AMERIGAS PARTNERS, L.P.
AND SUBSIDIARIES
QUARTERLY REPORT
for the three and six months ended March 31, 2024 and 2023
AmeriGas Partners, L.P. ("AmeriGas Partners") is an indirect, wholly owned subsidiary of UGI Corporation ("UGI"), with no class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result, AmeriGas Partners is not subject to the current and periodic reporting requirements of the Exchange Act. This quarterly report is provided to bondholders for informational purposes only pursuant to contractual requirements under certain indentures governing the rights of bondholders, and shall not constitute an offer to sell or the solicitation of an offer to buy any securities. As a result, none of UGI, AmeriGas Partners nor any of their respective affiliates accepts, and each specifically disclaims, any liability under federal securities laws whatsoever in connection with the provision of this quarterly report, including any liability under the Exchange Act or the Securities Act of 1933, as amended.
TABLE OF CONTENTS
Page | |
Condensed Consolidated Balance Sheets as of March 31, 2024, September 30, 2023 and March 31, 2023 | |
Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2024 and 2023 | |
Management's Discussion and Analysis of Financial Condition and Results of Operations | 15 |
Controls and Procedures | 24 |
Legal Proceedings | 24 |
Risk Factors | 24 |
Signatures | 25 |
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GLOSSARY OF TERMS AND ABBREVIATIONS
Terms and abbreviations used in this Quarterly Report are defined below:
AmeriGas Partners, L.P. and Related Entities
AmeriGas OLP - AmeriGas Propane, L.P., the principal operating subsidiary of AmeriGas Partners
AmeriGas Partners - AmeriGas Partners, L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of UGI Energy Services - UGI Energy Services, LLC, a wholly owned subsidiary of Enterprises
Enterprises - UGI Enterprises, LLC, a wholly owned subsidiary of UGI
General Partner - AmeriGas Propane, Inc., an indirect wholly owned subsidiary of UGI and the general partner of AmeriGas Partners
Partnership - AmeriGas Partners, AmeriGas OLP and all of their subsidiaries collectively
UGI - UGI Corporation or, collectively, UGI Corporation and its consolidated subsidiaries
Other Terms and Abbreviations
2023 Annual Report - AmeriGas Partners' Annual Report for the fiscal year ended September 30, 2023 2023 three-monthperiod - Three months ended March 31, 2023
2023 six-monthperiod - Six months ended March 31, 2023
2024 three-monthperiod - Three months ended March 31, 2024 2024 six-monthperiod - Six months ended March 31, 2024
2022 AmeriGas OLP Credit Agreement - Revolving credit agreement entered into by AmeriGas OLP on September 28, 2022 and scheduled to expire in September 2026
5.50% Senior Notes - An underwritten private offering of $700 million aggregate principal amount of notes due May 2025, co- issued by AmeriGas Partners and AmeriGas Finance Corp.
5.875% Senior Notes - An underwritten private offering of $675 million aggregate principal amount of notes due August 2026, co-issued by AmeriGas Partners and AmeriGas Finance Corp.
5.75% Senior Notes - An underwritten private offering of $525 million aggregate principal amount of notes due May 2027, co- issued by AmeriGas Partners and AmeriGas Finance Corp.
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
ASC - Accounting Standards Codification
ASC 606 - ASC 606, "Revenue from Contracts with Customers"
COVID-19- A novel strain of coronavirus disease discovered in 2019
FDIC - Federal Deposit Insurance Corporation
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
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GAAP - U.S. generally accepted accounting principles MGP - Manufactured gas plant
NOAA - National Oceanic and Atmospheric Administration NPNS - Normal purchase and normal sale
NYDEC - New York State Department of Environmental Conservation PRP - Potentially responsible party
ROD - Record of Decision
U.S. - United States of America
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Millions of dollars)
March 31, | September 30, | March 31, | ||||||
2024 | 2023 | 2023 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 108 | $ | 48 | $ | 37 | ||
Accounts receivable (less allowances for doubtful accounts of $27, | ||||||||
$21 and $22, respectively) | 319 | 240 | 348 | |||||
Inventories | 162 | 155 | 172 | |||||
Prepaid expenses and other current assets | 68 | 66 | 73 | |||||
Total current assets | 657 | 509 | 630 | |||||
Property, plant and equipment (less accumulated depreciation of $1,653, | ||||||||
$1,615 and $1,562, respectively) | 989 | 1,025 | 1,020 | |||||
Goodwill | 1,354 | 1,354 | 2,004 | |||||
Intangible assets, net | 85 | 100 | 116 | |||||
