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AmeriGas Reports Fiscal 2017 Results

VALLEY FORGE, Pa., Nov 08, 2017 (BUSINESS WIRE) --

AmeriGas Propane, Inc., general partner of AmeriGas Partners, L.P. ("the Partnership," NYSE: APU), today reported financial results for the fiscal year ended September 30, 2017.

EARNINGS HIGHLIGHTS

-- GAAP net income of $162.1 million and adjusted net income of $198.5 million

-- Adjusted EBITDA of $551.3 million, in line with revised guidance issued in May

"This year presented a challenge as we faced a second consecutive year of exceedingly warm weather that was 13.5% warmer than normal," said Jerry E. Sheridan, president and chief executive officer of AmeriGas. "We met the challenge by implementing our warm weather plan and maintaining a resolute focus on controlling costs and retaining balance sheet capacity. We were pleased to be able to deliver results in line with our revised guidance and I would like to thank the entire AmeriGas family for their outstanding efforts in connection with meeting this challenge."

Sheridan continued, "We made significant progress on our growth initiatives as reflected in several accomplishments including increasing our distribution and growing our ACE and National Accounts programs to record levels. The technology tools we have deployed in our operations over the past few years ensure that our business has never been better positioned than it is today."

STRATEGIC ACCOMPLISHMENTS

-- Advanced the Partnership's efforts in deploying industry-leading technology across our operating footprint that will improve the customer experience and reduce costs

-- Delivered record operating results in ACE and National Accounts programs

-- Completed five tuck-in acquisitions

-- Completed the refinancing of all long-term debt, reducing our average interest rate by more than 100 basis points

-- Increased Partnership distribution for the 13th consecutive year

EQUITY COMMITMENT FROM UGI

On November 7, the Partnership entered into a $225 million standby equity commitment agreement ("SECA") with UGI Corporation for the potential issuance of Class B common units. Key provisions of the commitment include:

-- Commitment period: November 8, 2017 through July 1, 2019

-- Minimum issuance of Class B common units: $50 million

-- Distributions: Paid in cash or additional Class B units

-- Conversion: Convertible into AmeriGas common units at UGI's option in five years and at AmeriGas' option in six years subject to certain conditions

-- IDRs: Not subject to IDRs until conversion to common units

Although the Partnership does not intend to call on this facility at the present time, this capital commitment provides balance sheet flexibility to continue our strategic initiatives following two historically warm years and underscores the Partnership's commitment to providing long-term value to its investors while maintaining a strong balance sheet.

A report on Form 8-K describing the SECA in greater detail will be filed on November 9, 2017.

2018 OUTLOOK

AmeriGas provided Adjusted EBITDA guidance in the range of $650 - $690 million for the fiscal year ending September 30, 2018.(1) This guidance range assumes normal weather and excludes mark-to-market gains and losses on commodity derivative instruments. Given recent trends in weather, the Partnership determined that using an average of 15 years is a more accurate indicator of normal weather than the previously used 30-year average, and is moving to this metric in fiscal 2018. The 15-year average is approximately 3% warmer than the 30-year average and the impact has been reflected in the Partnership's guidance for 2018.

(1) See Note on Guidance and Use of Forward Looking Statements

EARNINGS CALL and WEBCAST

AmeriGas Partners, L.P. will hold a live Internet Audio Webcast of its conference call to discuss fiscal 2017 earnings and other current activities at 9:00 AM ET on Thursday, November 9, 2017. Interested parties may listen to the audio webcast both live and in replay on the Internet at http://investors.amerigas.com/investor-relations/events-presentations or at the company website http://www.amerigas.com under Investor Relations. A telephonic replay will be available from 12:00 PM ET on November 9 through 11:59 PM on November 16. The replay may be accessed at (855) 859-2056, and internationally at 1-404-537-3406, conference ID 5917897.

ABOUT AMERIGAS

AmeriGas is the nation's largest retail propane marketer, serving approximately two million customers in all 50 states from approximately 1,900 distribution locations. UGI Corporation, through subsidiaries, is the sole General Partner and owns 26% of the Partnership and the public owns the remaining 74%. Comprehensive information about AmeriGas is available on the Internet at http://www.amerigas.com.

