UGI - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the UGI Corporation Third Quarter FY ‘20 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Investor Relations Manager, Alanna Zahora. Thank you. ahead. go Please

Alanna Zahora

Perreault, morning, UGI. With Good UGI thank for President Gas; you Bob LPG; of Thank John and today everyone are us. Walsh, Roger Natural President, me Executive CEO of Vice Ted joining President Beard, Global of you. and Vice and Executive Jastrzebski, Corporation; CFO

significantly, events as certain which management differ believes Before release we annual you of to remind results circumstances extensive statements, duty me affect from because different read and date our that for that that our Actual We XX-K results. be on uncertainties forward-looking difficult update reasonable of and begin, an or earnings let comments are today’s of could only. or factors today our that reflect expectations. includes predict. to report revise no risks Form forward-looking assume to may list are to Please statements

also measures our measures. using describe XX of certain presentation. We comparable business available Slide financial are the measures to non-GAAP our on will these of Reconciliations GAAP

Now, call John. over the let to me turn

John Walsh

and to Thanks, release morning review our press that results. the opportunity welcome all Good our to our hope call. reporting quarter third you Alanna. have I had

as on efforts increased with with maintained safe addressed third forward our and us We address range are very the focus pleased year step quarter our performance challenges help operations. COVID-XX, our guidance $X.XX $X.XX. we and strong significant systemic This for particularly our quarter and to full of of a to to racism, secure was a

in critical in we each While our these with remains, progress much work QX. areas were encouraged of

cash combination and our strong than and delivered positive margin of earnings, programs colder flow expense of weather, to Turning normal and liquidity. financial our we restructuring strong contributions results the underpins management, rigorous LPG as performance, a

quarter in in Our teams major addressed history. our XXX-year and unlike a their resiliency focus quarter we was that challenges as these demonstrated any

of performed UGI very very delivered our and QX challenges income ‘XX. three another the demonstrate businesses. Each despite the operating clearly our resiliency International domestic businesses well strength quarter. of fiscal increased results Our warm of in QX versus

strong working will did an cash our and will overview will will market and today’s our across you to outstanding UGI’s call, capital. activities business our financial CapEx flow, will wrap Bob to an gas addition quarter job on details free over On our with and closely of developments performance; who while follow earnings with key activities Beard managing Ted and I In Roger provide update comments turn program up I on delivering LPG the natural comment in business. then provide and it outlook. teams progress in on with an of key our performance, ESG

EPS Midstream That and as fiscal Appalachia QX million, $XX.X benefited EBIT growth indicator Our exchange was in AmeriGas One was this EPS $XX.X business UGI our was our below and QX was fiscal Eastern program continued above performance which of strength QX strength our well AmeriGas. weather EBIT of from the the our the in continued in our U.S., cooler million. of QX is of cylinder of ‘XX our underlying QX off-season GAAP EPS $X.XX. the adjusted was adjusted we and adjusted ‘XX of our of The EPS performance the ownership due during of impact pandemic. quarter to extremely $X.XX strong our $X.XX XXX%

Our performance is equally strong. year-to-date

warmer than across all normal has of and in warmer valuation items when of unsettled That prior hedges for been That our XX% is These EPS businesses EPS adjusted been year. adjusted Ted will EPS year-to-date a Our the than year-to-date $X.XX. year fiscal have adjusted and above cover comes adjusted EPS other of quarters and later. mark-to-market $X.XX performance year-to-date is GAAP our $X.XX. is ‘XX weather

our focus very while teams QX performance. also by are We on on needs our resilience and of on the the critical impact meeting really COVID strong to with range as Based pleased very strong of communities, significant provide and comments. be and we delivering $X.XX results the in demonstrated from the customers year of foreign commitment to tax expect will full we treatment, $X.XX. our the guidance his benefits Ted in EPS more the now our in inclusive detail increase

of Appalachia. was performance our As contribution I UGI the QX noted earlier, from continued strong one for the drivers

have operational to Most of of continue in UGI attributed versus Appalachia. effectiveness be UGI Appalachia benefited midstream improvement see We marketing and the the in the in year-to-date Appalachia last volume can team. QX income to from growth year from operating

