UGI CORPORATION Forward-Looking Statements
Information contained in this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Such statements use forward-looking words such as "believe," "plan," "anticipate," "continue," "estimate," "expect," "may," or other similar words. These statements discuss plans, strategies, events or developments that we expect or anticipate will or may occur in the future. 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 that actual results almost always 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 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 and the seasonal nature of our business; (2) cost volatility and availability of 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, tax, consumer protection, data privacy, accounting matters, and environmental, including 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; (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, 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 in all forms; (13) transmission or distribution system service interruptions; (14) political, regulatory and economic conditions inthe United States ,Europe and other foreign countries, including the current conflicts in theMiddle East and the withdrawal of theUnited Kingdom from theEuropean Union , and foreign currency exchange rate fluctuations, particularly the euro; (15) 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) reduced distributions from subsidiaries impacting the ability to pay dividends; (18) changes in Marcellus andUtica Shale gas production; (19) the availability, timing and success of our acquisitions, commercial initiatives and investments to grow our businesses; (20) our ability to successfully integrate acquired businesses and achieve anticipated synergies; (21) the interruption, disruption, failure or malfunction of our information technology systems, including due to cyber attack; (22) the inability to complete pending or future energy infrastructure projects; (23) our ability to achieve the operational benefits and cost efficiencies expected from the completion of pending and future business transformation initiatives including the impact of customer service disruptions resulting in potential customer loss due to the transformation activities; (24) uncertainties related to a global pandemic, including the duration and/or impact of the COVID-19 pandemic; and (25) the extent to which we are able to utilize certain tax benefits currently available under the CARES Act and similar tax legislation and whether such benefits will remain available in the future. These factors, and those factors set forth in Item 1A. Risk Factors in the Company's 2020 Annual Report, 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. We undertake no 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. ANALYSIS OF RESULTS OF OPERATIONS The following analyses compare the Company's results of operations for the 2021 three-month period with the 2020 three-month period and the 2021 six-month period with the 2020 six-month period. Our analyses of results of operations should be read in conjunction with the segment information included in Note 13 to Condensed 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. As a result, our operating results, excluding the effects of gains and losses on commodity derivative 34
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UGI CORPORATION AND SUBSIDIARIESinstruments not associated with current-period transactions as further discussed below, are significantly higher in our first and second fiscal quarters.
Recent Developments
Pending Acquisition ofMountaineer Gas Company OnDecember 29, 2020 ,UGI Corporation signed a definitive agreement to acquire Mountaineer, the largest natural gas distribution company inWest Virginia for a preliminary purchase price of$540 million , which includes the assumption of approximately$140 million of long-term debt. Mountaineer serves nearly 215,000 customers across 50 of the state's 55 counties. The pending acquisition is subject to customary regulatory and other closing conditions, including approval by thePublic Service Commission of West Virginia , and is expected to close in the second half of calendar year 2021. UGI currently expects to finance the pending acquisition through the issuance of debt and/or equity-linked securities and existing liquidity. COVID-19 Pandemic InMarch 2020 , the WHO declared a global pandemic attributable to the outbreak and continued spread of COVID-19 that has had a significant impact throughout the global economy. In connection with the mitigation and containment procedures recommended by the WHO, the CDC, and as imposed by federal, state, and local governmental authorities, including shelter-in-place orders, quarantines and similar restrictions, we implemented a variety of procedures to protect our employees, third-party business partners, and customers worldwide. Although our results continue to be impacted by COVID-19 in Fiscal 2021, we continue to provide essential products and services to our global customers in a safe and reliable manner and will continue to do so in compliance with mandated restrictions presented by each of the markets we serve. We continue to evaluate and react to the potential effects of a prolonged disruption and the continued impact on our results of operations. These items may include, but are not limited to: the financial condition of our customers; decreased availability and demand for our products and services; realization of accounts receivable; impairment considerations related to certain current assets, long-lived assets and goodwill; delays related to current and future projects; and the effects of government stimulus efforts including tax legislation (see "Interest Expense and Income Taxes" below) in response to COVID-19. We cannot predict the duration or total magnitude of the pandemic and the total effects on our business, financial position, results of operations, liquidity or cash flows at this time, but we remain focused on managing our financial condition and liquidity throughout this global crisis. Business Transformation Initiatives 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. While this initiative is being coordinated across multiple support functions, each area is at a different stage of transformation and will undergo the required changes over the next two to three years. In connection with these activities, we expect to incur approximately$40 million of non-recurring costs during that time resulting in more than$15 million of ongoing annualized savings by Fiscal 2023.AmeriGas Propane . AtAmeriGas Propane , we began executing on business transformation initiatives during Fiscal 2019 focused on efficiency and effectiveness in the following key areas: customer digital experience; customer relationship management; operating process redesign and specialization; distribution and routing optimization; sales and marketing effectiveness; purchasing and general and administrative efficiencies; and supply and logistics. The transformation activities will continue to be carried out over Fiscal 2021 and may result in customer service disruptions over the near term. However, once completed, these initiatives are expected to provide total annual benefits of more than$140 million by the end of Fiscal 2022 which will allow us to improve profitability and cash flow through operational efficiencies and expense reductions and enable increased investment into base business customer retention and growth initiatives, including the reduction of margins in select segments of our base business. We estimate the total cost of executing on these initiatives, including approximately$100 million of related capital expenditures, to be approximately$200 million .UGI International . At our UGI International LPG business, we launched an initiative in Fiscal 2019 and embarked on a process of identifying operational synergies across all 17 countries in which we currently do business. We call this initiativeProject Alliance , the goal of which is to focus attention on enhanced customer service and safe and efficient operations through the establishment of two centers of excellence. One such center will be focused on commercial excellence to identify and execute projects that improve the customer's experience. The second center will be focused on operational excellence across our distribution network and our filling centers. The business activities are in process and will continue to be executed primarily during Fiscal 2021. Once completed, these activities are expected to generate over €30 million of annual benefits. We estimate 35
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the total cumulative cost of executing on these Project Alliance initiatives,
including approximately €10 million related to IT capital expenditures, to be
approximately €55 million.
