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What changed in UGI CORP /PA/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UGI CORP /PA/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+356 added−309 removedSource: 10-K (2023-11-29) vs 10-K (2022-11-21)

Top changes in UGI CORP /PA/'s 2023 10-K

356 paragraphs added · 309 removed · 208 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+30 added−32 removed141 unchanged
Biggest changeThe failure to successfully identify, complete, and implement business combinations, asset acquisitions and investments intended to advance our business strategy could have an adverse impact on our business, cash flows, financial condition and results of operations. Energy efficiency and technology advances, as well as price induced customer conservation, may result in reduced demand for our energy products and services.
Biggest changeIn addition, we cannot be sure that these actions will be as successful in reducing our overall expenses as we expect or that we do not forego future business opportunities as a result of these actions. 34 Table of Contents The failure to successfully identify, complete, implement and manage business combinations, acquisitions, divestitures and investments intended to advance our business strategy could have an adverse impact on our business, cash flows, financial condition and results of operations.
For more information on these risks, please refer to the following risk factors included elsewhere in this section: • “Energy efficiency and technology advances, as well as price induced customer conservation, may result in reduced demand for our energy products and services”; 34 Table of Contents • “Our operations may be adversely affected by competition from other energy sources”; • “Our need to comply with, and respond to, industry-wide changes resulting from, comprehensive, complex, and sometimes unpredictable governmental regulations, including regulatory initiatives aimed at increasing competition within our industry, may increase our costs and limit our revenue growth, which may adversely affect our operating results”; • “Our operations, financial results and cash flows may be adversely affected by existing and future global climate change laws and regulations, including with respect to GHG emission restrictions, as well as market responses thereto”; and • “We are subject to operating and litigation risks that may not be covered by insurance”.
For more information on these risks, please refer to the following risk factors included elsewhere in this section: • “Energy efficiency and technology advances, as well as price induced customer conservation, may result in reduced demand for our energy products and services”; • “Our operations may be adversely affected by competition from other energy sources”; 33 Table of Contents • “Our need to comply with, and respond to, industry-wide changes resulting from, comprehensive, complex, and sometimes unpredictable governmental regulations, including regulatory initiatives aimed at increasing competition within our industry, may increase our costs and limit our revenue growth, which may adversely affect our operating results”; • “Our operations, financial results and cash flows may be adversely affected by existing and future global climate change laws and regulations, including with respect to GHG emission restrictions, as well as market responses thereto”; and • “We are subject to operating and litigation risks that may not be covered by insurance”.
These risks include, but are not limited to, the assumption of material liabilities, environmental liabilities, the diversion of management’s attention from the management of daily operations to the integration of acquired operations, difficulties in the assimilation and retention of employees and difficulties in the assimilation of different cultures and practices and internal controls, challenges with consolidating the operations of acquired companies into our own, as well as in the assimilation of broad and geographically dispersed personnel and operations.
These risks include, but are not limited to, the assumption of material liabilities, including environmental liabilities, the diversion of management’s attention from the management of daily operations to the integration of acquired operations, difficulties in the assimilation and retention of employees and difficulties in the assimilation of different cultures and practices and internal controls, challenges with consolidating the operations of acquired companies into our own, as well as in the assimilation of broad and geographically dispersed personnel and operations.
For example, historically, approximately 60% to 70% of AmeriGas Propane’s annual retail propane volume, 60% to 70% of UGI International’s annual retail LPG volume, 60% to 70% of Energy Services’ retail natural gas volume and 60% to 65% of PA Gas Utility’s natural gas throughput (the total volume of gas sold to or transported for customers within our distribution system) has typically been sold during these months.
For example, historically, approximately 60% to 70% of AmeriGas Propane’s annual retail propane volume, 60% of UGI International’s annual retail LPG volume, 55% to 65% of Energy Services’ retail natural gas volume and 60% of PA Gas Utility’s natural gas throughput (the total volume of gas sold to or transported for customers within our distribution system) has typically been sold during these months.
Nevertheless, the gradual expansion of natural gas distribution systems in our service areas may continue to result in the availability of natural gas in some areas that previously depended upon LPG resulting in lower demand for LPG. Our natural gas businesses in the U.S. compete primarily with electricity and fuel oil, and, to a lesser extent, with LPG and coal.
The gradual expansion of natural gas distribution systems in our service areas may continue to result in the availability of natural gas in some areas that previously depended upon LPG resulting in lower demand for LPG. Our natural gas businesses in the U.S. compete primarily with electricity and fuel oil, and, to a lesser extent, with LPG and coal.
Additionally, we may not be able to attract, retain or engage key employees if our compensation and benefits program is not as robust as the compensation and benefits programs offered by other employers for similar roles.
We may not be able to attract, retain or engage key employees if our compensation and benefits program is not as robust as the compensation and benefits programs offered by other employers for similar roles.
If we are unable to protect our information technology systems against future service interruption, misappropriation of data, or breaches of security resulting from cyber-security attacks or other events, or if we encounter other unforeseen difficulties in the design, implementation or operation of our information technology systems, or if our third-party vendors or service providers experience compromises to their information technology systems, our operations could be disrupted, our business and reputation may suffer, and our internal controls could be adversely affected.
If we are unable to protect our information technology systems against future service interruption, misappropriation of data, or breaches of security resulting from cybersecurity attacks or other events, or if we encounter other unforeseen difficulties in the design, implementation or operation of our information technology systems, or if our third-party vendors or service providers experience compromises to their information technology systems, our operations could be disrupted, our business and reputation may suffer, and our internal controls could be adversely affected.
Although we expect to continue to qualify as a non-financial counterparty under the EMIR, and thus not be required to post margin, we are currently subject to limited derivatives reporting requirements that could expand in the future, and may also be 43 Table of Contents subject to increased regulatory requirements, including recordkeeping, marking to market, timely confirmations, portfolio reconciliation and dispute resolution procedures.
Although we expect to continue to qualify as a non-financial counterparty under the EMIR, and thus not be required to post margin, we are currently subject to limited derivatives reporting requirements that could expand in the future, and may also be 42 Table of Contents subject to increased regulatory requirements, including recordkeeping, marking to market, timely confirmations, portfolio reconciliation and dispute resolution procedures.
These developments could have a material adverse effect on our results of operations, financial results, valuation and useful life of assets, and cash flows. 42 Table of Contents Changes in data privacy and data protection laws and regulations or any failure to comply with such laws and regulations, could adversely affect our business and financial results.
These developments could have a material adverse effect on our results of operations, financial results, valuation and useful life of assets, and cash flows. 41 Table of Contents Changes in data privacy and data protection laws and regulations or any failure to comply with such laws and regulations, could adversely affect our business and financial results.
Prices for LPG and natural gas are subject to volatile fluctuations as a result of changes in supply and demand as well as other market conditions. During periods of high energy commodity costs, our prices generally increase, which may lead to customer conservation and attrition.
Prices for LPG and natural gas are subject to volatile fluctuations as a result of changes in supply and demand as well as other market conditions and external factors. During periods of high energy commodity costs, our prices generally increase, which may lead to customer conservation and attrition.
Risks Relating to Our Supply Chain and Our Ability to Obtain Adequate Quantities of LPG We are dependent on our principal LPG suppliers, which increases the risks from an interruption in supply and transportation. During Fiscal 2022, AmeriGas Propane purchased approximately 85% of its propane needs from 20 suppliers.
Risks Relating to Our Supply Chain and Our Ability to Obtain Adequate Quantities of LPG We are dependent on our principal LPG suppliers, which increases the risks from an interruption in supply and transportation. During Fiscal 2023, AmeriGas Propane purchased approximately 85% of its propane needs from 20 suppliers.
Despite our security measures, our technologies, systems, and networks have been and may continue to be the target of cyber-security attacks or information security breaches that could result in the unauthorized release, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations.
Despite our security measures, our technologies, systems, and networks have been and may continue to be the target of cybersecurity attacks or information security breaches that could result in the unauthorized release, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations.
Comprehensive privacy laws with some similarities to the CCPA and CPRA have been proposed or passed at the U.S. federal and state levels, such as the Virginia Consumer Data Protection Act (the “VCDPA) and the Colorado Privacy Act (the “CPA”).
Comprehensive privacy laws with some similarities to the CCPA and CPRA have been proposed or passed at the U.S. federal and state levels, such as the Virginia Consumer Data Protection Act (the “VCDPA”) and the Colorado Privacy Act (the “CPA”).
Competition among these fuels is primarily a function of their comparative price and the relative cost and efficiency of fuel utilization equipment. There can be no assurance that our natural gas revenues will not be adversely affected by this competition. The expansion, construction and development of our energy infrastructure assets subjects us to risks.
Competition among these fuels is primarily a function of their comparative price and the relative cost and efficiency of fuel utilization equipment. There can be no assurance that our natural gas revenues will not be adversely affected by this competition. 35 Table of Contents The expansion, construction and development of our energy infrastructure assets subjects us to risks.
In addition, if LPG prices decline significantly subsequent to customers signing up for a fixed-price program, there is a risk that customers will default on their commitments, adversely affecting our results of operations. Changes in commodity market prices may have a significant negative effect on our liquidity.
In addition, if LPG prices decline significantly subsequent to customers signing up for a fixed-price program, there is a risk that customers will default on their commitments, adversely affecting our results of operations. 39 Table of Contents Changes in commodity market prices may have a significant negative effect on our liquidity.
There is no assurance that our international businesses will be able to continue to acquire sufficient supplies of LPG to meet demand at prices or within time periods that would allow them to remain competitive. 39 Table of Contents Our ability to obtain sufficient quantities of LPG is dependent on transportation facilities and providers.
There is no assurance that our international businesses will be able to continue to acquire sufficient supplies of LPG to meet demand at prices or within time periods that would allow them to remain competitive. Our ability to obtain sufficient quantities of LPG is dependent on transportation facilities and providers.
Most of our domestic LPG product supply contracts permit suppliers to charge posted prices at the time of delivery or the current prices established at major U.S. storage points such as Mont Belvieu, Texas or Conway, Kansas. Most of our international LPG supply contracts are based on internationally quoted market prices.
Most of our domestic LPG product supply contracts permit suppliers to charge posted prices at the time of delivery or negotiated prices based on the current industry index prices established at major U.S. storage points such as Mont Belvieu, Texas or Conway, Kansas. Most of our international LPG supply contracts are based on internationally quoted market prices.
If we are not able to do so and have to post margin as to our uncleared swaps in the future, our costs of entering into and maintaining swaps would be increased.
If we are not able to do so and have to post margin supporting our uncleared swaps in the future, our costs of entering into and maintaining swaps would be increased.
While significant uncertainty exists with respect to this matter, the war between Russia and Ukraine and its broader impacts, including any increased trade barriers or restrictions on global trade imposed by the U.S. or Europe, or further retaliatory trade measures taken by Russia or other countries in response, could have a material adverse effect on our operating results, financial condition and cash flows.