NOTE ON GUIDANCE and USE OF FORWARD-LOOKING STATEMENTS

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

This press release contains certain forward-looking statements that management believes to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management's control. You should read the Partnership's Annual Report on Form 10-K for a more extensive list of factors that could affect results. Among them are adverse weather conditions, cost volatility and availability of propane, increased customer conservation measures, the capacity to transport propane to our market areas, the impact of pending and future legal proceedings, political, economic and regulatory conditions in the U.S. and abroad, the availability, timing and success of our acquisitions, commercial initiatives and investments to grow our business, our ability to successfully integrate acquisitions and achieve anticipated synergies, and the interruption, disruption, failure, malfunction or breach of our information technology systems, including due to cyber-attack. The Partnership undertakes no obligation to release revisions to its forward-looking statements to reflect events or circumstances occurring after today.

USE OF NON-GAAP MEASURES

The Partnership's management uses certain non-GAAP financial measures, including adjusted total margin, EBITDA, adjusted EBITDA and adjusted net income (loss) attributable to AmeriGas Partners, L.P., when evaluating the Partnership's overall performance. These financial measures are not in accordance with, or an alternative to, GAAP and should be considered in addition to, and not as a substitute for, the comparable GAAP measures.

Management believes earnings before interest, income taxes, depreciation and amortization ("EBITDA"), as adjusted for the effects of gains and losses on commodity derivative instruments not associated with current-period transactions and other gains and losses that competitors do not necessarily have ("Adjusted EBITDA"), is a meaningful non-GAAP financial measure used by investors to (1) compare the Partnership's operating performance with that of other companies within the propane industry and (2) assess the Partnership's ability to meet loan covenants. The Partnership's definition of Adjusted EBITDA may be different from those used by other companies. Management uses Adjusted EBITDA to compare year-over-year profitability of the business without regard to capital structure as well as to compare the relative performance of the Partnership to that of other master limited partnerships without regard to their financing methods, capital structure, income taxes, the effects of gains and losses on commodity derivative instruments not associated with current-period transactions or historical cost basis. In view of the omission of interest, income taxes, depreciation and amortization, gains and losses on commodity derivative instruments not associated with current-period transactions and other gains and losses that competitors do not necessarily have from Adjusted EBITDA, management also assesses the profitability of the business by comparing net income attributable to AmeriGas Partners, L.P. for the relevant periods. Management also uses Adjusted EBITDA to assess the Partnership's profitability because its parent, UGI Corporation, uses the Partnership's Adjusted EBITDA to assess the profitability of the Partnership, which is one of UGI Corporation's industry segments. UGI Corporation discloses the Partnership's Adjusted EBITDA as the profitability measure for its domestic propane segment.

Management believes the presentation of other non-GAAP financial measures, comprised of adjusted total margin and adjusted net income (loss) attributable to AmeriGas Partners, L.P., provide useful information to investors to more effectively evaluate the period-over-period results of operations of the Partnership. Management uses these non-GAAP financial measures because they eliminate the impact of (1) gains and losses on commodity derivative instruments that are not associated with current-period transactions and (2) other gains and losses that competitors do not necessarily have to provide insight into the comparison of period-over-period profitability to that of other master limited partnerships.

Reconciliations of adjusted total margin, EBITDA, adjusted EBITDA and adjusted net income attributable to AmeriGas Partners, L.P. to the most directly comparable financial measure calculated and presented in accordance with GAAP are presented at the end of this press release.

REPORT OF EARNINGS

 
                                                                                                                                                                                      AMERIGAS PARTNERS, L.P. AND SUBSIDIARIES
                                                                                                                                                                             (Thousands, except per unit and where otherwise indicated)
                                                                                                                                                                                                     (Unaudited)
 
