and the operation of bulk storage propane
terminals.
Environmental
Generally, applicable environmental laws impose limitations on the discharge of pollutants, establish standards for the handling
of solid and hazardous substances, and require the investigation and cleanup of environmental contamination. These laws
include, among others, the Resource Conservation and Recovery Act, CERCLA, the Clean Air Act, the Clean Water Act, the
Homeland Security Act of 2002, the Emergency Planning and Community Right-to-Know Act, comparable state statutes and
any applicable amendments. The Partnership incurs expenses associated with compliance with its obligations under federal and
state environmental laws and regulations, and we believe that the Partnership is in material compliance with its obligations. The
Partnership maintains various permits that are necessary to operate its facilities, some of which may be material to its
operations. AmeriGas Propane continually monitors its operations with respect to potential environmental issues, including
changes in legal requirements.
AmeriGas Propane is investigating and remediating contamination at a number of present and former operating sites in the
U.S., including sites where its predecessor entities operated MGPs. CERCLA and similar state laws impose joint and several
liability on certain classes of persons considered to have contributed to the release or threatened release of a “hazardous
substance” into the environment without regard to fault or the legality of the original conduct. Propane is not a hazardous
substance within the meaning of CERCLA.
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Health and Safety
AmeriGas Propane is subject to the requirements of OSHA and comparable state laws that regulate the protection of the health
and safety of our workers. These laws require the Partnership, among other things, to maintain information about materials
utilized, stored, transported, or sold, in accordance with OSHA’s Hazard Communications Standard. Certain portions of this
information must be provided to employees, federal and state and local governmental authorities, emergency responders,
commercial and industrial customers and local citizens in accordance with the Environmental Protection Agency’s Emergency
Planning and Community Right-to-Know Act requirements.
All states in which AmeriGas Propane operates have adopted fire and life safety codes that regulate the storage, distribution,
and use of propane. In some states, these laws are administered by state agencies, and in others they are administered on a
municipal level. AmeriGas Propane conducts training programs to help ensure that its operations comply with applicable
governmental regulations. With respect to general operations, AmeriGas Propane is subject in all jurisdictions in which it
operates to rules and procedures governing the safe handling of propane, including those established by National Fire Protection
Association (“NFPA”) in the Liquefied Petroleum Gas Code (NFPA 58) and National Fuel Gas Code (NFPA 54), the
International Code Council’s International Fuel Gas Code and International Fire Code, as well as various state and local codes.
Management believes that the policies and procedures currently in effect at all of its facilities for the handling, storage,
distribution and use of propane are consistent with industry standards and are in compliance, in all material respects, with
applicable laws and regulations.
With respect to the transportation of propane, AmeriGas Propane is subject to regulations promulgated under federal legislation,
including the Federal Motor Carrier Safety Regulations and Pipeline Hazardous Materials Regulations which fall under the
enforcement and supervision of the DOT, Pipeline Hazardous Materials Safety Administration, Federal Railroad
Administration, Federal Motor Carrier Safety Administration, and the Federal Aviation Administration. AmeriGas Propane
facilities and containers are equally regulated by these agencies regarding security standards as well as the Cybersecurity and
Infrastructure Security Agency’s Chemical Facility Anti-Terrorism Standards. AmeriGas Propane’s programs related to the
transportation and security of hazardous materials are regularly inspected and meet all applicable standards and regulations.
AmeriGas Propane maintains jurisdictional pipeline systems as defined by the Transportation of Natural and Other Gas by
Pipeline: Minimum Federal Safety Standards as regulated by the Pipeline Hazardous Materials Safety Administration and
multiple State Public Utility Commissions under the authority and authorization of the Pipeline Hazardous Materials Safety
Administration. These pipeline safety regulations apply to, among other things, propane gas systems that supplies 10 or more
residential customers or two or more commercial customers from a single source and to a propane gas system any portion of
which is located in a public place. The DOT’s pipeline safety regulations require operators of all gas systems to provide
operator qualification standards and training and written instructions for employees and third-party contractors working on
covered pipelines and facilities, establish written procedures to minimize the hazards resulting from gas pipeline emergencies,
and conduct and keep records of inspections and testing. Operators are subject to the Pipeline Safety Improvement Act of 2002.
Management believes that the procedures currently in effect at all of AmeriGas Propane’s facilities for the handling, storage,
transportation and distribution of propane are consistent with industry standards and are in compliance, in all material respects,
with applicable laws and regulations.
Climate Change
There continues to be increased legislative and regulatory activity related to climate change and the contribution of GHG
emissions, most notably carbon dioxide, to global warming. Because propane is considered a clean alternative fuel under the
federal Clean Air Act Amendments of 1990, the Partnership believes this provides it with a competitive advantage over other
sources of energy, such as fuel oil and coal. At the same time, however, increasing regulations of GHG emissions, especially in
the transportation and building sectors, could restrict the use of fossil fuels and could impose significant additional costs on
AmeriGas Propane, its suppliers, its vendors and its customers. There has been an increase in state initiatives aimed at
regulating GHG emissions, including the California Low Carbon Fuel Standard, the Washington Cap and Invest Program and
the New York Climate Leadership and Community Protection Act. Compliance with these types of regulations may increase
our operating costs if we are unable to pass on these costs to our customers.
Employees
The Partnership does not directly employ any persons responsible for managing or operating the Partnership. The General
Partner provides these services and is reimbursed for its direct and indirect costs and expenses, including all compensation and
benefit costs. At September 30, 2023, the General Partner had approximately 5,160 employees, including more than 100 part-
time, seasonal and temporary employees, working on behalf of the Partnership. UGI also performs, and is reimbursed for,
certain financial and administrative services on behalf of the Partnership and AmeriGas OLP.
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UGI INTERNATIONAL
UGI International, through its subsidiaries and affiliates, conducts an LPG distribution business in 17 countries throughout
Europe (Austria, Belgium, the Czech Republic, Denmark, Finland, France, Hungary, Italy, Luxembourg, the Netherlands,
Norway, Poland, Romania, Slovakia, Sweden, Switzerland and the United Kingdom). Based on reported market volumes for
2022, which is the most recent information available, UGI International believes that it is the largest distributor of LPG in
France, Austria, Belgium, Denmark and Luxembourg and one of the largest distributors of LPG in Norway, Poland, the Czech
Republic, Slovakia, the Netherlands, Sweden and Switzerland.
During Fiscal 2023, we made significant progress on our strategic decision to exit the energy marketing business at UGI
International. In Fiscal 2023, we divested of our energy marketing business in the United Kingdom and Belgium. On October
1, 2023, we divested substantially all of our energy marketing business in France. We also continue to make significant
progress on the wind-down of our energy marketing business in the Netherlands.
Products, Services and Marketing
LPG Distribution Business
During Fiscal 2023, UGI International sold approximately 900 million gallons of LPG throughout Europe. UGI International
operates under six distinct LPG brands, and its customer base primarily consists of residential, commercial, industrial,
agricultural, wholesale and automobile fuel (“autogas”) customers that use LPG for space heating, cooking, water heating,
motor fuel, leisure activities, crop drying, irrigation, construction, power generation, manufacturing and as an aerosol
propellant. For Fiscal 2023, approximately 50% of UGI International’s LPG volume was sold to commercial and industrial
customers, 15% was sold to residential, 9% was sold to agricultural and 26% was sold to wholesale and other customers
(including autogas). UGI International supplies LPG to its customers in small, medium and large bulk tanks at their locations.
In addition to bulk sales, UGI International sells LPG in cylinders through retail outlets, such as supermarkets, individually
owned stores and gas stations and directly to businesses that operate LPG-powered forklifts. Sales of LPG are also made to
service stations to fuel vehicles that run on LPG. UGI International’s Fiscal 2023 LPG sales were attributed to bulk, cylinder,
wholesale and autogas. For Fiscal 2023, no single customer represented more than 5% of UGI International’s revenues.
Bulk
Approximately 62% of UGI International’s Fiscal 2023 LPG sales (based on volumes) were attributed to bulk customers. UGI
International classifies its bulk customers as small, medium or large bulk, depending upon volume consumed annually at the
customer locations. Based on volumes consumed, small bulk customers are primarily residential and small business users, such
as restaurants, that use LPG mainly for heating and cooking. Medium bulk customers consist mainly of large residential
housing developments, hospitals, hotels, municipalities, medium-sized industrial enterprises and poultry brooders. Large bulk
customers include agricultural customers (including crop drying) and companies that use LPG in their industrial processes. UGI
International had approximately 492,000 bulk LPG customers and sold 557 million gallons of bulk LPG during Fiscal 2023.
Cylinder
Approximately 15% of UGI International’s Fiscal 2023 LPG sales (based on volumes) were attributed to cylinder customers.
UGI International sells LPG in both steel and composite cylinders and typically owns the cylinders in which the LPG is sold.
The principal end-users of cylinders are residential customers who use LPG for domestic applications, such as cooking and
heating. Non-residential uses include fuel for forklift trucks, road construction and welding. At September 30, 2023, UGI
International had more than 20 million cylinders in circulation and sold approximately 137 million gallons of LPG in cylinders
during Fiscal 2023. UGI International also delivers LPG to wholesale and retail customers in cylinders, including through the
use of vending machines.
Wholesale, Autogas and Other Services
Approximately 19% of UGI International’s Fiscal 2023 LPG sales (based on volumes) were to wholesale customers (including
small competitors and large industrial customers), and approximately 4% of Fiscal 2023 LPG sales (based on volumes) were to
autogas customers. UGI International also provides logistics, storage and other services to third-party LPG distributors.
Energy Marketing Business
UGI sold its energy marketing business in the United Kingdom, France and Belgium and continues to make progress on the
wind-down of its energy marketing business in the Netherlands. For further information, see “Management’s Discussion and
Analysis of Financial Condition and Results of Operations - Executive Overview – Recent Developments.”
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LPG Supply, Storage and Transportation
UGI International is typically party to term contracts, with approximately 45 different suppliers, including producers and
international oil and gas trading companies, to meet LPG supply requirements throughout Europe. LPG supply is transported
via rail and sea, and by road for shorter distances. Agreements are generally one-year terms with pricing based on
internationally quoted market prices. Additionally, LPG is purchased on the European spot markets to manage supply needs. In
certain geographic areas, such as the U.K. and Italy, a single supplier may provide nearly 50% or more of UGI International’s
requirements. Because UGI International’s profitability is sensitive to changes in wholesale LPG costs, UGI International
generally seeks to pass on increases in the cost of LPG to its customers. There can be no assurance, however, that UGI
International will always be able to pass on product cost increases fully, or keep pace with such increases, particularly when
product costs rise rapidly. Product cost increases can be triggered by periods of severe cold weather, supply interruptions,
increases in the prices of base commodities such as crude oil and natural gas, or other unforeseen events.
The significant increase in European natural gas prices have resulted in refineries substituting a portion of their natural gas
refinery fuels with LPG, leading to a decrease in some areas in the availability of LPG. In addition, gas processing plants
supplying the United Kingdom and Norway markets are injecting LPG into the natural gas grid, decreasing the overall supply
of LPG from the gas processing plants.
UGI International stores LPG at various storage facilities and terminals located across Europe and has interests in both primary
storage facilities and secondary storage facilities. LPG stored in primary storage facilities is transported by rail and road to
secondary storage facilities where LPG is loaded into cylinders or trucks equipped with tanks and then is delivered to
customers. UGI International also manages an extensive logistics and transportation network and has access to seaborne import
facilities.
UGI International transports LPG to customers primarily through outsourced transportation providers to serve both bulk and
cylinder markets. UGI International has long-term relationships with many providers of logistics and transportation services in
most of its markets, and is not dependent on the services of any single transportation provider.
Trade Names, Trade and Service Marks
UGI International protects its intellectual property rights through tradenames, trade and service marks and foreign intellectual
property laws. UGI International and its subsidiaries utilize a variety of tradenames, including, but not limited to, AmeriGas
(Poland), Antargaz, AvantiGas, FLAGA, Kosan Gas and UniverGas, and related service marks to market its LPG products and
services and energy marketing services. UGI International and its subsidiaries currently have tradenames, trade and service
marks registered in various countries. UGI International’s trademarks, tradenames and other proprietary rights are valuable
assets and we believe that they have significant value in the marketing of our products and services.
Competition and Seasonality
The LPG markets in western and northern Europe are mature, with modest declines in total demand due to competition with
other fossil fuels and other energy sources, conservation and macroeconomic conditions. Sales volumes are affected principally
by the severity of the weather and customer migration to alternative energy forms, including natural gas, electricity, heating oil
and wood. High LPG prices also may result in slower than expected growth due to customer conservation and customers
seeking less expensive alternative energy sources. Conversely, high natural gas prices versus LPG prices over a period of time
will result in customers seeking to migrate to LPG. In addition, government policies and incentives that favor alternative energy
sources, such as heat pumps as well as wind and solar sources, can result in customers migrating to energy sources other than
LPG. In addition to price, UGI International competes for customers in its various markets based on contract terms. UGI
International competes locally as well as regionally in many of its service territories. Additionally, particularly in France,
although UGI International supplies certain supermarket chains, it also competes with some of these supermarket chains that
affiliate with LPG distributors to offer their own brands of cylinders. UGI International seeks to increase demand for its LPG
cylinders through marketing and product innovations, such as the use of automatic vending machines.
Because many of UGI International’s customers use LPG for heating, sales volumes are affected principally by the severity of
the temperatures during the heating season months and traditionally fluctuates from year-to-year in response to variations in
weather, prices and other factors, such as conservation efforts and the economic environment. During Fiscal 2023,
approximately 60% of UGI International’s retail sales volumes occurred during the peak heating season from October through
March. As a result of this seasonality, revenues are typically higher in UGI International’s first and second fiscal quarters
(October 1 through March 31). For historical information on weather statistics for UGI International, see ‘‘Management’s
Discussion and Analysis of Financial Condition and Results of Operations”.
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Government Regulation
UGI International’s business is subject to various laws and regulations at the country and local levels, as well as at the EU level,
with respect to matters such as protection of the environment, the storage, transportation and handling of hazardous materials
and flammable substances (including the Seveso II Directive), regulations specific to bulk tanks, cylinders and piped networks,
competition, pricing, regulation of contract terms, anti-corruption (including the U.S. Foreign Corrupt Practices Act, Sapin II
and the U.K. Bribery Act), data privacy and protection, and the safety of persons and property.
Environmental
Environmental laws and regulations may require expenditures over a long timeframe to control environmental effects.
Estimates of liabilities for environmental response costs are difficult to determine with precision because of the various factors
that can affect their ultimate level. These factors include, but are not limited to, the following: (i) the complexity of the site; (ii)
changes in environmental laws and regulations; (iii) the number of regulatory agencies or other parties involved; (iv) new
technology that renders previous technology obsolete or experience with existing technology that proves ineffective; (v) the
level of remediation required; and (vi) variation between the estimated and actual period of time required to respond to an
environmentally-contaminated site.
EU Carbon Neutral Target
In December 2019, EU leaders endorsed the objective of achieving a climate-neutral EU by 2050, with net-zero GHG
emissions, and in July 2021, the European Commission adopted the European Climate Law to write this target into the law. The
European Climate Law also includes a 2030 GHG reduction target of at least 55% below 1990 levels as an intermediate target.
These targets are legally binding and based on an impact assessment conducted by the Commission.
Data Privacy
The EU adopted the GDPR, which became effective in May 2018. The GDPR expanded the EU data protection laws to all
companies processing data of EU residents. It primarily focuses on unifying and strengthening the regulations dealing with the
collection, processing, use and security of personal and sensitive data.
Properties
In addition to regional headquarter locations and sales offices throughout its service territory, UGI International has interests in
ten primary storage facilities and more than 80 secondary storage facilities.
Employees
At September 30, 2023, UGI International had approximately 2,500 employees.
Retail Energy Marketing
MIDSTREAM & MARKETING
Our retail energy marketing business is conducted through Energy Services and its subsidiaries, and sells natural gas, RNG,
liquid fuels and electricity to nearly 11,500 residential, commercial, and industrial customers at approximately 41,000 locations.
In Fiscal 2023, we (i) served customers in all or portions of Pennsylvania, New Jersey, Delaware, New York, Ohio, Maryland,
Virginia, North Carolina, South Carolina, Massachusetts, New Hampshire, Rhode Island, California, and the District of
Columbia, (ii) distributed natural gas through the use of the distribution systems of 47 local gas utilities, and (iii) supplied
power to customers through the use of the transmission and distribution lines of 20 utility systems.
Historically, a majority of Energy Services’ commodity sales have been made under fixed-price agreements, which typically
contain a take-or-pay arrangement that permits customers to purchase a fixed amount of product for a fixed price during a
specified period, and requires payment even if the customer does not take delivery of the product. However, a growing number
of Energy Services’ commodity sales are currently being made under requirements contracts, under which Energy Services is
typically an exclusive supplier and will supply as much product at a fixed price as the customer requires. Energy Services
manages supply cost volatility related to these agreements by (i) entering into fixed-price supply arrangements with a diverse
group of suppliers, (ii) holding its own interstate pipeline transportation and storage contracts to efficiently utilize gas supplies,
(iii) entering into exchange-traded futures contracts on NYMEX and ICE, (iv) entering into over-the-counter derivative
arrangements with major international banks and major suppliers, (v) utilizing supply assets that it owns or manages, and (vi)
utilizing financial transmission rights to hedge price risk against certain transmission costs. Energy Services also bears the risk
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for balancing and delivering natural gas and power to its customers under various gas pipeline and utility company tariffs. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Disclosures.”
Midstream Assets
LNG
Our midstream assets, which are owned by Energy Services and its subsidiaries, comprise a natural gas liquefaction, storage
and vaporization facility in Temple, Pennsylvania, a natural gas liquefaction and storage facility in Mehoopany, Pennsylvania,
liquefied natural gas vaporization and storage facilities in Steelton and Bethlehem, Pennsylvania, and three small mobile
facilities located in Reading, Mount Carmel and Stroudsburg, Pennsylvania.
In addition, Energy Services sells LNG to customers for use by trucks, drilling rigs, other motor vehicles and facilities located
off the natural gas grid. In Fiscal 2023, Energy Services sold LNG to Mountaineer under a WVPSC-approved contract. Further,
in Fiscal 2023, our Midstream & Marketing segment also managed natural gas pipeline and storage contracts for utility
company customers, including UGI Utilities.
Natural Gas and Propane Storage
Energy Services and its subsidiaries own propane storage and propane-air mixing stations in Bethlehem, Reading, Hunlock
Creek and White Deer, Pennsylvania. Energy Services and its subsidiaries also operate propane storage, rail transshipment
terminals and propane-air mixing stations in Steelton and Williamsport, Pennsylvania. These assets are used in Midstream &
Marketing’s energy peaking business that provides supplemental energy, primarily LNG and propane-air mixtures, to gas
utilities at times of high demand (generally during periods of coldest winter weather).
A wholly owned subsidiary of Energy Services owns and operates underground natural gas storage and related high pressure
pipeline facilities, which have FERC approval to sell storage services at market-based rates. The storage facilities are located in
the Marcellus Shale region of north-central Pennsylvania and have a total storage capacity of 15 million dekatherms and a
maximum daily withdrawal quantity of 224,000 dekatherms. In Fiscal 2023, Energy Services leased approximately 82% of the
firm capacity at its underground natural gas facilities to third parties.
Gathering Systems and Pipelines
Energy Services operates the Auburn gathering system in the Marcellus Shale region of northeastern Pennsylvania with a total
pipeline system capacity of 635,000 dekatherms per day. The gathering system delivers into both the Tennessee Gas and
Transcontinental Gas pipelines and receives gas from Tennessee Gas Pipeline as part of a capacity lease with UGI Utilities.
Energy Services also operates a 6.5-mile pipeline, known as the Union Dale pipeline, that gathers gas in Susquehanna County
and has a capacity of 100,000 dekatherms per day. In addition, Energy Services owns and operates approximately 90 miles of
natural gas gathering lines, dehydration and compression facilities, known as Texas Creek, Marshlands, and Ponderosa, located
in Bradford, Tioga, Lycoming, Potter and Clinton Counties, Pennsylvania. The combined capacity of these three systems is
more than 250,000 dekatherms per day.
Energy Services and its subsidiaries also own and operate a 35-mile, 20-inch pipeline, known as the Sunbury pipeline, with
related facilities located in Snyder, Union, Northumberland, Montour, and Lycoming Counties, Pennsylvania, which has a
design capacity of 200,000 dekatherms per day. In addition, Energy Services owns and operates the Mt. Bethel pipeline, which
runs 12.5 miles in Northampton County, Pennsylvania and is designed to provide 72,000 dekatherms per day.
Energy Services’ subsidiary, UGI Appalachia, consists of six natural gas gathering systems with approximately 305 miles of
natural gas gathering pipelines and gas compressors and one processing plant in southwestern Pennsylvania, eastern Ohio, and
the panhandle of West Virginia. In Fiscal 2022, Energy Services also acquired the remaining ownership interest in Pennant, a
natural gas gathering system located in northeast Ohio and western Pennsylvania, and now has 100% ownership interest in
Pennant. The UGI Appalachia assets provide natural gas gathering and processing services in the Appalachian Basin with
gathering capacity of approximately 2,808,000 dekatherms per day and processing capacity of approximately 240,000
dekatherms per day.
In Fiscal 2021, a subsidiary of Energy Services entered into a joint venture with Stonehenge to acquire Pine Run Midstream,
LLC. Energy Services owns approximately 49% of the Pine Run Midstream joint venture with Stonehenge, and Stonehenge
operates the system. The system is currently comprised of approximately 46 miles of pipeline, 40,830 HP of installed
compression and dedicated production of 54,000 gross acres. The system is attached to another gathering system owned by
Energy Services.
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In January 2022, Energy Services acquired Stonehenge Appalachia, LLC from Stonehenge Energy Holdings, LLC and
subsequently renamed the system UGI Moraine East. The system consists of approximately 48 miles of pipeline and associated
compression assets.
Electric Generation Assets
Midstream & Marketing holds electric generation facilities conducted by Energy Services’ wholly owned subsidiary, UGID.
UGID owns and operates the Hunlock Creek Energy Center located near Wilkes-Barre, Pennsylvania, a 174-megawatt natural
gas-fueled electricity generating station. Additionally, UGID owns and operates 13.5 megawatts of solar-powered generation
capacity in Pennsylvania, Maryland and New Jersey.
Renewable Natural Gas
GHI, a wholly owned subsidiary of Energy Services, purchases gas produced from landfills and biodigesters and resells the gas
to fleet operators in California. Environmental credits are generated through this process, which are then sold to various third
parties for an additional revenue stream. See “Business Strategy – Investment in Renewable Energy” in this Item 1. and 2.
Business and Properties for information on transactions Energy Services completed to further UGI’s foundation for growth
within the renewable energy space.
Competition
Our Midstream & Marketing segment competes with other midstream operators to sell gathering, compression, storage and
pipeline transportation services. Our Midstream & Marketing segment competes in both the regulated and non-regulated
environment against interstate and intrastate pipelines that gather, compress, process, transport and market natural gas. Our
Midstream & Marketing segment sells midstream services primarily to producers, marketers and utilities on the basis of price,
customer service, flexibility, reliability and operational experience. The competition in the midstream segment is significant
and has grown recently in the northeast U.S. as more competitors seek opportunities offered by the development of the
Marcellus and Utica Shales.
Our Midstream & Marketing segment also competes with other marketers, consultants and local utilities to sell natural gas,
liquid fuels, electric power and related services to customers in its service area principally on the basis of price, customer
service and reliability. Midstream & Marketing’s midstream asset business has faced an increase in competition in recent years
with the consolidation of companies that have resulted in large, national competitors that can offer a suite of services across all
customer segments.
Our electricity generation assets compete with other generation stations on the interface of PJM, a regional transmission
organization that coordinates the movement of wholesale electricity in certain states, including the states in which we operate,
and bases sales on bid pricing.
Through our wholly owned subsidiary, GHI, Energy Services has the capability to source and deliver RNG to customers
throughout the U.S. GHI currently delivers RNG to transportation fleets for utilization in their compressed natural gas and LNG
fueled vehicles, resulting in the creation and monetization of California Low Carbon Fuel Standard credits and Renewable Fuel
Standard Renewable Identification Number credits. GHI competes with other RNG marketers and brokers on the basis of price,
customer service and reliability. Further, our Midstream & Marketing segment competes with other RNG project developers,
which has recently become a more competitive environment. We compete to acquire the projects from the feedstock generators,
which are typically farmers (for manure digesters) and landfill operators, including through offerings of joint venture ownership
interests, feedstock payments and royalties. In addition, there has been significant consolidation over the past year with both
agricultural and landfill RNG project owners/developers.
Government Regulation
FERC has jurisdiction over the rates and terms and conditions of service of wholesale sales of electric capacity and energy, as
well as the sales for resale of natural gas and related storage and transportation services. Energy Services has a tariff on file
with FERC, pursuant to which it may make power sales to wholesale customers at market-based rates, to the extent that Energy
Services purchases power in excess of its retail customer needs. Two subsidiaries of Energy Services, UGI LNG, Inc. and UGI
Storage Company, currently operate natural gas storage facilities under FERC certificate approvals and offer services to
wholesale customers at FERC-approved market-based rates. Two other Energy Services subsidiaries operate natural gas
pipelines that are subject to FERC regulation. UGI Mt. Bethel Pipeline Company, LLC operates a 12.5-mile, 12-inch pipeline
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located in Northampton County, Pennsylvania, and UGI Sunbury, LLC operates the Sunbury Pipeline, a 35-mile, 20-inch
diameter pipeline located in central Pennsylvania. Both pipelines offer open-access transportation services at cost-based rates
approved by FERC. Energy Services and its subsidiaries undertake various activities to maintain compliance with the FERC
Standards of Conduct with respect to pipeline operations. Energy Services is also subject to FERC reporting requirements,
market manipulation rules and other FERC enforcement and regulatory powers with respect to its wholesale commodity
business.
Midstream & Marketing’s midstream assets include natural gas gathering pipelines and compression and processing in
northeastern Pennsylvania, southwestern Pennsylvania, eastern Ohio and the panhandle of West Virginia that are regulated
under federal pipeline safety laws and subject to operational oversight by both the Pipeline and Hazardous Materials Safety
Administration and the state public utility commissions for the states in which the specific pipelines are located.
Certain of our Midstream & Marketing and RNG businesses are subject to various federal, state and local environmental, safety
and transportation laws and regulations governing the storage, distribution and transportation of propane and the operation of
bulk storage LPG terminals. These laws include, among others, the Resource Conservation and Recovery Act, CERCLA, the
Clean Air Act, OSHA, the Homeland Security Act of 2002, the Emergency Planning and Community Right-to-Know Act, the
Clean Water Act and comparable state statutes. CERCLA imposes joint and several liability on certain classes of persons
considered to have contributed to the release or threatened release of a “hazardous substance” into the environment without
regard to fault or the legality of the original conduct. With respect to the operation of natural gas gathering and transportation
pipelines, Energy Services also is required to comply with the provisions of the Pipeline Safety Improvement Act of 2002 and
the regulations of the DOT.
Our Midstream & Marketing’s electricity generation assets own electric generation facilities that are within the control area of
PJM and are dispatched in accordance with a FERC-approved open access tariff and associated agreements administered by
PJM. UGID is the entity designated for dispatching and financially settling all company owned generation and receives certain
revenues collected by PJM, determined under an approved rate schedule. Like Energy Services, UGID has a tariff on file with
FERC pursuant to which it may make power sales to wholesale customers at market-based rates, and FERC has approved
UGID’s market-based rate authority through 2023, with approval pending through 2026. UGID is also subject to FERC
reporting requirements, market manipulation rules and other FERC enforcement and regulatory powers.
Employees
At September 30, 2023, Midstream & Marketing had approximately 380 employees.
UTILITIES
PA GAS UTILITY
PA Gas Utility consists of the regulated natural gas distribution business of our subsidiary, UGI Utilities. PA Gas Utility serves
customers in eastern and central Pennsylvania and in portions of one Maryland county, and therefore is regulated by the
PAPUC and, with respect to its customers in Maryland, the MDPSC.
Service Area; Revenue Analysis
PA Gas Utility provides natural gas distribution services to approximately 684,000 customers in certificated portions of 46
eastern and central Pennsylvania counties through its distribution system. Contemporary materials, such as plastic or coated
steel, comprise approximately 93% of PA Gas Utility’s more than 12,600 miles of gas mains, with bare steel pipe comprising
approximately 6% and cast iron pipe comprising approximately 1% of PA Gas Utility’s gas mains. In accordance with PA Gas
Utility’s agreement with the PAPUC, PA Gas Utility will replace the cast iron portion of its gas mains by March 2027 and the
bare steel portion of its gas mains by September 2041. Located in PA Gas Utility’s service area are major production centers for
basic industries such as specialty metals, aluminum, glass, paper product manufacturing and several power generation facilities.
PA Gas Utility also distributes natural gas to more than 550 customers in portions of one Maryland county.
System throughput (the total volume of gas sold to or transported for customers within PA Gas Utility’s distribution system) for
Fiscal 2023 was approximately 324 Bcf. System sales of gas accounted for approximately 18% of system throughput, while gas
transported for residential, commercial and industrial customers who bought their gas from others accounted for approximately
82% of system throughput.
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Sources of Supply and Pipeline Capacity
PA Gas Utility is permitted to recover all prudently incurred costs of natural gas it sells to its customers. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations - Market Risk Disclosures” and Note 9 to
Consolidated Financial Statements. PA Gas Utility meets its service requirements by utilizing a diverse mix of natural gas
purchase contracts with marketers and producers, along with storage and transportation service contracts. These arrangements
enable PA Gas Utility to purchase gas from Marcellus, Gulf Coast, Mid-Continent, and Appalachian sources. For its
transportation and storage functions, PA Gas Utility has long-term agreements with a number of pipeline companies, including
Texas Eastern Transmission, LP, Columbia Gas Transmission, LLC, Transcontinental Gas Pipeline Company, LLC, Eastern
Gas Transmission and Storage, Inc., Tennessee Gas Pipeline Company, L.L.C., and Energy Services and its subsidiaries
(including UGI Storage Company and UGI Sunbury, LLC).
Gas Supply Contracts
During Fiscal 2023, PA Gas Utility purchased approximately 78 Bcf of natural gas for sale to retail core-market customers
(principally comprised of firm residential, commercial and industrial customers that purchase their gas from PA Gas Utility)
and off-system sales customers. Approximately 96% of the volumes purchased were supplied under agreements with ten
suppliers, with the remaining volumes supplied primarily by 30 producers and marketers. Gas supply contracts for PA Gas
Utility vary in length by counterparty and type of supply. Typically, pipeline and storage contracts range from one to five years
in length. PA Gas Utility also has long-term contracts with suppliers for natural gas peaking supply during the months of
November through March.
Seasonality
Because many of its customers use natural gas for heating purposes, PA Gas Utility’s sales are seasonal. For Fiscal 2023,
approximately 59% of PA Gas Utility’s sales volume was supplied, and approximately 90% of PA Gas Utility’s operating
income was earned, during the peak heating season from October through March.
Competition
Natural gas is a fuel that competes with electricity and oil and, to a lesser extent, with propane and coal. Competition among
these fuels is primarily a function of their comparative price and the relative cost and efficiency of the equipment. Natural gas
generally benefits from a competitive price advantage over oil, electricity and propane. Fuel oil dealers compete for customers
in all categories, including industrial customers. PA Gas Utility responds to this competition with marketing and sales efforts
designed to retain, expand and grow its customer base.
In substantially all of its service territories, PA Gas Utility is the only regulated gas distribution utility having the right, granted
by the PAPUC or by law, to provide gas distribution services. All of PA Gas Utility’s customers, including core-market
customers, have the right to purchase gas supplies from entities other than natural gas distribution utility companies.
A number of PA Gas Utility’s commercial and industrial customers have the ability to switch to an alternate fuel at any time
and, therefore, are served on an interruptible basis under rates that are competitively priced with respect to the alternate fuel.
Margin from these customers, therefore, is affected by the difference or “spread” between the customers’ delivered cost of gas
and the customers’ delivered cost of the alternate fuel, the frequency and duration of interruptions, and alternative firm service
options. See “Utilities Regulation - State Utility Regulation - PA Gas Utility.”
Approximately 74% of PA Gas Utility’s annual throughput volume for commercial and industrial customers includes customers
at locations that afford them the opportunity of seeking transportation service directly from interstate pipelines, thereby
bypassing PA Gas Utility. During Fiscal 2023, PA Gas Utility had 17 such customers, 15 of which have transportation contracts
extending beyond Fiscal 2024. The majority of these customers are served under transportation contracts having three to 20-
year terms and all are among the largest customers for PA Gas Utility in terms of annual volumes. No single customer
represents, or is anticipated to represent, more than five percent of PA Gas Utility’s total revenues.
Outlook for Gas Service and Supply
PA Gas Utility anticipates having adequate pipeline capacity, peaking services and other sources of supply available to it to
meet the full requirements of all firm customers on its system through Fiscal 2024. Supply mix is diversified, market priced
and delivered pursuant to a number of long-term and short-term primary firm transportation and storage arrangements,
including transportation contracts held by some of PA Gas Utility’s larger customers and natural gas suppliers serving
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customers on PA Gas Utility’s distribution system.
During Fiscal 2023, PA Gas Utility supplied transportation service to 11 electric generation facilities and 29 major co-
generation facilities. PA Gas Utility continues to seek new residential, commercial and industrial customers for both firm and
interruptible service. In Fiscal 2023, PA Gas Utility connected more than 1,460 new commercial and industrial customers. In
the residential market sector, PA Gas Utility added more than 11,100 residential heating customers during Fiscal 2023.
Approximately 56% of these customers converted to natural gas heating from other energy sources, mainly oil and electricity.
New home construction and existing non-heating gas customers who added gas heating systems to replace other energy sources
primarily accounted for the other residential heating connections in Fiscal 2023.
PA Gas Utility continues to monitor and participate, where appropriate, in rulemaking and individual rate and tariff proceedings
before FERC affecting the rates and the terms and conditions under which PA Gas Utility transports and stores natural gas
using interstate natural gas pipelines. Among these proceedings are those arising out of certain FERC orders and/or pipeline
filings that relate to (i) the pricing of pipeline services in a competitive energy marketplace, (ii) the flexibility of the terms and
conditions of pipeline service tariffs and contracts, and (iii) pipelines’ requests to increase their base rates, or change the terms
and conditions of their storage and transportation services.
PA Gas Utility’s objective in negotiations with providers of gas supply resources, and in proceedings before regulatory
agencies, is to ensure availability of supply, transportation and storage alternatives to serve market requirements at the lowest
cost possible, taking into account the need for safety, security and reliability of supply. Consistent with that objective, PA Gas
Utility negotiates certain terms of firm transportation capacity on all pipelines serving it, arranges for appropriate storage and
peak-shaving resources, negotiates with producers for competitively priced gas purchases and participates in regulatory
proceedings related to transportation rights and costs of service.
At September 30, 2023, PA Gas Utility had approximately 1,600 employees.
MOUNTAINEER
In September 2021, we completed the Mountaineer Acquisition, whereby Mountaineer Gas Company became an indirect,
wholly owned subsidiary of UGI. Mountaineer provides a regulated natural gas distribution business to over 211,000
customers in 50 of West Virginia’s 55 counties. Mountaineer’s system is comprised of approximately 6,200 miles of
distribution, transmission and gathering pipelines. Contemporary materials, such as plastic or coated steel, comprise
approximately 76% of Mountaineer’s gas mains, with bare steel pipe comprising the remaining 24%.
As of September 30, 2023, Mountaineer’s customer base was approximately 90% residential, and 10% commercial and
industrial customers, with throughput volumes consisting of approximately 25% residential, 33% commercial and 42%
industrial and other. Because many of its customers use gas for heating purposes, Mountaineer’s sales are seasonal. For Fiscal
2023, approximately 60% of Mountaineer’s sales volume (including transport volumes) was supplied, and 142% of
Mountaineer’s operating income was earned, during the peak heating season from October through March. No single customer
represents, or is anticipated to represent, more than five percent of Mountaineer’s total revenues.
System throughput (the total volume of gas sold to or transported for customers within Mountaineer’s distribution system) for
Fiscal 2023 was approximately 51 Bcf. Retail core-market sales of gas accounted for approximately 39% of system throughput,
while gas transported for commercial and industrial customers who bought their gas from others accounted for approximately
61% of system throughput. Mountaineer anticipates having adequate pipeline capacity, peaking services and other sources of
supply available to it to meet the full requirements of all firm customers on its system through Fiscal 2024.
Approximately 53% of Mountaineer’s annual throughput volume for commercial and industrial customers represents customers
who are served under interruptible rates and are also in a location near an interstate pipeline. As of September 30, 2023,
Mountaineer had 19 such customers, one of which has a transportation contract extending beyond September 30, 2024. The
majority of these customers, including 10 of Mountaineer’s largest customers in terms of annual volumes, are served under
evergreen transportation contracts having a 30- to 180-day termination notice.
Mountaineer meets its service requirements by utilizing a diverse mix of natural gas purchase contracts with marketers and
producers, along with storage and transportation service contracts. During Fiscal 2023, Mountaineer purchased approximately
20 Bcf of natural gas for sale to retail core-market customers (principally comprised of firm- residential, commercial and
industrial customers that purchase their gas from Mountaineer). Approximately 81% of the volume purchased was supplied
under agreements with 10 suppliers, with the remaining volumes supplied by various producers and marketers. Gas supply
contracts for Mountaineer are generally evergreen agreements with a 30-day termination notice.
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At September 30, 2023, Mountaineer had approximately 480 employees.
ELECTRIC UTILITY
Electric Utility supplies electric service to approximately 62,700 customers in portions of Luzerne and Wyoming counties in
northeastern Pennsylvania through a system consisting of over 2,600 miles of transmission and distribution lines and 14
substations. For Fiscal 2023, approximately 57% of sales volume came from residential customers, 32% from commercial
customers and 11% from industrial and other customers. During Fiscal 2023, 12 retail electric generation suppliers provided
energy for customers representing approximately 23% of Electric Utility’s sales volume. At September 30, 2023, UGI Utilities’
electric utility operations had approximately 80 employees.
UTILITIES REGULATION
State Utility Regulation
PA Gas Utility
PA Gas Utility is subject to regulation by the PAPUC as to rates, terms and conditions of service, accounting matters, issuance
of securities, contracts and other arrangements with affiliated entities, gas safety and various other matters. Rates that PA Gas
Utility may charge for gas service come in two forms: (i) rates designed to recover PGCs; and (ii) rates designed to recover
costs other than PGCs. Rates designed to recover PGCs are reviewed in PGC proceedings. Rates designed to recover costs
other than PGCs are primarily established in general base rate proceedings.
Act 11 of 2012 authorized the PAPUC to permit electric and gas distribution companies, between base rate cases and subject to
certain conditions, to recover reasonable and prudent costs incurred to repair, improve or replace eligible property through a
DSIC assessed to customers. Among other requirements, DSICs are subject to quarterly reconciliation of over-/under-
collection and are capped at five percent of total customer charges absent a PAPUC-granted exception. In addition, Act 11
requires affected utilities to obtain approval of LTIIPs from the PAPUC. Act 11 also authorized electric and gas distribution
companies to utilize a fully projected future test year when establishing rates in base rate cases before the PAPUC.
On August 21, 2019, PA Gas Utility filed a consolidated LTIIP designed for the 2020-2024 calendar years, during which PA
Gas Utility projects spending is $1.265 billion on DSIC-eligible property. PA Gas Utility’s filing was approved by the PAPUC
in an order entered December 19, 2019.
On September 15, 2022, the PAPUC issued a final order approving a settlement of a base rate proceeding by PA Gas Utility
that permitted PA Gas Utility to implement a $49 million annual base distribution rate increase through a phased approach, with
$38 million beginning October 29, 2022 and an additional $11 million beginning October 1, 2023. In accordance with the terms
of the final order, PA Gas Utility will not be permitted to file a rate case prior to January 1, 2024. Also in accordance with the
terms of the final order, PA Gas Utility implemented a weather normalization adjustment rider as a five-year pilot program
beginning on November 1, 2022. Under this rider, customer billings for distribution services are adjusted monthly to reflect
normal weather conditions where weather deviates more than three percent from normal. Additionally, under the terms of the
final order, PA Gas Utility is authorized to implement a DSIC once its total property, plant and equipment less accumulated
depreciation reached $3.368 billion. This threshold was achieved in September 2022 and PA Gas Utility implemented a new
DSIC effective January 1, 2023.
In addition to base distribution rates and various surcharges designed to recover specified types of costs, PA Gas Utility’s tariff
also includes a uniform PGC rate applicable to firm retail rate schedules for customers who do not obtain natural gas supply
service from an alternative supplier. The PGC rate permits recovery of all prudently incurred costs of natural gas that PA Gas
Utility sells to its retail customers. PGC rates are reviewed and approved annually by the PAPUC. PA Gas Utility may request
quarterly or, under certain conditions, monthly adjustments to reflect the actual cost of gas. Quarterly adjustments become
effective on one day’s notice to the PAPUC and are subject to review during the next annual PGC filing. Each proposed annual
PGC rate is required to be filed with the PAPUC six months prior to its effective date. During this period, the PAPUC
investigates and may hold hearings to determine whether the proposed rate reflects a least-cost fuel procurement policy
consistent with the obligation to provide safe, adequate and reliable service. After completion of these hearings, the PAPUC
issues an order permitting the collection of gas costs at levels that meet such standard. The PGC mechanism also provides for
an annual reconciliation and for the payment or collection of interest on over and under collections.
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PA Gas Utility’s gas service tariff also contains a state tax surcharge clause. The surcharge is recomputed whenever any of the
tax rates included in their calculation are changed. These clauses protect PA Gas Utility from the effects of increases in certain
of the Pennsylvania taxes to which it is subject.
Mountaineer
Mountaineer is subject to regulation of rates and other aspects of its business by the WVPSC. When necessary, Mountaineer
seeks general base rate increases to recover increased operating costs and a fair return on rate base investments. Base rates are
determined by the cost-of-service by rate class, and the rate design methodology allocates the majority of operating costs
through volumetric charges.
Mountaineer makes routine filings with the WVPSC to reflect changes in the costs of purchased gas. These purchased gas costs
are subject to rate recovery through a mechanism that provides dollar-for-dollar recovery of prudently incurred costs. Costs in
excess of revenues that are expected to be recovered in future rates are deferred as regulatory assets; conversely, revenues in
excess of costs are deferred as a regulatory liability. The PGA filings generally cover a prospective 12-month period. The
WVPSC entered a procedural order on September 9, 2022, directing all gas utilities and other parties to file proposals to reduce
or levelize the impact of high natural gas costs on utilities’ customers in the near term. Further, WVPSC issued orders issued on
November 28, 2022 and December 1, 2022 that established interim purchased gas rates. In addition, for Mountaineer’s
residential customers only, the WVPSC created a new monthly fixed charge of $11.08 to levelize the collection of the pipeline
demand charges. The WVPSC issued a final order and a further final order on April 12, 2023 and April 14, 2023, respectively,
which established final purchased gas rates, keeping in place the residential pipeline demand charge of $11.08 and permitted
partial recovery of interest on the unrecovered balance that was deferred. In July 2023, Mountaineer filed a PGA case, and on
October 5, 2023, an interim rate order was issued that established new reduced interim rates effective November 1, 2023. All
parties were directed to file further information in their final substantive recommendations regarding whether to continue the
residential pipeline demand charge or return to volumetric rate recovery. The final PGA rate order is not expected until the first
quarter of 2024.
As permitted by West Virginia law, the WVPSC has also approved a standalone cost recovery rider to recover specified costs
and a return on infrastructure projects between general base rate cases in accordance with its IREP. Mountaineer makes an
annual IREP filing, which is subject to an over/under-recovery mechanism similar to purchased gas costs. In December 2022,
the WVPSC issued a final order approving a settlement in Mountaineer’s 2023 IREP filing, resulting in an increase of $5.4
million effective January 1, 2023. In July 2023, Mountaineer submitted its annual IREP filing to the WVPSC requesting a
revenue increase of $6.5 million effective January 1, 2024, based on the forecasted 2024 calendar year IREP-eligible capital
investments of $67.0 million and recovery of eligible costs. An order from the WVPSC is expected in December 2023.
Mountaineer filed a base rate proceeding on March 6, 2023. By statute, the WVPSC suspended the rate increase until December
31, 2023. On October 6, 2023, Mountaineer filed a joint stipulation and agreement for settlement of the base rate case, which
included a net revenue increase of approximately $13.9 million, which is expected to result in an overall increase in total
revenues of 4.16%. An order from the Commission is expected in December and new rates will take effect on January 1, 2024.
Electric Utility
Electric Utility is permitted to recover prudently incurred electricity costs, including costs to obtain supply to meet its
customers’ energy requirements, pursuant to a supply plan filed with and approved by the PAPUC. Electric Utility distributes
electricity that it purchases from wholesale markets and electricity that customers purchase from other suppliers.
On January 27, 2023, Electric Utility filed for a base rate increase with the PAPUC. On July 14, 2023, Electric Utility filed a
joint petition for settlement of the rate case, which included a revenue increase of approximately $8.5 million. In an order dated
September 21, 2023, the PAPUC approved the settlement and authorized the increased rate to become effective October 1,
2023.
Electric Utility’s tariff includes rates, applicable to so-called “default service” customers who do not obtain electric generation
service from an alternative supplier, incurred pursuant to a PAPUC-approved supply plan. These default service rates are
reconcilable, may be adjusted quarterly, and are designed to permit Electric Utility to recover the full costs of providing default
service in a full and timely manner. Electric Utility’s default service rates include recovery of costs associated with compliance
with the AEPS Act, which requires Electric Utility to directly or indirectly acquire certain percentages of its supplies from
designated alternative energy sources. In an order dated January 14, 2021, the PAPUC authorized Electric Utility to implement
its current Default Service plan for the period June 1, 2021 through May 31, 2025, subject to possible, prospectively applied
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interim modifications that parties to that proceeding may propose in accordance with a settlement filed in that proceeding on
October 23, 2020.
Electric Utility’s tariff also includes a DSIC surcharge mechanism that was authorized by the PAPUC in 2019. Electric
Utility’s first LTIIP, approved in 2017, provided the basis for its current DSIC charges through September 30, 2022. That
authority was extended by order of the PAPUC issued August 25, 2022, in which Electric Utility’s second LTIIP filing was
approved, authorizing the expenditure of $50.6 million of DSIC-eligible plant over the five-year period ending September 30,
2027.
With the implementation of new base rates on October 1, 2023 pursuant to the PAPUC’s September 21, 2023 order in the 2023
Electric Utility base rate case, Electric Utility’s DSIC-eligible plant associated revenue requirement was rolled into Electric
Utility’s base rates. The final order issued by the PAPUC approved the settlement of the base rate proceeding and authorized
Electric Utility to implement a new DSIC surcharge once Electric Utility’s total gross plant balance exceeds $275 million.
Utility Franchises
PA Gas Utility and Electric Utility hold certificates of public convenience issued by the PAPUC and certain “grandfather
rights” predating the adoption of the Pennsylvania Public Utility Code and its predecessor statutes, which authorize it to carry
on its business in the territories in which it renders gas service. Under applicable Pennsylvania law, PA Gas Utility and Electric
Utility also have certain rights of eminent domain as well as the right to maintain their facilities in public streets and highways
in their respective territories.
Similarly, Mountaineer holds certificates of public convenience issued by the WVPSC, which authorize it to carry on its
business in substantially all of the territories in which it now renders gas service. Under applicable West Virginia law,
Mountaineer also has certain rights of eminent domain as well as the right to maintain its facilities in public streets and
highways in its territories.
Federal Energy Regulation
With the acquisition of Mountaineer on September 1, 2021, UGI and its subsidiaries became subject to FERC regulation under
PUHCA 2005 pertaining to record-keeping and affiliate service pricing requirements. UGI provided notice of its non-exempt
status on September 17, 2021.
Utilities is subject to Section 4A of the Natural Gas Act, which prohibits the use or employment of any manipulative or
deceptive devices or contrivances in connection with the purchase or sale of natural gas or natural gas transportation subject to
the jurisdiction of FERC, and FERC regulations that are designed to promote the transparency, efficiency, and integrity of gas
markets.
Similarly, UGI Utilities is also subject to Section 222 of the Federal Power Act, which prohibits the use or employment of any
manipulative or deceptive devices or contrivances in connection with the purchase or sale of electric energy or transmission
service subject to the jurisdiction of FERC, and FERC regulations that are designed to promote the transparency, efficiency, and
integrity of electric markets.
FERC has jurisdiction over the rates and terms and conditions of service of electric transmission facilities used for wholesale or
retail choice transactions. Electric Utility owns electric transmission facilities that are within the control area of PJM and are
dispatched in accordance with a FERC-approved open access tariff and associated agreements administered by PJM. PJM is a
regional transmission organization that regulates and coordinates generation, supply and the wholesale delivery of electricity.
Electric Utility receives certain revenues collected by PJM, determined under a formulary rate schedule that is adjusted in June
of each year to reflect annual changes in Electric Utility’s electric transmission revenue requirements, when its transmission
facilities are used by third parties. FERC has jurisdiction over the rates and terms and conditions of service of wholesale sales
of electric capacity and energy. Electric Utility has a tariff on file with FERC pursuant to which it may make power sales to
wholesale customers at market-based rates.
Under provisions of EPACT 2005, Electric Utility is subject to certain electric reliability standards established by FERC and
administered by an ERO. Electric Utility anticipates that substantially all the costs of complying with the ERO standards will
be recoverable through its PJM formulary electric transmission rate schedule.
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EPACT 2005 also granted FERC authority to impose substantial civil penalties for the violation of any regulations, orders or
provisions under the Federal Power Act and Natural Gas Act and clarified FERC’s authority over certain utility or holding
company mergers or acquisitions of electric utilities or electric transmitting utility property valued at $10 million or more.
Other Government Regulation
In addition to state and federal regulation discussed above, Utilities is subject to various federal, state and local laws governing
environmental matters, occupational health and safety, pipeline safety and other matters. Each is subject to the requirements of
the Resource Conservation and Recovery Act, CERCLA and comparable state statutes with respect to the release of hazardous
substances. See Note 16 to Consolidated Financial Statements.
BUSINESS SEGMENT INFORMATION
The table stating the amounts of revenues, operating income and identifiable assets attributable to each of UGI’s reportable
business segments, and to information regarding the geographic areas in which we operate, for Fiscal 2023, Fiscal 2022 and
Fiscal 2021 appears in Note 22 to Consolidated Financial Statements included in Item 15 of this Report and is incorporated
herein by reference.
At September 30, 2023, UGI and its subsidiaries had approximately 10,500 employees.
EMPLOYEES
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HUMAN CAPITAL MANAGEMENT
We are committed to the attraction, development, retention and safety of our employees. The following is an overview of some
of our key human capital initiatives that are designed to ensure the overall well-being of our employees and other stakeholders
as well as to promote workforce diversity.
UGI publishes annual sustainability reports, which are available free of charge on its corporate website under “ESG - Resources
- Sustainability Reports.” Information included in these sustainability reports is not intended to be incorporated into this
Report.
Workplace Safety
We are committed to maintaining an effective safety culture and stressing the importance of our employees’ role in identifying,
mitigating and reporting safety risks. We believe that the achievement of superior safety performance is both an important
short- and long-term strategic initiative in managing our operations. In this regard, our policies and operational practices
promote a culture where all levels of employees are responsible for safety. Safety is generally included as a component of the
annual bonus calculation for executives and non-executives, reinforcing our commitment to safety across our organization. For
more details as to how we integrate safety performance into our core business activities, please refer to our Health, Safety,
Security and the Environment (“HSSE”) Policy, which is available on our website under “Company - Company Policies -
HSSE Policy.”
UGI’s Board of Directors oversees safety efforts primarily through its Safety, Environmental, and Regulatory Compliance
(“SERC”) Committee, which is responsible for the governance and oversight of health and safety matters at the Company,
including compliance with applicable laws and regulations. The SERC Committee oversees the Company’s practices and
policies focused on protecting the health and safety of our employees, contractors, customers, the communities we serve, and
the environment. Additionally, our senior management team is actively engaged in our safety programs and conducts regular
reviews of safety performance metrics. These metrics are presented quarterly to the SERC Committee for review and
consideration. In addition, each of our business units has a safety team that is responsible for overseeing the safety of our
operations, reinforcing our values, and enhancing our safety culture within such business units. As part of our commitment to
continuously improve our safety performance, UGI has implemented robust training programs that enable field employees to
safely execute their job responsibilities. Our safety programs are required to comply with both OSHA and industry-specific
regulations.
Diversity Strategy
Diversity as Part of Our Company Culture
We believe that, by fostering an environment that exemplifies our core value of respect, we gain, as a Company, unique
perspectives, backgrounds and varying experiences to ensure our continued long-term success. Belonging, inclusion, diversity
and equity are essential to our success, and we respect and value all employees.
In alignment with our efforts to promote diversity and inclusion, our Belonging, Inclusion, Diversity and Equity (“BIDE”)
Initiative provides the organizational blueprint for achieving greater diversity and promoting respect for uniqueness of
individuals and cultures and inclusion of the varied perspectives they provide. We believe the BIDE Initiative helps align our
core values (safety, integrity, respect, sustainability, reliability, and excellence) with our leadership’s actions and our
employees’ work environment. The BIDE Initiative embodies and promotes internal policies with respect to setting
expectations relating to our work environment, including our Code of Business Conduct and Ethics and our Anti-Harassment/
Anti-Discrimination, and Human Rights policies. As part of the BIDE Initiative, we have partnerships with numerous
organizations that support underrepresented populations.