Other assets | 367 | 386 | 345 | |||||
Total assets | $ | 3,452 | $ | 3,374 | $ | 4,115 | ||
LIABILITIES AND PARTNER'S CAPITAL | ||||||||
Current liabilities: | ||||||||
Short-term borrowings | - | - | 30 | |||||
Accounts payable | 151 | 139 | 204 | |||||
Customer deposits and advances | 57 | 81 | 59 | |||||
Other current liabilities | 242 | 260 | 259 | |||||
Total current liabilities | 450 | 480 | 552 | |||||
Long-term debt | 2,350 | 2,385 | 2,565 | |||||
Other noncurrent liabilities | 349 | 368 | 333 | |||||
Total liabilities | 3,149 | 3,233 | 3,450 | |||||
Commitments and contingencies (Note 6) | ||||||||
Partner's capital | 303 | 141 | 665 | |||||
Total liabilities and partner's capital | $ | 3,452 | $ | 3,374 | $ | 4,115 | ||
See accompanying notes to condensed consolidated financial statements. | ||||||||
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
(unaudited) | |||||||||||
(Millions of dollars) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Revenues: | |||||||||||
Propane | $ | 726 | $ | 800 | $ | 1,281 | $ | 1,485 | |||
Other | 69 | 67 | 143 | 148 | |||||||
795 | 867 | 1,424 | 1,633 | ||||||||
Costs and expenses: | |||||||||||
Cost of sales - propane (excluding depreciation and amortization | 311 | 404 | 581 | 787 | |||||||
shown below) | |||||||||||
Cost of sales - other (excluding depreciation and amortization | 17 | 19 | 36 | 46 | |||||||
shown below) | |||||||||||
Operating and administrative expenses | 264 | 269 | 514 | 520 | |||||||
Depreciation and amortization | 44 | 45 | 88 | 89 | |||||||
Other operating income, net | (8) | (7) | (19) | (17) | |||||||
628 | 730 | 1,200 | 1,425 | ||||||||
Operating income | 167 | 137 | 224 | 208 | |||||||
Interest expense | (40) | (39) | (81) | (82) | |||||||
Income before income taxes | 127 | 98 | 143 | 126 | |||||||
Income tax expense | (1) | (1) | (1) | (1) | |||||||
Net income | $ | 126 | $ | 97 | $ | 142 | $ | 125 | |||
See accompanying notes to condensed consolidated financial statements.
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
(unaudited) | |||||
(Millions of dollars) | |||||
Six Months Ended | |||||
March 31, | |||||
2024 | 2023 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income | $ | 142 | $ | 125 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | 88 | 89 | |||
Provision for uncollectible accounts | 20 | 16 | |||
Change in unrealized gains and losses on derivatives instruments | (28) | 4 | |||
Other, net | (2) | 6 | |||
Net change in: | |||||
Accounts receivable | (93) | (116) | |||
Inventories | (7) | 52 | |||
Accounts payable | 6 | (37) | |||
Derivative instruments collateral deposits received (paid) | 2 | (7) | |||
Other current assets | 3 | 16 | |||
Other current liabilities | (26) | (19) | |||
Net cash provided by operating activities | 105 | 129 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Expenditures for property, plant and equipment | (44) | (51) | |||
Proceeds from disposals of assets | 17 | 13 | |||
Net cash used by investing activities | (27) | (38) | |||
CASH FLOWS FROM FINANCING ACTIVITIES |
Capital contributions
Decrease in short-term borrowings
Repayments of long-term debt, including redemption premiums Net cash used by financing activities
Cash and cash equivalents increase
CASH AND CASH EQUIVALENTS
20 | 36 | |||
- | (101) | |||
(38) | - | |||
(18) | (65) | |||
$ | 60 | $ | 26 | |
Cash and cash equivalents at end of period | $ | 108 | $ | 37 | |
Cash and cash equivalents at beginning of period | 48 | 11 | |||
Cash and cash equivalents increase | $ | 60 | $ | 26 | |
See accompanying notes to condensed consolidated financial statements.
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF PARTNER'S CAPITAL
(unaudited) (Millions of dollars)
Three Months Ended | Six Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Balance, beginning of period | $ | 157 | $ | 548 | $ | 141 | $ | 504 | |||
Net income | 126 | 97 | 142 | 125 | |||||||
Capital contributions | 20 | 20 | 20 | 36 | |||||||
Balance, end of period | $ | 303 | $ | 665 | $ | 303 | $ | 665 | |||
See accompanying notes to condensed consolidated financial statements.
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(Millions of dollars, except where indicated otherwise)
Note 1 - Nature of Operations
AmeriGas Partners conducts a national propane distribution business through its principal operating subsidiary, AmeriGas OLP. AmeriGas Partners and AmeriGas OLP are Delaware limited partnerships. AmeriGas OLP is engaged in the distribution of propane and related equipment and supplies. AmeriGas OLP comprises the largest retail propane distribution business in the U.S. based on the volume of propane gallons distributed annually, serving residential, commercial, industrial, motor fuel and agricultural customers in all 50 states.