                                                                                                                                                 Three Months Ended                                                                                                   Twelve Months Ended
                                                                                                                                                                                          September 30,                                                                                                                                              September 30,
                                                                                                                                        --------------------------------------------------------------------------------------------------------                                                  ----------------------------------------------------------------------------------------------------------
                                                                                                                                                        2017                                   2016                                                                         2017                                    2016
                                                                                                                                        -------------------------------------                                          ---------------------------------                                          ------------------------------------                                          ------------------------------------
Revenues:
   Propane                                                                                                                                    $ 379,722                                                                  $ 334,412                                                                   $ 2,183,538                                                                   $ 2,053,160
   Other                                                                                                                                         65,451                                                  59,136                                                    269,957                                                    258,657  
                                                                                                                                        ------------------------------------                                           --------------------------------                                           -----------------------------------                                           -----------------------------------
                                                                                                                                                445,173                                                 393,548                                                  2,453,495                                                  2,311,817  
                                                                                                                                        ------------------------------------                                           --------------------------------                                           -----------------------------------                                           -----------------------------------
Costs and expenses:
   Cost of sales - propane                                                                                                         128,730                                                                    128,487                                                                       891,261                                                                       719,842
   Cost of sales - other                                                                                                            20,335                                                                     19,684                                                                        80,611                                                                        78,857
   Operating and administrative expenses                                                                                                        220,953                                                                    242,208                                                                       915,133                                                                       928,786
   Depreciation                                                                                                                                  43,850                                                                     35,998                                                                       147,741                                                                       146,805
   Amortization                                                                                                                                  10,891                                                                     10,947                                                                        42,764                                                                        43,175
   Other operating income, net                                                                                                                   (1,086 )                                                                   (6,173 )                                                                     (11,873 )                                                                     (28,252 )
                                                                                                                                        ------------------------------------                                           --------------------------------                                           -----------------------------------                                           -----------------------------------
                                                                                                                                                423,673                                                 431,151                                                  2,065,637                                                  1,889,213  
                                                                                                                                        ------------------------------------                                           --------------------------------                                           -----------------------------------                                           -----------------------------------
Operating income (loss)                                                                                                                          21,500                                                                    (37,603 )                                                                     387,858                                                                       422,604
Loss on extinguishments of debt                                                                                                          --                                                                    (11,803 )                                                                     (59,729 )                                                                     (48,889 )
Interest expense                                                                                                                                (39,630 )                                                                  (41,426 )                                                                    (160,226 )                                                                    (164,095 )
                                                                                                                                        ------------------------------------                                           --------------------------------                                           -----------------------------------                                           -----------------------------------
(Loss) income before income taxes                                                                                                               (18,130 )                                                                  (90,832 )                                                                     167,903                                                                       209,620
Income tax benefit (expense)                                                                                                                         95                                                   3,680                                                     (2,034 )                                                                       1,573  
                                                                                                                                        ------------------------------------                                           --------------------------------                                           -----------------------------------                                           -----------------------------------
Net (loss) income including noncontrolling interest                                                                                             (18,035 )                                                                  (87,152 )                                                                     165,869                                                                       211,193
(Deduct net income) add net loss attributable to noncontrolling                                                                                    (196 )                                                                      324                                                     (3,810 )                                                                      (4,209 )
interest
                                                                                                                                        --------------  --------------------                                           ----------  --------------------                                           -------------  --------------------                                           -------------  --------------------
Net (loss) income attributable to AmeriGas Partners, L.P.                                                                                     $ (18,231 )                                                                $ (86,828 )                                                                 $   162,059                                                $   206,984  
                                                                                                                                        ======= ======= ====================                                           === ======= ====================                                           ==== ========= ====================                                           ==== ========= ====================
General partner's interest in net income attributable to AmeriGas                                                  $  11,146                                               $   9,564                                                $    45,146                                                $    40,227  
Partners, L.P.
                                                                                                                                        ======= ======= ====================                                           === ======= ====================                                           ==== ========= ====================                                           ==== ========= ====================
Limited partners' interest in net (loss) income attributable to                                                    $ (29,377 )                                                                $ (96,392 )                                                                 $   116,913                                                $   166,757  
AmeriGas Partners, L.P.
                                                                                                                                        ======= ======= ====================                                           === ======= ====================                                           ==== ========= ====================                                           ==== ========= ====================
Income (loss) per limited partner unit (a)
   Basic                                                                                                                                      $   (0.32 )                                                                $   (1.04 )                                                                 $      1.25                                                $      1.77  
                                                                                                                                        ======= ======= ====================                                           === ======= ====================                                           ==== ========= ====================                                           ==== ========= ====================
   Diluted                                                                                                                                    $   (0.32 )                                                                $   (1.04 )                                                                 $      1.25                                                $      1.77  
                                                                                                                                        ======= ======= ====================                                           === ======= ====================                                           ==== ========= ====================                                           ==== ========= ====================
Weighted-average limited partner units outstanding:
   Basic                                                                                                                                         93,011                                                  92,962                                                     92,996                                                     92,949  
                                                                                                                                        ====================================                                           ================================                                           ===================================                                           ===================================
   Diluted                                                                                                                                       93,011                                                  92,962                                                     93,050                                                     93,023  
                                                                                                                                        ====================================                                           ================================                                           ===================================                                           ===================================
SUPPLEMENTAL INFORMATION:
   Retail gallons sold (millions)                                                                                                                 183.5                                                                      181.8                                                                       1,046.9                                                                       1,065.5
   Wholesale gallons sold (millions)                                                                                                               10.6                                                                        9.7                                                                          49.1                                                                          49.7
   Total margin (b)                                                                                                                           $ 296,108                                                                  $ 245,377                                                                   $ 1,481,623                                                                   $ 1,513,118
   Adjusted total margin (c)                                                                                                                  $ 256,193                                                                  $ 240,969                                                                   $ 1,450,561                                                                   $ 1,447,039
   EBITDA (c)                                                                                                                                 $  76,045                                                                  $  (2,137 )                                                                 $   514,824                                                                   $   559,486
   Adjusted EBITDA (c)                                                                                                                        $  36,533                                                                  $   5,302                                                                   $   551,274                                                                   $   542,963
   Adjusted net (loss) income attributable to AmeriGas Partners, L.P.                                                                         $ (57,743 )                                                                $ (79,389 )                                                                 $   198,509                                                                   $   190,461
   (c)
   Expenditures for property, plant and equipment:
     Maintenance capital expenditures                                                                                                         $  12,180                                                                  $  15,829                                                                   $    52,034                                                                   $    52,104
     Growth capital expenditures                                                                                                              $  11,473                                                                  $  11,392                                                                   $    46,130                                                                   $    49,589
 
