Must-know: An analysis of AmeriGas' second quarter earnings (Part 1 of 2)
AmeriGas Partners L.P. (APU) is a master limited partnership and the nation’s largest retail propane marketer (based on the volume of propane gallons distributed annually). AmeriGas serves customers in all 50 states from approximately 2,500 distribution locations.
APU’s business can be broadly divided into three categories: national accounts, AmeriGas cylinder exchange, and acquisitions. National accounts includes large sale customers with multiple locations, but a single point of contact with AmeriGas. AmeriGas’ cylinder exchange business (or ACE) is a counter-season business that enables consumers to purchase propane cylinders or exchange their empty propane cylinders at various retail locations, such as home centers, gas stations, mass merchandisers, and grocery stores. The third business segment seeks to grow APU’s footprint through strategic acquisitions—the most recent of them being the Heritage Propane acquisition from Energy Transfer Partners L.P. (ETP).
APU’s end users include residential, commercial, motor fuel, and agriculture and transport as well as other propane distributors. AmeriGas operates from 2,500 retail locations and 47,000 ACE distribution points. It has an internal fleet of over 360 transport trucks, over 350 rail cars, and 28 propane terminals.
The general partner for APU is AmeriGas Propane Inc., which is an indirect wholly owned subsidiary of UGI Corp (UGI). Through AmeriGas Propane Inc., UGI holds a 1% general partner interest in AmeriGas Partners and an ~18 % limited partner interest in APU. Petrolane Inc., which was a predecessor company of APU, owns ~7% limited partner interest in APU. The General Partner has an approximate 26% effective ownership interest in the partnership. Additionally, on January 12, 2012, APU completed the acquisition of its subsidiaries of Energy Transfer Partners L.P. (ETP) that operated ETP’s propane distribution business (Heritage Propane, which had operations in 41 states and was the third-largest retail propane distributor in the United States in 2011). ETP has an effective 24% limited partner interest in the partnership. The remaining common units (50%) are publicly held.
It is important to note that both APU and ETP are a part of the Global X MLP ETF (MLPA) while UGI is a part of the First Trust North American Energy Infrastructure Fund (EMLP).
On May 7, 2014, APU announced earnings for the second quarter which ended March 31. Continue reading the next part of this series to learn how APU performed in the quarter.
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