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.
The following tables reflect the adjustments referred to above and reconcile net
income 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:
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Adjusted net income attributable to UGI Three Months Ended Six Months Ended
Corporation March 31, March 31,
(Dollars in millions) 2021 2020 2021 2020
AmeriGas Propane $ 150 $ 122 $ 224 $ 213
UGI International 99 75 191 148
Midstream & Marketing 64 50 99 86
UGI Utilities 99 82 148 143
Corporate & Other (a) 77 (103) 130 (152)
Net income attributable to UGI Corporation 489 226 792 438
Net (gains) losses on commodity derivative
instruments not associated with
current-period transactions (net of tax of
$22 , $(41) , $53 , and $(43) , respectively) (52) 89 (137) 99
Unrealized (gains) losses on foreign currency
derivative instruments (net of tax of $4 , $1 ,
$(1) , and $(3) , respectively) (11) (1) 4 10
Acquisition and integration expenses
associated with the CMG Acquisition (net of
tax of $0 , $(1) , $0 , and $(1) , respectively) - - - 1
Acquisition expenses associated with the
pending Mountaineer Acquisition (net of tax
of $0 , $0 , $(1) , and $0 , respectively) 1 - 2 -
Business transformation expenses (net of tax
of $(5) , $(5) , $(9) , and $(10) , respectively) 14 14 27 26
Impact of change in Italian tax law (b) (23) - (23) -
Total adjustments (a) (c) (71) 102 (127) 136
Adjusted net income attributable to UGI
Corporation $ 418 $ 328 $ 665 $ 574
Three Months Ended Six Months Ended
March 31, March 31,
Adjusted diluted earnings per share 2021 2020 2021 2020
AmeriGas Propane $ 0.71 $ 0.58 $ 1.07 $ 1.01
UGI International 0.47 0.36 0.91 0.70
Midstream & Marketing 0.31 0.24 0.47 0.41
UGI Utilities 0.47 0.39 0.71 0.68
Corporate & Other (a) 0.37 (0.50) 0.61 (0.72)
Earnings per share - diluted 2.33 1.07 3.77 2.08
Net (gains) losses on commodity derivative
instruments not associated with
current-period transactions (0.25) 0.43 (0.65) 0.47
Unrealized (gains) losses on foreign currency
derivative instruments (0.05) (0.01) 0.02 0.05
Acquisition and integration expenses
associated with the CMG Acquisition - - - 0.01
Acquisition expenses associated with the
pending Mountaineer Acquisition - - 0.01 -
Business transformation expenses 0.07 0.07 0.13 0.12
Impact of change in Italian tax law (b) (0.11) - (0.11) -
Total adjustments (a) (0.34) 0.49 (0.60) 0.65
Adjusted earnings per share - diluted $ 1.99 $ 1.56 $ 3.17 $ 2.73
(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 13
to Condensed Consolidated Financial
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Statements for additional information related to these adjustments, as well as
other items included within Corporate & Other.
(b)See "Interest Expense and Income Taxes" below for additional information
related to this adjustment.
(c)Income taxes associated with pre-tax adjustments determined using statutory
business unit tax rates.
EXECUTIVE OVERVIEW
2021 three-month period compared with 2020 three-month period
Discussion. Net income attributable toUGI Corporation for the 2021 three-month period was$489 million (equal to$2.33 per diluted share) compared to$226 million (equal to$1.07 per diluted share) during the 2020 three-month period. Net income attributable toUGI Corporation in the 2021 three-month period reflects net gains from changes in unrealized commodity derivative instruments and certain foreign currency derivative instruments compared to net losses on comparable instruments in the prior-year period. Net income attributable toUGI Corporation also reflects business transformation expenses of$14 million in both the 2021 and 2020 three-month periods, as well as a$23 million tax benefit in the 2021 three-month period related to an election made in connection with a tax law change inItaly . Adjusted net income attributable toUGI Corporation for the 2021 three-month period was$418 million (equal to$1.99 per diluted share) compared to$328 million (equal to$1.56 per diluted share) during the 2020 three-month period. The increase in adjusted net income attributable toUGI Corporation during the 2021 three-month period largely reflects higher earnings contributions from each of our business segments which benefited from colder weather compared to the prior-year period, higher average LPG unit margins including effective margin management efforts, and the increase inUGI Utilities base rates that went into effect onJanuary 1, 2021 .AmeriGas Propane's adjusted net income attributable toUGI Corporation increased$28 million in the 2021 three-month period. This increase was largely attributable to higher total margin on improved retail volumes reflecting colder weather compared to the prior-year period and higher average unit margins due to effective margin management efforts.UGI International's adjusted net income attributable toUGI Corporation increased$24 million in the 2021 three-month period principally reflecting higher total margin which benefited from colder weather compared to the prior-year period, improved retail LPG volumes and average unit margins including effective margin management efforts, and the translation effects of stronger foreign currencies in the 2021 three-month period. These positive factors were partially offset by lower realized gains on foreign currency exchange contracts and higher operating and administrative expenses compared to the prior-year period. Midstream & Marketing's adjusted net income attributable toUGI Corporation increased$14 million in the 2021 three-month period reflecting higher earnings attributable to natural gas and renewable energy activities including the impact of acquisitions and new assets placed into service, favorable capacity management margin, and lower operating and administrative expenses compared to the prior-year period.UGI Utilities' adjusted net income attributable toUGI Corporation increased$17 million in the 2021 three-month period compared to the prior-year period. The increase was largely attributable to higher Gas Utility margin reflecting the effects of colder weather compared to the prior-year period and the increase in base rates that went into effect onJanuary 1, 2021 . These positive factors were partially offset by higher depreciation expenses related to continued capital improvement activities compared to the prior-year period.