UGI also supports diverse segments of our workforce through employee resource groups. Employee resource groups are a key
component of the BIDE Initiative. These groups are open to all employees and allow them to learn from a cultural perspective
and support their colleagues through allyship. UGI’s employee resource groups include the Black Organizational Leadership
and Development (“BOLD”) resource group, the Women’s Impact Network (“WIN”), and the Veteran Employee Team
(“VET”).
•
BOLD is focused on inclusion, equity, education, and empowerment for black employees and their allies, and assists
leadership with communication, talent recruitment, retention and development opportunities. BOLD focuses on
professional development by creating mentoring opportunities, increasing exposure through networking and career
development events, broadening outreach to and recruitment of talent and sponsoring activities such as lectures
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featuring distinguished speakers. The group aims to support and promote UGI’s BIDE Initiative by providing cultural
insight from employee, customer and community partner perspectives.
• WIN is an organization that aims to foster an environment for women and their allies to be recruited, retained,
developed and advanced as leaders throughout UGI. Membership in WIN offers exposure to various professional
development opportunities, including speaker series events, group engagement activities, virtual group discussions,
and partnerships with local organizations.
•
VET focuses on recruiting and retaining veterans, as well as creating growth for and goodwill towards military
veterans. VET members include Active Duty, Reserve, and National Guard veterans of the Army, Navy, Marines,
Coast Guard, and Air Force, their families, and partners committed to supporting military veteran employees.
Diversity in Our Leadership
We believe that diversity in our Board of Directors is critical for effective governance. In assessing the Board of Directors’
composition, the Board of Directors and its Corporate Governance Committee ensure that our Board of Directors and its
standing committees have the appropriate qualifications, skills, experience and characteristics, including diversity of
perspectives, to support our business. In assessing director candidates, the Board of Directors and Corporate Governance
Committee consider a number of qualifications, including independence, knowledge, judgment, character, leadership skills,
education, experience, financial literacy, standing in the community and diversity of backgrounds and views, including, but not
limited to, gender, race, ethnicity and national origin. The Board of Directors and Corporate Governance Committee look to
complement the Board of Directors’ existing strengths, recognizing that diversity is a critical element to enhancing Board
effectiveness. Our Board of Directors is currently comprised of 10 directors, of which three are female, two are racially diverse
and one identifies as LGBTQ+.
Similarly, we believe diversity of management is crucial to position our business for continued success. UGI ensures that
diverse candidates are considered for all leadership positions and is committed to considering all qualified applicants in our
hiring process.
As part of our continued commitment to enhancing opportunities for diversity in our workforce, in Fiscal 2023 all executives
had a diversity and inclusion component in their annual bonus plan. The executive team was evaluated on the effectiveness of
the Company’s development and implementation of a multi-dimensional strategy to deepen and improve the Company’s
commitment to diversity and inclusion, supporting the Company’s BIDE Initiative and establishing a roadmap to achieve
excellence in diversity and inclusion and branding UGI as an employer of choice for diverse candidates.
Diversity in Our Workforce
UGI strives for diverse representation at all levels of our business. We annually publish our workforce demographics (which
reflects our EEO-1 reporting data) in our sustainability reports. We believe that by publicly disclosing our workforce
demographics, we increase transparency in the composition of our workforce as well as facilitate accountability in ensuring that
diverse candidates are actively considered for roles throughout the organization.
Diversity as Part of Our Employee Development
UGI has a global partnership with the Human Library Organization (the “Human Library”), a global not-for-profit learning
platform that hosts personal conversations designed to challenge stigma and stereotypes and create a safe space for dialogue
where topics are discussed openly between “human books” and their readers. The Human Library is a thought leader when it
comes to diversity and inclusion in the workplace, partnering with companies that are committed to incorporating social
understanding and cultural awareness as part of their business model in relation to their workforce, partnerships, clients and
customers.
UGI has committed to a sponsorship role with the Human Library for the creation of a digital learning platform that will expand
the reach of the Human Library’s diversity experiences across the globe. UGI began working with the Human Library in Fiscal
2020 to provide diversity and inclusion education for its leadership development, supervisor training and new hire onboarding
programs. Many of our employees participated in the Human Library “reader sessions” over the past few years.
Talent Development and Support
Maintaining a robust pipeline of talent is crucial to UGI’s ongoing success and is a key aspect of succession planning efforts
across the organization. Our leadership and human resources teams are responsible for attracting and retaining quality talent by
supporting management in fostering an environment where employees feel supported and encouraged in their professional and
personal development. Competition for attracting and retaining talent has increased in recent years. UGI understands this
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challenge and the importance of maintaining competitive compensation and benefits as well as providing appropriate training
that enables growth, developmental opportunities and multiple career paths within our Company. We commit to investing in
our employees through training and development programs, including mentorship, manager trainings, and leadership
development programs, as well as through tuition reimbursement to promote continued professional growth. For example, UGI
Global Leadership Summit is an enterprise leadership development program for high potential leaders identified for future
executive roles. Rooted in research of what skills executives need most, our potential leaders learn and practice skills such as
learning agility, strategic thinking, adaptability intelligence, advanced emotional intelligence and leadership presence. In
addition, potential leaders engage directly with business unit leaders and executives, gaining a broader sense of UGI and the
stakeholders it serves. In addition, in Fiscal 2023, UGI launched Lifecycle Leadership, which is an enterprise wide leadership
development initiative providing development to all levels of leaders, including three programs: (1) People Leaders Program,
for managers at all levels of the company, (2) Experienced Managers Program, for managers with three or more years of
experience, and (3) Managers of Managers Program, for managers who manage two or more teams. Through our Lifecycle
Leadership initiatives, our leaders complete a variety of assessments and practice strategic and tactical skills such as effective
communication, time management, delegation, employee development, conflict resolution, budgeting and finance, and
unconscious bias, among other skills needed for success as a leader.
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ITEM 1A. RISK FACTORS
There are many factors that may affect our business, financial condition and results of operations, many of which are not within
our control, including the following risks relating to: (1) the demand for our products and services and our ability to grow our
customer base; (2) our business operations, including internal and external factors that may impact our operational continuity;
(3) our international operations; (4) our supply chain and our ability to obtain and transport adequate quantities of LPG; (5)
government regulation and oversight; and (6) general factors that may impact our business and our shareholders. Investors
should carefully consider, together with the other information contained in this Report, the risks and uncertainties described
below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may
materially affect our business, financial condition and results of operations. No priority or significance is intended by, nor
should be attached to, the order in which the risk factors appear.
Risks Relating to the Demand for Our Products and Services and Our Ability to Grow Our Customer Base
Our business is seasonal and decreases in the demand for our energy products and services because of warmer-than-normal
heating season weather or unfavorable weather conditions may adversely affect our results of operations. Because many of
our customers rely on our energy products and services to heat their homes and businesses our results of operations are
adversely affected by warmer-than-normal heating season weather. Weather conditions have a significant impact on the
demand for our energy products and services for both heating and agricultural purposes. Accordingly, the volume of our
energy products sold is at its highest during the peak heating season of October through March and is directly affected by the
severity of the winter weather. For example, historically, approximately 60% to 70% of AmeriGas Propane’s annual retail
propane volume, 60% of UGI International’s annual retail LPG volume, 55% to 65% of Energy Services’ retail natural gas
volume and 60% of PA Gas Utility’s natural gas throughput (the total volume of gas sold to or transported for customers within
our distribution system) has typically been sold during these months. There can be no assurance that normal winter weather in
our market areas will occur in the future.
In addition, our agricultural customers use LPG for purposes other than heating, including for crop drying, and unfavorable
weather conditions, such as lack of precipitation, may impact the demand for LPG. Moreover, harsh weather conditions may at
times impede the transportation and delivery of LPG or restrict our ability to obtain LPG from suppliers. Spikes in demand
caused by weather or other factors can stress the supply chain and limit our ability to obtain additional quantities of LPG.
Changes in LPG supply costs are normally passed through to customers, but time lags (between when we purchase the LPG and
when the customer purchases the LPG) may result in significant gross margin fluctuations that could adversely affect our results
of operations.
The potential effects of climate change may affect our business, operations, supply chain and customers, which could
adversely impact our financial condition and results of operations. Shifts and fluctuations in weather patterns and other
environmental conditions, including temperature and precipitation levels, may affect consumer demand for our energy products
and services. In addition, the potential physical effects of climate change, such as increased frequency and severity of storms,
floods, fires and other climatic events, could disrupt our operations and supply chain, and cause us to incur significant costs in
preparing for or responding to these effects. These or other meteorological changes could lead to increased operating costs,
capital expenses or supply costs. Our commercial and residential customers may also experience the potential physical impacts
of climate change and may incur significant costs in preparing for or responding to these efforts, including increasing the mix
and resiliency of their energy solutions and supply, which may adversely impact their ability to pay for our products and
services or decrease demand for our products and services. The impact of any one or all of the foregoing factors may adversely
affect our financial condition and results of operations.
In addition to the direct physical impact that climate change may have on our business, financial condition and results of
operations, we may also be adversely impacted by other environmental factors, including: (i) technological advances designed
to promote energy efficiency and limit environmental impact; (ii) increased competition from alternative energy sources; (iii)
regulatory responses aimed at decreasing GHG emissions; and (iv) litigation or regulatory actions that address the
environmental impact of our energy products and services. For more information on these risks, please refer to the following
risk factors included elsewhere in this section:
•
•
“Energy efficiency and technology advances, as well as price induced customer conservation, may result in reduced
demand for our energy products and services”;
“Our operations may be adversely affected by competition from other energy sources”;
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•
•
•
“Our need to comply with, and respond to, industry-wide changes resulting from, comprehensive, complex, and
sometimes unpredictable governmental regulations, including regulatory initiatives aimed at increasing competition
within our industry, may increase our costs and limit our revenue growth, which may adversely affect our operating
results”;
“Our operations, financial results and cash flows may be adversely affected by existing and future global climate
change laws and regulations, including with respect to GHG emission restrictions, as well as market responses
thereto”; and
“We are subject to operating and litigation risks that may not be covered by insurance”.
Our potential to increase revenues may be affected by the decline in retail volumes of LPG and our ability to retain and grow
our customer base. The retail LPG distribution industry in the U.S. and many of the European countries in which we operate is
mature and has experienced either no or modest growth (or decline) the past few years, and we do not expect significant
changes to total demand in the near future. Accordingly, we expect that year-to-year industry volumes will be principally
affected by weather patterns. Therefore, our ability to grow within the LPG industry is dependent on our ability to acquire
other retail distributors and to achieve internal growth, which includes the continuation of the ACE, Cynch and National
Accounts programs in the U.S. and expansion in Europe, as well as the success of our sales and marketing programs designed to
attract and retain customers. Any failure to retain and grow our customer base and successfully acquire other distributors would
have an adverse impact on our results.
Our ability to successfully execute on strategic initiatives and achieve our long-term goals may be adversely affected if we
are not successful in identifying and completing strategic transactions and investments, or if we are unable to realize the
anticipated benefits from such strategic transactions and investments. As part of our business strategy, we have pursued, and
may continue to pursue, acquisitions, joint ventures, partnerships, divestitures, dispositions, and other strategic transactions and
relationships with third parties. We have grown the Company through investments in the U.S. and in international markets, and
have expanded our presence in the renewable energy industry. We may choose to finance any future investments with debt,
equity, cash or a combination of the three. We can give no assurances that we will find attractive investment opportunities in
the future (including renewable energy opportunities), that we will be able to complete and finance these transactions on
economically acceptable terms, that any investments and related transactions will not be dilutive to earnings or that any
additional debt incurred to finance such investment will not affect our ability to pay dividends. Moreover, certain investments
and acquisitions in the U.S. and Europe may require merger control filings with the Federal Trade Commission and the
European Commission, as applicable, and commitments (such as agreements not to compete for certain businesses) or
divestments of assets may be required to obtain clearance. Such commitments or divestments may adversely influence the
overall economics and risk profile of the contemplated transaction.
To the extent we are successful in executing these transactions, such transactions involve a number of risks. These risks include,
but are not limited to, the assumption of material liabilities, including environmental liabilities, the diversion of management’s
attention from the management of daily operations to the integration of acquired operations, difficulties in the assimilation and
retention of employees and difficulties in the assimilation of different cultures and practices and internal controls, challenges
with consolidating the operations of acquired companies into our own, as well as in the assimilation of broad and
geographically dispersed personnel and operations. We also may experience integration difficulties, including in implementing
new systems and processes and with integrating systems and processes of companies with complex operations, which can result
in inconsistencies in standards, controls, procedures and policies and may increase the risk that our internal controls are found
to be ineffective. Future investments could also result in, among other things, the failure to identify material issues during due
diligence, the risk of overpaying for assets, unanticipated capital expenditures, the failure to maintain effective internal control
over financial reporting, recording goodwill and other intangible assets at values that ultimately may be subject to impairment
charges and fluctuations in quarterly results. There can also be no assurance that our past and future investments, including our
recent investments in renewable energy, will deliver the strategic, financial, operational and environmental benefits that we
anticipate, nor can we be certain that strategic investments will remain available in the future.
Similarly, any divestitures or dispositions of assets have inherent risks, including the inability to find potential buyers upon
favorable terms, expenses associated with a divestiture, the possibility that any anticipated sale will be delayed or will not
occur, the potential impact on our cash flows and results of operations, the potential delay or failure to realize the perceived
strategic or financial benefits of the divestment or disposition, difficulties in the separation of operations, services, information
technology, products and personnel, potential loss of customers or employees, exposure to unanticipated liabilities, unexpected
costs associated with such separation, diversion of management’s attention from other business concerns and potential post-
closing claims for alleged breaches of related agreements, indemnification or other disputes. Further, any cost saving measures,
restructurings and divestitures may result in workforce reduction and consolidation of our facilities. As a result of these actions,
we may experience a loss of continuity, loss of accumulated knowledge, disruptions to our operations and inefficiency during
transitional periods. These actions could also impact employee retention. In addition, we cannot be sure that these actions will
be as successful in reducing our overall expenses as we expect or that we do not forego future business opportunities as a result
of these actions.
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The failure to successfully identify, complete, implement and manage business combinations, acquisitions, divestitures and
investments intended to advance our business strategy could have an adverse impact on our business, cash flows, financial
condition and results of operations.
Further, our long-term goal to grow our earnings per share is driven by disciplined investments and is impacted by, among other
things, our ability to increase investments in our regulated utilities businesses and generate significant fee-based income in our
Midstream and Marketing operations. Other factors, assumptions and beliefs of management and our Board regarding external
factors, including the global economy and regulatory developments, on which our long-term goals were based may also prove
to differ materially from actual future results. Accordingly, we may not achieve our stated long-term goals, or our stated long-
term goals may be negatively revised, as a result of less than expected progress toward achieving these goals.
Energy efficiency and technology advances, as well as price induced customer conservation, may result in reduced demand
for our energy products and services. The trend toward increased energy efficiency and technological advances, including
installation of improved insulation and the development of more efficient boilers and increased consumer preference for
alternative heating equipment installations, such as electric heat pumps, alongside concerted conservation measures, which have
been exacerbated particularly in Europe by the evolving energy crisis, may reduce the demand for our energy products. Prices
for LPG and natural gas are subject to volatile fluctuations as a result of changes in supply and demand as well as other market
conditions and external factors. During periods of high energy commodity costs, our prices generally increase, which may lead
to customer conservation and attrition. A reduction in demand could lower our revenues and, therefore, lower our net income
and adversely affect our cash flows. In addition, federal, European and/or local regulators may offer energy conservation
incentives or otherwise enact laws and regulations that may require mandatory conservation measures, which would reduce the
demand for our energy products. In Europe, measures are underway to decarbonize the electric generation grid, as well as
residential and commercial heating, in order to achieve EU climate change objectives, including a net zero goal by 2050. For
example, in 2018 the EU revised the Energy Performance of Buildings Directive (the “EPBD”) with the goal to create a clear
path towards a low and zero-emission and decarbonized building stock in the EU by 2050. Updates to the EPBD continue to
make their way through EU legislative approvals, which will establish stronger targets for management of new and existing
building construction and integral heating systems that focus on low or zero carbon outcomes. For example, certain EU
countries have adopted legislation mandating the replacement of existing fossil-fuel based heating systems with lower carbon
solutions and requiring newly installed heating systems to operate with renewable energy sources. Over time, these various
measures will impact fossil fuel consumption in Europe and the demand for our energy products. We cannot predict the
materiality of the effect of future conservation measures or the effect that any technological advances in heating, conservation,
energy generation or other devices might have on our operations.
Our operations may be adversely affected by competition from other energy sources. Our energy products and services face
competition from other energy sources, some of which are less costly for equivalent energy value. In addition, we cannot
predict the effect that the development of alternative energy sources might have on our operations.
Our LPG distribution businesses compete for customers against suppliers of electricity, fuel oil and natural gas. Electricity is a
major competitor of LPG but is generally more expensive than LPG on a Btu equivalent basis for space heating, water heating
and cooking. However, in Europe and elsewhere, climate change policies favoring electricity from renewable energy sources or
the use of electric-powered equipment, such as heat pumps in heating applications, may cause changes in current relative price
relationships. Moreover, notwithstanding cost or regulatory mandates or incentives, the convenience and efficiency of
electricity make it an attractive energy source for consumers and developers of new homes. Fuel oil, which is a major
competitor to propane, is a less environmentally attractive energy source. Furnaces and appliances that burn LPG must be
upgraded to run on fuel oil and vice versa, and, therefore, a conversion from one fuel to the other requires the installation of
new equipment. Our customers generally have an incentive to switch to fuel oil only if fuel oil becomes significantly less
expensive than LPG, and in multiple countries, the risk of conversion to fuel oil is diminishing due to regulations that prevent
or disfavor the installation and/or use of fuel oil boilers or fuel oil for heating applications. The gradual expansion of natural
gas distribution systems in our service areas may continue to result in the availability of natural gas in some areas that
previously depended upon LPG resulting in lower demand for LPG.
Our natural gas businesses in the U.S. compete primarily with electricity and fuel oil, and, to a lesser extent, with LPG and coal.
Competition among these fuels is primarily a function of their comparative price and the relative cost and efficiency of fuel
utilization equipment. There can be no assurance that our natural gas revenues will not be adversely affected by this
competition.
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The expansion, construction and development of our energy infrastructure assets subjects us to risks. We seek to grow our
business through the expansion, construction and development of our energy infrastructure, including new pipelines, gathering
systems, facilities and other assets. These projects are subject to state and federal regulatory oversight and require certain
property rights, such as easements and rights-of-way from public and private owners, as well as regulatory approvals, including
environmental and other permits and licenses. There is no assurance that we or our project partners, as applicable, will be able
to obtain the necessary property rights, permits and licenses in a timely and cost-efficient manner, or at all, which may result in
a delay or failure to complete a project. We may face opposition to the expansion, construction or development of new or
existing pipelines, gathering systems, facilities or other assets from environmental groups, landowners, local groups and other
advocates. This opposition could take many forms, including organized protests, attempts to block or sabotage our operations,
intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent,
disrupt, or delay the development or operation of our assets and business. Failure to complete any pending or future
infrastructure project may have a materially adverse impact on our financial condition and results of operations.
Even if we are able to successfully complete any pending or future infrastructure project, our revenues may not increase
immediately upon the expenditure of funds on a particular project or as anticipated during the lifespan of the project. As a
result, there is the risk that new and expanded energy infrastructure may not achieve our expected investment returns, which
could have a material adverse effect on our business, financial condition and results of operations.
Risks Relating to Our Business Operations, Including Internal and External Factors that May Impact Our Operational
Continuity
Our review of potential strategic alternatives may not result in the approval or completion of any specific transaction or
outcome, and the process of reviewing strategic alternatives or the outcome could adversely affect our business, financial
condition, operations and stock price. In August 2023, we announced that our Board of Directors initiated a process to evaluate
potential strategic alternatives, including cost optimization initiatives, with the intent to unlock and maximize shareholder
value. Our Board has not yet established a timeline for completion of the strategic review process, and there is no assurance that
the process will result in the approval or completion of any specific transaction or outcome. We are actively working with
financial and legal advisors in connection with our review of potential strategic alternatives.
Any potential transaction or other strategic alternative would be dependent on a number of factors that may be beyond our
control, including, among other things, market conditions, industry trends, regulatory approvals, and the availability of
financing for a potential transaction on reasonable terms. The process of reviewing potential strategic alternatives, including
optimization of our cost structure, is time consuming, may divert the attention of our Board and management from core
business operations, and may be distracting and disruptive to our business operations and long-term planning, which may cause
concern to our current or potential customers, employees, investors, strategic partners and other stakeholders, and may have a
material impact on our business and operating results or our internal controls and procedures, or result in increased volatility in
our share price. We may incur substantial expenses associated with identifying, evaluating and negotiating potential strategic
alternatives. There can be no assurance that any potential transaction or other strategic alternative, if consummated, will provide
greater value to our shareholders than that reflected in the current price of our common stock. Additionally, the outcome of the
strategic review may adversely impact our business, cash flows, operations, financial condition and stock price. Until the review
process is concluded or developments on the progress of the strategic review are disclosed, perceived uncertainties related to
our future may result in the loss of potential business opportunities, volatility in the market price of our common stock, and
difficulty attracting and retaining qualified employees and business partners. Similarly, activist investors may engage in proxy
solicitations or advance shareholder proposals, or otherwise attempt to affect changes and assert influence on our Board of
Directors and management, which could negatively impact our business and operations and cause a distraction to our Board,
management and employees.
Our information technology systems and those of our third-party vendors have been the target of cybersecurity attacks in the
past. If we are unable to protect our information technology systems against future service interruption, misappropriation of
data, or breaches of security resulting from cybersecurity attacks or other events, or if we encounter other unforeseen
difficulties in the design, implementation or operation of our information technology systems, or if our third-party vendors
or service providers experience compromises to their information technology systems, our operations could be disrupted, our
business and reputation may suffer, and our internal controls could be adversely affected. In the ordinary course of business,
we rely on information technology systems, including the Internet and third-party hosted services, to support a variety of
business processes and activities and to store sensitive data, including (i) intellectual property, (ii) our proprietary business
information and that of our suppliers and business partners, (iii) personally identifiable information of our customers and
employees, and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain
activities. In addition, we rely on our information technology systems to process financial information and results of operations
for internal reporting purposes and to comply with financial reporting, legal, and tax requirements.
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Cybersecurity incidents have recently increased in both frequency and magnitude and have involved malicious software and
attempts to gain unauthorized access to data and systems, including ransomware attacks where a target’s access to its
information systems is blocked until a ransom has been paid. The White House and various regulators, including the SEC, have
accordingly increased their focus on companies’ cybersecurity vulnerabilities and risks. Despite our security measures, our
technologies, systems, and networks have been and may continue to be the target of cybersecurity attacks or information
security breaches that could result in the unauthorized release, misuse, loss or destruction of proprietary and other information,
or other disruption of our business operations. Due to increasingly sophisticated threat actors, we may be unable to detect,
identify or prevent attacks, and even if detected, we may be unable to adequately stop, investigate or remediate our systems
given the tools and techniques being used by threat actors to circumvent controls and to remove or obfuscate forensic evidence.
Attacks and incidents may also occur due to malfeasance by employees or contractors, as well as human error as in the case of
social engineering and phishing campaigns. A number of our employees currently work remotely full-time or on a hybrid basis;
as a result, our cybersecurity program may be less effective and information technology security may be less robust for those
employees. Similarly, our third-party vendors or service providers have been impacted by cybersecurity attacks and incidents
and are subject to many, if not all, of the same risks and disruptions as described above. A loss of our information technology
systems, or temporary interruptions in the operation of our information technology systems, or those of our third-party vendors
or service providers, or any other misappropriation of data, or breaches of security could lead to investigations and fines or
penalties, litigation, increased costs for compliance and for remediation or rebuilding of our systems, and could have a material
adverse effect on our business, financial condition, results of operations, and reputation. In addition, an attack could provide an
intruder with the ability to control or alter our pipeline operations. Such an act could result in critical pipeline failures.
The efficient execution of our businesses is dependent upon the proper design, implementation and functioning of its current
and future internal systems, such as the information technology systems that support our underlying business processes. Any
significant failure or malfunction of such information technology systems may result in disruptions of our operations. In
addition, the effectiveness of our internal controls could be adversely affected if we encounter unforeseen problems with respect
to the operation of our information technology systems.
Moreover, as cybersecurity incidents increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance
in amounts and on terms we view as adequate for our operations, including the agreement to certain indemnification provisions
by our insurance providers.
Our utility transmission and distribution systems, our non-utility midstream assets, and the assets of upstream interstate
pipelines and other midstream providers may not operate as planned, which may increase our expenses or decrease our
revenues and, thus, have an adverse impact on our financial results. Our ability to manage operational risk with respect to
utility distribution and transmission and non-utility midstream assets, and the availability of natural gas delivered by interstate
natural gas pipelines and midstream gathering assets is critical to our financial results. We obtain our supply from local
Marcellus and Utica Shale sources, as well as other trading points in the U.S. If we experience physical capacity constraints on
one or more of the interstate or intrastate natural gas pipelines that supply our businesses, we may not be able to supply our
customers, which could have an adverse impact on our financial results. Our businesses also face several risks, including the
breakdown or failure of, or damage to, equipment or processes (especially due to severe weather or natural disasters), accidents
and other factors, including as a result of overpressurization of or damage to natural gas pipelines. Operation of our
transmission and distribution systems or our midstream assets below our expectations may result in lost revenues or increased
expenses, including higher maintenance costs, civil litigation and the risk of regulatory penalties.
Risks Relating to Our International Operations
Our international operations could be subject to increased risks, which may negatively affect our business results. We
operate LPG distribution and energy marketing businesses in Europe through our subsidiaries. As a result, we face risks in
conducting business abroad that we do not face domestically. Certain aspects inherent in transacting business internationally
could negatively impact our operating results, including:
• costs and difficulties in staffing and managing international operations;
• disagreements and disputes with our employees represented by a works council or union;
• strikes and work stoppages by the employees of the Company or our suppliers and vendors;
• fluctuations in currency exchange rates, particularly the euro, which can affect demand for our products, increase our
costs and adversely affect our profitability and reported results;
• new or revised regulatory requirements, including European competition and carbon emission reduction laws, that
may adversely affect the terms of contracts with customers, including with respect to exclusive supply rights and
usage restrictions, and stricter regulations applicable to the storage and handling of LPG;
• new and inconsistently enforced industry regulatory requirements, which can have an adverse effect on our
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competitive position;
• tariffs and other trade barriers;
• difficulties in enforcing contractual rights;
• local political and economic conditions as well as geopolitical conditions that could cause instability and adversely
impact the global economy or specific markets, such as the war between Russia and Ukraine; and
• potential violations of federal regulatory requirements, including anti-bribery, anti-corruption, and anti-money
laundering law, economic sanctions, the Foreign Corrupt Practices Act of 1977, as amended, and EU regulatory
requirements, including the GDPR and Sapin II.
In particular, certain legal and regulatory risks are associated with international business operations. We are subject to various
anti-corruption, economic sanctions and trade compliance laws, rules and regulations. For example, the U.S. government
imposes restrictions and prohibitions on transactions in certain foreign countries, including restrictions directed at oil and gas
activities in Russia. U.S. laws also prohibit the improper offer, payment, promise to pay, or authorization of the payment of
money or anything of value to any foreign official or political party, or to any person, knowing that all or a portion of it will be
used to influence a foreign official in his or her official duties or to secure an improper advantage. Ensuring compliance with
all relevant laws, rules and regulations is a complex task. Violation of one or more of these laws, rules or regulations could lead
to loss of import or export privileges, civil or criminal penalties for us or our employees, or potential reputational harm, which
could have a material adverse impact on earnings, cash flows and financial condition.
The European energy crisis may create LPG commodity supply challenges and could negatively impact our business results.
The geopolitical situation in Europe during 2022 led to a sharp decrease in natural gas imports from Russia to Europe. This
decrease resulted in a significant increase in natural gas prices in Europe. Although the natural gas prices have declined from
the unprecedented highs of 2022, in response to the significant price increases experienced, refineries still see an incentive to,
and are substituting a portion of their natural gas refinery fuels with, LPG leading to a decrease in the availability of inland LPG
as well as higher LPG costs. In addition, gas processing plants supplying the United Kingdom and Norway markets are
injecting LPG into the natural gas grid, decreasing the overall supply of LPG from the gas processing plants. In this context,
LPG supply patterns are substantially changing with increased reliance on sea-imports and land logistics.
We anticipate that the European energy crisis and the corresponding response by refineries and gas processing plants will
continue in Fiscal 2024, leading to continued commodity supply challenges in some markets, higher commodity costs that may
not be able to be absorbed by our customers, particularly in the Nordic countries and our Eastern European markets, and lower
consumption by our customers, among other impacts, which could have a material adverse impact on our earnings, cash flows
and overall financial condition.
Economic and geopolitical instability, including as a result of acts of war, have had, and could continue to have, an adverse
effect on our operating results, financial condition, and cash flows. In late February 2022, Russian military forces launched
significant military action against Ukraine, which has continued through the date of this Report. We do not have operations in
Russia or Ukraine. Nevertheless, the outbreak of war between Russia and Ukraine and the resulting sanctions by U.S. and
European governments, together with any additional future sanctions by them, could have a larger impact that expands into
other geographies where we do business, including our supply chain, business partners and customers in those markets, which
could result in lost sales, supply shortages, commodity price fluctuations, increased costs, transportation logistics challenges,
customer credit and liquidity issues, and lost efficiencies. The acceleration of a global energy crisis, including as a result of
restrictions on Russia’s energy exports, could similarly impact the geographies where we do business. In addition, the U.S. and
Europe have commenced certain trade actions as a result of the war between Russia and Ukraine. While significant uncertainty
exists with respect to this matter, the war between Russia and Ukraine and its broader impacts, including any increased trade
barriers or restrictions on global trade imposed by the U.S. or Europe, or further trade measures taken by Russia or other
countries in response, could have a material impact on our operating results, financial condition and cash flows.
Our energy marketing business in Europe may continue to be disrupted by extreme prices and volatility in the natural gas
and power markets in Europe, which have resulted in, and may continue to result in, a material negative impact on our
financial results. Our natural gas and power marketing businesses have traditionally relied upon relative pricing and periods of
market stability. Since the end of 2021, the European energy markets have been in an unprecedented state of volatility. The war
between Russia and Ukraine and the resulting substantial reduction of natural gas imports from Russia to Europe have led to
significant uncertainty in supply, including price volatility of both wholesale gas and power, and have created new risks that we
have experienced and expect to continue to experience within our European energy marketing business. These risks include: (i)
the ability to economically support the traditional fixed price and full requirement contracts of customers due to the significant
increased cost to adjust for shifting volumes due to excess or shortage of consumption expectations; (ii) the ability to service
typical portfolio needs with standard trading activities due to the limitations on purchasing cost effective services in the market;
(iii) the ability to pass increased and volume deviation costs, including balancing costs, onto customers due, among other
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things, to timing, regulatory and contractual constraints, (iv) the ability to maintain sourcing services to customers due to the
margining and liquidity constraints as well as maximum trading limits implemented by both clearing banks and wholesale
counterparties on energy suppliers, and (v) the ability to economically support fixed and variable price products while offering
competitive services in the market. As a result, UGI considered all scenarios with respect to the future of its energy marketing
business in Europe and decided to exit this market. UGI sold its energy marketing businesses in the United Kingdom, France
and Belgium and UGI continues to make progress on the wind-down of its energy marketing business in the Netherlands. The
risks identified with respect to our energy marketing business in Europe have resulted in and may continue to have a material
negative impact on our financial results.
Risks Relating to Our Supply Chain and Our Ability to Obtain Adequate Quantities of LPG
We are dependent on our principal LPG suppliers, which increases the risks from an interruption in supply and
transportation. During Fiscal 2023, AmeriGas Propane purchased approximately 85% of its propane needs from 20 suppliers.
If supplies from these sources were interrupted, the cost of procuring replacement supplies and transporting those supplies from
alternative locations might be materially higher and, at least on a short-term basis, our earnings could be affected. Additionally,
in certain geographic areas, a single supplier provides more than 50% of AmeriGas Propane’s propane requirements.
Disruptions in supply in these geographic areas could also have an adverse impact on our earnings. Our international businesses
are similarly dependent upon their LPG suppliers. For example, during Fiscal 2023, UGI International’s business in the United
Kingdom purchased approximately 76% of its LPG needs from two suppliers and, in Italy, approximately 72% of its supply
was sourced from two suppliers. If supplies from UGI International’s principal LPG sources are interrupted, the cost of
procuring replacement supplies and transporting those supplies from alternative locations might be materially higher and our
earnings could be adversely affected. There is no assurance that our international businesses will be able to continue to acquire
sufficient supplies of LPG to meet demand at prices or within time periods that would allow them to remain competitive.
Our ability to obtain sufficient quantities of LPG is dependent on transportation facilities and providers. Spikes in demand
caused by weather or other factors can limit our access to port terminals and other transportation and storage facilities, disrupt
transportation and limit our ability to obtain sufficient quantities of LPG. A significant increase in port and similar fees and
fuel prices may also adversely affect our transportation costs and business. Transportation providers (rail and truck) in some
circumstances have limited ability to provide additional resources in times of peak demand. Moreover, the ability of our
transportation providers to maintain a staff of qualified truck drivers is critical to the success of our business. Regulatory
requirements and an improvement in the economy could reduce the number of eligible drivers or require us to pay higher
transportation fees as our transportation providers seek to pass on additional labor costs associated with attracting and retaining
drivers.
Our profitability is subject to LPG pricing and inventory risk. The retail LPG business is a “margin-based” business in which
gross profits are dependent upon the excess of the sales price over LPG supply costs. LPG is a commodity, and, as such, its
unit price is subject to fluctuations in response to changes in supply or other market conditions. We have no control over
supplies, commodity prices or market conditions. Consequently, the unit price of the LPG that our subsidiaries and other
distributors and marketers purchase can change rapidly over a short period of time. Most of our domestic LPG product supply
contracts permit suppliers to charge posted prices at the time of delivery or negotiated prices based on the current industry index
prices established at major U.S. storage points such as Mont Belvieu, Texas or Conway, Kansas. Most of our international LPG
supply contracts are based on internationally quoted market prices. We also purchase a portion of our supplies in the spot
market. Because our subsidiaries’ profitability is sensitive to changes in wholesale LPG supply costs, we will be adversely
affected if we cannot pass on increases in the cost of LPG to our customers, or if there is a delay in passing on such cost
increases. Due to competitive pricing in the industry, our subsidiaries may not fully be able to pass on product cost increases to
our customers when product costs rise, or when our competitors do not raise their product prices in a timely manner. Finally,
market volatility may cause our subsidiaries to sell LPG at less than the price at which they purchased it, which would
adversely affect our operating results.
We offer our customers various fixed-price LPG programs, and a significant number of our customers utilize our fixed-price
programs. In order to manage the price risk from offering these services, we utilize our physical inventory position,
supplemented by forward commodity transactions with various third parties having terms and volumes substantially the same as
our customers’ contracts, but there can be no assurance that such measures will be effective. In periods of high LPG price
volatility, the fixed-price programs create exposure to over or under-supply positions as the demand from customers may
significantly exceed or fall short of supply procured. In addition, if LPG prices decline significantly subsequent to customers
signing up for a fixed-price program, there is a risk that customers will default on their commitments, adversely affecting our
results of operations.
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Changes in commodity market prices may have a significant negative effect on our liquidity. Depending on the terms of our
contracts with suppliers as well as our use of financial instruments to reduce volatility in the cost of LPG and natural gas,
changes in the market price of LPG and natural gas can create margin payment obligations for us and expose us to increased
liquidity risk. In addition, increased demand for domestically produced LPG and natural gas overseas may, depending on
production volumes in the U.S., result in higher domestic prices and expose us to additional liquidity risks.
Supplier and derivative counterparty defaults may have a negative effect on our operating results. When we enter into fixed-
price sales contracts with customers, we typically enter into fixed-price purchase contracts with suppliers. Depending on
changes in the market prices of products compared to the prices secured in our contracts with suppliers of LPG, natural gas and
electricity, a default of or force majeure by one or more of our suppliers under such contracts could cause us to purchase those
commodities at higher prices from alternate suppliers, which would have a negative impact on our operating results.
Additionally, we economically hedge the market risk associated with a substantial portion of our supply purchases using certain
derivative instruments. Such changes in market prices of the aforementioned commodities could result in material exposures or
significant concentrations of balances with derivative counterparties. If certain counterparties were unable to meet the
obligations set forth in these derivative contracts and we were unable to fully mitigate this exposure via collateral deposit
requirements and master netting arrangements, such outcomes could result in a negative effect on our operating results.
Our business is dependent on the domestic and global supply chain to ensure that equipment, materials and other resources
are available to both expand and maintain services in a safe and reliable manner. Moreover, prices of equipment, materials
and other resources have increased recently and may continue to increase in the future. Failure to secure equipment,
materials and other resources on economically acceptable terms may adversely impact our financial condition and results of
operations. Current domestic and global supply chain issues are delaying the delivery, and in some cases resulting in shortages
of, materials, equipment and other resources that are critical to our business operations. Failure to eliminate or manage the
constraints in the supply chain may impact the availability of items that are necessary to support normal operations as well as
materials that are required for continued infrastructure growth, including the replacement of end-of-life assets.
Moreover, inflation has been and continues to be an area of increasing economic concern, both domestically and internationally.
Changes in the costs of providing our energy products and services, including price increases in equipment and materials as
well as increases in labor and distribution costs, have negatively impacted, and may continue to negatively impact, our financial
condition and results of operations and/or result in corresponding price increases for the energy products and services we offer
our customers.
Risks Relating to Government Regulation and Oversight
Regulators may not approve the rates we request and existing rates may be challenged, which may adversely affect our
results of operations. In our Utilities segment, our distribution operations are subject to regulation by the PAPUC, WVPSC and
MDPSC, depending on the state in which the operations are located. These regulatory bodies, among other things, approve the
rates that Utilities may charge utility customers, thus impacting the returns that Utilities may earn on the assets that are
dedicated to its operations. Utilities periodically files, and we expect to continue to periodically file, requests with these
regulatory bodies to increase base rates charged to customers in the respective states in which Utilities operates. If Utilities is
required in a rate proceeding to reduce the rates it charges its utility customers, or is unable to obtain approval for timely rate
increases from the appropriate regulatory body, particularly when necessary to cover increased costs, Utilities’ revenue growth
will be limited and earnings may decrease.
The enactment of proposed or future tax legislation may adversely impact our financial condition and results of operations.
We continue to assess the impact of various U.S. federal, state, local and international legislative proposals that could result in a
material increase to our U.S. federal, state, local and/or international taxes. We cannot predict what impact, if any, changes in
federal policy, including tax policies, will have on our industry or whether any specific legislation will be enacted or the terms
of any such legislation. However, if such proposals were to be enacted, or if modifications were to be made to certain existing
regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our
cost of tax compliance or otherwise adversely affecting our financial position, results of operations, cash flows and liquidity.
Changes in applicable U.S. or foreign tax laws and regulations, or their interpretation and application, including the possibility
of retroactive effect, could affect our tax expense and profitability. Such impact may also be affected positively or negatively by
subsequent potential judicial interpretation or related regulation or legislation which cannot be predicted with certainty.
Our need to comply with, and respond to, industry-wide changes resulting from, comprehensive, complex, and sometimes
unpredictable governmental regulations, including regulatory initiatives aimed at increasing competition within our
industry, may increase our costs and limit our revenue growth, which may adversely affect our operating results. While we
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generally refer to our Utilities segment as our “regulated segment,” there are many governmental regulations that have an
impact on all of our businesses. Currently, we are subject to extensive and changing international, federal, state, and local laws
and regulations including, but not limited to, safety, health, transportation, tax, and environmental laws and regulations that
govern the marketing, storage, distribution, and transportation of our energy products. Moreover, existing statutes and
regulations may be revised or reinterpreted and new laws and regulations may be adopted or become applicable to us that may
affect our businesses in ways that we cannot predict.
New regulations, or a change in the interpretation of existing regulations, could result in increased expenditures. In addition,
for many of our operations, we are required to obtain permits from regulatory authorities and, in some cases, such regulatory
permits could subject our operations to additional regulations and standards of conduct. Failure to obtain or comply with these
permits or applicable regulations and standards of conduct could result in civil and criminal fines or the cessation of the
operations in violation. Governmental regulations and policies in the U.S. and Europe may provide for subsidies or incentives
to customers who use alternative fuels instead of carbon fuels. The EU has committed to cut CO2 emissions and EU member
states are proposing and implementing a range of subsidies and incentives to achieve the EU’s climate change goals. These
subsidies and incentives may result in reduced demand for our energy products and services.
We are investigating and remediating contamination at a number of present and former operating sites in the U.S., including
former sites where we or our former subsidiaries operated MGPs. We have also received claims from third parties that allege
that we are responsible for costs to clean up properties where we or our former subsidiaries operated a MGP or conducted other
operations. Most of the costs we incur to remediate sites outside of Pennsylvania cannot currently be recovered in PAPUC rate
proceedings, and insurance may not cover all or even part of these costs. Our actual costs to clean up these sites may exceed
our current estimates due to factors beyond our control, such as:
•
•
•
•
the discovery of presently unknown conditions;
changes in environmental laws and regulations;
judicial rejection of our legal defenses to third-party claims; or
the insolvency of other responsible parties at the sites at which we are involved.
Moreover, if we discover additional contaminated sites, we could be required to incur material costs, which would reduce our
net income.
We also may be unable to timely respond to changes within the energy and utility sectors that may result from regulatory
initiatives to further increase competition within our industry. Such regulatory initiatives may create opportunities for additional
competitors to grow their business or enter our markets and, as a result, we may be unable to maintain our revenues or continue
to pursue our current business strategy.
Our operations, financial results and cash flows may be adversely affected by existing and future global climate change laws
and regulations, including with respect to GHG emission restrictions, as well as market responses thereto. Climate change
continues to attract considerable public and scientific attention in the U.S. and in foreign countries. As a result, numerous
proposals have been made, and could continue to be made, at the international, national, regional, state and local levels of
government to monitor and limit GHG emissions and climate impact. These efforts have included consideration of, among
other things, cap-and-trade programs, carbon taxes, GHG reporting and tracking programs, and regulations that directly limit
GHG emissions from certain sources.
Increased regulation of GHG emissions, or climate impact generally, could have significant additional adverse impacts on us as
well as our suppliers, vendors, and customers. The adoption and implementation of any laws or regulations imposing
obligations on, or limiting GHG emissions from, our equipment and operations could require us to incur significant costs to
reduce GHG emissions associated with our operations or could adversely affect demand for our energy products. The potential
increase in our operating costs could include, but are not limited to, new costs to operate and maintain our facilities, install new
emission controls on our facilities, acquire allowances to authorize our GHG emissions, pay taxes related to our GHG
emissions, administer and manage a GHG emissions reduction program, and adversely impact the value of certain assets. We
may not be able to pass on resulting increases in costs to customers. In addition, changes in regulatory policies that result in a
reduction in the demand for hydrocarbon products and carbon-emitting fuel sources that are deemed to contribute to climate
change, or restrict the use of such products or fuel sources, may reduce volumes available to us for processing, transportation,
marketing and storage and could cause increases in costs or production disruptions. These developments could have a material
adverse effect on our results of operations, financial results, valuation and useful life of assets, and cash flows.
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Changes in data privacy and data protection laws and regulations or any failure to comply with such laws and regulations,
could adversely affect our business and financial results. As part of our operations, we collect, use, store and transfer the
personal information and data of our employees as well as customer, vendor and supplier data in and across various
jurisdictions. There has been increased public attention regarding the use of personal information and data transfers,
accompanied by legislation and regulations intended to strengthen data protection, information security and consumer and
personal privacy. The laws in these areas continue to develop and the changing nature of data protection, information security
and privacy laws in the U.S., the EU and elsewhere could impact our processing of the personal information and data of our
employees, vendors, suppliers and customers, which could lead to increased operating costs. Existing and emerging laws and
regulations are inconsistent across jurisdictions and are subject to evolving, differing, and sometimes conflicting interpretations.
The EU adopted the GDPR, which expanded EU data protections, in certain circumstances, to companies outside of the EU
processing data of EU residents, regardless of whether the processing occurs in the EU. Similarly, the State of California
legislature passed the California Consumer Privacy Act of 2018 (the “CCPA”) and the California Privacy Rights Act (the
“CPRA”), which, among other things, grant a number of rights to California residents with respect to their personal
information, and require companies to make extensive disclosures to consumers about such companies’ data collection, use, and
sharing practices and inform consumers of their personal information rights. In addition, the CPRA created a new state privacy
regulator, which will likely result in greater regulatory activity and enforcement in the privacy area. Comprehensive privacy
laws with some similarities to the CCPA and CPRA have been proposed or passed at the U.S. federal and state levels, such as
the Virginia Consumer Data Protection Act (the “VCDPA”) and the Colorado Privacy Act (the “CPA”). Additionally, the
Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to
impose standards for the online collection, use, dissemination and security of data as well as requiring disclosures about these
practices. We expect that there will continue to be new laws, regulations and industry standards concerning data privacy and
data protection, including artificial intelligence, in the U.S., the EU and other jurisdictions, and we cannot yet determine the
impact such laws, regulations, interpretations and standards may have on our business.
While we have invested significant time and resources in our GDPR and U.S. privacy law compliance program, emerging and
changing data privacy and data protection requirements as well as other new and upcoming European and U.S. federal and state
privacy and cybersecurity laws and industry standards may cause us to incur substantial fines, additional significant costs or
require us to change our business practices. Any failure or perceived failure to comply may result in proceedings or actions
against us by government entities or individuals, including class actions. Moreover, any inquiries or investigations, any other
government actions or any actions by individuals may be costly to comply with, result in negative publicity, increase our
operating costs, require significant management time and attention and subject us to remedies that may harm our business,
including fines, demands or orders that we modify or cease existing business practices.
The provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), related
regulations, and the rules adopted thereunder and other regulations, including the European Market Infrastructure
Regulation (the “EMIR”), may have an adverse effect on our ability to use derivative instruments to hedge risks associated
with our business. Our derivative hedging activities are subject to Title VII of the Dodd-Frank Act, which regulates the over-
the-counter derivatives market and entities that participate in that market. The Dodd-Frank Act requires the CFTC and the
federal banking regulators to implement the Dodd-Frank Act’s provisions through rulemaking, including rules regarding
mandatory clearing, trade execution and margin requirements. We have and expect to continue to qualify for and rely upon an
exception from mandatory clearing and trade execution requirements for swaps entered into by commercial end-users to hedge
commercial risks. In addition to relief from the clearing mandate, we also expect to continue to qualify for an exception for non-
financial end-users from the margin requirements on uncleared swaps. If we are not able to do so and have to post margin
supporting our uncleared swaps in the future, our costs of entering into and maintaining swaps would be increased.
Based on information available as of the date of this Report, the effect of such requirements will be likely to (directly or
indirectly) increase our overall costs of entering into derivatives transactions. In particular, new margin requirements, position
limits and significantly higher capital charges resulting from new global capital regulations, even if not directly applicable to us,
may cause an increase in the pricing of derivatives transactions entered into by market participants to whom such requirements
apply or affect our overall ability to enter into derivatives transactions with certain counterparties. While costs imposed directly
on us due to regulatory requirements for derivatives under the Dodd-Frank Act, such as reporting, recordkeeping and electing
the end-user exception from mandatory clearing, are relatively minor, costs imposed upon our counterparties may increase the
cost of our doing business in the derivatives markets to the extent such costs are passed on to us.
The EMIR may result in increased costs for over-the-counter derivative counterparties trading in the EU and may also lead to
an increase in the costs of, and demand for, the liquid collateral that the EMIR requires central counterparties to accept.
Although we expect to continue to qualify as a non-financial counterparty under the EMIR, and thus not be required to post
margin, we are currently subject to limited derivatives reporting requirements that could expand in the future, and may also be
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subject to increased regulatory requirements, including recordkeeping, marking to market, timely confirmations, portfolio
reconciliation and dispute resolution procedures. Provisions under the EMIR could significantly increase the cost of derivatives
contracts, materially alter the terms of derivatives contracts and reduce the availability of derivatives to protect against risks that
we encounter. The increased trading costs and collateral costs may have an adverse impact on our business, contracts, financial
condition, operating results, cash flow, liquidity and prospects.
General Risks that May Impact Our Business and Our Shareholders
The inability to attract, develop, retain and engage key employees could adversely affect our ability to execute our strategic,
operational and financial plans. We are dependent upon the continued service and contributions of our management and key
technical and professional employees, as well as our ability to transfer the knowledge and expertise of our workforce to new
employees as our employees retire or we otherwise experience employee turnover. In addition, the success of our operations
depends on our ability to identify, attract and develop skilled and experienced key employees. There is increased competition
for experienced management and technical and professional employees, which could increase the costs associated with
identifying, attracting and retaining such individuals. We may not be able to attract, retain or engage key employees if our
compensation and benefits program is not as robust as the compensation and benefits programs offered by other employers for
similar roles. Further, a lack of employee engagement could lead to loss of productivity and increased employee burnout,
turnover, absenteeism, safety incidents as well as decreased customer satisfaction. Additionally, uncertainty as a result of our
ongoing review of strategic alternatives could negatively impact our ability to recruit and retain key employees. If we cannot
identify, attract, develop, retain and engage management, technical and professional employees, along with other qualified
employees, to support the various functions of our business, our operations and financial performance could be adversely
impacted.
We may not be able to collect on the accounts of our customers. We depend on the viability of our customers for collections of
accounts receivable and notes receivable. Moreover, our businesses serve numerous retail customers, and as we grow our
businesses organically and through acquisitions, our retail customer base is expected to expand. There can be no assurance that
our customers will not experience financial difficulties in the future or that we will be able to collect all of our outstanding
accounts receivable or notes receivable. Any such nonpayment by our customers could adversely affect our business.
We are subject to operating and litigation risks that may not be covered by insurance. Our business operations are subject to
all of the operating hazards and risks normally incidental to the handling, storage and distribution of combustible products, such
as LPG and natural gas, and the generation of electricity. These risks could result in substantial losses due to personal injury
and/or loss of life, and severe damage to and destruction of property and equipment arising from explosions and other
catastrophic events, including acts of terrorism. As a result of these and other incidents, we are sometimes a defendant in legal
proceedings and litigation arising in the ordinary course of business, including regulatory investigations, claims, lawsuits and
other proceedings. Additionally, environmental contamination or other incidents resulting in an environmental impact have
resulted in, and could continue to result in, legal or regulatory proceedings (see “Our need to comply with, and respond to,
industry-wide changes resulting from, comprehensive, complex, and sometimes unpredictable governmental regulations,
including regulatory initiatives aimed at increasing competition within our industry, may increase our costs and limit our
revenue growth, which may adversely affect our operating results” for more information on such proceedings). There can be no
assurance that our insurance coverage will be adequate to protect us from all material expenses related to pending and future
claims or that such levels of insurance would be available in the future at economical prices. Moreover, defense and settlement
costs may be substantial, even with respect to claims and investigations that have no merit. If we cannot resolve these matters
favorably, our business, financial condition, results of operations and future prospects may be materially adversely affected.
The risk of natural disasters, pandemics and catastrophic events, including acts of war and terrorism, may adversely affect
the economy and the price and availability of LPG, other refined fuels and natural gas. Natural disasters, pandemics and
catastrophic events, such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, terrorist attacks, war (including
conflict in the Middle East), political unrest and other similar occurrences, may adversely impact the demand for, price and
availability of LPG (including propane), other refined fuels and natural gas, which could adversely impact our financial
condition and results of operations, our ability to raise capital and our future growth. The impact that the foregoing may have
on our industries in general, and on us in particular, is not known at this time. A natural disaster, pandemic or an act of war or
terrorism could result in disruptions of crude oil or natural gas supplies and markets (the sources of LPG), cause price volatility
in the cost of LPG, fuel oil and natural gas, and our infrastructure facilities could be directly or indirectly impacted.
Additionally, if our means of supply transportation, such as rail, truck or pipeline, are delayed or temporarily unavailable due to
a natural disaster, pandemic, war or terrorist activity, we may be unable to transport LPG and other refined fuels in a timely
manner or at all. A lower level of economic activity could result in a decline in energy consumption, which could adversely
affect our revenues or restrict our future growth. Instability in the financial markets as a result of a natural disaster, pandemic,
war or terrorism could also affect our ability to raise capital. We have opted to purchase insurance coverage for natural disasters
and terrorist acts within our property and casualty insurance programs, but we can give no assurance that our insurance
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coverage would be adequate to fully compensate us for any losses to our business or property resulting from natural disasters or
terrorist acts.
Our indebtedness may adversely affect our business, financial condition and operating results. Our debt agreements also
contain covenants that restrict our operational flexibility. As of September 30, 2023, we had total indebtedness of
approximately $7 billion. Our indebtedness could adversely affect our business, financial condition, operating results and
operational flexibility by, among other things:
•
•
•
•
•
•
impairing our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions
or other purposes;
limiting operational flexibility and our ability to pursue business opportunities and implement certain business
strategies;
impairing our ability to respond to changing business and economic conditions;
impairing our ability to repay our indebtedness at maturity, especially where our debt agreements contain significant
maturities;
exposing us to the risk of increased interest rates where our debt agreements have variable interest rates; and
placing us at a competitive disadvantage compared to our competitors that have proportionately less debt and fewer
guarantee obligations.
The occurrence of any of such events could have a material adverse effect upon our business, financial condition and results of
operations. Further, if our credit ratings were to be downgraded, or general market conditions were to ascribe higher risk to our
rating levels, our industry, or us, our access to capital and the cost of any future debt financing could be negatively impacted.
