UGI Revenue Up 22.6%, Earnings Per Share Up 6%

Business Wire,  August 1, 2001  

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Business Editors

VALLEY FORGE, Pa.--(BUSINESS WIRE)--Aug. 1, 2001

UGI Corporation (NYSE:UGI), reported an increase in revenue for the third quarter of fiscal 2001 of 22.6% to $411,900,000 from $335,900,000 for the same period in 2000.

UGI also reported a seasonal loss of $0.16 per share for the third quarter, a 6% improvement over the seasonal loss of $0.17 per share during the same period in 2000. Net income per share for the nine months ended June 30, 2001 was $2.50 per share, excluding the cumulative effects of accounting changes, an increase of 23.8% compared to $2.02 per share for the same period in 2000.

Lon R. Greenberg, UGI chairman and chief executive officer, said, "We are pleased to report improved quarterly earnings per share once again. The improvement this quarter was achieved despite the adverse effects of weather that was warmer than last year, continuing customer conservation and a general economic slowdown. Also, we continued to make progress on our announced strategy to invest in our core utility and propane distribution businesses as well as related business opportunities that will fuel future growth."

UGI's ongoing objective is to grow earnings six to ten percent per year, increase the dividend three percent per year, and invest in related and complementary businesses.

Since July 1999, UGI has significantly improved earnings, raised the dividend three times, invested in propane distribution in Europe and invested in its regional electric generation, gas marketing and heating and air conditioning businesses.

Pretax income from Utilities for the third quarter of fiscal 2001 increased to $8,300,000 from $7,900,000 last year. Operating income in the Gas Utility increased to $10,800,000 from $9,400,000 on weather that was nearly 13% warmer than normal and 3% warmer than last year.

The benefits of improved sales volumes and margin from the core market and higher other income were offset by lower volume sales and margin to interruptible customers as a result of a less favorable spread between oil and natural gas prices. Operating expenses declined slightly versus the prior-year quarter.

"Core market volumes increased as a result of our ongoing investments to grow our customer base," explained Greenberg. In the Electric Utility, operating income for the quarter was $1,900,000 versus $2,900,000 a year ago as a result of higher purchased power costs partially offset by lower power production costs and higher unit sales.

In UGI's domestic propane unit, AmeriGas Partners, L. P. (NYSE:APU), the seasonal pretax loss was $14,100,000 for the third quarter of 2001 compared to a pretax loss of $12,800,000 last year. Results for the prior-year period include the beneficial effects of adjustments to employee-related accruals of $1,900,000.

Retail volumes for the quarter declined modestly to 133.2 million gallons from 135.4 million gallons for the quarter ended June 30, 2000 on weather that was 4.1% warmer than the prior-year period and 12.7% warmer than normal, according to information published by the National Oceanographic and Atmospheric Administration.

"At AmeriGas we continued to focus this quarter on achieving our strategic goals of exploiting our national footprint, including growth in AmeriGas' PPX(R) grill cylinder exchange program, improving our business processes to increase productivity and reduce expenses and capturing horizontal growth through acquisitions," noted Greenberg. "We are particularly pleased to have made significant progress in our efforts to purchase the retail propane distribution businesses of Columbia Propane. We now expect to close the acquisition by the end of the summer."

Operating and administrative expenses, which reflect higher vehicle expenses and expenses related to growth initiatives, rose 7% over the prior-year quarter, after adjusting for the beneficial effects of adjustments to employee-related accruals in the prior-year period previously mentioned.

Energy marketing pretax income for the quarter rose substantially to $2,400,000 compared with $500,000 last year, reflecting higher volumes and margins resulting from recent acquisitions and internal growth. "GASMARK is a notable example of our successful strategy to grow our related businesses. It has continued to grow both internally and through acquisition of customer segments from other marketers exiting the business," said Greenberg.

As previously reported, UGI acquired the gas marketing business of PG Energy Services, Inc., a subsidiary of Southern Union Company (NYSE:SUG) on July 1.

Results of international propane operations improved to a seasonal operating loss of $300,000 for the third quarter compared to an operating loss of $1,000,000 a year ago, primarily as a result of improved performance at FLAGA, UGI's European propane distribution operation acquired in September 1999. Weather, which was 10% warmer than normal, adversely affected sales volumes in the quarter.

"We continue to see improvements in unit margins and we are focusing our efforts on reducing operating expenses," explained Greenberg.