2021 six-month period compared with 2020 six-month period
Discussion. Net income attributable toUGI Corporation for the 2021 six-month period was$792 million (equal to$3.77 per diluted share) compared to$438 million (equal to$2.08 per diluted share) during the 2020 six-month period. Net income attributable toUGI Corporation in the 2021 six-month period reflects net gains from changes in unrealized commodity derivative instruments and certain foreign currency derivative instruments compared to net losses on comparable instruments in the prior-year period. Net income attributable toUGI Corporation also reflects business transformation expenses of$27 million and$26 million , respectively, in the 2021 and 2020 six-month periods, as well as a$23 million tax benefit in the 2021 six-month period related to an election made in connection with a tax law change inItaly . Adjusted net income attributable toUGI Corporation for the 2021 six-month period was$665 million (equal to$3.17 per diluted share) compared to$574 million (equal to$2.73 per diluted share) during the 2020 six-month period. The increase in adjusted net income attributable toUGI Corporation during the 2021 six-month period reflects higher earnings contributions from each of our business segments which benefited from colder weather compared to the prior-year period, effective expense 38
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management efforts, the increase in base rates at UGI Utilities that went into
effect on January 1, 2021 , and the effects of acquisitions and assets placed
into service. These positive impacts were partially offset by the effects of
COVID-19 compared to the prior-year period.
AmeriGas Propane's adjusted net income attributable to UGI Corporation increased
$11 million in the 2021 six-month period. This increase principally reflects
lower operating and administrative expenses, including partial benefits related
to ongoing transformation initiatives, and lower interest expense compared to
the prior-year period. These positive factors were partially offset by lower
retail propane margin primarily attributable to lower volumes.
UGI International's adjusted net income attributable to UGI Corporation
increased $43 million in the 2021 six-month period principally reflecting higher
total margin due to higher bulk and heating-related LPG retail volumes on colder
weather compared to the prior-year period, and higher average LPG unit margins
including effective margin management efforts. These positive factors were
partially offset by higher operating and administrative expenses principally
reflecting the translation effects of stronger foreign currencies compared to
the prior-year period.
Midstream & Marketing's adjusted net income attributable to UGI Corporation
increased $13 million in the 2021 six-month period largely driven by higher
total margin attributable to capacity management, natural gas, and renewable
energy activities compared to the prior-year period. These positive factors were
partially offset by the absence of earnings contributions from assets divested
in the prior year.
UGI Utilities' adjusted net income attributable to UGI Corporation increased $5
million in the 2021 six-month period compared to the prior-year period. The
increase was largely attributable to higher Gas Utility margin reflecting
increased base rates that went into effect on January 1, 2021 , and the effects
of colder weather compared to the prior-year period. These positive factors were
largely offset by higher depreciation expense related to continued capital
improvement activities, and slightly higher operating and administrative
expenses compared to the prior-year period.
SEGMENT RESULTS OF OPERATIONS
2021 Three-Month Period Compared with the 2020 Three-Month Period
AmeriGas Propane
For the three months ended March 31, 2021 2020 Increase
(Dollars in millions)
Revenues $ 940 $ 802 $ 138 17 %
Total margin (a) $ 509 $ 477 $ 32 7 %
Operating and administrative expenses $ 233 $ 231 $ 2 1 %
Operating income/earnings before interest
expense and income taxes $ 239 $ 206 $ 33 16 %
Retail gallons sold (millions) 356 340 16 5 %
Heating degree days-% warmer than normal
(b) (2.2) % (10.7) % - -
(a)Total margin represents total revenues less total cost of sales.
(b)Beginning in Fiscal 2021, 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 . Prior-period amounts have been restated to
conform to the current-period presentation.
Average temperatures during the 2021 three-month period were 2.2% warmer than
normal but 8.4% colder than the prior-year period. Total retail gallons sold
during the 2021 three-month period were 5% higher principally reflecting higher
residential and resale volumes attributable to colder weather compared to the
prior-year period and pandemic-related usage. These increases were partially
offset by the effects of structural conservation and other residual volume loss
and the continued impact of COVID-19 on commercial and motor fuel volumes.
Total revenues increased $138 million during the 2021 three-month period largely
reflecting higher average retail and wholesale propane selling prices ($104
million ) and the higher retail propane volumes ($33 million ) compared to the
prior-year period. Average daily wholesale propane commodity prices at Mont
Belvieu, Texas , one of the major supply points in the U.S. , were significantly
higher during the 2021 three-month period (approximately 143%) compared to such
prices during the prior-year period. Total cost of sales increased $106 million
during the 2021 three-month period principally reflecting the higher average
total propane product costs ($88 million ) and higher total propane volumes ($17
million ).
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AmeriGas Propane total margin increased $32 million in the 2021 three-month
period reflecting the higher retail propane volumes ($20 million ) and higher
average retail unit margins including ($15 million ) compared to the prior-year
period due to effective margin management efforts. These positive impacts were
partially offset by lower non-propane margin attributable to fees and services
($3 million ).
Operating income and earnings before interest expense and income taxes both
increased $33 million during the 2021 three-month period principally reflecting
the increase in total margin. Operating and administrative expenses were
slightly higher in the 2021 three-month period reflecting, among other things,
higher employee related cost primarily attributable to incentive compensation
($3 million ), increased advertising costs ($2 million ) and higher
telecommunications expenses ($2 million ) partially offset by lower general
insurance costs ($5 million ). Operating and administrative expenses continue to
reflect the partial benefits related to the previously mentioned ongoing
business transformation initiatives.