Additionally, our ability to make payments of principal and interest on our indebtedness depends upon our future performance,
which is subject to economic and political conditions, seasonal cycles and financial, business and other factors, many of which
are beyond our control. If we are unable to generate sufficient cash flow from operations to service our indebtedness, we may
be required to, among other things, refinance or restructure all or a portion of our indebtedness, reduce or delay planned capital
or operating expenditures or sell selected assets. Such measures might not be sufficient to enable us to service our indebtedness,
and any such refinancing, restructuring or sale of assets might not be available on favorable terms or at all.
In addition, our debt agreements generally contain customary affirmative covenants, including, among others, covenants
pertaining to the delivery of financial statements; certain financial covenants; notices of default and certain other material
events; payment of obligations; preservation of corporate existence, rights, privileges, permits, licenses, franchises and
intellectual property; maintenance of property and insurance and compliance with laws, as well as customary negative
covenants, including, among others, limitations on the incurrence of liens, investments and indebtedness; mergers, acquisitions
and certain other fundamental changes; transfers, leases or dispositions of assets outside the ordinary course of business;
restricted payments; changes in our line of business; transactions with affiliates and burdensome agreements. These covenants
could affect our ability to operate our business, respond to changes in business and economic conditions, obtain additional
financing (if needed), and may increase the amount of interest expense we ultimately pay pursuant to the debt agreements.
Further, our ability to comply with the covenants and restrictions contained in our debt agreements may be affected by events
beyond our control, including prevailing economic, financial and industry conditions or regulatory changes. A failure to comply
with the covenants in our debt agreements could result in a default or an event of default. Upon an event of default, unless
waived, the lenders could elect to terminate their commitments, cease making further loans, require cash collateralization of
letters of credit, cause their loans to become due and payable in full, foreclose against any assets securing the debt under our
debt agreements and force us and our subsidiaries into bankruptcy or liquidation. If the payment of our debt is accelerated, we
cannot be certain that we will have sufficient funds available to pay down the indebtedness (together with accrued interest and
fees), or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all. This could
have a material adverse effect upon our business, financial condition and results of operations.
Additionally, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral,
which may further restrict our business operations or conflict with covenant restrictions then in effect. As a result, there is no
guarantee that financings will be available in the future to fund our obligations, or that they will be available on terms consistent
with our expectations. See the liquidity section in Item 7. Management's Discussion and Analysis for additional information on
our current debt agreements.
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An impairment of our assets could adversely affect our financial condition and results of operations. We test goodwill,
intangible, and other long-lived assets for impairment annually or whenever events or circumstances indicate impairment may
have occurred. To the extent the value of goodwill or long-lived assets becomes impaired, the Company may be required to
incur impairment charges that could have a material impact on our results of operations. The testing of assets for impairment
requires us to make significant estimates about our future events, including our performance and projected cash flows, as well
as other assumptions. These estimates can be affected by numerous factors, including developments in the global economic
environment, including the prospect of higher interest rates, developments in regulatory, industry and market conditions,
changes in business operations, changes in competition or changes in technologies. Any changes in key assumptions, or actual
performance compared with key assumptions, about our business and its future prospects could affect the fair value of one or
more of our assets, which may result in an impairment charge. We have incurred and may continue to incur impairment charges
on certain of our assets that could have a material impact on our results of operations.
Our holding company structure could limit our ability to pay dividends or service debt. We are a holding company whose
material assets are the stock of our subsidiaries. Our ability to pay dividends on our Common Stock and to pay principal and
accrued interest on our debt, if any, depends on the payment of dividends to us by our principal subsidiaries. Payments to us by
our subsidiaries, in turn, depend upon their consolidated results of operations and cash flows. The operations of our subsidiaries
are affected by conditions beyond our control, including weather, regulations, competition in national and international markets
we serve, the costs and availability of propane, butane, natural gas, electricity, and other energy sources, capital market
conditions and interest rates and other business risks impacting liquidity levels. The ability of our subsidiaries to make
payments to us is also affected by the level of indebtedness of our subsidiaries, which is substantial, and the restrictions on
payments to us imposed under the terms of such indebtedness.
Volatility in credit and capital markets may restrict our ability to grow, increase the likelihood of defaults by our suppliers
and vendors, customers and counterparties and adversely affect our operating results. Volatility in credit and capital markets
may create additional risks to our businesses in the future. We are exposed to financial market risk (including refinancing risk)
resulting from factors beyond our control, including, among other things, commodity price volatility and changes in interest
rates and conditions in the credit and capital markets. Adverse developments in the credit markets may increase our possible
exposure to the liquidity, default and credit risks of our suppliers and vendors, counterparties associated with derivative
financial instruments and our customers.
We depend on our intellectual property and failure to protect that intellectual property could adversely affect us. We seek
trademark protection for our brands in each of our businesses, and we invest significant resources in developing our business
brands. Failure to maintain our trademarks and brands could adversely affect our customer-facing businesses and our
operational results.
Declines in the stock market or bond market, and a low interest rate environment, may negatively impact our pension
liability. Declines in the stock market and a low interest rate environment historically have resulted in a significant impact on
our pension liability and funded status. Declines in the stock or bond market and valuation of stocks or bonds, combined with
low interest rates, could further impact our pension liability and funded status and increase the amount of required contributions
to our pension plans.
Unless we otherwise consent in writing, our Amended and Restated Bylaws designate a state court located in Montgomery
County, Pennsylvania or, if no state court located within such county has jurisdiction over such action or proceeding, the
federal United States District Court for the Eastern District of Pennsylvania, as the sole and exclusive forum for certain
types of actions and proceedings that may be initiated by our shareholders, which could discourage lawsuits against us and
our directors and officers. Our Amended and Restated Bylaws provide that, unless we otherwise consent in writing, a state
court located in Montgomery County, Pennsylvania or, if no state court located within such county has jurisdiction over such
action or proceeding, the federal United States District Court for the Eastern District of Pennsylvania, as the sole and exclusive
forum for: (a) any derivative action or proceeding brought on behalf of us; (b) any action or proceeding asserting a claim of
breach of duty owed to us or our shareholders by any director, officer, or other employee of ours; (c) any action or proceeding
asserting a claim against us or against any of our directors, officers or other employees arising pursuant to, or involving any
interpretation or enforcement of, any provision of the Pennsylvania Associations Code, Pennsylvania Business Corporation
Law of 1988, or our Amended and Restated Articles of Incorporation or Amended and Restated Bylaws; and (d) any action or
proceeding asserting a claim peculiar to the relationship between or among us and our officers, directors, and shareholders, or
otherwise governed by or involving the internal affairs doctrine. This exclusive forum provision does not apply to suits brought
to enforce a duty or liability created by the Exchange Act or the Securities Act.
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This exclusive forum provision may limit the ability of our shareholders to bring a claim in a judicial forum that such
shareholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and
our directors and officers. Alternatively, if a court outside of Pennsylvania were to find this exclusive forum provision
inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we
may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our
business, results of operations and financial condition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 3. LEGAL PROCEEDINGS
With the exception of those matters set forth in Note 16 to Consolidated Financial Statements included in Item 15 of this
Report, no material legal proceedings are pending involving the Company, any of its subsidiaries, or any of their properties, and
no such proceedings are known to be contemplated by governmental authorities other than claims arising in the ordinary course
of business.
ITEM 4. MINE SAFETY DISCLOSURES
None.
EXECUTIVE OFFICERS
Information regarding our executive officers is included in Part III of this Report and is incorporated in Part I by reference.
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PART II:
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Dividend Policy
Our Common Stock is traded on the New York Stock Exchange under the symbol “UGI.” On November 10, 2023, we had
6,313 holders of record of Common Stock.
Payment of dividends is subject to declaration by the Board of Directors. Factors considered in determining dividends include
our profitability and expected capital needs. Subject to these qualifications, we presently expect to continue to pay dividends on
a quarterly basis.
Equity Compensation Plan Information
Information regarding the securities authorized for issuance under our equity compensation plans can be found under Part III of
this Report.
Issuer Purchases of Equity Securities
The Company did not repurchase any shares of its Common Stock during the quarter ended September 30, 2023. As of
September 30, 2023, the Company had 6.50 million shares of Common Stock available for repurchase through an extension of a
previous share repurchase program announced by the Company on February 2, 2022. The Board of Directors authorized the
repurchase of up to 8 million shares of Common Stock over a four-year period expiring in February 2026.
Recent Sale of Unregistered Securities
The Company did not sell any unregistered securities during Fiscal 2023.
Performance Graph
The following graph compares the cumulative five-year total shareholder return (stock price appreciation and the reinvestment
of dividends) on an investment of $100 in UGI Common Stock, the S&P 500 Index, and the S&P 500 Utilities Index over the
five years from September 30, 2018, through September 30, 2023. The stock performance shown on the graph below is based
on historical data and is not necessarily indicative of future stock price performance.
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ITEM 6. SELECTED FINANCIAL DATA
Intentionally omitted.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
MD&A discusses our results of operations for Fiscal 2023 and Fiscal 2022, and our financial condition. For discussion of our
results of operations and cash flows for Fiscal 2022 compared with Fiscal 2021, refer to “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in our Fiscal 2022 Annual Report on Form 10-K, filed with the
SEC on November 21, 2022. MD&A should be read in conjunction with Items 1 and 2, “Business and Properties,” Item 1A,
“Risk Factors,” and the Consolidated Financial Statements in Item 8 below including “Segment Information” included in Note
22 to Consolidated Financial Statements.
Because most of our businesses sell or distribute energy products used in large part for heating purposes, our results are
significantly influenced by temperatures in our service territories, particularly during the heating-season months of October
through March. Accordingly, our results of operations, after adjusting for the effects of gains and losses on derivative
instruments not associated with current-period transactions as further discussed below, are significantly higher in our first and
second fiscal quarters.
Executive Overview
Recent Developments
Review of Strategic Alternatives. In August 2023, the Company announced the commencement of a strategic review, focused
on the LPG businesses, intending to unlock and maximize shareholder value. The Company is exploring a full range of options
with the goal of reducing UGI’s earnings volatility and strengthening our balance sheet. In conjunction with the strategic
review, the Company is also pursuing actions to optimize its cost structure and re-align its capital allocation priorities. The
Company expects to continue on its existing plans while the review of strategic alternatives is ongoing.
Impairment of Goodwill. During the quarter ended June 30, 2023, the Company identified interim impairment indicators
related to goodwill within the AmeriGas Propane reporting unit: (1) AmeriGas Partners issued $500 million of Senior Notes at
an interest rate of 9.375%, which was significantly higher than the interest rates on the other AmeriGas Propane debt
obligations; and (2) financial projections for the AmeriGas Propane reporting unit were reduced significantly compared to
previous forecasts following declines in gross margins and customer retention and higher operating expenses. The Company
concluded that these events constituted triggering events that indicate that the AmeriGas Propane goodwill may be impaired
and, as such, performed an interim impairment test of its goodwill as of May 31, 2023.
Based on such impairment test, the estimated fair value of the AmeriGas Propane reporting unit was determined to be less than
its carrying value. As a result, the Company recorded a non-cash pre-tax goodwill impairment charge of $656 million, included
in “Impairment of goodwill” on the Consolidated Statement of Income, to reduce the carrying value of AmeriGas Propane to its
fair value.
The performance of the AmeriGas Propane reporting unit and the potential for future developments in the global economic
environment, including the prospect of higher interest rates, introduces a heightened risk for additional impairment in the
AmeriGas Propane reporting unit. If there is continued deterioration in the results of operations, a portion or all of the
remaining recorded goodwill for the AmeriGas Propane reporting unit, which was $1.3 billion as of September 30, 2023, could
be subject to further impairment.
See Note 12 to Consolidated Financial Statements for additional information.
UGI International Energy Marketing Transactions
During Fiscal 2023 and in October 2023, the Company entered into a number of transactions pursuant to its previously
announced decision to exit its European energy marketing business. The European energy marketing business primarily markets
natural gas and electricity to customers through third-party distribution systems in France, the Netherlands and, prior to its
sales, in Belgium and the United Kingdom.
48
France. In October 2023, UGI International, through a wholly-owned subsidiary, sold substantially all of its energy marketing
business located in France for a net cash payment to the buyer of $25 million (which approximates a pre-tax loss) subject to
certain adjustments principally related to the pending transfer of certain customer contracts. As of September 30, 2023, the $25
million cash to be paid to the buyer in October 2023 had been placed in escrow and is reflected in “Other current assets” on the
September 30, 2023 Consolidated Balance Sheet. The carrying values of the assets and liabilities associated with this business,
principally comprising certain commodity derivative instruments, energy certificates and certain working capital, have been
classified as held-for-sale on the September 30, 2023 Consolidated Balance Sheet. The Company did not recognize any
impairment associated with the assets held for sale in Fiscal 2023 because, in accordance with our policy related to such assets,
any impairment is limited to the disposal group’s long-lived assets, and such assets were not material.
Belgium. In September 2023, UGI International, through a wholly-owned subsidiary, sold its energy marketing business
located in Belgium for a net cash payment to the buyer of $3 million. Pursuant to the sale agreement, the Company transferred
to the buyer certain assets, principally comprising customer and energy broker contracts. In conjunction with the sale, the
Company recorded a pre-tax loss of $6 million ($5 million after-tax) which amount includes the net payment to the buyer, the
write-off of certain prepaid energy broker payments and associated transaction costs and fees. The loss is reflected in “Loss on
disposal of UGI International energy marketing business” on the Consolidated Statements of Income.
United Kingdom. In October 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing
business located in the U.K. for a net cash payment to the buyer of $19 million which includes certain working capital
adjustments. In conjunction with the sale, the Company recorded a pre-tax loss of $215 million ($151 million after-tax)
substantially all of which loss was due to the non-cash transfer of commodity derivative instruments associated with the
business. The loss is reflected in “Loss on disposal of UGI International energy marketing business” on the Consolidated
Statements of Income. At the date of closing of the sale, these commodity derivative instruments had a net carrying value of
$206 million which is attributable to net unrealized gains on such instruments. At September 30, 2022, these derivative
instruments were classified as held-for-sale assets and liabilities on the Consolidated Balance Sheets and had a net carrying
value of $276 million. The change in the carrying value of these derivative instruments between September 30, 2022 and
October 21, 2022 resulted from changes in their fair values during that period.
Netherlands. In September 2023, a substantial number of DVEP’s customers agreed to modify their energy marketing contracts
whereby the Company will continue to provide for the delivery of electricity and natural gas at fixed prices through December
31, 2023 but the Company’s obligations to provide future services will be terminated effective January 1, 2024. As
consideration for the early termination of such contracts, the Company has agreed to make cash payments to the customers
equal to the fair values of specific commodity derivative instruments associated with periods after December 31, 2023. The
carrying values of these commodity derivative instruments are subject to change until such contracts are settled, and the cash
payments are made, during the first quarter of Fiscal 2024. At September 30, 2023, the carrying value of these commodity
derivative instruments was $44 million. The early termination agreements with DVEP customers are considered contract
modifications and the cash consideration to be paid to these customers has been, and will be, reflected as a reduction in
revenues on a pro-rata basis, over the remaining performance period of such agreements through December 31, 2023.
Accordingly, during the fourth quarter of Fiscal 2023, the Company reduced its revenues from these customers by $4 million,
which represents the pro-rated performance obligation through September 30, 2023 from the aforementioned $44 million.
In conjunction with the wind-down of its European energy marketing business, in July 2023, DVEP agreed to sell a substantial
portion of its power purchase agreements to a third party for a cash payment to the buyer of $6 million. The closing of the sale
is expected to occur during the first quarter of Fiscal 2024. The loss from the sale is not expected to be material.
During the first quarter of Fiscal 2023, the Company recorded a $19 million pre-tax impairment charge to reduce the carrying
values of certain assets associated with its energy marketing business in the Netherlands, comprising property, plant and
equipment and intangible assets. The impairment charge is reflected in “Operating and administrative expenses” on the
Consolidated Statements of Income and included in the UGI International reportable segment.
49
Global Macroeconomic Conditions
Beginning in Fiscal 2021 and continuing into Fiscal 2023, global commodity and labor markets have experienced significant
inflationary pressures attributable to various economic and political factors, including, among others: supply chain issues
including those associated with labor shortages; significant increase and volatility in energy commodity prices; and geopolitical
and regulatory conditions resulting from the war between Russia and Ukraine. These factors have contributed to inflationary
pressures as evidenced by increases in various consumer price indices. In response to these inflationary pressures, central banks
in the U.S. and Europe increased interest rates during Fiscal 2022 and Fiscal 2023. In addition, during the last several years, we
have experienced significant volatility in energy commodity prices, particularly in LPG, natural gas and electricity prices,
which, have resulted in substantial fluctuations in the fair values of our commodity derivative instruments. These inflationary
pressures and commodity price fluctuations have resulted in, among other things, fluctuations in inventory and cost of sales,
and increases in certain operating and distribution expenses across all of our businesses. Commodity price fluctuations have
also significantly affected the cash collateral deposit requirements of our derivative instrument counterparties and the restricted
cash required to be held in our derivative broker and clearing institution accounts. We cannot predict the duration or total
magnitude of these conditions and the effects such conditions may have on our future business, financial results, financial
position, liquidity and cash flows. However, we continue to monitor and respond to these global economic and geopolitical
conditions and remain focused on managing our financial condition and liquidity as these conditions continue to evolve.
Non-GAAP Financial Measures
UGI management uses “adjusted net income attributable to UGI Corporation” and “adjusted diluted earnings per share,” both of
which are non-GAAP financial measures, when evaluating UGI’s overall performance. Management believes that these non-
GAAP measures provide meaningful information to investors about UGI’s performance because they eliminate gains and losses
on commodity and certain foreign currency derivative instruments not associated with current-period transactions and other
significant discrete items that can affect the comparison of period-over-period results.
UGI does not designate its commodity and certain foreign currency derivative instruments as hedges under GAAP. Volatility in
net income attributable to UGI Corporation can occur as a result of gains and losses on such derivative instruments not
associated with current-period transactions. These gains and losses result principally from recording changes in unrealized
gains and losses on unsettled commodity and certain foreign currency derivative instruments and, to a much lesser extent,
certain realized gains and losses on settled commodity derivative instruments that are not associated with current-period
transactions. However, because these derivative instruments economically hedge anticipated future purchases or sales of energy
commodities, or in the case of certain foreign currency derivatives, reduce volatility in anticipated future earnings associated
with our foreign operations, we expect that such gains or losses will be largely offset by gains or losses on anticipated future
energy commodity transactions or mitigate volatility in anticipated future earnings. Non-GAAP 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.
50
The following tables reflect the adjustments referred to above and reconcile net income (loss) attributable to UGI Corporation,
the most directly comparable GAAP measure, to adjusted net income attributable to UGI Corporation, and reconcile diluted
earnings per share, the most directly comparable GAAP measure, to adjusted diluted earnings per share:
(Millions of dollars, except per share amounts)
Adjusted net income (loss) attributable to UGI Corporation:
Year Ended September 30,
2023
2022
AmeriGas Propane
UGI International
Midstream & Marketing
Utilities
Corporate & Other (a)
Net (loss) income attributable to UGI Corporation
Net losses (gains) on commodity derivative instruments not associated with current-period
transactions (net of tax of $(419) and $140, respectively)
Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(11) and
$14, respectively)
Loss associated with impairment of AmeriGas Propane goodwill (net of tax of $4 and $0,
respectively)
Loss on extinguishments of debt (net of tax of $(2) and $(3), respectively)
Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax
of $0 and $(1), respectively)
Business transformation expenses (net of tax of $(3) and $(2), respectively)
AmeriGas operations enhancement for growth project (net of tax of $(6) and $(2),
respectively)
Impairments of certain equity method investments (net of tax of $0 and $(13), respectively)
Restructuring costs (net of tax of $0 and $(8), respectively)
Costs associated with exit of the UGI International energy marketing business (net of tax of
$(67) and $(1), respectively)
Net gain on sale of UGI headquarters building (net of tax of $4 and $0, respectively)
Impact of change in tax law
Total adjustments (a) (b)
$
71 $
172
193
219
(2,157)
(1,502)
1,225
27
660
7
—
7
18
—
—
181
(10)
—
2,115
Adjusted net income attributable to UGI Corporation
$
613 $
112
175
163
206
417
1,073
(458)
(36)
—
8
1
7
3
22
21
4
—
(19)
(447)
626
51
Adjusted diluted earnings per share:
AmeriGas Propane
UGI International
Midstream & Marketing
Utilities
Corporate & Other (a)
(Loss) earnings per share - diluted (c)
Net losses (gains) on commodity derivative instruments not associated with current-period
transactions
Unrealized losses (gains) on foreign currency derivative instruments
Loss associated with impairment of AmeriGas Propane goodwill
Loss on extinguishments of debt
Business transformation expenses
AmeriGas operations enhancement for growth project
Impairments of certain equity method investments
Restructuring costs
Costs associated with exit of the UGI International energy marketing business
Net gain on sale of UGI headquarters building
Impact of change in tax law
Total adjustments (a)
Adjusted diluted earnings per share (c)
Year Ended September 30,
2023
2022
$
0.33 $
0.80
0.89
1.01
(10.19)
(7.16)
5.77
0.13
3.14
0.03
0.03
0.09
—
—
0.86
(0.05)
—
10.00
$
2.84 $
0.52
0.81
0.76
0.95
1.93
4.97
(2.11)
(0.17)
—
0.03
0.03
0.02
0.10
0.10
0.02
—
(0.09)
(2.07)
2.90
(a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income attributable to
UGI Corporation. These adjustments have been excluded from the segment results to align with the measure used by our
CODM in assessing segment performance and allocating resources. See Note 22 to Consolidated Financial Statements for
additional information related to these adjustments, as well as other items included within Corporate & Other.
(b) Income taxes associated with pre-tax adjustments determined using statutory business unit tax rates.
(c) The loss per share for Fiscal 2023, was determined excluding the effect of 6.13 million dilutive shares as the impact of such
shares would have been antidilutive due to the net loss for the period, while the adjusted earnings per share for Fiscal 2023,
was determined based upon fully diluted shares of 215.94 million.
52
Fiscal 2023 Compared with Fiscal 2022
Discussion. Net (loss) income attributable to UGI Corporation was $(1,502) million in Fiscal 2023 (equal to $(7.16) per diluted
share) compared to $1,073 million in Fiscal 2022 (equal to $4.97 per diluted share). These results include net (losses) gains
from changes in unrealized commodity derivative instruments and certain foreign currency derivative instruments of $(1,252)
million and $494 million in Fiscal 2023 and Fiscal 2022, respectively. The higher losses from changes in commodity derivative
instruments in Fiscal 2023 principally reflects significant declines in commodity energy prices in Europe following
unprecedented increases in such prices during Fiscal 2022.
Net loss attributable to UGI Corporation in Fiscal 2023 also includes (1) a $660 million loss associated with impairment of
AmeriGas Propane goodwill; (2) $181 million costs associated with exit of our UGI International energy marketing business in
Europe, principally reflecting loss on the sale of the energy marketing business located in the U.K. and Belgium and wind-down
activities in the Netherlands; (3) external advisory fees of $18 million associated with AmeriGas operations enhancement for
growth project; (4) a $10 million net gain on sale of UGI Corporation’s headquarters building; (5) loss on extinguishment of
debt of $7 million at AmeriGas Propane; and (6) business transformation expenses of $7 million associated with corporate
support functions.
Net loss attributable to UGI Corporation in Fiscal 2022 also includes (1) impairments of certain equity method investments of
$22 million; (2) restructuring costs of $21 million largely attributable to reductions in workforce and related costs; (3) $19
million of income tax benefits related to tax law changes; (4) loss on extinguishment of debt of $8 million at UGI International;
(5) business transformation expenses of $7 million associated with corporate support functions; (6) $4 million costs associated
with exit of our UGI International energy marketing business in the U.K.; (7) external advisory fees of $3 million associated
with AmeriGas operations enhancement for growth project; and (8) acquisition and integration expenses of $1 million
associated with the Mountaineer Acquisition.
Adjusted net income attributable to UGI Corporation for Fiscal 2023 was $613 million (equal to $2.84 per diluted share)
compared to adjusted net income attributable to UGI Corporation for Fiscal 2022 of $626 million (equal to $2.90 per diluted
share). The decrease in adjusted net income attributable to UGI Corporation during Fiscal 2023 reflects lower earnings
contributions from our LPG businesses, primarily AmeriGas Propane. Such decrease was partially offset by higher earnings
contributions from our Midstream & Marketing and Utilities segments. In Fiscal 2023, temperatures in all of our business
segments, except for AmeriGas Propane, were warmer than the prior year.
AmeriGas Propane’s adjusted net income attributable to UGI Corporation decreased $41 million during Fiscal 2023. This
decrease principally reflects higher operating and administrative expenses primarily resulting from, among other things, higher
vehicle expenses, higher overtime and other employee-related costs associated with distribution activity, and the effects of
continuing inflationary pressures. These factors were partially offset by higher gains on sales of fixed assets.
UGI International’s adjusted net income attributable to UGI Corporation decreased $3 million during Fiscal 2023. This
decrease mainly reflects the translation effects of weaker foreign currencies. UGI International operating results principally
reflect (1) lower total LPG margin principally due to the effects of the lower LPG retail volumes sold attributable to the
significantly warmer weather and lower residential LPG consumption resulting from energy conservation measures in Europe
due in large part to the war between Ukraine and Russia; and (2) higher operating and administrative expenses primarily
resulting from the effects of continuing inflationary pressures. These decreases were partially offset by higher margin from our
natural gas energy marketing activities and higher retail LPG average unit margins attributable to strong margin management
efforts and lower commodity prices.
Midstream & Marketing adjusted net income in Fiscal 2023 was $30 million higher than the prior year. This increase
principally reflects incremental earnings contributions from UGI Moraine East and Pennant, partially offset by lower margins
related to natural gas marketing activities.
Utilities Fiscal 2023 adjusted net income increased $13 million compared to the prior year. The increase was largely related to
the increase in base rates and the implementation of the weather normalization adjustment at PA Gas Utility, both of which
became effective during the first quarter of Fiscal 2023. This increase was partially offset by higher operating and
administrative expenses.
53
AmeriGas Propane
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses
Operating income / earnings before interest expense and
income taxes
Retail gallons sold (millions)
2023
2022
Increase (Decrease)
$
$
$
$
2,581
1,331
950
268
823
$
$
$
$
2,943
1,330
889
307
888
$
$
$
$
(362)
1
61
(39)
(65)
—
(12) %
— %
7 %
(13) %
(7) %
—
Degree days – % colder (warmer) than normal (b)
0.5 %
(0.8) %
(a) Total margin represents revenues less cost of sales.
(b) Deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather
data based on weather statistics provided by NOAA for 344 regions in the United States, excluding Alaska and Hawaii.
Average temperatures during Fiscal 2023 were 0.5% colder than normal and 1.9% colder than the prior year. Total retail
propane gallons sold decreased 7% during Fiscal 2023 due to the effects of driver staffing shortages (which also limited
growth), continuing customer attribution and structural conservation.
Average daily wholesale propane commodity prices during Fiscal 2023 at Mont Belvieu, Texas, one of the major supply points
in the U.S., were approximately 39% lower than such prices during Fiscal 2022. Total revenues decreased $362 million during
Fiscal 2023 largely reflecting the lower retail propane volumes sold ($179 million), lower wholesale revenues ($100 million)
and the effects of lower average retail propane selling prices ($76 million). Total cost of sales decreased $363 million during
Fiscal 2023 largely attributable to the lower average propane product costs ($160 million), lower wholesale cost of sales ($101
million) and the lower retail propane volumes sold ($95 million).
AmeriGas Propane total margin increased $1 million in Fiscal 2023 largely attributable to higher average retail propane unit
margins ($84 million), substantially offset by the lower retail propane volumes sold ($83 million).
AmeriGas Propane operating income and earnings before interest expense and income taxes decreased $39 million in Fiscal
2023 primarily attributable to higher operating and administrative expenses ($61 million), partially offset by higher other
operating income ($21 million), largely related to gains on sales of fixed assets. The increase in operating and administrative
expenses reflects, among other things, higher vehicle expenses, higher staffing, overtime and other employee-related costs
associated with distribution activity and higher advertising expenses, partially offset by lower salaries and benefits expenses,
including the carryover impact of the workforce reductions made during Fiscal 2022.
UGI International
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses
Operating income
Earnings before interest expense and income taxes
LPG retail gallons sold (millions)
2023
2022
Increase (Decrease)
$
$
$
$
$
2,965
920
623
215
234
729
$
$
$
$
$
3,686
935
611
237
254
799
$
$
$
$
$
(721)
(20) %
(15)
12
(22)
(20)
(70)
—
(2) %
2 %
(9) %
(8) %
(9) %
—
Degree days - % (warmer) than normal (b)
(10.5) %
(2.6) %
(a) Total margin represents total revenues less total cost of sales.
(b) Deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather
data at locations in our UGI International service territories.
Average temperatures during Fiscal 2023 were 10.5% warmer than normal and 8.4% warmer than Fiscal 2022. Total LPG retail
gallons sold decreased 9% during Fiscal 2023, largely attributable to the significantly warmer weather; lower consumption,
principally from residential customers, primarily resulting from the European conservation measures due in large part to high
global energy prices and the war between Russia and Ukraine; lower cylinder volumes; and reduced crop drying campaigns.
These decreases were partially offset by growth due to natural gas conversions.
54
UGI International base-currency results are translated into U.S. dollars based upon exchange rates experienced during the
reporting periods. The functional currency of a significant portion of our UGI International results is the euro and, to a much
lesser extent, the British pound sterling. During Fiscal 2023 and Fiscal 2022, the average unweighted euro-to-dollar translation
rates were approximately $1.07 and $1.08, respectively, and the average unweighted British pound sterling-to-dollar translation
rates were approximately $1.23 and $1.28, respectively. Fluctuations in these foreign currency exchange rates can have a
significant impact on the individual financial statement components discussed below. The Company uses forward foreign
currency exchange contracts entered into over multi-year periods to reduce the volatility in earnings that may result from such
changes in foreign currency exchange rates. These forward foreign currency exchange contracts resulted in realized net gains
of $15 million and $13 million in Fiscal 2023 and Fiscal 2022, respectively.
Average wholesale prices for propane and butane during Fiscal 2023 in northwest Europe were approximately 25% and 26%
lower, respectively, compared to Fiscal 2022. UGI International revenues and cost of sales decreased $721 million and $706
million, respectively, in Fiscal 2023. The decrease in revenues and cost of sales principally reflects the impact from our energy
marketing business of lower volumes sold, partially offset by the impact of higher prices. The decrease in revenues and cost of
sales also reflects the impact of the lower LPG retail volumes sold and the lower average LPG product costs. The decrease in
revenues and cost of sales also reflects the translation effects of the weaker foreign currencies (approximately $115 million and
$88 million, respectively).
UGI International total margin decreased $15 million during Fiscal 2023 primarily reflecting the effects of the lower LPG retail
volumes sold ($90 million) and the translation effects of the weaker foreign currencies (approximately $27 million). These
factors were substantially offset by higher average LPG retail unit margins attributable to strong margin management efforts,
the lower average LPG product costs and higher total margin from our energy marketing business ($29 million). The higher
energy marketing margin reflects higher natural gas energy marketing margin, partially offset by lower electricity energy
marketing margin.
UGI International operating income and earnings before interest expense and income taxes decreased $22 million and $20
million, respectively, during Fiscal 2023. The decrease in operating income principally reflects the decrease in total margin
($15 million) and higher operating and administrative expenses ($12 million), partially offset by higher other operating income
($8 million). The higher operating and administrative expenses during Fiscal 2023 primarily reflects the effects of inflationary
increases, partially offset by lower distribution and personnel-related costs and the translation effects of the weaker foreign
currencies (approximately $11 million). The higher other operating income during Fiscal 2023 primarily represents higher
foreign currency transaction gains ($12 million) and higher cylinder deposit income ($5 million), partially offset by lower gains
associated with sales of fixed assets ($11 million). The decrease in earnings before interest expense and income taxes in Fiscal
2023 largely reflects the decrease in operating income partially offset by higher realized gains on foreign currency exchange
contracts ($2 million) entered into in order to reduce volatility in UGI International earnings resulting from the effects of
changes in foreign currency exchange rates.
Midstream & Marketing
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses
Operating income
Earnings before interest expense and income taxes
2023
2022
Increase (Decrease)
$
$
$
$
$
1,847 $
487 $
133 $
285 $
291 $
2,326 $
450 $
129 $
246 $
269 $
(479)
37
4
39
22
(21) %
8 %
3 %
16 %
8 %
(a) Total margin represents total revenues less total cost of sales.
Average temperatures across Midstream & Marketing’s energy marketing territory during Fiscal 2023 were 11.0% warmer than
normal and 6.0% warmer than the prior year.
Midstream & Marketing’s revenues decreased $479 million during Fiscal 2023, principally reflecting lower revenues from
natural gas marketing activities ($519 million), including the effects of peaking and capacity management activities, principally
reflecting significantly lower average natural gas prices and, to a lesser extent, lower volumes from the warmer weather. This
decrease was partially offset by higher natural gas gathering and processing activities ($43 million), primarily due to the impact
on revenues from the prior-year acquisitions of UGI Moraine East and Pennant.
55
Midstream & Marketing cost of sales decreased $516 million during Fiscal 2023, primarily reflecting the lower natural gas
costs ($511 million) related to the previously mentioned natural gas marketing activities.
Midstream & Marketing total margin increased $37 million in Fiscal 2023, primarily reflecting incremental natural gas
gathering and processing activities ($49 million), primarily from the prior year acquisitions of UGI Moraine East and Pennant,
partially offset by lower margins from natural gas marketing activities ($8 million), including the effects of peaking and
capacity management activities, despite the benefits from extremely cold weather in late December 2022. In Fiscal 2022, the
margin from natural gas marketing activities included the positive impact of settlement timing of certain multi-year commodity
storage hedge contracts.
Midstream & Marketing operating income and earnings before interest expense and income taxes during Fiscal 2023 increased
$39 million and $22 million, respectively. The increase in operating income principally reflects the increase in total margin
($37 million) and higher other operating income ($13 million), partially offset by higher depreciation and amortization expense
($7 million) and higher operating and administrative expenses ($4 million). The increase in earnings before interest expense
and income taxes principally reflects the higher operating income ($39 million), partially offset by lower income from equity
investees ($17 million) following the acquisition of the remaining 53% ownership interest in Pennant during the fourth quarter
of Fiscal 2022.
Utilities
(Dollars in millions)
Revenues
Total margin (a)
Operating and administrative expenses (a)
Operating income
Earnings before interest expense and income taxes
Gas Utility system throughput – bcf
Core market
Total
Electric Utility distribution sales - gwh
2023
2022
Increase (Decrease)
$
$
$
$
$
$
$
$
$
$
1,854
877
368
357
365
96
375
959
$
$
$
$
$
1,620
801
332
327
336
100
363
997
234
76
36
30
29
(4)
12
(38)
—
14 %
9 %
11 %
9 %
9 %
(4) %
3 %
(4) %
—
Gas Utility degree days – % (warmer) than normal (b)
(11.7) %
(7.5) %
(a) Total margin represents total revenues less total cost of sales and revenue-related taxes (i.e. Electric Utility gross receipts
and business and occupation taxes) of $24 million and $21 million, respectively, during Fiscal 2023 and Fiscal 2022. For
financial statement purposes, revenue-related taxes are included in “Operating and administrative expenses” on the
Consolidated Statements of Income (but are excluded from operating expenses presented above).
(b) Deviation from average heating degree days is determined on a 10-year period utilizing volume-weighted weather data
based on weather statistics provided by NOAA for airports located within Gas Utility service territories.
Temperatures in Gas Utility’s service territories during Fiscal 2023 were 11.7% warmer than normal and 4.8% warmer than the
prior year. The decrease in Gas Utility core market volumes during Fiscal 2023 is largely related to the warmer weather,
partially offset by growth in the core market customers. The decrease in Electric Utility distribution sales volumes during
Fiscal 2023 is primarily attributable to warmer weather.
Utilities revenues increased $234 million in Fiscal 2023 reflecting a $225 million increase in Gas Utility revenues and a $9
million increase in Electric Utility revenues. The increase in Gas Utility revenues was largely driven by higher PGC and PGA
rates reflecting higher natural gas costs; the effects of the increase in base rates and weather normalization adjustments for PA
Gas Utility that went into effect during the first quarter of Fiscal 2023; and higher other revenues. These increases were
partially offset by the effects on core market volumes of the warmer weather and lower off-system sales. The increase in
Electric Utility revenues during Fiscal 2023 was largely driven by higher DS rates, reflecting higher power costs.
Utilities cost of sales (including revenue-related taxes) was $977 million in Fiscal 2023 compared with $819 million in Fiscal
2022. The increase of $158 million is primarily attributable to Gas Utility ($149 million) mainly reflecting higher PGC and
PGA rates and higher other cost of sales, partially offset by lower cost of sales associated with off-system sales. Electric Utility
cost of sales increased $9 million in Fiscal 2023 largely reflecting the higher DS rates.
56
Utilities total margin increased $76 million during Fiscal 2023 substantially attributable to higher Gas Utility total margin
mainly reflecting the effects of the increase in base rates and weather normalization adjustments for PA Gas Utility that went
into effect during the first quarter of Fiscal 2023 and, to a much lesser extent, impacts from growth in the core market
customers and higher other revenues. Electric Utility margin was comparable to the prior year.
Utilities operating income and earnings before interest expense and income taxes during Fiscal 2023 increased $30 million and
$29 million, respectively, compared to the prior year. These increases largely reflect the previously mentioned increase in total
margin, partially offset by higher operating and administrative expenses ($36 million) and higher depreciation expense ($8
million). The higher operating and administrative expenses reflect, among other things, higher uncollectible accounts expenses,
contract labor costs and personnel-related expenses. The higher depreciation expense compared to the prior year reflects the
effects of continued distribution system capital expenditure activity.
Interest Expense and Income Taxes
Our consolidated interest expense during Fiscal 2023 was $379 million compared to $329 million during the prior year. The
increase in interest expense largely reflects higher credit agreement interest rates and borrowings, higher average interest rates
on UGI Corporation long-term debt and higher average long-term debt outstanding principally at our Utilities and Midstream &
Marketing segments.
Our effective income tax rate decreased between Fiscal 2022 and Fiscal 2023, primarily due to the release of a valuation
allowance related to the utilization of foreign tax credits and the availability of investment tax credits in Fiscal 2023 that were
not available in Fiscal 2022. These decreases were partially offset by (1) a higher concentration of pre-tax losses in higher
income tax rate jurisdictions resulting from losses on derivative instruments; (2) establishing a valuation allowance for interest
expense disallowance at AmeriGas Propane; and (3) the impact on income taxes from the goodwill impairment at AmeriGas
Propane, which included certain adjustments to the associated deferred tax assets. For additional information on our income
taxes, including tax law changes, see Note 7 to Consolidated Financial Statements.
Financial Condition and Liquidity
The Company expects to have sufficient liquidity including cash on hand and available borrowing capacity, to continue to
support long-term commitments and ongoing operations despite uncertainties associated with ongoing global macroeconomic
conditions including, among others, changes in consumer behavior, the inflationary cost environment and ongoing energy
commodity price volatility. Our total available liquidity balance, comprising cash and cash equivalents and available borrowing
capacity on our revolving credit facilities, totaled approximately $1.6 billion and $1.7 billion at September 30, 2023 and 2022,
respectively. The Company does not have any senior notes or term loans maturing in the next twelve months. The Company
cannot predict the duration or total magnitude of the uncertain economic factors mentioned above and the total effects they will
have on its liquidity, debt covenants, financial condition or the timing of capital expenditures. UGI and its subsidiaries were in
compliance with its debt covenants as of September 30, 2023. See Note 6 to the Consolidated Financial Statements for
additional information on compliance.
We depend on both internal and external sources of liquidity to provide funds for working capital and to fund capital
requirements. Our short-term cash requirements not met by cash from operations are generally satisfied with borrowings under
credit facilities and, in the case of Midstream & Marketing, also from a Receivables Facility. Long-term cash requirements are
generally met through the issuance of long-term debt or equity securities. We believe that each of our business units has
sufficient liquidity in the forms of cash and cash equivalents on hand; cash expected to be generated from operations; credit
facility and Receivables Facility borrowing capacity; and the ability to obtain long-term financing to meet anticipated
contractual and projected cash commitments. Issuances of debt and equity securities in the capital markets and additional credit
facilities may not, however, be available to us on acceptable terms.
The primary sources of UGI’s cash and cash equivalents are the dividends and other cash payments made to UGI or its
corporate subsidiaries by its principal business units. Our cash and cash equivalents totaled $241 million at September 30, 2023,
compared with $405 million at September 30, 2022. Excluding cash and cash equivalents that reside at UGI’s operating
subsidiaries, at September 30, 2023 and 2022, our cash and cash equivalents totaled $51 million and $140 million, respectively.
Such cash is available to pay dividends on UGI Common Stock and for investment purposes. The decrease in cash and cash
equivalents since September 30, 2022, can be attributed to, among other things, temporary restrictions on the payment of
dividends from AmeriGas OLP to UGI resulting from the use of an equity cure, as defined by the 2022 AmeriGas OLP Credit
Agreement and an increase in cash outflow in the form of capital contributions to AmeriGas Partners. In November 2023, the
Company amended the 2022 AmeriGas OLP Credit agreement to reduce both the revolver amount and the minimum interest
57
coverage ratio. As of September 30, 2023 the Partnership was in compliance with all debt covenants as set forth in the amended
2022 AmeriGas OLP Credit Agreement without the consideration of the equity cure provisions, alleviating the restriction on the
subsidiaries ability to pay dividends to the parent. See Note 6 to the Consolidated Financial Statements for additional
information.
During Fiscal 2023 and Fiscal 2022, our principal business units paid cash dividends and made other cash payments to UGI and
its subsidiaries as follows:
(Millions of dollars)
AmeriGas Propane
UGI International
Midstream & Marketing
Utilities
Total
Common and Preferred Stock
Issuance of Equity Units
2023
2022
$
— $
248
215
5
$
468 $
227
116
—
—
343
On May 25, 2021, the Company issued 2.2 million Equity Units with a total notional value of $220 million. Each Equity Unit
has a stated amount of $100 and consists of (1) a 10% undivided beneficial ownership interest in one share of Convertible
Preferred Stock with a liquidation preference of $1,000 per share and (2) a 2024 Purchase Contract. The Company received
approximately $213 million in proceeds from the issuance of the Equity Units, net of offering expenses and underwriting costs
and commissions, and issued 220,000 shares of Convertible Preferred Stock, recording $213 million in “Preferred stock” on the
accompanying Consolidated Balance Sheet. The proceeds were used to pay a portion of the purchase price for the Mountaineer
Acquisition and related fees and expenses, and for general corporate purposes. For additional information on the Mountaineer
Acquisition and the issuance of Equity Units, see Notes 5 and 13 to the Consolidated Financial Statements.
Dividends
Quarterly dividends per share of UGI Common Stock paid during Fiscal 2023 and Fiscal 2022 were as follows:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Total
2023
2022
0.360 $
0.360
0.375
0.375
1.470 $
0.345
0.345
0.360
0.360
1.410
$
$
On November 16, 2023, UGI’s Board of Directors declared a cash dividend equal to $0.375 per common share. The dividend
will be payable on January 1, 2024, to shareholders of record on December 15, 2023.
Repurchases of Common Stock
During Fiscal 2023 and Fiscal 2022, the Company repurchased 600,000 shares and 900,000 shares of its common stock at a
total purchase price of $22 million and $38 million, respectively. For additional information on the authorization of these
repurchases, see Note 13 to the Consolidated Financial Statements.
58
Long-term Debt and Credit Facilities
The Company’s debt outstanding at September 30, 2023 and 2022, comprised the following:
(Millions of dollars)
Short-term borrowings
Long-term debt (including current
maturities):
Senior notes
Term loans
Other long-term debt
Unamortized debt issuance costs
Total long-term debt
Total debt
Significant Financing Activities
AmeriGas
Propane
$
— $
UGI
International
214 $
2023
Midstream
& Marketing Utilities
103 $
Corp. &
Other
332 $ — $
2022
Total
Total
649 $
368
$
$
$
2,400 $
—
—
(15)
2,385 $
2,385 $
424 $
317
6
(8)
739 $
953 $
— $ 1,505 $ — $ 4,329 $ 4,472
1,871
794
322
41
(15)
(33)
820 $ 1,649 $ 1,007 $ 6,600 $ 6,632
923 $ 1,981 $ 1,007 $ 7,249 $ 7,000
1,967
351
(47)
129
21
(6)
727
283
(3)
2022 AmeriGas OLP Credit Agreement. Under the 2022 AmeriGas OLP Credit Agreement, AmeriGas OLP, as borrower, is
required to comply with financial covenants related to leverage and interest coverage measured at the Partnership and at
AmeriGas OLP. On November 15, 2023, the Company entered into an amendment to the 2022 AmeriGas OLP Credit
Agreement, which amends certain provisions of the credit agreement dated as of September 28, 2022 to, among other things, (i)
reduce the maximum revolver amount from $600 million to $400 million, (ii) reduce the minimum interest coverage ratio,
effective for the fourth quarter of Fiscal 2023 through the end of the fourth quarter of Fiscal 2024 and (iii) beginning for the
first quarter of Fiscal 2025, the minimum interest coverage ratio will remain reduced if the net leverage ratio is below a
threshold as defined by the agreement; if the net leverage ratio exceeds such threshold, the minimum interest coverage ratio will
revert to the original ratio as defined by the agreement.
As of March 31, 2023, AmeriGas OLP was in breach of the leverage ratio debt covenant and interest coverage ratio, which it
cured with the funds received from UGI. The 2022 AmeriGas OLP Credit Agreement contains an equity cure provision, which
allows AmeriGas OLP’s direct or indirect parent, including UGI and its other subsidiaries, to fund capital contributions to
eliminate any EBITDA (as defined in the 2022 AmeriGas OLP Credit Agreement) shortfalls that would otherwise result in non-
compliance with these financial covenants. UGI made capital contributions to AmeriGas OLP of $20 million and $11 million
on March 31, 2023 and April 24, 2023, respectively, which in aggregate represented one equity cure in accordance with the
2022 AmeriGas OLP Credit Agreement. As a result of these capital contributions, AmeriGas OLP and the Partnership were in
compliance with its financial covenants after considering the equity cure provision as of June 30, 2023 and March 31, 2023. As
of September 30, 2023 the Partnership was in compliance with all debt covenants as set forth in the amended 2022 AmeriGas
OLP Credit Agreement without the consideration of the equity cure provisions.
UGI also provided an irrevocable letter of support whereby UGI has committed to fund any such EBITDA shortfalls and debt
service, if any. Based on the support and the projected EBITDA, AmeriGas OLP is expected to remain in compliance with its
financial debt covenants for the succeeding twelve-month period. In addition, in May 2023, the Company contributed $52
million in an equity contribution to AmeriGas Partners principally to fund debt service on AmeriGas Partners Senior Notes.
UGI Utilities 2023 Credit Agreement. On November 9, 2023, UGI Utilities entered into the UGI Utilities 2023 Credit
Agreement providing for borrowings up to $375 million (including a $50 million sublimit for letters of credit and a $38 million
sublimit for swingline loans). UGI Utilities may request an increase in the amount of loan commitments under the credit
agreement to a maximum aggregate amount of $125 million. The interest rates applicable to borrowings under the UGI Utilities
2023 Credit Agreement will remain unchanged. The credit agreement contains customary covenants and default provisions and
requires compliance with certain financial covenants including a maximum debt to capitalization ratio as defined in the
agreement. The maturity of the credit agreement was extended to November 2024 with an additional automatic 5-year extension
upon receipt of authorization for such extension from the PAPUC. Borrowings under the credit agreement may be used to
refinance UGI Utilities existing indebtedness, finance the working capital needs of UGI Utilities and for general corporate
purposes.
59
On December 13, 2022, UGI Utilities entered into an amendment to the UGI Utilities Credit Agreement, providing for
borrowings up to $425 million and to replace the use of LIBOR with Term SOFR.
AmeriGas Partners Senior Notes. On May 31, 2023, AmeriGas Partners and AmeriGas Finance Corp. issued $500 million
principal amount of 9.375% Senior Notes due May 2028. The 9.375% Senior Notes rank equally with AmeriGas Partners’
existing senior notes. The net proceeds from the issuance of the 9.375% Senior Notes, together with cash on hand, a $150
million cash contribution from the Company and other sources of liquidity, were used for the early repayment, pursuant to a
tender offer and notice of redemption, of all AmeriGas Partners 5.625% Senior Notes having an aggregate principal balance of
$675 million, plus tender premiums and accrued and unpaid interest. In conjunction with the early repayment of the 5.625%
Senior Notes, in June 2023 the Partnership recognized a pre-tax loss of $9 million primarily comprising tender premiums and
the write-off of unamortized debt issuance costs, which is reflected in “Loss on extinguishments of debt” on the Consolidated
Statements of Income.
UGI International 2023 Credit Facilities Agreement. On March 7, 2023, UGI International, LLC and its indirect wholly-
owned subsidiary, UGI International Holdings B.V., entered into the UGI International 2023 Credit Facilities Agreement, a
five-year unsecured senior facilities agreement, maturing March 7, 2028, with a consortium of banks. The UGI International
2023 Credit Facilities Agreement consists of (1) a €300 million variable-rate term loan facility ("Facility A") and (2) a €500
million multicurrency revolving credit facility, including a €100 million sublimit for swingline loans ("Facility B"). We have
designated borrowings under Facility A as a net investment hedge. In connection with the entering into of the UGI International
2023 Credit Facilities Agreement, UGI International, LLC paid off in full and terminated the UGI International Credit Facilities
Agreement, dated as of October 18, 2018. Borrowings under the multicurrency revolving credit facility may be used to finance
the working capital needs of UGI International, LLC and its subsidiaries and for general corporate purposes.
UGI Energy Services Credit Agreement. On May 12, 2023, Energy Services entered into the second amendment to the UGI
Energy Services Credit Agreement, which provides that the Term SOFR rate (as defined in the UGI Energy Services Credit
Agreement) shall replace LIBOR as a reference rate. After giving effect to the second amendment, the UGI Energy Services
Credit Agreement shall bear interest at a floating rate of, at Energy Services’ option, either (i) Term SOFR plus the Applicable
Rate (as defined in the UGI Energy Services Credit Agreement) plus a credit spread adjustment of 0.10%, or (ii) the base rate
plus the Applicable Rate. The Applicable Rate will be based on the leverage of Energy Services.
Energy Services Amended Term Loan Credit Agreement. On February 23, 2023, Energy Services entered into the Energy
Services Amended Term Loan Credit Agreement, the first amendment to the Energy Services Term Loan Credit Agreement,
dated August 13, 2019. The Energy Services Amended Term Loan Credit Agreement provides, among other items, that (i) the
outstanding principal amount of the loans shall be increased by $125 million to $800 million, (ii) the maturity date of the loans
shall be extended to February 22, 2030, and (iii) Term SOFR (as defined in the Energy Services Amended Term Loan Credit
Agreement) shall replace LIBOR as a reference rate.
Mountaineer 2023 Credit Agreement. On October 20, 2022, Mountaineer entered into the Mountaineer 2023 Credit
Agreement, as borrower, with a group of lenders. The Mountaineer 2023 Credit Agreement amends and restates a previous
credit agreement and provides for borrowings up to $150 million, including a $20 million sublimit for letters of credit.
Mountaineer may request an increase in the amount of loan commitments to a maximum aggregate amount of $250 million,
subject to certain terms and conditions. Borrowings under the Mountaineer 2023 Credit Agreement can be used to finance the
working capital needs of Mountaineer and for general corporate purposes. The Mountaineer 2023 Credit Agreement is
scheduled to expire in November 2024, and Mountaineer has the option, with the consent of the lenders, to request extension of
the maturity date to November 2025, and then to November 2026, upon fulfillment of specified conditions.
UGI Corporation Credit Facility Agreement. On May 12, 2023, the Company entered into the second amendment to the UGI
Corporation Credit Agreement, which provides that the Term SOFR rate (as defined in the UGI Corporation Credit Agreement)
shall replace LIBOR as a reference rate. After giving effect to the second amendment, the UGI Corporation Credit Agreement
shall bear interest at a floating rate of, at the Company’s option, either (i) Term SOFR plus the Applicable Rate (as defined in
the UGI Corporation Credit Agreement) plus a credit spread adjustment of 0.10%, or (ii) the base rate plus the applicable
margin that will be based on the leverage of the Company or credit ratings assigned to certain indebtedness of the Company.
On September 20, 2023, UGI amended the UGI Corporation Credit Facility Agreement which extended the maturity date of the
(1) five-year $250 million amortizing variable-rate term loan and (2) five-year $300 million revolving credit facility to May
2025 and increased the applicable rates (as defined in the amended UGI Corporation Credit Agreement) by 0.125%.
60
Credit Facilities
Information about the Company’s principal credit agreements (excluding Energy Services’ Receivables Facility, which is
discussed below) as of September 30, 2023 and 2022, is presented in the tables below.
