UGI - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Denise and I'll be your conference operator today. At this time I'd like to welcome everyone to the UGI Corporation AmeriGas Second Quarter Fiscal Year 2019 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. you. Thank Instructions] [Operator of you Director conference. begin Investor Heck, may Relations, your Brendan

Brendan Heck

UGI President you, and and are me of everyone Good John Ted Hugh for CFO Thank CEO morning With Walsh, thanks President Denise. of AmeriGas CEO and of joining and us. Jastrzebski, Corporation; Propane; Gallagher, UGI. today

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

turn to John. call let the Now, me over

John Walsh

Welcome all call. quarter review to morning hope that UGI I and you for results Thanks Good press releases Brendan. have everyone. to opportunity second the our our reporting AmeriGas.

in will the the best developments in an Our update it I'll Ted in solid turn provides an I'll over and Despite UGI's results Hugh on volatility a in our review with key history. region capacity comment then QX call, for On initiatives. and activities adjusted quarter with as the wrap Marcellus quarter well Europe of of AmeriGas weather performance. our challenges, you the up and QX on posting who second financial consecutive as to strategic market of performance these overview today's warm in second delivered management I'll reflect weather the EPS a on very we impact limited in QX quarter business. our

EPS was gas record Our QX of EPS EPS QX adjusted adjusted fiscal was XX% fiscal $X.XX, our adjusted but QX Net was $X.XX. $X.XX. of QX EPS EPS XXXX our adjusted and X% above XXXX $X.XX below

the should QX fiscal in that EPS history. XXXX included I I have later. business, mark-to-market QX our valuation tax noted from in fiscal was ratepayers cover returned second which also adjusted in our unsettled positive highest Ted $X.XX XXXX. a other UGI's reform is results for Both been items to subsequently note impact Utilities adjusted will this earlier, of quarters hedges and As which QX the

our updated reaffirming will his comments. guidance on which For on Ted provide $X.XX, to detail call. our our reviewed outlook more of April Xnd in we $X.XX

projects fiscal well Utilities. Pennsylvania survey court Protection our we and transaction Jersey final applications. in survey addition unitholders work regarding complete who also unitholders flow progress of type legal in two-thirds their will on transaction for state and given submission as This to our beyond. small construction December. close approval on AmeriGas remains and significant initiated our strategic transaction Pennsylvania, The agreement in fourth Pennsylvania a AmeriGas route that on the which be is of hope making to a of common X, activities a the received units in agreement their value owned anticipated AmeriGas units permitting given residential Project all rulings quarter, and at the submission. Analyst owed enhance the by to commence We've we review. Department new good is receive field This progress in and expect in completed We're is majority an and shareholders In added commercial demand there is XXXX best was shareholders rights fiscal quarter. as of parcels customers' ruling process project. soon team will opportunity our complete. required gas Environmental the initiatives. announced the outcome to UGI. infrastructure likelihood the has our to April PennEast as XXXX, early our was having to in an survey acquire We've to updated for the has number to progress our of court There receive a technical track subject this determined approval route. to applications Day of themes review favorable possible, in awaiting access land in New We're cash announced of PennEast for we interest related and permit accretive of DEP the the On public. noteworthy become earnings have required earnings to the which service in UGI of for heating we key be the second to access, along remain almost formally New all the surveys agreement is be continues strategic Jersey outcome XXXX replacement review as and We are solid significantly favorable for retained the the at robust. that administratively believe Growth was performance our fair and year-to-date and the our by all

send out gas Our demand and gas mid-January service for record in underlying a recorded strong. is utility

for the invest we're addition reinforcement. our record to In growth levels continuing infrastructure on expenditure of capital programs, and to replacement

for with pace challenge infrastructure bare plan. of almost capital steel XXXX were forecast southeast, slightly overall spend last in for reached over X% National the year, much in program a record volumes detail cast weather volumes growth The performance weather and replacement faced a $XXX fiscal year. year. strong quarter PUC up We with quarter performance delivered minutes. weather very in few will more normal below us. in prior significant but a be million X.X% QX our Accounts while that on another AmeriGas' warm comment National and Our prior long-term warmer approved infrastructure than was with were and has warmer Accounts had on in the particularly our remains challenge replacement AmeriGas iron this than International UGI XX% will Hugh ACE ACE programs. in X%.