UGI International
For the three months ended March 31, 2021 2020 Increase
(Dollars in millions)
Revenues $ 834 $ 704 $ 130 18 %
Total margin (a) $ 343 $ 295 $ 48 16 %
Operating and administrative expenses $ 164 $ 147 $ 17 12 %
Operating income $ 147 $ 117 $ 30 26 %
Earnings before interest expense and income taxes $ 149 $ 126 $ 23 18 %
LPG retail gallons sold (millions) 242 230 12 5 %
Heating degree days-% warmer than normal (b) (3.4) % (14.7) % - -
(a)Total margin represents revenues less cost of sales and, in the 2020
three-month period, LPG cylinder filling costs of $7 million . For financial
statement purposes, LPG cylinder filling costs in the 2020 three-month period
are included in "Operating and administrative expenses" on the 2020 Condensed
Consolidated Statement of Income (but are excluded from operating and
administrative expenses presented above). LPG cylinder filling costs are
included in "Cost of sales" on the 2021 Condensed Consolidated Statement of
Income.
(b)Beginning in Fiscal 2021, 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. Prior-period amounts
have been restated to conform to the current-period presentation.
Average temperatures during the 2021 three-month period were 3.4% warmer than
normal but 11.8% colder than the prior-year period. Total LPG retail gallons
sold during the 2021 three-month period increased 5% reflecting higher bulk
volumes attributable to increased heating-related bulk sales related to colder
weather and higher cylinder volumes compared to the prior-year period. These
volume improvements were partially offset by the continued impact of COVID-19 on
certain commercial and industrial volumes. Average wholesale prices for propane
and butane during the 2021 three-month period in northwest Europe were
approximately 47% and 13% higher, respectively, compared with the prior-year
period.
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 the 2021 and
2020 three-month periods, the average unweighted euro-to-dollar translation
rates were approximately $1.21 and $1.10 , respectively, and the average
unweighted British pound sterling-to-dollar translation rates were approximately
$1.38 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 net effect of changes in foreign currency
exchange rates on UGI International's earnings before interest expense and
income taxes resulted in a net benefit of $13 million in the 2021 three-month
period. However, the impact of these changes is mitigated by the effects of
forward foreign currency exchange contracts entered into over a multi-year
period intended to substantially offset this volatility. These forward foreign
currency exchange contracts resulted in realized net gains of $2 million and $9
million , respectively, in the 2021 and 2020 three-month periods.
UGI International revenues and cost of sales increased $130 million and $82
million , respectively, during the 2021 three-month period. The increase in both
revenues and cost of sales principally reflects the translation effects of
stronger foreign currencies (approximately $69 million and $40 million ,
respectively), the effects of higher average LPG selling prices and product
costs compared to the prior-year period, and the previously mentioned increase
in retail LPG volumes. Energy marketing activities
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during the 2021 three-month period also contributed to the increased revenues
and cost of sales largely related to higher natural gas volumes compared to the
prior-year period.
UGI International total margin increased $48 million during the 2021 three-month
period reflecting the translation effects of stronger foreign currencies
(approximately $29 million ), higher average LPG unit margins and the previously
mentioned increase in bulk and cylinder volumes. These positive impacts were
partially offset by lower autogas and other low-margin volumes. The increase in
average LPG unit margins includes the continued effects of margin management
efforts.
UGI International operating income and earnings before interest expense and
income taxes increased $30 million and $23 million , respectively, during the
2021 three-month period compared to the prior-year period. The increase in
operating income principally reflects the increase in total margin partially
offset by higher operating and administrative expenses ($17 million ) largely
attributable to the effects of stronger foreign currencies (approximately $13
million ) compared to the prior-year period. Higher maintenance and distribution
costs related to the increased volumes also contributed to the increase in
operating and administrative expenses, substantially offset by lower employee
costs, travel and entertainment expenses and uncollectible accounts expense. The
increase in earnings before interest expense and income taxes in the 2021
three-month period largely reflects the higher operating income, and was
partially offset by lower realized gains on foreign currency exchange contracts
entered into in order to reduce volatility in UGI International earnings
resulting from the effects of changes in foreign currency exchange rates ($7
million ).
Midstream & Marketing
For the three months ended March 31, 2021 2020 Increase (Decrease)
(Dollars in millions)
Revenues $ 484 $ 422 $ 62 15 %
Total margin (a) $ 141 $ 123 $ 18 15 %
Operating and administrative expenses $ 28 $ 34 $ (6) (18) %
Operating income $ 90 $ 71 $ 19 27 %
Earnings before interest expense and income
taxes $ 100 $ 79 $ 21 27 %
(a)Total margin represents revenues less cost of sales.
