UGI - Earnings call transcript Q2 2018

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Operator

Good morning. My name is Casey, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the UGI Corporation and AmeriGas Partners Fiscal Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions]. you. Thank Mr. of may Director your Relations, Investor Ruthrauff, begin you conference. Will

Will Ruthrauff

thank Good joining morning, Casey. you everyone Thanks, and for us.

President UGI On the Propane; Jerry Propane; of AmeriGas Walsh, UGI. President CFO Gallagher, of and Sheridan, and Corporation; CEO John call today Kirk are Oliver, Hugh and AmeriGas CEO of of CFO

may reflect statements, of remind today's expectations. to believes be non-GAAP report financial results. our the and list assume as to of appendix revise Before an of to certain me no our events for are factors We'll business presentation. predict. GAAP that today using of duty management you we difficult in begin, because will Reconciliations Form to on earnings the or Please which are comments or only. different differ are Actual uncertainties also that read comparable could results extensive measures date circumstances XX-K of that annual describe risks release let from affect include significantly measures certain these forward-looking to We our update measures. and statements that reasonable our our forward-looking available

turn to John. call let the Now, me over

John Walsh

welcome than International. businesses our than in basis. earnings normal was colder of in had our all warmer a Weather adjusted four call. quarter very strong review XXXX. net of We contributed to morning hope achieving that fiscal slightly and GAAP updated I each fiscal EPS you've and slightly results Thanks Each Good press release's normal the both Will. domestic UGI for had AmeriGas. QX and higher and to chance second businesses a UGI on our our reporting XXXX record guidance adjusted income QX for and than

Tax the in I'll and in the the noteworthy our domestic comment businesses, following Act activities weather and earnings contributions new effective our quarter up developments of impact for investments on with to financial and report acquisitions. and wrap to Jerry market Our our pleased again over winter from for performance. with overview details We're passage turn continuing you QX provide strong tax UGI. reflects earnings in of rate UGI's initiatives. QX review I'll Reform the once more it an lower positive update normal record AmeriGas and of the performance strategic our then Kirk, who'll on will

QX a QX and other $X.XX EPS and later. $X.XX, of adjusted EPS a quarters GAAP adjusted a EPS of adjusted highest Kirk time QX was adjusted earnings the at adjusted UGI's was which mark-to-market our reported EPS an history. in $X.XX. little was fiscal will our Our was which QX XX% valuation Both hedges That XXXX above the for cover items have

our business EPS was XXXX. results the was tax QX strong. the almost impact up clearly impact positive underlying extremely our While performance Reform, of benefited over Tax from XX% excluding QX fiscal

almost adjusted to and $X.XX of $X.XX the range above guidance a updated the of XXXX XX% midpoint our reported year Based year-to-date, we were year. that very you increasing above XX% performance, strong position adjusted $X.XX. of and our original of of fiscal a to in XXXX is X% our guidance good update EPS full running QX prior this On a $X.XX guidance over guidance on fiscal Now is midpoint $X.XX. for year we're The our above XXXX. to full EPS

to it's important we've addition earnings progress note second strategic activities. projects the the number on a performance quarter, in and strong to In the made of

their acquisitions meet our or to meeting projects always their focus targets. Our commitments serve, capital our in new communities maintain critical the performance customers also ensuring teams we exceed while on as that and

working Jersey. to the critical route cooperatively and and of the New government processes of working acquisitions This and certificate quarter. customers project will local Pennsylvania in through Pennsylvania activities survey provide the New gas is surveys, team residential partnership route we owners property the partnership agencies affordable Pennsylvania permitting. property new of We're across state states, has and focused eastern New now in the for Some highlights Jersey. in to local XX% with our pipeline is to hand, closely in move and in PennEast XX% both as enhanced and capacity access with related both in FERC commission detailed on With Jersey. obtained Marcellus land the for The

our facilities in new came early our cold year. QX, busy which in Manning of on LNG were is severe particularly facility Manning stream extremely during last well and at the services also New in liquefaction great is to produced provide We Our of for very contracts The customers critical LNG peaking LNG growing being incremental January. use us Demand period service made of used high. to portfolio England. LNG to positions

increased pipeline in capacity of combination demand and regions ramping mid-Atlantic element portfolio our the Manning areas peak incremental day looks essential gas those New supply LNG the supply the the strains available sector England. the all was many As for investment as for has most an timed LDCs generation and power of of demand become of for and capacity. well

