Morningstar | Colder-Than-Normal Weather Helps AmeriGas' Fiscal 1Q Results
We are reaffirming our $32 fair value estimate and no moat and negative moat trend ratings for AmeriGas Partners after the partnership reported fiscal 2019 first-quarter adjusted EBITDA of $210.7 million compared with $194.1 million in the year-ago period.AmeriGas benefited from increased volumes associated with colder weather, which was 5% colder than normal and 6% colder than last year. We expect this benefit to run into the second quarter of this year. We are maintaining our current estimates. Any near-term weather-related volume increases will not have a material impact on our fair value estimate. AmeriGas' smaller cylinder exchange and national account volumes continue to be a growth area for the company, increasing volumes 10% quarter over quarter.
We continue to believe current distributions are unsustainable. We forecast AmeriGas will cut its distribution to $2.60 per unit from $3.80. This creates a sustainable distribution payout of roughly 1.4 times, up from the current 1.0, without the need for significant new equity and debt.
A distribution cut also provides opportunities for AmeriGas to reduce its leveraged balance sheet. Near-term financial benefits from colder-than-normal weather might allow management to sustain current distribution levels in 2019. Management's strategic review is on schedule to conclude in April, and we expect management will address distribution payout levels.
AmeriGas Partners is a holding company. Through its operating partnership, AmeriGas Propane, L.P., the company is engaged as a retail propane distributor. The company serves residential, commercial, industrial, agricultural, wholesale and motor fuel customers from several propane distribution locations. In addition to distributing propane, the company also sells, installs and services propane appliances, including heating systems and propane-powered generators. As part of its overall transportation and distribution infrastructure, the company operates as an interstate carrier throughout the continental U.S.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.