Average temperatures across Midstream & Marketing's energy marketing territory during the 2021 three-month period were 5.8% warmer than normal but 11.7% colder than the prior-year period. Beginning in Fiscal 2021, deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather data. Prior-period amounts have been restated to conform to the current-period presentation. Midstream & Marketing's prior year results include contributions from its HVAC business and ownership interest in Conemaugh, both of which were sold inSeptember 2020 . Midstream & Marketing revenues for the 2021 three-month period were$62 million higher than the prior-year period principally reflecting increased revenues from natural gas marketing activities ($50 million ), renewable energy marketing activities ($15 million ), and capacity management activities ($6 million ). These revenue increases were partially offset by the absence of revenues attributable to its former HVAC business and ownership interest in Conemaugh ($14 million ). Midstream & Marketing cost of sales were$343 million in the 2021 three-month period compared to$299 million in the prior-year period. This$44 million increase largely reflects increased cost of sales attributable to natural gas ($40 million ) and renewable energy ($9 million ) marketing activities, partially offset by the absence of costs attributable to HVAC and Conemaugh ($7 million ). The significant increases in both natural gas revenues and cost of sales during the 2021 three-month period are largely attributable to higher average natural gas prices compared to the prior-year period. Midstream & Marketing total margin increased$18 million in the 2021 three-month period reflecting higher margin from natural gas ($10 million ) and renewable energy ($6 million ) marketing activities, improved capacity management margin ($6 million ), and higher margin from natural gas gathering activities ($4 million ). These margin improvements include the impact of acquisitions and new assets placed into service sinceMarch 31, 2020 , and were partially offset by the absence of margins attributable to HVAC and Conemaugh ($7 million ) in 2021 three-month period. Midstream & Marketing operating income and earnings before interest expense and income taxes during the 2021 three-month period increased$19 million and$21 million , respectively, compared to the prior-year period. The increase in operating income principally reflects the increase in total margin and lower operating and administrative expenses ($6 million ) compared to the prior-year period, partially offset by an adjustment to the contingent consideration related to the GHI acquisition ($4 million ). The decrease in operating and administrative expenses was largely related to the absence of the previously mentioned divested assets partially offset by increases related to acquisitions and new assets placed into service. The increase in earnings before 41
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interest expense and income taxes reflects the increase in operating income and
incremental equity method earnings related to the investment in
UGI Utilities For the three months ended March 31, 2021 2020 Increase (Dollars in millions) Revenues$ 442 $ 393 $ 49 12 % Total margin (a)$ 238 $ 207 $ 31 15 % Operating and administrative expenses (a)$ 67 $ 66 $ 1 2 % Operating income$ 142 $ 116 $ 26 22 % Earnings before interest expense and income taxes$ 142 $ 116 $ 26 22 % Gas Utility system throughput-bcf Core market 38 33 5 15 % Total 100 98 2 2 % Electric Utility distribution sales - gwh 276 259 17 7 % Gas Utility heating degree days-% warmer than normal (b) (8.1) % (18.9) % - - (a)Total margin represents revenues less cost of sales and revenue-related taxes (i.e., Electric Utility gross receipts taxes) of$2 million and$1 million during the 2021 and 2020 three-month periods, respectively. For financial statement purposes, revenue-related taxes are included in "Operating and administrative expenses" on the Condensed Consolidated Statements of Income (but are excluded from operating and administrative expenses presented above). (b)Beginning in Fiscal 2021, deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather data based on weather statistics provided byNOAA for airports located within Gas Utility's service territory. Prior-period amounts have been restated to conform to the current-period presentation. Temperatures in Gas Utility's service territory during the 2021 three-month period were 8.1% warmer than normal but 13.3% colder than the prior-year period. Gas Utility core market volumes increased 15% (5 bcf) during the 2021 three-month period primarily attributable to the effects of colder weather compared with the prior-year period and growth in the number of core market customers. Total Gas Utility distribution system throughput increased during the 2021 three-month period (2 bcf) reflecting the increased core market volumes and higher large firm delivery service volumes, partially offset by a decrease in interruptible delivery service volumes. Electric Utility distribution sales volumes increased during the 2021 three-month period largely related to the colder weather compared to the prior-year period.UGI Utilities revenues increased$49 million in the 2021 three-month period reflecting a$47 million increase in Gas Utility revenues and a slight increase in Electric Utility revenues. The increase in Gas Utility revenues principally reflects higher core market revenues ($35 million ) attributable to the increase in base rates that went into effect onJanuary 1, 2021 and the higher core market volumes. The increase in Electric Utility revenues during the 2021 three-month period reflects the increase in sales volumes and slightly higher DS rates compared to the prior-year period.UGI Utilities cost of sales was$202 million in the 2021 three-month period compared with$185 million in the prior-year period. The increase is largely attributable to higher Gas Utility cost of sales ($16 million ) which reflects the effects of the increased core market volumes partially offset by lower PGC rates compared to the prior-year period.UGI Utilities total margin increased$31 million during the 2021 three-month period primarily reflecting higher margin from Gas Utility ($30 million ). This increase largely reflects higher margin from core market customers ($26 million ) primarily attributable to the previously mentioned increase in core market volumes and the increase in base rates that went into effect onJanuary 1, 2021 . Customer growth and increased sales volumes related to large firm delivery service ($3 million ) compared to the prior-year period also contributed to the increase.UGI Utilities operating income and earnings before interest expense and income taxes both increased$26 million during the 2021 three-month period. These improvements reflect the previously mentioned increase in total margin partially offset by higher depreciation expense ($3 million ) and slightly higher operating and administrative expenses ($1 million ) compared to the prior-year period. The increase in depreciation expense relates to continued distribution system and IT capital expenditure activity. The slight increase in operating and administrative expenses reflect, among other things, higher allocation of corporate expenses partially offset by lower professional services costs compared to the prior-year period. 42
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UGI CORPORATION AND SUBSIDIARIESInterest Expense and Income Taxes
Our consolidated interest expense during the 2021 three-month period was