home systems We the have increase despite in performance impact strong are delivered of to our delivery This early colder pandemic. of weather business. quarter, in new growth a and due cylinder AmeriGas midstream exchange to our was very year-on-year service. the focused element EBIT in the vending in these pleased in our expense as core investment a management solid from

fuel pandemic motor we uplift while spend in and as cylinder at cooking volumes, additional the addition, home. an commercial In time our reduced customers business received more

busy team had well. a very quarter Our as utilities

teams Our about the and X customer-facing late we restarted months activity outstanding as did for then an quarter. job much of in activities field non-essential stopped that all

public. prioritized the of customers executing our the are our work and new We our field safety with that protocols employees,

review PUC law for increases We is the $XX our by agreement proposed expect with decision rate by fall. forward early the and by of a and judge rate agreement we with case. presiding a then also move first under million settlement That administrative

in our the increase, PennEast few a quarter project. in speak rate for to related recovery rate the Bob was settlement the certain mechanism case a to pandemic-related includes There limited increased in activity any minutes. addition costs, detail including will In expenses. more the to uncollectible

partners to the to gain work to approval with our continue forward. closely We move necessary

Court to gain to when case. are decides early our expect We Supreme the if additional clarity they fall going the hear U.S. in

benefit from the our the to by positioned encouraged existing improving commodity gas values network believe commodity is are natural assets market. and midstream of ideally We of firming that

or This of we completion are are We as of delayed. storage and our vaporization cancelled system. important expansion expansion an network increasing as LNG demand LNG and peaking nearing Greenfield the see LNG is Bethlehem projects pipeline

outlook other to regions We financial Northeast balance over and later comment in customer pipeline continue progress demand on year. like call at to peak of ESG our exceeds this transport it Mid-Atlantic Ted? for But Ted and on existing return the our will as the also I turn the to the the to supply on I capacity. point the would for LNG to review.

Ted Jastrzebski

John. Thanks,

to quarter, the the for anticipate of $X.XX Appalachia. COVID impact share. still additional in margin from UGI but EBIT headwind to to mentioned, call, with our in and our from an original strong projected in to roughly to increase is tailwind our guidance $X.XX But As in are range range. and our updated John quarter LPG we our in results guidance year. updated into in wanted discuss This included per we expense to of higher get full headwind a create quarter. also an report due from transformation disciplined I quarter created is before third previously already strong quarterly weather management, very expect the quarter, guidance which XX% results, projections. our very pleased fourth cold earnings results, April in benefited roughly we incremental to and an we we $X.XX be we the stated investments The to provided that On coming COVID $X.XX second our than $X.XX $X.XX a

pattern that recent known mitigated quarter. reduced income the COVID commercial combined tax demand four CARES and COVID next same it provisions this Furthermore, the that will partially in are incremental across amplifying repeat and domestic our The expect level operations, the our to benefits for year GILTI, our the Act approximately it and in businesses, of as TCJA of with result intangible sales customers not cylinder particular the $X.XX we all the taxed While international XXXX. outsized weather was for is results benefit year. by clear to fact they global in reform ACE low

weather lessens business a in will or represents We for forward-looking when the and development recent We been XXXX a using more this want remain of of projection believe items, years. begin we that management, that This average EPS degree allocation fiscal volatility. influence we we will of any X capital trends. XX-year And history update years based our weather result while to believe in change we of we $X.XX share normal average long-term the of defining And we million in quarter. $XX a heating while this strategic will will better an next next in recent EBIT on normal to we warmer future provide to weather the and weather have and conditions, year. than on potential decrease next approach are align assessing on are discuss with the responsive must forward year guidance XX-year year fiscal shift year, day we change as instead cost impact

not our continues COVID-XX will flow cash of adjustments and us make strong with Liquidity. guidance situation. maintain We for the continued any UGI EPS generate to significant financial growth. sheet long-term uncertainty balance serving dividend and to a well the