While significant uncertainty exists with respect to this matter, the war between Russia and Ukraine and its broader impacts, including any increased trade barriers or restrictions on global trade imposed by the U.S. or Europe, or further trade measures taken by Russia or other countries in response, could have a material impact on our operating results, financial condition and cash flows.
Natural disasters, pandemics and catastrophic events, such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, terrorist attacks, war, political unrest and other similar occurrences, may adversely impact the demand for, price and availability of LPG (including propane), other refined fuels and natural gas, which could adversely impact our financial condition and results of operations, our ability to raise capital and our future growth.
Natural disasters, pandemics and catastrophic events, such as fires, earthquakes, explosions, floods, tornadoes, hurricanes, terrorist attacks, war (including conflict in the Middle East), political unrest and other similar occurrences, may adversely impact the demand for, price and availability of LPG (including propane), other refined fuels and natural gas, which could adversely impact our financial condition and results of operations, our ability to raise capital and our future growth.
We expect that there will continue to be new laws, regulations and industry standards concerning data privacy and data protection in the U.S., the EU and other jurisdictions, and we cannot yet determine the impact such laws, regulations, interpretations and standards may have on our business.
We expect that there will continue to be new laws, regulations and industry standards concerning data privacy and data protection, including artificial intelligence, in the U.S., the EU and other jurisdictions, and we cannot yet determine the impact such laws, regulations, interpretations and standards may have on our business.
Additionally, our ability to make payments of principal and interest on our indebtedness depends upon our future performance, 45 Table of Contents which is subject to economic and political conditions, seasonal cycles and financial, business and other factors, many of which are beyond our control.
Additionally, our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which is subject to economic and political conditions, seasonal cycles and financial, business and other factors, many of which are beyond our control.
Moreover, as cyber incidents increase in frequency and magnitude, we may be unable to obtain cyber-security insurance in amounts and on terms we view as adequate for our operations, including the agreement to certain indemnification provisions by our insurance providers.
Moreover, as cybersecurity incidents increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as adequate for our operations, including the agreement to certain indemnification provisions by our insurance providers.
Similarly, our third-party vendors or service providers have been impacted by cyber-security attacks and incidents and are subject to many, if not all, of the same risks and disruptions as described above.
Similarly, our third-party vendors or service providers have been impacted by cybersecurity attacks and incidents and are subject to many, if not all, of the same risks and disruptions as described above.
Because many of our customers rely on our energy products and services to heat their homes and businesses, and for agricultural purposes such as crop drying, our results of operations are adversely affected by warmer-than-normal heating season weather. Weather conditions have a significant impact on the demand for our energy products and services for both heating and agricultural purposes.
Because many of our customers rely on our energy products and services to heat their homes and businesses our results of operations are adversely affected by warmer-than-normal heating season weather. Weather conditions have a significant impact on the demand for our energy products and services for both heating and agricultural purposes.
Our indebtedness may adversely affect our business, financial condition and operating results. Our debt agreements also contain covenants that restrict our operational flexibility. As of September 30, 2022, we had total indebtedness of $7 billion.
Our indebtedness may adversely affect our business, financial condition and operating results. Our debt agreements also contain covenants that restrict our operational flexibility. As of September 30, 2023, we had total indebtedness of approximately $7 billion.
The European energy crisis may create LPG commodity supply challenges and could negatively impact our business results. The geopolitical situation in Europe during 2022 led to a sharp decrease in natural gas imports from Russia to Europe. This 38 Table of Contents decrease resulted in a significant increase in natural gas prices in Europe.
The European energy crisis may create LPG commodity supply challenges and could negatively impact our business results. The geopolitical situation in Europe during 2022 led to a sharp decrease in natural gas imports from Russia to Europe. This decrease resulted in a significant increase in natural gas prices in Europe.
We have opted to purchase insurance coverage for natural disasters and terrorist acts within our property and casualty insurance programs, but we can give no assurance that our insurance coverage would be adequate to fully compensate us for any losses to our business or property resulting from natural disasters or terrorist acts.
We have opted to purchase insurance coverage for natural disasters and terrorist acts within our property and casualty insurance programs, but we can give no assurance that our insurance 43 Table of Contents coverage would be adequate to fully compensate us for any losses to our business or property resulting from natural disasters or terrorist acts.
Changes in the costs of providing our energy products and services, including price increases in equipment and materials as well as increases in labor and distribution costs, may negatively impact our financial condition and results of operations and/or result in corresponding price increases for the energy products and services we offer our customers.
Changes in the costs of providing our energy products and services, including price increases in equipment and materials as well as increases in labor and distribution costs, have negatively impacted, and may continue to negatively impact, our financial condition and results of operations and/or result in corresponding price increases for the energy products and services we offer our customers.
Any failure or perceived failure to comply may result in proceedings or actions against us by government entities or individuals.
Any failure or perceived failure to comply may result in proceedings or actions against us by government entities or individuals, including class actions.
In 37 Table of Contents addition, the effectiveness of our internal controls could be adversely affected if we encounter unforeseen problems with respect to the operation of our information technology systems.
In addition, the effectiveness of our internal controls could be adversely affected if we encounter unforeseen problems with respect to the operation of our information technology systems.
While we generally refer to our Utilities segment as our “regulated segment,” there are many governmental regulations that have an impact on all of our businesses.
While we 40 Table of Contents generally refer to our Utilities segment as our “regulated segment,” there are many governmental regulations that have an impact on all of our businesses.
In addition, a cyber-security attack could provide a cyber-intruder with the ability to control or alter our pipeline operations. Such an act could result in critical pipeline failures.
In addition, an attack could provide an intruder with the ability to control or alter our pipeline operations. Such an act could result in critical pipeline failures.
We anticipate that the European energy crisis and the corresponding response by refineries and gas processing plants will continue in Fiscal 2023, which may lead to commodity supply challenges in some markets, higher commodity costs that may not be able to be absorbed by our customers, particularly in the United Kingdom and our Eastern European markets, and lower consumption by our customers, among other impacts, which could have a material adverse impact on our earnings, cash flows and overall financial condition.
We anticipate that the European energy crisis and the corresponding response by refineries and gas processing plants will continue in Fiscal 2024, leading to continued commodity supply challenges in some markets, higher commodity costs that may not be able to be absorbed by our customers, particularly in the Nordic countries and our Eastern European markets, and lower consumption by our customers, among other impacts, which could have a material adverse impact on our earnings, cash flows and overall financial condition.
Failure to eliminate or manage the 40 Table of Contents constraints in the supply chain may impact the availability of items that are necessary to support normal operations as well as materials that are required for continued infrastructure growth, including the replacement of end-of-life assets. Moreover, inflation is an area of increasing economic concern, both domestically and internationally.
Failure to eliminate or manage the constraints in the supply chain may impact the availability of items that are necessary to support normal operations as well as materials that are required for continued infrastructure growth, including the replacement of end-of-life assets. Moreover, inflation has been and continues to be an area of increasing economic concern, both domestically and internationally.
In addition, the potential physical effects of climate change, such as increased frequency and severity of storms, floods and other climatic events, could disrupt our operations and supply chain, and cause us to incur significant costs in preparing for or responding to these effects. These or other meteorological changes could lead to increased operating costs, capital expenses or supply costs.
In addition, the potential physical effects of climate change, such as increased frequency and severity of storms, floods, fires and other climatic events, could disrupt our operations and supply chain, and cause us to incur significant costs in preparing for or responding to these effects.
The operations of our subsidiaries are affected by conditions beyond our control, including weather, regulations, competition in national and international markets we serve, the costs and availability of propane, butane, natural gas, electricity, and other energy sources and capital market conditions.
The operations of our subsidiaries are affected by conditions beyond our control, including weather, regulations, competition in national and international markets we serve, the costs and availability of propane, butane, natural gas, electricity, and other energy sources, capital market conditions and interest rates and other business risks impacting liquidity levels.
If we cannot identify, attract, develop, retain and engage management, technical and professional employees, along with other qualified employees, to support the various functions of our business, our operations and financial performance could be adversely impacted.
If we cannot identify, attract, develop, retain and engage management, technical and professional employees, along with other qualified employees, to support the various functions of our business, our operations and financial performance could be adversely impacted. We may not be able to collect on the accounts of our customers.
While we have invested significant time and resources in our GDPR compliance program, emerging and changing data privacy and data protection requirements, including CCPA, CPRA, VCDPA and CPA, as well as other new and upcoming federal and state privacy laws and industry standards may cause us to incur substantial fines, additional significant costs or require us to change our business practices.
While we have invested significant time and resources in our GDPR and U.S. privacy law compliance program, emerging and changing data privacy and data protection requirements as well as other new and upcoming European and U.S. federal and state privacy and cybersecurity laws and industry standards may cause us to incur substantial fines, additional significant costs or require us to change our business practices.
For example, during Fiscal 2022, UGI International’s business in the United Kingdom purchased approximately 90% of its LPG needs from two suppliers and, in Italy, approximately 74% of its supply was sourced from two suppliers.
For example, during Fiscal 2023, UGI International’s business in the United Kingdom purchased approximately 76% of its LPG needs from two suppliers and, in Italy, approximately 72% of its supply was sourced from two suppliers.
Economic and geopolitical instability, including as a result of acts of war, could have a material adverse effect on our operating results, financial condition, and cash flows. In late February 2022, Russian military forces launched significant military action against Ukraine, which has continued through the date of this Report. We do not have operations in Russia or Ukraine.
Economic and geopolitical instability, including as a result of acts of war, have had, and could continue to have, an adverse effect on our operating results, financial condition, and cash flows. In late February 2022, Russian military forces launched significant military action against Ukraine, which has continued through the date of this Report.
Our energy marketing business in Europe may continue to be dramatically disrupted by extreme prices and volatility in the natural gas and power markets in Europe, which have resulted in, and may continue to result in, a material negative impact on our financial results. Our natural gas and power marketing businesses have traditionally relied upon stable price and availability conditions.
Our energy marketing business in Europe may continue to be disrupted by extreme prices and volatility in the natural gas and power markets in Europe, which have resulted in, and may continue to result in, a material negative impact on our financial results.
A reduction in demand could lower our revenues and, therefore, lower our net income and adversely affect our cash flows. In addition, federal, European and/or local laws and regulations may require mandatory conservation 35 Table of Contents measures, which would reduce the demand for our energy products.
A reduction in demand could lower our revenues and, therefore, lower our net income and adversely affect our cash flows. In addition, federal, European and/or local regulators may offer energy conservation incentives or otherwise enact laws and regulations that may require mandatory conservation measures, which would reduce the demand for our energy products.
In addition to the pre-existing natural gas supply shortages, the war between Russia and Ukraine and the resulting substantial reduction of natural gas imports from Russia to Europe have led to significant increases in the costs of both wholesale gas and power, and have created new risks that we have experienced and expect to continue to experience in Fiscal 2023 within our European energy marketing business.