The lower effective income tax rate for the 2021 three-month period is largely attributable to higher discrete benefits compared to the prior-year period. This positive impact was largely related to an election made available under a tax law change inItaly which allowed the Company to step up its tax basis on certain assets in exchange for paying a three percent substitute tax in connection with such election. This resulted in a$23 million net benefit in the current period resulting in incremental tax basis that will be deductible in future periods. Also contributing to the decreased effective rate was lowerU.S. tax on foreign source income including the effects of regulations issued inJuly 2020 related to the high-tax exception on GILTI income. These reductions were partially offset by a lower NOL carryback benefit under the CARES Act compared to the prior-year period. The Company continues to evaluate the elections available under current regulations, recent government stimulus efforts including the anticipated benefits mentioned above related to the election made in connection with the tax law change inItaly , the modified GILTI provisions, and the CARES Act. Accordingly, the impacts on the Company's income tax provisions and taxes payable or refundable related to these items are subject to change. 2021 Six-Month Period Compared with the 2020Six-Month Period AmeriGas Propane For the six months ended March 31, 2021 2020 Increase (Decrease) (Dollars in millions) Revenues$ 1,606 $ 1,532 $ 74 5 % Total margin (a)$ 903 $ 918 $ (15) (2) % Operating and administrative expenses$ 454 $ 471 $ (17) (4) % Operating income/earnings before interest expense and income taxes$ 380 $ 371 $ 9 2 % Retail gallons sold (millions) 631 644 (13) (2) % Heating degree days-% warmer than normal (b) (3.3) % (4.6) % - - (a)Total margin represents total revenues less total cost of sales. (b)Beginning in Fiscal 2021, deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather data based on weather statistics provided byNOAA for 344 regions inthe United States , excludingAlaska andHawaii . Prior-period amounts have been restated to conform to the current-period presentation. Average temperatures during the 2021 six-month period were 3.3% warmer than normal and relatively consistent with the prior-year period (0.7% colder). Total retail gallons sold during the 2021 six-month period were 2% lower than the prior-year period principally reflecting structural conservation and other residual volume loss and the continued impact of COVID-19 on commercial and motor fuel volumes. These decreases were partially offset by higher resale and cylinder exchange volumes attributable to growth and pandemic-related usage. Total revenues increased$74 million during the 2021 six-month period largely reflecting higher average propane selling prices ($104 million ) partially offset by the lower retail propane volumes ($27 million ) compared to the prior-year period. Average daily wholesale propane commodity prices during the 2021 six-month period atMont Belvieu, Texas , one of the major supply points in theU.S. , were approximately 70% higher than such prices during the 2020 six-month period. Total cost of sales increased$89 million during the 2021 six-month period principally reflecting the higher average propane product costs ($96 million ) partially offset by the lower retail propane volumes ($11 million ).AmeriGas Propane total margin decreased$15 million in the 2021 six-month period largely attributable to the lower retail propane volumes ($16 million ) and decreased non-propane margin ($6 million ) principally reflecting lower fees and services partially offset by increased cylinder sales. The effects of these decreases were partially offset by slight improvements in average retail propane unit margins ($8 million ) compared to the prior-year period due to effective margin management efforts. Operating income and earnings before interest expense and income taxes increased$9 million during the 2021 six-month period reflecting lower operating and administrative expenses ($17 million ) compared to the prior-year period and gains on the early settlement of certain commodity derivative instruments ($5 million ) during the 2021 six-month period. These positive impacts 43
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were partially offset by the previously mentioned decrease in total margin ($15
million ). The decrease in operating and administrative expenses in the 2021
six-month period reflects, among other things, lower employee compensation and
benefits-related costs ($8 million ), decreased vehicle and equipment operating
and maintenance expenses ($7 million ), lower general insurance costs ($8
million ), and lower employee travel expenses ($3 million ). These decreases were
partially offset by increased advertising expenses ($3 million ), higher
allocated corporate costs ($2 million ), and higher telecommunications expenses
($2 million ) compared to the prior-year period. The lower operating and
administrative expenses reflect the partial benefits related to the previously
mentioned ongoing business transformation initiatives.
UGI International
For the six months ended March 31, 2021 2020 Increase
(Dollars in millions)
Revenues $ 1,534 $ 1,355 $ 179 13 %
Total margin (a) $ 660 $ 571 $ 89 16 %
Operating and administrative expenses $ 321 $ 298 $ 23 8 %
Operating income $ 282 $ 213 $ 69 32 %
Earnings before interest expense and income taxes $ 285 $ 226 $ 59 26 %
LPG retail gallons sold (millions) 478 477 1 - %
Heating degree days-% warmer than normal (b) (2.8) % (11.9) % - -
(a)Total margin represents revenues less cost of sales and, in the 2020
six-month period, LPG cylinder filling costs of $14 million . For financial
statement purposes, LPG cylinder filling costs in the 2020 six-month period are
included in "Operating and administrative expenses" on the 2020 Condensed
Consolidated Statement of Income (but are excluded from operating and
administrative expenses presented above). LPG cylinder filling costs are
included in "Cost of sales" on the 2021 Condensed Consolidated Statement of
Income.
(b)Beginning in Fiscal 2021, 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. Prior-period amounts
have been restated to conform to the current-period presentation.
Average temperatures during the 2021 six-month period were 2.8% warmer than
normal but 8.7% colder than the prior-year period. Total LPG retail gallons sold
during the 2021 six-month period increased slightly reflecting the effects of
higher bulk volumes attributable to increased heating-related bulk sales related
to colder weather, crop drying volumes and higher cylinder volumes compared to
the prior-year period. These volume improvements were partially offset by the
termination of a high-volume, low-margin autogas contract in Italy during the
prior year and the continued impact of COVID-19 on certain commercial and
industrial volumes. Average wholesale prices for propane in northwest Europe
were approximately 17% higher during the 2021 six-month period compared with the
prior-year period, while average butane prices were relatively constant during
both periods.
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 the 2021 and
2020 six-month periods, the average unweighted euro-to-dollar translation rates
were approximately $1.20 and $1.10 , respectively, and the average unweighted
British pound sterling-to-dollar translation rates were approximately $1.35 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 net effect of changes in foreign currency exchange rates on
UGI International's earnings before interest expense and income taxes resulted
in a net benefit of $22 million in the 2021 six-month period. However, the
impact of these changes is mitigated by the effects of forward foreign currency
exchange contracts entered into over a multi-year period intended to
substantially offset this volatility. These forward foreign currency exchange
contracts resulted in realized net gains of $2 million and $13 million ,
respectively, in the 2021 and 2020 six-month periods.