this fiscal the power UniverGas on the Ted in We've fiscal However, and it margin diligent International. contributions offset later financial. and in volumes from Ted? XXXX. made initiatives. control. effective impact from I'll like weather again UGI return earnings to of the The strategic for turn to in the and was by this solid largely expense resiliency positive point early I'd challenged an to lower management of comment DVEP and late at over performance quarter once XXXX acquisitions our demonstrates the call benefited

Ted Jastrzebski

John. Thanks

As last record This John the second QX year. earnings fiscal versus $X.XX were but GAAP second mentioned, fiscal this table earnings for out XXXX. XXXX. results the adjusted earnings XXXX per were share $X.XX quarter short of of of lays quarter quarter per solid, share Adjusted our fell in the compared and our to

$X.XX impact year. commodity a earnings hedging our such instruments loss this the you last of number year the $X.XX as As items see, of mark-to-market in versus loss of of exclude changes adjusted a can

had XXXX. on of derivative unrealized in we This quarter $X.XX gains currency instruments our of foreign $X.XX loss

has have integration Finagaz can fully quarter, last expense see you acquisition integrated. longer we that no mentioned been this also as As

Lastly, of into of merger impact QX this adjusted but quarter Adjusted per proposed versus EPS the approximately with $X.XX we booked the XXXX. negligible. XXX,XXX paid decreased earnings to AmeriGas, is expense share

and winter February. colder a overall the AmeriGas experienced [ph] year. normal businesses, For versus were our They LPG down in weather warmer during than U.S. $X.XX January last significantly southeastern

Our management. result focused but income is international and expense face weather warmer business net continues to as margin up a of conditions,

from rates results statutory detail speak to in benefited in reduced a we tax Additionally, I'll in more moment. France. international

declined for natural Marketing gas earnings restrictions Midstream revenues Midstream result savings weather and respectively. to our the both benefit margin. volatile pipeline capacity tax Less Utilities EPS as and limited of businesses, last increased due the $X.XX TCJA. $X.XX the primarily associated period margin & a For management Marketing versus were year in & business adjusted Utility, adjusted from At and the on $X.XX down in prior the and

international versus areas weather during in warm EBITDA and cold before February. have the by disciplined the extreme search this where million AmeriGas XX was Weather cold past although nationally more skewed prior warmer in detail critical approach year management teams few period, normal and discuss the very weather the adjusted results for quarter we the last adjusted minutes. warmer weather International reported million a footprint. $XXX The Turning to opportunities months for $XXX later reported in taxes AmeriGas now will normal experienced U.S. Hugh Southeastern to was than year. individual to months. the XX% heating of January and in second of than number to quarter efficiencies. was businesses, Furthermore, than maintained UGI in team of drive a a of million. income warmer XX expense the X.X% experienced $XXX operational The continues

rates. we in currency from changes UGI income foreign in contracts volatility As resulting International's exchange in you layer reduce of know, exchange currency foreign net the to effects translation

second that quarter opportunities. economic for activities. credit quarter expense, before taxes electric were cold expenses we million. energy compensation of approximately that passed dispatch weather last at from the order increased from PUC $XXX.X early of were experience and facility associated natural a on pipeline in remove and benefits reflects operating other same the offset Pennsylvania year and margin rate restrictions. reported higher reported volumes, on type of driver from management of income tax margin the addressing the The remember gathering the income last where that given from On last came XXXX, decrease versus million of lack $XX.X not we of basis, last well and Midstream decreased up costs a $XX the due to delivered versus weather the the & but currency, slightly primary management. sustained did due higher Total to weather the of the remaining Utilities our team before did coupled volatility compared year to last XXXX adjusted a Operating important increased primarily that's reflecting which QX came payers of while among The conservation, and with associated When gas was million. reflecting May TCJA. unlocked greater you warm million year year it's generation of the results, taxes savings higher impact margin warm volumes unit impact controlled decreased with to weather colder. decrease impact largely Marketing quarter, comparative If XX, are things, by capacity was customers. with UGI the compliance lower part expenses LNG extreme of to expenses looking peaking, $XX our slightly slightly this to solid year