The war between Russia and Ukraine and the resulting substantial reduction of natural gas imports from Russia to Europe have led to significant uncertainty in supply, including price volatility of both wholesale gas and power, and have created new risks that we have experienced and expect to continue to experience within our European energy marketing business.
As a result, there is no guarantee that financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. See the liquidity section in Item 7. Management's Discussion and Analysis for additional information on our current debt agreements.
As a result, there is no guarantee that financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. See the liquidity section in Item 7.
Any future legislative changes could negatively impact our anticipated cash-flow and after-tax results of operations. Our need to comply with, and respond to, industry-wide changes resulting from, comprehensive, complex, and sometimes unpredictable governmental regulations, including regulatory initiatives aimed at increasing competition within our industry, may increase our costs and limit our revenue growth, which may adversely affect our operating results.
Our need to comply with, and respond to, industry-wide changes resulting from, comprehensive, complex, and sometimes unpredictable governmental regulations, including regulatory initiatives aimed at increasing competition within our industry, may increase our costs and limit our revenue growth, which may adversely affect our operating results.
Fuel oil, which is a major competitor to propane, is a less environmentally attractive energy source. Furnaces and appliances that burn LPG must be upgraded to run on fuel oil and vice versa, and, therefore, a conversion from one fuel to the other requires the installation of new equipment.
Furnaces and appliances that burn LPG must be upgraded to run on fuel oil and vice versa, and, therefore, a conversion from one fuel to the other requires the installation of new equipment.
Certain aspects inherent in transacting business internationally could negatively impact our operating results, including: • costs and difficulties in staffing and managing international operations; • potentially adverse tax consequences, including restrictions on repatriating earnings, the threat of “double taxation,” and potential increases to corporate income taxes (including the proposed OECD framework that aims to reform international taxation rules with the goal of ensuring that multinational corporations pay adequate taxes in the jurisdictions in which they operate and other similar proposals); • fluctuations in currency exchange rates, particularly the euro, which can affect demand for our products, increase our costs and adversely affect our profitability and reported results; • new or revised regulatory requirements, including European competition and carbon emission laws, that may adversely affect the terms of contracts with customers, including with respect to exclusive supply rights and usage restrictions, and stricter regulations applicable to the storage and handling of LPG; • new and inconsistently enforced industry regulatory requirements, which can have an adverse effect on our competitive position; • tariffs and other trade barriers; • difficulties in enforcing contractual rights; • local political and economic conditions as well as geopolitical conditions that could cause instability and adversely impact the global economy or specific markets, such as the war between Russia and Ukraine; and • potential violations of federal regulatory requirements, including anti-bribery, anti-corruption, and anti-money laundering law, economic sanctions, the Foreign Corrupt Practices Act of 1977, as amended, and EU regulatory requirements, including the GDPR and Sapin II.
Certain aspects inherent in transacting business internationally could negatively impact our operating results, including: • costs and difficulties in staffing and managing international operations; • disagreements and disputes with our employees represented by a works council or union; • strikes and work stoppages by the employees of the Company or our suppliers and vendors; • fluctuations in currency exchange rates, particularly the euro, which can affect demand for our products, increase our costs and adversely affect our profitability and reported results; • new or revised regulatory requirements, including European competition and carbon emission reduction laws, that may adversely affect the terms of contracts with customers, including with respect to exclusive supply rights and usage restrictions, and stricter regulations applicable to the storage and handling of LPG; • new and inconsistently enforced industry regulatory requirements, which can have an adverse effect on our 37 Table of Contents competitive position; • tariffs and other trade barriers; • difficulties in enforcing contractual rights; • local political and economic conditions as well as geopolitical conditions that could cause instability and adversely impact the global economy or specific markets, such as the war between Russia and Ukraine; and • potential violations of federal regulatory requirements, including anti-bribery, anti-corruption, and anti-money laundering law, economic sanctions, the Foreign Corrupt Practices Act of 1977, as amended, and EU regulatory requirements, including the GDPR and Sapin II.
Updates to the EPBD continue to make their way through EU legislative approvals, which will establish stronger targets for management of new and existing building construction and integral heating systems that focus on low or zero carbon outcomes. Over time, these various measures will impact fossil fuel consumption in Europe and the demand for our energy products.
Updates to the EPBD continue to make their way through EU legislative approvals, which will establish stronger targets for management of new and existing building construction and integral heating systems that focus on low or zero carbon outcomes.
Failure to maintain our trademarks and brands could adversely affect our customer-facing businesses and our operational results. 46 Table of Contents Declines in the stock market or bond market, and a low interest rate environment, may negatively impact our pension liability.
We seek trademark protection for our brands in each of our businesses, and we invest significant resources in developing our business brands. Failure to maintain our trademarks and brands could adversely affect our customer-facing businesses and our operational results. Declines in the stock market or bond market, and a low interest rate environment, may negatively impact our pension liability.
The EU has committed to cut CO 2 emissions and EU member states are proposing and implementing a range of subsidies and incentives to achieve the EU’s climate change goals.
The EU has committed to cut CO 2 emissions and EU member states are proposing and implementing a range of subsidies and incentives to achieve the EU’s climate change goals. These subsidies and incentives may result in reduced demand for our energy products and services.
However, in Europe and elsewhere, climate change policies favoring electricity from renewable energy sources or the use of electric-powered equipment, such as heat pumps in heating applications, may cause changes in current relative price relationships. Moreover, notwithstanding cost, the convenience and efficiency of electricity make it an attractive energy source for consumers and developers of new homes.
However, in Europe and elsewhere, climate change policies favoring electricity from renewable energy sources or the use of electric-powered equipment, such as heat pumps in heating applications, may cause changes in current relative price relationships.
This exclusive forum provision may limit the ability of our shareholders to bring a claim in a judicial forum that such shareholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors and officers.
This exclusive forum provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or the Securities Act. 45 Table of Contents This exclusive forum provision may limit the ability of our shareholders to bring a claim in a judicial forum that such shareholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors and officers.
Spikes in demand caused by weather or other factors can stress the supply chain and limit our ability to obtain additional quantities of LPG.
Moreover, harsh weather conditions may at times impede the transportation and delivery of LPG or restrict our ability to obtain LPG from suppliers. Spikes in demand caused by weather or other factors can stress the supply chain and limit our ability to obtain additional quantities of LPG.
These risks include: (i) the ability to economically support the traditional fixed price and full requirement contracts of customers due to the significant increased cost to purchase incremental additional volumes consumed in excess of expectations; (ii) the ability to service typical portfolio needs with standard trading activities due to the limitations on purchasing cost effective services in the market; (iii) the ability to pass increased costs onto customers due, among other things, to timing, regulatory and contractual constraints, and (iv) the ability to maintain hedging services to customers due to the margining constraints and maximum trading limits implemented by clearing banks on supplier counterparties.
These risks include: (i) the ability to economically support the traditional fixed price and full requirement contracts of customers due to the significant increased cost to adjust for shifting volumes due to excess or shortage of consumption expectations; (ii) the ability to service typical portfolio needs with standard trading activities due to the limitations on purchasing cost effective services in the market; (iii) the ability to pass increased and volume deviation costs, including balancing costs, onto customers due, among other 38 Table of Contents things, to timing, regulatory and contractual constraints, (iv) the ability to maintain sourcing services to customers due to the margining and liquidity constraints as well as maximum trading limits implemented by both clearing banks and wholesale counterparties on energy suppliers, and (v) the ability to economically support fixed and variable price products while offering competitive services in the market.
These subsidies and incentives may result in reduced demand for our energy products and services. 41 Table of Contents We are investigating and remediating contamination at a number of present and former operating sites in the U.S., including former sites where we or our former subsidiaries operated MGPs.
We are investigating and remediating contamination at a number of present and former operating sites in the U.S., including former sites where we or our former subsidiaries operated MGPs.
Our holding company structure could limit our ability to pay dividends or service debt. We are a holding company whose material assets are the stock of our subsidiaries.
We have incurred and may continue to incur impairment charges on certain of our assets that could have a material impact on our results of operations. Our holding company structure could limit our ability to pay dividends or service debt. We are a holding company whose material assets are the stock of our subsidiaries.
Further, a lack of employee engagement could lead to loss of productivity and increased employee burnout, turnover, absenteeism, safety incidents as well as decreased customer satisfaction.
Further, a lack of employee engagement could lead to loss of productivity and increased employee burnout, turnover, absenteeism, safety incidents as well as decreased customer satisfaction. Additionally, uncertainty as a result of our ongoing review of strategic alternatives could negatively impact our ability to recruit and retain key employees.
The acceleration of a global energy crisis, including as a result of restrictions on Russia’s energy exports, could similarly impact the geographies where we do business.
The acceleration of a global energy crisis, including as a result of restrictions on Russia’s energy exports, could similarly impact the geographies where we do business. In addition, the U.S. and Europe have commenced certain trade actions as a result of the war between Russia and Ukraine.
Attacks and incidents may also occur due to malfeasance by employees or contractors, as well as human error as in the case of social engineering and phishing campaigns. A number of our employees currently work remotely; as a result, our cyber-security program may be less effective and information technology security may be less robust for those employees.
Attacks and incidents may also occur due to malfeasance by employees or contractors, as well as human error as in the case of social engineering and phishing campaigns.
The retail LPG distribution industry in the U.S. and many of the European countries in which we operate is mature and has been declining over the past several years, with no or modest growth (or decline) in total demand foreseen in the near future. Accordingly, we expect that year-to-year industry volumes will be principally affected by weather patterns.
The retail LPG distribution industry in the U.S. and many of the European countries in which we operate is mature and has experienced either no or modest growth (or decline) the past few years, and we do not expect significant changes to total demand in the near future.
Cyber-security incidents have recently increased in both frequency and magnitude and have involved malicious software and attempts to gain unauthorized access to data and systems, including ransomware attacks where a target’s access to its information systems is blocked until a ransom has been paid.
In addition, we rely on our information technology systems to process financial information and results of operations for internal reporting purposes and to comply with financial reporting, legal, and tax requirements. 36 Table of Contents Cybersecurity incidents have recently increased in both frequency and magnitude and have involved malicious software and attempts to gain unauthorized access to data and systems, including ransomware attacks where a target’s access to its information systems is blocked until a ransom has been paid.
In response to the significant price increase, refineries are substituting a portion of their natural gas refinery fuels with LPG, leading to a decrease in the availability of LPG in some areas of Europe as well as higher LPG costs.
Although the natural gas prices have declined from the unprecedented highs of 2022, in response to the significant price increases experienced, refineries still see an incentive to, and are substituting a portion of their natural gas refinery fuels with, LPG leading to a decrease in the availability of inland LPG as well as higher LPG costs.
As a result, UGI is considering all scenarios with respect to the future of its energy marketing business in Europe, including exit and wind down. On October 25, 2022, UGI announced the sale of its energy marketing business in the United Kingdom and in November 2022, UGI announced its intent to sell its energy marketing business located in France.