(Currency in millions)
Expiration Date
September 30, 2023
AmeriGas OLP
September 2026
UGI International, LLC (a)
March 2028
Energy Services
UGI Utilities (c)
Mountaineer
UGI Corporation (b)
September 30, 2022
March 2025
June 2024
November 2024
May 2025
AmeriGas OLP
September 2026
UGI International, LLC (a)
October 2023
Energy Services
UGI Utilities
Mountaineer
UGI Corporation (b)
March 2025
June 2024
November 2024
August 2024
$
€
$
$
$
$
$
€
$
$
$
$
Total
Capacity
Borrowings
Outstanding
Letters of
Credit and
Guarantees
Outstanding
Available
Borrowing
Capacity
Weighted
Average
Interest Rate
- End of Year
600 $
500 €
260 $
425 $
150 $
300 $
600 $
300 €
260 $
350 $
100 $
300 $
— $
202 €
57 $
248 $
84 $
283 $
131 $
— €
— $
151 $
85 $
252 $
2 $
— €
— $
— $
— $
— $
2 $
— €
— $
— $
— $
— $
598
298
203
177
66
17
467
300
260
199
15
48
N.A.
5.17 %
7.67 %
6.30 %
6.68 %
7.80 %
7.27 %
N.A.
N.A.
4.37 %
3.82 %
5.62 %
(a) Permits UGI International, LLC to borrow in euros or USD.
(b) Borrowings outstanding have been classified as “Long-term debt” on the Consolidated Balance Sheets. Subsequent to
September 30, 2022, the Company repaid $87 million of such borrowings and classified these repayments as “Current
maturities of long-term debt” on the Consolidated Balance Sheets.
(c) On November 9, 2023, UGI Utilities entered into the UGI Utilities 2023 Credit Agreement and concurrently terminated the
UGI Utilities Credit Agreement, a predecessor agreement. See Significant Financing Activities above and Note 6 for
additional information.
N.A. - Not applicable
The average daily and peak short-term borrowings under the Company’s principal credit agreements are as follows:
(Currency in millions)
AmeriGas OLP
UGI International, LLC
Energy Services
UGI Utilities
Mountaineer
UGI Corporation
2023
2022
Average
Peak
Average
Peak
$
€
$
$
$
$
79 $
203 €
13 $
190 $
73 $
249 $
242 $
300 €
82 $
340 $
101 $
296 $
181 $
77 €
— $
163 $
53 $
191 $
388
250
—
270
85
288
Receivables Facility. Energy Services has a Receivables Facility with an issuer of receivables-backed commercial paper. On
October 20, 2023, the expiration date of the Receivables Facility was extended to October 18, 2024. The Receivables Facility
provides Energy Services with the ability to borrow up to $200 million of eligible receivables during the period October 20,
2023 to April 30, 2024, and up to $100 million of eligible receivables during the period May 1, 2024 to October 18, 2024.
Energy Services uses the Receivables Facility to fund working capital, margin calls under commodity futures contracts, capital
expenditures, dividends and for general corporate purposes.
Under the Receivables Facility, Energy Services transfers, on an ongoing basis and without recourse, its trade accounts
receivable to its wholly owned, special purpose subsidiary, ESFC, which is consolidated for financial statement purposes.
61
ESFC, in turn, has sold and, subject to certain conditions, may from time to time sell, an undivided interest in some or all of the
receivables to a major bank. Amounts sold to the bank are reflected as “Short-term borrowings” on the Consolidated Balance
Sheets. ESFC was created and has been structured to isolate its assets from creditors of Energy Services and its affiliates,
including UGI. Trade receivables sold to the bank remain on the Company’s balance sheet and the Company reflects a liability
equal to the amount advanced by the bank. The Company records interest expense on amounts owed to the bank. Energy
Services continues to service, administer and collect trade receivables on behalf of the bank, as applicable.
At September 30, 2023, the outstanding balance of trade receivables was $62 million, $46 million of which were sold to the
bank. At September 30, 2022, the outstanding balance of trade receivables was $101 million, none of which was sold to the
bank. Amounts sold to the bank are reflected as “Short-term borrowings” on the Consolidated Balance Sheet. During Fiscal
2023 and Fiscal 2022, peak sales of receivables were $150 million and $98 million, respectively. During Fiscal 2023 and Fiscal
2022, average daily amounts sold were $46 million and $2 million, respectively.
For further information on the Company’s long-term debt, credit facilities and the Receivables Facility, see Note 6 to
Consolidated Financial Statements.
Cash Flows
Due to the seasonal nature of the Company’s businesses, cash flows from operating activities are generally strongest during the
second and third fiscal quarters when customers pay for natural gas, LPG, electricity and other energy products and services
consumed during the peak heating season months. Conversely, operating cash flows are generally at their lowest levels during
the fourth and first fiscal quarters when the Company’s investment in working capital, principally inventories and accounts
receivable, is generally greatest.
Operating Activities:
Year-to-year variations in our cash flows from operating activities can be significantly affected by changes in operating
working capital, especially during periods with significant changes in energy commodity prices. Cash flows from operating
activities in Fiscal 2023 and Fiscal 2022 were $1,107 million and $716 million, respectively. The increase in cash flow from
operations principally reflects greater cash flow from changes in operating working capital offset in part by higher net
derivative instrument collateral repayments. Cash flows from operating activities before changes in operating working capital
were $1,258 million in Fiscal 2023 and $1,269 million in Fiscal 2022. Changes in operating working capital and collateral
deposits used operating cash flow of $151 million in Fiscal 2023 compared to $553 million of cash flow used in Fiscal 2022.
The significant decrease in cash used to fund changes in operating working capital principally reflects lower cash used to fund
changes in accounts receivable and inventories partially offset by a significant increase in collateral deposit repayments and
cash required to fund changes in accounts payable. These changes in operating working capital and collateral deposits
principally reflect the effects of the previously mentioned significant decrease in commodity energy prices during Fiscal 2023,
principally at UGI International and Midstream & Marketing.
Investing Activities:
Investing activity cash flow is principally affected by cash expenditures for property, plant and equipment; cash paid for
acquisitions of businesses and assets; investments in equity method investees; and cash proceeds from sales and retirements of
property, plant and equipment. Cash expenditures for property, plant and equipment totaled $974 million in Fiscal 2023 and
$804 million in Fiscal 2022. The increase in cash payments for property, plant and equipment in Fiscal 2023 compared with
Fiscal 2022 principally reflects higher cash capital expenditures in our Midstream & Marketing segment due in large part to the
investments in committed renewable energy projects and new LNG facilities and, to a lesser extent, slightly higher cash capital
expenditures at our Utilities segment. Cash used for acquisitions of businesses and assets in Fiscal 2023 reflects a small
acquisition in Europe while Fiscal 2022 includes the Stonehenge Acquisition and the Pennant Acquisition. Cash used for
investments in equity method investees was $146 million in Fiscal 2023 compared to $47 million in Fiscal 2022 principally
reflecting investments in biomass and renewable energy projects at our Midstream & Marketing reportable segment and, to a
much lesser extent, our investment in a renewable energy joint venture at UGI International. Cash inflows associated with
investing activities during Fiscal 2023 and Fiscal 2022 also includes cash received from the settlement of certain forward
foreign currency contracts previously designated as net investment hedges.
Financing Activities:
Changes in cash flow from financing activities are primarily due to issuances and repayments of long-term debt; net short-term
borrowings; dividends on UGI Common Stock; quarterly payments on outstanding Purchase Contracts; and issuances and
repurchases of equity instruments.
62
Cash flow used by financing activities was $168 million in Fiscal 2023 compared to cash flow used by financing activities of
$51 million in Fiscal 2022. Fiscal 2023 activities include (1) entering into the previously mentioned UGI International 2023
Credit Facilities Agreement in March 2023 and the concurrent repayment of borrowings under the UGI International Credit
Facilities Agreement (a predecessor agreement); (2) entering into the previously mentioned Energy Services Amended Term
Loan Agreement in February 2023 and the concurrent repayment of amounts outstanding under the Energy Services variable
rate term loan; and (3) the May 2023 issuance of $500 million principal amount of AmeriGas Partners’ 9.375% Senior Notes
and the repayment of the $675 million aggregate principal balance of AmeriGas Partners 5.625% Senior Notes. During Fiscal
2022, UGI International issued €400 million principal amount of senior notes and Utilities issued a combined $215 million
principal amount of senior notes. Proceeds from the Fiscal 2022 UGI International senior notes were used to repay existing
long-term debt, while proceeds from the Utilities notes were used to reduce short-term borrowings and for general corporate
purposes. In Fiscal 2023 and Fiscal 2022, the Company had aggregate net borrowings from credit facilities and the Receivables
Facility totaling $267 million and $1 million, respectively.
Capital Expenditures
In the following table, we present capital expenditures (which exclude acquisitions of businesses and assets) for Fiscal 2023 and
Fiscal 2022. We also provide amounts we expect to spend in Fiscal 2024. We expect to finance a substantial portion of our
Fiscal 2024 capital expenditures from cash generated by operations and cash on hand.
(Millions of dollars)
AmeriGas Propane
UGI International
Midstream & Marketing
Utilities
Total
2024
(estimate)
2023
2022
$
100 $
134 $
70
163
499
129
130
563
$
832 $
956 $
128
107
38
562
835
The increases in capital expenditures at Midstream & Marketing in Fiscal 2023, and the projected increase in Fiscal 2024,
reflect increased levels of capital expenditures associated with investments in renewable energy projects and in new LNG
facilities.
Contractual Cash Obligations and Commitments
The Company has contractual cash obligations that extend beyond Fiscal 2023. The following table presents contractual cash
obligations with non-affiliates under agreements existing as of September 30, 2023:
(Millions of dollars)
Short-term borrowings (a)
Long-term debt (a)
Interest on long-term fixed-rate debt (a)(b)(c)
Operating leases
AmeriGas Propane supply contracts
UGI International supply contracts
Midstream & Marketing supply contracts
Utilities construction, supply, storage and
transportation contracts
Derivative instruments (d)
Total
Payments Due by Period
Fiscal
2025 - 2026
Fiscal
2027 - 2028
Fiscal
2024
Thereafter
Total
$
649 $
649 $
— $
— $
6,647
2,183
502
10
464
1,020
401
99
57
381
104
10
464
277
173
69
2,651
1,468
600
158
—
—
199
116
29
309
110
—
—
120
67
1
—
2,471
893
130
—
—
424
45
—
$
11,975 $
2,184 $
3,753 $
2,075 $
3,963
(a) Based upon stated maturity dates for debt outstanding at September 30, 2023.
(b) Based upon stated interest rates adjusted for the effects of interest rate swaps.
(c) Calculated using applicable interest rates or forward interest rate curves, and UGI’s and its subsidiaries’ leverage ratios, as
of September 30, 2023.
63
(d) Represents the sum of amounts due if derivative instrument liabilities were settled at the September 30, 2023 amounts
reflected in the Consolidated Balance Sheet (but excluding amounts associated with interest rate contracts).
“Other noncurrent liabilities” included in our Consolidated Balance Sheet at September 30, 2023, principally comprise
operating lease liabilities (see Note 15 to Consolidated Financial Statements); regulatory liabilities (see Note 9 to Consolidated
Financial Statements); refundable tank and cylinder deposits (as further described in Note 2 to Consolidated Financial
Statements under the caption “Refundable Tank and Cylinder Deposits”); litigation, property and casualty liabilities and
obligations under environmental remediation agreements (see Note 16 to Consolidated Financial Statements); pension and other
postretirement benefit liabilities recorded in accordance with accounting guidance relating to employee retirement plans (see
Note 8 to Consolidated Financial Statements); and liabilities associated with executive compensation plans (see Note 14 to
Consolidated Financial Statements). These liabilities, with the exception of operating lease liabilities, are not included in the
table of Contractual Cash Obligations and Commitments because they are estimates of future payments and not contractually
fixed as to timing or amount. Required minimum contributions to the U.S. Pension Plans (as further described below under
“U.S. Pension Plans”) in Fiscal 2024 are $22 million. Required minimum contributions to the U.S. Pension Plans in years
beyond Fiscal 2024 will depend, in large part, on the impacts of future returns on pension plan assets and interest rates on
pension plan liabilities.
U.S. Pension Plans
The U.S. Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI
Utilities, and certain of UGI’s other domestic wholly owned subsidiaries, and (2) a defined benefit pension plan for
Mountaineer employees hired prior to January 1, 2023. The fair values of the U.S. Pension Plans’ assets totaled $539 million
and $525 million at September 30, 2023 and 2022, respectively. At September 30, 2023 and 2022, the underfunded positions of
the U.S. Pension Plans, defined as the excess of the PBO over the U.S. Pension Plans’ assets, were $55 million and $82 million,
respectively.
We believe we are in compliance with regulations governing defined benefit pension plans, including the ERISA rules and
regulations. Required minimum contributions to the U.S. Pension Plans in Fiscal 2024 is $22 million.
GAAP guidance associated with pension and other postretirement plans generally requires recognition of an asset or liability in
the statement of financial position reflecting the funded status of pension and other postretirement benefit plans with current
year changes recognized in shareholders’ equity unless such amounts are subject to regulatory recovery. At September 30,
2023, we have recorded pre-tax credits to UGI Corporation’s stockholders’ equity of $4 million and recorded regulatory assets
totaling $111 million in order to reflect the funded status of the U.S. Pension Plans. For a more detailed discussion of the U.S.
Pension Plans and our other postretirement benefit plans, see Note 8 to Consolidated Financial Statements.
Related Party Transactions
During Fiscal 2023 and Fiscal 2022, we did not enter into any related-party transactions that had a material effect on our
financial condition, results of operations or cash flows.
Off-Balance-Sheet Arrangements
UGI primarily enters into guarantee arrangements on behalf of its consolidated subsidiaries. These arrangements are not subject
to the recognition and measurement guidance relating to guarantees under GAAP.
We do not have any off-balance-sheet arrangements that are expected to have a material effect on our financial condition,
change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Utility Regulatory Matters
UGI Utilities. On January 27, 2023, Electric Utility filed a request with the PAPUC to increase its annual base distribution
revenues by $11 million. On September 21, 2023, the PAPUC issued a final order approving a settlement providing for a $9
million annual base distribution rate increase for Electric Utility, effective October 1, 2023.
On January 28, 2022, PA Gas Utility filed a request with the PAPUC to increase its base operating revenues for residential,
commercial and industrial customers by $83 million annually. On September 15, 2022, the PAPUC issued a final order
approving a settlement providing for a $49 million annual base distribution rate increase for PA Gas Utility, through a phased
approach, with $38 million beginning October 29, 2022 and an additional $11 million beginning October 1, 2023. In
accordance with the terms of the final order, PA Gas Utility will not be permitted to file a rate case prior to January 1, 2024.
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Also in accordance with the terms of the final order, PA Gas Utility was authorized to implement a weather normalization
adjustment rider as a five-year pilot program beginning on November 1, 2022. Under this rider, when weather deviates from
normal by more than 3%, residential and small commercial customer billings for distribution services are adjusted monthly for
weather related impacts exceeding the 3% threshold. Additionally, under the terms of the final order, PA Gas Utility was
authorized to implement a DSIC once its total property, plant and equipment less accumulated depreciation reached $3,368
million (which threshold was achieved in September 2022).
On February 8, 2021, Electric Utility filed a request with the PAPUC to increase its annual base distribution revenues by $9
million. On October 28, 2021, the PAPUC issued a final order approving a settlement that permitted Electric Utility, effective
November 9, 2021, to increase its base distribution revenues by $6 million.
Mountaineer. On July 31, 2023, Mountaineer submitted its 2023 IREP filing to the WVPSC requesting recovery of $10
million, an increase of $6 million, for costs associated with capital investments after December 31, 2022, that total $131
million, including $67 million in calendar year 2024. With new base rates expected to be effective January 1, 2024, revenues
from IREP rates would decrease by $12 million. The filing included capital investments totaling $383 million over the 2024 -
2028 period.
On March 6, 2023, Mountaineer submitted a base rate case filing with the WVPSC seeking a net revenue increase of $20
million, which consisted of an increase in base rates of $38 million and a decrease in the IREP rates of $18 million annually to
be effective on April 5, 2023. On March 31, 2023, the WVPSC suspended the effective date of the requested rate change
increase until January 1, 2024 to allow for a full review of the filing. On October 6, 2023, Mountaineer filed a joint stipulation
and agreement for settlement of the base rate case, which included a $14 million net revenue increase. An order from the
Commission is expected in December and new rates will take effect on January 1, 2024.
On July 29, 2022, Mountaineer submitted its 2022 IREP filing to the WVPSC requesting recovery of costs associated with
capital investments totaling $354 million over the 2023 - 2027 period, including $64 million in calendar year 2023. On
November 16, 2022, Mountaineer and the intervening parties submitted a joint stipulation and agreement for settlement to the
WVPSC requesting approval of 2023 IREP revenue of $22 million to be charged effective January 1, 2023, which includes the
recovery of a $1 million under-recovery of 2021 IREP revenue. On December 21, 2022, the WVPSC issued an order approving
the joint stipulation and agreement for settlement as filed.
Other Matters
West Reading, Pennsylvania Explosion. On March 24, 2023, an explosion occurred in West Reading, Pennsylvania which
resulted in seven fatalities, significant injuries to eleven others, and extensive property damage to buildings owned by R.M.
Palmer, a local chocolate manufacturer, and other neighboring structures. The NTSB and the PAPUC are investigating the West
Reading incident. On July 18, 2023, the NTSB issued an Investigative Update in its ongoing investigation. The report identifies
a fracture in a retired UGI gas service tee and a fracture in a nearby steam system, but it does not address causation of the
fractures or the explosion. The NTSB investigative team includes representatives from the Company, the PAPUC, the local fire
department and the Pipeline and Hazardous Materials Safety Administration. The Company is cooperating with the
investigation. The NTSB may invite other parties to participate. In September 2023, OSHA closed their investigation of this
matter, without any finding pertaining to UGI Utilities.
While the investigation into this incident is still underway and the cause of the explosion has not been determined, the
Company has received claims as a result of the explosion and is involved in lawsuits relative to the incident. The Company
maintains liability insurance for personal injury, property and casualty damages and believes that third-party claims associated
with the explosion, in excess of the Company’s deductible, are recoverable through the Company’s insurance. The Company
cannot predict the result of these pending or future claims and legal actions at this time.
Regarding these pending claims and legal actions, the Company does not believe, at this early stage, that there is sufficient
information available to reasonably estimate a range of loss, if any, or conclude that the final outcome of these matters will or
will not have a material effect on our financial statements.
Market Risk Disclosures
Our primary market risk exposures are (1) commodity price risk; (2) interest rate risk; and (3) foreign currency exchange rate
risk. Although we use derivative financial and commodity instruments to reduce market price risk associated with forecasted
transactions, we do not use derivative financial and commodity instruments for speculative or trading purposes.
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Commodity Price Risk
The risk associated with fluctuations in the prices the Partnership and our UGI International operations pay for LPG is
principally a result of market forces reflecting changes in supply and demand for LPG and other energy commodities. Their
profitability is sensitive to changes in LPG supply costs. Increases in supply costs are generally passed on to customers. The
Partnership and UGI International may not, however, always be able to pass through product cost increases fully or on a timely
basis, particularly when product costs rise rapidly. In order to reduce the volatility of LPG market price risk, the Partnership
uses contracts for the forward purchase or sale of propane, propane fixed-price supply agreements and over-the-counter
derivative commodity instruments including price swap and option contracts. Our UGI International operations use over-the-
counter derivative commodity instruments and may from time to time enter into other derivative contracts, similar to those used
by the Partnership, to reduce market risk associated with a portion of their LPG purchases. Over-the-counter derivative
commodity instruments used to economically hedge forecasted purchases of LPG are generally settled at expiration of the
contract.
Utilities’ tariffs contain clauses that permit recovery of all prudently incurred costs of natural gas it sells to its retail core-market
customers, including the cost of financial instruments used to hedge purchased gas costs. The recovery clauses provide for
periodic adjustments for the difference between the total amounts actually billed to customers through PGC and PGA rates and
the recoverable costs incurred. Because of this ratemaking mechanism, there is limited commodity price risk associated with
our Utilities operations. PA Gas Utility uses derivative financial instruments, including natural gas futures and option contracts
traded on the NYMEX, to reduce volatility in the cost of gas it purchases for its retail core-market customers. The cost of these
derivative financial instruments, net of any associated gains or losses, is included in PA Gas Utility's PGC recovery mechanism.
In order to manage market price risk relating to substantially all of Midstream & Marketing’s fixed-price sale contracts for
physical natural gas and electricity, Midstream & Marketing enters into NYMEX, ICE and over-the-counter natural gas and
electricity futures and option contracts, and natural gas basis swap contracts or enters into fixed-price supply arrangements.
Midstream & Marketing also uses NYMEX and over-the-counter electricity futures contracts to economically hedge a portion
of its anticipated sales of electricity from its electricity generation facilities. Although Midstream & Marketing’s fixed-price
supply arrangements mitigate significant risks associated with its fixed-price sales contracts, should any of the suppliers under
these arrangements fail to perform, increases, if any, in the cost of replacement natural gas or electricity would adversely impact
Midstream & Marketing’s results. Any volume deviations from the amounts forecasted under fixed-price requirement sale
contracts, would introduce price risks, which could adversely impact Midstream & Marketing’s results. In order to reduce this
risk of supplier nonperformance, Midstream & Marketing has diversified its purchases across a number of suppliers. UGI
International’s natural gas and electricity marketing businesses also use natural gas and electricity futures and forward contracts
to economically hedge market risk associated with a substantial portion of anticipated volumes under fixed-price sales and
purchase contracts. See Note 5 to Consolidated Financial Statements regarding recent transactions related to UGI
International’s energy marketing business.
Midstream & Marketing has entered into fixed-price sales agreements for a portion of the electricity expected to be generated
by its electric generation assets. In the event that these generation assets would not be able to produce all of the electricity
needed to supply electricity under these agreements, Midstream & Marketing would be required to purchase electricity on the
spot market or under contract with other electricity suppliers. Accordingly, increases in the cost of replacement power could
negatively impact Midstream & Marketing’s results.
Interest Rate Risk
We have both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but
generally do not impact their fair value. Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not
impact their cash flows.
Our variable-rate debt at September 30, 2023, includes revolving credit facility borrowings and variable-rate term loans at UGI
International, Utilities, Energy Services and UGI Corporation. These debt agreements have interest rates that are generally
indexed to short-term market interest rates. We have entered into pay-fixed, receive-variable interest rate swap agreements on
all or a significant portion of the term loans’ principal balances and all or a significant portion of the term loans’ tenor. We have
designated these interest rate swaps as cash flow hedges. At September 30, 2023, combined borrowings outstanding under
variable-rate debt agreements, excluding the previously mentioned effectively fixed-rate debt, totaled $1,272 million. Based
upon average borrowings outstanding under variable-rate borrowings (excluding effectively fixed-rate term loan debt), an
increase in short-term interest rates of 100 basis points (1%) would have increased our Fiscal 2023 interest expense by
approximately $12 million. The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point
increase in market interest rates would result in decreases in the fair value of this fixed-rate debt of approximately $160 million
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at September 30, 2023. A 100 basis point decrease in market interest rates would result in increases in the fair value of this
fixed-rate debt of approximately $220 million at September 30, 2023.
Long-term debt associated with our domestic businesses is typically issued at fixed rates of interest based upon market rates for
debt with similar terms and credit ratings. As these long-term debt issues mature, we may refinance such debt with new debt
having interest rates reflecting then-current market conditions. In order to reduce interest rate risk associated with near- to
medium-term forecasted issuances of fixed rate debt, from time to time we enter into IRPAs.
Foreign Currency Exchange Rate Risk
Our primary currency exchange rate risk is associated with the USD versus the euro and, to a lesser extent, the USD versus the
British pound sterling. The USD value of our foreign currency denominated assets and liabilities will fluctuate with changes in
the associated foreign currency exchange rates. From time to time, we use derivative instruments to hedge portions of our net
investments in foreign subsidiaries, including anticipated foreign currency denominated dividends. Gains or losses on these net
investment hedges remain in AOCI until such foreign operations are sold or liquidated. With respect to our net investments in
our UGI International operations, a 10% decline in the value of the associated foreign currencies versus the USD would reduce
their aggregate net book value at September 30, 2023, by approximately $70 million, which amount would be reflected in other
comprehensive income. We have designated certain euro-denominated borrowings as net investment hedges.
In order to reduce the volatility in net income associated with our foreign operations, principally as a result of changes in the
USD exchange rate between the euro and British pound sterling, we enter into forward foreign currency exchange contracts. We
layer in these foreign currency exchange contracts over a multi-year period to eventually equal approximately 90% of
anticipated UGI International foreign currency earnings before income taxes.
Derivative Instrument Credit Risk
We are exposed to risk of loss in the event of nonperformance by our derivative instrument counterparties. Our derivative
instrument counterparties principally comprise large energy companies and major U.S. and international financial institutions.
We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include
evaluating and monitoring our counterparties’ financial condition, including their credit ratings, and entering into agreements
with counterparties that govern credit limits or entering into netting agreements that allow for offsetting counterparty receivable
and payable balances for certain financial transactions, as deemed appropriate.
We have concentrations of credit risk associated with derivative instruments and we evaluate the creditworthiness of our
derivative counterparties on an ongoing basis. As of September 30, 2023, the maximum amount of loss, based upon the gross
fair values of the derivative instruments, we would incur if these counterparties failed to perform according to the terms of their
contracts was $298 million. In general, many of our over-the-counter derivative instruments and all exchange contracts call for
the posting of collateral by the counterparty or by the Company in the forms of letters of credit, parental guarantees or cash. At
September 30, 2023, we had received cash collateral from derivative instrument counterparties totaling $40 million. In addition,
we may have offsetting derivative liabilities and certain accounts payable balances with certain of these counterparties, which
further mitigates the previously mentioned maximum amount of losses. Certain of the Partnership’s derivative contracts have
credit-risk-related contingent features that may require the posting of additional collateral in the event of a downgrade of the
Partnership’s debt rating. At September 30, 2023, if the credit-risk-related contingent features were triggered, the amount of
collateral required to be posted would not be material.
The following table summarizes the fair values of unsettled market risk sensitive derivative instrument assets (liabilities) held at
September 30, 2023 and changes in their fair values due to market risks. Certain of UGI Utilities’ commodity derivative
instruments are excluded from the table below because any associated net gains or losses are refundable to or recoverable from
customers in accordance with UGI Utilities ratemaking.
(Millions of dollars)
September 30, 2023
Commodity price risk (1)
Interest rate risk (2)
Foreign currency exchange rate risk (3)
Asset (Liability)
Fair Value
Change in
Fair Value
$
$
$
(40) $
28 $
36 $
(148)
(16)
(46)
(1) Change in fair value represents a 10% adverse change in the market prices of certain commodities
(2) Change in fair value represents a 50 basis point adverse change in prevailing market interest rates
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(3) Change in fair value represents a 10% adverse change in the value of the Euro and the British pound sterling versus the
USD.
Critical Accounting Policies and Estimates
The accounting policies and estimates discussed in this section are those that we consider to be the most critical to an
understanding of our financial statements because they involve significant judgments and uncertainties. The application of these
accounting policies and estimates necessarily requires management’s most subjective or complex judgments regarding
estimates and projected outcomes of future events. Changes in these policies and estimates could have a material effect on our
financial statements. Management has reviewed these critical accounting policies, and the estimates and assumptions associated
with them, with the Company’s Audit Committee. Also, see Note 2 to Consolidated Financial Statements which discusses our
significant accounting policies.
Goodwill Impairment Evaluation. Our goodwill is the result of business acquisitions. We do not amortize goodwill, but test
it at least annually for impairment at the reporting unit level. A reporting unit is an operating segment, or one level below an
operating segment (a component), if it constitutes a business for which discrete financial information is available and regularly
reviewed by segment management. Components are aggregated into a single reporting unit if they have similar economic
characteristics. A reporting unit with goodwill is required to perform an impairment test annually or whenever events or
circumstances indicate that the value of goodwill may be impaired.
For certain of our reporting units with goodwill, we assess qualitative factors to determine whether it is more likely than not that
the fair value of such reporting unit is less than its carrying amount. For our other reporting units with goodwill, we bypass the
qualitative assessment and perform the quantitative assessment by comparing the fair values of the reporting units with their
carrying amounts, including goodwill. We determine fair values generally based on a weighting of income and market
approaches. For purposes of the income approach, fair values are determined based upon the present value of the reporting
unit’s estimated future cash flows, including an estimate of the reporting unit’s terminal value based upon these cash flows,
discounted at appropriate risk-adjusted rates. We use our internal forecasts to estimate future cash flows, which may include
estimates of long-term future growth rates based upon our most recent reviews of the long-term outlook for each reporting unit.
Cash flow estimates used to establish fair values under our income approach involve management judgments based on a broad
range of information and historical results. In addition, external economic and competitive conditions can influence future
performance. For purposes of the market approach, we use valuation multiples for companies comparable to our reporting units.
The market approach requires judgment to determine the appropriate valuation multiples. If the carrying amount of a reporting
unit exceeds its fair value, an impairment loss is recognized in an amount equal to such excess but not to exceed the total
amount of the goodwill of the reporting unit.
During the third quarter of Fiscal 2023, the Company identified interim impairment indicators related to goodwill within the
AmeriGas Propane reporting unit: (1) AmeriGas Partners issued $500 million of Senior Notes at an interest rate of 9.375%,
which was significantly higher than the interest rates on the other AmeriGas Propane debt obligations; and (2) financial
projections for the AmeriGas Propane reporting unit were reduced significantly compared to previous forecasts following
declines in gross margins and customer retention and higher operating expenses. The Company concluded that these events
constituted triggering events that indicate that the AmeriGas Propane goodwill may be impaired and, as such, performed an
interim impairment test of its goodwill as of May 31, 2023.
Using level 3 inputs, we performed a quantitative assessment of the AmeriGas Propane reporting unit using a weighting of the
income and market approaches to determine its fair value. With respect to the income approach, management used a discounted
cash flow (“DCF”) method, using unobservable inputs. The significant assumptions in our DCF model include projected
EBITDA and a discount rate (and estimates in the discount rate inputs). With respect to the market approach, management used
recent transaction market multiples for similar companies in the U.S. The resulting estimates of fair value from the income
approach and the market approach were then weighted equally in determining the overall estimated fair value of AmeriGas
Propane.
Based on our evaluation, the estimated fair value of the AmeriGas Propane reporting unit was determined to be less than its
carrying value. As a result, the Company recorded a non-cash pre-tax goodwill impairment charge of $656 million, included in
“Impairment of goodwill” on the Fiscal 2023 Consolidated Statement of Income, to reduce the carrying value of AmeriGas
Propane to its fair value. The Company calculated the deferred tax effect using the simultaneous equation method.
The performance of the AmeriGas Propane reporting unit and the potential for future developments in the global economic
environment, including the prospect of higher interest rates, introduces a heightened risk for additional impairment in the
AmeriGas Propane reporting unit. If there is continued deterioration in the results of operations, a portion or all of the
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remaining recorded goodwill for the AmeriGas Propane reporting unit, which was $1.3 billion as of September 30, 2023, could
be subject to further impairment.
With respect to UGI International's Fiscal 2023 goodwill impairment test, the Company bypassed the qualitative assessment
and performed a quantitative assessment. Such assessment used a weighting of income and market approaches to determine fair
value. With respect to the income approach, management used a discounted cash flow (“DCF”) method, using unobservable
inputs. The significant assumptions in our DCF model include projected EBITDA, and a discount rate (and estimates in the
discount rate inputs). With respect to the market approach, management used recent transaction market multiples for similar
companies. Based on our evaluation, we determined that UGI International’s fair value exceeded its carrying value by
approximately 10%. While the Company believes that its judgments used in the quantitative assessment of UGI International’s
fair value are reasonable based upon currently available facts and circumstances, if UGI International were not able to achieve
its anticipated results and/or if its discount rate were to increase, its fair value would be adversely affected, which may result in
an impairment. There is approximately $911 million of goodwill in this reporting unit as of September 30, 2023. The Company
will continue to monitor its reporting units and related goodwill for any possible future non-cash impairment charges.
As of September 30, 2023, our goodwill totaled $3,027 million. Except for the previously mentioned impairment charge of
$656 million at the AmeriGas Propane reporting unit, no other impairments of goodwill were recognized in Fiscal 2023 and
Fiscal 2022.
Impairment of Long-Lived Assets. An impairment test for long-lived assets (or an asset group) is required when
circumstances indicate that such assets may be impaired. If it is determined that a triggering event has occurred, we perform a
recoverability test based upon estimated undiscounted cash flow projections expected to be realized over the remaining useful
life of the long-lived asset. If the undiscounted cash flows used in the recoverability test are less than the long-lived asset's
carrying amount, we determine its fair value. If the fair value is determined to be less than its carrying amount, the long-lived
asset is reduced to its estimated fair value and an impairment loss is recognized in an amount equal to such shortfall. When
determining whether a long-lived asset has been impaired, management groups assets at the lowest level that has identifiable
cash flows that are independent of other assets. Performing an impairment test on long-lived assets involves judgment in areas
such as identifying when a triggering event requiring evaluation occurs; identifying and grouping assets; and, if the
undiscounted cash flows used in the recoverability test are less than the long-lived asset's carrying amount, determining the fair
value of the long-lived asset. Although cash flow estimates are based upon relevant information at the time the estimates are
made, estimates of future cash flows are by nature highly uncertain and contemplate factors that change over time such as the
expected use of the asset including future production and sales volumes, expected fluctuations in prices of commodities and
expected proceeds from disposition.
The impairment of AmeriGas Propane’s goodwill during the quarter ended June 30, 2023, was determined to be a triggering
event requiring an interim impairment analysis of AmeriGas Propane’s long-lived and definite lived intangible assets.
Accordingly, the Company performed a recoverability test of AmeriGas Propane’s long-lived assets, including right-of-use
(“ROU”) assets and definite lived intangible assets, as of May 31, 2023, using estimated undiscounted cash flow projections
expected to be generated over the remaining useful life of the primary asset of the asset group at the lowest level with
identifiable cash flows that are independent of other assets. Based on the recoverability test performed, we determined that (1)
AmeriGas Propane’s long-lived assets, including ROU assets and definite lived intangible assets, were recoverable and, as such,
no impairment charges were recorded; and (2) no adjustments to the remaining useful lives were necessary.
No material provisions for impairments of long-lived assets were recorded during Fiscal 2023 and Fiscal 2022.
Loss Contingencies and Environmental Remediation Liabilities. We are involved in litigation that arises in the normal
course of business, and we are subject to risk of loss for general, automobile and product liability and workers’ compensation
claims for which we obtain insurance coverage subject to self-insured retentions or deductibles. We are also subject to
environmental laws and regulations intended to mitigate or remove the effects of past operations and improve or maintain the
quality of the environment. These laws and regulations require the removal or remedy of the effect on the environment of the
disposal or release of certain specified hazardous substances at current or former operating sites.
We establish reserves for loss contingencies including pending litigation, and for pending and incurred but not reported claims
associated with general and product liability, automobile and workers’ compensation when it is probable that a liability exists
and the amount or range of amounts related to such liability can be reasonably estimated. When no amount within a range of
possible loss is a better estimate than any other amount within the range, liabilities recorded are based upon the low end of the
range. With respect to unasserted claims arising from unreported incidents, we may use the work of specialists to estimate the
ultimate losses to be incurred using actuarially determined loss development factors applied to actual claims data.
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The likelihood of a loss with respect to a particular loss contingency is often difficult to predict. In addition, a reasonable
estimate of the loss, or a range of possible loss, may not be practicable based upon the information available and the potential
effects of future events and decisions by third parties that will determine the ultimate resolution of the loss contingency.
Reasonable estimates involve management judgments based on a broad range of information and prior experience. For
litigation and pending claims including those covered by insurance policies, the analysis of probable loss is performed on a case
by case basis and includes an evaluation of the nature of the claim, the procedural status of the matter, the probability or
likelihood of success in prosecuting or defending the claim, the information available with respect to the claim, the opinions and
views of outside counsel and other advisors, and past experience in similar matters. These judgments are reviewed quarterly as
more information is received, and the amounts reserved are updated as necessary. Our estimated reserves for loss contingencies
and for pending and incurred but not reported claims associated with general and product liability, automobile and workers’
compensation may differ materially from the ultimate liability and such reserves may change materially as more information
becomes available and estimated reserves are adjusted.
We accrue reserves for environmental remediation when assessments indicate that it is probable a liability has been incurred
and an amount can be reasonably estimated. Amounts recorded as environmental liabilities on the Consolidated Balance Sheets
represent our best estimate of costs expected to be incurred or, if no best estimate can be made, the minimum liability associated
with a range of expected environmental investigation and remediation costs. These estimates are based upon a number of
factors including whether the company will be responsible for such remediation, the scope and cost of the remediation work to
be performed, the portion of costs that will be shared with other potentially responsible parties, the timing of the remediation
and possible impact of changes in technology, and the regulations and requirements of local governmental authorities. Our
estimated reserves for environmental remediation may differ materially from the ultimate liability and such reserves may
change materially as more information becomes available and estimated reserves are adjusted. PA Gas Utility receives
ratemaking recognition of environmental investigation and remediation costs associated with its in-state environmental sites.
This ratemaking recognition balances the accumulated difference between historical costs and rate recoveries with an estimate
of future costs associated with the sites.
Regulatory Assets and Liabilities. The accounting for our rate regulated gas and electric utility businesses differs from the
accounting for nonregulated operations in that these businesses are required to reflect the effects of rate regulation in the
consolidated financial statements. Regulatory practices that assign costs to accounting periods may differ from accounting
methods generally applied by nonregulated businesses. When it is probable that regulators will permit the recovery of current
costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are
deferred as regulatory assets. Similarly, regulatory liabilities are recognized when it is probable that regulators will require
customer refunds through future rates or when revenue is collected from customers for expenditures that have yet to be
incurred. We continually assess whether the regulatory assets are probable of future recovery by evaluating the regulatory
environment, recent rate orders and public statements issued by the PAPUC, WVPSC and MDPSC, and discussions with
regulatory authorities and legal counsel. If future recovery of regulatory assets ceases to be probable, the elimination of those
regulatory assets would adversely impact our results of operations and cash flows. As of September 30, 2023, our regulatory
assets and regulatory liabilities totaled $347 million and $366 million, respectively. For additional information on regulatory
assets and liabilities, see Notes 2 and 9 to Consolidated Financial Statements.
Income Taxes. We use the asset and liability method of accounting for income taxes. We recognize the tax benefits from
income tax positions that have a greater than more likely than not likelihood of being sustained upon examination by the taxing
authorities. A liability is recorded for uncertain tax positions where it is more likely than not the position may not be sustained
based on its technical merits. We use assumptions, judgments and estimates to determine our current provision for income
taxes. We also use assumptions, judgments and estimates to determine our deferred tax assets and liabilities and any valuation
allowance to be recorded against a deferred tax asset. The interpretation of tax laws involves uncertainty since tax authorities
may interpret the laws differently. Our assumptions, judgments and estimates relative to the current provision for income tax
give consideration to current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits
conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation thereof and the resolution of current
and future tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.
Our assumptions, judgments and estimates relative to the amount of deferred income taxes take into account estimates of the
amount of future taxable income. Actual taxable income or future estimates of taxable income could render our current
assumptions, judgments and estimates inaccurate. Changes in the assumptions, judgments and estimates mentioned above could
cause our actual income tax obligations to differ significantly from our estimates. As of September 30, 2023, our net deferred
tax liabilities totaled $871 million.
Business Combination Purchase Price Allocations. From time to time, the Company enters into material business
combinations. The purchase price is allocated to the various assets acquired and liabilities assumed at their estimated fair value
as of the acquisition date with the residual of the purchase price allocated to goodwill. From time to time, we engage third-party
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valuation experts to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuations
require management to make significant judgments, estimates and assumptions especially with respect to intangible assets.
Management makes estimates of fair value based upon assumptions it believes to be reasonable. These estimates are based upon
historical experience and information obtained from the management of the acquired companies and are inherently uncertain.
Critical estimates in valuing certain of the intangible assets include, but are not limited to, discount rates and expected future
cash flows from and the economic lives of customer relationships, trade names, existing technology, and other intangible assets.
Unanticipated events and circumstances may occur, which may affect the accuracy or validity of such assumptions or estimates.
The allocation of the purchase price may be modified up to one year after the acquisition date, under certain circumstances, as
more information is obtained about the fair value of assets acquired and liabilities assumed.
Recently Issued Accounting Pronouncements
See Note 3 to Consolidated Financial Statements for a discussion of the effects of recently issued accounting guidance.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
“Quantitative and Qualitative Disclosures About Market Risk” are contained in Item 7 - Management’s Discussion and
Analysis of Financial Condition and Results of Operations under the caption “Market Risk Disclosures” and are incorporated
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s Annual Report on Internal Control Over Financial Reporting included in Item 9A and the financial statements
and financial statement schedules referred to in the Index contained on page F-2 of this Report are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) The Company's disclosure controls and procedures are designed to provide reasonable assurance that the information
required to be disclosed by the Company in reports filed or submitted under the Securities Exchange Act of 1934, as
amended is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and
forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company's management,
with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of
the Company's disclosure controls and procedures as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and
procedures, as of September 30, 2023, were effective at the reasonable assurance level.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended. In order to
evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act
of 2002, management has conducted an assessment, including testing, of the Company’s internal control over financial
reporting as of September 30, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).
Internal control over financial reporting refers to the process, designed under the supervision and with the participation of
management, including our Chief Executive Officer and our Chief Financial Officer, and effected by the Company’s Board
of Directors, to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
71
and expenditures of the Company are being made only in accordance with authorizations of management and directors of
the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
due to changing conditions, or the degree of compliance with the policies or procedures may deteriorate.
Based on its assessment, management has concluded that the Company’s internal control over financial reporting was
effective as of September 30, 2023, based on the COSO criteria. The Company’s independent registered public accounting
firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of the Company’s internal control over
financial reporting as of September 30, 2023. This report is set forth below.
(c) During the most recent fiscal quarter, no change in the Company’s internal control over financial reporting occurred that
has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
72
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of UGI Corporation
Opinion on Internal Control Over Financial Reporting
We have audited UGI Corporation and subsidiaries’ internal control over financial reporting as of September 30, 2023, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, UGI Corporation and subsidiaries (the
Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023,
based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of September 30, 2023 and 2022, the related consolidated
statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended
September 30, 2023, and the related notes and the financial statement schedules listed in the Index at Item 15(a) and our report
dated November 28, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
November 28, 2023
73
ITEM 9B. OTHER INFORMATION
During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule
10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation-
S-K. Further, during the three months ended September 30, 2023, the Company did not adopt or terminate a “Rule 10b5-1
trading arrangement” as defined in Item 408(a) of Regulation-S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable
74
PART III:
ITEMS 10 THROUGH 14.
In accordance with General Instruction G(3), and except as set forth below, the information required by Items 10, 11, 12, 13 and
14 is incorporated in this Report by reference to the following portions of UGI’s Proxy Statement, which will be filed with the
SEC by December 31, 2023.
Item 10.
Directors, Executive Officers
Governance
and Corporate
Information
Captions of Proxy Statement
Incorporated by Reference
Election of Directors - Nominees; Corporate
Governance; Report of the Audit Committee of the
Board of Directors
on
charge
and Governance
The Code of Business Conduct and Ethics is available
without
the Company’s website,
www.ugicorp.com under the caption “Company -
- Governance
Leadership
Documents”, or by writing to Director, Investor
Relations, UGI Corporation, P. O. Box 858, Valley
Forge, PA 19482. We will disclose on the Company’s
website any waiver from or amendment to the Code of
Business Conduct and Ethics that applies to the
Company’s principal executive officer, principal
financial officer, principal accounting officer or
controller or persons performing similar functions and
that relates to any element of the code of ethics
definition in Item 406(b) of Regulations S-K.
Item 11.
Executive Compensation
of Directors; Report
the
Compensation
Compensation
and Management Development
Committee of the Board of Directors; Compensation
Discussion and Analysis; Compensation of Executive
Officers; Compensation Committee Interlocks and
Insider Participation
of
Item 12.
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Securities Ownership of Certain Beneficial Owners
Item 13.
Certain Relationships and Related Transactions, and
Director Independence
Corporate Governance
- Director
Independence;
- Board and Committee
Corporate Governance
Structure; Corporate Governance - Selection of Board
Candidates; Policy for Approval of Related Person
Transactions
Item 14.
Principal Accounting Fees and Services
Our Independent Registered Public Accounting Firm
75
Equity Compensation Table
The following table sets forth information as of the end of Fiscal 2023 with respect to compensation plans under which our
equity securities are authorized for issuance.
Number of securities
to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available for future
issuance under equity
compensation plans
(excluding securities reflected
in column (a)) (c)
8,358,125 (1) $
1,502,253 (3) $
42.58
0
16,014,039 (2)
—
Plan category
Equity compensation
plans approved by
security holders
Equity compensation
plans not approved by
security holders
Total
9,860,378
$
42.58 (4)
(1) Represents 8,358,125 stock options under the UGI Corporation 2021 Incentive Award Plan, which supersedes and replaces
the UGI Corporation 2013 Omnibus Incentive Compensation Plan. The UGI Corporation 2021 Incentive Award Plan was
approved by shareholders on January 29, 2021.
(2) Represents securities remaining for issuance under the UGI Corporation 2021 Incentive Award Plan. The UGI Corporation
2021 Incentive Award Plan uses a share pool under which each share issued pursuant to a stock option or stock
appreciation right reduces the number of shares available by one share, and each share issued pursuant to awards other than
stock options or stock appreciation rights reduces the number of shares available by three (3) shares.
(3) Represents 1,502,253 restricted stock units under the UGI Corporation 2021 Incentive Award Plan.
(4) Weighted-average exercise price of outstanding options; excludes restricted stock units.
The information concerning the Company’s executive officers required by Item 10 is set forth below.
Name
Roger Perreault
Sean P. O’Brien
Robert F. Beard, Jr.
EXECUTIVE OFFICERS
Age
59
54 Chief Financial Officer
President and Chief Executive Officer
Position
58
Chief Operations Officer of UGI Corporation, President, AmeriGas Propane, Inc. and
Chief Executive Officer of UGI Utilities, Inc.
John Koerwer
Kathleen Shea Ballay
Jean Felix Tematio Dontsop
Judy A. Zagorski
63 Chief Information Officer
58 General Counsel and Chief Legal Officer
47 Vice President - Chief Accounting Officer and Corporate Controller
60 Chief Human Resources Officer
All officers are elected for a one-year term at the organizational meeting of the Board of Directors held each year.
There are no family relationships between any of the officers or between any of the officers and any of the directors.
Roger Perreault
Mr. Perreault is a Director and President and Chief Executive Officer of UGI Corporation (since 2021). Mr. Perreault
previously served as Executive Vice President, Global LPG (2018 to 2021) and President - UGI International, LLC (2015 to
2021). Prior to joining UGI Corporation, Mr. Perreault held various positions at Air Liquide, an industrial gases company he
joined in 1994, and served in various leadership positions from 2008 to 2014, including in a global role as President, Large
Industries with international responsibilities and, prior to that, in a role with responsibility for Air Liquide’s North American
large industries business. Prior to joining Air Liquide, Mr. Perreault was a chemical engineer and operations manager with
I.C.I. in Quebec, Canada.
76
Sean P. O’Brien
Mr. O’Brien is Chief Financial Officer of UGI Corporation (since 2023). Prior to joining UGI Corporation, Mr. O’Brien held
various leadership positions at DCP Midstream, which he joined in 2009, including Group Vice President and Chief Financial
Officer (2012 to 2023), Senior Vice President, Treasurer (2011 to 2012) and Vice President, Financial Planning and Analysis
(2009 to 2011). Prior to joining DCP Midstream, Mr. O’Brien served in financial roles of increasing responsibility at Duke
Energy, including Divisional Chief Financial Officer, Commercial Business (2006 to 2009), and Vice President and Controller,
Duke Energy Generation Services (2005 to 2006). Mr. O’Brien is a certified public accountant with over 25 years of financial
experience and energy industry experience.
Robert F. Beard, Jr.
Mr. Beard is Chief Operations Officer of UGI Corporation (since 2022), President, AmeriGas Propane, Inc. (since 2023) and
Chief Executive Officer of UGI Utilities, Inc. (since 2011). He joined UGI in 2008 and most recently served as Executive Vice
President, Natural Gas, Global Engineering & Construction and Procurement of UGI Corporation (2021-2022) and Chief
Executive Officer of Mountaineer Gas Company (2021-2022). Prior, he was Executive Vice President, Natural Gas of UGI
Corporation (2018-2021) and previously served as President (2011- 2020), Vice President - Marketing, Rates and Gas Supply
(2010-2011) and Vice President - Southern Region (2008-2010) of UGI Utilities, Inc. Before joining UGI, Mr. Beard served as
Vice President - Operations and Engineering of PPL Gas Utilities Corporation (2006-2008) and as Director - Operations and
Engineering of PPL Gas Utilities Corporation (2002-2006).
John Koerwer
Mr. Koerwer is the Chief Information Officer of UGI Corporation (since 2020). Mr. Koerwer joined UGI as Vice President,
Information Technology, for UGI International in 2016 and later was named Group CIO for UGI Corporation, responsible for
the global IT strategy, operations, products and services to support both the domestic and international businesses units. Over a
30-year career in Information Technology, Mr. Koerwer has demonstrated leadership in leading transformations and aligning
strategy and performance with diverse, global teams. Previously, Mr. Koerwer served in multiple IT/IS leadership roles for The
Linde Group, a multi-national industrial gas company based in Munich, Germany.
Kathleen Shea Ballay
Ms. Shea Ballay is the General Counsel and Chief Legal Officer of UGI Corporation (since 2023). Prior to joining UGI
Corporation, Ms. Shea Ballay served as General Counsel, Secretary and Chief Compliance Officer at Lotus Midstream, LLC,
an independent energy company focused on the development of midstream infrastructure and distribution (2018 to 2023). Ms.
Shea Ballay also served in various positions at Sunoco, including as Senior Vice President, General Counsel and Corporate
Secretary at Sunoco Logistics Partners L.P. (2010 to 2017), and Deputy General Counsel, Assistant General Counsel & Chief
Commercial Counsel & Chair, Corporate Transactions and Securities Group at Sunoco, Inc. (2005 to 2010). Prior to joining
Sunoco, she spent 12 years as a Partner, Of Counsel and Associate at the law firm of Pepper Hamilton LLP (1993 to 2005).
Jean Felix Tematio Dontsop
Mr. Tematio Dontsop is the Vice President, Chief Accounting Officer and Controller of UGI Corporation (since 2021). Mr.
Tematio Dontsop most recently served as Vice President of Internal Audit for West Pharmaceuticals Services, Inc. in Exton,
Pennsylvania (2020 to 2021). Previously, he held several roles of increasing responsibility over 15 years with
PricewaterhouseCoopers, based in Philadelphia, Pennsylvania and Paris, France, including Audit Director (2019 to 2020) and
Audit Senior Manager (2011 to 2019). Mr. Tematio Dontsop also worked earlier in his career as an auditor for KPMG, based in
Paris.
Judy A. Zagorski
Ms. Zagorski is the Chief Human Resources Officer of UGI Corporation (since 2020). Previously, Ms. Zagorski served as
Executive Vice President, Global Human Resources & CHRO at Church & Dwight, a major manufacturer of household
products headquartered in Ewing, New Jersey (2017 to 2020). Prior to joining Church & Dwight, Ms. Zagorski held the
positions of Senior Vice President - Human Resources and Vice President - Human Resources, Development and Strategy at
BASF (2011 to 2017).
77
PART IV:
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1)
Financial Statements:
Included under Item 8 are the following financial statements and supplementary data:
Management’s Annual Report on Consolidated Financial Statements and Schedules
Report of Independent Registered Public Accounting Firm (PCAOB ID:42) (on Consolidated Financial
Statements and Schedules)
Consolidated Balance Sheets as of September 30, 2023 and 2022
Consolidated Statements of Income for the years ended September 30, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended September 30, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended September 30, 2023, 2022 and 2021
Consolidated Statements of Changes in Equity for the years ended September 30, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
(2)
Financial Statement Schedules:
I — Condensed Financial Information of Registrant (Parent Company)
II — Valuation and Qualifying Accounts for the years ended September 30, 2023, 2022 and 2021
We have omitted all other financial statement schedules because the required information is (1) not present;
(2) not present in amounts sufficient to require submission of the schedule; or (3) included elsewhere in the
financial statements or related notes.
(3)
List of Exhibits:
The exhibits filed as part of this report are as follows (exhibits incorporated by reference are set forth with the
name of the registrant, the type of report and registration number or last date of the period for which it was filed,
and the exhibit number in such filing):
Incorporation by Reference
Exhibit No.
3.1
Exhibit
(Second) Amended and
Restated Articles of
Incorporation of the Company
as amended through June 6,
2005.
Articles of Amendment to the
Amended and Restated
Articles of Incorporation of
UGI Corporation.
Amended and Restated
Bylaws of UGI Corporation,
effective as of May 3, 2023.
3.2
3.3
Registrant
Filing
Exhibit
3.1
Form 10-Q
(6/30/05)
Form 8-K
(7/29/14)
Form 8-K
(5/3/23)
3.1
3.1
UGI
UGI
UGI
78
Incorporation by Reference
Exhibit No.
3.4
Registrant
Filing
Exhibit
3.1
Form 8-K
(5/25/21)
UGI
UGI
Form 8-K
(5/25/21)
3.2
Exhibit
Statement with Respect to
Shares of the Company with
respect to the Convertible
Preferred Stock, filed with the
Secretary of the
Commonwealth of
Pennsylvania and effective on
May 25, 2021.
Statement with Respect to
Shares of the Company with
respect to the Series B
Preferred Stock, filed with the
Secretary of the
Commonwealth of
Pennsylvania and effective on
May 25, 2021.