our heating We've grow to and commercial mains residential very over to increase gas across X,XXX continue customers towns service added to and under-served at We five commonwealth. over an we of the approximately UGI new as UGI add base extent customer Pennsylvania, new XXX,XXX years. along reach Utilities, mains customers be demand gas serves and in our customers continues the past year-to-date for XX,XXX Utility almost customers' natural our strong. now

to progress great our We across critical mission our reinforce continue make system. to replace infrastructure with and

point steel on in replacement the had strong cast QX across quarter solid more QX reflecting in acquisitions during fiscal over LPG before Adjusted the the UniverGas fiscal the XXXX. power a program moved in two years business back solid a minutes. International of XXXX. basis, to on from the across Kirk? demonstrate income as much they areas and earnings the achieved and where call performance adjusted late variable the Financial DVEP a income up drivers on EBITDA QX Review. and to turn team handling before performance UGI comment underlying detail we back bare AmeriGas' record These the outstanding conditions fiscal XX% early in to assets two initiatives, did like International. this strategic I'd was will return XXXX. fiscal comment On quarter, the UGI later for versus adjusted over quarter, and pace. tax roughly very but I'll with Jerry Kirk positive contributions resiliency approximately of remains a to outstanding few year-to-date U.S. needed. XXXX XXXX. made weather earnings International to in half in iron and clearly AmeriGas the fiscal X% up our to The were infrastructure an UGI Our job equivalent taxes for by had the AmeriGas first at and

Kirk Oliver

our adjusted for Thanks quarter John. per Good morning, QX this compared everybody last share lays of year. to on GAAP the table and phone. earnings out This

the As this you loss impact the of can commodity instruments. $X.XX see, adjusted versus in results $X.XX changes year. in prior hedging of quarter exclude A mark-to-market

losses integration on You Jobs impacts Finance the and French Tax the associated acquisition, expenses the Bill can see with of tax the Act. unrealized one-time and foreign the the Cuts also currency hedges Finagaz and

was from the share to is positive up colder significantly normal, that last $X.XX capital projects year, a of the earnings acquisitions. adjusted our year and and contributions quarter largely due weather for $X.XX the but from prior relatively per Our than recent

impact resulting utility. to tax positive rate This and this half to a from attributable lower higher the of the federal in $X.XX quarter's of results the income year-to-date rates a due quarter the and negative France. Act benefit Jobs of for tax benefit, include and Tax Cuts a is Approximately that

adjusted can and investments our we made than businesses highlighting positive respectively, EPS of of and Marketing year. contributions were that and of all Tax from have benefits and weather, In few see, UTI you the of was As XX% up the colder years. over the the results Midstream Reform posted past XX% prior impact case the the higher Utilities,

exchange $XX $XX up LPG normal million well quarter, International $XXX administrative currency XX% the slightly as currency volumes as acquisitions. contributed UGI approximately last partially well unit foreign from reflecting second that an than UniverGas DVEP spend by by quarter year, translation representing or million AmeriGas will gallons incremental million, $XX expenses UniverGas the increased more UniverGas, million Jerry last a X% before rates, total October. versus adjusted year. level. million acquisition expenses As Adjusted incremental just that last over XX of reflecting than was up Italy XX%, Retail as was about XX% $XX offset for some $XX year. in stronger driving associated weather bit. colder well completed by the year of about that effects colder margins. XX% above as the with in prior incremental $XXX was higher income we mentioned, million as margin and prior as increase and DVEP but up volume Total or and from time margin was were the was Operating a increase million of last that in margin driven Retail million, on lower year. weather experience $X about AmeriGas million volume EBITDA was the taxes,

in The are is Total and by the assets quarter, $XX before peaking driven in of in acquired million, margin. foreign management cold losses quarter. from recorded up as and margin, and were and These capacity Midstream as increase expense. Sunbury natural as statement our we the taxes income currency to million million electric up in Marketing pipeline, well from that October. contributions are and higher reflecting contracts other $XXX.X extremely largely number gains the early items weather exchange reminder, As an was occurred increases a financial fluctuations foreign hedging. as Texas individual higher gathering impact creek margin gathering $XX line gas offset for the hedging income peaking generation by the well

of income than Utilities year's quarter. $XXX last XX. $XX taxes Slide to Turning about higher million, before

rates for Slide EPS half the of results relatively experienced and higher last results margin due first driven firm Both from its I and higher in customer company in with PNG compares weather XX%. the normal October Total expenses. volumes than up increase and that with utilities XXXX, the were went million, half that all the margin throughput the our was about revenues increased This reserves weather by accounts effect base compensation drove about which this of an into hire As up in that higher $XX driven XX% offsetting million, earlier, year to base deliveries. along core growth was mentioned market our time continued increase driven quarter. administrative receivable territory. colder Partially operating $X primarily experienced first by weather of in the service in expenses last and in throughput, large

adjusted can than You from or see benefits Reform XX%. by that EPS Tax more has excluding $X.XX increased the