As a result, UGI considered all scenarios with respect to the future of its energy marketing business in Europe and decided to exit this market. UGI sold its energy marketing businesses in the United Kingdom, France and Belgium and UGI continues to make progress on the wind-down of its energy marketing business in the Netherlands.
Our ability to grow our businesses will be adversely affected if we are not successful in identifying and completing business combinations, asset acquisitions or investments in joint ventures intended to advance our business strategy, or if we are unable to realize the anticipated benefits from such transactions we have completed.
Our ability to successfully execute on strategic initiatives and achieve our long-term goals may be adversely affected if we are not successful in identifying and completing strategic transactions and investments, or if we are unable to realize the anticipated benefits from such strategic transactions and investments .
We are exposed to financial market risk (including refinancing risk) resulting from, among other things, changes in interest rates and conditions in the credit and capital markets. Adverse developments in the credit markets may increase our possible exposure to the liquidity, default and credit risks of our suppliers and vendors, counterparties associated with derivative financial instruments and our customers.
We are exposed to financial market risk (including refinancing risk) resulting from factors beyond our control, including, among other things, commodity price volatility and changes in interest rates and conditions in the credit and capital markets.
In addition, our agricultural customers use LPG for purposes other than heating, including for crop drying, and unfavorable weather conditions, such as lack of precipitation, may impact the demand for LPG. Moreover, harsh weather conditions may at times impede the transportation and delivery of LPG or restrict our ability to obtain LPG from suppliers.
There can be no assurance that normal winter weather in our market areas will occur in the future. In addition, our agricultural customers use LPG for purposes other than heating, including for crop drying, and unfavorable weather conditions, such as lack of precipitation, may impact the demand for LPG.
For further information on these initiatives, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Executive Overview - Continuing Business Transformation Initiatives.” Our information technology systems and those of our third-party vendors have been the target of cyber-security attacks in the past.
Our information technology systems and those of our third-party vendors have been the target of cybersecurity attacks in the past.
One element of our business strategy is to grow through investments in the U.S. and in international markets, which includes our recent efforts to expand our presence in the renewable energy industry. We may choose to finance such future investments with debt, equity, cash or a combination of the three.
We may choose to finance any future investments with debt, equity, cash or a combination of the three.
The enactment of proposed or future tax legislation may adversely impact our financial condition and results of operations. On March 27, 2020, the U.S. enacted the CARES Act. Our financial statements reflect the realized benefits of the CARES Act.
The enactment of proposed or future tax legislation may adversely impact our financial condition and results of operations. We continue to assess the impact of various U.S. federal, state, local and international legislative proposals that could result in a material increase to our U.S. federal, state, local and/or international taxes.
The European energy markets have entered in an unprecedented state of volatility.
Our natural gas and power marketing businesses have traditionally relied upon relative pricing and periods of market stability. Since the end of 2021, the European energy markets have been in an unprecedented state of volatility.
Removed
Additionally, as a result of the AmeriGas Merger, an even greater portion of our earnings has been and will continue to be derived during the peak heating season of October through March. There can be no assurance that normal winter weather in our market areas will occur in the future.
Added
These or other meteorological changes could lead to increased operating costs, capital expenses or supply costs.
Removed
Historically, most applications for LPG have generally not been competitive with natural gas in areas where natural gas pipelines already exist because natural gas was a significantly less expensive source of energy than LPG.
Added
Accordingly, we expect that year-to-year industry volumes will be principally affected by weather patterns.
Removed
However, as a result of the recent and ongoing energy crisis in Europe, the cost of LPG in many of our European markets is less than natural gas, which is driving a stronger demand for LPG applications.
Added
As part of our business strategy, we have pursued, and may continue to pursue, acquisitions, joint ventures, partnerships, divestitures, dispositions, and other strategic transactions and relationships with third parties. We have grown the Company through investments in the U.S. and in international markets, and have expanded our presence in the renewable energy industry.
Removed
Risks Relating to Our Business Operations, Including Internal and External Factors that May Impact Our Operational Continuity Our efforts to create operational benefits and cost efficiencies through business transformation initiatives at our business units and various corporate services functions may be disruptive and adversely affect our business, financial condition and 36 Table of Contents results of operations.
Added
We also may experience integration difficulties, including in implementing new systems and processes and with integrating systems and processes of companies with complex operations, which can result in inconsistencies in standards, controls, procedures and policies and may increase the risk that our internal controls are found to be ineffective.
Removed
We have made, and may continue to make, adjustments to our workforce in response to management changes, product changes, performance issues, changes in strategy, acquisitions or other internal and external considerations.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeLEGAL PROCEEDINGS With the exception of those matters set forth in Note 17 to Consolidated Financial Statements included in Item 15 of this Report, no material legal proceedings are pending involving the Company, any of its subsidiaries, or any of their properties, and no such proceedings are known to be contemplated by governmental authorities other than claims arising in the ordinary course of business.
Biggest changeLEGAL PROCEEDINGS With the exception of those matters set forth in Note 16 to Consolidated Financial Statements included in Item 15 of this Report, no material legal proceedings are pending involving the Company, any of its subsidiaries, or any of their properties, and no such proceedings are known to be contemplated by governmental authorities other than claims arising in the ordinary course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividend Policy Our Common Stock is traded on the New York Stock Exchange under the symbol “UGI.” On November 11, 2022, we had 6,485 holders of record of Common Stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Dividend Policy Our Common Stock is traded on the New York Stock Exchange under the symbol “UGI.” On November 10, 2023, we had 6,313 holders of record of Common Stock.
Equity Compensation Plan Information Information regarding the securities authorized for issuance under our equity compensation plans can be found under Part III of this Report. Issuer Purchases of Equity Securities The Company did not repurchase any shares of its Common Stock during the quarter ended September 30, 2022.
Equity Compensation Plan Information Information regarding the securities authorized for issuance under our equity compensation plans can be found under Part III of this Report. Issuer Purchases of Equity Securities The Company did not repurchase any shares of its Common Stock during the quarter ended September 30, 2023.
The stock performance shown on the graph below is based on historical data and is not necessarily indicative of future stock price performance. 48 Table of Contents ITEM 6. SELECTED FINANCIAL DATA Intentionally omitted.
The stock performance shown on the graph below is based on historical data and is not necessarily indicative of future stock price performance. 47 Table of Contents ITEM 6. SELECTED FINANCIAL DATA Intentionally omitted.
Performance Graph The following graph compares the cumulative five-year total shareholder return (stock price appreciation and the reinvestment of dividends) on an investment of $100 in UGI Common Stock, the S&P 500 Index, and the S&P 500 Utilities Index over the five years from September 30, 2017, through September 30, 2022.
Performance Graph The following graph compares the cumulative five-year total shareholder return (stock price appreciation and the reinvestment of dividends) on an investment of $100 in UGI Common Stock, the S&P 500 Index, and the S&P 500 Utilities Index over the five years from September 30, 2018, through September 30, 2023.
As of September 30, 2022, the Company had 7.10 million shares of Common Stock available for repurchase through an extension of a previous share repurchase program announced by the Company on February 2, 2022. The Board of Directors authorized the repurchase of up to 8 million shares of Common Stock over a four-year period expiring in February 2026.
As of September 30, 2023, the Company had 6.50 million shares of Common Stock available for repurchase through an extension of a previous share repurchase program announced by the Company on February 2, 2022. The Board of Directors authorized the repurchase of up to 8 million shares of Common Stock over a four-year period expiring in February 2026.
Recent Sale of Unregistered Securities The Company did not sell any unregistered securities during Fiscal 2022.
Recent Sale of Unregistered Securities The Company did not sell any unregistered securities during Fiscal 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe 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: 50 Table of Contents Year Ended September 30, (Millions of dollars, except per share amounts) 2022 2021 Adjusted net income attributable to UGI Corporation: AmeriGas Propane $ 112 $ 168 UGI International 175 221 Midstream & Marketing 163 107 Utilities 206 144 Corporate & Other (a) 417 827 Net income attributable to UGI Corporation 1,073 1,467 Net gains on commodity derivative instruments not associated with current-period transactions (net of tax of $140 and $389, respectively) (458) (1,001) Unrealized gains on foreign currency derivative instruments (net of tax of $14 and $2, respectively) (36) (6) Business transformation expenses (net of tax of $(2) and $(27), respectively) 7 74 Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax of $(1) and $(4), respectively) 1 10 Impairment of customer relationship intangible (net of tax of $0 and $(5), respectively) — 15 Impairments of certain equity method investments and assets (net of tax of $(14) and $0, respectively) 26 93 Impact of change in tax law (19) (23) Loss on extinguishment of debt (net of tax of $(3) and $0, respectively) 8 — Restructuring costs (net of tax of $(10) and $0, respectively) 24 — Total adjustments (a) (b) (447) (838) Adjusted net income attributable to UGI Corporation $ 626 $ 629 Adjusted diluted earnings per share: AmeriGas Propane $ 0.52 $ 0.79 UGI International 0.81 1.04 Midstream & Marketing 0.76 0.51 Utilities 0.95 0.68 Corporate & Other (a) 1.93 3.90 Earnings per share - diluted 4.97 6.92 Net gains on commodity derivative instruments not associated with current-period transactions (2.11) (4.72) Unrealized gains on foreign currency derivative instruments (0.17) (0.03) Business transformation expenses 0.03 0.35 Acquisition and integration expenses associated with the Mountaineer Acquisition — 0.04 Impairment of customer relationship intangible — 0.07 Impairments of certain equity method investments and assets 0.12 0.44 Impact of change in tax law (0.09) (0.11) Loss on extinguishment of debt 0.03 — Restructuring costs 0.12 — Total adjustments (a) (2.07) (3.96) Adjusted diluted earnings per share $ 2.90 $ 2.96 (a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income attributable to UGI Corporation.