UGI International revenues and cost of sales increased $179 million and $90
million , respectively, during the 2021 six-month period compared to the
prior-year period. The increase in revenues and cost of sales principally
reflects the translation effects of stronger foreign currencies (approximately
$113 million and $63 million , respectively), the effects of higher average
butane selling prices compared to the prior-year period, and the previously
mentioned increases in bulk, crop drying and cylinder volumes. Energy marketing
activities during the 2021 six-month period also contributed to the increased
revenues and cost of sales largely related to higher natural gas volumes.
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UGI International total margin increased $89 million during the 2021 six-month
period reflecting the translation effects of stronger foreign currencies
(approximately $50 million ), higher average LPG unit margins including the
continued effects of margin management efforts, lower costs associated with
energy conservation certificates including adjustments related to the current
compliance period, and the previously mentioned increase in crop drying and bulk
volumes. Higher margin from energy marketing activities also contributed to the
increase including increased natural gas volumes and average margins. These
margin improvements were partially offset by lower autogas and other low-margin
volumes and the effects of COVID-19 compared with the prior-year period.
UGI International operating income and earnings before interest expense and
income taxes increased $69 million and $59 million , respectively, during the
2021 six-month period compared to the prior-year period. The increase in
operating income principally reflects the increase in total margin partially
offset by higher operating and administrative expenses ($23 million ) which was
largely attributable to the effects of stronger foreign currencies compared to
the prior-year period. The increase in earnings before interest expense and
income taxes in the 2021 six-month period largely reflects the higher operating
income, partially offset by lower realized gains on foreign currency exchange
contracts entered into in order to reduce volatility in UGI International
earnings resulting from the effects of changes in foreign currency exchange
rates ($11 million ).
Midstream & Marketing
For the six months ended March 31, 2021 2020 Increase (Decrease)
(Dollars in millions)
Revenues $ 825 $ 795 $ 30 4 %
Total margin (a) $ 245 $ 232 $ 13 6 %
Operating and administrative expenses $ 60 $ 69 $ (9) (13) %
Operating income $ 142 $ 126 $ 16 13 %
Earnings before interest expense and income
taxes $ 159 $ 141 $ 18 13 %
(a)Total margin represents revenues less cost of sales.
Average temperatures across Midstream & Marketing's energy marketing territory during the 2021 six-month period were 7.1% warmer than normal but 1.4% colder than the prior-year period. Beginning in Fiscal 2021, deviation from average heating degree days is determined on a rolling 10-year period utilizing volume-weighted weather data. Prior-period amounts have been restated to conform to the current-period presentation. Midstream & Marketing's prior year results include contributions from its HVAC business and ownership interest in Conemaugh, both of which were sold inSeptember 2020 . Midstream & Marketing revenues for the 2021 six-month period increased$30 million compared to the prior-year period principally reflecting increased revenues from natural gas ($21 million ) and renewable energy ($22 million ) marketing activities, higher capacity management revenues ($14 million ), and higher natural gas gathering revenues ($5 million ). These revenue increases were partially offset by the absence of revenues attributable to its former HVAC business and ownership interest in Conemaugh ($30 million ). Midstream & Marketing cost of sales were$580 million in the 2021 six-month period compared to$563 million in the prior-year period. The$17 million increase principally reflects higher cost of sales related to natural gas ($14 million ) and renewable energy marketing activities ($17 million ), partially offset by the absence of costs attributable to HVAC and Conemaugh ($16 million ). The increases in both natural gas revenues and cost of sales during the 2021 six-month period are largely attributable to higher average natural gas prices compared to the prior-year period. Midstream & Marketing total margin increased$13 million in the 2021 six-month period reflecting improved capacity management margin ($14 million ), higher margin from natural gas ($7 million ) and renewable energy ($5 million ) marketing activities, and higher margin from natural gas gathering activities ($5 million ). These margin improvements include the impact of acquisitions and new assets placed into service sinceMarch 31, 2020 , and were partially offset by the absence of margins attributable to HVAC and Conemaugh ($14 million ). Midstream & Marketing operating income and earnings before interest expense and income taxes during the 2021 six-month period increased$16 million and$18 million , respectively, compared to the prior-year period. The improvement in operating income reflects the increase in total margin and lower operating and administrative expenses ($9 million ) compared to the prior-year period, partially offset by an adjustment to the contingent consideration related to the GHI acquisition ($6 million ). The decrease in operating and administrative expenses was largely related to the absence of the previously mentioned divested assets partially offset by increases related to new assets placed into service and acquisitions. The increase in earnings before interest expense and income taxes reflects the improvement in operating income and incremental equity method earnings related to the investment inPine Run . 45
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UGI Utilities
For the six months ended March 31, 2021 2020 Increase
(Dollars in millions)
Revenues $ 742 $ 722 $ 20 3 %
Total margin (a) $ 405 $ 384 $ 21 5 %
Operating and administrative expenses (a) $ 127 $ 124 $ 3 2 %
Operating income $ 219 $ 208 $ 11 5 %
Earnings before interest expense and income
taxes $ 220 $ 208 $ 12 6 %
Gas Utility system throughput-bcf
Core market 62 59 3 5 %
Total 183 182 1 1 %
Electric Utility distribution sales - gwh 520 505 15 3 %
Gas Utility heating degree days-% warmer than
normal (b) (8.8) % (11.2) % - -
(a)Total margin represents revenues less cost of sales and revenue-related taxes
(i.e., Electric Utility gross receipts taxes) of $3 million and $2 million
during the 2021 and 2020 six-month periods, respectively. For financial
statement purposes, revenue-related taxes are included in "Operating and
administrative expenses" on the Condensed Consolidated Statements of Income (but
are excluded from operating and administrative expenses presented above).
(b)Beginning in Fiscal 2021, 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 airports located within Gas
Utility's service territory. Prior-period amounts have been restated to conform
to the current-period presentation.