Instruments defining the rights
of security holders, including
indentures. (The Company
agrees to furnish to the
Commission upon request a
copy of any instrument
defining the rights of holders
of long-term debt not required
to be filed pursuant to Item
601(b)(4) of Regulation S-K).
UGI
Form 8-B/A
(4/17/96)
3.(4)
Utilities
4(c)
Registration
Statement No.
33-77514
(4/8/94)
Utilities
Form 8-K
(9/12/06)
4.2
Utilities
Form 8-K
(10/30/13)
4.1
The description of the
Company’s Common Stock
contained in the Company’s
registration statement filed
under the Securities Exchange
Act of 1934, as amended.
UGI Corporation’s (Second)
Amended and Restated
Articles of Incorporation, as
amended, and Bylaws referred
to in 3.1, 3.2, and 3.3 above.
Indenture, dated as of August
1, 1993, by and between UGI
Utilities, Inc., as Issuer, and
U.S. Bank National
Association, as successor
trustee, incorporated by
reference to the Registration
Statement on Form S-3 filed
on April 8, 1994.
Supplemental Indenture, dated
as of September 15, 2006, by
and between UGI Utilities,
Inc., as Issuer, and U.S. Bank
National Association,
successor trustee to Wachovia
Bank, National Association.
Form of Note Purchase
Agreement dated October 30,
2013 between the Company
and the purchasers listed as
signatories thereto.
79
3.5
4.1
4.2
4.3
4.4
4.5
4.6
Incorporation by Reference
Exhibit No.
4.7
Exhibit
Note Purchase Agreement
dated April 22, 2016 between
the Company and the
purchasers listed as
signatories thereto.
Registrant
Filing
Utilities
Form 8-K
(4/28/16)
Exhibit
4.1
AmeriGas
Partners, L.P.
Form 8-K
(6/27/16)
4.1
AmeriGas
Partners, L.P.
Form 8-K
(6/27/16)
4.2
AmeriGas
Partners, L.P.
Form 8-K
(12/28/16)
4.1
AmeriGas
Partners, L.P.
Form 8-K
(2/13/17)
4.1
UGI
Form 8-K
(10/25/18)
4.1
UGI
Form 8-K
(12/7/21)
4.1
4.8
4.9
4.10
4.11
4.12
4.13
Indenture, dated as of June 27,
2016, among AmeriGas
Partners, L.P., AmeriGas
Finance Corp., and U.S. Bank
National Association, as
trustee.
First Supplemental Indenture,
dated as of June 27, 2016,
among AmeriGas Partners,
L.P., AmeriGas Finance
Corp., and U.S. Bank National
Association, as trustee.
Second Supplemental
Indenture, dated as of
December 28, 2016, among
AmeriGas Partners, L.P.,
AmeriGas Finance Corp., and
U.S. Bank National
Association, as trustee
(including form of global
note).
Third Supplemental Indenture,
dated as of February 13, 2017,
among AmeriGas Partners,
L.P., AmeriGas Finance
Corp., and U.S. Bank National
Association, as trustee
(including form of global
note).
Indenture, dated as of October
25, 2018, by and among
International, the guarantors
named therein, U.S. Bank
National Association, as
trustee, Elavon Financial
Services DAC, as registrar
and transfer agent, and Elavon
Financial Services DAC, UK
Branch, as paying agent
(including the form of Note).
Indenture, dated as of
December 7, 2021, by and
among UGI International,
LLC, the guarantors named
therein, U.S. Bank National
Association, as trustee, Elavon
Financial Services DAC, as
registrar and transfer agent,
and Elavon Financial Services
DAC, UK Branch, as paying
agent (including the form of
Note).
80
Incorporation by Reference
Exhibit No.
4.14
Registrant
Filing
Exhibit
4.1
Form 8-K
(5/31/23)
Exhibit
Indenture, dated as of May 31,
2023, by and among
AmeriGas Partners, L.P. and
AmeriGas Finance Corp. (the
Issuers) and U.S. Bank Trust
Company, National
Association, as trustee
(including the form of 2028
Notes).
Form of Note Purchase
Agreement dated December
21, 2018 between the
Company and the purchasers
listed as signatories thereto.
Note Purchase Agreement,
dated as of March 19, 2020,
by and among the Company
and the purchasers listed as
signatories thereto.
Note Purchase Agreement,
dated May 7, 2021, by and
among UGI Utilities, Inc. and
the purchasers listed as
signatories thereto.
Note Purchase Agreement,
dated June 30, 2022, by and
among UGI Utilities, Inc. and
the purchasers listed as
signatories thereto.
Note Purchase Agreement,
dated June 30, 2022, by and
among Mountaineer Gas
Company and the purchasers
listed as signatories thereto.
Acknowledgement, dated as
of October 23, 2023, to the
Note Purchase Agreement,
dated as of June 30, 2022, by
and among Mountaineer Gas
Company, Teachers Insurance
and Annuity Association of
America and The Lincoln
National Life Insurance
Company.
Purchase Contract and Pledge
Agreement, dated May 25,
2021, between the Company
and U.S. Bank National
Association, as purchase
contract agent, collateral
agent, custodial agent and
securities intermediary.
Form of Corporate Unit
(included as Exhibit A to
Exhibit 4.21 hereto).
Form of Treasury Unit
(included as Exhibit B to
Exhibit 4.21 hereto).
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
81
4.15
4.16
4.17
4.18
4.19
*4.20
4.21
4.22
4.23
Form 10-Q
(12/31/18)
4.1
Form 8-K
(3/19/20)
Form 8-K
(5/4/21)
4.1
4.1
Form 8-K
(6/30/22)
4.1
Form 8-K
(6/30/22)
4.2
Form 8-K
(5/25/21)
4.1
Form 8-K
(5/25/21)
Form 8-K
(5/25/21)
4.2
4.3
Incorporation by Reference
Exhibit No.
4.24
Registrant
Filing
4.25
4.26
4.27
10.1**
10.2**
10.3**
10.4**
10.5**
10.6**
10.7**
10.8**
10.9**
10.10**
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
Exhibit
Form of Cash Settled Unit
(included as Exhibit C to
Exhibit 4.21 hereto).
Form of Series A Cumulative
Perpetual Convertible
Preferred Stock Certificate.
Form of Series B Cumulative
Perpetual Preferred Stock
Certificate.
Description of the Registrant’s
Securities Registered Pursuant
to Section 12 of the Securities
Exchange Act of 1934.
UGI Corporation 2004
Omnibus Equity
Compensation Plan Amended
and Restated as of September
5, 2014.
UGI Corporation 2004
Omnibus Equity
Compensation Plan Amended
and Restated as of September
5, 2014 - Terms and
Conditions as effective
January 1, 2016.
UGI Corporation 2009
Deferral Plan, as Amended
and Restated effective June
15, 2017.
UGI Corporation 2009
Supplemental Executive
Retirement Plan for New
Employees, as Amended and
Restated as of June 15, 2017.
UGI Corporation 2013
Omnibus Incentive
Compensation Plan, effective
as of September 5, 2014.
UGI Corporation 2013
Omnibus Incentive
Compensation Plan, Terms
and Conditions for Non-
Employee Directors, effective
January 1, 2019.
UGI Corporation
Supplemental Executive
Retirement Plan and
Supplemental Savings Plan, as
Amended and Restated
effective April 1, 2015.
UGI Corporation Executive
Annual Bonus Plan as
amended November 15, 2018.
UGI Corporation 2021
Incentive Award Plan.
UGI Corporation 2021
Incentive Award Plan, Terms
and Conditions for Non-
Employee Directors, effective
February 1, 2021.
82
Exhibit
4.4
4.5
4.6
Form 8-K
(5/25/21)
Form 8-K
(5/25/21)
Form 8-K
(5/25/21)
Form 10-K
(9/30/21)
4.22
Form 10-K
(9/30/16)
10.25
Form 10-K
(9/30/16)
10.26
Form 10-Q
(6/30/17)
10.6
Form 10-Q
(6/30/17)
10.1
Form 10-K
(9/30/16)
10.30
Form 10-Q
(3/31/19)
10.6
Form 10-K
(9/30/17)
10.26
Form 10-Q
(3/31/19)
10.7
Form S-8
(2/4/21)
Form 10-K
(9/30/22)
4.4
10.10
Incorporation by Reference
Exhibit No.
10.11**
Registrant
Filing
Exhibit
10.1
Form 8-K
(9/29/21)
10.12**
10.13**
10.14**
10.15**
10.16**
10.17**
10.18**
10.19**
10.20**
10.21**
10.22**
Exhibit
UGI Corporation Executive
Severance Plan, as effective
October 1, 2021.
Form of UGI Corporation
2013 Omnibus Incentive
Compensation Plan,
Nonqualified Stock Option
Grant Letter for all US
Employees.
Form of UGI Corporation
2013 Omnibus Incentive
Compensation Plan
Performance Unit Grant Letter
for all US Employees.
Form of UGI Corporation
2013 Omnibus Incentive
Compensation Plan Stock
Unit Grant Letter for all US
Employees.
Form of UGI Corporation
2013 Omnibus Incentive
Compensation Plan,
Nonqualified Stock Option
Grant Letter for Non-
Employee Directors.
Form of UGI Corporation
2013 Omnibus Incentive
Compensation Plan Stock
Unit Grant Letter for Non-
Employee Directors.
Form of UGI Corporation
2021 Incentive Award Plan
Nonqualified Stock Option
Grant Letter for Non-
Employee Directors.
Form of UGI Corporation
2021 Incentive Award Plan
Restricted Stock Unit Grant
Letter for Non-Employee
Directors.
Form of UGI Corporation
2021 Incentive Award Plan
Nonqualified Stock Option
Grant Letter for all US
Employees.
Form of UGI Corporation
2021 Incentive Award Plan
Performance Unit Grant Letter
for all US Employees.
Form of UGI Corporation
2021 Incentive Award Plan
Stock Unit Grant Letter for all
US Employees.
Form of UGI Corporation
2021 Incentive Award Plan
Performance Unit Grant Letter
for NEOs (EPS).
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
UGI
83
Form 10-Q
(3/31/21)
10.1
Form 10-Q
(3/31/21)
10.2
Form 10-Q
(3/31/21)
10.3
Form 10-Q
(3/31/21)
10.4
Form 10-Q
(3/31/21)
10.5
Form 10-K
(9/30/22)
10.17
Form 10-K
(9/30/22)
10.18
Form 10-Q
(6/30/21)
10.1
Form 10-Q
(6/30/21)
10.2
Form 10-Q
(6/30/21)
10.3
Form 10-Q
(3/31/23)
10.3
Incorporation by Reference
Exhibit No.
10.23**
Registrant
Filing
Exhibit
10.4
Form 10-Q
(3/31/23)
UGI
UGI
UGI
UGI
UGI
UGI
UGI
Exhibit
Form of UGI Corporation
2021 Incentive Award Plan
Performance Unit Grant Letter
for US Employees (TSR).
Form of Confidentiality, Non-
Competition and Non-
Solicitation Agreement
between UGI Corporation and
Mr. Roger Perreault.
Form of Confidentiality, Non-
Competition and Non-
Solicitation Agreement
between UGI Corporation and
Mr. Robert F. Beard.
Form of Confidentiality, Non-
Competition and Non-
Solicitation Agreement
between UGI Corporation and
Ms. Judy Zagorski.
Form of Confidentiality, Non-
Competition and Non-
Solicitation Agreement
between UGI Corporation and
Mr. Sean P. O’Brien.
Form of Confidentiality, Non-
Competition and Non-
Solicitation Agreement
between UGI Corporation and
Mr. John Koerwer.
Form of Change in Control
Agreement between UGI
Corporation and Messrs.
Perreault, Beard, O’Brien and
Koerwer and Ms. Zagorski.
Form of Receivables Purchase
Agreement, dated as of
November 30, 2001, as
amended through and
including Amendment No. 18
thereto dated October 27,
2017, by and among UGI
Energy Services, LLC, as
servicer, Energy Services
Funding Corporation, as
seller, and PNC Bank,
National Association, as
issuer and administrator.
10.24**
10.25**
10.26**
10.27**
*10.28**
10.29**
10.30
10.31
Form 10-Q
(6/30/21)
10.4
Form 10-Q
(12/31/22)
10.1
Form 10-K
(9/30/21)
10.31
Form 10-Q
(3/31/23)
10.2
Form 10-K
(9/30/21)
10.32
Form 10-K
(9/30/17)
10.38
UGI
Form 8-K
(10/26/18)
10.1
Amendment No. 19, dated as
of October 26, 2018, to
Receivables Purchase
Agreement, dated as of
November 30, 2001 (as
amended, supplemented or
modified from time to time),
by and among UGI Energy
Services, LLC, as servicer,
Energy Services Funding
Corporation, as seller, and
PNC Bank, National
Association, as issuer and
administrator.
84
Incorporation by Reference
Exhibit No.
10.32
10.33
10.34
10.35
10.36
Exhibit
Amendment No. 20, dated as
of October 25, 2019, to
Receivables Purchase
Agreement, dated as of
November 30, 2001 (as
amended, supplemented or
modified from time to time),
by and among UGI Energy
Services, LLC, as servicer,
Energy Services Funding
Corporation, as seller, and
PNC Bank, National
Association, as issuer and
administrator.
Amendment No. 21, dated as
of October 23, 2020, to
Receivables Purchase
Agreement, dated as of
November 30, 2001, by and
among UGI Energy Services,
LLC, as servicer, Energy
Services Funding Corporation,
as seller, and PNC Bank,
National Association, as
issuer and administrator.
Amendment No. 22, dated as
of October 22, 2021, to
Receivables Purchase
Agreement, dated as of
November 30, 2001, by and
among UGI Energy Services,
LLC, as servicer, Energy
Services Funding Corporation,
as seller, and PNC Bank,
National Association, as
issuer and administrator.
Amendment No. 23, dated as
of October 21, 2022, to
Receivables Purchase
Agreement, dated as of
November 30, 2001, by and
among UGI Energy Services,
LLC, as servicer, Energy
Services Funding Corporation,
as seller, and PNC Bank,
National Association, as
issuer and administrator.
Amendment No. 24, dated as
of October 20, 2023, to
Receivables Purchase
Agreement, dated as of
November 30, 2001, by and
among UGI Energy Services,
LLC, as servicer, Energy
Services Funding Corporation,
as seller, and PNC Bank,
National Association, as
issuer and administrator.
Registrant
Filing
UGI
Form 8-K
(10/25/19)
Exhibit
10.1
UGI
Form 8-K
(10/23/20)
10.1
UGI
Form 8-K
(10/22/21)
10.1
UGI
Form 8-K
(10/20/22)
10.2
UGI
Form 8-K
(10/20/23)
10.1
85
Incorporation by Reference
Exhibit No.
10.37
Registrant
Filing
UGI
Form 10-K
(9/30/17)
Exhibit
10.39
10.38
10.39
10.40
10.41
10.42
10.43
10.44
Exhibit
Form of Purchase and Sale
Agreement, dated as of
November 30, 2001, as
amended through and
including Amendment No. 4
thereto dated October 1, 2013,
by and between UGI Energy
Services, LLC and Energy
Services Funding Corporation.
FSS Service Agreement No.
79028 effective as of
December 1, 2019 by and
between Columbia Gas
Transmission, LLC and UGI
Utilities, Inc.
SST Service Agreement
No. 79133 effective as of
December 1, 2019 by and
between Columbia Gas
Transmission, LLC and UGI
Utilities, Inc.
Gas Supply and Delivery
Service Agreement between
UGI Utilities, Inc. and UGI
Energy Services, LLC,
effective November 1, 2015.
First Amendment, dated
November 1, 2020, to Gas
Supply and Delivery Service
Agreement First Amendment,
dated November 1, 2020, to
Gas Supply and Delivery
Service Agreement between
UGI Utilities, Inc. and UGI
Energy Services, LLC,
effective November 1, 2015.
UGI Utilities, Inc. and UGI
Energy Services, LLC,
effective November 1, 2015.
Gas Supply and Delivery
Service Agreement between
UGI Utilities, Inc. and UGI
Energy Services, LLC,
effective November 1, 2020.
Gas Supply and Delivery
Service Agreement between
UGI Utilities, Inc. and UGI
Energy Services, LLC,
effective November 1, 2021.
Credit Agreement, dated
October 31, 2017, by and
among UGI Utilities, Inc.,
PNC Bank National
Association, as administrative
agent, The Bank of New York
Mellon, as syndication agent,
and certain other lenders
named therein.
86
UGI
UGI
Form 10-K
(9/30/19)
10.40
Form 10-K
(9/30/19)
10.41
Utilities
Form 10-K
(9/30/16)
10.19
UGI
Form 10-K
(9/30/20)
10.41
UGI
UGI
Form 10-K
(9/30/20)
10.42
Form 10-K
(9/30/21)
10.47
Utilities
Form 8-K
(10/31/17)
10.1
Incorporation by Reference
Exhibit No.
10.45
Registrant
Filing
Exhibit
10.1
Form 8-K
(7/21/22)
10.46
10.47
10.48
10.49
10.50
Exhibit
First Amendment to Credit
Agreement, dated July 12,
2022, by and among UGI
Utilities, Inc., the lenders
party thereto and PNC Bank,
National Association, as
administrative agent.
Credit Agreement, dated as of
August 13, 2019, by and
among UGI Energy Services,
LLC, as borrower, Credit
Suisse AG, Cayman Islands
Branch, as administrative
agent and collateral agent, and
the lenders party thereto.
First Amendment to Credit
Agreement, dated February
23, 2023, by and among UGI
Energy Services, LLC, the
guarantors party thereto, the
lenders party thereto and
Credit Suisse AG, Cayman
Islands Branch, as
administrative agent.
Third Amended and Restated
Credit Agreement, dated as of
March 6, 2020, by and among
UGI Energy Services, LLC, as
borrower, JPMorgan Chase
Bank, N.A., as administrative
agent, PNC Bank, National
Association, as syndication
agent, and Wells Fargo Bank,
National Association, as
documentation agent.
Second Amendment to the
Third Amended and Restated
Credit Agreement, dated as of
May 12, 2023, by and among
UGI Energy Services, LLC,
the lenders party thereto and
JPMorgan Chase Bank, N.A.,
as administrative agent.
Amended and Restated Credit
Agreement, dated as of May
4, 2021, by and among UGI
Corporation and JPMorgan
Chase Bank, N.A., as
administrative agent, Citizens
Bank, N.A., PNC Bank,
National Association and
Wells Fargo Bank, National
Association, as co-
documentation agents, and the
other financial institutions
from time to time party
thereto.
UGI
UGI
UGI
UGI
UGI
UGI
87
Form 8-K
(8/13/19)
10.1
Form 8-K
(2/23/23)
10.1
Form 8-K
(3/6/20)
10.1
Form 8-K
(5/12/23)
10.2
Form 8-K
(5/4/21)
10.1
Incorporation by Reference
Exhibit No.
10.51
10.52
10.53
10.54
10.55
10.56
Exhibit
First Amendment to the
Amended and Restated Credit
Agreement, dated as of June
23, 2021, by and among UGI
Corporation, as borrower,
JPMorgan Chase Bank, N.A.,
as administrative agent, and
the lenders party thereto.
Second Amendment to the
Amended and Restated Credit
Agreement, dated as of May
12, 2023, by and among UGI
Corporation, the lenders party
thereto and JPMorgan Chase
Bank, N.A., as administrative
agent.
Third Amendment to the
Amended and Restated Credit
Agreement, dated as of
September 20, 2023, by and
among UGI Corporation, the
lenders party thereto and
JPMorgan Chase Bank, N.A.,
as administrative agent.
Credit Agreement, dated as of
September 28, 2022, by and
among AmeriGas Propane,
L.P., AmeriGas Propane, Inc.,
the lenders from time to time
party thereto and Wells Fargo
Bank, National Association,
as administrative agent.
First Amendment to Credit
Agreement, dated November
15, 2023, by and among
AmeriGas Propane, L.P.,
AmeriGas Propane, Inc., the
lenders party thereto and
Wells Fargo Bank, National
Association, as administrative
agent.
Third Amendment to Third
Amended and Restated Credit
Agreement, dated as of
October 20, 2022, by and
among Mountaineer Gas
Company, as borrower, the
lenders party thereto and
Truist Bank, as administrative
agent, letter of credit issuer
and swing line lender
Registrant
Filing
UGI
Form 10-Q
(6/30/21)
Exhibit
10.6
UGI
UGI
UGI
Form 8-K
(5/12/23)
10.1
Form 8-K
(9/20/23)
10.1
Form 8-K
(9/28/22)
10.1
UGI
Form 8-K
(11/15/23)
10.1
UGI
Form 8-K
(10/20/22)
10.1
88
Incorporation by Reference
Exhibit No.
10.57
Registrant
Filing
Exhibit
10.1
Form 8-K
(3/7/23)
UGI
UGI
UGI
Form 8-K
(11/9/23)
10.1
Form 10-K
(9/30/21)
14
10.58
14
*21
*23
*31.1
*31.2
*32
*97.1
*101.INS
*101.SCH
*101.CAL
*101.DEF
Exhibit
Multicurrency Facilities
Agreement, dated March 7,
2023, by and among UGI
International, LLC, UGI
International Holdings B.V.
the guarantors party thereto,
the lenders party thereto and
Natixis, as agent.
Credit Agreement, dated
November 9, 2023, by and
among UGI Utilities, Inc., the
lenders party thereto and PNC
Bank, National Association,
as administrative agent.
Code of Business Conduct
and Ethics.
Subsidiaries of the Registrant.
Consent of Ernst & Young
LLP
Certification by the Chief
Executive Officer relating to
the Registrant’s Report on
Form 10-K for the fiscal year
ended September 30, 2022
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification by the Chief
Financial Officer relating to
the Registrant’s Report on
Form 10-K for the fiscal year
ended September 30, 2022
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification by the Chief
Executive Officer and the
Chief Financial Officer
relating to the Registrant’s
Report on Form 10-K for the
fiscal year ended September
30, 2022, pursuant to Section
906 of the Sarbanes-Oxley
Act of 2002.
Clawback Policy.
XBRL Instance - the instance
document does not appear in
the Interactive Data File
because its XBRL tags are
embedded within the Inline
XBRL document
XBRL Taxonomy Extension
Schema
XBRL Taxonomy Extension
Calculation Linkbase
XBRL Taxonomy Extension
Definition Linkbase
89
Incorporation by Reference
Exhibit No.
*101.LAB
*101.PRE
Exhibit
XBRL Taxonomy Extension
Labels Linkbase
XBRL Taxonomy Extension
Presentation Linkbase
Registrant
Filing
Exhibit
Filed herewith.
*
** As required by Item 15(a)(3), this exhibit is identified as a compensatory plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
None.
Exhibit No. Description
EXHIBIT INDEX
4.20
10.28
21
23
31.1
31.2
32
Acknowledgement, dated as of October 23, 2023, to the Note Purchase Agreement, dated as of June 30, 2022,
by and among Mountaineer Gas Company, Teachers Insurance and Annuity Association of America and The
Lincoln National Life Insurance Company.
Form of Confidentiality, Non-Competition and Non-Solicitation Agreement between UGI Corporation and
Mr. John Koerwer.
Subsidiaries of the Registrant.
Consent of Ernst & Young LLP.
Certification by the Chief Executive Officer relating to the Registrant’s Report on Form 10-K for the fiscal
year ended September 30, 2023 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification by the Chief Financial Officer relating to the Registrant’s Report on Form 10-K for the fiscal year
ended September 30, 2023 pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification by the Chief Executive Officer and the Chief Financial Officer relating to the Registrant’s Report
on Form 10-K for the fiscal year ended September 30, 2023, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
97.1
Clawback Policy.
101.INS
XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Labels Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
90
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: November 28, 2023
UGI CORPORATION
By:
/s/ Sean O’Brien
Sean O’Brien
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below on November 28,
2023, by the following persons on behalf of the Registrant in the capacities indicated.
Signature
/s/ Roger Perreault
Roger Perreault
/s/ Sean O’Brien
Sean O’Brien
/s/ Jean Felix Tematio Dontsop
Jean Felix Tematio Dontsop
/s/ Frank S. Hermance
Frank S. Hermance
/s/ M. Shawn Bort
M. Shawn Bort
/s/ Theodore A. Dosch
Theodore A. Dosch
/s/ Alan N. Harris
Alan N. Harris
/s/ Mario Longhi
Mario Longhi
/s/ William J. Marrazzo
William J. Marrazzo
/s/ Cindy J. Miller
Cindy J. Miller
/s/ Kelly A. Romano
Kelly A. Romano
/s/ Santiago Seage
Santiago Seage
Title
President and Chief Executive Officer
(Principal Executive Officer) and Director
Chief Financial Officer
(Principal Financial Officer)
Vice President, Chief Accounting Officer and Corporate
Controller (Principal Accounting Officer)
Chairman and Director
Director
Director
Director
Director
Director
Director
Director
Director
91
UGI CORPORATION AND SUBSIDIARIES
FINANCIAL INFORMATION
FOR INCLUSION IN ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 2023
F-1
UGI CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Management’s Annual Report on Consolidated Financial Statements and Schedules
Financial Statements:
Report of Independent Registered Public Accounting Firm (on Consolidated Financial Statements and
Schedules)
Consolidated Balance Sheets as of September 30, 2023 and 2022
Consolidated Statements of Income for the years ended September 30, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended September 30, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the years ended September 30, 2023, 2022 and 2021
Consolidated Statements of Changes in Equity for the years ended September 30, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Financial Statement Schedules:
For the years ended September 30, 2023, 2022 and 2021:
I — Condensed Financial Information of Registrant (Parent Company)
II — Valuation and Qualifying Accounts
Pages
F-3
F-4
F-6
F-7
F-8
F-9
F-10
F-11
S-1
S-4
We have omitted all other financial statement schedules because the required information is either (1) not present; (2) not
present in amounts sufficient to require submission of the schedule; or (3) included elsewhere in the financial statements or
related notes.
F-2
Management’s Annual Report on Consolidated Financial Statements and Schedules
The Company’s consolidated financial statements and other financial information contained in this Annual Report were
prepared by management, which is responsible for their fairness, integrity and objectivity. The consolidated financial statements
and related information were prepared in accordance with GAAP and include amounts that are based on management’s best
judgments and estimates.
The Audit Committee of the Board of Directors (the “Committee”) is composed of three members, each of whom is
independent and a non-employee director of the Company. The Committee is responsible for monitoring and overseeing the
financial reporting process, the adequacy of internal accounting controls, and the independence and performance of the
Company’s independent registered public accounting firm and internal auditors. The Committee meets regularly, with and
without management present, with the independent registered public accounting firm and the internal auditors, both of which
report directly to the Committee. In addition, the Committee provides regular reports to the Board of Directors.
/s/ Roger Perreault
Chief Executive Officer
/s/ Sean P. O’Brien
Chief Financial Officer
/s/ Jean Felix Tematio Dontsop
Chief Accounting Officer
F-3
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of UGI Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UGI Corporation and subsidiaries (the Company) as of
September 30, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and
cash flows for each of the three years in the period ended September 30, 2023, and the related notes and financial statement
schedules listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September
30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended September
30, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of September 30, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated November 28, 2023, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Description
of the Matter
Valuation of general liability, automobile and workers’ compensation reserves
As discussed in Note 2 to the consolidated financial statements, the Company is subject to risk of loss for
general liability, automobile, and workers’ compensation claims for which it obtains coverage under
insurance policies that are subject to self-insured retentions or deductibles. The Company establishes
reserves for pending and incurred but not reported claims associated with general liability, automobile, and
workers’ compensation when it is probable that a liability exists and the amount or range of amounts can be
reasonably estimated.
Auditing the Company’s general liability, automobile, and workers’ compensation reserves was complex
due to the significant measurement uncertainty associated with the estimate and the use of actuarial
methods, including the Company’s use of actuarial specialists. Specifically, the reserve estimate is sensitive
to significant management assumptions, including the loss development factors for reported claims.
F-4
How We
Addressed
the Matter in
Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over
the Company’s valuation of general liability, automobile, and workers’ compensation reserves. For
example, we tested controls over management’s review of the appropriateness of the assumptions used in
the calculations and the completeness and accuracy of the data underlying the reserves.
Description
of the Matter
To test the valuation of general liability, automobile, and workers’ compensation reserves, our audit
procedures included, among others, assessing the methodologies used to estimate the reserves and testing
the completeness and accuracy of the underlying data, as well as inspecting the Company’s insurance
policies for coverage limits above which would be paid by the insurance carrier. We involved our actuarial
specialists to assist in evaluating the significant assumptions and actuarial methodologies used by the
Company to estimate the total expected losses for claims. We also performed a search for unrecorded
claims reserves related to claims incurred prior to the balance sheet date through examination of subsequent
payments and other supporting documentation to determine if unrecorded claims affect the loss reserve
estimation process or reserve balance.
Goodwill Impairment Evaluation of the AmeriGas Propane and UGI International Reporting Units
At September 30, 2023, the Company’s goodwill balance was $3,027 million. As discussed in Note 2 to the
consolidated financial statements, the Company’s goodwill is tested for impairment at least annually, or
whenever events or circumstances indicate that the value of goodwill may be impaired. If goodwill is
determined to be impaired, an impairment loss is measured at the amount by which the reporting unit’s
carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. During the interim
period ended June 30, 2023, the Company identified interim impairment indicators related to goodwill
within the AmeriGas Propane reporting unit. The Company performed a quantitative assessment of the
reporting unit to determine its fair value. Based on the Company’s evaluation, the estimated fair value of
the reporting unit was determined to be less than its carrying value. As a result, a non-cash pre-tax goodwill
impairment charge of $656 million was recognized. Furthermore, as discussed in Note 2 to the consolidated
financial statements, the fair value of the UGI International reporting unit exceeded its carrying value by
approximately 10% at September 30, 2023.
Auditing the Company’s goodwill impairment tests for the AmeriGas Propane and UGI International
reporting units required especially challenging and complex judgment to evaluate the effects of
macroeconomic and industry conditions such as future growth rates and discount rates and involved a high
degree of subjectivity due to the significant estimation required to determine the fair value of the reporting
unit. In particular, the fair value estimate of the reporting unit involves the use of significant unobservable
inputs and is sensitive to changes in significant assumptions, such as the discount rate and earnings before
interest, taxes, depreciation and amortization (“EBITDA”).
How We
Addressed
the Matter in
Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company's goodwill impairment review and testing process which included the AmeriGas Propane and
UGI International reporting units. For example, we tested controls over management’s review of the
valuation model, the significant assumptions described above, and the completeness and accuracy of the
data used in the valuations.
To test the estimated fair value for the AmeriGas Propane and UGI International reporting units, we
performed audit procedures that included, among others, assessing the methodologies used to develop the
estimated fair values, testing the significant assumptions discussed above, and evaluating the completeness
and accuracy of the underlying data used by the Company in its analyses. We compared the significant
assumptions used by management to current industry trends. We assessed the historical accuracy of
management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the
changes in the fair value of the reporting units that would result from changes in the assumptions. We also
involved valuation specialists to assist in our evaluation of the overall methodologies and the discount rates
used in the fair value estimate.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Philadelphia, Pennsylvania
November 28, 2023
F-5
UGI CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
ASSETS
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable (less allowances for doubtful accounts of $71 and $64, respectively)
Accrued utility revenues
Income taxes receivable
Inventories
Derivative instruments
Prepaid expenses
Held for sale assets
Other current assets
Total current assets
Property, plant and equipment
Non-utility
Utility
Accumulated depreciation
Net property, plant, and equipment
Goodwill
Intangible assets, net
Utility regulatory assets
Derivative instruments
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt
Short-term borrowings
Accounts payable
Employee compensation and benefits accrued
Deposits and advances
Derivative instruments
Held for sale liabilities
Other current liabilities
Total current liabilities
Noncurrent liabilities
Long-term debt
Deferred income taxes
Derivative instruments
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (Note 16)
Equity:
UGI Corporation stockholders’ equity:
Preferred Stock, without par value (authorized 5,000,000 shares; issued 220,000 and 220,000 Series A
shares, respectively)
UGI Common Stock, without par value (authorized – 450,000,000 shares; issued – 210,906,052 and
210,560,494 shares, respectively)
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total UGI Corporation stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
See accompanying Notes to Consolidated Financial Statements.
F-6
September 30,
2023
2022
241 $
99
878
33
36
433
75
123
13
114
2,045
7,046
6,082
13,128
(4,581)
8,547
3,027
443
302
49
988
15,401 $
57 $
649
613
142
232
60
16
505
2,274
6,543
928
27
1,235
11,007
405
64
1,127
23
128
665
865
110
295
120
3,802
6,656
5,550
12,206
(4,166)
8,040
3,612
500
301
565
755
17,575
149
368
891
147
225
144
19
501
2,444
6,483
1,305
50
1,219
11,501
167
162
1,503
3,027
(256)
(55)
4,386
8
4,394
15,401 $
1,483
4,841
(380)
(40)
6,066
8
6,074
17,575
$
$
$
$
UGI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share amounts)
Revenues
Costs and expenses:
Cost of sales (excluding depreciation and amortization shown below)
Operating and administrative expenses
Depreciation and amortization
Impairment of goodwill
Loss on disposal of UGI International energy marketing business
Other operating income, net
Operating (loss) income
Income (loss) from equity investees
Loss on extinguishments of debt
Other non-operating (expense) income, net
Interest expense
(Loss) income before income taxes
Income tax benefit (expense)
Net (loss) income including noncontrolling interests
Deduct net income attributable to noncontrolling interests
Net (loss) income attributable to UGI Corporation
Earnings per common share attributable to UGI Corporation stockholders:
Basic
Diluted
Weighted-average common shares outstanding (thousands):
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
Year Ended September 30,
2023
2022
2021
$
8,928 $
10,106 $
7,447
6,937
2,158
532
656
221
(132)
10,372
(1,444)
2
(9)
(7)
(379)
(1,837)
335
(1,502)
—
5,973
2,028
518
—
—
(79)
8,440
1,666
(14)
(11)
75
(329)
1,387
(313)
1,074
(1)
$
$
$
(1,502) $
1,073 $
(7.16) $
(7.16) $
5.11 $
4.97 $
2,614
2,014
502
—
—
(33)
5,097
2,350
(63)
—
12
(310)
1,989
(522)
1,467
—
1,467
7.02
6.92
209,806
209,806
209,940
215,821
209,063
212,126
F-7
UGI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Millions of dollars)
Net (loss) income including noncontrolling interests
Net gains on derivative instruments (net of tax of $(9), $(27), and $(1),
respectively)
Reclassifications of net (gains) losses on derivative instruments (net of tax
of $13, $(1), and $(7), respectively)
Foreign currency translation adjustments (net of tax of $21, $(55), and $(4),
respectively)
Foreign currency gains (losses) on long-term intra-company transactions
Benefit plans, principally actuarial gains (net of tax of $(2), $(10), and $(3),
respectively)
Reclassifications of benefit plans actuarial (gains) losses and net prior
service benefit (net of tax of $1, $(1), and $(1), respectively)
Other comprehensive income (loss)
Comprehensive (loss) income including noncontrolling interests
Deduct comprehensive income attributable to noncontrolling interests
Year Ended September 30,
2023
2022
2021
$
(1,502) $
1,074 $
1,467
16
(27)
68
64
5
(2)
124
(1,378)
—
64
6
(193)
(148)
28
3
(240)
834
(1)
833 $
3
18
(11)
(12)
7
2
7
1,474
—
1,474
Comprehensive (loss) income attributable to UGI Corporation
$
(1,378) $
See accompanying Notes to Consolidated Financial Statements.
F-8
UGI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
Year Ended September 30,
2022
2023
2021
$
(1,502) $
1,074 $
1,467
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income including noncontrolling interests
Adjustments to reconcile net (loss) income including noncontrolling interests
to net cash provided by operating activities:
Depreciation and amortization
Deferred income tax (benefit) expense, net
Provision for uncollectible accounts
Changes in unrealized gains and losses on derivative instruments
Loss on disposal of UGI International energy marketing business
Impairment of assets
Impairment of goodwill
Equity-based compensation expense
Loss on extinguishments of debt
(Income) loss from equity investees
Settlement of Energy Services interest rate swap, net of amortization
Gain on sale of fixed assets
Other, net
Net change in:
Accounts receivable and accrued utility revenues
Income taxes receivable
Inventories
Utility deferred fuel costs, net of changes in unsettled derivatives
Accounts payable
Derivative instruments collateral (paid) received
Other current assets
Other current liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment
Acquisitions of businesses and assets, net of cash and restricted cash acquired
Investments in equity method investees
Settlements of net investment hedges
Net proceeds from the disposition of businesses and assets
Other, net
Net cash used by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends on UGI Common Stock
Issuances of debt, net of discount and issuance costs
Repayments of debt and finance leases, including redemption premiums
Receivables Facility net borrowings (repayments)
Increase (decrease) in short-term borrowings
Issuances of preferred stock, net of issuance costs
Issuances of UGI Common Stock
Repurchases of UGI Common Stock
Payments on Purchase Contracts
Net cash (used) provided by financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash (decrease) increase
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash, cash equivalents and restricted cash at end of year
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash (decrease) increase
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid (received) for:
Interest
Income taxes
See accompanying Notes to Consolidated Financial Statements.
$
$
$
$
$
F-9
532
(420)
69
1,682
221
19
656
17
9
(2)
19
(61)
19
212
91
247
64
(291)
(420)
(36)
(18)
1,107
(974)
(9)
(146)
22
30
—
(1,077)
(308)
1,930
(2,031)
46
221
—
12
(22)
(16)
(168)
9
(129) $
340 $
469
(129) $
518
221
61
(648)
—
5
—
15
11
14
—
(33)
31
(431)
—
(224)
(24)
85
(9)
54
(4)
716
(804)
(242)
(47)
26
44
11
(1,012)
(296)
1,257
(978)
—
1
—
19
(38)
(16)
(51)
(61)
(408) $
469 $
877
(408) $
332 $
(17) $
320 $
61 $
502
478
36
(1,398)
—
—
—
21
—
63
—
(11)
42
(233)
(48)
(231)
(22)
366
472
(10)
(13)
1,481
(690)
(397)
(65)
—
39
—
(1,113)
(282)
656
(405)
(19)
(16)
213
19
—
—
166
(14)
520
877
357
520
297
96
UGI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Millions of dollars, except per share amounts)
Preferred stock, without par value
Balance, beginning of year
Issuance of preferred stock
Cumulative effect of change in accounting - ASU 2020-06 (Note 3)
Other
Balance, end of year
Common stock, without par value
Balance, beginning of year
Common Stock issued in connection with employee and director plans, net of
tax withheld
Equity-based compensation expense
Issuance of Equity Units - 2024 Purchase Contracts
Cumulative effect of change in accounting - ASU 2020-06 (Note 3)
Other
Balance, end of year
Retained earnings
Balance, beginning of year
Net (loss) income attributable to UGI Corporation
Cash dividends on common stock ($1.47, $1.41, and $1.35 per share,
respectively)
Losses on treasury stock transactions in connection with employee and director
plans
Cumulative effect of change in accounting - ASU 2020-06 (Note 3)
Balance, end of year
Accumulated other comprehensive income (loss)
Balance, beginning of year
Net gains on derivative instruments
Reclassification of net (gains) losses on derivative instruments
Benefit plans, principally actuarial gains
Reclassification of benefit plans net actuarial (gains) losses and net prior
service benefits
Foreign currency gains (losses) on long-term intra-company transactions
Foreign currency translation adjustments
Balance, end of year
Treasury stock
Balance, beginning of year
Common Stock issued in connection with employee and director plans, net of
tax withheld
Repurchases of common stock
Reacquired common stock – employee and director plans
Balance, end of year
Total UGI Corporation stockholders’ equity
Noncontrolling interests
Balance, beginning of year
Net income attributable to noncontrolling interests
Other
Balance, end of year
Total equity
See accompanying Notes to Consolidated Financial Statements.
Year Ended September 30,
2023
2022
2021
162 $
—
5
—
167 $
213 $
—
—
(51)
162 $
—
213
—
—
213
1,483 $
1,394 $
1,416
8
18
—
(6)
—
1,503 $
19
17
—
—
53
1,483 $
9
16
(45)
—
(2)
1,394
4,841 $
(1,502)
4,081 $
1,073
2,908
1,467
(308)
(296)
(282)
(5)
1
3,027 $
(17)
—
4,841 $
(12)
—
4,081
(380) $
16
(27)
5
(2)
64
68
(256) $
(140) $
64
6
28
3
(148)
(193)
(380) $
(147)
3
18
7
2
(12)
(11)
(140)
(40) $
(26) $
(49)
7
(22)
—
(55) $
4,386 $
8 $
—
—
8 $
4,394 $
34
(38)
(10)
(40) $
6,066 $
9 $
1
(2)
8 $
6,074 $
24
—
(1)
(26)
5,522
9
—
—
9
5,531
$
$
$
$
$
$
$
$
$
$
$
$
$
$
F-10
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Index to Notes
Note 1 — Nature of Operations
Note 2 — Summary of Significant Accounting Policies
Note 3 — Accounting Changes
Note 4 — Revenue from Contracts with Customers
Note 5 — Acquisitions and Dispositions
Note 6 — Debt
Note 7 — Income Taxes
Note 8 — Employee Retirement Plans
Note 9 — Utility Regulatory Assets and Liabilities and Regulatory Matters
Note 10 — Inventories
Note 11 — Property, Plant and Equipment
Note 12 — Goodwill and Intangible Assets
Note 13 — Equity
Note 14 — Equity-Based Compensation
Note 15 — Leases
Note 16 — Commitments and Contingencies
Note 17 — Fair Value Measurements
Note 18 — Derivative Instruments and Hedging Activities
Note 19 — Accumulated Other Comprehensive Income (Loss)
Note 20 — Other Operating Income, Net and Other Non-Operating Income (Expense), Net
Note 21 — Equity Method Investments
Note 22 — Segment Information
Note 23 — Global LPG Business Transformation Initiatives
Note 1 — Nature of Operations
UGI is a holding company that, through subsidiaries and affiliates, distributes, stores, transports and markets energy products
and related services. In the U.S., we own and operate (1) a retail propane marketing and distribution business; (2) natural gas
and electric distribution utilities; and (3) energy marketing, midstream infrastructure, storage, natural gas gathering and
processing, natural gas production, electricity generation and energy services businesses. In Europe, we market and distribute
propane and other LPG, and market other energy products and services.
We conduct a domestic propane marketing and distribution business through AmeriGas Partners. AmeriGas Partners conducts
its propane marketing and distribution business through its principal operating subsidiary AmeriGas OLP.
UGI International, LLC, through its subsidiaries and affiliates, conducts (1) an LPG distribution business throughout much of
Europe and (2) an energy marketing business in France and the Netherlands and, prior to its sales in Fiscal 2023, in Belgium
and the United Kingdom. These businesses are conducted principally through our subsidiaries, UGI France, Flaga, AvantiGas,
DVEP and UniverGas. See Note 5 for additional information regarding the UGI International energy marketing business.
Energy Services conducts, directly and through subsidiaries and affiliates, energy marketing, including RNG, midstream
transmission, LNG storage, natural gas gathering and processing, natural gas and RNG production, electricity generation and
energy services businesses primarily in the eastern region of the U.S., eastern Ohio, the panhandle of West Virginia and
California. UGID owns electricity generation facilities principally located in Pennsylvania. Energy Services and its
subsidiaries’ storage, LNG and portions of its midstream transmission operations are subject to regulation by the FERC.
Our Utilities segment includes UGI Utilities and Mountaineer. PA Gas Utility serves customers in eastern and central
Pennsylvania and in portions of one Maryland county, and Mountaineer serves customers in West Virginia. Electric Utility
F-11
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
serves customers in portions of Luzerne and Wyoming counties in northeastern Pennsylvania. PA Gas Utility is subject to
regulation by the PAPUC and FERC and, with respect to its customers in Maryland, the MDPSC. Mountaineer is subject to
regulation by the WVPSC and FERC. Electric Utility is subject to regulation by the PAPUC and FERC.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of financial statements in
accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, expenses and costs. These estimates are based on management’s knowledge of current events, historical
experience and various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual
results may be different from these estimates and assumptions.
Principles of Consolidation
The consolidated financial statements include the accounts of UGI and its controlled subsidiary companies which are majority
owned. We report outside ownership interests in other consolidated but less than 100%-owned subsidiaries, as noncontrolling
interests. We eliminate intercompany accounts and transactions when we consolidate.
We account for privately held equity securities of entities without readily determinable fair values in which we do not have
control, but have significant influence over operating and financial policies, under the equity method. See Note 21 for
additional information on our equity method investments. Investments in equity securities related to entities in which we do not
have significant influence over operating and financial policies are generally initially valued at their cost less impairment (if
any) and subsequently remeasured at fair value, as applicable, in accordance with the relevant provisions under GAAP.
Effects of Regulation
Certain of our subsidiaries account for the financial effects of regulation in accordance with ASC 980. In accordance with this
guidance, incurred costs that would otherwise be charged to expense are capitalized and recorded as regulatory assets when it is
probable that the incurred costs will be recovered through rates in the future. Similarly, we recognize regulatory liabilities
when it is probable that regulators will require customer refunds through future rates or when revenue is collected from
customers for expenditures that have not yet been incurred. Regulatory assets and liabilities are classified as current if, upon
initial recognition, the entire amount related to that item will be recovered or refunded within a year of the balance sheet date.
Generally, regulatory assets and regulatory liabilities are amortized into expense and income over the periods authorized by the
respective regulatory body. For additional information regarding the effects of rate regulation on our utility operations, see
Note 9.
Fair Value Measurements
The Company applies fair value measurements on a recurring and, as otherwise required under ASC 820, on a nonrecurring
basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an
orderly transaction between market participants at the measurement date. Fair value measurements performed on a recurring
basis principally relate to derivative instruments and investments held in supplemental executive retirement plan grantor trusts.
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into
three levels. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A level within the fair value hierarchy is
based on the lowest level of any input that is significant to the fair value measurement.
We use the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into
three broad levels:
•
•
Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access
at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the
asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or
F-12
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or
liability, and inputs that are derived from observable market data by correlation or other means.
•
Level 3 — Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for
the asset or liability.
Fair value is based upon assumptions that market participants would use when pricing an asset or liability, including
assumptions about risk and risks inherent in valuation techniques and inputs to valuations. This includes not only the credit
standing of counterparties and credit enhancements but also the impact of our own nonperformance risk on our liabilities. We
evaluate the need for credit adjustments to our derivative instrument fair values. These credit adjustments were not material to
the fair values of our derivative instruments.
Derivative Instruments
Derivative instruments are reported on the Consolidated Balance Sheets at their fair values, unless the NPNS exception is
elected. The accounting for changes in fair value depends upon the purpose of the derivative instrument, whether it is subject to
regulatory ratemaking mechanisms or if it qualifies and is designated as a hedge for accounting purposes.
Certain of our derivative instruments qualify and are designated as cash flow hedges. For cash flow hedges, changes in the fair
values of the derivative instruments are recorded in AOCI, to the extent effective at offsetting changes in the hedged item, until
earnings are affected by the hedged item. We discontinue cash flow hedge accounting if occurrence of the forecasted
transaction is determined to be no longer probable. Hedge accounting is also discontinued for derivatives that cease to be highly
effective. We do not designate our commodity and certain foreign currency derivative instruments as hedges under GAAP.
Changes in the fair values of these derivative instruments are reflected in net income. Gains and losses on substantially all of
the commodity derivative instruments used by Utilities are included in regulatory assets or liabilities because it is probable such
gains or losses will be recoverable from, or refundable to, customers. From time to time, we also enter into net investment
hedges. Gains and losses on net investment hedges that relate to our foreign operations are included in the cumulative
translation adjustment component in AOCI until such foreign net investment is substantially sold or liquidated.
Cash flows from derivative instruments, other than certain net investment hedges, are included in cash flows from operating
activities on the Consolidated Statements of Cash Flows. Cash flows from net investment hedges are included in cash flows
from investing activities on the Consolidated Statements of Cash Flows.
For a more detailed description of the derivative instruments we use, our accounting for derivatives, our objectives for using
them and other information, see Note 18.
Business Combination Purchase Price Allocations
From time to time, the Company enters into material business combinations. The purchase price is allocated to the various
assets acquired and liabilities assumed at their estimated fair value as of the acquisition date with the residual of the purchase
price allocated to goodwill. Fair values of assets acquired and liabilities assumed are based upon available information.
Estimating fair values is generally subject to significant judgment, estimates and assumptions especially with respect to
intangible assets. The allocation of the purchase price may be modified up to one year after the acquisition date, under certain
circumstances, as more information is obtained about the fair value of assets acquired and liabilities assumed.
Foreign Currency Translation
Balance sheets of international subsidiaries are translated into USD using the exchange rate at the balance sheet date. Income
statements and equity investee results are translated into USD using an average exchange rate for each reporting period. Where
the local currency is the functional currency, translation adjustments are recorded in other comprehensive income. Transactions
denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions
arise with the impact of subsequent changes in such rates reflected in the income statement. The functional currency of a
significant portion of our international operations is the euro.
Revenue Recognition
In accordance with ASC 606, the Company recognizes revenue when control of promised goods or services is transferred to
customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.
F-13
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Certain revenues such as revenue from leases, financial instruments and other revenues are not within the scope of ASC 606
because they are not from contracts with customers. Such revenues are accounted for in accordance with other GAAP.
Revenue-related taxes collected on behalf of customers and remitted to taxing authorities, principally sales and use taxes, are
not included in revenues. Gross receipts taxes at Midstream & Marketing, Mountaineer and Electric Utility are presented on a
gross basis. The Company has elected to use the practical expedient to expense the costs to obtain contracts when incurred for
contracts that have a term less than one year. The costs incurred to obtain contracts that have durations of longer than one year
are not material. See Note 4 for additional disclosures regarding the Company’s revenue from contracts with customers.
Accounts Receivable
Accounts receivable are reported on the Consolidated Balance Sheets at the gross outstanding amount adjusted for an allowance
for doubtful accounts. Accounts receivable that are acquired are initially recorded at fair value on the date of acquisition.
Provisions for uncollectible accounts are established based upon our collection experience, the assessment of the collectability
of specific amounts and the Company’s best estimate of current expected credit losses. Accounts receivable are written off in
the period in which the receivable is deemed uncollectible.
LPG Delivery Expenses
Expenses associated with the delivery of LPG to customers of the Partnership and our UGI International operations (including
vehicle expenses, expenses of delivery personnel, vehicle repair and maintenance and general liability expenses) are classified
as “Operating and administrative expenses” on the Consolidated Statements of Income. Depreciation expense associated with
the Partnership and UGI International delivery vehicles is classified in “Depreciation and amortization” on the Consolidated
Statements of Income.
Income Taxes
AmeriGas Partners and AmeriGas OLP are not directly subject to federal income taxes. Instead, their taxable income or loss is
allocated to the individual partners. We record income taxes on (1) our share of the Partnership’s current taxable income or loss
and (2) the differences between the book and tax basis of our investment in the Partnership. AmeriGas OLP has subsidiaries
which operate in corporate form and are directly subject to federal and state income taxes. Legislation in certain states allows
for taxation of partnership income and the accompanying financial statements reflect state income taxes resulting from such
legislation.
Utilities records deferred income taxes in the Consolidated Statements of Income resulting from the use of accelerated tax
depreciation methods based upon amounts recognized for ratemaking purposes. Utilities also records a deferred income tax
liability for tax benefits, principally the result of accelerated tax depreciation for state income tax purposes, that are flowed
through to ratepayers when temporary differences originate and records a regulatory income tax asset for the probable increase
in future revenues that will result when the temporary differences reverse.
We are amortizing deferred investment tax credits related to UGI Utilities’ plant additions over the service lives of the related
property. UGI Utilities reduces its deferred income tax liability for the future tax benefits that will occur when investment tax
credits, which are not taxable, are amortized. We also reduce the regulatory income tax asset for the probable reduction in
future revenues that will result when such deferred investment tax credits amortize. Investment tax credits associated with
Midstream & Marketing’s qualifying renewable natural gas property under the Inflation Reduction Act of 2022 are reflected in
income taxes.
We record interest on underpayments and overpayments of income taxes, and income tax penalties, in “Income tax benefit
(expense)” on the Consolidated Statements of Income. Interest income or expense recognized was not material for all periods
presented.
F-14
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Earnings Per Common Share
Basic earnings per share attributable to UGI Corporation stockholders reflect the weighted-average number of common shares
outstanding. Diluted earnings per share attributable to UGI Corporation include the effects of dilutive stock options, common
stock awards and Equity Units. Shares used in computing basic and diluted earnings per share are as follows:
(Thousands of shares)
Weighted-average common shares outstanding for basic computation
Incremental shares issuable for stock options, common stock awards and
Equity Units (a) (b)
Weighted-average common shares outstanding for diluted computation
2023
2022
2021
209,806
209,940
209,063
—
209,806
5,881
215,821
3,063
212,126
(a)
Includes the impact of common shares assumed to be outstanding under the if-converted method in connection with the
May 2021 issuance of Equity Units (see Note 13).
(b) For Fiscal 2023, 6,132 of such shares have been excluded as such incremental shares would be antidilutive due to the net
loss for the period. For Fiscal 2022 and Fiscal 2021, 8,138 shares and 5,267 shares, respectively, associated with
outstanding stock option awards were excluded from the computation of diluted earnings per share because their effect was
antidilutive.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include cash on hand, cash in banks and highly liquid investments with maturities of three months or
less when purchased. Restricted cash principally represents those cash balances in our commodity futures brokerage accounts
that are restricted from withdrawal.
The following table provides a reconciliation of the total cash, cash equivalents and restricted cash reported on the Consolidated
Balance Sheets to the corresponding amounts reported on the Consolidated Statements of Cash Flows.