Biggest changeNon-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. 50 Table of Contents The following tables reflect the adjustments referred to above and reconcile net income (loss) 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: Year Ended September 30, (Millions of dollars, except per share amounts) 2023 2022 Adjusted net income (loss) attributable to UGI Corporation: AmeriGas Propane $ 71 $ 112 UGI International 172 175 Midstream & Marketing 193 163 Utilities 219 206 Corporate & Other (a) (2,157) 417 Net (loss) income attributable to UGI Corporation (1,502) 1,073 Net losses (gains) on commodity derivative instruments not associated with current-period transactions (net of tax of $(419) and $140, respectively) 1,225 (458) Unrealized losses (gains) on foreign currency derivative instruments (net of tax of $(11) and $14, respectively) 27 (36) Loss associated with impairment of AmeriGas Propane goodwill (net of tax of $4 and $0, respectively) 660 — Loss on extinguishments of debt (net of tax of $(2) and $(3), respectively) 7 8 Acquisition and integration expenses associated with the Mountaineer Acquisition (net of tax of $0 and $(1), respectively) — 1 Business transformation expenses (net of tax of $(3) and $(2), respectively) 7 7 AmeriGas operations enhancement for growth project (net of tax of $(6) and $(2), respectively) 18 3 Impairments of certain equity method investments (net of tax of $0 and $(13), respectively) — 22 Restructuring costs (net of tax of $0 and $(8), respectively) — 21 Costs associated with exit of the UGI International energy marketing business (net of tax of $(67) and $(1), respectively) 181 4 Net gain on sale of UGI headquarters building (net of tax of $4 and $0, respectively) (10) — Impact of change in tax law — (19) Total adjustments (a) (b) 2,115 (447) Adjusted net income attributable to UGI Corporation $ 613 $ 626 51 Table of Contents Year Ended September 30, 2023 2022 Adjusted diluted earnings per share: AmeriGas Propane $ 0.33 $ 0.52 UGI International 0.80 0.81 Midstream & Marketing 0.89 0.76 Utilities 1.01 0.95 Corporate & Other (a) (10.19) 1.93 (Loss) earnings per share - diluted (c) (7.16) 4.97 Net losses (gains) on commodity derivative instruments not associated with current-period transactions 5.77 (2.11) Unrealized losses (gains) on foreign currency derivative instruments 0.13 (0.17) Loss associated with impairment of AmeriGas Propane goodwill 3.14 — Loss on extinguishments of debt 0.03 0.03 Business transformation expenses 0.03 0.03 AmeriGas operations enhancement for growth project 0.09 0.02 Impairments of certain equity method investments — 0.10 Restructuring costs — 0.10 Costs associated with exit of the UGI International energy marketing business 0.86 0.02 Net gain on sale of UGI headquarters building (0.05) — Impact of change in tax law — (0.09) Total adjustments (a) 10.00 (2.07) Adjusted diluted earnings per share (c) $ 2.84 $ 2.90 (a) Corporate & Other includes certain adjustments made to our reporting segments in arriving at net income attributable to UGI Corporation.
On October 20, 2022, Mountaineer entered into the Mountaineer 2023 Credit Agreement, as borrower, with a group of lenders. The Mountaineer 2023 Credit Agreement amends and restates a previous credit agreement and provides for borrowings up to $150 million, including a $20 million sublimit for letters of credit.
Mountaineer 2023 Credit Agreement. On October 20, 2022, Mountaineer entered into the Mountaineer 2023 Credit Agreement, as borrower, with a group of lenders. The Mountaineer 2023 Credit Agreement amends and restates a previous credit agreement and provides for borrowings up to $150 million, including a $20 million sublimit for letters of credit.
Related Party Transactions During Fiscal 2022 and Fiscal 2021, we did not enter into any related-party transactions that had a material effect on our financial condition, results of operations or cash flows. Off-Balance-Sheet Arrangements UGI primarily enters into guarantee arrangements on behalf of its consolidated subsidiaries.
Related Party Transactions During Fiscal 2023 and Fiscal 2022, we did not enter into any related-party transactions that had a material effect on our financial condition, results of operations or cash flows. Off-Balance-Sheet Arrangements UGI primarily enters into guarantee arrangements on behalf of its consolidated subsidiaries.
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 23 to Consolidated Financial Statements for additional information related to these adjustments, as well as other items included within Corporate & Other.
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 22 to Consolidated Financial Statements for additional information related to these adjustments, as well as other items included within Corporate & Other.
Although Midstream & Marketing’s fixed-price supply arrangements mitigate most risks associated with its fixed-price sales contracts, should any of the suppliers under these arrangements fail to perform, increases, if any, in the cost of replacement natural gas or electricity would adversely impact Midstream & Marketing’s results.
Although Midstream & Marketing’s fixed-price supply arrangements mitigate significant risks associated with its fixed-price sales contracts, should any of the suppliers under these arrangements fail to perform, increases, if any, in the cost of replacement natural gas or electricity would adversely impact Midstream & Marketing’s results.
During Fiscal 2022, UGI International issued €400 million principal amount of senior notes and Utilities issued a combined $215 million principal amount of senior notes. Proceeds from the UGI International senior notes were principally used to reduce existing long-term debt while proceeds from the Utilities borrowings were used to reduce short-term borrowings and for general corporate purposes.
During Fiscal 2022, UGI International issued €400 million principal amount of senior notes and Utilities issued a combined $215 million principal amount of senior notes. Proceeds from the Fiscal 2022 UGI International senior notes were used to repay existing long-term debt, while proceeds from the Utilities notes were used to reduce short-term borrowings and for general corporate purposes.
“Other noncurrent liabilities” included in our Consolidated Balance Sheet at September 30, 2022, principally comprise operating lease liabilities (see Note 16 to Consolidated Financial Statements); regulatory liabilities (see Note 9 to Consolidated Financial Statements); refundable tank and cylinder deposits (as further described in Note 2 to Consolidated Financial Statements under the caption “Refundable Tank and Cylinder Deposits”); litigation, property and casualty liabilities and obligations under environmental remediation agreements (see Note 17 to Consolidated Financial Statements); pension and other postretirement benefit liabilities recorded in accordance with accounting guidance relating to employee retirement plans (see Note 8 to Consolidated Financial Statements); and liabilities associated with executive compensation plans (see Note 14 to Consolidated Financial Statements).
“Other noncurrent liabilities” included in our Consolidated Balance Sheet at September 30, 2023, principally comprise operating lease liabilities (see Note 15 to Consolidated Financial Statements); regulatory liabilities (see Note 9 to Consolidated Financial Statements); refundable tank and cylinder deposits (as further described in Note 2 to Consolidated Financial Statements under the caption “Refundable Tank and Cylinder Deposits”); litigation, property and casualty liabilities and obligations under environmental remediation agreements (see Note 16 to Consolidated Financial Statements); pension and other postretirement benefit liabilities recorded in accordance with accounting guidance relating to employee retirement plans (see Note 8 to Consolidated Financial Statements); and liabilities associated with executive compensation plans (see Note 14 to Consolidated Financial Statements).
MD&A should be read in conjunction with Items 1 and 2, “Business and Properties,” Item 1A, “Risk Factors,” and the Consolidated Financial Statements in Item 8 below including “Segment Information” included in Note 23 to Consolidated Financial Statements.
MD&A should be read in conjunction with Items 1 and 2, “Business and Properties,” Item 1A, “Risk Factors,” and the Consolidated Financial Statements in Item 8 below including “Segment Information” included in Note 22 to Consolidated Financial Statements.
From time to time, we engage third-party valuation experts to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant judgments, estimates and assumptions especially with respect to intangible assets. Management makes estimates of fair value based upon assumptions it believes to be reasonable.
From time to time, we engage third-party 70 Table of Contents valuation experts to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuations require management to make significant judgments, estimates and assumptions especially with respect to intangible assets. Management makes estimates of fair value based upon assumptions it believes to be reasonable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MD&A discusses our results of operations for Fiscal 2022 and Fiscal 2021, and our financial condition. For discussion of our results of operations and cash flows for Fiscal 2021 compared with Fiscal 2020, refer to “Item 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MD&A discusses our results of operations for Fiscal 2023 and Fiscal 2022, and our financial condition. For discussion of our results of operations and cash flows for Fiscal 2022 compared with Fiscal 2021, refer to “Item 7.
The Company cannot predict the duration or total magnitude of the uncertain economic factors mentioned above and the total effects they 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 of September 30, 2022.
The Company cannot predict the duration or total magnitude of the uncertain economic factors mentioned above and the total effects they will have on its liquidity, debt covenants, financial condition or the timing of capital expenditures. UGI and its subsidiaries were in compliance with its debt covenants as of September 30, 2023.
With respect to unasserted claims arising from unreported incidents, we may use the work of specialists to estimate the ultimate losses to be incurred using actuarially determined loss development factors applied to actual claims data. The likelihood of a loss with respect to a particular loss contingency is often difficult to predict.
With respect to unasserted claims arising from unreported incidents, we may use the work of specialists to estimate the ultimate losses to be incurred using actuarially determined loss development factors applied to actual claims data. 69 Table of Contents The likelihood of a loss with respect to a particular loss contingency is often difficult to predict.
With respect to our net investments in our UGI International operations, a 10% decline in the value of the associated foreign currencies versus the USD would reduce their aggregate net book value at September 30, 2022, by approximately $180 million, which amount would be reflected in other comprehensive income. We have designated certain euro-denominated borrowings as net investment hedges.
With respect to our net investments in our UGI International operations, a 10% decline in the value of the associated foreign currencies versus the USD would reduce their aggregate net book value at September 30, 2023, by approximately $70 million, which amount would be reflected in other comprehensive income. We have designated certain euro-denominated borrowings as net investment hedges.
Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI Utilities, and certain of UGI’s other domestic wholly owned subsidiaries, and (2) a defined benefit pension plan for substantially all Mountaineer employees. The fair values of the U.S.
Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI Utilities, and certain of UGI’s other domestic wholly owned subsidiaries, and (2) a defined benefit pension plan for Mountaineer employees hired prior to January 1, 2023. The fair values of the U.S.
A 100 basis point decrease in market interest rates would result in increases in the fair value of this fixed-rate debt of approximately $265 million at September 30, 2022. Long-term debt associated with our domestic businesses is typically issued at fixed rates of interest based upon market rates for debt with similar terms and credit ratings.
A 100 basis point decrease in market interest rates would result in increases in the fair value of this fixed-rate debt of approximately $220 million at September 30, 2023. Long-term debt associated with our domestic businesses is typically issued at fixed rates of interest based upon market rates for debt with similar terms and credit ratings.
The decrease in earnings before interest expense and income taxes in Fiscal 2022 largely reflects the decrease in operating income partially offset by higher realized gains on foreign currency exchange contracts ($12 million) entered into in order to reduce volatility in UGI International earnings resulting from the effects of changes in foreign currency exchange rates.
The decrease in earnings before interest expense and income taxes in Fiscal 2023 largely reflects the decrease in operating income partially offset by higher realized gains on foreign currency exchange contracts ($2 million) entered into in order to reduce volatility in UGI International earnings resulting from the effects of changes in foreign currency exchange rates.
We expect to finance a substantial portion of our Fiscal 2023 capital expenditures from cash generated by operations and cash on hand.
We expect to finance a substantial portion of our Fiscal 2024 capital expenditures from cash generated by operations and cash on hand.
Electric Utility gross receipts and business and occupation taxes) of $21 million and $5 million, respectively, during Fiscal 2022 and Fiscal 2021. For financial statement purposes, revenue-related taxes are included in “Operating and administrative expenses” on the Consolidated Statements of Income (but are excluded from operating expenses presented above).
Electric Utility gross receipts and business and occupation taxes) of $24 million and $21 million, respectively, during Fiscal 2023 and Fiscal 2022. For financial statement purposes, revenue-related taxes are included in “Operating and administrative expenses” on the Consolidated Statements of Income (but are excluded from operating expenses presented above).
In general, many of our over-the-counter derivative instruments and all exchange contracts call for the posting of collateral by the counterparty or by the Company in the forms of letters of credit, parental guarantees or cash. At September 30, 2022, we had received cash collateral from derivative instrument counterparties totaling $398 million.