 
(a)       Income (loss) per limited partner unit is computed in accordance
                                                with accounting guidance regarding the application of the
                                                two-class method for determining earnings per share as it relates
                                                to master limited partnerships. Refer to Note 2 to the
                                                consolidated financial statements included in the AmeriGas
                                                Partners, L.P. Annual Report on Form 10-K for the fiscal year
                                                ended September 30, 2016.
 
(b)                                             Total margin represents "total revenues" less "cost of sales -
                                                propane" and "cost of sales - other."
 
(c)                                             The Partnership's management uses certain non-GAAP financial
                                                measures, including adjusted total margin, EBITDA, adjusted EBITDA.
 
 
GAAP / NON-GAAP RECONCILIATION
(Thousands)
(Unaudited)
 
                                                                                                                             Three Months Ended                                                                                                      Twelve Months Ended
                                                                                                                                                                                         September 30,                                                                                                                                                 September 30,
                                                                                                                                     ------------------------------------------------------------------------------------------------------------                                                  -------------------------------------------------------------------------------------------------------------
                                                                                                                                                     2017                                     2016                                                                           2017                                     2016
                                                                                                                                     -------------------------------------                                          -------------------------------------                                          ------------------------------------                                          ---------------------------------------
Adjusted total margin:
   Total revenues                                                                                                                          $ 445,173                                                                      $ 393,548                                                                   $ 2,453,495                                                                      $ 2,311,817
   Cost of sales - propane                                                                                                     (128,730 )                                                                     (128,487 )                                                                    (891,261 )                                                                       (719,842 )
   Cost of sales - other                                                                                                        (20,335 )                                                                      (19,684 )                                                                     (80,611 )                                                                        (78,857 )
                                                                                                                                     ------------------------------------                                           ------------------------------------                                           -----------------------------------                                           --------------------------------------
   Total margin                                                                                                                              296,108                                                                        245,377                                                                     1,481,623                                                                        1,513,118
   Subtract net gains on commodity derivative instruments not                                                                                (39,915 )                                                                       (4,408 )                                                                     (31,062 )                                                                        (66,079 )
   associated with current-period transactions
                                                                                                                                     --------------  --------------------                                           --------------  --------------------                                           -------------  --------------------                                           ----------------  --------------------
   Adjusted total margin                                                                                                                   $ 256,193                                                   $ 240,969                                                $ 1,450,561                                                   $ 1,447,039  
                                                                                                                                     ======= ======= ====================                                           ======= ======= ====================                                           ==== ========= ====================                                           ======= ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                  
Adjusted net income (loss) attributable to AmeriGas Partners, L.P.:
   Net (loss) income attributable to AmeriGas Partners, L.P.                                                                               $ (18,231 )                                                                    $ (86,828 )                                                                 $   162,059                                                                      $   206,984
   Subtract net gains on commodity derivative instruments not                                                                                (39,915 )                                                                       (4,408 )                                                                     (31,062 )                                                                        (66,079 )
   associated with current-period transactions
   Noncontrolling interest in net gains on commodity derivative                                                                                  403                                                                             44                                                                           238                                                                              667
   instruments not associated with current-period transactions
   Loss on extinguishments of debt                                                                                                    --                                                                         11,803                                                                        59,729                                                                           48,889
   MGP environmental accrual                                                                                                          --                                              --                                                      7,545                                                --  
                                                                                                                                     ------------------------------------                                           ------------------------------------                                           -----------------------------------                                           --------------------------------------
   Adjusted net (loss) income attributable to AmeriGas Partners, L.P.                                                                      $ (57,743 )                                                                    $ (79,389 )                                                                 $   198,509                                                   $   190,461  
                                                                                                                                     ======= ======= ====================                                           ======= ======= ====================                                           ==== ========= ====================                                           ======= ========= ====================
 