Tax a five With the prepared the and for Reform EPS AmeriGas. capital of included, call very remarks was company's disciplined proximately over the adjusted to my I'll XX%. years is his efficiency. turn the on projects now the over due on past Jerry This That intense growth UGI's completes reports of growth investment attractive benefits and operational and focus to

Jerry Sheridan

earnings Kirk. with XX% Certainly critical and of essentially second development Weather second weather percent welcome year was last than adjusted our XX million, Thanks, finished to the the AmeriGas of year. see during the normal ahead quarter when normalized at year. in the quarter colder XX% QX cycle. $XXX last EBITDA

the weather the significant normal there swings. Although quarter, some basically were was for

up noted trend January to previous benefited due January cost and up late lag for XX% was relatively up good in from year Propane year, quarter stable the quarter mostly XX% April. delivery the than call, significantly on Mid turned with last from been warmer were quarter relationship. XX% a was almost and quarter the over though up up the the and last weather, cycle. delivery greater volume to quarter. Overall this cold very the weather, normal. the weather to per the was QX this in XX% Mt. associated late than return colder cold for into extreme hand $X.XX orders normal XX% was expenses has XX% volume to related percent from customer costs other so cost and QX X% than January temperatures volume warm, operating Belvieu gallon, the March between on I February in last As year XX% December, colder continued with

this the due Finally, range, fiscal midpoint percent are EBITDA to to year. we of principally QX guidance weather colder again the XX% of million At updating to and EBITDA up weather. and for the start warm our adjusted from in warm would $XXX in million $XXX XX% XXXX February be

for The increase AmeriGas same as to increase in X% our program QX XX% compared store including saw last a in quarter turning volume to a Cylinder Exchange year growth. Now sales. the

program Accounts a XX%, these both new platforms. growth very volume due quarter for National weather Our strong to and up business, was of both so

We to gallons also expected one add that's closed acquisition X April annually. in and million

Before moving matter. on, accounting mention wanted to I upcoming

As XXXX, footprint. across to that use we acquisition a in newly result we the Propane trade intended expanded of Heritage names our acquired

and we completed a that years operational definite acquired just years Now had we an either the complete we life of and we names value fiscal strategies subject trade more names eliminate across amortization were to previously adopt the recently acquisition, have are or our will will intent three these to not indefinite work was these a five removed Heritage now of XXXX. co-branding than life disclosed names. the X trade during from that concluded This review previously to and trade would of

upcoming a in five in upcoming to it we to of years cash this flow approximately no will These as trade I the QX I non-cash a while of fair an non-cash be disclosed and make chart event April, it excluded names be is amortized these is for over During as EBITDA. $XX this aware as three mentioned, will names given adjusted the life recorded the you be QX to wanted trade useful impact beginning and and of from shorter charge revalue also next our million value charge, XX-Q. adjust there

recently a this two annual and warm we improved distribution a action quarter, way quarter. when really seek board recommended holding significant approved years as prior Finally, distribution with our believe from Directors and results unchanged in discuss the long with actions and is following XXXX distribution a $X.XX of of Board of our for they we the this the go distribution year. approved flat our to We build This we year the XXXX. along will time coverage

finish We times expect one the coverage XXXX time. over X.X to range with distribution leverage improved in of and

you. That turn over to my call John. thank I'll back the concludes So comments.