As increased revenues million which revenue of the a impact customer total increased $XX million due market in excluding the to $X reduced result higher volumes, to were quarter or due reduction, the primary Operating The which margin IT Depreciation and growth capital million uncollectible versus slightly. investments. administrative and distribution $X.X driver increased decreased slightly weather. of increased lower system and year. colder expenses last accounts from by improved

help Hugh Based and and on our to to half quarters, dividend on from highlight it I revised the we revised in results $X.XX. that'll our our month guidance guidance turn I of that fourth I range. Before want Last our some historical week. to first guidance initiatives achieve to third announced briefly comment range performance we our us last our want $X.XX

management. First, throughout focus our business. teams to has major been This on continue OpEx we for UTI look for a we the continue efficiencies focus to as

such we Ponderosa expect Next, in margin as assets that – will from from years. that we Creek not Texas now from additional benefit increased and benefit midstream prior our did

compliance earlier, expect these UGI our the buy of are benefits immediately at over margins to timing International increases there's as customers conservation in offset some once. quarters. a I to we the lag As and which not time increased realize They realized product third mentioned Margin energy fourth means at margin simply all costs. at

and million the guidance. quarters XXXX order achieve we XXXX our to and commitment growth. not XXnd deliver third quarterly now a to XX% help us for basis, Pennsylvania EPS our will and have has dividend quarter year-over-year to versus is representing our XXXX. $X.XX XX.X% increase May a on UGI year To revised UGI X% dividend. per long-term in the yield increasing on share that believe PUC of revenue the We of reduction performance Lastly, in well increase. the dividend, associated The $XX.X factors remains with will historical positioned consecutive our the these third fourth had results that

the In for reminder, and the As when a of to Hugh? increased the XX% AmeriGas. report call we additional action AmeriGas concludes his trading will after That over the increase I'll turn my an dividend close. remarks total, transactions. closing now planned on have Hugh

Hugh Gallagher

EBITDA for of the for fiscal was year. last million colder norm Adjusted were $XXX.X than Ted. within of the Thanks, quarter XX-year last year. to and XXXX Nationwide degree $XXX.X days second second compared million, colder the QX than X% quarter X%

and results, normal last January usually financial which a the largely Conversely, plains concentrated southeastern significant little you regional of we operations we in explain. well February. as were we the warmer was than have this Our that than did quite in where track presence, the way weather cold want The patterns temperatures especially presence. to in year, weather where a have quarter I in experienced due the U.S. significantly most that not intense to know

So nearly related from down primarily last operations the last year, and to shortfall X% our contribution were short down Similarly, with South year to the fall in XX% due also operations from south. in volumes adjusted East. from overall for quarter our the EBITDA year-over-year EBITDA primarily was our retail

thrust, growth for to Amerigas of our volumes increasing our Accounts and to solid with continue XX%. Cylinder growth range programs programs the now in National both Turning both Exchange experience

for making initial summer. our in late the later cylinder are home concept, We last business planning we initial good we in developing are this very year progressed our and pilot the we're the has delivery of well – integration progress acquired

We experience Exchange. demand AmeriGas Cylinder strong continue to for

XXX% We our by the of UGI including large this the plans locations that were announce with result the store and Amerigas that year. expansion hundred retailer pleased are the transaction convenience several calendar in acquire major would additional XX/X XXX-day finalizing of a to cylinder chain We would rollout review. end vending of automated

fiscal anticipated streams strive work to the we initiatives advance business related key take generate to merger continue sustainable for XXXX various on performance. closing business long-term the we for As focused date, an financial QX remain and forward as

we will tangible announcements exchange on business costs. capability we're focus quarter, cylinder our of last that scale facing efficiencies advance is it leveraging this stated to and lower I are are making and and our generate As focused The our sign technology customer and I'll and that both commitment to build turn to already closing, momentum. the roles front starting in their that to with thank support employees In on I it And for to company. want continued his John lines over customers closing our our our for remarks. today

John Walsh

Thanks Hugh.

one in I report adjusted mentioned my QX of best EPS As UTIs were earlier in the we results remarks, pleased history.