 
                                                                                                                       Three Months Ended                                                                                                    Twelve Months Ended
                                                                                                                                                                                   September 30,                                                                                                                                               September 30,
                                                                                                                               ------------------------------------------------------------------------------------------------------------                                                  --------------------------------------------------------------------------------------------------------
                                                                                                                                               2017                                     2016                                                                         2017                                   2016
                                                                                                                               -------------------------------------                                          -------------------------------------                                          ---------------------------------                                          -------------------------------------
EBITDA and Adjusted EBITDA:
   Net (loss) income attributable to AmeriGas Partners, L.P.                                                                         $ (18,231 )                                                                    $ (86,828 )                                                                $ 162,059                                                                      $ 206,984
   Income tax (benefit) expense                                                                                                            (95 )                                                                       (3,680 )                                                                    2,034                                                                         (1,573 )
   Interest expense                                                                                                                     39,630                                                                         41,426                                                                    160,226                                                                        164,095
   Depreciation                                                                                                                         43,850                                                                         35,998                                                                    147,741                                                                        146,805
   Amortization                                                                                                                         10,891                                                      10,947                                                  42,764                                                      43,175  
                                                                                                                               ------------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
   EBITDA                                                                                                                               76,045                                                                         (2,137 )                                                                  514,824                                                                        559,486
   Subtract net gains on commodity derivative instruments not                                                                          (39,915 )                                                                       (4,408 )                                                                  (31,062 )                                                                      (66,079 )
   associated with current-period transactions
   Noncontrolling interest in net gains on commodity derivative                                                                            403                                                                             44                                                                        238                                                                            667
   instruments not associated with current-period transactions
   Loss on extinguishments of debt                                                                                              --                                                                         11,803                                                                     59,729                                                                         48,889
   MGP environmental accrual                                                                                                    --                                              --                                                   7,545                                              --  
                                                                                                                               ------------------------------------                                           ------------------------------------                                           --------------------------------                                           ------------------------------------
   Adjusted EBITDA                                                                                                                   $  36,533                                                   $   5,302                                               $ 551,274                                                   $ 542,963  
                                                                                                                               ======= ======= ====================                                           ======= ======= ====================                                           === ======= ====================                                           ======= ======= ====================
 
The following table includes a quantification of interest expense,
income tax expense, depreciation and amortization included in the
calculation of forecasted Adjusted EBITDA guidance range for the
fiscal year ending September 30, 2018:
 
                                                         Forecast Fiscal Year Ending
                                                                                                                      September 30, 2018
                                                                                             --------------------------------------------------------------
                                                                                               (Low End)        (High End)
Adjusted EBITDA (estimate)                                                                     $ 650,000                                                $ 690,000
Interest expense (estimate)                                                                      161,000                                                  159,000
Income tax expense (estimate)                                                                      3,500                                                    3,500
Depreciation (estimate)                                                                          139,000                                                  139,000
Amortization (estimate)                                                                           43,000                                                   43,000
 

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SOURCE: AmeriGas Partners, L.P.

AmeriGas Partners, L.P. 
Will Ruthrauff, 610-337-7000 ext. 6571 
Shelly Oates, 610-337-7000 ext. 3202

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