respectively quarter ago. UGI On four cash close of both free and $X.X $X.X XX, billion the in at Our a liquidity cash basis, strong X% up across same closed and distributed from year XX% growing flows against remain the flows a by of as versus businesses. had provided with cash covenants. debt ample operating year-to-date with room their the Corporation all activities the June period We our position available consolidated billion QX of

conjunction of versus period. $X.XX $X.XX EPS that quarterly an the on of fiscal XX, EPS Board Lastly, XX.X We the share. our merger. in AmeriGas of shares figures prior dividend Directors adjusted million in delivered XXXX issued incremental reflect a $X.XX Please July note the declared for per with year

year. $XX Our lays share and GAAP per $XX EBIT was earnings last fiscal million compared million fiscal ‘XX. out for segment’s adjusted to table This to compared our reportable ‘XX

this earnings a number mark-to-market year. such exclude in loss no had currency the on a you items see, gain a last of ‘XX. loss of as of can year, foreign $X.XX we third versus changes impact our $X.XX commodity a As $X.XX quarter This impact in instruments instruments derivative of and hedging fiscal the year of adjusted

initiatives of LPG to business You $X.XX. can bringing our see associated we total year-to-date adjusted with out $X.XX expenses transformation our

our generation This UGI the sale The Lastly, ESG of ownership of I impairment wanted non-core tremendous of related assets in benefit is interest will sale. generates the out for to sale Pennsylvania. in station asset Western point as held Bob this Conemaugh a to describe. $X.XX for the

Our and to COVID, domestic previously combined. June cold than days mentioned results June has the the May as May more heating degree expense in in In business particularly management. weather, delivered from due and strong results benefited which spite April, of well

sold, prior XX% colder businesses our quarter gallons Our Appalachia. customers, the businesses years acquisition last non-essential ended COVID margins as $X which face declines, volumes. two the impacted quarter, benefited LPG the and we XX% school than warm quickly year, weather higher business, conditions was gas on dropped the mitigating while million UGI in which hospitality on impact as than the experienced another quarter and by operating in very volume weather the faced significantly roughly margin in restaurants many average from from cylinder customers, commercial strong More well specifically Total very as other adverse period. benefited that business AmeriGas earnings unit from AmeriGas predominantly COVID The sharp customers. mid-March. despite increased headwinds, international service delivered cold strong warmer team a natural incremental Areas, different of sales autogas mostly customers retail include as such commercial where as driven

XX% transformation to you and to As can end we continues expenses team the for the initiatives. million a The declined to deliver AmeriGas We beginning P&L ‘XX. LPG prior see of $XXX the remain and on versus of $XX are hit do target see, million nice the our OpEx fiscal track ‘XX of progress fiscal of to job well-positioned are managing savings year. by

progress largely offset attributable volume the in Lastly, making from million in of UGI team International the $XX The quarter compared OpEx in Margin transformation XXXX. continues $XX of achieved million COVID lower quarter. the on benefited International to million. industrial to impacted decrease UGI warm EBIT management and litigation while some initiatives. weather of effectively the roughly fiscal deliver commercial to segments. $XX the expense OpEx Like headwinds is AmeriGas, in savings,

million in P&L expect ‘XX are to the by We in and ‘XX. the on million savings €X realize deliver in the €XX savings to fiscal of track fiscal full full cost end

and to main the last rate XXXX. the reported COVID in to operating due depreciation was share natural create impact for impacted the improvement. our a and volume the case driver QX side COVID-related to and quarter the increase related expenses. the allowance Turning did commodity of of PUCs house, contributed benefits the both mostly on October our margin and million year. to million whereby to income including Total largely gas of our third cold million commodity which accounts, uncollectible and and ability other COVID, the consulting assets million impact pandemic-related to $X share headwind to that year. will and margin in administrative for increases IT in in expenses in in doubtful the uncollectible $XX service recovery of was effective and amortization which the in quarter. fourth effects the maintenance our regulatory of compared was the Utilities marketing in the roughly all to compared third business in includes the record reflect The primarily Midstream Total volume is of by quarter order to compensation increased margin, rates, details marketing prohibiting EBIT driven million, Appalachia which related Marketing became commercial $XX settlement, this the accounts the our accounts. quarter had we which EBIT quarter, $X impacted customers. want UGI XX, termination weather Bob UGI the quarter, compared $X In to base moment, XXXX. of the and prior expected of a expense employee expenses, of by expenses, quarter of decrease however year-over-year related OpEx higher acquisition. future flat reported We

the versus our activity. Lastly, Bob? prior expenditure expense due turn With year Bob. to quarter call I continued will that, the over IT increased to and capital distribution depreciation system