UGI's wholly owned second-tier subsidiary, AmeriGas Propane, Inc. serves as the General Partner of AmeriGas Partners. AmeriGas Propane GP, LLC, a wholly owned subsidiary of AmeriGas Partners, is the general partner of AmeriGas OLP.
AmeriGas Partners and AmeriGas OLP have no employees. Employees of the General Partner conduct, direct and manage our operations. The General Partner is reimbursed monthly for all direct and indirect expenses it incurs on the Partnership's behalf (see Note 9).
Note 2 - Summary of Significant Accounting Policies
Overview. The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with GAAP. They include all adjustments which we consider necessary for a fair statement of the results for the interim periods presented. Such adjustments consist only of normal recurring items unless otherwise disclosed. The September 30, 2023, Condensed Consolidated Balance Sheet was derived from audited financial statements but does not include all footnote disclosures from the annual financial statements.
These financial statements should be read in conjunction with the financial statements and related notes included in the Partnership's 2023 Annual Report. Weather significantly impacts demand for propane and profitability because many customers use propane for heating purposes. Due to the seasonal nature of the Partnership's propane business, the results of operations for interim periods are not necessarily indicative of the results to be expected for a full year.
Derivative Instruments. Derivative instruments are reported on the Condensed Consolidated Balance Sheets at their fair values, unless the NPNS exception is elected. Since we do not currently have derivative instruments that are designated and qualify as cash flow hedges, changes in fair value of our commodity derivative instruments that are not subject to the NPNS exception are reflected in "Cost of sales - propane" on the Condensed Consolidated Statements of Operations. Cash flows from commodity derivative instruments are included in cash flows from operating activities on the Condensed 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 8.
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. 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.
As previously disclosed in Note 9 in the Partnership's 2023 Annual Report, a non-cashpre-tax goodwill impairment charge of $650 was recognized in Fiscal 2023 to reduce the carrying value of the Partnership to its fair value. The Partnership continues to monitor for any changes in facts and circumstances that would indicate it is more likely than not that the fair value of the Partnership is less than its carrying amount. No such indicators were identified at March 31, 2024, however if the Partnership 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 further impairment. There is approximately $1.4 billion of goodwill as of March 31, 2024.
Use of Estimates. 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
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AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(Millions of dollars, except where indicated otherwise)
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.
Subsequent Events. Management has evaluated the impact of subsequent events through [May 2, 2024], the date these condensed consolidated financial statements were issued and the effects, if any, of such evaluation have been reflected in the condensed consolidated financial statements and related disclosures.
Note 3 - Revenue from Contracts with Customers
We recognize revenue when control of the 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. See Note 3 in the Partnership's 2023 Annual Report for additional information on our revenues from contracts with customers.
Revenue Disaggregation | |||||||||||
The following table presents our disaggregated revenues: | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
March 31, | March 31, | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Revenues from contracts with customers: | |||||||||||
Propane: | |||||||||||
Retail | $ | 697 | $ | 755 | $ | 1,230 | $ | 1,389 | |||
Wholesale | 29 | 45 | 51 | 96 | |||||||
Other | 51 | 47 | 103 | 104 | |||||||
Total revenues from contracts with customers | 777 | 847 | 1,384 | 1,589 | |||||||
Other revenues (a) | 18 | 20 | 40 | 44 | |||||||
Total revenues | $ | 795 | $ | 867 | $ | 1,424 | $ | 1,633 | |||
- Primarily represents revenues from tank rentals that are not within the scope of ASC 606 and accounted for in accordance with other GAAP.
Contract Balances
The timing of revenue recognition may differ from the timing of invoicing to customers or cash receipts. Contract assets represent the Partnership's 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 for all periods presented. Substantially all of the Partnership's receivables are unconditional rights to consideration and are included in "Accounts receivable" on the Condensed 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 Partnership's obligations to transfer goods or services to a customer for which the Partnership has received consideration from the customer. The balances of contract liabilities were $48, $73 and $52 at March 31, 2024, September 30, 2023 and March 31, 2023, respectively, and are included in "Customer deposits and advances" and "Other current liabilities" on the Condensed Consolidated Balance Sheets. Revenues recognized during the six months ended March 31, 2024 and 2023, from the amounts included in contract liabilities at September 30, 2023 and 2022, were $42 and $54, respectively.
Remaining Performance Obligations
The Partnership excludes disclosures related to the aggregate amount of the transaction price allocated to the 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.
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UGI Corporation published this content on 02 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 May 2024 18:23:07 UTC.