Cash and cash equivalents
Restricted cash
Cash, cash equivalents and restricted cash
Inventories
2023
2022
2021
$
$
241 $
99
340 $
405 $
64
469 $
855
22
877
Our inventories are stated at the lower of cost or net realizable value. We determine cost using an average cost method for non-
utility LPG and natural gas and utility inventories; specific identification for appliances; and the FIFO method for all other
inventories.
The Company accounts for renewable energy certificates as inventory, which generally represents costs incurred to generate a
certificate for sale. The Company recognizes revenue from the sale of renewable energy certificates when control of the
certificate is transferred to the buyer, and the cost of the certificate, if any, is then recorded within “Cost of sales” on the
Consolidated Statements of Income.
Property, Plant and Equipment and Related Depreciation
We record property, plant and equipment at the lower of original cost or fair value, if impaired. Capitalized costs include labor,
materials and other direct and indirect costs, and for certain operations subject to cost-of-service rate regulation, AFUDC. We
also include in property, plant and equipment costs associated with computer software we develop or obtain for use in our
businesses. The amounts assigned to property, plant and equipment of acquired businesses are based upon estimated fair value
at date of acquisition. When we retire or otherwise dispose of non-utility plant and equipment, we eliminate the associated cost
and accumulated depreciation and recognize any resulting gain or loss in "Other operating income, net" on the Consolidated
Statements of Income. For property subject to cost of service rate regulation, upon retirement we charge the original cost to
accumulated depreciation for financial accounting purposes. Costs incurred to retire UGI Utilities plant and equipment, net of
salvage, are recorded in regulatory assets and amortized over five years, consistent with prior ratemaking treatment.
F-15
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
We record depreciation expense on non-utility plant and equipment on a straight-line basis over estimated economic useful
lives. We record depreciation expense for Utilities’ plant and equipment on a straight-line basis based upon the projected
service lives of the various classes of its depreciable property. We classify amortization of computer software and related IT
system installation costs included in property, plant and equipment as depreciation expense. No depreciation expense is
included in cost of sales on the Consolidated Statements of Income.
Goodwill and Intangible Assets
Intangible Assets. We amortize intangible assets over their estimated useful lives unless we determine their lives to be
indefinite. Estimated useful lives of definite-lived intangible assets, primarily consisting of customer relationships. We test
definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the associated
carrying amounts may be impaired. Determining whether an impairment loss occurred requires comparing the carrying amount
to the estimated fair value of the asset in accordance with ASC 820. Intangible assets with indefinite lives are not amortized but
are tested for impairment annually (and more frequently if events or changes in circumstances between annual tests indicate that
it is more likely than not that they are impaired) and written down to fair value, if impaired. See Note 12 for additional
information related to intangible asset impairments recognized in Fiscal 2023 and Fiscal 2021.
Goodwill. We do not amortize goodwill, but test it at least annually for impairment at the reporting unit level. A reporting unit
is an operating segment, or one level below an operating segment (a component) if it constitutes a business for which discrete
financial information is available and regularly reviewed by segment management. Components are aggregated into a single
reporting unit if they have similar economic characteristics. Each of our reporting units with goodwill is required to perform
impairment tests annually or whenever events or circumstances indicate that the value of goodwill may be impaired.
For certain of our reporting units with goodwill, we assess qualitative factors to determine whether it is more likely than not that
the fair value of such reporting unit is less than its carrying amount. For our other reporting units with goodwill, we bypass the
qualitative assessment and perform the quantitative assessment by comparing the fair values of the reporting units with their
carrying amounts, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is
recognized in an amount equal to such excess but not to exceed the total amount of the goodwill of the reporting unit.
During the third quarter of Fiscal 2023, the Company identified interim impairment indicators at its AmeriGas Propane
reporting unit and, as such, performed an interim impairment test of its goodwill as of May 31, 2023. Based on such
impairment test, the Company recognized a non-cash pre-tax goodwill impairment charge of $656. See Note 12 for additional
information.
With respect to UGI International's Fiscal 2023 goodwill impairment test, the Company bypassed the qualitative assessment
and performed a quantitative assessment. Such assessment used a weighting of income and market approaches to determine fair
value. With respect to the income approach, management used a discounted cash flow (“DCF”) method, using unobservable
inputs. The significant assumptions in our DCF model include projected EBITDA, and a discount rate (and estimates in the
discount rate inputs). With respect to the market approach, management used recent transaction market multiples for similar
companies. Based on our evaluation, we determined that UGI International’s fair value exceeded its carrying value by
approximately 10%. While the Company believes that its judgments used in the quantitative assessment of UGI International’s
fair value are reasonable based upon currently available facts and circumstances, if UGI International were not able to achieve
its anticipated results and/or if its discount rate were to increase, its fair value would be adversely affected, which may result in
an impairment. There is approximately $911 of goodwill in this reporting unit as of September 30, 2023. The Company will
continue to monitor its reporting units and related goodwill for any possible future non-cash impairment charges.
Accumulated goodwill impairment was $656 at September 30, 2023. There were no accumulated goodwill impairment losses
at September 30, 2022. Except for the previously mentioned impairment charge of $656 at the AmeriGas Propane reporting
unit, there were no other impairments of goodwill recognized in all periods presented.
Impairment of Long-Lived Assets
Impairment testing for long-lived assets (or an asset group) is required when circumstances indicate that such assets may be
impaired. If it is determined that a triggering event has occurred, we perform a recoverability test based upon estimated
undiscounted cash flow projections expected to be realized over the remaining useful life of the long-lived asset. If the
undiscounted cash flows used in the recoverability test are less than the long-lived asset's carrying amount, we determine its fair
value. If the fair value is determined to be less than its carrying amount, the long-lived asset is reduced to its estimated fair
F-16
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
value and an impairment loss is recognized in an amount equal to such shortfall. When determining whether a long-lived asset
has been impaired, management groups assets at the lowest level that has identifiable cash flows that are independent of other
assets.
The impairment of AmeriGas Propane’s goodwill during the quarter ended June 30, 2023, was determined to be a triggering
event requiring an interim impairment analysis of AmeriGas Propane’s long-lived and definite lived intangible assets.
Accordingly, the Company performed a recoverability test of AmeriGas Propane’s long-lived assets, including right-of-use
(“ROU”) assets and definite lived intangible assets, as of May 31, 2023, using estimated undiscounted cash flow projections
expected to be generated over the remaining useful life of the primary asset of the asset group at the lowest level with
identifiable cash flows that are independent of other assets. Based on the recoverability test performed, we determined that (1)
AmeriGas Propane’s long-lived assets, including ROU assets and definite lived intangible assets, were recoverable and, as such,
no impairment charges were recorded; and (2) no adjustments to the remaining useful lives were necessary.
No material provisions for impairments of long-lived assets were recorded for all periods presented.
Refundable Tank and Cylinder Deposits
Included in “Other noncurrent liabilities” on our Consolidated Balance Sheets are customer paid deposits on tanks and cylinders
primarily owned by subsidiaries of UGI France of $249 and $243 at September 30, 2023 and 2022, respectively. Deposits are
refundable to customers when the tanks or cylinders are returned in accordance with contract terms.
Environmental Matters
We are subject to environmental laws and regulations intended to mitigate or remove the effects of past operations and improve
or maintain the quality of the environment. These laws and regulations require the removal or remedy of the effect on the
environment of the disposal or release of certain specified hazardous substances at current or former operating sites.
Environmental reserves are accrued when assessments indicate that it is probable that a liability has been incurred and an
amount can be reasonably estimated. Amounts recorded as environmental liabilities on the Consolidated Balance Sheets
represent our best estimate of costs expected to be incurred or, if no best estimate can be made, the minimum liability associated
with a range of expected environmental investigation and remediation costs. These estimates are based upon a number of
factors including whether the Company will be responsible for such remediation, the scope and cost of the remediation work to
be performed, the portion of costs that will be shared with other potentially responsible parties, the timing of the remediation
and possible impact of changes in technology, and the regulations and requirements of local governmental authorities. Our
estimated liability for environmental contamination is reduced to reflect anticipated participation of other responsible parties but
is not reduced for possible recovery from insurance carriers. Under GAAP, if the amount and timing of cash payments
associated with environmental investigation and cleanup are reliably determinable, such liabilities are discounted to reflect the
time value of money. We intend to pursue recovery of incurred costs through all appropriate means, including regulatory relief.
PA Gas Utility receives ratemaking recognition of environmental investigation and remediation costs associated with in-state
environmental sites. This ratemaking recognition balances the accumulated difference between historical costs and rate
recoveries with an estimate of future costs associated with the sites. For further information, see Note 16.
Loss Contingencies Subject to Insurance
We are subject to risk of loss for general, automobile and product liability, and workers’ compensation claims for which we
obtain insurance coverage under insurance policies that are subject to self-insured retentions or deductibles. In accordance with
GAAP, we record accruals when it is probable that a liability exists and the amount or range of amounts can be reasonably
estimated. When no amount within a range of possible loss is a better estimate than any other amount within the range,
liabilities recorded are based upon the low end of the range. For litigation and pending claims including those covered by
insurance policies, the analysis of probable loss is performed on a case by case basis and includes an evaluation of the nature of
the claim, the procedural status of the matter, the probability or likelihood of success in prosecuting or defending the claim, the
information available with respect to the claim, the opinions and views of outside counsel and other advisors, and past
experience in similar matters. With respect to unasserted claims arising from unreported incidents, we may use the work of
specialists to estimate the ultimate losses to be incurred using actuarially determined loss development factors applied to actual
claims data. Our estimated reserves for loss contingencies may differ materially from the ultimate liability and such reserves
may change materially as more information becomes available and estimated reserves are adjusted. We maintain insurance
coverage such that our net exposure for claims covered by insurance would be limited to the self-insured retentions or
F-17
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
deductibles, claims above which would be paid by the insurance carrier. For such claims, we record a receivable related to the
amount of the liability expected to be paid by insurance.
Employee Retirement Plans
We use a market-related value of plan assets and an expected long-term rate of return to determine the expected return on assets
of our U.S. pension and other postretirement plans. The market-related value of plan assets, other than equity investments, is
based upon fair values. The market-related value of equity investments is calculated by rolling forward the prior-year’s market-
related value with contributions, disbursements and the expected return on plan assets. One third of the difference between the
expected and the actual value is then added to or subtracted from the expected value to determine the new market-related value
(see Note 8).
Note 3 — Accounting Changes
New Accounting Standard Adopted in Fiscal 2023
Debt and Derivatives and Hedging. Effective October 1, 2022, the Company adopted ASU 2020-06, “Debt - Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic
815-40),” using the modified retrospective approach. The amendments in this ASU affect entities that issue convertible
instruments and/or contracts indexed to and potentially settled in an entity’s own equity. This ASU reduces the number of
accounting models for convertible debt instruments and convertible preferred stock, expands disclosure requirements for
convertible instruments, and simplifies the related earnings per share guidance. The adoption of the new guidance did not have
a material impact on our consolidated financial statements.
Upon adoption, we reclassified $6 from Common Stock to Preferred Stock associated with the previously separated equity-
classified beneficial conversion feature, which was accounted for as a deemed dividend. The increase to Preferred Stock was
partially offset by an increase of $1 to opening retained earnings for the previously recognized non-cash amortization of the
beneficial conversion feature. The ASU 2020-06 also removes the presumption of cash settlement for contracts that may be
settled in cash or shares. In accordance with the new guidance, we included the dilutive impact of the quarterly contract
adjustment payment liability associated with the 2024 Purchase Contracts, which may be settled in cash or shares, in our
computation of weighted average diluted common shares outstanding. The adoption of the new guidance did not, and is not
expected to, have a material impact on our consolidated financial statements.
Note 4 — Revenue from Contracts with Customers
The Company recognizes revenue when control of promised goods or services is transferred to customers in an amount that
reflects the consideration to which we expect to be entitled in exchange for those goods or services. The Company generally has
the right to consideration from a customer in an amount that corresponds directly with the value to the customer for
performance completed to date. As such, we have elected to recognize revenue in the amount to which we have a right to
invoice except in the case of certain of Utilities’ large delivery service customers and Midstream & Marketing’s peaking
contracts for which we recognize revenue on a straight-line basis over the term of the contract, consistent with when the
performance obligations are satisfied by the Company.
We do not have a significant financing component in our contracts because we receive payment shortly before, at, or shortly
after the transfer of control of the good or service. Because the period between the time the performance obligation is satisfied
and payment is received is generally one year or less, the Company has elected to apply the significant financing component
practical expedient and no amount of consideration has been allocated as a financing component.
The Company’s revenues from contracts with customers are discussed below.
Utility Revenues
Utilities supplies natural gas and electricity and provides distribution services of natural gas and electricity to residential,
commercial, and industrial customers who are generally billed at standard regulated tariff rates approved by the regulatory
bodies through the ratemaking process. Tariff rates include a component that provides for a reasonable opportunity to recover
F-18
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
operating costs and expenses and to earn a return on net investment, and a component that provides for the recovery, subject to
reasonableness reviews, of PGC, PGA and DS costs.
Customers may choose to purchase their natural gas and electricity from Utilities, or, alternatively, may contract separately with
alternate suppliers. Accordingly, our contracts with customers comprise two promised goods or services: (1) delivery service of
natural gas and electricity through the Company’s utility distribution systems and (2) the natural gas or electricity commodity
itself for those customers who choose to purchase the natural gas or electricity directly from the Company. Revenue is not
recorded for the sale of natural gas or electricity to customers who have contracted separately with alternate suppliers. For those
customers who choose to purchase their natural gas or electricity from the Company, the performance obligation includes both
the supply of the commodity and the delivery service.
The terms of our core market customer contracts are generally considered day-to-day as customers can discontinue service at
any time without penalty. Performance obligations are generally satisfied over time as the natural gas or electricity is delivered
to customers, at which point the customers simultaneously receive and consume the benefits provided by the delivery service
and, when applicable, the commodity. Amounts are billed to customers based upon the reading of a customer’s meter, which
occurs on a cycle basis throughout each reporting period. An unbilled amount is recorded at the end of each reporting period
based upon estimated amounts of natural gas or electricity delivered to customers since the date of the last meter reading. These
unbilled estimates consider various factors such as historical customer usage patterns, customer rates and weather.
Utilities has certain fixed-term contracts with large commercial and industrial customers to provide natural gas delivery services
at contracted rates and at volumes generally based on the customer’s needs. The performance obligation to provide the
contracted delivery service for these large commercial and industrial customers is satisfied over time and revenue is generally
recognized on a straight-line basis.
Utilities makes off-system sales whereby natural gas delivered to our system in excess of amounts needed to fulfill our
distribution system needs is sold to other customers, primarily other distributors of natural gas, based on an agreed-upon price
and volume between the Company and the counterparty. Utilities also sells excess natural gas capacity whereby interstate
pipeline capacity in excess of amounts needed to meet our customer obligations is sold to other distributors of natural gas based
upon an agreed-upon rate. Off-system sales and capacity releases are generally entered into one month at a time and comprise
the sale of a specific volume of gas or pipeline capacity at a specific delivery point or points over a specific time. As such,
performance obligations associated with off-system sales and capacity release customers are satisfied, and associated revenue is
recorded, when the agreed upon volume of natural gas is delivered or capacity is provided, and title is transferred, in accordance
with the contract terms.
Electric Utility provides transmission services to PJM by allowing PJM to access Electric Utility’s electricity transmission
facilities. In exchange for providing access, PJM pays Electric Utility consideration determined by a formula-based rate
approved by the FERC. The formula-based rate, which is updated annually, allows recovery of costs incurred to provide
transmission services and return on transmission-related net investment. We recognize revenue over time as we provide
transmission service.
Other Utility revenues represent revenues from other ancillary services provided to customers and are generally recorded as the
service is provided to customers.
Non-Utility Revenues
LPG. AmeriGas Propane and UGI International record revenue principally from the sale of LPG to retail and wholesale
customers. The primary performance obligation associated with the sale of LPG is the delivery of LPG to (1) the customer’s
point of delivery for retail customers and (2) the customer’s specified location where LPG is picked up by wholesale customers,
at which point control of the LPG is transferred to the customer, the performance obligation is satisfied, and the associated
revenue is recognized.
Contracts with customers comprise different types of contracts with varying length terms, fixed or variable prices, and fixed or
variable quantities. Contracts with our residential customers, which comprise a substantial number of our customer contracts,
are generally one year or less. Customer contracts for the sale of LPG include fixed-price, fixed-quantity contracts under which
LPG is provided to customers at a fixed price and a fixed volume, and contracts that provide for the sale of LPG at market
prices at date of delivery with no fixed volumes. AmeriGas Propane offers contracts that permit customers to lock in a fixed
price for their volumes for a fee and also provide customers with the option to pre-buy a fixed amount of LPG at a fixed price.
F-19
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Amounts received under pre-buy arrangements are recorded as a contract liability when received and recorded as revenue when
LPG is delivered and control is transferred to the customer. Fee revenue associated with fixed-price contracts are recorded as
contract liabilities and recorded ratably over the contract period.
AmeriGas Propane and UGI International also distribute LPG to customers in portable cylinders. Under certain contracts, filled
cylinders are delivered, and control is transferred, to a reseller. In such instances, the reseller is our customer and we record
revenue upon delivery to the reseller. Under other contracts, filled cylinders are delivered to a reseller, but the Company retains
control of the cylinders. In such instances, we record revenue at the time the reseller transfers control of the cylinder to the end
user.
Certain retail LPG customers for AmeriGas Propane receive credits which we account for as variable consideration. We
estimate these credits based upon past practices and historical customer experience and we reduce our revenues recognized for
these credits.
Energy Marketing. Midstream & Marketing and UGI International operate energy marketing businesses that sell energy
commodities, principally natural gas and electricity, to residential, commercial, industrial and wholesale customers. See Note 5
regarding recent transactions related to UGI International’s energy marketing business.
Midstream & Marketing and UGI International market natural gas and electricity on full-requirements or agreed-upon volume
bases under contracts with varying length terms and at fixed or floating prices that are based on market indices adjusted for
differences in price between the market location and delivery locations. Performance obligations associated with these
contracts primarily comprise the delivery of the natural gas and electricity over a contractual period of time. Performance
obligations also include other energy-related ancillary services provided to customers such as capacity. For performance
obligations that are satisfied at a point in time such as the delivery of natural gas, revenue is recorded when customers take
control of the natural gas. Revenue is recorded for performance obligations that qualify as a series, when customers consume
the natural gas or electricity is delivered, which corresponds to the amount invoiced to the customer. For transactions where the
price or volume is not fixed, the transaction price is not determined until delivery occurs. The billed amount, and the revenue
recorded, is based upon consumption by the customer.
Midstream. Midstream & Marketing provides natural gas pipeline transportation, natural gas gathering, natural gas processing
and natural gas underground storage services, which generally contain a performance obligation for the Company to have
availability to transport or store a product. Additionally, the Company provides stand-ready services to sell supplemental
energy products and related services, primarily LNG and propane-air mixtures during periods of high demand that typically
result from cold weather. The Company also sells LNG to end-user customers for use by trucks, drilling rigs and other motored
vehicles and equipment, and facilities that are located off the natural gas grid.
Contracts for natural gas transportation and gathering services are typically long-term contracts with terms of up to 30 years,
while contracts for storage are typically for one-year or multiple storage season periods. Contracts to provide natural gas during
periods of high demand have terms of up to 15 years. Contracts to sell LNG for trucks, drilling rigs and other motor vehicles
and facilities are typically short-term (less than one year). Depending on the type of services provided or goods sold, midstream
revenues may consist of demand rates, commodity rates, and transportation rates and may include other fees for ancillary
services. Pipeline transportation, natural gas gathering and storage services provided and services to stand ready to sell
supplemental energy products and services each are considered to have a single performance obligation satisfied through the
passage of time ratably based upon providing a stand-ready service generally on a monthly basis. Contracts to sell LNG to end-
user customers contain performance obligations to deliver LNG over the term of the contract and revenue is recognized at a
point in time when the control of the energy products is transferred to the customer. The price in the contract corresponds to
our efforts to satisfy the performance obligation and reflects the consideration we expect to receive for the satisfied
performance obligation, and, therefore, the revenue is recognized based on the volume delivered and the price within the
contract. In cases where shipping and handling occurs prior to the LNG being delivered to the customer’s storage vessel, we
have elected to treat this as a cost of fulfillment and not a separate performance obligation. Revenues are typically billed and
payment received monthly. Advance fees received from customers for stand-ready services are deferred as contract liabilities
and revenue is recognized ratably over time as the performance obligation is satisfied over a period less than one year.
Electricity Generation. Midstream & Marketing sells power generated from electricity generation assets in the wholesale
electricity markets administered by PJM regional transmission organization. Power contracts with PJM consist of the sale of
power, capacity and ancillary services, all of which are considered a bundle of various services. Performance obligations are
satisfied over time, generally on a daily basis, as electricity is delivered to and simultaneously consumed by the customer. As
F-20
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
such, the Company has elected to recognize revenue in the amount to which we have a right to invoice which is based on
market prices at the time of the delivery of the electricity to the customers.
Other. Other revenues from contracts with customers are generated primarily from AmeriGas Propane’s parts and services
business. The performance obligations of this business include installation and repair services. The performance obligations
under these contracts are satisfied, and revenue is recognized, as control of the product is transferred or the services are
rendered. Other LPG revenues from contracts with customers are generated primarily from certain fees AmeriGas Propane and
UGI International charge associated with the delivery of LPG, including hazmat safety compliance, inspection, metering,
installation, fuel recovery and certain other services. Revenues from fees are typically recorded when the LPG is delivered to
the customer or the associated service is completed.
Revenue Disaggregation
The following tables present our disaggregated revenues by reportable segment during Fiscal 2023, Fiscal 2022 and Fiscal
2021:
Total
Eliminations
(a)
AmeriGas
Propane
UGI
International
Midstream
&
Marketing
Utilities
Corporate
& Other
$
2023
Revenues from contracts with
customers:
Utility:
Core Market:
Residential
Commercial & Industrial
Large delivery service
Off-system sales and capacity
releases
Other
Total Utility
Non-Utility:
LPG:
Retail
Wholesale
Energy Marketing
Midstream:
Pipeline
Peaking
Other
Electricity Generation
Other
Total Non-Utility
Total revenues from contracts with
customers
Other revenues (b)(c)
Total revenues
$
1,020
413
177
89
43
1,742
3,952
325
2,139
251
31
14
33
274
7,019
8,761
167
8,928
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7
7
$
$
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
$
$
1,020
413
177
162
44
1,816
2,184
118
—
—
—
—
—
194
2,496
2,496
85
2,581
$
1,768
207
872
—
—
—
—
80
2,927
2,927
38
2,965
$
—
—
1,410
251
137
14
33
—
1,845
1,845
2
1,847
—
—
—
—
—
—
—
—
—
1,816
38
1,854
$
$
$
—
—
—
(73)
(1)
(74)
—
—
(143)
—
(106)
—
—
—
(249)
(323)
(3)
(326) $
$
F-21
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
2022
Revenues from contracts with
customers:
Utility:
Core Market:
Residential
Commercial & Industrial
Large delivery service
Off-system sales and capacity
releases
Other
Total Utility
Non-Utility:
LPG:
Retail
Wholesale
Energy Marketing
Midstream:
Pipeline
Peaking
Other
Electricity Generation
Other
Total Non-Utility
Total revenues from contracts with
customers
Other revenues (b)
Total revenues
Total
Eliminations
(a)
AmeriGas
Propane
UGI
International
Midstream
&
Marketing
Utilities
Corporate
& Other
$
$
875
365
171
$
—
—
—
76
23
1,510
4,436
496
2,951
211
48
9
34
286
8,471
(104)
(1)
(105)
—
—
(264)
—
(105)
—
—
—
(369)
9,981
125
$ 10,106
$
(474)
(3)
(477) $
$
—
—
—
—
—
—
$
—
—
—
—
—
—
2,439
218
—
—
—
—
—
207
2,864
2,864
79
2,943
$
1,997
278
1,298
—
—
—
—
79
3,652
3,652
34
3,686
$
—
—
—
—
—
—
—
—
1,917
211
153
9
34
—
2,324
2,324
2
2,326
$
$
875
365
171
180
24
1,615
—
—
—
—
—
—
—
—
—
1,615
5
1,620
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8
8
F-22
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
2021
Revenues from contracts with
customers:
Utility:
Core Market:
Residential
Commercial & Industrial
Large delivery service
Off-system sales and capacity
releases
Other
Total Utility
Non-Utility:
LPG:
Retail
Wholesale
Energy Marketing
Midstream:
Pipeline
Peaking
Other
Electricity Generation
Other
Total
Eliminations
(a)
AmeriGas
Propane
UGI
International
Midstream
&
Marketing
Utilities
Corporate
& Other
$
$
568
218
148
51
21
1,006
3,957
328
1,564
181
16
8
13
275
6,342
7,348
99
7,447
—
—
—
(62)
(2)
(64)
—
—
(126)
—
(98)
—
—
—
(224)
$
$
—
—
—
—
—
—
$
—
—
—
—
—
—
2,203
139
—
—
—
—
—
206
2,548
2,548
66
2,614
$
1,754
189
605
—
—
—
—
69
2,617
2,617
34
2,651
$
—
—
—
—
—
—
—
—
1,085
181
114
8
13
—
1,401
1,401
5
1,406
$
$
568
218
148
113
23
1,070
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,070
9
1,079
$
$
—
(12)
(12)
Total Non-Utility
Total revenues from contracts with
customers
Other revenues (b)
Total revenues
$
(288)
(3)
(291) $
$
Includes intersegment revenues principally among Midstream & Marketing, Utilities and AmeriGas Propane.
(a)
(b) Primarily represents revenues from tank rentals at AmeriGas Propane and UGI International, revenues from certain
gathering assets at Midstream & Marketing, revenues from alternative revenue programs at Utilities and gains and losses
on commodity derivative instruments not associated with current-period transactions reflected in Corporate & Other, none
of which are within the scope of ASC 606 and are accounted for in accordance with other GAAP.
Includes the impact of the weather normalization adjustment rider, a five-year pilot program beginning on November 1,
2022 for PA Gas Utility. See Note 9 for additional information.
(c)
Contract Balances
The timing of revenue recognition may differ from the timing of invoicing to customers or cash receipts. Contract assets
represent our right to consideration after the performance obligations have been satisfied when such right is conditioned on
something other than the passage of time. Contract assets were not material at September 30, 2023 and 2022. Substantially all
of our receivables are unconditional rights to consideration and are included in “Accounts receivable” and, in the case of
Utilities, “Accrued utility revenues” on the Consolidated Balance Sheets. Amounts billed are generally due within the
following month.
Contract liabilities arise when payment from a customer is received before the performance obligations have been satisfied and
represent the Company’s obligations to transfer goods or services to a customer for which we have received consideration. The
balances of contract liabilities were $158 and $164 at September 30, 2023 and 2022, respectively, and are primarily included in
“Deposits and advances” on the Consolidated Balance Sheets. Revenues recognized during Fiscal 2023, Fiscal 2022 and Fiscal
2021 from the amounts included in contract liabilities at September 30, 2022, September 30, 2021 and September 30, 2020 was
$127, $119 and $138, respectively.
F-23
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Remaining Performance Obligations
The Company excludes disclosures related to the aggregate amount of the transaction price allocated to certain performance
obligations that are unsatisfied as of the end of the reporting period because these contracts have an initial expected term of one
year or less, or we have a right to bill the customer in an amount that corresponds directly with the value of services provided to
the customer to date. Certain contracts with customers at Midstream & Marketing and Utilities contain minimum future
performance obligations through 2047 and 2053, respectively. At September 30, 2023, Midstream & Marketing and Utilities
expect to record approximately $2.2 billion and $0.2 billion of revenues, respectively, related to the minimum future
performance obligations over the remaining terms of the related contracts.
Note 5 — Acquisitions and Dispositions
Mountaineer Acquisition
On September 1, 2021, UGI completed the Mountaineer Acquisition in which UGI acquired all of the equity interests in
Mountaineer, the largest natural gas distribution company in West Virginia, for a purchase price of $540, including the
assumption of $140 principal amounts of long-term debt. The Mountaineer Acquisition was consummated pursuant to a
purchase and sale agreement between UGI and the iCON Sellers and is consistent with our growth strategies, including
expanding our core utility operations in the mid-Atlantic region. The Mountaineer Acquisition was funded with cash proceeds
from the 2021 UGI Corporation Senior Credit Facility $215 term loan and cash on hand including proceeds from the issuance
of Equity Units. Accounts associated with Mountaineer are included within our Utilities reportable segment. The Company has
accounted for the Mountaineer Acquisition using the acquisition method.
F-24
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The components of the Mountaineer purchase accounting are as follows:
Assets acquired:
Cash and cash equivalents
Accounts receivable
Inventories
Other current assets
Property, plant and equipment
Other noncurrent assets
Total assets acquired
Liabilities assumed:
Short-term borrowings
Accounts payable
Other current liabilities
Long-term debt
Pension and other postretirement benefit obligation
Deferred income taxes
Other noncurrent liabilities
Total liabilities assumed
Goodwill
Net consideration transferred
$
$
$
$
$
3
14
41
21
397
48
524
55
20
52
164
33
21
29
374
250
400
Mountaineer is a regulated entity which accounts for the financial effects of regulation in accordance with ASC 980. The effects
of regulation can impact the fair value of certain assets and liabilities acquired, and as such, the measurement of the fair value
of regulated property assets using the predecessor’s carrying value is generally accepted since regulation attaches to the assets
and regulation is so pervasive that the regulation extends to the individual assets. In certain other instances where assets or
liabilities are subject to rate recovery, we recorded fair value adjustments to such assets and liabilities as regulatory assets and
liabilities.
The excess of the purchase price for the Mountaineer Acquisition over the fair values of the assets acquired and liabilities
assumed has been reflected as goodwill, assigned to the Utilities reportable segment. Goodwill is attributable to the assembled
workforce of Mountaineer, planned customer growth and planned growth in rate base through continued investment in utility
infrastructure. The goodwill recognized from the Mountaineer Acquisition is not expected to be deductible for income tax
purposes.
The Company recognized $13 of direct transaction-related costs associated with the Mountaineer Acquisition during Fiscal
2021, which costs are reflected in “Operating and administrative expenses” on the 2021 Consolidated Statement of Income. The
Mountaineer Acquisition did not have a material impact on the Company’s revenues or net income attributable to UGI for
Fiscal 2021. In addition, the impact of the Mountaineer Acquisition on a pro forma basis as if the Mountaineer Acquisition had
occurred on October 1, 2019 was not material to the Company’s revenues or net income for Fiscal 2021.
Acquisitions of Assets
Pennant. During the fourth quarter of Fiscal 2022, Energy Services completed the Pennant Acquisition and acquired the
remaining 53% of the equity interests in Pennant for total cash consideration of approximately $61. The Pennant Acquisition
was funded using available cash. The acquisition of the remaining interests has been accounted for as an acquisition of assets,
F-25
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
and the purchase price has been primarily allocated to property, plant and equipment. See Note 21 for additional information
related to the acquired interest in Pennant.
Stonehenge. In January 2022, Energy Services completed the Stonehenge Acquisition and acquired all of the equity interests in
Stonehenge for total cash consideration of approximately $190. The Stonehenge business includes a natural gas gathering
system, located in western Pennsylvania, with more than 47 miles of pipeline and associated compression assets. The
Stonehenge Acquisition is consistent with our growth strategies, including expanding our midstream natural gas gathering
assets within the Appalachian basin production region. The Stonehenge Acquisition was funded using available cash. This
transaction has been accounted for as an acquisition of assets, and the purchase price has been primarily allocated to property,
plant and equipment. We refer to Stonehenge and its assets as “UGI Moraine East.”
Dispositions
UGI International Energy Marketing Transactions
During Fiscal 2023 and in October 2023, the Company entered into a number of transactions pursuant to its previously
announced decision to exit its European energy marketing business. The European energy marketing business primarily markets
natural gas and electricity to customers through third-party distribution systems in France, the Netherlands and, prior to its
sales, in Belgium and the United Kingdom.
France. In October 2023, UGI International, through a wholly-owned subsidiary, sold substantially all of its energy marketing
business located in France for a net cash payment to the buyer of $25 (which approximates a pre-tax loss), subject to certain
adjustments principally related to the pending transfer of certain customer contracts. As of September 30, 2023, the $25 cash to
be paid to the buyer in October 2023 had been placed in escrow and is reflected in “Other current assets” on the September 30,
2023 Consolidated Balance Sheet. The carrying values of the assets and liabilities associated with this business, principally
comprising certain commodity derivative instruments, energy certificates and certain working capital, have been classified as
held-for-sale on the September 30, 2023 Consolidated Balance Sheet. The Company did not recognize any impairment
associated with the assets held for sale in Fiscal 2023 because, in accordance with our policy related to such assets, any
impairment is limited to the disposal group’s long-lived assets, and such assets were not material.
Belgium. In September 2023, UGI International, through a wholly-owned subsidiary, sold its energy marketing business
located in Belgium for a net cash payment to the buyer of $3. Pursuant to the sale agreement, the Company transferred to the
buyer certain assets, principally comprising customer and energy broker contracts. In conjunction with the sale, the Company
recorded a pre-tax loss of $6 ($5 after-tax) which amount includes the net payment to the buyer, the write-off of certain prepaid
energy broker payments and associated transaction costs and fees. The loss is reflected in “Loss on disposal of UGI
International energy marketing business” on the Consolidated Statements of Income.
United Kingdom. In October 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing
business located in the U.K. for a net cash payment to the buyer of $19 which includes certain working capital adjustments. In
conjunction with the sale, the Company recorded a pre-tax loss of $215 ($151 after-tax) substantially all of which loss was due
to the non-cash transfer of commodity derivative instruments associated with the business. The loss is reflected in “Loss on
disposal of UGI International energy marketing business” on the Consolidated Statements of Income. At the date of closing of
the sale, these commodity derivative instruments had a net carrying value of $206 which is attributable to net unrealized gains
on such instruments. At September 30, 2022, these derivative instruments were classified as held-for-sale assets and liabilities
on the Consolidated Balance Sheets and had a net carrying value of $276. The change in the carrying value of these derivative
instruments between September 30, 2022 and October 21, 2022 resulted from changes in their fair values during that period.
Netherlands. In September 2023, a substantial number of DVEP’s customers agreed to modify their energy marketing contracts
whereby the Company will continue to provide for the delivery of electricity and natural gas at fixed prices through December
31, 2023, but the Company’s obligations to provide future services will be terminated effective January 1, 2024. As
consideration for the early termination of such contracts, the Company has agreed to make cash payments to the customers
equal to the fair values of specific commodity derivative instruments associated with periods after December 31, 2023. The
carrying values of these commodity derivative instruments are subject to change until such contracts are settled, and the cash
payments are made during the first quarter of Fiscal 2024. At September 30, 2023, the carrying value of these commodity
derivative instruments was $44. The early termination agreements with DVEP customers are considered contract modifications
and the cash consideration to be paid to these customers has been, and will be reflected as a reduction in revenues, on a pro-rata
F-26
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
basis, over the remaining performance period of such agreements through December 31, 2023. Accordingly, during the fourth
quarter of Fiscal 2023, the Company reduced its revenues from these customers by $4, which represents the pro-rated
performance obligation through September 30, 2023 from the aforementioned $44.
In conjunction with the wind-down of its European energy marketing business, in July 2023, DVEP agreed to sell a substantial
portion of its power purchase agreements to a third party for a cash payment to the buyer of $6. The closing of the sale is
expected to occur during the first quarter of Fiscal 2024. The loss from the sale is not expected to be material.
During the first quarter of Fiscal 2023, the Company recorded a $19 pre-tax impairment charge to reduce the carrying values of
certain assets associated with its energy marketing business in the Netherlands, comprising property, plant and equipment and
intangible assets. The impairment charge is reflected in “Operating and administrative expenses” on the Consolidated
Statements of Income and included in the UGI International reportable segment.
Note 6 — Debt
Significant Financing Activities Since September 30, 2022
UGI Utilities 2023 Credit Agreement. On November 9, 2023, UGI Utilities entered into the UGI Utilities 2023 Credit
Agreement providing for borrowings up to $375 (including a $50 sublimit for letters of credit and a $38 sublimit for swingline
loans). UGI Utilities may request an increase in the amount of loan commitments under the credit agreement to a maximum
aggregate amount of $125. The interest rate applicable to borrowings under the UGI Utilities 2023 Credit Agreement will
remain unchanged. The credit agreement contains customary covenants and default provisions and requires compliance with
certain financial covenants including a maximum debt to capitalization ratio as defined in the agreement. The maturity of the
credit agreement was extended to November 2024 with an additional automatic 5-year extension upon receipt of authorization
for such extension from the PAPUC. Borrowings under the credit agreement may be used to refinance UGI Utilities existing
indebtedness and for general corporate purposes and ongoing working capital needs of UGI Utilities.
On December 13, 2022, UGI Utilities entered into an amendment to the UGI Utilities Credit Agreement, providing for
borrowings up to $425 and to replace the use of LIBOR with Term SOFR.
Borrowings under the amended UGI Utilities Credit Agreement bear interest, subject to our election, at a floating rate of either
(i) Term SOFR plus the applicable margin plus a credit spread adjustment of 0.10% or (ii) the base rate plus the applicable
margin. The applicable margin remains unchanged from the original credit agreement.
AmeriGas Partners Senior Notes. On May 31, 2023, AmeriGas Partners and AmeriGas Finance Corp. issued $500 principal
amount of 9.375% Senior Notes due May 2028. The 9.375% Senior Notes rank equally with AmeriGas Partners’ existing senior
notes. The net proceeds from the issuance of the 9.375% Senior Notes, together with cash on hand, a $150 cash contribution
from the Company and other sources of liquidity, were used for the early repayment, pursuant to a tender offer and notice of
redemption, of all AmeriGas Partners 5.625% Senior Notes having an aggregate principal balance of $675, plus tender
premiums and accrued and unpaid interest. In conjunction with the early repayment of the 5.625% Senior Notes, in June 2023
the Partnership recognized a pre-tax loss of $9 primarily comprising tender premiums and the write-off of unamortized debt
issuance costs, which is reflected in “Loss on extinguishments of debt” on the Consolidated Statement of Income.
The 9.375% Senior Notes are redeemable at the issuers’ option prior to June 2025 at a make whole premium or, on or after June
2025, at a call premium that declines from 4.688% to 0% depending on the year of redemption.
The 9.375% Senior Notes indenture contains customary covenants and default provisions that limit AmeriGas Partners’ ability
to, among other things: incur additional indebtedness; create or incur liens; engage in transactions with affiliates; engage in
mergers or consolidations or sell all or substantially all of the issuers’ assets; make restricted payments, loans and investments;
enter into business combinations and sell assets; and engage in other lines of business.
UGI International 2023 Credit Facilities Agreement. On March 7, 2023, UGI International, LLC and its indirect wholly-
owned subsidiary, UGI International Holdings B.V., entered into the UGI International 2023 Credit Facilities Agreement, a
five-year unsecured senior facilities agreement, maturing March 7, 2028, with a consortium of banks. The UGI International
2023 Credit Facilities Agreement consists of (1) a €300 variable-rate term loan facility ("Facility A") and (2) a €500
multicurrency revolving credit facility, including a €100 sublimit for swingline loans ("Facility B"). We have designated
F-27
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
borrowings under Facility A as a net investment hedge. In connection with entering into the UGI International 2023 Credit
Facilities Agreement, UGI International, LLC paid off in full and terminated the UGI International Credit Facilities Agreement,
dated as of October 18, 2018. Borrowings under the multicurrency revolving credit facility may be used to finance the working
capital needs of UGI International, LLC and its subsidiaries and for general corporate purposes.
Borrowings under Facility A bear interest at the euro interbank offered rate plus the applicable margin and borrowings under
Facility B bear interest at the daily non-cumulative compounded Reference Rate Terms, as defined in the Agreement, plus the
applicable margin. The applicable margin for Facility A ranges from 1.70% to 3.35%, and for Facility B from 1.35% to 3.35%,
and are dependent on the total net leverage ratio of UGI International, LLC and its subsidiaries on a consolidated basis. UGI
International, LLC entered into an interest rate swap, effective March 31, 2023, that fixes the underlying market-based interest
rate on Facility A at 3.10% through March 2026.
The UGI International 2023 Credit Facilities Agreement contains customary covenants and default provisions and requires
compliance with certain financial covenants including a consolidated net leverage ratio as defined in the agreement.
UGI Energy Services Credit Agreement. On May 12, 2023, Energy Services entered into the second amendment to the UGI
Energy Services Credit Agreement, which provides that the Term SOFR rate (as defined in the UGI Energy Services Credit
Agreement) shall replace LIBOR as a reference rate. After giving effect to the second amendment, the UGI Energy Services
Credit Agreement shall bear interest at a floating rate of, at Energy Services’ option, either (i) Term SOFR plus the Applicable
Rate (as defined in the UGI Energy Services Credit Agreement) plus a credit spread adjustment of 0.10%, or (ii) the base rate
plus the applicable margin that is based on the leverage of Energy Services.
Energy Services Amended Term Loan Credit Agreement. On February 23, 2023, Energy Services entered into the Energy
Services Amended Term Loan Credit Agreement, the first amendment to the Energy Services Term Loan Credit Agreement,
dated August 13, 2019. The Energy Services Amended Term Loan Credit Agreement provides, among other items, that (i) the
outstanding principal amount of the loans shall be increased by $125 to $800, (ii) the maturity date of the loans shall be
extended to February 22, 2030, (iii) Term SOFR (as defined in the Energy Services Amended Term Loan Credit Agreement)
shall replace LIBOR as a reference rate and (iv) borrowings under the Energy Services Amended Term Loan Credit Agreement
shall bear interest at a floating rate of, at Energy Services’ option, either (x) Term SOFR plus the applicable margin plus a
credit spread adjustment of 0.10% or (y) the base rate, as defined in the Agreement, plus the applicable margin. The applicable
margin shall be 3.25% per annum for Term SOFR loans and 2.25% per annum for base rate loans. Borrowings under the
Energy Services Amended Term Loan Credit Agreement are payable in equal quarterly installments of $2, commencing in
March 2023, with the balance of the principal being due and payable in full at maturity.
The Energy Services Amended Term Loan Credit Agreement contains customary covenants and default provisions and requires
compliance with certain financial covenants including a minimum debt service coverage ratio as defined in the Agreement.
In March 2023, in connection with the Energy Services Amended Term Loan Credit Agreement, Energy Services terminated
and settled its existing interest rate swap associated with the Energy Services Term Loan Credit Agreement at a $32 gain. This
gain has been deferred in AOCI and is being amortized to interest expense over the remaining term of the initial interest rate
swap ending July 2024. Energy Services entered into a new interest rate swap, effective March 31, 2023, that fixes the
underlying market-based interest rate on this variable-rate term loan at 4.53% through September 2026.
Mountaineer 2023 Credit Agreement. On October 20, 2022, Mountaineer entered into the Mountaineer 2023 Credit Agreement
with a group of lenders. The Mountaineer 2023 Credit Agreement amends and restates a previous credit agreement and
provides for borrowings up to $150, including a $20 sublimit for letters of credit. Mountaineer may request an increase in the
amount of loan commitments to a maximum aggregate amount of $250, subject to certain terms and conditions. Borrowings
under the Mountaineer 2023 Credit Agreement can be used to finance the working capital needs of Mountaineer and for general
corporate purposes. The Mountaineer 2023 Credit Agreement is scheduled to expire in November 2024, and Mountaineer has
the option, with the consent of the lenders, to extend the maturity date up to November 2026.
F-28
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Borrowings under the Mountaineer 2023 Credit Agreement bear interest, subject to our election, at either (i) the base rate,
defined as the highest of (a) the prime rate, (b) the federal funds rate plus 0.50% and (c) the adjusted Term SOFR rate for a one-
month tenor plus 1%, in each case, plus the applicable margin or (ii) the adjusted Term SOFR rate plus the applicable margin.
The applicable margin for base rate loans ranges from 0% to 1.25%, and for Term SOFR loans from 1.00% to 2.25%,
depending on the debt rating of Mountaineer. The adjusted Term SOFR rate is defined as the Term SOFR reference rate for the
selected interest period, plus 0.10% per annum for a one-month interest period, 0.15% per annum for a three-month interest
period, or 0.25% per annum for a six-month interest period. The Mountaineer Credit Agreement contains customary covenants
and default provisions and requires compliance with certain financial covenants including a maximum leverage ratio and a
minimum interest coverage ratio as defined in the agreement.
UGI Corporation Credit Facility Agreement. On May 12, 2023, the Company entered into the second amendment to the UGI
Corporation Credit Agreement, which provides that the Term SOFR rate (as defined in the UGI Corporation Credit Agreement)
shall replace LIBOR as a reference rate. After giving effect to the second amendment, the UGI Corporation Credit Agreement
shall bear interest at a floating rate of, at the Company’s option, either (i) Term SOFR plus the Applicable Rate (as defined in
the UGI Corporation Credit Agreement) plus a credit spread adjustment of 0.10%, or (ii) the base rate plus the applicable
margin that will be based on the leverage of the Company or credit ratings assigned to certain indebtedness of the Company.
On September 20, 2023, UGI amended the UGI Corporation Credit Facility Agreement which extended the maturity date of the
(1) five-year $250 amortizing variable-rate term loan and (2) five-year $300 revolving credit facility to May 2025 and increased
the applicable rate (as defined in the amended UGI Corporation Credit Agreement) by 0.125%.
Credit Facilities and Short-term Borrowings
Information about the Company’s principal credit agreements (excluding the Energy Services Receivables Facility, which is
discussed below) as of September 30, 2023 and 2022, is presented in the following table. Borrowings on these credit
agreements bear interest at rates indexed to short-term market rates. Borrowings outstanding under these agreements (other than
the 2021 UGI Corporation Senior Credit Facility) are classified as “Short-term borrowings” on the Consolidated Balance
Sheets.
Expiration Date
Total
Capacity
Borrowings
Outstanding
Letters of
Credit and
Guarantees
Outstanding
Available
Borrowing
Capacity
Weighted
Average
Interest
Rate - End
of Year
September 30, 2023
AmeriGas OLP (a)
UGI International, LLC (b)
Energy Services (c)
UGI Utilities (d)
Mountaineer (e)
UGI Corporation (f)
September 30, 2022
September 2026
March 2028
March 2025
June 2024
November 2024
May 2025
AmeriGas OLP (a)
September 2026
UGI International, LLC (b)
October 2023
Energy Services (c)
UGI Utilities (d)
Mountaineer (e)
UGI Corporation (f)
March 2025
June 2024
November 2024
August 2024
$
€
$
$
$
$
$
€
$
$
$
$
600 $
500 €
260 $
425 $
150 $
300 $
600 $
300 €
260 $
350 $
100 $
300 $
— $
202 €
57 $
248 $
84 $
283 $
131 $
— €
— $
151 $
85 $
252 $
2 $
— €
— $
— $
— $
— $
2 $
— €
— $
— $
— $
— $
598
298
203
177
66
17
467
300
260
199
15
48
N.A.
5.17 %
7.67 %
6.30 %
6.68 %
7.80 %
7.27 %
N.A.
N.A.
4.37 %
3.82 %
5.62 %
(a) At September 30, 2023 and 2022 the 2022 AmeriGas OLP Credit Agreement includes a $100 sublimit for letters of credit.
(b) The UGI International 2023 Credit Facilities Agreement and the previous UGI International Credit Facilities Agreement
permits borrowings in euros or USD.
(c) The Energy Services Credit Agreement includes a $50 sublimit for letters of credit and is guaranteed by certain subsidiaries
of Energy Services.
F-29
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
(d) The UGI Utilities Credit Agreement includes a $100 sublimit for letters of credit. On November 9, 2023, UGI Utilities
entered into the UGI Utilities 2023 Credit Agreement and concurrently terminated the UGI Utilities Credit Agreement, a
predecessor agreement. See Significant Financing Activities above and Note 6 for additional information. See Significant
Financing Activities Since September 30, 2022 above for additional information.
(e) The Mountaineer 2023 Credit Agreements includes a $20 sublimit for letters of credit.
(f) At September 30, 2023 and 2022, management intended to maintain a substantial portion of amounts outstanding under the
UGI Corporation Senior Credit Facility beyond twelve months from the respective balance sheet dates. As such,
borrowings outstanding are classified as “Long-term debt” on the Consolidated Balance Sheets. Subsequent to September
30, 2022, the Company repaid $87 of such borrowings and classified these repayments as “Current maturities of long-term
debt” on the Consolidated Balance Sheets. The UGI Corporation Senior Credit Facility includes a $10 sublimit for letters
of credit.
N.A. - Not applicable
Energy Services Receivables Facility. Energy Services has a Receivables Facility with an issuer of receivables-backed
commercial paper. On October 20, 2023, the expiration date of the Receivables Facility was extended to October 18, 2024. The
Receivables Facility provides Energy Services with the ability to borrow up to $200 of eligible receivables during the period
October 20, 2023 to April 30, 2024, and up to $100 of eligible receivables during the period May 1, 2024 to October 18, 2024.
Energy Services uses the Receivables Facility to fund working capital, margin calls under commodity futures contracts, capital
expenditures, dividends and for general corporate purposes.
Under the Receivables Facility, Energy Services transfers, on an ongoing basis and without recourse, its trade accounts
receivable to its wholly owned, special purpose subsidiary, ESFC, which is consolidated for financial statement purposes.
ESFC, in turn, has sold and, subject to certain conditions, may from time to time sell, an undivided interest in some or all of the
receivables to a major bank. Amounts sold to the bank are reflected as “Short-term borrowings” on the Consolidated Balance
Sheets. ESFC was created and has been structured to isolate its assets from creditors of Energy Services and its affiliates,
including UGI. Trade receivables sold to the bank remain on the Company’s balance sheet and the Company reflects a liability
equal to the amount advanced by the bank. The Company records interest expense on amounts owed to the bank. Energy
Services continues to service, administer and collect trade receivables on behalf of the bank, as applicable.
Information regarding the amounts of trade receivables transferred to ESFC and the amounts sold to the bank are as follows:
Trade receivables transferred to ESFC during the year
ESFC trade receivables sold to the bank during the year
ESFC trade receivables - end of year (a)
2023
2022
2021
$
$
$
1,946 $
2,221 $
1,353
535 $
62 $
152 $
101 $
308
61
(a) At September 30, 2023, the amounts of ESFC trade receivables sold to the bank was $46, and is reflected as “Short-term
borrowings” on the Consolidated Balance Sheets. At September 30, 2022 there were no ESFC trade receivables sold to the
bank.
F-30
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Long-term Debt
Long-term debt comprises the following at September 30:
AmeriGas Propane:
AmeriGas Partners Senior Notes:
5.50% due May 2025
5.875% due August 2026
5.625% due May 2024
5.75% due May 2027
9.375% due May 2028
Unamortized debt issuance costs
Total AmeriGas Propane
UGI International:
2.50% Senior Notes due December 2029
UGI International, LLC variable-rate term loan due March 2028 (a)
UGI International, LLC variable-rate term loan due October 2023 (b)
Other
Unamortized debt issuance costs
Total UGI International
Midstream & Marketing:
Energy Services variable-rate term loan due through February 2030 (c)
Other
Unamortized discount and debt issuance costs
Total Energy Services
Utilities:
UGI Utilities Senior Notes:
4.12% due September 2046
4.98% due March 2044
3.12% due April 2050
4.55% due February 2049
4.12% due October 2046
6.21% due September 2036
2.95% due June 2026
1.59% due June 2026
1.64% due September 2026
4.75% due July 2032
4.99% due September 2052
UGI Utilities Medium-Term Notes:
6.13% due October 2034
6.50% due August 2033
Mountaineer senior notes (d)
UGI Utilities variable-rate term loan due through July 2027 (e)
Other
Unamortized debt issuance costs
Total Utilities
UGI Corporation:
UGI Corporation Credit Facilities:
UGI Corporation revolving credit facility maturing May 2025 (f)
UGI Corporation variable-rate term loan due May 2025 (g)
UGI Corporation variable-rate term loan due through May 2025 (h)
UGI Corporation variable-rate term loan due May 2025 (i)
Unamortized debt issuance costs
Total UGI Corporation
Other
Total long-term debt
Less: current maturities
Total long-term debt due after one year
$
F-31
2023
2022
$
700 $
675
—
525
500
(15)
2,385
700
675
675
525
—
(12)
2,563
392
—
294
2
(6)
682
677
40
(7)
710
200
175
150
150
100
100
100
100
75
90
85
20
20
201
95
1
(6)
1,656
252
300
250
215
(2)
1,015
6
6,632
(149)
6,483
424
317
—
6
(8)
739
794
41
(15)
820
200
175
150
150
100
100
100
100
75
90
85
20
20
199
89
2
(6)
1,649
283
300
212
215
(3)
1,007
—
6,600
(57)
6,543 $
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
(a) At September 30, 2023, the effective interest rate on the term loan was 4.95%. We have entered into pay-fixed, receive-
variable interest rate swaps that fix the underlying variable rate at 3.10% through March 2026.
(b) At September 30, 2022, the effective interest rate on the term loan was 1.89%. The term loan was repaid in full and
terminated concurrently with the execution of the UGI International 2023 Credit Facilities Agreement.
(c) At September 30, 2023 and 2022, the effective interest rates on the term loan were 7.82% and 5.13%, respectively. We
have entered into a pay-fixed, receive-variable interest rate swap to effectively fix the underlying variable rate at 4.53% on
these borrowings through September 2026. Term loan borrowings are due in equal quarterly installments of $2, with the
balance of the principal being due in full at maturity. Under certain circumstances, Energy Services is required to make
additional principal payments if the consolidated total leverage ratio, as defined, is greater than defined thresholds. This
term loan is collateralized by substantially all of the assets of Energy Services, subject to certain exceptions and carveouts
including, but not limited to, accounts receivable and certain real property.