Bob Beard

replacement A more reduction businesses. we portion program capital additional the emissions. us replacing will has and result was virus. dekatherms with for third provide Appalachia Energy Bethlehem our this as once and which UGI EBIT QX than years XX increase ‘XX construction LNG for at this included the quarter UGI’s Ted. challenges Services, a EBIT project quarter services businesses, Services on performance within a capability solid Thanks our QX be ‘XX. this next Combined companies continued FY the LNG was strong capacity, and program. fall budget. was of completed both million higher of significant will gas expenses, of discretionary program that contributed reduce gas expect very X energy XX% nearly COVID both of well of despite for by emissions a invest activities years. XX% a normal, that normal. performing aged strong COX weather Utilities, and complete, which we Energy whether facility, strong Utilities, both infrastructure, capital Drivers well billion gas of in At did expect natural FY colder XX,XXX see continue than XX% the usage, remain over over an as the on very Utilities dedicated that execute we growth and large than XXXX, effects more expansion large to a COVID. colder we than day our continues track Both XX% Core natural experienced is of negated $XX next an than $X helps was coupled which additional with to XX% to natural companies customer focus At XX% of vaporization also on Utilities our QX. Since time these controlling reduced to on effectively at a equivalent which facility opportunities

call, earnings growth quarter team the X like commenced even in over notable last As I is Auburn on a several would BCF prices. This that the first Energy were by good Services recent to delivering Auburn this I how has of cover. Services Energy our period There project same June project on service events or throughput This XX% prior project depressed system, the year-to-date XX through natural year. year. nearly times fiscal of the fiscal increasing is during gas proven mentioned with example on a successful

UGI represents on Considering commodity operating acquisition the is natural from company, transportation of growth is customers that natural federal credits. will service reduction, low to focus GHI benefit July the X, Services this renewable in it doing gas opportunity. by identification to for Energy UGI upside to experience. completed fuel deep continued gas in as emissions on California’s acquisition number depressed renewable California. GHI marketing carbon our there the This we First, believe a opportunity and so provides Energy, and standard and meaningful credits a qualifies renewable customer important space

The located megawatt Johnstown, will While intensify consistent are our what on approximately and UGI’s by X,XXX forward by ESG XX% thus LLC. We generating with announced utilities encouraged emissions than UGI’s sale we the this the our business. look Conemaugh and facility we acquisition of more this coal-fired the is as have of Conemaugh very businesses equivalent non-core focusing interest our reduce and a by generating facility to X% midstream Montour, COX Pennsylvania. on electric is far focus is to opportunities near we growth presented in recent, learned recently asset efforts. growing sale direct

to the highlight to includes and would $XX base an of settlement filed in in the Finally, addressed. on January would increase is be petition that settlement million, Pennsylvania debt like rates provision how important settlement, which year. the million, bad million another an An $XX include July of in August X, XXXX. this of of this joint effective increase of XXXX I $XX agreement the January of UGI of Commission, case Public rate a in increase Utilities submitted Utilities for Terms

for at level. next Going a of amortize the case, capped to P&L utility We a due very be over current XX forward, exceeds related bad COVID as and debt years. our level will expense in this risk regulatory our gas natural Therefore, be expense rate debt will positive effects it treated asset bad any included this plan mitigates as our settlement provision, COVID. view as that

cap in a provision target normally on incrementally, Another net based source in charge construction distribution of years, would settlement to of allow us pace ‘XX. will system important X% an income improvement of the includes us to we a Considering up also continue additional implement lower The allows summer the realize our grow remains early several and that anticipate needs beginning over benefit which customers, to payment-troubled our is the planned few on will a settlement fall of FY being end service next sensitive distribution apply. margin FY customers. settlement or this revenue Based by The plant ‘XX to in this and of this current environment of a of to receiving and substantially the mid PAPUC this we to low provisions fair. settlement to late approval, believe subject year. of

to I will over Now, it turn Roger.