John Walsh

Jerry. Thanks

and section of moment that line during commitment and infrastructure strategic into our Auburn is on the the review right a investment commitment pipeline of around new public challenges the comment construction I service. a show, discussion just this There by of Before today photos the like that and need the sector slide. for seriously. placing is related right that on is I'd service. The the placed activities, to power. side pipeline And the take These amount away side after to restoration our colleagues phase in Auburn Auburn very on was to development left take infrastructure the UGI same the the responsible of one our into new responsible significant example to to something line

pleased were for and report for guidance QX full EPS. earlier our increase year my we record As in remarks, adjusted I to EPS mentioned adjusted

earnings were achievements east earnings the several for many noteworthy there LDCs in first weeks that during gas demand experienced January. other future will performance, well that natural quarter position to record addition coast us the UGI growth. other two In of and

important in Our this the during England. the peak capacity demand polar new strong pipeline We're creates for on record of peak New the gas for This partners, address company. one delivery XX% this achieved natural but earlier PennEast to In a opportunities of on mid-Atlantic of the day the portfolio vortex and the need investments. above a only multiple new demand, status investment significant exceeded need we light is were call. project forward available to send commented UGI of our send capacity. X% outs XXXX. and is of infrastructure This which I new market pushing an on see continued for gas to fronts outs UGI natural

network. on series our our demand in peaking rapidly natural construction investments demand of the meeting We've for to system solutions LNG growing very Pennsylvania ability and assets We dynamically of the with to and continue and a network strong ability in meet concluded capacity. services LNG It expand enhance focused rapidly storage escalating storage gas LNG storage the vaporization the to facility million conditions. delivery to to another services. term New our LNG strengthen our access Bethlehem, of steels add LNG project has will vaporization demand our England for peaking the mid-Atlantic approximately market LNG unit $XX will representing an board seek million consumers gallons long Pennsylvania. on to $X the approved LNG near and new use investment of and construction based our supply This and LDCs large for There's other as ensure

outlook needs customer utilities remains investment strong. for base. to Our address of infrastructure deploying levels capital while record growing very our We're

cost Our customers core in and continue goal to unserved or ensure the commonwealth. is low our areas natural provide access of previously underserved to access gas for

billion noted we on deploy to great their of call, upwards to growth plan a utilizing nation's the their doing of Accounts next capabilities the in is National $X.X propane programs. largest at the drive Exchange last team and AmeriGas I as years. over job and utilities A scale Cylinder four capital distributor in our operational As

Cylinder Accounts second mentioned, Exchange grew for the National our volumes volumes while up Jerry quarter XX%, customers in our XX%. As were A

acquisition acquisitions unit our the continue DVEP, our in to of activities Europe, of on two power related made integration in comment Finagaz. our marketing in be investment Netherlands, progress the XXXX natural in market. on initial the pleased also the and We and performance to UniverGas, should I most very LPG with recent gas our the Italian France

final stages. is Our integration now program on

the year We're the milestones anniversary we integration job our that an investment this strategic has work integration critical and on Our for France of approaching and team of schedule three conclude outstanding fiscal that performance in year. achieving will all done expect Finagaz.

combination business beneficial performance Kirk drove quarter excellent and our impact the of As highlighted operating of unit full-year outlook. the financial his in remarks, Reform and performance for Legislation enhanced strong Tax the

that companies the mentioned beginning teams Tax his attractive of operationally at identify first excludes $X.XX with our increasing the changes of well positive impact the of charge benefit our guidance invest We're descriptions and reward confidence range trade who prudent strategies. I quarters, fiscal these discussed Reform fits growth sheet. ability Jerry us. As also impact year as of the performance in reflects in $X.XX companies the been of benefits our the consistently to of $X.XX. long are it to operating so This have and to of AmeriGas very recent also to benefits Reform both range $X.XX their Legislation. These at execute and business align great EPS as we the our investments opportunities UGI growth for call, a managing that guidance term the that these balance non-cash two strong excited unit related Tax adjusted and in of remarks. from meaningful are We've names about

Jastrzebski CFO, the about to be introducing fall. of Our our weeks the Ted Ted joining to summer look will and new and course the of forward we company in three investors

grateful I'll that, new work will the the endeavors we're for leadership it thank over up questions. We and you his to with had close the for up turn contributions With back Kirk to my we've your five past wish like all our years. Casey? with I'd call Casey a the over success in CFO who him. Finally, as opportunity best open his Kirk to our to for and remarks Oliver to

Operator

Instructions] with is you. question Mirek line ahead, Zak open. first go And from Citigroup. Please Thank Great. [Operator your comes your

Mirek Zak

Hi, good everyone. morning,

John Walsh

Good morning.