In general, many of our over-the-counter derivative instruments and all exchange contracts call for the posting of collateral by the counterparty or by the Company in the forms of letters of credit, parental guarantees or cash. At September 30, 2023, we had received cash collateral from derivative instrument counterparties totaling $40 million.
These arrangements are not subject to the recognition and measurement guidance relating to guarantees under GAAP. We do not have any off-balance-sheet arrangements that are expected to have a material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Utility Regulatory Matters Base Rate Filings.
These arrangements are not subject to the recognition and measurement guidance relating to guarantees under GAAP. We do not have any off-balance-sheet arrangements that are expected to have a material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Utility Regulatory Matters UGI Utilities.
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 ongoing global macroeconomic conditions including, among others, changes in consumer behavior resulting from the COVID-19 pandemic, the inflationary cost environment and ongoing energy commodity price volatility.
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 ongoing global macroeconomic conditions including, among others, changes in consumer behavior, the inflationary cost environment and ongoing energy commodity price volatility.
Operating Activities: Year-to-year variations in our cash flows from operating activities can be significantly affected by changes in operating working capital, especially during periods with significant changes in energy commodity prices. Cash flows from operating activities in Fiscal 2022 and Fiscal 2021 were $716 million and $1,481 million, respectively.
Operating Activities: Year-to-year variations in our cash flows from operating activities can be significantly affected by changes in operating working capital, especially during periods with significant changes in energy commodity prices. Cash flows from operating activities in Fiscal 2023 and Fiscal 2022 were $1,107 million and $716 million, respectively.
We are involved in litigation that arises in the normal course of business, and we are subject to risk of loss for general, automobile and product liability and workers’ compensation claims for which we obtain insurance coverage subject to self-insured retentions or deductibles.
Loss Contingencies and Environmental Remediation Liabilities. We are involved in litigation that arises in the normal course of business, and we are subject to risk of loss for general, automobile and product liability and workers’ compensation claims for which we obtain insurance coverage subject to self-insured retentions or deductibles.
Actual taxable income or future estimates of taxable income could render our current assumptions, judgments and estimates inaccurate. Changes in the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ significantly from our estimates. As of September 30, 2022, our net deferred tax liabilities totaled $1,249 million. Business Combination Purchase Price Allocations.
Actual taxable income or future estimates of taxable income could render our current assumptions, judgments and estimates inaccurate. Changes in the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ significantly from our estimates. As of September 30, 2023, our net deferred tax liabilities totaled $871 million. Business Combination Purchase Price Allocations.
This ratemaking recognition balances the accumulated difference between historical costs and rate recoveries with an estimate of future costs associated with the sites. 66 Table of Contents Regulatory Assets and Liabilities.
This ratemaking recognition balances the accumulated difference between historical costs and rate recoveries with an estimate of future costs associated with the sites. Regulatory Assets and Liabilities.
At September 30, 2022, combined borrowings outstanding under variable-rate debt agreements, excluding the previously mentioned effectively fixed-rate debt, totaled $800 million. Based upon average borrowings outstanding under variable-rate borrowings (excluding effectively fixed-rate term loan debt), an increase in short-term interest rates of 100 basis points (1%) would have increased our Fiscal 2022 interest expense by approximately $8 million.
At September 30, 2023, combined borrowings outstanding under variable-rate debt agreements, excluding the previously mentioned effectively fixed-rate debt, totaled $1,272 million. Based upon average borrowings outstanding under variable-rate borrowings (excluding effectively fixed-rate term loan debt), an increase in short-term interest rates of 100 basis points (1%) would have increased our Fiscal 2023 interest expense by approximately $12 million.
These liabilities, with the exception of operating lease liabilities, are not included in the 61 Table of Contents table of Contractual Cash Obligations and Commitments because they are estimates of future payments and not contractually fixed as to timing or amount. Required minimum contributions to the U.S. Pension Plans (as further described below under “U.S.
These liabilities, with the exception of operating lease liabilities, are not included in the table of Contractual Cash Obligations and Commitments because they are estimates of future payments and not contractually fixed as to timing or amount. Required minimum contributions to the U.S. Pension Plans (as further described below under “U.S. Pension Plans”) in Fiscal 2024 are $22 million.
As of September 30, 2022, the maximum amount of loss, based upon the gross fair values of the derivative instruments, we would incur if these counterparties failed to perform according to the terms of their contracts was $2,418 million.
As of September 30, 2023, the maximum amount of loss, based upon the gross fair values of the derivative instruments, we would incur if these counterparties failed to perform according to the terms of their contracts was $298 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Fiscal 2021 Annual Report on Form 10-K, filed with the SEC on November 19, 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Fiscal 2022 Annual Report on Form 10-K, filed with the SEC on November 21, 2022.
(b) 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. Average temperatures during Fiscal 2022 were 2.6% warmer than normal and 5.0% warmer than Fiscal 2021.
(b) 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. Average temperatures during Fiscal 2023 were 10.5% warmer than normal and 8.4% warmer than Fiscal 2022.
When determining whether a long-lived asset has been impaired, management groups assets at the lowest level that has identifiable cash flows.
When determining whether a long-lived asset has been impaired, management groups assets at the lowest level that has identifiable cash flows that are independent of other assets.
Dividends Quarterly dividends per share of UGI Common Stock paid during Fiscal 2022 and Fiscal 2021 were as follows: 2022 2021 1 st Quarter $ 0.345 $ 0.330 2 nd Quarter 0.345 0.330 3 rd Quarter 0.360 0.345 4 th Quarter 0.360 0.345 Total $ 1.410 $ 1.350 On November 17, 2022, UGI’s Board of Directors declared a cash dividend equal to $0.360 per common share.
Dividends Quarterly dividends per share of UGI Common Stock paid during Fiscal 2023 and Fiscal 2022 were as follows: 2023 2022 1 st Quarter $ 0.360 $ 0.345 2 nd Quarter 0.360 0.345 3 rd Quarter 0.375 0.360 4 th Quarter 0.375 0.360 Total $ 1.470 $ 1.410 On November 16, 2023, UGI’s Board of Directors declared a cash dividend equal to $0.375 per common share.
During Fiscal 2022 and Fiscal 2021, peak sales of receivables were $98 million and $87 million, respectively. During Fiscal 2022 and Fiscal 2021, average daily amounts sold were $2 million and $21 million, respectively. For further information on the Company’s long-term debt and credit facilities, see Note 6 to Consolidated Financial Statements.
During Fiscal 2023 and Fiscal 2022, peak sales of receivables were $150 million and $98 million, respectively. During Fiscal 2023 and Fiscal 2022, average daily amounts sold were $46 million and $2 million, respectively. For further information on the Company’s long-term debt, credit facilities and the Receivables Facility, see Note 6 to Consolidated Financial Statements.
Accordingly, our results of operations, after adjusting for the effects of gains and losses on derivative instruments not associated with current-period transactions as further discussed below, are significantly higher in our first and second fiscal quarters.
Accordingly, our results of operations, after adjusting for the effects of gains and losses on derivative instruments not associated with current-period transactions as further discussed below, are significantly higher in our first and second fiscal quarters. Executive Overview Recent Developments Review of Strategic Alternatives.
If future recovery of regulatory assets ceases to be probable, the elimination of those regulatory assets would adversely impact our results of operations and cash flows. As of September 30, 2022, our regulatory assets and regulatory liabilities totaled $340 million and $335 million, respectively.
If future recovery of regulatory assets ceases to be probable, the elimination of those regulatory assets would adversely impact our results of operations and cash flows. As of September 30, 2023, our regulatory assets and regulatory liabilities totaled $347 million and $366 million, respectively.
(b) 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. 52 Table of Contents Average temperatures during Fiscal 2022 were 0.8% warmer than normal and 1.8% colder than the prior year.
(b) 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. Average temperatures during Fiscal 2023 were 0.5% colder than normal and 1.9% colder than the prior year.
Energy Services also has a Receivables Facility with an issuer of receivables-backed commercial paper. On October 21, 2022, the expiration date of the Receivables Facility was extended to October 20, 2023.
Energy Services has a Receivables Facility with an issuer of receivables-backed commercial paper. On October 20, 2023, the expiration date of the Receivables Facility was extended to October 18, 2024.
The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point increase in market interest rates would result in decreases in the fair value of this fixed-rate debt of approximately $165 million at September 30, 2022.
The remainder of our debt outstanding is subject to fixed rates of interest. A 100 basis point increase in market interest rates would result in decreases in the fair value of this fixed-rate debt of approximately $160 million 66 Table of Contents at September 30, 2023.
Pension Plans’ assets totaled $525 million and $717 million at September 30, 2022 and 2021, respectively. At September 30, 2022 and 2021, the underfunded positions of the U.S. Pension Plans, defined as the excess of the PBO over the U.S. Pension Plans’ assets, were $82 million and $109 million, respectively.
Pension Plans’ assets totaled $539 million and $525 million at September 30, 2023 and 2022, respectively. At September 30, 2023 and 2022, the underfunded positions of the U.S. Pension Plans, defined as the excess of the PBO over the U.S. Pension Plans’ assets, were $55 million and $82 million, respectively.
At September 30, 2022, we have recorded after-tax charges to UGI Corporation’s stockholders’ equity of $14 million and recorded regulatory assets totaling $114 million in order to reflect the funded status of the U.S. Pension Plans. For a more detailed discussion of the U.S. Pension Plans and our other postretirement benefit plans, see Note 8 to Consolidated Financial Statements.
At September 30, 2023, we have recorded pre-tax credits to UGI Corporation’s stockholders’ equity of $4 million and recorded regulatory assets totaling $111 million in order to reflect the funded status of the U.S. Pension Plans. For a more detailed discussion of the U.S. Pension Plans and our other postretirement benefit plans, see Note 8 to Consolidated Financial Statements.
Adjusted net income attributable to UGI Corporation for Fiscal 2022 was $626 million (equal to $2.90 per diluted share) compared to adjusted net income attributable to UGI Corporation for Fiscal 2021 of $629 million (equal to $2.96 per diluted share).
Adjusted net income attributable to UGI Corporation for Fiscal 2023 was $613 million (equal to $2.84 per diluted share) compared to adjusted net income attributable to UGI Corporation for Fiscal 2022 of $626 million (equal to $2.90 per diluted share).
Pension Plans”) in Fiscal 2023 are not expected to be material. Required minimum contributions to the U.S. Pension Plans in years beyond Fiscal 2023 will depend, in large part, on the impacts of future returns on pension plan assets and interest rates on pension plan liabilities. U.S. Pension Plans The U.S.
Required minimum contributions to the U.S. Pension Plans in years beyond Fiscal 2024 will depend, in large part, on the impacts of future returns on pension plan assets and interest rates on pension plan liabilities. U.S. Pension Plans The U.S.
On February 8, 2021, Electric Utility filed a rate request with the PAPUC to increase its annual base distribution revenues by $9 million. On October 28, 2021, the PAPUC issued a final order approving a settlement that permitted Electric Utility, effective November 9, 2021, to increase its base distribution revenues by $6 million.