Roger Perreault

the offset commercial cooler Europe pandemic and the in by and volumes. industrial global by quarter in driven partially The with volumes backdrop third a with of the of U.S. year weather a EBIT warm and roughly strong or Europe solid prior COVI in and over This very lower LPG XX%. up experienced is Bob. weather Thanks business United cylinder million performance very longer States $XX both

transformation excellent both efforts, an coming UGI job did at benefits AmeriGas of at controlling teams International the are The at becoming and our evident. Our controllable.

I by our transformation managing offset contribution not a in the expense manage service take volume declines as return leadership open but continue and the exchange results the segments the delivery our Cynch, our Europe, to Europe. stringent in quarter, cooler the economies and in quarter. commercial cylinder program, began workplace accounts partially moment In in expenses the see are the year-over-year customers an in our as would effectively management as we the cylinder significant did like utilizing increase to shutdowns while projects the cylinder the home and to to began discuss U.S., industrial and weather to our underway. We branded during from

exchange volumes and from of enhancements, quarter, now light shined still currently delivery As are to AmeriGas them another terms is our new cylinder more has the were we of John program a new but on cities mentioned, a strong years. machines XX,XXX Cynch of two-thirds customer-centric and enhancement business. compared some an vending offered as very at in our to roughly of in innovative XX over changing COVID service The next our AmeriGas such pandemic cities recent is home in had third up has quarter. consumers rollout to and as XX% their the year. X Cynch small customers the example our service, over our and customers preferences. with Cynch, X delivery Cynch home is in plan total volume, it XX prior the

announced $XXX program year an As of AmeriGas a the exceed permanent included transformation at reminder, fiscal provide that we previously end benefits to the million investment ‘XX. will million expect $XXX of by

that say track fiscal million pleased deliver we $XX to on over continue and we will to ‘XX. are in be year We

look customer end to forward, effect inflation, fiscal and structural evolving This on impact the benefit the by our conservation, more mix ‘XX. churn business. deliver the of the remain we will than we million offset of As $XXX course of

solid a earmarking in we with business and are a take into retention invested program for investments proactive to efficient position the portion certain focused customers of to base achieved us business operations. We targeted be back high customers. the value the approach growth will lifetime These and benefits customer on as from growth

strategy, growth in this excellent we value efficiencies AmeriGas drive continued on will the our long-term provide customer this but a gain. business strategic X.X program initiative. continued cost focus and processes are to retention value lifetime digitizing call, QX experience a will an customer deliver for the for approach high third market customer The and on our more and pricing position share invest expecting to We on detail AmeriGas about savings of major

about words few a UGI International. additional Now,

COVID-XX and continue in recovery the weeks economies activities as USA the earlier by several European evident has impacted to been the Our than open. were

to great deal Our insight operations based European were businesses for how teams pandemic a on eventual continue to of the to return responsive and the U.S. our very and to provide normal. start to preparing adjust

our fiscal of has digital that last performance provide and is As investments on deliver the of experience ‘XX. million on million with €XX call, report on earnings savings over customer focused am €XX team been plans in are mentioned million international fiscal slowdown In and to insight will to efficiencies validated pleased improving during driving objectives no these our €X in the and our of also I QX. by end the experienced still track action quarter closing, and transformation our continued third initiatives. excellent ‘XX

efficiencies on distribution by European management continued and The solid in results value. and pandemic. Our business was the across countries the operational the the impacted and of U.S. COVID resiliency diversification significantly cost the quarter adds contributed shareholder LPG that our to focus XX

to call John. Now, I the over back pass will

John Walsh

Thanks, Roger.

