Please ensure Javascript is enabled for purposes of website accessibility

UGI Corp Starts 2018 With a Record-Setting Quarter

By Matthew DiLallo - Feb 1, 2018 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The energy holding company benefitted from three important factors.

UGI's (UGI 2.88%) first fiscal quarter of 2018 benefited from a series of tailwinds that sent earnings to a quarterly record. Not only was the weather cooler than last year, but the company's growth initiatives are starting to pay dividends. On top of that, it benefited from changes to the U.S. tax code. These factors set the company up for what could be an excellent fiscal year. 

UGI results: The raw numbers


Fiscal Q1 2018

Fiscal Q1 2017

Year-Over-Year Change

Adjusted net income

$179.3 million

$160.9 million


Adjusted EPS




Data source: UGI Corporation. EPS = earnings per share.

Pipeline valves covered in snow.

Image source: Getty Images.

What happened with UGI this quarter? 

The weather played a big role this quarter.

  • Adjusted EBITDA at the company's AmeriGas Propane (APU) subsidiary rose 4.9% versus the year-ago period. While the weather was 9.9% colder than the previous year, gallons sold dipped 0.2%. That's mainly because temperatures were warmer than normal for all but that last week when they plummeted 60% below the year-ago level. That said, AmeriGas Propane more than made up for the weaker volumes by keeping costs at bay, which helped boost margins.
  • Adjusted income at UGI International dropped 8.3% even though gallons sold increased 3.7% due to recent acquisitions. That was because the weather was warmer than last year and expenses rose due to the impact of foreign exchange fluctuations.
  • Midstream and marketing income was up 7.1% thanks to weather that was 6.2% colder than last year, which fueled demand for natural gas. In addition to that, the company benefited from the placing the Sunbury pipeline into service.
  • Income in the UGI Utilities segment rose 18.3% because the weather was 6% colder than last year, which drove demand for natural gas. In addition to that, the company added 3,800 new heating customers and also benefited from higher rates.

What management had to say 

CEO John Walsh commented on the company's fiscal first quarter by saying:

This was a strong start to fiscal 2018 as we experienced colder weather than the prior year in most of our service territories and realized benefits from our growth initiatives, as well as the U.S. tax reform legislation. Subsequent to the end of the quarter, our electric utility filed its first rate case in 22 years, and we were pleased to receive the FERC certificate for the PennEast pipeline.

The changes in the tax law had a noticeable impact on UGI's financial results. Reported earnings skyrocketed 59% to $2.07 per share after the company recorded tax benefits from not only the U.S. tax overhaul but a finance bill in France. Meanwhile, even after adjusting for those one-time benefits, UGI still realized higher profits in the quarter directly relating to the tax law changes. Overall, the legislation in the U.S. added $0.12 per share to its adjusted earnings during the quarter, while the French finance bill partially offset that with a negative $0.03 per share impact, resulting in a net $0.09 per share boost to the bottom line. For the full-year, the company expects that the changes to the two tax codes will add $0.15 to $0.25 per share to its adjusted earnings.

Looking forward 

That said, even with the strong showing in its fiscal first quarter, and the added benefit from the tax law changes, the company isn't yet ready to make any adjustments to its full-year guidance. That's because its fiscal second quarter is the most significant contributor to full-year results, which is causing it to wait until after the current quarter closes before making changes to that forecast. However, with the cold blast from late last year stretching into early January, and another cold snap expected in the U.S. this month, the current quarter could be an excellent one for the company, which increases the odds that it will boost its full-year outlook.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

UGI Corporation Stock Quote
UGI Corporation
$39.72 (2.88%) $1.11
AmeriGas Partners, L.P. Stock Quote
AmeriGas Partners, L.P.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.