Temperatures in Gas Utility's service territory during the 2021 six-month period
were 8.8% warmer than normal but 2.7% colder than the prior-year period. Gas
Utility core market volumes increased during the 2021 six-month period (3 bcf)
reflecting the effects of colder weather compared to the prior-year period and
growth in the number of core market customers. Total Gas Utility distribution
system throughput reflects a slight increase (1 bcf) during the 2021 six-month
period attributable to the increased core market volumes and higher large firm
delivery service volumes, partially offset by a decrease in interruptible
delivery service volumes and the continued impact of COVID-19 on commercial and
industrial volumes. Electric Utility distribution sales volumes increase during
the 2021 six-month period primarily attributable to the colder weather compared
to the prior-year period.
UGI Utilities revenues increased $20 million in the 2021 six-month period
reflecting increases of $16 million and $4 million attributable to Gas Utility
and Electric Utility, respectively. The increase in Gas Utility revenues
principally reflects higher core market revenues ($7 million ) largely
attributable to the increase in base rates that went into effect on January 1,
2021 , and the increased core market volumes, slightly offset by lower PGC rates
compared to the prior-year period. Higher off system sales ($5 million ), and
higher large firm delivery service sales ($3 million ) also contributed to the
increase. The increase in Electric Utility revenues during the 2021 six-month
period reflects higher sales volumes and DS rates compared to the prior-year
period.
UGI Utilities cost of sales was $334 million in the 2021 six-month period
compared with $336 million in the prior-year period. Gas Utility cost of sales
decreased during the 2021 six-month period ($5 million ) reflecting lower PGC
rates partially offset by the increase in core market volumes and higher cost of
sales associated with off system sales. Electric Utility cost of sales increased
during the 2021 six-month period ($3 million ) reflecting the increased volumes
and higher average DS rates compared to the prior-year period.
UGI Utilities total margin increased $21 million during the 2021 six-month
period principally reflecting higher margin from Gas Utility. This increase
largely reflects higher margin from core market customers ($18 million )
primarily attributable to the increase in base rates that went into effect on
January 1, 2021 , and the previously mentioned increase in core market volumes.
Customer growth and increased sales volumes related to large firm delivery
service ($3 million ) compared to the prior-year period also contributed to the
increase.
UGI Utilities operating income and earnings before interest expense and income
taxes increased $11 million and $12 million , respectively, during the 2021
six-month period. These increases largely reflect the previously mentioned
increase in total margin partially offset by higher depreciation expense ($6
million ) and higher operating and administrative expenses ($3
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million) compared to the prior-year period. The increase in depreciation expense
relates to continued distribution system and IT capital expenditure activity.
The increase in operating and administrative expenses reflect, among other
things, higher employee compensation and benefits-related costs and higher
allocations of corporate expenses. These increases were partially offset by
lower professional services costs and contracted labor compared to the
prior-year period.
Interest Expense and Income Taxes
Our consolidated interest expense during the 2021 six-month period was$156 million compared to$167 million during the 2020 six-month period. The decrease in interest expense principally reflects lower average short-term borrowings outstanding compared to the prior-year period. The lower effective income tax rate for the 2021 six-month period is largely attributable to higher discrete benefits compared to the prior-year period. This positive impact was largely related to an election made available under a tax law change inItaly which allowed the Company to step up its tax basis on certain assets in exchange for paying a three percent substitute tax in connection with such election. This resulted in a$23 million net benefit in the current period resulting in incremental tax basis that will be deductible in future periods. Also contributing to the decreased effective rate was lowerU.S. tax on foreign source income including the effects of regulations issued inJuly 2020 related to the high-tax exception on GILTI income. These reductions were partially offset by a lower NOL carryback benefit under the CARES Act compared to the prior-year period. The Company continues to evaluate the elections available under current regulations, recent government stimulus efforts including the anticipated benefits mentioned above related to the election made in connection with the tax law change inItaly , the modified GILTI provisions, and the CARES Act. Accordingly, the impacts on the Company's income tax provisions and taxes payable or refundable related to these items are subject to change. 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 the outbreak and continued spread of COVID-19. 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$1.5 billion atMarch 31, 2021 andSeptember 30, 2020 , respectively. The Company does not have any near-term senior note or term loan maturities. While the Company's operations and financial performance has been impacted by COVID-19 in the 2021 three- and six-month periods, it is a rapidly evolving situation and the Company cannot predict the ultimate impact that COVID-19 will have on its liquidity, debt covenants, financial condition or the timing of capital expenditures. UGI and its subsidiaries were in compliance with all debt covenants as ofMarch 31, 2021 . 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$444 million atMarch 31, 2021 , compared with$336 million atSeptember 30, 2020 . Excluding cash and cash equivalents that reside at UGI's operating subsidiaries, atMarch 31, 2021 andSeptember 30, 2020 , UGI had$83 million and$112 million of cash and cash equivalents, respectively. Such cash is available to pay dividends on UGI Common Stock and for investment purposes. 47
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UGI CORPORATION AND SUBSIDIARIESLong-term Debt and Credit Facilities
Long-term Debt
The Company's debt outstanding atMarch 31, 2021 andSeptember 30, 2020 , comprises the following: September 30, March 31, 2021 2020 AmeriGas Midstream & Corp & (Millions of dollars) Propane UGI International Marketing UGI Utilities Other Total Total Short-term borrowings$ 130 $ - $ 17 $ 193 $ -$ 340 $ 347 Long-term debt (including current maturities): Senior notes$ 2,575 $ 411 $ - $ 975 $ -$ 3,961 $ 3,960 Term loans - 352 688 144 550 1,734 1,741 Other long-term debt 4 23 41 2 281 351 380 Unamortized debt issuance costs (18) (6) (11) (5) (2) (42) (47) Total long-term debt$ 2,561 $ 780 $ 718$ 1,116 $ 829 $ 6,004 $ 6,034 Total debt$ 2,691 $ 780 $ 735$ 1,309 $ 829 $ 6,344 $ 6,381
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