Mirek Zak

it and volumes the weather to linear, than volumes normal relationship but So, is more I between didn't our respond quite have winter weather might some understand seems necessarily expected.

playing attrition during wondering mom-and-pops was So any or dynamics increased sort just with quarter customer large the you to out competition price are if can if speak level I you players any saw during the in of of increased maybe quarter? other

John Walsh

No. no.

one. parts a really in good did of tanks. have January of to where fill of did year have the moments country retention, short minor. don't some some We parts filling customer for of number it's enough we shortage during But was propane where in that been we the So do pretty terms just us

quarter think got to water it the responded you down then pool really February very for and slow of warmer course It than the I mid-March, XX% around quickly was really your being normal. strong headline again. cause

in So, April's you early us just March an December in the cold part in outstanding late great March. as cold warm certainly of been for saw as February April, gave lead month the helped a effected us the the so But well. January,

Kirk Oliver

very International. And because Europe. in I to broadly and The AmeriGas similar just at both comment weather and response with the to regard of patterns weather look patterns more UGI we the U.S. volumes and are

volume business we compare lag. and AmeriGas where back you weather similar, of pattern that we and pattern depending weather in very the France very, same large with timing of say So volumes sort have follow lack to that on but a that get

Mirek Zak

Okay.

necessarily consider of weather, So going the wouldn't forward? you more a situation normalized this a considering sort

John Walsh

a normal the QX normal. but time, December you excluding week remember across period X% warmer of last also was It's than of

not does normal that year, warm So when relatively start, look and troughs off things. this really that at but a peaks we cold, having we're to so looking significant have at got these had so sudden year, extreme that affect and we a been

Mirek Zak

Is and a sort can that delta way these the due there was trough? you you of think what peak quantify to

John Walsh

far as volume? As

Mirek Zak

Yes.

John Walsh

look that's year. we're business the you all you looking across up of XX% weather this our it at volume quarter, So, colder when and and I for sensitive. if not mean And whether instance XX% entire at

business, you restaurants one we've a lot so it don't So, and commercial be expect for forth. one, got to of

about weather. Forklifts care don't that really the

really XX% weather of relationship of effect. that's that that quite that is having normal have year-over-years the you something So kind

Mirek Zak

one. Okay. And quick more just one

of business, the in that operate year the make growing same investment capital your excluding Exchange with maintenance what Cylinder is to what expense? is you business, associated and sort On the typical that business is typical a in

Jerry Sheridan

of growth we In separately type half business don't by disclose it don't and capital the maintenance growth, of Hugh. is but of business, is is maintenance disclose details. capital we but half ACEs This the

Mirek Zak

for thank me. Alright, That's all Okay. great, you.

John Walsh

you. Thank

Operator

[Operator next question is Instructions] from your ahead, go James. Ben Your open. with Please Brownlow Raymond comes line

Ben Brownlow

good Hi, morning.

last guess slightly a kind the I angle. Just question from of on different

guide year kind color the for where? versus any provide of the around unit can On down that the margins or what you was expectations the driven volume internal entirely in OpEx your

John Walsh

Our been volume very in in probably critical some We up a our we've guidance down you have come lost callback but of you have could well, of than in February through. XX% fact that X% such made was But half for the expenses a we of really our year. problem. bit in normal. is warmer and tracking just but had QX to the to a midpoint year now back became opportunities February month and an know that have important month But

Kirk Oliver

metrics, when gallon, well. very EBITDA delivered you the Yeah, look is at the business unit per critical performing margins or

in right and that metrics effectiveness capture of in the are the operational underlying sort trending effectiveness So the direction. business commercial would

it volume is So related.

John Walsh

Our it's been EBITDA acquired for Heritage highest, gallon first since we in quarter. the

Ben Brownlow

you the coverage terms current should how definitely its one can norm, basis, the obviously on at and the maintaining but In seasonally the through quarter Great, volatile level weather we closer on go distribution colder times. historical getting not basis trailing think very as it the think to obviously thanks. about improving forward steps coverage about ratio ratio, just we level extremely below obviously that high, And a to as four pattern winter year-over-year just but ideal, you us a is know an walk one step? high or ideal distribution

John Walsh

the the going Yeah, constituencies. had and at we're think I us very you all and a level. we watch on Moody's keep watch rating there's to not know no suggestion it agencies that But negative to we're we current sensitive the

going to two. step spend little will be like we'd where is year a a great So building This which one to forward. we're back be, time one, to to one,

and be be to weather should year next distribution instead the do we We completely back see Next year. in of might rateable position more on a extremes. basis increase normalized