(d) Total long-term debt at September 30, 2023 and 2022, comprises $180 principal amount of Mountaineer senior secured
notes plus unamortized premium of $19 and $21 for September 30, 2023 and 2022, respectively. The face interest rates on
the Mountaineer senior notes range from 3.50% to 4.49%, with maturities ranging from 2027 to 2052.
(e) At September 30, 2023 and 2022, the effective interest rate on this term loan was 3.92%. We have entered into a pay-fixed,
receive-variable interest rate swap to effectively fix the underlying variable rate at approximately 2.82% on a portion of
these borrowings through June 2026. Term loan borrowings are due in equal quarterly installments of $2, with the balance
of the principal being due in full at maturity.
(f) At September 30, 2023 and 2022, the effective interest rates on credit facility borrowings were 7.80% and 5.61%,
respectively.
(g) At September 30, 2023 and 2022, the effective interest rates on the term loan were 2.77% and 2.67%, respectively. We
have entered into pay-fixed, receive-variable interest rate swaps to effectively fix the underlying variable rate at
approximately 0.70% on these borrowings through September 2024.
(h) At September 30, 2023 and 2022, the effective interest rates on the term loan were 7.79% and 4.15%, respectively. Term
loan borrowings are due in equal quarterly installments of $9, commencing December 2022, which the balance of the
principal being due in full at maturity.
(i) At September 30, 2023 and 2022, the effective interest rates on the term loan were 4.73% and 3.53%, respectively. We
have entered into pay-fixed, receive-variable interest rate swaps to effectively fix the underlying variable rate at
approximately 0.70% on a portion of these borrowings through September 2024.
Scheduled principal repayments of long-term debt for each of the next five fiscal years ending September 30 are as follows:
AmeriGas Propane
UGI International
Midstream & Marketing
Utilities
UGI Corporation
Total
2024
2025
2026
2027
2028
$
$
— $
1
12
6
38
57 $
700 $
675 $
525 $
—
8
6
973
—
8
281
—
—
8
70
—
1,687 $
964 $
603 $
500
317
8
40
—
865
F-32
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Restrictive Covenants
Our long-term debt and credit facility agreements generally contain customary covenants and default provisions which may
include, among other things, restrictions on the incurrence of additional indebtedness and also restrict liens, guarantees,
investments, loans and advances, payments, mergers, consolidations, asset transfers, transactions with affiliates, sales of assets,
acquisitions and other transactions. These agreements contain standard provisions which require compliance with certain
financial ratios. Certain of the subsidiaries nonrecourse debt agreements contain cross-default provisions, whereby default
under an agreement with one lender simultaneously causes default under agreements with other lenders. In addition, under the
default provisions, a default of a subsidiary results in or is at risk of triggering a cross-default under the debt of the parent
company. UGI and its subsidiaries were in compliance with all debt covenants as of September 30, 2023.
2022 AmeriGas OLP Credit Agreement. Under the 2022 AmeriGas OLP Credit Agreement, AmeriGas OLP, as borrower, is
required to comply with financial covenants related to leverage and interest coverage measured at the Partnership and at
AmeriGas OLP. On November 15 2023, the Company entered into an amendment to the 2022 AmeriGas OLP Credit
Agreement, which amends certain provisions of the credit agreement dated as of September 28, 2022 to, among other things, (i)
reduce the maximum revolver amount from $600 to $400, (ii) reduce the minimum interest coverage ratio, effective for the
fourth quarter of Fiscal 2023 through the end of the fourth quarter of Fiscal 2024 and (iii) beginning for the first quarter of
Fiscal 2025, the minimum interest coverage ratio will remain reduced if the net leverage ratio is below a threshold as defined by
the agreement; if the net leverage ratio exceeds such threshold, the minimum interest coverage ratio will revert to the original
ratio as defined by the agreement.
As of March 31, 2023, AmeriGas OLP was in breach of the leverage ratio debt covenant and interest coverage ratio, which it
cured with the funds received from UGI. The 2022 AmeriGas OLP Credit Agreement contains an equity cure provision, which
allows AmeriGas OLP’s direct or indirect parent, including UGI and its other subsidiaries, to fund capital contributions to
eliminate any EBITDA (as defined in the 2022 AmeriGas OLP Credit Agreement) shortfalls that would otherwise result in non-
compliance with these financial covenants. UGI made capital contributions to AmeriGas OLP of $20 and $11 on March 31,
2023 and April 24, 2023, respectively, which in aggregate represented one equity cure in accordance with the 2022 AmeriGas
OLP Credit Agreement. As a result of these capital contributions, AmeriGas OLP and the Partnership were in compliance with
its financial covenants after considering the equity cure provision as of June 30, 2023 and March 31, 2023. As of September 30,
2023, the Partnership was in compliance with all debt covenants as set forth in the amended 2022 AmeriGas OLP Credit
Agreement without the consideration of the equity cure provision.
UGI also provided an irrevocable letter of support whereby UGI has committed to fund any such EBITDA shortfalls and debt
service, if any. Based on the support and the projected EBITDA, AmeriGas OLP is expected to remain in compliance with its
financial debt covenants for the succeeding twelve-month period. In addition, in May 2023, the Company contributed $52 in an
equity contribution principally to fund debt service on the senior notes.
Restricted Net Assets
At September 30, 2023, the amount of net assets of UGI’s consolidated subsidiaries that were restricted from transfer to UGI
under debt agreements, subsidiary partnership agreements and regulatory requirements under foreign laws totaled
approximately $3,600.
Note 7 — Income Taxes
(Loss) income before income taxes comprises the following:
Domestic
Foreign
Total (loss) income before income taxes
2023
2022
2021
$
$
(346) $
(1,491)
(1,837) $
362 $
1,025
1,387 $
647
1,342
1,989
F-33
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The provisions for income taxes consist of the following:
Current expense (benefit):
Federal
State
Foreign
Total current expense
Deferred expense (benefit):
Federal
State
Foreign
Total deferred (benefit) expense
Total income tax (benefit) expense
2023
2022
2021
$
(1) $
24 $
37
49
85
34
(21)
(433)
(420)
18
50
92
45
(17)
193
221
$
(335) $
313 $
(48)
7
85
44
168
48
262
478
522
Federal income taxes for Fiscal 2023 and Fiscal 2022 are net of foreign tax credits of $25 and $5, respectively. There were no
foreign tax credits utilized in Fiscal 2021.
A reconciliation from the U.S. federal statutory tax rate to our effective tax rate is as follows:
U.S. federal statutory tax rate
Difference in tax rate due to:
Goodwill impairment not deductible for tax
Effects of foreign operations
State income taxes, net of federal benefit
Valuation allowance adjustments
Effects of tax rate changes – State, net of federal benefit
Effects of tax rate changes - International
Effects of U.S. tax legislation
Other, net
Effective tax rate
2023
2022
2021
21.0 %
21.0 %
21.0 %
(7.3)
3.9
(1.1)
1.1
0.2
—
—
0.4
—
4.4
1.5
(0.5)
(1.4)
(2.3)
—
(0.1)
—
4.6
1.9
1.0
—
(1.3)
(0.8)
(0.2)
18.2 %
22.6 %
26.2 %
In July 2022, tax legislation was enacted in Pennsylvania reducing the state’s corporate net income tax rate from 9.99% to
4.99% over a nine-year period, beginning with an initial reduction to 8.99% beginning in Fiscal 2024. The legislation resulted
in $4 and $20 of tax benefits being recorded in Fiscal 2023 and Fiscal 2022, respectively, based on the Company’s analysis of
future reversals of net deferred tax liabilities.
In February 2021, tax legislation was enacted in Italy which allowed the Company to align book basis with tax basis on certain
assets in exchange for paying a three percent substitute tax payment payable in three annual installments. This election resulted
in a $23 net benefit in Fiscal 2021. Timing of the recovery of the resulting incremental tax basis was changed with legislation in
Fiscal 2022 extending the deductible period of recovery from 18 to 50 years.
On March 27, 2020 the CARES Act was enacted into law. The primary impact of the legislation was the change in federal net
operating loss carryback rules which allowed the Company’s U.S. federal tax losses generated in Fiscal 2021 to be carried back
to Fiscal 2016. The carryback of our Fiscal 2021 U.S. federal tax losses from a 21% rate environment to offset taxable income
in Fiscal 2016 in a 35% rate environment generated incremental benefits of $15. A $37 refund claim for the Fiscal 2021 claim
has been filed and is included in “Income taxes receivable” on the Consolidated Balance Sheet at September 30, 2023 and 2022.
F-34
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Our effective tax rate is subject to the impact of changes to the taxation of foreign source income made by the TCJA and the
high tax exception regulations issued in July 2020. Income tax expense for Fiscal 2023, Fiscal 2022 and Fiscal 2021 includes
$13, $3, and $8, respectively, of GILTI taxes that are treated as current period costs and carry no related deferred taxes.
Pennsylvania and West Virginia utility ratemaking practices permit the flow through to ratepayers of state tax benefits resulting
from accelerated tax depreciation. For Fiscal 2023, Fiscal 2022 and Fiscal 2021, the beneficial effects of state tax flow through
of accelerated depreciation reduced income tax expense by $11, $10, and $9, respectively.
Deferred tax liabilities (assets) comprise the following at September 30:
Excess book basis over tax basis of property, plant and equipment
Utility regulatory assets
Intangible assets and goodwill
Derivative instrument assets
Other
Gross deferred tax liabilities
Investment in AmeriGas Partners
Pension plan liabilities
Employee-related benefits
Operating loss carryforwards
Foreign tax credit carryforwards
Utility regulatory liabilities
Utility environmental liabilities
Interest expense
Other
Gross deferred tax assets
Deferred tax assets valuation allowance
Net deferred tax liabilities
2023
2022
$
966 $
84
81
19
37
867
106
75
514
33
1,187
1,595
(28)
(14)
(37)
(75)
(64)
(83)
(15)
(83)
(58)
(79)
(21)
(38)
(48)
(76)
(85)
(15)
(51)
(74)
(457)
141
871 $
(487)
141
1,249
$
At September 30, 2023, we carried foreign net operating loss carryforwards of $6 relating to Flaga, $23 at certain subsidiaries
of UGI France, $10 relating to Belgium, $5 relating to U.K., and $44 in the Netherlands with no expiration dates. We have state
net operating loss carryforwards primarily relating to certain subsidiaries that approximate $1,071 and expire through 2043. We
also have federal operating loss carryforwards of $9 for certain operations of AmeriGas Propane. At September 30, 2023,
deferred tax assets relating to operating loss carryforwards amounted to $75 related to various UGI subsidiaries.
Valuation allowances against deferred tax assets exist for foreign tax credit carryforwards, net operating loss carryforwards of
foreign subsidiaries, capital loss carryforwards and a notional interest deduction. The valuation allowance for all deferred tax
remained the same in Fiscal 2023, which included an increase of $19 for disallowed interest, an increase of $11 for foreign net
operating losses, $5 for a notional interest deduction and $3 from state tax rate decreases were offset by $22 decrease against
capital losses and a $16 decrease against FTC’s.
The valuation allowance for all deferred tax assets increased by $3 in Fiscal 2022, which included a $17 increase in a notional
interest deduction carryover, offset by a release of $6 against FTCs that will be realizable in the future, a $4 decrease from state
tax rate changes, and a $4 decrease related to foreign net operating loss carry forwards.
We conduct business and file tax returns in the U.S., and various local, state and foreign jurisdictions. Our U.S. federal income
tax returns are settled through the 2019 tax year, and our European tax returns are effectively settled for various years from
2015 to 2020. State and other income tax returns in the U.S. are generally subject to examination for a period of three to five
years after the filing of the respective returns.
F-35
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The Company’s unrecognized tax benefits including amounts related to accrued interest, which if subsequently recognized
would be recorded as a benefit to income taxes, amounted to $26, $5, and $3 at September 30, 2023, 2022 and 2021,
respectively. Generally, a net reduction in unrecognized tax benefits could occur because of the expiration of the statute of
limitations in certain jurisdictions or as a result of settlements with tax authorities. The expected change in unrecognized tax
benefits and related interest in the next twelve months as the result of the expiration of certain statutes is immaterial.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
Unrecognized tax benefits — beginning of year
Additions for tax positions of the current year
Decreases for tax positions taken in prior years
Increases for tax positions taken in prior years
Settlements with tax authorities/statute lapses
Unrecognized tax benefits — end of year
Note 8 — Employee Retirement Plans
Defined Benefit Pension and Other Postretirement Plans
2023
2022
2021
$
5 $
3 $
3
—
19
(1)
26 $
2
—
1
(1)
5 $
$
4
—
(2)
1
—
3
The U.S. Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI
Utilities, and certain of UGI’s other domestic wholly owned subsidiaries and (2) a defined benefit pension plan for Mountaineer
employees hired prior to January 1, 2023. U.S. Pension Plans’ benefits are based on years of service, age and employee
compensation. In addition, certain UGI International employees in France and Belgium are covered by defined benefit pension
and postretirement plans. Although the disclosures in the tables below include amounts related to the UGI International plans,
such amounts are not material.
We also provide postretirement health care benefits to certain retirees and postretirement life insurance benefits to certain U.S.
active and retired employees. The ABO of our other postretirement benefit plans was $21 and $22 as of September 30, 2023
and 2022, respectively. The fair value of the plan assets of our other postretirement benefit plans was $18 and $16 as of
September 30, 2023 and 2022, respectively.
The following table provides a reconciliation of the PBOs of our pension plans (the U.S. Pension Plans and the UGI
International pension plans), plan assets, and the related funded status of our pension plans as of September 30, 2023 and 2022.
ABO is the present value of benefits earned to date with benefits based upon current compensation levels. PBO is ABO
increased to reflect estimated future compensation.
Pension Benefits
2023
2022
$
633 $
9
35
(20)
—
2
(36)
623 $
870
16
26
(240)
1
(6)
(34)
633
Change in benefit obligations:
Benefit obligations — beginning of year
Service cost
Interest cost
Actuarial gain
Plan amendments
Foreign currency
Benefits paid
Benefit obligations — end of year (a)
$
F-36
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Change in plan assets:
Fair value of plan assets — beginning of year
Actual gain (loss) on plan assets
Foreign currency
Employer contributions
Benefits paid
Fair value of plan assets — end of year
Funded status of the plans — end of year (b)
Amounts recorded in UGI Corporation stockholders’ equity (pre-tax):
Prior service cost
Net actuarial gain
Total
Amounts recorded in regulatory assets and liabilities (pre-tax):
Net actuarial loss
Total
Pension Benefits
2023
2022
$
541 $
31
1
19
(36)
556 $
(67) $
3 $
(17)
(14) $
110
110 $
$
$
$
$
$
736
(173)
(3)
15
(34)
541
(92)
3
(17)
(14)
114
114
(a) The ABO for the U.S. Pension Plans was $558 and $570 as of September 30, 2023 and 2022, respectively.
(b) Amounts are reflected in “Other noncurrent liabilities” and “Other assets” on the Consolidated Balance Sheets. Amounts
reflected in “Other assets” are not material.
In Fiscal 2023 and Fiscal 2022, the change in the pension plans’ PBO due to actuarial gains is principally the result of changes
in discount rates.
Actuarial assumptions for our U.S. Pension Plans are described below. The discount rate assumption was determined by
selecting a hypothetical portfolio of high quality corporate bonds appropriate to provide for the projected benefit payments of
the plans. The discount rate was then developed as the single rate that equates the market value of the bonds purchased to the
discounted value of the plans’ benefit payments. The expected rate of return on assets assumption is based on current and
expected asset allocations as well as historical and expected returns on various categories of plan assets (as further described
below).
Weighted-average assumptions:
Discount rate – benefit obligations
Discount rate – benefit cost
Expected return on plan assets
Rate of increase in salary levels
Pension Plans
2023
2022
2021
6.09 %
5.70 %
7.50 %
3.25 %
5.70 %
3.13 %
7.10 %
3.25 %
3.13 %
2.90 %
7.10 %
3.25 %
F-37
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The service cost component of our pension and other postretirement plans, net of amounts capitalized, is reflected in “Operating
and administrative expenses” on the Consolidated Statements of Income. The non-service cost components, net of amounts
capitalized by Utilities as a regulatory asset, are reflected in “Other non-operating (expense) income, net” on the Consolidated
Statements of Income. Other postretirement benefit cost was not material for all periods presented. Net periodic pension
(income) cost includes the following components:
Service cost
Interest cost
Expected return on assets
Amortization of:
Actuarial (gain) loss
Net benefit (income) cost
Pension Benefits
2023
2022
2021
$
9 $
16 $
35
(45)
26
(50)
(3)
(4) $
7
(1) $
$
12
22
(40)
14
8
It is our general policy to fund amounts for U.S. Pension Plans benefits equal to at least the minimum required contribution set
forth in applicable employee benefit laws. From time to time, we may, at our discretion, contribute additional amounts. During
Fiscal 2023, Fiscal 2022 and Fiscal 2021, we made cash contributions to the U.S. Pension Plans of $18, $14 and $13,
respectively. The minimum required contributions to the U.S. Pension Plans in Fiscal 2024 is $22.
UGI Utilities has established a VEBA trust to pay certain retiree health care and life insurance benefits by depositing into the
VEBA the annual amount of postretirement benefits costs, if any. Assets associated with the VEBA are not material and we do
not expect to be required to make any contributions to the VEBA during Fiscal 2024.
Expected payments for postretirement benefits over the next 10 years are not material. Expected payments for pension benefits
are as follows:
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal 2028
Fiscal 2029 - 2033
Pension
Benefits
39
39
41
43
44
238
$
$
$
$
$
$
We also sponsor unfunded and non-qualified supplemental executive defined benefit retirement plans. At September 30, 2023
and 2022, the PBOs of these plans, including obligations for amounts held in grantor trusts, totaled $34 and $44, respectively.
Costs associated with these plans and amounts recorded in UGI’s stockholder’s equity representing actuarial gains and losses
were not material for all periods presented and are excluded from the tables above. During Fiscal 2023 and Fiscal 2022, the
payments the Company made with respect to the supplemental executive defined benefit retirement plans were not material.
During Fiscal 2021, the Company made $12 of payments for the supplemental executive defined benefit retirement plans. The
total fair value of the grantor trust investment assets associated with the supplemental executive defined benefit retirement
plans, which are included in “Other assets” on the Consolidated Balance Sheets, totaled $26 and $31 at September 30, 2023 and
2022, respectively.
U.S. Pension Plans’ Assets
The assets of the U.S. Pension Plans are held in trust. The investment policies and asset allocation strategies for the assets in
these trusts are determined by the Retirement Plan Committee comprising certain members of UGI’s senior management. The
overall investment objective is to minimize projected funded status volatility by more closely aligning the duration of the U.S.
Pension Plans’ fixed income portfolio to the duration of its liabilities. The proportion of plan assets allocated to fixed income
investments will increase as the funded status increases. Investments are made principally in common collective trust funds that
F-38
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
consist of equity index investments, bond index investments and short-term investments, and, to a much less extent, UGI
Common Stock.
The targets and actual allocations for the U.S. Pension Plans’ trust assets at September 30 are as follows:
Equity investments:
U.S. equities
Non-U.S. equities
Global equities (a)
Total
Fixed income funds & cash equivalents
Alternative investments
Total
Actual
Target Asset Allocation (b)
2023
2022
2023
2022
25.8 %
21.7 %
13.9 %
61.4 %
35.5 %
3.1 %
26.5 %
20.9 %
13.8 %
61.2 %
35.5 %
3.3 %
27.6 %
23.3 %
10.7 %
61.6 %
35.0 %
3.4 %
24.7 %
20.9 %
13.1 %
58.7 %
35.0 %
6.3 %
100.0 %
100.0 %
100.0 %
100.0 %
(a) Comprises investment funds that consist of a mix of U.S. and Non-U.S. equity securities.
(b) There is a permitted range for the allocation of the trust assets for the U.S. Pension Plans, excluding the defined benefit
pension plan for Mountaineer employees, which is 5% less than and greater than the target allocation.
Common collective trust funds in the U.S. Pension Plans primarily include investments in U.S., Non-U.S. and global (a mix of
U.S. and Non-U.S.) equities, fixed income and short-term investments. The fair values of common collective trust funds and
cash equivalents are valued at the NAV of units of the collective trusts. The NAVs, as provided by the trustee, are used as a
practical expedient to estimate fair value based on the fair values of the underlying investments held by the funds less their
liabilities. The fair values of the U.S. Pension Plans trust assets by asset class as of September 30, 2023 and 2022 are as
follows:
U.S. Pension Plans:
Domestic equity investments:
UGI Corporation Common Stock
Total domestic equity investments (a)
Common collective trust funds:
U.S. equity index investments
Non-U.S. equity index investments
Global equity index investments
Bond index investments
Cash equivalents
Total common collective trust funds (b)
Alternative investments (b)
Total
2023
2022
$
19 $
19
120
117
75
183
8
503
17
$
539 $
26
26
113
110
72
177
10
482
17
525
(a) Level 1 investments within the fair value hierarchy.
(b) Assets measured at NAV and therefore excluded from the fair value hierarchy.
The expected long-term rates of return on U.S. Pension Plans’ trust assets have been developed using a best estimate of
expected returns, volatilities and correlations for each asset class. The estimates are based on historical capital market
performance data and future expectations provided by independent consultants. Future expectations are determined by using
simulations that provide a wide range of scenarios of future market performance. The market conditions in these simulations
consider the long-term relationships between equities and fixed income as well as current market conditions at the start of the
F-39
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
simulation. The expected rate begins with a risk-free rate of return with other factors being added such as inflation, duration,
credit spreads and equity risk premiums. The rates of return derived from this process are applied to our target asset allocation
to develop a reasonable return assumption.
Defined Contribution Plans
We sponsor 401(k) savings plans for eligible employees of UGI and certain of UGI’s domestic subsidiaries. Generally,
participants in these plans may contribute a portion of their compensation on either a before-tax basis, or on both a before-tax
and after-tax basis. These plans also provide for employer matching contributions at various rates. The cost of benefits under
the savings plans totaled $22 in Fiscal 2023, $21 in Fiscal 2022 and $21 in Fiscal 2021. The Company also sponsors certain
nonqualified supplemental defined contribution executive retirement plans. These plans generally provide supplemental benefits
to certain executives that would otherwise be provided under retirement plans but are prohibited due to limitations imposed by
the IRC. The Company makes payments to self-directed grantor trusts with respect to these supplemental defined contribution
plans. Such payments during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were not material. At September 30, 2023 and 2022, the
total fair values of these grantor trust investment assets, which amounts are included in “Other assets” on the Consolidated
Balance Sheets, were $9 and $7, respectively.
Note 9 — Utility Regulatory Assets and Liabilities and Regulatory Matters
The following regulatory assets and liabilities associated with our Utilities reportable segment are included in our Consolidated
Balance Sheets at September 30:
Regulatory assets (a):
Income taxes recoverable
Underfunded pension plans
Environmental costs
Deferred fuel and power costs
Removal costs, net
Other
Total regulatory assets
Regulatory liabilities (a):
Postretirement benefits
Deferred fuel and power refunds
State income tax benefits — distribution system repairs
Excess federal deferred income taxes
Other
Total regulatory liabilities
2023
2022
$
94 $
111
28
27
23
64
347 $
12 $
55
43
254
2
$
$
$
366 $
83
114
37
32
22
52
340
11
3
38
279
4
335
(a) Current regulatory assets are recorded in “Other current assets” on the Consolidated Balance Sheets. Regulatory liabilities
are recorded in “Other current liabilities” and “Other noncurrent liabilities” on the Consolidated Balance Sheets.
Other than removal costs, Utilities currently does not recover a rate of return on the regulatory assets included in the table
above.
Income taxes recoverable. This regulatory asset is the result of recording deferred tax liabilities pertaining to temporary tax
differences principally as a result of the pass through to ratepayers of the tax benefit on accelerated tax depreciation for state
income tax purposes, and the flow through of accelerated tax depreciation for federal income tax purposes for certain years
prior to 1981. These deferred taxes have been reduced by deferred tax assets pertaining to utility deferred investment tax
credits. Utilities has recorded regulatory income tax assets related to these deferred tax liabilities representing future revenues
recoverable through the ratemaking process over the average remaining depreciable lives of the associated property ranging
from 1 to approximately 65 years.
F-40
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Underfunded pension plans. This regulatory asset represents the portion of net actuarial losses and prior service costs (credits)
associated with Gas Utility and Electric Utility pension benefits which are probable of being recovered through future rates
based upon established regulatory practices. These regulatory assets are adjusted annually or more frequently under certain
circumstances when the funded status of the plans is remeasured in accordance with GAAP. These costs are amortized over the
average remaining future service lives of plan participants.
Environmental costs. Environmental costs principally represent estimated probable future environmental remediation and
investigation costs that PA Gas Utility expects to incur, primarily at MGP sites in Pennsylvania, in conjunction with a
remediation COA with the PADEP. Pursuant to base rate orders, PA Gas Utility receives ratemaking recognition of its
estimated environmental investigation and remediation costs associated with its environmental sites. This ratemaking
recognition balances the accumulated difference between historical costs and rate recoveries with an estimate of future costs
associated with the sites. The period over which PA Gas Utility expects to recover these costs will depend upon future
remediation activity. For additional information on environmental costs, see Note 16.
Removal costs, net. This regulatory asset represents costs incurred, net of salvage, associated with the retirement of depreciable
utility plant of UGI Utilities. As required by PAPUC ratemaking, removal costs include actual costs incurred associated with
asset retirement obligations. Consistent with prior ratemaking treatment, UGI Utilities expects to recover these costs over five
years.
Postretirement benefits. This regulatory liability represents the difference between amounts recovered through rates by PA Gas
Utility and Electric Utility and actual costs incurred in accordance with accounting for postretirement benefits. A portion of this
liability will be refunded to customers over the average remaining future service lives of plan participants. Another portion of
this liability represents overcollections for which refund periods have been established within ratemaking proceedings. With
respect to Gas Utility, postretirement benefit overcollections are generally being refunded to customers over a ten-year period
beginning October 19, 2016. With respect to Electric Utility, the overcollections are being refunded to ratepayers over a 20-
year period effective October 27, 2018.
Deferred fuel and power - costs and refunds. Utilities’ tariffs contain clauses that permit recovery of all prudently incurred
purchased gas and power costs through the application of PGC rates, PGA rates and DS tariffs. These clauses provide for
periodic adjustments to PGC, PGA and DS rates for differences between the total amount of purchased gas and electric
generation supply costs collected from customers and recoverable costs incurred. Net undercollected costs are classified as a
regulatory asset and net overcollections are classified as a regulatory liability.
The WVPSC, in an effort to mitigate the impact of WV Gas Utility’s 2022 PGA rate increase to customers, delayed the
effective date in 2022 from November 1 to December 1 and deferred $12 of unrecovered gas costs in determining the rates to be
charged to the various customer classes effective December 1, 2022. Additionally, in order to lower winter bills for residential
customers, the WVPSC removed transportation and storage costs from the volumetric rate and created a fixed monthly pipeline
demand charge applicable only to residential customers. On April 12, 2023, the WVPSC issued a final order that increased the
PGA rate, which included the unrecovered gas cost balance initially deferred in the interim order, and continued the fixed
monthly demand charge for residential customers.
PA Gas Utility uses derivative instruments to reduce volatility in the cost of gas it purchases for retail core-market customers.
Realized and unrealized gains or losses on natural gas derivative instruments are included in deferred fuel and power costs or
refunds. Net unrealized (losses) gains on such contracts at September 30, 2023 and 2022 were $(2) and $5, respectively.
State income tax benefits — distribution system repairs. This regulatory liability represents Pennsylvania state income tax
benefits, net of federal benefit, resulting from the deduction for income tax purposes of repair and maintenance costs associated
with UGI Utilities’ assets that are capitalized for regulatory and GAAP reporting. The tax benefits associated with these repair
and maintenance deductions will be reflected as a reduction to income tax expense over the remaining tax lives of the related
book assets.
Excess federal deferred income taxes. This regulatory liability is the result of remeasuring Utilities’ federal deferred income
tax liabilities on utility plant due to the enactment of the TCJA on December 22, 2017. In order for our utility assets to continue
to be eligible for accelerated tax depreciation, current law requires that excess federal deferred income taxes resulting from the
remeasurement be amortized no more rapidly than over the remaining lives of the assets that gave rise to the excess federal
deferred income taxes, ranging from 1 year to approximately 65 years. This regulatory liability has been increased to reflect the
F-41
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
tax benefit generated by the amortization of the excess deferred federal income taxes and is being amortized and credited to tax
expense.
Other. Other regulatory assets and liabilities comprise a number of deferred items including, among others, certain fair value
adjustments related to the Mountaineer Acquisition, certain information technology costs, energy efficiency conservation costs
and rate case expenses.
Other Regulatory Matters
UGI Utilities. On January 27, 2023, Electric Utility filed a request with the PAPUC to increase its annual base distribution
revenues by $11. On September 21, 2023, the PAPUC issued a final order approving a settlement providing for a $9 annual
base distribution rate increase for Electric Utility, effective October 1, 2023.
On January 28, 2022, PA Gas Utility filed a request with the PAPUC to increase its base operating revenues for residential,
commercial and industrial customers by $83 annually. On September 15, 2022, the PAPUC issued a final order approving a
settlement providing for a $49 annual base distribution rate increase for PA Gas Utility, through a phased approach, with $38
beginning October 29, 2022 and an additional $11 beginning October 1, 2023. In accordance with the terms of the final order,
PA Gas Utility will not be permitted to file a rate case prior to January 1, 2024. Also in accordance with the terms of the final
order, PA Gas Utility was authorized to implement a weather normalization adjustment rider as a five-year pilot program
beginning on November 1, 2022. Under this rider, when weather deviates from normal by more than 3%, residential and small
commercial customer billings for distribution services are adjusted monthly for weather related impacts exceeding the 3%
threshold. Additionally, under the terms of the final order, PA Gas Utility was authorized to implement a DSIC once its total
property, plant and equipment less accumulated depreciation reached $3,368 (which threshold was achieved in September
2022).
On February 8, 2021, Electric Utility filed a request with the PAPUC to increase its annual base distribution revenues by $9. On
October 28, 2021, the PAPUC issued a final order approving a settlement that permitted Electric Utility, effective November 9,
2021, to increase its base distribution revenues by $6.
Mountaineer. On July 31, 2023, Mountaineer submitted its 2023 IREP filing to the WVPSC requesting recovery of $10, an
increase of $6, for costs associated with capital investments after December 31, 2022, that total $131, including $67 in calendar
year 2024. With new base rates expected to be effective January 1, 2024, revenues from IREP rates would decrease by $12. The
filing included capital investments totaling $383 over the 2024 - 2028 period.
On March 6, 2023, Mountaineer submitted a base rate case filing with the WVPSC seeking a net revenue increase of $20,
which consisted of an increase in base rates of $38 and a decrease in the IREP rates of $18 annually to be effective on April 5,
2023. On March 31, 2023, the WVPSC suspended the effective date of the requested rate change increase until January 1, 2024
to allow for a full review of the filing. On October 6, 2023, Mountaineer filed a joint stipulation and agreement for settlement of
the base rate case, which included a $14 net revenue increase. An order from the Commission is expected in December and new
rates will take effect on January 1, 2024.
On July 29, 2022, Mountaineer submitted its 2022 IREP filing to the WVPSC requesting recovery of costs associated with
capital investments totaling $354 over the 2023 - 2027 period, including $64 in calendar year 2023. On November 16, 2022,
Mountaineer and the intervening parties submitted a joint stipulation and agreement for settlement to the WVPSC requesting
approval of 2023 IREP revenue of $22 to be charged effective January 1, 2023, which includes the recovery of a $1 under-
recovery of 2021 IREP revenue. On December 21, 2022, the WVPSC issued an order approving the joint stipulation and
agreement for settlement as filed.
F-42
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Note 10 — Inventories
Inventories comprise the following at September 30:
Non-utility LPG and natural gas
Gas Utility natural gas
Energy certificates
Materials, supplies and other
Total inventories
Note 11 — Property, Plant and Equipment
Property, plant and equipment comprise the following at September 30:
2023
2022
$
212 $
55
64
102
$
433 $
335
166
70
94
665
Utility:
Distribution
Transmission
General and other
Work in process
Total Utility
Non-utility:
Land
Buildings and improvements
Transportation equipment
Equipment, primarily cylinders and tanks
Electric generation
Pipeline and related assets
Other
Work in process
Total non-utility
2023
2022
Estimated Useful Life
$
5,204 $
123
660
95
6,082
174
418
238
3,903
190
1,577
390
156
7,046
4,746
123
557
124
5,550
179
426
234
3,645
216
1,523
380
53
6,656
10 - 40 years
3 - 10 years
5 - 30 years
25 - 40 years
25 - 40 years
1 - 12 years
Total property, plant and equipment
$
13,128 $
12,206
The average composite depreciation rates at our Gas Utility and Electric Utility were as follows:
Regulated natural gas utilities
Electric Utility
2023
2022
2021
2.4 %
2.3 %
2.6 %
2.4 %
2.6 %
2.3 %
Depreciation expense totaled $476, $460 and $437 for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.
F-43
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Note 12 — Goodwill and Intangible Assets
Changes in the carrying amount of goodwill by reportable segment are as follows:
AmeriGas
Propane
UGI
International
Midstream &
Marketing
Utilities
Total
Balance September 30, 2021
$
2,004 $
Purchase accounting adjustments
Foreign currency translation
Balance September 30, 2022
Impairment of goodwill
Acquisitions
Foreign currency translation
—
—
2,004
(656)
—
—
993 $
—
(153)
840
—
3
68
336 $
—
—
336
—
—
—
437 $
(5)
—
432
—
—
—
3,770
(5)
(153)
3,612
(656)
3
68
Balance September 30, 2023
$
1,348 $
911 $
336 $
432 $
3,027
During the third quarter of Fiscal 2023, the Company identified interim impairment indicators related to goodwill within the
AmeriGas Propane reporting unit: (1) AmeriGas Partners issued $500 of Senior Notes at an interest rate of 9.375%, which was
significantly higher than the interest rates on the other AmeriGas Propane debt obligations; and (2) financial projections for the
AmeriGas Propane reporting unit were reduced significantly compared to previous forecasts following declines in gross
margins and customer retention and higher operating expenses. The Company concluded that these events constituted triggering
events that indicate that the AmeriGas Propane goodwill may be impaired and, as such, performed an interim impairment test of
its goodwill as of May 31, 2023.
Using level 3 inputs, we performed a quantitative assessment of the AmeriGas Propane reporting unit using a weighting of the
income and market approaches to determine its fair value. With respect to the income approach, management used a discounted
cash flow (“DCF”) method, using unobservable inputs. The significant assumptions in our DCF model include projected
EBITDA and a discount rate (and estimates in the discount rate inputs). With respect to the market approach, management used
recent transaction market multiples for similar companies in the U.S. The resulting estimates of fair value from the income
approach and the market approach were then weighted equally in determining the overall estimated fair value of AmeriGas
Propane.
Based on our evaluation, the estimated fair value of the AmeriGas Propane reporting unit was determined to be less than its
carrying value. As a result, the Company recorded a non-cash pre-tax goodwill impairment charge of $656, included in
“Impairment of goodwill” on the Fiscal 2023 Consolidated Statement of Income, to reduce the carrying value of AmeriGas
Propane to its fair value. The Company calculated the deferred tax effect using the simultaneous equation method.
The performance of the AmeriGas Propane reporting unit and the potential for future developments in the global economic
environment, including the prospect of higher interest rates, introduces a heightened risk for additional impairment in the
AmeriGas Propane reporting unit. If there is continued deterioration in the results of operations, a portion or all of the
remaining recorded goodwill for the AmeriGas Propane reporting unit, which was $1.3 billion as of September 30, 2023, could
be subject to further impairment.
F-44
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Intangible assets comprise the following at September 30:
Customer relationships
Trademarks and tradenames
Noncompete agreements and other
Accumulated amortization
Intangible assets, net (definite-lived)
Trademarks and tradenames (indefinite-lived)
Total intangible assets, net
2023
2022
$
977 $
1,006
4
26
3
71
(602)
(621)
405
38
$
443 $
459
41
500
During Fiscal 2023, the Company recognized a $10 non-cash, pre-tax impairment charge related to customer relationships
intangible assets and indefinite-lived tradenames at DVEP in connection with the wind-down of the energy marketing business
in the Netherlands (see Note 5). During Fiscal 2021, the Company recognized a $20 non-cash, pre-tax impairment charge
related to a customer relationship intangible asset at DVEP resulting from a decline in anticipated volumes attributable to a
historical customer. These charges are reflected in “Operating and administrative expenses” on the Consolidated Statements of
Income.
Amortization expense of intangible assets was $56, $61 and $76 for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.
Estimated amortization expense of intangible assets during the next five fiscal years is as follows: Fiscal 2024 — $53; Fiscal
2025 — $51; Fiscal 2026 — $50; Fiscal 2027 — $27; Fiscal 2028 — $18.
Note 13 — Equity
On February 2, 2022, UGI’s Board of Directors authorized an extension of an existing share repurchase program for up to
8,000,000 shares of UGI Corporation Common Stock for an additional four-year period, expiring February 2026. Pursuant to
the Board authorization, during Fiscal 2023 and Fiscal 2022 the Company purchased and placed in treasury stock 600,000
shares and 900,000 shares at a total cost of $22 and $38, respectively. There were no such repurchases during Fiscal 2021.
UGI Preferred Stock and Common Stock share activity for Fiscal 2023, Fiscal 2022 and Fiscal 2021 is as follows:
Balance at September 30, 2020
Issued:
Equity Unit Offering
Employee and director plans
Reacquired common stock – employee and director plans
Preferred
Stock
Issued/
Outstanding
Common Stock
Issued
Treasury
Outstanding
—
209,514,044
(1,159,606) 208,354,438
220,000
—
—
—
—
329,252
554,315
—
(21,870)
—
883,567
(21,870)
Balance at September 30, 2021
220,000
209,843,296
(627,161) 209,216,135
Issued:
Employee and director plans
Repurchases of common stock
Reacquired common stock – employee and director plans
Balance at September 30, 2022
Issued:
Employee and director plans
Repurchases of common stock
Balance at September 30, 2023
—
—
—
717,198
799,152
1,516,350
—
—
(900,000)
(900,000)
(250,273)
(250,273)
220,000
210,560,494
(978,282) 209,582,212
—
—
220,000
345,558
—
210,906,052
167,313
(600,000)
512,871
(600,000)
(1,410,969) 209,495,083
F-45
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
UGI also has 5,000,000 shares of UGI Series Preference Stock authorized for issuance. UGI had no shares of UGI
Series Preference Stock outstanding at September 30, 2023 or 2022.
Issuance of Equity Units
On May 25, 2021, the Company issued 2.2 million Equity Units with a total notional value of $220. Each Equity Unit has a
stated amount of $100 and consists of (i) a 10% undivided beneficial ownership interest in one share of Convertible Preferred
Stock with a liquidation preference of $1,000 per share and (ii) a 2024 Purchase Contract. The Company received
approximately $213 of proceeds from the issuance of the Equity Units, net of offering expenses and underwriting costs and
commissions, and issued 220,000 shares of Convertible Preferred Stock which was recorded in “Preferred stock” on the
accompanying Consolidated Balance Sheet. The proceeds were used to pay a portion of the purchase price for the Mountaineer
Acquisition and related fees and expenses, and for general corporate purposes. During the second quarter of Fiscal 2022, the
Company reclassified certain amounts on the Consolidated Balance Sheet and Consolidated Statement of Changes in Equity
related to the accounting for the Equity Units.
Convertible Preferred Stock. Holders of the Convertible Preferred Stock will generally have no voting rights, except under the
limited circumstances as described in the Equity Unit Agreements, and will be entitled to receive cumulative dividends at an
initial annual rate of 0.125% when, as, and if declared by the UGI Board of Directors, payable quarterly in arrears on March 1,
June 1, September 1 and December 1, commencing September 1, 2021. The Company may elect to pay such dividends in cash,
shares of UGI’s common stock or a combination of cash and shares of UGI’s common stock. Unless all accumulated and
unpaid dividends on the Convertible Preferred Stock for prior completed dividend periods have been declared and paid, the
Company may not make any distributions on, or repurchase, any of its capital stock ranking equal or junior to the Convertible
Preferred Stock as to dividends or upon liquidation, subject to certain exceptions.
The Convertible Preferred Stock has no maturity date and will remain outstanding unless converted by holders or redeemed by
the Company. The Company has the option to redeem all or a portion of the Convertible Preferred Stock at any time, and from
time to time, on or after September 3, 2024, for cash at a redemption price equal to the liquidation preference of the Convertible
Preferred Stock being redeemed plus any accumulated and unpaid dividends. Each share of Convertible Preferred Stock may be
converted at the option of the holders on and after June 1, 2024, only after it has been separated from the Equity Units and,
prior to June 1, 2024, only under limited circumstances in connection with a fundamental change, as defined in the Equity Unit
Agreements. The Company will settle conversions by paying or delivering (i) one share of UGI’s 0.125% Series B preferred
stock (or, for conversions in connection with a redemption of the Convertible Preferred Stock, up to $1,000 per share in cash
plus all accumulated but unpaid dividends to, but excluding, the payment date immediately preceding the relevant conversion
date) per share of Convertible Preferred Stock being converted; and (ii) to the extent the conversion value exceeds the
liquidation preference of the Convertible Preferred Stock, shares of UGI’s common stock. The conversion rate is initially
19.0215 shares of UGI’s common stock per one share of Convertible Preferred Stock, which is equivalent to an initial
conversion price of approximately $52.57 per share of UGI’s common stock. At September 30, 2023, 2022 and 2021, there
were 220,000 shares of Series B preferred stock authorized for issuance pursuant to the settlement terms discussed above.
The Convertible Preferred Stock can be remarketed during either (i) an optional remarketing period beginning on, and
including, March 1, 2024 and ending on, and including, May 13, 2024 or (ii) a final remarketing period beginning on, and
including, May 23, 2024 and ending on, and including, May 30, 2024. In connection with a successful remarketing, the
conversion rate and dividend rate of the Convertible Preferred Stock may be increased, and the earliest redemption date for the
Convertible Preferred Stock may be changed to a later date that is on or before August 29, 2025.
2024 Purchase Contracts. The 2024 Purchase Contracts obligate the holders to pay $100 to UGI to purchase a variable number
of shares of UGI common stock on the purchase contract settlement date, which is scheduled to occur on June 1, 2024. The
number of shares of UGI common stock to be issued upon settlement of each 2024 Purchase Contract on the purchase contract
settlement date will be equal to $100 divided by the market value per share of UGI common stock, which will be determined
over a market value averaging period preceding the settlement date, subject to a maximum settlement rate of 2.2826 shares of
UGI common stock per 2024 Purchase Contract, subject to adjustment. The initial maximum settlement rate of the 2024
Purchase Contracts is approximately equal to $100 divided by the last reported sale price of $43.81 per share of UGI common
stock on May 17, 2021. Absent any fundamental changes, as defined in the Equity Unit Agreements, the holders can settle the
2024 Purchase Contracts early, subject to certain exceptions and conditions. Upon early settlement of any 2024 Purchase
Contracts, other than in connection with a fundamental change, the Company will deliver the number of shares of UGI common
stock equal to 85% of the number of shares of UGI common stock that would have otherwise been deliverable.
F-46
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The Company will pay holders of the 2024 Purchase Contracts quarterly contract adjustment payments at an annual rate of
7.125%, payable quarterly in arrears on March 1, June 1, September 1 and December 1, commencing September 1, 2021. The
Company may elect to pay such contract adjustment payments in cash, shares of UGI common stock or a combination of cash
and shares of UGI common stock. The Company may defer the contract adjustment payments for one or more consecutive
periods but generally not beyond the purchase contract settlement date. If contract adjustment payments are deferred, the
Company will be subject to certain dividend, distribution, and other restrictions related to its capital stock as defined in the
Equity Unit Agreements.
The present value of the quarterly contract adjustment payments liability was $45 upon issuance of the Equity Units and is
recorded in “Other current liabilities” and “Other noncurrent liabilities” (with a corresponding reduction to “UGI Preferred
Stock”) on the Consolidated Balance Sheet. As each quarterly contract adjustment payment is made, the related liability is
reduced and the difference between the cash payment and the present value will accrete to “Interest expense” on the
Consolidated Statements of Income. This accretion was not material during Fiscal 2023, Fiscal 2022, and Fiscal 2021.
Note 14 — Equity-Based Compensation
The Company grants equity-based awards to employees and non-employee directors comprising UGI stock options and, UGI
Common Stock-based equity instruments. We recognized total pre-tax equity-based compensation expense of $17 ($13 after-
tax), $15 ($11 after-tax) and $21 ($15 after-tax) in Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.
UGI Equity-Based Compensation Plans and Awards. On January 29, 2021, the Company’s shareholders approved the 2021
IAP. Under the 2021 IAP, awards representing up to 20,500,000 shares of UGI Common Stock may be granted. UGI Unit
Awards granted to employees and non-employee directors, including dividend equivalents, are settled in shares of UGI
Common Stock and cash. The 2021 IAP supersedes and replaces the 2013 OICP for awards granted on or after February 1,
2021. The terms and conditions of the 2013 OICP will continue to govern any outstanding awards granted thereunder. Similar
to the 2013 OICP, under the 2021 IAP, we may grant options to acquire shares of UGI Common Stock, SARs, UGI Units
(comprising “Stock Units” and “UGI Performance Units”), other equity-based awards and cash to key employees and non-
employee directors. The exercise price for options may not be less than the fair market value on the grant date. Awards granted
under the 2021 IAP may vest immediately or ratably over a period of years, and stock options can be exercised no later than ten
years from the grant date. Except in the event of retirement, death or disability, each grant, unless paid, will terminate when the
participant ceases to be employed. There are certain change of control and retirement eligibility conditions that, if met,
generally result in accelerated vesting or elimination of further service requirements.
There were 16,014,039 shares of Common Stock available for future grants under the 2021 IAP at September 30, 2023.
UGI Stock Option Awards. We measure the fair value of stock options using a Black-Scholes option pricing model that uses
certain key assumptions for such options related to the expected life, volatility, dividend yield and the Company’s risk-free rate
at the valuation date. The per share weighted average fair value of stock options granted under our option plans was $9.31,
$8.47 and $6.05 in Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. As of September 30, 2023, there was $5 of
unrecognized compensation cost associated with unvested stock options that is expected to be recognized over a weighted-
average period of 1.9 years. There were 8,358,125 stock options outstanding at September 30, 2023, of which, 7,122,824 stock
options were exercisable with a weighted-average option price of $42.79.
UGI Unit Awards. Awards of UGI Stock Units and UGI Performance Units subject to market-based conditions entitle the
grantee to shares of UGI Common Stock or cash once the service condition is met and, with respect to UGI Performance Unit
subject to market-based conditions, subject to UGI’s TSR percentile rank relative to companies in the UGI comparator group.
Recipients of UGI Performance Unit subject to market-based conditions are awarded a target number of such awards. The
number of UGI Performance Units subject to market-based conditions ultimately paid at the end of the performance period
(generally 3 years) may be higher or lower than the target amount, or even zero, based on UGI’s TSR percentile rank relative
to companies in the UGI comparator group. Grantees may receive 0% to 200% of the target award granted. Awards granted
vest ratably over the performance period.
In January 2023, the Company granted the UGI EPS Performance Unit awards. UGI EPS Performance Unit awards entitle the
grantee to shares of UGI Common Stock or cash once the service condition is met and subject to the achievement of a UGI EPS
goal, which is a non-market performance condition. UGI EPS Performance Unit grant recipients are awarded a target number of
UGI EPS Performance Units. The number of UGI EPS Performance Units ultimately paid at the end of the service period may
F-47
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
be higher or lower than the target amount, or even zero, based upon the actual EPS performance. Grantees may receive 0% to
200% of the target award granted. The EPS performance period for the UGI EPS Performance Unit awards granted in January
2023 is October 1, 2022 through September 30, 2024.
The fair value of UGI Stock Units on the grant date is equal to the market price of UGI Stock on the grant date plus the fair
value of dividend equivalents if applicable. The fair value of UGI Performance Units is estimated using a Monte Carlo
valuation model. The fair value associated with the target award is accounted for as equity and the fair value of the award over
the target, as well as all dividend equivalents, is accounted for as a liability. The fair value of UGI EPS Performance Units is
equal to the market price of UGI stock on the grant date plus the fair value of dividend equivalents if applicable.
The weighted-average grant date fair value of UGI Stock Units, UGI Performance Units and EPS Performance Units granted to
employees during Fiscal 2023, Fiscal 2022, and Fiscal 2021 was $44.62, $51.24 and $41.41, respectively.
As of September 30, 2023, there was a total of $25 unrecognized compensation cost associated with UGI Unit awards
outstanding that is expected to be recognized over a weighted-average period of 2.0 years. As of September 30, 2023, there
were 1,502,253 UGI Unit awards outstanding with a weighted-average grant-date fair value of $43.09 per share.
Note 15 — Leases
Lessee
We lease various buildings and other facilities, real estate, vehicles, rail cars and other equipment, the majority of which are
operating leases. We determine if a contract is or contains a lease by evaluating whether the contract explicitly or implicitly
identifies an asset, whether we have the right to obtain substantially all of the economic benefits of the identified leased asset
and to direct its use.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make
lease payments arising from the lease. We recognize ROU assets at the lease commencement date at the value of the lease
liability adjusted for any prepayments, lease incentives received, and initial direct costs incurred. Lease liabilities are
recognized at the lease commencement date based on the present value of lease payments over the lease term. These payments
are discounted using the discount rate implicit in the lease, when available. We apply an incremental borrowing rate, which is
developed utilizing a credit notching approach based on information available at the lease commencement date, to substantially
all of our leases as the implicit rate is often not available.
Lease expense is recognized on a straight-line basis over the expected lease term. Renewal and termination options are not
included in the lease term unless we are reasonably certain that such options will be exercised. Leases with an original lease
term of one year or less, including consideration of any renewal options assumed to be exercised, are not included in the
Consolidated Balance Sheets.
Certain lease arrangements, primarily fleet vehicle leases with lease terms of one to ten years, contain purchase options. The
Company generally excludes purchase options in evaluating its leases unless it is reasonably certain that such options will be
exercised. Additionally, leases of fleet vehicles often contain residual value guarantees that are due at the end of the lease.
Such amounts are included in the determination of lease liabilities when we are reasonably certain that they will be owed.
Certain leasing arrangements require variable payments that are dependent on asset usage or are based on changes in index
rates, such as the Consumer Price Index. The variable payments component of such leases cannot be determined at lease
commencement and is not recognized in the measurement of ROU assets or lease liabilities, but is recognized in earnings in the
period in which the obligation occurs.
Sale-leaseback transaction. During the fourth quarter of Fiscal 2023, AmeriGas OLP completed a sale-leaseback transaction
with an independent third party for the land, building and improvements of an office and service center located in Gardena,
California. The office and service center was leased back to AmeriGas OLP under an operating lease agreement having an
initial six-year term with an option to renew. In conjunction with the transaction, AmeriGas OLP received approximately $32 in
cash proceeds which resulted in a pre-tax gain of $29, reflected in Other operating income, net on the Fiscal 2023 Consolidated
Statement of Income.
F-48
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
ROU assets and lease liabilities recorded in the Consolidated Balance Sheets as of September 30 are as follows:
2023
2022
Location on the Balance Sheet
ROU assets:
Operating lease ROU assets
Finance lease ROU assets
Total ROU assets
Lease liabilities:
Operating lease liabilities — current
Operating lease liabilities — noncurrent
Finance lease liabilities — current
Finance lease liabilities — noncurrent
Total lease liabilities
$
$
$
$
420 $
50
470 $
87 $
340
5
45
477 $
368
48
416
82
294
4
41
421
Other assets
Property, plant and equipment
Other current liabilities
Other noncurrent liabilities
Current maturities of long-
term debt
Long-term debt
The components of lease cost for Fiscal 2023, Fiscal 2022 and Fiscal 2021 are as follows:
Operating lease cost
Finance lease cost:
Amortization of ROU assets
Interest on lease liabilities
Variable lease cost
Short-term lease cost
Total lease cost
2023
2022
2021
$
104 $
96 $
101
3
3
2
4
4
3
6
2
4
3
4
2
$
116 $
111 $
114
The following table presents the cash and non-cash activity related to lease liabilities included in the Consolidated Statements
of Cash Flows during Fiscal 2023, Fiscal 2022 and Fiscal 2021:
Cash paid related to lease liabilities:
Operating cash flows — operating leases
Operating cash flows — finance leases
Financing cash flows — finance leases
Non-cash lease liability activities:
ROU assets obtained in exchange for operating lease liabilities
ROU assets obtained in exchange for finance lease liabilities
2023
2022
2021
$
$
$
$
$
103 $
3 $
1 $
95 $
3 $
2 $
136 $
6 $
72 $
2 $
99
3
3
85
1
F-49
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The following table presents the weighted-average remaining lease term and weighted-average discount rate:
Weighted-average remaining lease term (in years)
Operating leases
Finance leases
Weighted-average discount rate (%)
Operating leases
Finance leases
2023
7.1
5.3
2023
4.5%
2.2%
2022
6.0
3.7
2022
3.6%
1.8%
Expected annual lease payments based on maturities of operating and finance leases, as well as a reconciliation to the lease
liabilities on the Consolidated Balance Sheet, as of September 30, 2023, were as follows:
2024
2025
2026
2027
2028
After
2028
Total
Lease
Payments
Imputed
Interest
Lease
Liabilities
Operating leases
Finance leases
$
$
104 $
86 $
72 $
5 $
5 $
5 $
61 $
4 $
49 $
130 $
502 $
(75) $
4 $
76 $
99 $
(49) $
427
50
Approximately 80% of the operating lease liabilities presented above relate to AmeriGas Propane.