In were the other us will in noteworthy position future growth. that earnings earnings performance, achievements for well that addition several to there quarter

out marketing building Marcellus and midstream focused across Our its asset on region. team network the remains

Coast vaporization. utilized we we've our based our that ability growing of grow rising in fee income storage In LNG new network. rapidly market storage add record solution. Bethlehem, approximately the natural LNG enhance LNG including gallons ability project our send on We assets to add in million response levels strategy. stream continue for $XX demand Steelton for our LNG facility construction assets central LNG demonstrating system January, strengthen million new LDCs out our as storage This demand and percentage It of and to to investment our of use Marcellus vaporization and to once near meet long-term the the two will will need to UGI, to conditions. is and representing to gas Pennsylvania. dynamically based gathering higher East This Many new peaking our again a midstream fee-based income shift our experienced begun

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

We're of are providing to in the next over throughout providing focused gas Pennsylvania. the Our serve committed of eastern areas safe, also capital un-served ever families the to Commonwealth. likely underserved access in reliable $X years. and teams five low previously and XXX,XXX billion to affordable, our filed approximately invest largest on and to cost access central Pennsylvania PUC We or commitment The we that filing natural we infrastructure will request businesses We're new conclude later for service under our XXXX the with rate January. case rates reflects The year in fiscal effect into and of our territory scale to the late in growth is the and opportunities review by the expect with million $XX.X this request PUC the process season. replacement. going winter the

when for the We're filed will well SEC. actually event with of significant, gas X. foundation this future company Yesterday, SX a form will investments the about the announced our available end the capital cash most excited registration we the just This provide This the for of effectively When capital position the this this merger exceptionally will occurred entire decade later proposed and our over be recent, positive and transaction year, deploy natural future investments major transaction. the dividends. major closes we Our businesses statement corporation. quarter across with on to ourselves our strategic our enhance for positioned businessed. Amerigas significantly fund transaction after to M&A growth. funding our ability impact April next pride UGI in both across We broader the on

capital to excited well engine of commitment deliver UGI’s to for about long-term enhancement positions Our to us We're allocation on our XX% X% approach this disciplined EPS growth. to cash major growth.

by to our of forward beyond, and businesses. the As the we investment we're XXXX look opportunities by energized range across and fiscal pending transaction

who for Denise identify operationally over strategies. ability growth I'll of back unit with will up open that, turn align investments We the have our confidence in our great questions. that With business execute the call to attractive it to teams and

Operator

comes of America. Bank Instructions] first with question [Operator Coleman from you. Your Thank Dennis

is open. line Your

Dennis Coleman

morning. Thank you. Hi. Good

Hugh Gallagher

Good morning.

Dennis Coleman

can you any from the watch or remind watch case, you know for? filings, I later me just on but we talked can year, would that actions just or just is? couple you should me A the put concluding we along what PUC there if this the please, rate of by timeline milestones the are questions about way,

Hugh Gallagher

and next companies will that the over process PUC in involves filed we Pennsylvania Yes or in five us The that so. settlement, months for filed early the underway, the Previously scheduled. been review is four resolution process typical timeframe have cases. have but most these obviously in January, out or is play months, fall late to testimonies hearings been a four other and

Dennis Coleman

settlement that's scheduled is had discussions as or that's you well? already something Have Okay.

Hugh Gallagher

various the We're still in process of the testimony. filing parties

Dennis Coleman

Okay.

Hugh Gallagher

[indiscernible] would that That of process. conclusion

Dennis Coleman

for soon that. too So

Hugh Gallagher

Yes.

Dennis Coleman

Okay. I know a any guess a M&A transaction I be past, APU you've the lot allowing little do this bit about guess, at, that. but and one you're and question, the but I other one, about, you there it's a broad mentioned that looking Talk useful? in a areas updates talked you that to would

Hugh Gallagher

look we Sure, corporation. look in we M&A terms across, the entire across broadly of

So gas to to there. there'll on transactions, and fall of do which there made And business short our We're acquisitions businesses for the term we on side term the continue opportunities gas in propane or look opportunities be systems the gathering segment invest focused natural description. AmeriGas but fit in most would area across continue the in as to evolves. Europe, upcoming that several recently further natural opportunities involving longer that in that our certainly we've

to always region in fact M&A, return capital. and utilities anything look continuing midstream requirements normal in interest at the having for our of is M&A Marcellus look we’d broadly in and So opportunities, investment terms across, greater deploying we

that not major at to be the look we side spans side. project we gas opportunities to set it's on M&A at So that and natural that house and a then the clustered based, exclusive of of the and corporation activities opportunities broad entire have CAPO through but filter, it

Dennis Coleman

That's from Got me. it, reviewing that. thanks for it

Hugh Gallagher

Okay, great. Thanks Den.