On October 28, 2021, the PAPUC issued a final order approving a settlement that permitted Electric Utility, effective November 9, 2021, to increase its base distribution revenues by $6 million. Mountaineer.
While the Company believes that its judgments used in the quantitative assessment of AmeriGas Propane’s fair value are reasonable based upon currently available facts and circumstances, if AmeriGas Propane were not able to achieve its anticipated results and/or if its weighted average cost of capital were to increase, its fair value would be adversely affected, which may result in an impairment.
While the Company believes that its judgments used in the quantitative assessment of UGI International’s fair value are reasonable based upon currently available facts and circumstances, if UGI International were not able to achieve its anticipated results and/or if its discount rate were to increase, its fair value would be adversely affected, which may result in an impairment.
Subsequent to September 30, 2022 and 2021, the Company repaid $87 million and $70 million, respectively, of such borrowings and classified these repayments as “Current maturities of long-term debt” on the Consolidated Balance Sheets.
(b) Borrowings outstanding have been classified as “Long-term debt” on the Consolidated Balance Sheets. Subsequent to September 30, 2022, the Company repaid $87 million of such borrowings and classified these repayments as “Current maturities of long-term debt” on the Consolidated Balance Sheets.
Executive Overview Recent Developments UGI International Energy Marketing Business In October 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing business located in the United Kingdom resulting in a net cash payment to the buyer of $19 million which includes working capital adjustments.
United Kingdom. In October 2022, UGI International, through a wholly-owned subsidiary, sold its natural gas marketing business located in the U.K. for a net cash payment to the buyer of $19 million which includes certain working capital adjustments.
In the event that these generation assets would not be able to produce all of the electricity needed to supply electricity under these agreements, Midstream & Marketing would be required to purchase electricity on the spot market or under contract with other electricity suppliers.
In the event that these generation assets would not be able to produce all of the electricity needed to supply electricity under these agreements, Midstream & Marketing would be required to purchase electricity on the spot market or under contract with other electricity suppliers. Accordingly, increases in the cost of replacement power could negatively impact Midstream & Marketing’s results.
(b) Deviation from average heating degree days is determined on a 10-year period utilizing volume-weighted weather data based on weather statistics provided by NOAA for airports located within Utilities natural gas service territory. Temperatures in Utilities’ natural gas service territory during Fiscal 2022 were 7.5% warmer than normal and slightly warmer than the prior year.
(b) Deviation from average heating degree days is determined on a 10-year period utilizing volume-weighted weather data based on weather statistics provided by NOAA for airports located within Gas Utility service territories. Temperatures in Gas Utility’s service territories during Fiscal 2023 were 11.7% warmer than normal and 4.8% warmer than the prior year.
The dividend will be payable on January 1, 2023, to shareholders of record on December 15, 2022. Repurchases of Common Stock During Fiscal 2022, the Company repurchased 900,000 shares at a total purchase price of $38 million. There were no such repurchases during Fiscal 2021.
The dividend will be payable on January 1, 2024, to shareholders of record on December 15, 2023. Repurchases of Common Stock During Fiscal 2023 and Fiscal 2022, the Company repurchased 600,000 shares and 900,000 shares of its common stock at a total purchase price of $22 million and $38 million, respectively.
(Currency in millions) Expiration Date Total Capacity Borrowings Outstanding Letters of Credit and Guarantees Outstanding Available Borrowing Capacity Weighted Average Interest Rate - End of Year September 30, 2022 AmeriGas OLP September 2026 $ 600 $ 131 $ 2 $ 467 7.27 % UGI International, LLC (a) October 2023 € 300 € — € — € 300 N.A.
(Currency in millions) Expiration Date Total Capacity Borrowings Outstanding Letters of Credit and Guarantees Outstanding Available Borrowing Capacity Weighted Average Interest Rate - End of Year September 30, 2023 AmeriGas OLP September 2026 $ 600 $ — $ 2 $ 598 N.A.
Such cash is available to pay dividends on UGI Common Stock and for investment purposes. 56 Table of Contents During Fiscal 2022 and Fiscal 2021, our principal business units paid cash dividends and made other cash payments to UGI and its subsidiaries as follows: (Millions of dollars) 2022 2021 AmeriGas Propane $ 227 $ 135 UGI International 116 212 Midstream & Marketing — 25 Utilities — 35 Total $ 343 $ 407 Common and Preferred Stock Issuance of Equity Units On May 25, 2021, the Company issued 2.2 million Equity Units with a total notional value of $220 million.
During Fiscal 2023 and Fiscal 2022, our principal business units paid cash dividends and made other cash payments to UGI and its subsidiaries as follows: (Millions of dollars) 2023 2022 AmeriGas Propane $ — $ 227 UGI International 248 116 Midstream & Marketing 215 — Utilities 5 — Total $ 468 $ 343 Common and Preferred Stock Issuance of Equity Units On May 25, 2021, the Company issued 2.2 million Equity Units with a total notional value of $220 million.
Cash used for investments in equity method investees was $47 million in Fiscal 2022 including investments in biomass and renewable energy projects at our Midstream & Marketing reportable segment and an investment in a renewable energy joint venture at UGI International.
Cash used for investments in equity method investees was $146 million in Fiscal 2023 compared to $47 million in Fiscal 2022 principally reflecting investments in biomass and renewable energy projects at our Midstream & Marketing reportable segment and, to a much lesser extent, our investment in a renewable energy joint venture at UGI International.
If the undiscounted cash flows used in the recoverability test are less than the long-lived asset's carrying amount, we determine its fair value. If the fair value is determined to be less than its carrying amount, the long-lived asset is reduced to its estimated fair value and an impairment loss is recognized in an amount equal to such shortfall.
If the fair value is determined to be less than its carrying amount, the long-lived asset is reduced to its estimated fair value and an impairment loss is recognized in an amount equal to such shortfall.
The Receivables Facility provides Energy Services with the ability to borrow up to $150 million of eligible receivables during the period October 21, 2022 through April 30, 2023, and up to $75 million of eligible receivables during the period May 1, 2023 through October 20, 2023.
The Receivables Facility provides Energy Services with the ability to borrow up to $200 million of eligible receivables during the period October 20, 2023 to April 30, 2024, and up to $100 million of eligible receivables during the period May 1, 2024 to October 18, 2024.
Asset (Liability) (Millions of dollars) Fair Value Change in Fair Value September 30, 2022 Commodity price risk (1) $ 1,715 $ (353) Interest rate risk (2) $ 66 $ (11) Foreign currency exchange rate risk (3) $ 117 $ (47) (1) Change in fair value represents a 10% adverse change in the market prices of certain commodities (2) Change in fair value represents a 50 basis point adverse change in prevailing market interest rates (3) Change in fair value represents a 10% adverse change in the value of the Euro and the British pound sterling versus the USD.
Asset (Liability) (Millions of dollars) Fair Value Change in Fair Value September 30, 2023 Commodity price risk (1) $ (40) $ (148) Interest rate risk (2) $ 28 $ (16) Foreign currency exchange rate risk (3) $ 36 $ (46) (1) Change in fair value represents a 10% adverse change in the market prices of certain commodities (2) Change in fair value represents a 50 basis point adverse change in prevailing market interest rates 67 Table of Contents (3) Change in fair value represents a 10% adverse change in the value of the Euro and the British pound sterling versus the USD.
Financing Activities: Changes in cash flow from financing activities are primarily due to issuances and repayments of long-term debt; short-term borrowings; dividends on UGI Common Stock; and issuances or repurchases of equity instruments. Cash flow used by financing activities was $51 million in Fiscal 2022 compared to cash flow provided by financing activities of $166 million in Fiscal 2021.
Financing Activities: Changes in cash flow from financing activities are primarily due to issuances and repayments of long-term debt; net short-term borrowings; dividends on UGI Common Stock; quarterly payments on outstanding Purchase Contracts; and issuances and repurchases of equity instruments. 62 Table of Contents Cash flow used by financing activities was $168 million in Fiscal 2023 compared to cash flow used by financing activities of $51 million in Fiscal 2022.
The Partnership and UGI International may not, however, always be able to pass through product cost increases fully or on a timely basis, particularly when product costs rise rapidly.
Their profitability is sensitive to changes in LPG supply costs. Increases in supply costs are generally passed on to customers. The Partnership and UGI International may not, however, always be able to pass through product cost increases fully or on a timely basis, particularly when product costs rise rapidly.
Cash inflows associated with investing activities during Fiscal 2022 includes cash received from the settlement of certain forward foreign currency contracts previously designated as net investment hedges. Fiscal 2021 includes cash contributions to Pine Run to fund the acquisition of Pine Run Midstream, LLC.
Cash inflows associated with investing activities during Fiscal 2023 and Fiscal 2022 also includes cash received from the settlement of certain forward foreign currency contracts previously designated as net investment hedges.
N.A. - Not applicable N.M. - Not meaningful The average daily and peak short-term borrowings under the Company’s principal credit agreements are as follows: 2022 2021 (Currency in millions) Average Peak Average Peak AmeriGas OLP $ 181 $ 388 $ 168 $ 293 UGI International, LLC € 77 € 250 € — € — Energy Services $ — $ — $ 3 $ 32 UGI Utilities $ 163 $ 270 $ 186 $ 279 Mountaineer $ 53 $ 85 $ 58 $ 67 UGI Corporation $ 191 $ 288 $ 191 $ 300 Receivables Facility.
N.A. - Not applicable The average daily and peak short-term borrowings under the Company’s principal credit agreements are as follows: 2023 2022 (Currency in millions) Average Peak Average Peak AmeriGas OLP $ 79 $ 242 $ 181 $ 388 UGI International, LLC € 203 € 300 € 77 € 250 Energy Services $ 13 $ 82 $ — $ — UGI Utilities $ 190 $ 340 $ 163 $ 270 Mountaineer $ 73 $ 101 $ 53 $ 85 UGI Corporation $ 249 $ 296 $ 191 $ 288 Receivables Facility.
Average temperatures across Midstream & Marketing’s energy marketing territory during Fiscal 2022 were 8.1% warmer than normal and 4.3% warmer than the prior year.
Average temperatures across Midstream & Marketing’s energy marketing territory during Fiscal 2023 were 11.0% warmer than normal and 6.0% warmer than the prior year.
Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not impact their cash flows. Our variable-rate debt at September 30, 2022, includes revolving credit facility borrowings and variable-rate term loans at UGI International, Utilities, Energy Services and UGI Corporation. These debt agreements have interest rates that are generally indexed to short-term market interest rates.
Our variable-rate debt at September 30, 2023, includes revolving credit facility borrowings and variable-rate term loans at UGI International, Utilities, Energy Services and UGI Corporation. These debt agreements have interest rates that are generally indexed to short-term market interest rates.
There is approximately $2 65 Table of Contents billion of goodwill in this reporting unit as of September 30, 2022. The Company will continue to monitor its reporting units and related goodwill for any possible future non-cash impairment charges. Impairment of Long-Lived Assets.