Kirk Oliver

the two two Accounts, year, efficiencies And the for ACE level in over but a year, the we're look year, look there. you it's confident, as activity and growth for performance the at, our at guidance the predicting also orders. improved driven are forecasting driven and there updated last lower the we performance National if of core you about we're like But balance look we quarters guidance from quarters operational AmeriGas, some of strong quite talked by of by of sectors and the that's obviously

moving fiscal we segments, of confidence grow as So a a of well. as in coverage and which drive gives improves those distribution us operational business performance the puts business XXXX. great the underlying overall us terms specific of you obviously at performance, efficiencies position into in year When look lot

Ben Brownlow

propane sales in late May, any sense guess thank how March for you you. Great, kind of April? And I one just follow-up, to last made a around comment to

Jerry Sheridan

of a record, close is very so higher really Yeah, to QX year, for shaping than about month was up nicely. April last record volume XX% strong.

Ben Brownlow

Great, luck. of thank best and you

Jerry Sheridan

Thank you.

Operator

ahead, Chris today open. Sighinolfi question from comes go final Your your Please with line is Jefferies.

Chris Sighinolfi

Thanks. morning. Good

John Walsh

Good Chris. morning,

Chris Sighinolfi

- Jerry, couple wanted to a just questions. have I

regard With sure in for accounting the offering you're to those intend practices, an trade accounting trademark guess I just want am names you before, I regions? that to I change to - make all but just correctly, the commentary you. First in do use your understanding still

Jerry Sheridan

so clearly marketing now, got, the websites, expensive know all hundred to have business - about the and brands know. that you've you a things an of the hundred is all do to we're way we kind collateral. country going one You across

it So value. local have the really with in our we've that high brands folks field, reviewed operating concluded there's XX around

and is to But the are to going value charges and up because them will slowly programmed years was begin the co-brand on now removed. diminished. the take something balance be completely six is away So, sheet we just over whole non-cash that operational slowly time we'll total ago rest then hung the

Chris Sighinolfi

just Okay, is be streamlining pay that that well, acquisitions true will on practice on that you names here AmeriGas region? of how market a but likely when now brand study which make on do that and there it from I operates it of guess the number as

Jerry Sheridan

the that keeping I ever to a say acquire experience and company but the we'll brand again, customer be leave that digital and best has. Yeah, wouldn't we never AmeriGas continue improve will as everything can toward alone bias our the

John Walsh

really we part a particular more our helpful think approach. branding new as a I enhance ways align we Yeah, communication really customers in that and tools, digital can communicate using if lot is with last on it's critical

this So that that reflecting acceleration activity. of is sort that of

Chris Sighinolfi

more costs streamline I than term longer efficient, be sort with into a you have putting are lot away in a any Jerry, you you is them that a in expect is should know an co-brand said imagine something know trademark but can...? there costs So, that product, this you like in uptick you that gains of or way efficiency branded we do they'll as some meaningful

Jerry Sheridan

replace going not material, we signs the a massive anyway, all to Nothing is I mean this undertaking. be time so

Chris Sighinolfi

Okay, the perfect. the your that Is advantage would between encountered, a this about you business and is of gears guess of ago, to of infrastructure have PennEast the then Midstream sources north that. couple to whole the exists in if Pennsylvania your line pipelines you was notion know production the And be intensification go and position seems gap as John, fields talk back to lot we've about demand other talk thought if and years take and something east Marketing switch to opposition regional I I could then and an I in interested it's comments them. intensive you

actively infrastructure You is working happened to that with infrastructure. it - also gap, that that dislocations straddling gap new bridge that the know was

mentioned broader I LNG guys UGI to back that, about new release your And plant. how had percent utility, Bethlehem at question does peaking, I went thirty and up you pretty X% time your the guess load XXXX is, looked about that for the But was think regulator in peaking about throughput within so talked the and look similar XX% over demand were period. the you but you that interested was and appetite that were the they and

about think about it's fact gets this fact before how think better? in not that, that infrastructure beyond maybe - regulators I the the question, maybe does state guess a how maybe question gap the it So but Pennsylvania it's getting worse does

