UGI (NYSE:UGI) Energy Services, LLC, a wholly owned subsidiary of UGI Corporation, has amended its credit agreement terms, according to a recent SEC filing. On Monday, the company entered into a second amendment to its credit agreement that adjusts the applicable interest rates for its loans.
The amendment, dated June 28, 2024, modifies the Term Loan Credit Agreement originally established on August 13, 2019. Under the new terms, the applicable rate for SOFR Loans, which are based on the Secured Overnight Financing Rate, is set at 2.50% per annum. The rate for base rate loans has been adjusted to 1.50% per annum. These changes were negotiated with HSBC Bank USA, N.A., serving as the administrative agent, alongside other lenders and guarantors involved in the original agreement.
UGI Corporation, through its subsidiary, is engaged in the gas and other services combined industry, classified under the standard industrial code 4932. The Pennsylvania-based company, with its principal executive offices in King of Prussia, is listed on the New York Stock Exchange under the ticker symbol UGI.
In other recent news, UGI Corporation has reported a robust performance for the second quarter of 2024, indicating a significant increase in adjusted earnings per share (EPS) to $1.97, a rise of $0.29 from the previous year. This growth was mainly attributed to the success of its natural gas businesses. Instead of selling or forming a joint venture for its LPG businesses, UGI has opted for a restructuring and operational improvement plan, particularly targeting AmeriGas for a turnaround.
The company also reaffirmed its fiscal 2024 adjusted EPS guidance range of $2.70 to $3.00. UGI aims to reduce AmeriGas's debt by $350 million to $450 million in the latter half of fiscal 2024. The company anticipates a 4% to 6% EPS growth rate and plans to maintain a leverage ratio between 3.5 to 4 times from fiscal 2024 to 2027.
These developments are part of UGI's strategy of focusing on operational efficiency and balance sheet strength. The company has also celebrated its 140th consecutive year of paying dividends, although it expects dividend growth to be flat through fiscal 2026 with a target growth rate of 4% in fiscal 2027. Despite challenges faced by AmeriGas, UGI's overall financial health appears robust, with a clear plan for reducing debt and investing in growth areas.
InvestingPro Insights
As UGI Corporation navigates its financial strategies, real-time data from InvestingPro offers valuable insights for investors tracking the company's performance. With a market capitalization of $4.74 billion and a noteworthy dividend yield of 6.6%, UGI stands out for its commitment to shareholder returns. Notably, the company has a longstanding history of dividend reliability, having raised its dividend for 31 consecutive years and maintaining payments for 54 consecutive years. This consistency is a testament to UGI's stable financial practices and its prioritization of shareholder value.
InvestingPro Tips highlight that, despite a challenging revenue growth outlook with a decrease of over 22% as of the last twelve months leading up to Q2 2024, analysts predict the company will return to profitability this year. Additionally, UGI's liquid assets surpass its short-term obligations, indicating a solid liquidity position. For investors interested in further analysis and additional InvestingPro Tips, they can explore more at: https://www.investing.com/pro/UGI. There are currently 6 more tips available, which could provide deeper insights into UGI's financial health and future prospects.
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