There is approximately $911 million of goodwill in this reporting unit as of September 30, 2023. The Company will continue to monitor its reporting units and related goodwill for any possible future non-cash impairment charges. As of September 30, 2023, our goodwill totaled $3,027 million.
Accordingly, increases in the cost of replacement power could negatively impact Midstream & Marketing’s results. 63 Table of Contents Interest Rate Risk We have both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but generally do not impact their fair value.
Interest Rate Risk We have both fixed-rate and variable-rate debt. Changes in interest rates impact the cash flows of variable-rate debt but generally do not impact their fair value. Conversely, changes in interest rates impact the fair value of fixed-rate debt but do not impact their cash flows.
Additionally, under the terms of the final order, PA Gas Utility will be authorized to implement a DSIC once its total property, plant and equipment less accumulated depreciation reaches $3,368 million (which threshold was achieved in September 2022).
Additionally, under the terms of the final order, PA Gas Utility was authorized to implement a DSIC once its total property, plant and equipment less accumulated depreciation reached $3,368 million (which threshold was achieved in September 2022). On February 8, 2021, Electric Utility filed a request with the PAPUC to increase its annual base distribution revenues by $9 million.
Midstream & Marketing adjusted net income in Fiscal 2022 was $56 million higher than the prior year. This increase principally reflects higher margins related to natural gas marketing activities, higher total earnings from renewable energy marketing activities, and incremental contributions from UGI Moraine East. Utilities Fiscal 2022 adjusted net income increased $62 million compared to the prior year.
This increase principally reflects incremental earnings contributions from UGI Moraine East and Pennant, partially offset by lower margins related to natural gas marketing activities. Utilities Fiscal 2023 adjusted net income increased $13 million compared to the prior year.
We believe we are in compliance with regulations governing defined benefit pension plans, including the ERISA rules and regulations. Required minimum contributions to the U.S. Pension Plans in Fiscal 2023 are not expected to be material. Pre-tax pension cost associated with the U.S. Pension Plans in Fiscal 2022 was not material. Pre-tax pension cost associated with the U.S.
We believe we are in compliance with regulations governing defined benefit pension plans, including the ERISA rules and regulations. Required minimum contributions to the U.S. Pension Plans in Fiscal 2024 is $22 million.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to such excess but not to exceed the total amount of the goodwill of the reporting unit. As of September 30, 2022, our goodwill totaled $3,612 million. No impairments of goodwill were recorded during any of the periods presented.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to such excess but not to exceed the total amount of the goodwill of the reporting unit.
In addition, we may have offsetting derivative liabilities and certain accounts payable balances with certain of these counterparties, which further mitigates the previously mentioned maximum amount of losses.
In addition, we may have offsetting derivative liabilities and certain accounts payable balances with certain of these counterparties, which further mitigates the previously mentioned maximum amount of losses. Certain of the Partnership’s derivative contracts have credit-risk-related contingent features that may require the posting of additional collateral in the event of a downgrade of the Partnership’s debt rating.
The following table summarizes the fair values of unsettled market risk sensitive derivative instrument assets (liabilities) held at September 30, 2022 and changes in their fair values due to market risks.
At September 30, 2023, if the credit-risk-related contingent features were triggered, the amount of collateral required to be posted would not be material. The following table summarizes the fair values of unsettled market risk sensitive derivative instrument assets (liabilities) held at September 30, 2023 and changes in their fair values due to market risks.
Excluding these collateral deposits received and cash and cash equivalents that reside at UGI’s operating subsidiaries, at September 30, 2022 and 2021, our cash and cash equivalents totaled $140 million and $172 million, respectively.
Our cash and cash equivalents totaled $241 million at September 30, 2023, compared with $405 million at September 30, 2022. Excluding cash and cash equivalents that reside at UGI’s operating subsidiaries, at September 30, 2023 and 2022, our cash and cash equivalents totaled $51 million and $140 million, respectively.
Electric Utility margin increased $6 million largely attributable to the increase in base rates compared to the prior year. Utilities operating income and earnings before interest expense and income taxes during Fiscal 2022 increased $86 million and $94 million, respectively, compared to the prior year.
Electric Utility margin was comparable to the prior year. Utilities operating income and earnings before interest expense and income taxes during Fiscal 2023 increased $30 million and $29 million, respectively, compared to the prior year.
Utilities 2022 2021 Increase (Decrease) (Dollars in millions) Revenues $ 1,620 $ 1,079 $ 541 50 % Total margin (a) $ 801 $ 616 $ 185 30 % Operating and administrative expenses (a) $ 332 $ 254 $ 78 31 % Operating income $ 327 $ 241 $ 86 36 % Earnings before interest expense and income taxes $ 336 $ 242 $ 94 39 % Gas Utility system throughput – bcf Core market 100 77 23 30 % Total 363 311 52 17 % Electric Utility distribution sales - gwh 997 998 (1) — % Natural gas degree days – % warmer than normal (b) (7.5) % (6.5) % — — (a) Total margin represents total revenues less total cost of sales and revenue-related taxes (i.e.
Utilities 2023 2022 Increase (Decrease) (Dollars in millions) Revenues $ 1,854 $ 1,620 $ 234 14 % Total margin (a) $ 877 $ 801 $ 76 9 % Operating and administrative expenses (a) $ 368 $ 332 $ 36 11 % Operating income $ 357 $ 327 $ 30 9 % Earnings before interest expense and income taxes $ 365 $ 336 $ 29 9 % Gas Utility system throughput – bcf Core market 96 100 (4) (4) % Total 375 363 12 3 % Electric Utility distribution sales - gwh 959 997 (38) (4) % Gas Utility degree days – % (warmer) than normal (b) (11.7) % (7.5) % — — (a) Total margin represents total revenues less total cost of sales and revenue-related taxes (i.e.
AmeriGas Propane 2022 2021 Increase (Decrease) (Dollars in millions) Revenues $ 2,943 $ 2,614 $ 329 13 % Total margin (a) $ 1,330 $ 1,397 $ (67) (5) % Operating and administrative expenses $ 889 $ 869 $ 20 2 % Operating income / earnings before interest expense and income taxes $ 307 $ 385 $ (78) (20) % Retail gallons sold (millions) 888 968 (80) (8) % Degree days – % warmer than normal (b) (0.8) % (2.8) % — — (a) Total margin represents revenues less cost of sales.
This increase was partially offset by higher operating and administrative expenses. 53 Table of Contents AmeriGas Propane 2023 2022 Increase (Decrease) (Dollars in millions) Revenues $ 2,581 $ 2,943 $ (362) (12) % Total margin (a) $ 1,331 $ 1,330 $ 1 — % Operating and administrative expenses $ 950 $ 889 $ 61 7 % Operating income / earnings before interest expense and income taxes $ 268 $ 307 $ (39) (13) % Retail gallons sold (millions) 823 888 (65) (7) % Degree days – % colder (warmer) than normal (b) 0.5 % (0.8) % — — (a) Total margin represents revenues less cost of sales.
(d) Represents the sum of amounts due if derivative instrument liabilities were settled at the September 30, 2022 amounts reflected in the Consolidated Balance Sheet (but excluding amounts associated with interest rate contracts).
(c) Calculated using applicable interest rates or forward interest rate curves, and UGI’s and its subsidiaries’ leverage ratios, as of September 30, 2023. 63 Table of Contents (d) Represents the sum of amounts due if derivative instrument liabilities were settled at the September 30, 2023 amounts reflected in the Consolidated Balance Sheet (but excluding amounts associated with interest rate contracts).
UGI International 2022 2021 Increase (Decrease) (Dollars in millions) Revenues $ 3,686 $ 2,651 $ 1,035 39 % Total margin (a) $ 935 $ 1,053 $ (118) (11) % Operating and administrative expenses $ 611 $ 622 $ (11) (2) % Operating income $ 237 $ 314 $ (77) (25) % Earnings before interest expense and income taxes $ 254 $ 317 $ (63) (20) % LPG retail gallons sold (millions) 799 792 7 1 % Degree days - % (warmer) colder than normal (b) (2.6) % 0.4 % — — (a) Total margin represents total revenues less total cost of sales.
UGI International 2023 2022 Increase (Decrease) (Dollars in millions) Revenues $ 2,965 $ 3,686 $ (721) (20) % Total margin (a) $ 920 $ 935 $ (15) (2) % Operating and administrative expenses $ 623 $ 611 $ 12 2 % Operating income $ 215 $ 237 $ (22) (9) % Earnings before interest expense and income taxes $ 234 $ 254 $ (20) (8) % LPG retail gallons sold (millions) 729 799 (70) (9) % Degree days - % (warmer) than normal (b) (10.5) % (2.6) % — — (a) Total margin represents total revenues less total cost of sales.
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.
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.
An impairment test for long-lived assets (or an asset group) is required when circumstances indicate that such assets may be impaired. If it is determined that a triggering event has occurred, we perform a recoverability test based upon estimated undiscounted cash flow projections expected to be realized over the remaining useful life of the long-lived asset.
If it is determined that a triggering event has occurred, we perform a recoverability test based upon estimated undiscounted cash flow projections expected to be realized over the remaining useful life of the long-lived asset. If the undiscounted cash flows used in the recoverability test are less than the long-lived asset's carrying amount, we determine its fair value.
Midstream & Marketing 2022 2021 Increase (Dollars in millions) Revenues $ 2,326 $ 1,406 $ 920 65 % Total margin (a) $ 450 $ 373 $ 77 21 % Operating and administrative expenses $ 129 $ 129 $ — — % Operating income $ 246 $ 160 $ 86 54 % Earnings before interest expense and income taxes $ 269 $ 190 $ 79 42 % (a) Total margin represents total revenues less total cost of sales.
Midstream & Marketing 2023 2022 Increase (Decrease) (Dollars in millions) Revenues $ 1,847 $ 2,326 $ (479) (21) % Total margin (a) $ 487 $ 450 $ 37 8 % Operating and administrative expenses $ 133 $ 129 $ 4 3 % Operating income $ 285 $ 246 $ 39 16 % Earnings before interest expense and income taxes $ 291 $ 269 $ 22 8 % (a) Total margin represents total revenues less total cost of sales.
Our total available liquidity balance, comprising cash and cash equivalents and available borrowing capacity on our revolving credit facilities, totaled approximately $1.7 billion and $2.2 billion at September 30, 2022 and 2021, respectively.
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 $1.7 billion at September 30, 2023 and 2022, respectively. The Company does not have any senior notes or term loans maturing in the next twelve months.
For additional information on regulatory assets and liabilities, see Notes 2 and 9 to Consolidated Financial Statements. Income Taxes. We use the asset and liability method of accounting for income taxes.
For additional information on regulatory assets and liabilities, see Notes 2 and 9 to Consolidated Financial Statements. Income Taxes. We use the asset and liability method of accounting for income taxes. We recognize the tax benefits from income tax positions that have a greater than more likely than not likelihood of being sustained upon examination by the taxing authorities.

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