John Walsh

the for pretty access Yeah, that's the Pennsylvania Marcellus are have Certainly you resources. major a to within I think state, of fortunate most we concern. ready

utility your from gas and of Marcellus. XX%, the are is know of you majority sourcing our coming know vast So XX%-XX% others natural upwards the you

where pretty that Pennsylvania comes it's about placed So access. that's to Peaking and well solution and efficient provide in. being all is is a efficient we're very peaking

core five are Most if you're of the Pennsylvania, up over can we we're that because demand think challenges are described the part Chris. customer utilities utilities last and supplier years. have serving see demand including been to in that that many ramping add us as I significant generation seven ramp are as customers not a type northeast new they new seeing or built there unique east you fired gas facilities of

gap, also LNG such for LNG across and which then capacity with of So move creates us back and high our options a systems as for the creates utilize market, network they'll us it services market. that the you to pipeline England. the is a demand like opportunities existing they expand which opportunities expand what's rise. creates just slowing continues Auburn. to happening as tend are certainly projects for on investment. also canceled, existing New all mid-Atlantic to challenge if slowing demand side demand noted, have And some region down, others some to pass are for producers opportunities bigger utilities have us incremental is that And for which to infrastructure fewer we And as is for does then it and down, What and many investment because look create to are come being provides to systems is, on provision product LNG some and our peaking

Chris Sighinolfi

Okay. some saw and somewhere mirrored And and on we we point opportunity I the it's being now saw there re-gas, the liquefaction guess Bethlehem, at and temple system build tight. by we're know Manning, adding original you in another we then that's about think re-gas should stilt

John Walsh

provides utilities steel, also is No, the can service the vaporize where commitment that to would their this twin to provide during inject UGI saw demand, cold serve customers this in we customers. Bethlehem And deliver for Midstream beginning which there in site peaking be up can free value volatility. vaporization, directly of peak to have marketing capacity the so areas. and create gas volatility serve local a significant But that's so their certainly use to serve a amount the a significant a those a we can because they'll days utilized we system, and another very us is that that kind activity critical Bethlehem asset quarter, to case be storage the pipeline to to that team of of basis store this we is can periods significant sort inject utilized quarter of of across the vaporize was constrained and and on and on

So and to quite was the northeast gas move east those days on ability valuable.

Chris Sighinolfi

the Okay. color mistake. on Thanks that, My for John.

John Walsh

Sure.

Chris Sighinolfi

the range range I'm you'll to for curious the XX% question had the dividend historically end you you this and paying with have low ratio puts given the guess year new just of raise a I how announced, of the sort what the final payout policy at XXX this And up with guess I in very guys just to XX% end is regard ratio. guidance guidance me static works. just dividend, terms midpoint of of

the about board are it I'm as we explorations that So ups dividend the factors and thinking the the to should you've comes of considers the some what in as be I done punctuated might punctuates guess just step potential past step considering just future up? be curious board other

John Walsh

through element fall to at state have is, that given Sure. kind policy. - that we XX% range, We look sure then a of dual but roughly in approach in what you of of terms that we Yeah, as range our as making target we Chris, XX%.

With the around somewhere new guidance be the dividend, and we'd increased XX%.

which So a coming good thing. is we're down

So two in mind forward. moving we factors keep those certainly

or which higher, say its is, it's historically, increases. for us we period XX average As use. on X to rough dividend that increases Because we or periodic average we period those that you make of it keep over are is range X% look within XX term year depending or that that X% is long our

was about cash Reform and I deferred. as consideration earnings, evident Act policy our of impact will Act impact think cash earnings clearly for The we positive at beneficial us, dividend when we Tax the positive think the was impact. the but be look one is the Tax Reform

interim, impact of when roughly somewhere two years a intricacies that million in cash but see of it really some of to material it's see that. cash the couple basis. Tax it's positive, on materially deferred it's neighborhood turns for million cash the it's Reform XX But neutral positive, until So based XX based of the as of positive in the incremental neutral Act, from we'll It's just said on I we years.

Chris Sighinolfi

Thanks a a best this morning time been you. next lot guys your for endeavors, Okay. it's luck and the pleasure working of on with

John Walsh

Thanks, Chris.

Operator

will back now Mr. And remarks. I the John over Walsh turn call closing for to

John Walsh

with and you. next and Thank updated Okay. for you Thank and you, we all you and thank on Casey look keeping speaking our to you on forward attention your time call. this morning progress

Operator

ladies and today's concludes And call. gentlemen, this conference

disconnect. now may You

UGI (UGI) 6 May 182018 Q2 Earnings call transcript