At September 30, 2023, operating and finance leases that had not yet commenced were not material.
Lessor
We enter into lessor arrangements for the purposes of storing, gathering or distributing natural gas and LPG. AmeriGas Propane
and UGI International have lessor arrangements that grant customers the right to use small, medium and large storage tanks,
which we classify as operating leases. These agreements contain renewal options for periods up to nine years and certain
agreements at UGI International contain a purchase option. Energy Services leases certain natural gas gathering assets to
customers, which we classify as operating leases. Lease income is generally recognized on a straight-line basis over the lease
term and included in “Revenues” on the Consolidated Statements of Income (see Note 4).
Note 16 — Commitments and Contingencies
Environmental Matters
UGI Utilities
From the late 1800s through the mid-1900s, UGI Utilities and its former subsidiaries owned and operated a number of MGPs
prior to the general availability of natural gas. Some constituents of coal tars and other residues of the manufactured gas process
are today considered hazardous substances under the Superfund Law and may be present on the sites of former MGPs. Between
1882 and 1953, UGI Utilities owned the stock of subsidiary gas companies in Pennsylvania and elsewhere and also operated the
businesses of some gas companies under agreement. By the early 1950s, UGI Utilities divested all of its utility operations other
than certain gas and electric operations. Beginning in 2006 and 2008, UGI Utilities also owned and operated two acquired
subsidiaries, with similar histories of owning, and in some cases operating, MGPs in Pennsylvania.
UGI Utilities is subject to a COA with the PADEP to address the remediation of specified former MGP sites in Pennsylvania,
which is scheduled to terminate at the end of 2031. In accordance with the COA, UGI Utilities is required to either obtain a
certain number of points per calendar year based on defined eligible environmental investigatory and/or remedial activities at
the MGPs, or make expenditures for such activities in an amount equal to an annual environmental minimum expenditure
threshold. The annual minimum expenditure threshold of the COA is $5. At September 30, 2023 and 2022, our aggregate
estimated accrued liabilities for environmental investigation and remediation costs related to the COA totaled $52 and $53,
respectively.
We do not expect the costs for investigation and remediation of hazardous substances at Pennsylvania MGP sites to be material
to UGI Utilities’ results of operations because UGI Utilities receives ratemaking recovery of actual environmental investigation
and remediation costs associated with the sites covered by the COA. This ratemaking recognition reconciles the accumulated
F-50
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
difference between historical costs and rate recoveries with an estimate of future costs associated with the sites. As such, UGI
Utilities has recorded an associated regulatory asset for these costs because recovery of these costs from customers is probable
(see Note 9).
From time to time, UGI Utilities is notified of sites outside Pennsylvania on which private parties allege MGPs were formerly
owned or operated by UGI Utilities or owned or operated by a former subsidiary. Such parties generally investigate the extent
of environmental contamination or perform environmental remediation. Management believes that under applicable law UGI
Utilities should not be liable in those instances in which a former subsidiary owned or operated an MGP. There could be,
however, significant future costs of an uncertain amount associated with environmental damage caused by MGPs outside
Pennsylvania that UGI Utilities directly operated, or that were owned or operated by a former subsidiary of UGI Utilities if a
court were to conclude that (1) the subsidiary’s separate corporate form should be disregarded, or (2) UGI Utilities should be
considered to have been an operator because of its conduct with respect to its subsidiary’s MGP. Neither the undiscounted nor
the accrued liability for environmental investigation and cleanup costs for UGI Utilities’ MGP sites outside Pennsylvania were
material for all periods presented.
AmeriGas Propane
AmeriGas OLP Saranac Lake. In 2008, the NYDEC notified AmeriGas OLP that the NYDEC had placed property purportedly
owned by AmeriGas OLP in Saranac Lake, New York on the New York State Registry of Inactive Hazardous Waste Disposal
Sites. A site characterization study performed by the NYDEC disclosed contamination related to a former MGP. AmeriGas
OLP responded to the NYDEC in 2009 to dispute the contention it was a PRP as it did not operate the MGP and appeared to
only own a portion of the site. In 2017, the NYDEC communicated to AmeriGas OLP that the NYDEC had previously issued
three RODs related to remediation of the site totaling approximately $28 and requested additional information regarding
AmeriGas OLP’s purported ownership. AmeriGas OLP renewed its challenge to designation as a PRP and identified potential
defenses. The NYDEC subsequently identified a third party PRP with respect to the site.
The NYDEC commenced implementation of the remediation plan in the spring of 2018. Based on our evaluation of the
available information as of September 30, 2023 and 2022, the Partnership has an undiscounted environmental remediation
liability of $8 related to the site. Our share of the actual remediation costs could be significantly more or less than the accrued
amount.
Other Matters
West Reading, Pennsylvania Explosion. On March 24, 2023, an explosion occurred in West Reading, Pennsylvania which
resulted in seven fatalities, significant injuries to eleven others, and extensive property damage to buildings owned by R.M.
Palmer, a local chocolate manufacturer, and other neighboring structures. The NTSB and the PAPUC are investigating the West
Reading incident. On July 18, 2023, the NTSB issued an Investigative Update in its ongoing investigation. That report identifies
a fracture in a retired UGI gas service tee and a fracture in a nearby steam system, but it does not address causation of the
fractures or the explosion. The NTSB investigative team includes representatives from the Company, the PAPUC, the local fire
department and the Pipeline and Hazardous Materials Safety Administration. The Company is cooperating with the
investigation. The NTSB may invite other parties to participate. In September 2023, OSHA closed their investigation of this
matter, without any finding pertaining to UGI Utilities.
While the investigation into this incident is still underway and the cause of the explosion has not been determined, the
Company has received claims as a result of the explosion and is involved in lawsuits relative to the incident. The Company
maintains liability insurance for personal injury, property and casualty damages and believes that third-party claims associated
with the explosion, in excess of the Company’s deductible, are recoverable through the Company’s insurance. The Company
cannot predict the result of these pending or future claims and legal actions at this time.
Regarding these pending claims and legal actions, the Company does not believe, at this early stage, that there is sufficient
information available to reasonably estimate a range of loss, if any, or conclude that the final outcome of these matters will or
will not have a material effect on our financial statements.
In addition to the matters described above, there are other pending claims and legal actions arising in the normal course of our
businesses. Although we cannot predict the final results of these pending claims and legal actions, including those described
above, we believe, after consultation with counsel, that the final outcome of these matters will not have a material effect on our
financial statements.
F-51
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Note 17 — Fair Value Measurements
Recurring Fair Value Measurements
The following table presents, on a gross basis, our financial assets and liabilities, including both current and noncurrent
portions, that are measured at fair value on a recurring basis within the fair value hierarchy as described in Note 2:
Level 1
Level 2
Level 3
Total
Asset (Liability)
September 30, 2023:
Derivative instruments:
Assets:
Commodity contracts (c)
Foreign currency contracts
Interest rate contracts
Liabilities:
Commodity contracts (c)
Foreign currency contracts
Non-qualified supplemental postretirement
grantor trust investments (a)
September 30, 2022
Derivative instruments:
Assets:
Commodity contracts (b)
Foreign currency contracts
Interest rate contracts
Liabilities:
Commodity contracts (b)
Foreign currency contracts
Non-qualified supplemental postretirement
grantor trust investments (a)
$
$
$
$
$
$
$
$
$
$
$
$
117 $
— $
— $
(193) $
— $
115 $
38 $
28 $
(81) $
(2) $
— $
— $
— $
— $
— $
232
38
28
(274)
(2)
39 $
— $
— $
39
938 $
— $
— $
(377) $
— $
1,268 $
119 $
66 $
(136) $
(2) $
27 $
— $
— $
— $
— $
2,233
119
66
(513)
(2)
43 $
— $
— $
43
(a) Consists primarily of mutual fund investments held in grantor trusts associated with non-qualified supplemental retirement
plans (see Note 8).
(b) Includes derivative assets and liabilities associated with the October 2022 sale of UGI International energy marketing
(c)
business located in the U.K., classified as held for sale (see Note 5).
Includes derivative assets and liabilities associated with certain UGI International energy marketing business transactions
(see Note 5).
The fair values of our Level 1 exchange-traded commodity futures and option contracts and non-exchange-traded commodity
futures and forward contracts are based upon actively quoted market prices for identical assets and liabilities. Substantially all
of the remaining derivative instruments are designated as Level 2. The fair values of certain non-exchange-traded commodity
derivatives designated as Level 2 are based upon indicative price quotations available through brokers, industry price
publications or recent market transactions and related market indicators. The fair values of our Level 2 interest rate contracts
and foreign currency contracts are based upon third-party quotes or indicative values based on recent market transactions. The
fair values of our Level 3 natural gas commodity contracts at September 30, 2022 attributable to our UGI International
operations have been determined using unobservable inputs in an illiquid market and ranged from $7 to $27 given the available
F-52
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
inputs considered. The fair values of investments held in grantor trusts are derived from quoted market prices as substantially
all of the investments in these trusts have active markets.
Nonrecurring Fair Value Measurements
During the quarter ended June 30, 2023, the Company performed an interim goodwill impairment test for its AmeriGas Propane
reporting unit, which resulted in a non-cash pre-tax goodwill impairment charge of $656 to reduce the carrying value of
AmeriGas Propane to its fair value as of May 31, 2023. See Note 12 for further information on the results of the impairment
test including the key assumptions used to determine the fair value of the AmeriGas Propane reporting unit.
Other Financial Instruments
The carrying amounts of other financial instruments included in current assets and current liabilities (except for current
maturities of long-term debt) approximate their fair values because of their short-term nature. We estimate the fair value of
long-term debt by using current market rates and by discounting future cash flows using rates available for similar type debt
(Level 2). The carrying amounts and estimated fair values of our long-term debt (including current maturities but excluding
unamortized debt issuance costs) were as follows:
Carrying amount
Estimated fair value
2023
2022
$
$
6,647 $
6,238 $
6,665
6,189
Financial instruments other than derivative instruments, such as short-term investments and trade accounts receivable, could
expose us to concentrations of credit risk. We limit credit risk from short-term investments by investing only in investment-
grade commercial paper, money market mutual funds, securities guaranteed by the U.S. Government or its agencies and FDIC
insured bank deposits. The credit risk arising from concentrations of trade accounts receivable is limited because we have a
large customer base that extends across many different U.S. markets and a number of foreign countries. For information
regarding concentrations of credit risk associated with our derivative instruments, see Note 18.
Note 18 — Derivative Instruments and Hedging Activities
We are exposed to certain market risks related to our ongoing business operations. Management uses derivative financial and
commodity instruments, among other things, to manage: (1) commodity price risk; (2) interest rate risk; and (3) foreign
currency exchange rate risk. Although we use derivative financial and commodity instruments to reduce market risk associated
with forecasted transactions, we do not use derivative financial and commodity instruments for speculative or trading purposes.
The use of derivative instruments is controlled by our risk management and credit policies, which govern, among other things,
the derivative instruments we can use, counterparty credit limits and contract authorization limits. Although our commodity
derivative instruments extend over a number of years, a significant portion of our commodity derivative instruments
economically hedge commodity price risk during the next twelve months. For information on the accounting for our derivative
instruments, see Note 2.
The following sections summarize the types of derivative instruments used by the Company to manage these market risks.
Commodity Price Risk
Regulated Utility Operations
Natural Gas
PA Gas Utility’s tariffs contain clauses that permit recovery of all prudently incurred costs of natural gas it sells to retail core-
market customers, including the cost of financial instruments used to hedge purchased gas costs. As permitted and agreed to by
the PAPUC pursuant to PA Gas Utility’s annual PGC filings, PA Gas Utility currently uses NYMEX natural gas futures and
option contracts to reduce commodity price volatility associated with a portion of the natural gas it purchases for its retail core-
market customers. See Note 9 for further information on the regulatory accounting treatment for these derivative instruments.
F-53
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Non-utility Operations
LPG
In order to manage market price risk associated with the Partnership’s fixed-price programs and to reduce the effects of short-
term commodity price volatility, the Partnership uses over-the-counter derivative commodity instruments, principally price
swap contracts. In addition, the Partnership and our UGI International operations also use over-the-counter price swap and
option contracts to reduce commodity price volatility associated with a portion of their forecasted LPG purchases.
Natural Gas
In order to manage market price risk relating to fixed-price sales contracts for physical natural gas, Midstream & Marketing
enters into NYMEX and over-the-counter natural gas futures and over-the-counter and ICE natural gas basis swap contracts. In
addition, Midstream & Marketing uses NYMEX and over-the-counter futures and options contracts to economically hedge
price volatility associated with the gross margin derived from the purchase and anticipated later near-term sale of natural gas
storage inventories. Outside of the financial market, Midstream & Marketing also uses ICE and over-the-counter forward
physical contracts. UGI International also uses natural gas futures and forward contracts to economically hedge market price
risk associated with a substantial portion of anticipated volumes under fixed-price sales contracts with its customers.
Electricity
In order to manage market price risk relating to fixed-price sales contracts for electricity, Midstream & Marketing enters into
electricity futures and forward contracts. Midstream & Marketing also uses NYMEX and over-the-counter electricity futures
contracts to economically hedge the price of a portion of its anticipated future sales of electricity from its electric generation
facilities. UGI International also uses electricity futures and forward contracts to economically hedge market price risk
associated with fixed-price sales and purchase contracts for electricity.
Interest Rate Risk
Certain of our long-term debt agreements have interest rates that are generally indexed to short-term market interest rates. In
order to fix the underlying short-term market interest rates, we may enter into pay-fixed, receive-variable interest rate swap
agreements and designate such swaps as cash flow hedges. In March 2023, in connection with the Energy Services Amended
Term Loan Credit Agreement, Energy Services terminated and settled its existing interest rate swap associated with the Energy
Services Term Loan Credit Agreement (see Note 6).
The remainder of our long-term debt is typically issued at fixed rates of interest. As this long-term debt matures, we typically
refinance such debt with new debt having interest rates reflecting then-current market conditions. In order to reduce market rate
risk on the underlying benchmark rate of interest associated with near- to medium-term forecasted issuances of fixed-rate debt,
from time to time we enter into IRPAs. We account for IRPAs as cash flow hedges. There were no unsettled IRPAs during any
of the periods presented. At September 30, 2023, the amount of pre-tax net gains associated with interest rate hedges expected
to be reclassified into earnings during the next twelve months is $46.
Foreign Currency Exchange Rate Risk
Forward Foreign Currency Exchange Contracts
In order to reduce the volatility in net income associated with our foreign operations, principally as a result of changes in the
USD exchange rate to the euro and British pound sterling, we enter into forward foreign currency exchange contracts. We layer
in these foreign currency exchange contracts over multi-year periods to eventually equal approximately 90% of anticipated UGI
International foreign currency earnings before income taxes. Because these contracts are not designated as hedging instruments,
realized and unrealized gains and losses on these contracts are recorded in “Other non-operating (expense) income, net” on the
Consolidated Statements of Income.
Net Investment Hedges
From time to time, we also enter into certain forward foreign currency exchange contracts to reduce the volatility of the USD
value of a portion of our UGI International euro-denominated net investments, including anticipated foreign currency
denominated dividends. We account for these foreign currency exchange contracts as net investment hedges and all changes in
F-54
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
the fair value of these contracts are reported in the cumulative translation adjustment component in AOCI. We use the spot rate
method to measure ineffectiveness of our net investment hedges.
Concurrent with the repayment of UGI International’s 3.25% Senior Notes on December 7, 2021, we settled an associated net
investment hedge having a notional value of €93. Additionally, in May 2022, we restructured certain net investment hedges
associated with anticipated foreign currency denominated dividends. Cash flows from these settlements are included in cash
flows from investing activities on the Consolidated Statements of Cash Flows.
Our euro-denominated long-term debt has also been designated as net investment hedges, representing a portion of our UGI
International euro-denominated net investment. We recognized pre-tax (losses) gains associated with these net investment
hedges in the foreign currency component of AOCI totaling $(57), $123 and $9 during Fiscal 2023, Fiscal 2022, and Fiscal
2021, respectively.
Quantitative Disclosures Related to Derivative Instruments
The following table summarizes by derivative type the gross notional amounts related to open derivative contracts at
September 30, 2023 and 2022 and the final settlement dates of the Company's open derivative contracts as of September 30,
2023, but excluding those derivatives that qualified for the NPNS exception:
Commodity Price Risk:
Type
Regulated Utility Operations
PA Gas Utility NYMEX natural gas futures and option
contracts
Non-utility Operations
LPG swaps
Natural gas futures, forward, basis swap, options and pipeline
contracts (a)
Electricity forward and futures contracts
Interest Rate Risk:
Interest rate swaps
Interest rate swaps
Foreign Currency Exchange Rate Risk:
Forward foreign currency exchange contracts
Net investment hedge forward foreign exchange contracts
Notional Amounts
(in millions)
September 30,
2023
2022
Units
Settlements
Extending Through
Dekatherms
September 2024
38
19
Gallons
February 2026
December 2027
727
338
874
363
Dekatherms
Kilowatt
hours
Euro
USD
USD
Euro
December 2026
1,260
2,446
March 2026
€
300 €
300
September 2026
$ 1,270 $ 1,358
September 2026
December 2026
$
€
425 $
256 €
465
411
(a) Amounts at September 30, 2023 and 2022 include contracts associated with certain UGI International energy marketing
business transactions (see Note 5).
Derivative Instrument Credit Risk
We are exposed to risk of loss in the event of nonperformance by our derivative instrument counterparties. Our derivative
instrument counterparties principally comprise large energy companies and major U.S. and international financial institutions.
We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include
evaluating and monitoring our counterparties’ financial condition, including their credit ratings, and entering into agreements
with counterparties that govern credit limits or entering into netting agreements that allow for offsetting counterparty receivable
and payable balances for certain financial transactions, as deemed appropriate.
We have concentrations of credit risk associated with derivative instruments and we evaluate the creditworthiness of our
derivative counterparties on an ongoing basis. As of September 30, 2023, the maximum amount of loss, based upon the gross
F-55
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
fair values of the derivative instruments, we would incur if these counterparties failed to perform according to the terms of their
contracts was $298. In general, many of our over-the-counter derivative instruments and all exchange contracts call for the
posting of collateral by the counterparty or by the Company in the forms of letters of credit, parental guarantees or cash. At
September 30, 2023, we had received cash collateral from derivative instrument counterparties totaling $40. In addition, we
may have offsetting derivative liabilities and certain accounts payable balances with certain of these counterparties, which
further mitigates the previously mentioned maximum amount of losses. Certain of the Partnership’s derivative contracts have
credit-risk-related contingent features that may require the posting of additional collateral in the event of a downgrade of the
Partnership’s debt rating. At September 30, 2023, if the credit-risk-related contingent features were triggered, the amount of
collateral required to be posted would not be material.
Offsetting Derivative Assets and Liabilities
Derivative assets and liabilities are presented net by counterparty on the Consolidated Balance Sheets if the right of offset
exists. We offset amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against
amounts recognized for derivative instruments executed with the same counterparty. Our derivative instruments include both
those that are executed on an exchange through brokers and centrally cleared and over-the-counter transactions. Exchange
contracts utilize a financial intermediary, exchange, or clearinghouse to enter, execute, or clear the transactions. Over-the-
counter contracts are bilateral contracts that are transacted directly with a third party. Certain over-the-counter and exchange
contracts contain contractual rights of offset through master netting arrangements, derivative clearing agreements, and contract
default provisions. In addition, the contracts are subject to conditional rights of offset through counterparty nonperformance,
insolvency or other conditions.
In general, many of our over-the-counter transactions and all exchange contracts are subject to collateral requirements. Types of
collateral generally include cash or letters of credit. Cash collateral paid by us to our over-the-counter derivative counterparties,
if any, is reflected in the table below to offset derivative liabilities. Cash collateral received by us from our over-the-counter
derivative counterparties, if any, is reflected in the table below to offset derivative assets. Certain other accounts receivable and
accounts payable balances recognized on the Consolidated Balance Sheets with our derivative counterparties are not included in
the table below but could reduce our net exposure to such counterparties because such balances are subject to master netting or
similar arrangements.
F-56
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Fair Value of Derivative Instruments
The following table presents the Company’s derivative assets and liabilities by type, as well as the effects of offsetting, as of
September 30:
Derivative assets:
Derivatives designated as hedging instruments:
Foreign currency contracts
Interest rate contracts
Derivatives subject to PGC and DS mechanisms:
Commodity contracts
Derivatives not designated as hedging instruments:
Commodity contracts (a)
Foreign currency contracts
Total derivative assets – gross
Gross amounts offset in the balance sheet
Cash collateral received
Total derivative assets – net
Derivative liabilities:
Derivatives subject to PGC and DS mechanisms:
Commodity contracts
Derivatives not designated as hedging instruments:
Commodity contracts (a)
Foreign currency contracts
Total derivative liabilities – gross
Gross amounts offset in the balance sheet
Cash collateral pledged
Total derivative liabilities – net
2023
2022
$
14 $
28
42
6
226
24
250
298
(124)
(40)
57
66
123
31
2,202
62
2,264
2,418
(295)
(398)
$
134 $
1,725
$
(8) $
(26)
(266)
(2)
(268)
(276)
124
53
(487)
(2)
(489)
(515)
295
7
$
(99) $
(213)
(a)
Includes certain derivative contracts associated with UGI International energy marketing business transactions (see Note 5)
that are classified as held for sale on the Consolidated Balance Sheets at September 30, 2023 and 2022. At September 30,
2023 and 2022, there were $10 and $295 of derivative assets, respectively, included in Held for sale assets and $12 and $19
of derivative liabilities, respectively, included in Held for sale liabilities, on the Consolidated Balance Sheets.
F-57
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Effects of Derivative Instruments
The following tables provide information on the effects of derivative instruments on the Consolidated Statements of Income
and changes in AOCI for Fiscal 2023, Fiscal 2022 and Fiscal 2021:
Gain (Loss)
Recognized in
AOCI
Gain (Loss)
Reclassified from
AOCI into Income
2023
2022
2021
2023
2022
2021
Location of Gain (Loss)
Reclassified from
AOCI into Income
Cash Flow Hedges:
Interest rate contracts
$
25 $
91 $
4 $
40 $
(7) $
(25) Interest expense
Net Investment Hedges:
Foreign currency contracts
$
(21) $
69 $
4
Gain (Loss)
Recognized in Income
2023
2022
2021
Location of
Gain (Loss)
Recognized in Income
Derivatives Not Designated as
Hedging Instruments:
Commodity contracts
Commodity contracts
Commodity contracts
Foreign currency contracts
(17) Revenues
1,545 Cost of sales
$
11 $
(9) $
(1,771) 1,181
2
(23)
1
63
5 Other operating income, net
9 Other non-operating (expense) income, net
Total
$ (1,781) $ 1,236 $ 1,542
We are also a party to a number of other contracts that have elements of a derivative instrument. However, these contracts
qualify for NPNS exception accounting because they provide for the delivery of products or services in quantities that are
expected to be used in the normal course of operating our business and the price in these contracts are based on an underlying
that is directly associated with the price of the product or service being purchased or sold. These contracts include, among
others, binding purchase orders, contracts that provide for the purchase and delivery, or sale, of energy products, and service
contracts that require the counterparty to provide commodity storage, transportation or capacity service to meet our normal
sales commitments.
Note 19 — Accumulated Other Comprehensive Income (Loss)
Other comprehensive income (loss) principally comprises (1) gains and losses on derivative instruments qualifying as cash flow
hedges, net of reclassifications to net income; (2) actuarial gains and losses on postretirement benefit plans, net of associated
amortization; and (3) foreign currency translation and long-term intra-company transaction adjustments.
F-58
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
The tables below present changes in AOCI, net of tax, during Fiscal 2023, Fiscal 2022 and Fiscal 2021:
AOCI - September 30, 2020
Other comprehensive income (loss) before reclassification
adjustments
Amounts reclassified from AOCI
Other comprehensive income (loss) attributable to UGI
AOCI - September 30, 2021
Other comprehensive income (loss) before reclassification
adjustments
Amounts reclassified from AOCI
Other comprehensive income (loss) attributable to UGI
AOCI - September 30, 2022
Other comprehensive income (loss) before reclassification
adjustments
$
Amounts reclassified from AOCI
Other comprehensive income (loss) attributable to UGI
Postretirement
Benefit
Plans
Derivative
Instruments
Foreign
Currency
Total
$
(26) $
(54) $
(67) $
(147)
7
2
9
3
18
21
(23)
—
(23)
(13)
20
7
$
(17) $
(33) $
(90) $
(140)
28
3
31
14
5
(2)
3
64
6
70
(341)
—
(341)
$
37 $
(431) $
16
(27)
(11)
132
—
132
(249)
9
(240)
(380)
153
(29)
124
AOCI - September 30, 2023
$
17
$
26 $
(299) $
(256)
Note 20 — Other Operating Income, Net and Other Non-Operating Income (Expense), Net
Other Operating Income, Net
Other operating income, net, comprises the following:
Finance charges
Gains on sales of fixed assets, net (a)
Gain on early derivative termination
Foreign currency transaction gains (losses)
Cylinder deposit income
Interest and interest-related income
Other, net
Total other operating income, net
2023
2022
2021
$
17 $
61
—
7
23
6
18
18 $
33
—
(5)
18
1
14
$
132 $
79 $
(a) Fiscal 2023 includes a $15 gain on the sale of UGI Corporation’s headquarters building in August 2023.
Other Non-Operating (Expense) Income, Net
Other non-operating (expense) income, net comprises the following:
(Losses) gains on foreign currency contracts, net
Amortization of excluded components of certain net investment hedges
Pension and other postretirement plans non-service income, net
Total other non-operating (expense) income, net
$
$
(23) $
7
9
(7) $
63 $
7
5
75 $
2023
2022
2021
17
11
5
—
9
—
(9)
33
9
2
1
12
F-59
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Note 21 — Equity Method Investments
Equity method investments which are included within “Other assets” on the Consolidated Balance Sheets, comprises the
following as of September 30:
Investees
2023
2022
2023
2022
Carrying Value
Ownership Interest
Midstream & Marketing
Aurum Renewables
Pine Run
MBL Bioenergy
Other
Total Midstream & Marketing
UGI International
Total investments in equity method investees
$
$
45 $
77
122
20
264
35
299 $
—
68
23
18
109
21
130
40%
49%
99.99%
various
N/A
49%
99.99%
various
various
various
Aurum Renewables. In January 2023, the Company, through its wholly owned indirect subsidiary, entered into a joint venture
agreement with a third party Archaea Holdings, LLC (“Archaea”). The primary purpose of the joint venture, Aurum
Renewables LLC, is to upgrade landfill gas from the Commonwealth Environmental Systems landfill located in Hegins,
Pennsylvania to pipeline-quality RNG. Pursuant to this agreement, the Company contributed its existing 11 megawatt landfill
gas-to-electricity facility, as non-cash consideration, in return for a 40% equity interest in the joint venture. Once complete, the
project is expected to have the capacity to produce approximately 5,000 MMBtu per day of pipeline-quality RNG. Archaea will
lead the development, engineering, construction, and operation of the new RNG facility, and Energy Services will take a lead
role in marketing the RNG produced by the facility.
Pine Run. Pine Run is a company jointly owned by UGI Pine Run, LLC (a wholly-owned subsidiary of Energy Services) and
Stonehenge Energy Resources. In February 2021, Pine Run completed the acquisition of Pine Run Midstream, an affiliate of
PennEnergy, and minority partners for approximately $205. The acquisition was funded by cash contributions by UGI Pine
Run, LLC and Stonehenge Energy Resources totaling approximately $115, and the issuance by Pine Run of $90 of long-term
debt. Pine Run Midstream operates dry gas gathering pipelines and compression assets in western Pennsylvania. Pine Run is
accounted for as an equity method investment as we have the ability to exercise significant influence, but not control, over the
entity.
MBL Bioenergy. MBL Bioenergy is a company jointly owned by UGI Dakota, LLC (a wholly-owned subsidiary of Energy
Services), Sevana Bioenergy and a subsidiary of California Bioenergy. The sole purpose of MBL Bioenergy is the development
of RNG projects in South Dakota comprising three dairy waste anaerobic digester systems. MBL Bioenergy is a variable
interest entity whereby the Company has determined that it is not the primary beneficiary since it does not direct the activities
that most significantly impact the entity’s economic performance. In addition to consent being required for all equity holders for
significant activities, such as major procurement, construction contracting and offtake, our partners manage the day-to-day
project management and operations for MBL Bioenergy and its subsidiaries.
Pennant. During the fourth quarter of Fiscal 2022, Energy Services completed the Pennant Acquisition and acquired the
remaining 53% of the equity interests in Pennant. Prior to the Pennant Acquisition, the Company’s investment in Pennant was
accounted for as an equity method investment as we had the ability to exercise significant influence, but not control, over the
entity. The acquisition of the remaining interests was accounted for as an acquisition of assets, and the purchase price of
approximately $61 was primarily allocated to property, plant and equipment. In connection with the acquisition of the
controlling financial interest in Pennant, the Company recognized an other-than-temporary pre-tax impairment charge of $44
related to its then existing 47% membership interest, which amount is reflected in “Income (loss) from equity investees” in the
Consolidated Statements of Income.
PennEast. UGI PennEast, LLC and four other members each hold a 20% membership interest in PennEast. PennEast was
formed to construct an approximate 120-mile natural gas pipeline from Luzerne County, Pennsylvania to the Trenton-
F-60
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Woodbury interconnection in New Jersey. PennEast is accounted for as an equity method investment as we have the ability to
exercise significant influence, but not control, over PennEast.
During the third-quarter of Fiscal 2021, the partners of the PennEast project re-assessed the remaining legal and regulatory
contingencies which needed to be resolved before construction could commence. Based on the significant remaining legal
challenges and the expected further delays in obtaining necessary regulatory approvals, which were preventing the
commencement of construction and commercial operation of the project, the Company concluded that its investment in
PennEast was impaired at June 30, 2021, and that such impairment was other-than-temporary. The estimated fair value of the
Company’s investment in PennEast was measured using probability-weighted cash flows under an expected present value
technique based on management's estimates and assumptions regarding the likelihood of certain outcomes (and the related
timing) that would be used by market participants at the time. Based upon this analysis, the Company recognized an other-than-
temporary pre-tax impairment charge of $93 in June 2021, which is reflected in “Income (loss) from equity investees” in the
Consolidated Statements of Income.
In September 2021, the PennEast partners announced that further development of the project is no longer supported and all
further development has ceased. Following this announcement, the estimated fair value of the remaining assets of the project
was assessed using the liquidation value of equipment held by PennEast. Such assessment did not result in a material change in
the carrying value and no further impairment loss was recognized. The estimated fair value of the Company’s investment in
PennEast was determined to be a Level 2 measurement within the fair value hierarchy. During the fourth quarter of Fiscal 2022,
the Company recognized $9 of equity earnings related to the ongoing liquidation of PennEast assets. The carrying value of our
investment in PennEast at September 30, 2023 and 2022 was not material.
Other Equity Method Investments. The carrying values of our other equity investments totaled $55 and $39 at September 30,
2023 and 2022, respectively, and principally comprise a number of investments in biomass and other renewable energy projects
at Energy Services and an investment in a renewable energy joint venture at UGI International.
Our maximum exposure to loss related to these investments is limited to the amount invested.
F-61
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Note 22 — Segment Information
Our operations comprise four reportable segments generally based upon products or services sold, geographic location and
regulatory environment: (1) AmeriGas Propane; (2) UGI International; (3) Midstream & Marketing; and (4) Utilities.
AmeriGas Propane derives its revenues principally from the sale of propane and related equipment and supplies to retail
customers in all 50 states. UGI International derives its revenues principally from the distribution of LPG to retail customers
throughout much of Europe. In addition, UGI International derives revenue from energy marketing business that primarily
markets natural gas and electricity to customers in France, the Netherlands and, prior to its sales, in Belgium and the United
Kingdom (see Note 5 regarding the sale and wind-down of the UGI International energy marketing business). Midstream &
Marketing derives its revenues principally from the sale of natural gas, liquid fuels and electricity as well as revenues and fees
from storage, pipeline transportation, natural gas gathering, and natural gas and RNG production activities primarily in the Mid-
Atlantic region of the U.S. eastern Ohio, the panhandle of West Virginia and California. Midstream & Marketing also derives
revenues from the sale of electricity through PJM, a regional electricity transmission organization in the eastern U.S. Our
Utilities segment primarily derives its revenues from the sale and distribution of natural gas to customers in eastern and central
Pennsylvania and subsequent to the Mountaineer Acquisition in September 2021, in West Virginia (see Note 5). To a much
lesser extent, Utilities also derives revenues from the sale and distribution of electricity in two northeastern Pennsylvania
counties.
Corporate & Other includes certain items that are excluded from our CODM’s assessment of segment performance (see below
for further details on these items). Corporate & Other also includes the net expenses of UGI’s captive general liability insurance
company, UGI’s corporate headquarters facility and UGI’s unallocated corporate and general expenses as well as interest
expense on UGI debt that is not allocated. Corporate & Other assets principally comprise cash and cash equivalents of UGI and
its captive insurance company, and UGI corporate headquarters’ assets.
The accounting policies of our reportable segments are the same as those described in Note 2. Our CODM evaluates the
performance of all of our reportable segments based upon earnings before interest expense and income taxes, excluding the
items noted below.
No single customer represents more than ten percent of our consolidated revenues. In addition, all of our reportable segments’
revenues, other than those of UGI International, are derived from sources within the United States, and all of our reportable
segments’ long-lived assets, other than those of UGI International, are located in the United States. The amounts of revenues
and long-lived assets associated with our operations in France represent approximately 20% and 10% of the respective
consolidated amounts.
Total
Elim-
inations
AmeriGas
Propane
UGI
International
Midstream
&
Marketing
Utilities
Corporate &
Other (a)
2023
Revenues from external customers
Intersegment revenues
Cost of sales
Operating (loss) income
$
$
$
$
Income (loss) from equity investees
Loss on extinguishments of debt
Other non-operating (loss) income, net
(Loss) earnings before interest expense and
income taxes
Interest expense
Income tax benefit (expense)
Net (loss) income attributable to UGI
Depreciation and amortization
Total assets
Short-term borrowings
Capital expenditures (including the effects of
accruals)
Investments in equity investees
$
$
$
$
$
$
$
$
$
$
2,965 $
1,596 $
1,780
— $
251 $
2,045 $
1,360 $
215 $
285 $
(4)
—
23
234
(37)
(25)
6
—
—
291
(45)
(53)
172 $
116 $
193 $
86 $
3,105 $
3,160 $
214 $
103 $
129 $
35 $
130 $
264 $
74
953
357
—
—
8
365
(82)
(64)
219
152
5,691
332
563
—
$
$
$
$
$
$
$
$
$
$
6
1
1,654
(2,569)
—
(9)
(38)
(2,616)
(52)
511
(2,157)
1
203
—
—
—
—
1,250
268
—
—
—
268
(163)
(34)
71
177
3,415
—
134
—
8,928
$ —
$
2,581
—
6,937
$
$
(326) (b) $
(325) (b) $
(1,444) $ —
$
2
(9)
(7)
(1,458)
(379)
335
—
—
—
—
—
—
$
$
(1,502) $ —
$ —
532
$ 15,401
$
(173)
$
$
$
649
$ —
956
299
$ —
$
$
$
$
$
$
F-62
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Total
Elim-
inations
AmeriGas
Propane
UGI
International
Midstream
&
Marketing
Utilities
Corporate &
Other (a)
2022
Revenues from external customers
$ 10,106
$ —
$
2,943
Intersegment revenues
Cost of sales
Operating income
$
$
$
—
5,973
1,666
$
$
(477) (b) $
(474) (b) $
$ —
$
(Loss) income from equity investees
Loss on extinguishments of debt
Other non-operating income, net
Earnings before interest expense and income
taxes
Interest expense
Income tax expense
Noncontrolling interests’ net (income) loss
Net income attributable to UGI
Depreciation and amortization
Total assets
Short-term borrowings
Capital expenditures (including the effects of
accruals)
Investments in equity investees
2021
Revenues from external customers
Intersegment revenues
Cost of sales
Operating income
(Loss) income from equity investees
Other non-operating income, net
Earnings before interest expense and income
taxes
Interest expense
Income tax expense
Net income attributable to UGI
Depreciation and amortization
Total assets
(14)
(11)
75
1,716
(329)
(313)
(1)
—
—
—
—
—
—
—
$
$
1,073
$ —
518
$ —
$ 17,575
$
(203)
368
$ —
835
130
$ —
$ —
$
$
$
$
$
$
$
(63)
12
2,299
(310)
(522)
—
—
—
—
—
$
$
1,467
$ —
502
$ —
$ 16,723
$
(241)
Short-term borrowings
Capital expenditures (including the effects of
accruals)
Investments in equity investees
$
$
$
367
$ —
674
174
$ —
$ —
$
$
$
$
$
$
$
$
$
$
$
$
7,447
$ —
$
2,614
—
2,614
2,350
$
$
(291) (b) $
(288) (b) $
$ —
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,686 $
1,957 $
1,515
— $
369 $
2,751 $
1,876 $
237 $
246 $
(2)
—
19
254
(28)
(50)
(1)
23
—
—
269
(41)
(65)
—
175 $
116 $
163 $
79 $
4,610 $
3,286 $
1 $
— $
107 $
20 $
38 $
109 $
105
798
327
—
—
9
336
(65)
(65)
—
206
144
5,354
236
562
—
2,651 $
1,182 $
1,015
— $
224 $
1,598 $
1,033 $
314 $
160 $
—
3
317
(27)
(69)
30
—
190
(42)
(41)
221 $
134 $
107 $
76 $
4,421 $
3,010 $
— $
— $
107 $
11 $
43 $
163 $
64
458
241
—
1
242
(56)
(42)
144
119
4,859
197
394
—
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5
3
(591)
549
(35)
(11)
47
550
(35)
(98)
—
417
2
196
—
—
1
(15)
3
(1,404)
1,250
(93)
8
1,165
(26)
(312)
827
—
189
—
—
—
—
1,613
307
—
—
—
307
(160)
(35)
—
112
177
4,332
131
128
—
—
1,217
385
—
—
385
(159)
(58)
168
173
4,485
170
130
—
(a) Corporate & Other includes specific items attributable to our reportable segments that are not included in the segment
profit measures used by our CODM in assessing our reportable segments’ performance or allocating resources. The
following table presents such pre-tax gains (losses) which have been included in Corporate & Other, and the reportable
segments to which they relate, for Fiscal 2023, Fiscal 2022 and Fiscal 2021:
F-63
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Location on Income Statement
AmeriGas
Propane
UGI
International
Midstream
& Marketing
2023
Net gains on commodity derivative instruments not
associated with current-period transactions
Revenues
Net losses on commodity derivative instruments not
associated with current-period transactions
AmeriGas performance enhancement
Loss on extinguishment of debt
Unrealized losses on foreign currency derivative
instruments
Loss associated with impairment of AmeriGas Propane
goodwill
Costs associated with exit of the UGI International
energy marketing business
Costs associated with exit of the UGI International
energy marketing business
Cost of Sales
Operating and administrative
expenses
Loss on extinguishments of debt
Other non-operating (expense)
income, net
Impairment of goodwill
Revenues/Operating and
administrative expenses
Loss on disposal of UGI
International energy marketing
business
2022
Net gains (losses) on commodity derivative instruments
not associated with current-period transactions
Net (losses) gains on commodity derivative instruments
not associated with current-period transactions
Net gains on commodity derivative instruments not
associated with current-period transactions
Restructuring costs
Loss on extinguishment of debt
Unrealized gains on foreign currency derivative
instruments
AmeriGas performance enhancement
Costs associated with exit of the UGI International
energy marketing business
Impairments associated with certain equity method
investments
2021
Net losses on commodity derivative instruments not
associated with current-period transactions
Net gains on commodity derivative instruments not
associated with current-period transactions
Unrealized gains on foreign currency derivative
instruments
Business transformation expenses
Impairment of customer relationship intangible
Impairments associated with certain equity method
investments
Revenues
Cost of sales
Other operating income, net
Operating and administrative
expenses
Loss on extinguishments of debt
Other non-operating (expense)
income, net
Operating and administrative
expenses
Operating and administrative
expenses
Income (loss) from equity
investees
Revenues
Cost of Sales
Other non-operating (expense)
income, net
Operating and administrative
expenses
Operating and administrative
expenses
Income (loss) from equity
investees
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
— $
4 $
6
(16) $
(1,402) $
(236)
(24) $
(9) $
— $
— $
— $
(38) $
(656) $
— $
— $
(27) $
— $
(221) $
—
—
—
—
—
—
— $
9 $
(4)
(185) $
797 $
(21)
— $
2 $
(16) $
(9) $
— $
(11) $
— $
50 $
(5) $
— $
— $
(5) $
—
(1)
—
—
—
—
— $
— $
(35)
— $
— $
(15)
167 $
1,065 $
173
— $
8 $
(54) $
(33) $
— $
(20) $
—
—
—
— $
— $
(93)
(b) Represents the elimination of intersegment transactions principally among Midstream & Marketing, Utilities and AmeriGas
Propane.
F-64
UGI Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(Currency in millions, except per share amounts and where indicated otherwise)
Note 23 — Global LPG Business Transformation Initiatives
AmeriGas Propane and UGI International. Beginning in Fiscal 2019, we began executing on multi-year business
transformation initiatives at our AmeriGas Propane and UGI International business segments. These initiatives are designed to
improve long-term operational performance by, among other things, reducing costs and improving efficiency in the areas of
sales and marketing, supply and logistics, operations, purchasing, and administration. In addition, these business transformation
initiatives focus on enhancing the customer experience through, among other things, enhanced customer relationship
management and an improved digital customer experience. During Fiscal 2021 we incurred $87 of costs principally comprising
consulting, advisory, marketing and employee-related costs. These costs are primarily reflected in “Operating and
administrative expenses” on the Consolidated Statements of Income. These previously announced business transformation
initiatives were substantially complete by the end of Fiscal 2021.
Corporate Services. Beginning in Fiscal 2020, we initiated a transformation project focused on our support functions including:
finance, procurement, human resources, and information technology. This initiative will standardize processes and activities
across our global platform, while leveraging the use of best practices and efficiencies between our businesses. In connection
with this initiative, during Fiscal 2023, 2022 and 2021, we incurred costs of $10, $9, and $14, respectively, that are reflected in
“Operating and administrative expenses” on the Consolidated Statements of Income. This transformation project was
substantially complete by the end of Fiscal 2023.
F-65
UGI CORPORATION
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
BALANCE SHEETS
(Millions of dollars)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable – related parties
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Investments in subsidiaries
Other assets
Total assets
LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt
Accounts and notes payable
Accrued liabilities
Total current liabilities
Long-term debt
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (Note 1)
Equity:
Preferred Stock, without par value (authorized - 5,000,000; issued - 220,000 and 220,000,
respectively)
Common Stock, without par value (authorized – 450,000,000 shares; issued – 210,906,052
and 210,560,494 shares, respectively)
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total common stockholders’ equity
September 30,
2023
2022
$
7 $
11
23
41
—
5,343
143
5,527 $
38 $
28
39
105
969
67
$
$
20
24
20
64
1
7,035
97
7,197
125
20
51
196
889
46
1,141
1,131
167
162
1,503
3,027
(256)
(55)
4,386
1,483
4,841
(380)
(40)
6,066
7,197
Total liabilities and common stockholders’ equity
$
5,527 $
Note 1 — Commitments and Contingencies:
At September 30, 2023, UGI Corporation had agreed to indemnify the issuers of $105 of surety bonds issued on behalf of
certain UGI subsidiaries. UGI Corporation is authorized to guarantee up to $475 of obligations to suppliers and customers of
Energy Services and subsidiaries of which $358 of such obligations were outstanding as of September 30, 2023.
Scheduled principal repayments of long-term debt include $38 in Fiscal 2024 and $973 in Fiscal 2025.
S-1
UGI CORPORATION
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF INCOME
(Millions of dollars, except per share amounts)
Revenues
Costs and expenses:
Operating and administrative expenses
Other operating income, net (a)
Operating loss
Pension and other postretirement plans non-service expense
Interest expense
Loss before income taxes
Income tax (benefit) expense
Loss before equity in income of unconsolidated subsidiaries
Year Ended September 30,
2023
2022
2021
$
— $
— $
—
95
(83)
12
(12)
—
(52)
(64)
(13)
(51)
74
(63)
11
(11)
(3)
(35)
(49)
—
(49)
94
(65)
29
(29)
—
(27)
(56)
9
(65)
1,532
1,467
7
—
Equity in (loss) income of unconsolidated subsidiaries
(1,451)
1,122
Net (loss) income attributable to UGI Corporation
$
(1,502) $
1,073 $
Other comprehensive (loss) income
Equity in other comprehensive income (loss) of unconsolidated subsidiaries
(8)
132
34
(274)
Comprehensive (loss) income attributable to UGI Corporation
(Loss) earnings per common share attributable to UGI Corporation
stockholders:
Basic
Diluted
Weighted - average common shares outstanding (thousands):
Basic
Diluted
$
$
$
(1,378) $
833 $
1,474
(7.16) $
(7.16) $
5.11 $
4.97 $
7.02
6.92
209,806
209,806
209,940
215,821
209,063
212,126
(a) UGI provides certain financial and administrative services to certain of its subsidiaries. UGI bills these subsidiaries
monthly for all direct expenses incurred by UGI on behalf of its subsidiaries as well as allocated shares of indirect
corporate expense incurred or paid with respect to services provided by UGI. The allocation of indirect UGI corporate
expenses to certain of its subsidiaries utilizes a weighted, three-component formula comprising revenues, operating
expenses, and net assets employed and considers the relative percentage of such items for each subsidiary to the total of
such items for all UGI operating subsidiaries for which general and administrative services are provided. Management
believes that this allocation method is reasonable and equitable to its subsidiaries. These billed expenses are classified as
“Other operating income, net” in the Statements of Income above.
S-2
UGI CORPORATION
SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(Millions of dollars)
Year Ended September 30,
2023
2022
2021
NET CASH PROVIDED BY OPERATING ACTIVITIES (a)
$
636 $
485 $
300
CASH FLOWS FROM INVESTING ACTIVITIES:
Return of capital distributions
Net investments in unconsolidated subsidiaries
Net cash used by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on UGI Common Stock
Issuances of debt, net of issuance costs
Repayments of long-term debt
Issuance of Preferred Stock, net of issuance costs
Issuances of UGI Common Stock
Repurchases of UGI Common Stock
Payments on Purchase Contracts
Net cash (used) provided by financing activities
Cash and cash equivalents (decrease) increase
Cash and cash equivalents:
End of year
Beginning of year
Cash and cash equivalents (decrease) increase
—
(309)
(309)
(308)
327
(333)
—
12
(22)
(16)
(340)
(13) $
7 $
20
(13) $
175
(390)
(215)
(296)
597
(530)
—
19
(38)
(16)
(264)
—
(401)
(401)
(282)
483
(385)
213
19
—
—
48
6 $
(53)
20 $
14
6 $
14
67
(53)
$
$
$
(a)
Includes dividends received from unconsolidated subsidiaries of $680, $506 and $354 for the years ended September 30,
2023, 2022 and 2021, respectively.
S-3
UGI CORPORATION AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(Millions of dollars)
Balance at
beginning
of year
Charged
(credited)
to costs and
expenses
Other
Balance at
end of
year
Year Ended September 30, 2023
Reserves deducted from assets in the consolidated
balance sheet:
Allowance for doubtful accounts
Other reserves:
Deferred tax assets valuation allowance
Year Ended September 30, 2022
Reserves deducted from assets in the consolidated
balance sheet:
Allowance for doubtful accounts
Other reserves:
Deferred tax assets valuation allowance
Year Ended September 30, 2021
Reserves deducted from assets in the consolidated
balance sheet:
Allowance for doubtful accounts
Other reserves:
Deferred tax assets valuation allowance
$
$
$
$
$
$
64 $
69 $
(62) (1) $
71
141 $
(38) $
38 (2) $
141
53 $
61 $
(50) (1) $
64
138 $
(14) $
17 (2) $
141
42 $
36 $
(25) (1) $
53
105 $
23 $
10 (2) $
138
(1) Uncollectible accounts written off, net of recoveries.
(2) Primarily a notional interest deduction valuation allowance adjustment.
S-4
I, Roger Perreault, certify that:
CERTIFICATION
EXHIBIT 31.1
1.
I have reviewed this annual report on Form 10-K of UGI Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: November 28, 2023
/s/ Roger Perreault
Roger Perreault
President and Chief Executive Officer of
UGI Corporation
EXHIBIT 31.2
I, Sean P. O'Brien, certify that:
CERTIFICATION
1.
I have reviewed this annual report on Form 10-K of UGI Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: November 28, 2023
/s/ Sean P. O'Brien
Sean P. O'Brien
Chief Financial Officer of UGI Corporation
Certification by the Chief Executive Officer and Chief Financial Officer
Relating to a Periodic Report Containing Financial Statements
EXHIBIT 32
I, Roger Perreault, Chief Executive Officer, and I, Sean P. O'Brien, Chief Financial Officer, of UGI
Corporation, a Pennsylvania corporation (the “Company”), hereby certify that to our knowledge:
(1) The Company’s annual report on Form 10-K for the period ended September 30, 2023 (the “Form 10-K”)
fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended;
and
(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition
and results of operations of the Company.
CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICER
¬¬¬
/s/Roger Perreault
Roger Perreault
/s/ Sean P. O'Brien
Sean P. O'Brien
Date: November 28, 2023
Date: November 28, 2023
Corporate Information
Officers
Mario Longhi
Interim President and Chief Executive Officer, UGI Corporation
Sean O’Brien
Chief Financial Officer, UGI Corporation
Robert F. Beard
Chief Operations Officer, UGI Corporation
Kathleen Shea-Ballay
General Counsel and Chief Legal Officer, UGI Corporation
John Koerwer
Chief Information Officer, UGI Corporation
Judy A. Zagorski
Chief Human Resources Officer, UGI Corporation
Jean Felix Tematio Dontsop
Vice President, Chief Accounting Officer and
Corporate Controller, UGI Corporation
Hans G. Bell
President, UGI Utilities Inc.
Joseph L. Hartz
President, UGI Energy Services, LLC
C. David Lokant
President, Mountaineer Gas Company
Board of Directors
Frank S. Hermance
Chair of the Board since January 2020; Director since September 2011
M. Shawn Bort
Director since January 2009
Theodore A. Dosch
Director since July 2017
Alan N. Harris
Director since March 2018
Kelly A. Romano
Director since January 2019
William J. Marrazzo
Director since September 2019
Mario Longhi
Director since April 2020
Cindy J. Miller
Director since September 2020
Santiago Seage
Director since September 2023
Annual Meeting
The Annual Meeting of Shareholders will be held virtually at 9:00 a.m. Eastern
Standard Time on Friday, January 26, 2024. Interested parties may listen to the
audio webcast at www.virtualshareholdermeeting.com/UGI2024
Investor Services
Transfer Agent and Registrar
Shareholder communications regarding transfer of shares, book-entry
shares, lost certificates, lost dividend checks or changes of address should
be directed to:
By Mail:
Computershare Investor Services
P.O. Box 43006
Providence, RI 02940-3066
By Overnight Delivery:
Computershare Investor Services
150 Royall St., Suite 101
Canton, MA 02021
800-850-1774 (U.S. and Canada), 312-360-5100 (other countries)
Shareholders can also view real-time account information and request
transfer agent services online at the Computershare Investor Services website:
www.computershare.com/investor. Computershare Investor Services can be
accessed through telecommunications devices for the hearing impaired by
calling: 800-822-2794 (U.S. and Canada), 312-588-4110 (other countries)
Dividend Reinvestment and Direct Stock Purchase Plan
The plan is sponsored and administered by Computershare, N.A. and provides
investors with a simple and convenient method to purchase shares of UGI
Common Stock. Shareholders may use all or any part of the dividends
they receive to purchase shares of Common Stock. The plan also permits
participants to make monthly cash purchases of Common Stock not exceeding
$75,000 per year. Investors may become participants by making an initial cash
investment of at least $1,000 but not more than $75,000. All such purchases
are without brokerage commissions or service charges. For information about
the Plan, write or call:
By Mail:
Computershare Investor Services
P.O. Box 43006
Providence, RI 02940-3066
By Overnight Delivery:
Computershare Investor Services
150 Royall St., Suite 101
Canton, MA 02021
800-850-1774 (U.S. and Canada), 312-360-5100 (other countries)
Plan information is also available on the Computershare Investor Services
website: www.computershare.com/investor
Investor Relations
Securities analysts, portfolio managers and other members of the professional
investment community should direct inquiries about the Company to:
Senior Director, Investor Relations
UGI Corporation
P.O. Box 858
Valley Forge, PA 19482
610-337-1000
News, Earnings, Financial Reports and Governance Documents
Comprehensive news, webcast events, governance documents and other
information about UGI is available via the internet at https://www.ugicorp.com.
You can request reports filed with the SEC and corporate governance
documents, including the Company’s Code of Business Conduct and Ethics,
Principles of Corporate Governance, and the charters for the Company’s Board
Committees, free of charge by writing to Senior Director, Investor Relations,
UGI Corporation, at the address above.
P.O. Box 858
Valley Forge, PA 19482
You can obtain news and other information about
UGI Corporation at www.ugicorp.com