Operator

next Your comes with Sighinolfi Chris Jefferies. from question

line is Your open.

Chris Sighinolfi

Hey, good morning John.

John Walsh

Good morning.

Chris Sighinolfi

forecasting, and performance on guess variations the in difficulty about and presenting that's in but question, touch detailed I I the the of review past the operating a of two-part regards things, you forecasting just couple quarter, that I'm in there's even company. acquisition. about this to do well SX I out might operating off to, differently that company, maybe think, guess, comes as that on UGI wanted I minimization first talked front think the that things regional you anything the with just to look guess if we a go on regard this, to, to that AmeriGas’ I your last to on terms came mind but weather wondering and guess, of help Just to the with is, in with but something that also regards see quarter space, experience basis forward call, the the both a of us but variability post it's is

Hugh Gallagher

variable respond. we this a Yes most have challenge prepared challenging in where for I to just of noted had challenges a be but think in it's the presented by terms his did And weather weather in we not and I year. nice comments, Europe to had conditions, think, us, new Ted we responding do job

scale One activities, on driver leverage areas is of point our we're cost we technology our the better can out that of down. focusing fixed cost to take to our where

can help of across that certainly year addressing us that drive occurs. more the technology the in warm consistently, avoid terms we've and and businesses where challenges in the and some case So propane broadly to come in where that will terms weather each our of cold up with utilize deporting begun to we're it – having already do we

we move So is can forward that's, be I from think, a of to you'll as to hearing nimble a of a and powered we bit these cold. in more us respond little and us theme enable terms differing both that conditions, some efforts warm be operating accelerate consistent

Chris Sighinolfi

not I more – correct? be are series looks. those just regarding in In of filed independent, to that night the ahead. go what they which the is and I talked know, all I of pro SX, there, a you quarter, see not last all, it's that wanted but on footnotes, in release. about Is are Okay. terms forecast are forma for those And the clarification a point just me, clear it's your

Hugh Gallagher

reviewing looking, As we're it's Chris, you've a extensive very seen, document. and

So forecasting that provided basis each information advisors by come did you summer planned we go company have planning the winter. the through was as various the is of for we our process budgeted out company. some based The them on that that to

process So with then that’s that we was and financial updates. work now with another And shared businesses done of that at the looking that the will work XXXX. to pretty initiate sort we’ve of that come and advisors with of out independent updated the for each for come our market with minor foundation extensive kind parties markets That's various be obviously in some And way an in as of operate. winter view the process which we works. we when that fiscal the process reflected

Chris Sighinolfi

But guess DOR the cash I about when the that. looked and attributes on you are and of Okay. Ted significant clearly at have the talked I front that

page that. I think, looked talked when You some not about of independent accretion a that John third-party those it or fiscal I numbers we of independent of XX safe I about had guys call. excesses should of of looks it in Is on chance are to – But the that the question go that levels my And Page on to? anchor when I forecast to talk which that something separately you based merger over fair share implied EPS sort guess to is at I today assume what and the spirit the in I see provided think you see I be count. of and we reflected in XXXX, guess with accretion, or beginning the again that noted

Ted Jastrzebski

you been of Those for started that basically I've then specific the with those to of different and that committee at document the provided information they AmeriGas numbers that the was are Board special numbers ran some established. review are, as and referencing, I the management the said, forecast looking advisors scenarios

Chris Sighinolfi

Okay…

John Walsh

Just reinvestment. over a Chris made it’s, come the will available increase flow that a in EPS back more cash positive it's fundamentally announced say of impact. cash we payments because on is benefit much EPS for we accretive, will be we I’d trends sizable the to transaction. what But have grow when This yes, EPS time accretion

is So it's time take to ability outset a and it cash positive that EPS over that enhanced redeploy. the at by story our

Chris Sighinolfi

Appreciate Understood, well the thanks lot. this understood. Alright, a morning. time

John Walsh

Sure.

Hugh Gallagher

you. Thank

Operator

further Walsh. no I’ll queue turn questions are There in the over call John back at up time. this to

John Walsh

and look forward Well future on morning. our you Okay. for We when your the with to in QX you near we thank time speaking this attention review results.

Ted Jastrzebski

you. Thank

Operator

This conference concludes may today's you call, disconnect. now

UGI (UGI) 7 May 192019 Q2 Earnings call transcript