work hard to was in I the society. particularly by role QX earlier pandemic, and our my challenges also the address diligently us. addressing remarks, a presented We issue company’s taking racial of inequality in mentioned important in look As at the understand a for quarter while the

to job our provision issues, an committed these excellent staying teams of the of Our services critical while engaging critical have focused addressing and done and long-term customers. to

in leader this area. also some We commitment which be our with a this ESG our we program, critical major believe took quarter to demonstrates steps

environment, report to providing of by solutions. Utilities XX% Last million the affordable reducing and well-being serve tons. our on significantly UGI the of month, committed at our our we energy second gas renewable, metric to and over with our the by and committed fugitive health greenhouse operations our ESG to are impact issued and contributing communities customers methane emissions significantly our We reduce we emissions X

coal-fired We an XX, Conemaugh meet our On we both Bob interest noted, July these to into agreement as generation power entered ownership commitments in sell will station. XXXX. by the

will Our sale of XX%. X emissions over total Conemaugh Scope by UGI’s reduce

acquisition a natural we of renewable the As on Bob Energy, gas X, July announced also company. GHI noted,

We company’s generation, installed to all onside for power tons solar expand year. the new the solutions internal are electricity serve demand the to electric combined will in of with Utilities heat to XXX building. kilowatts GHI of gases needs and the coupled to forward the newly and reducing solar use, look include This also excited we system, supply constructed our generation offerings product by per RNG. utilities growing greenhouse the for nearly customer investing for projects XXX

forward we and the far in of by our ‘XX. performance we thus look As fiscal to QX encouraged ‘XX, strength are very fiscal

and We have even demonstrated resiliency environments. challenging the ability to operate most in our effectively our

that Our is and of indicator strength increased one guidance resilience.

are We this As basis as fiscal also average Ted the by XX-year noted, weather we both for adjusting foundation our the better for provides our using financial normal. and and assumption beyond for ‘XX a new believe planning. operational

the normal budgeted move X.X% to X% noted fiscal affect and ‘XX our volumes QX Ted by by but share XX-year to weather as from our EPS earnings will We earlier. when XX-year guidance provide much $X.XX more approximately detail call, we on on our this will

the such challenges. terms COVID capabilities we are year some in those as and are confident impacts challenges and the ‘XX, still fiscal there While finish address of financially will we that remain, well-positioned to into that linger potential questions to for

customers. gains delivering pursuing growth renewable on focus in and will back driving our in core our We opportunities for solutions carbon field in businesses, and low emerging efficiency office energy our and operations

will all will do the questions. back I the to operator we to the neighbors while who serve. advocate in lives to turn With over this quality We it that, call will communities the contributing and up committing for open positively of of our for

Operator

you. with Thank UBS. [Operator Instructions] Your first from comes Shneur Gershuni question

open. is Your line

Shneur Gershuni

$X.XX last a you from everyone is recall of everyone. an to time. if a your comparison of that was I positive gave wondering tell Maybe apples-to-apples if exclusive details tracking now, around COVID. I I perspective. and correctly, as said well. right the just start morning, you do sort to Good was off where $X.XX was little impact to to for bit, $X.XX the good can time we that If had bit impact us you tax last wondering Hi, what you if can little give more a guidance can us

of of tracking wondering how kind Just terms in that’s your forecasts?

John Walsh

Sure. tracking of the $X.XX within Good This is $X.XX think band towards Yes, I we that sort middle range. are Shneur. morning, to lower John. end basically of that or

Europe. is thing was see that I we be and going of out there. but recovery turned think big that’s of our across businesses. assumption across surprises COVID by impact in terms of be and bit I a Ted It’s QX to of the majority in the no different we well U.S. both that kind the it that’s both the would provided much quarter, of less the as will when timing originally comment to across the QX nature in let spread one more

Ted Jastrzebski

so in not to we in talked mean, midpoint about $X.XX. all a there. I about where $X.XX, of to we That’s our right add are had much $X.XX Yes, now. forecast

reflect have and be that have a $X.XX are to from last year are actuals about Our impacts the that dime. seen already about this continue of to impact the – expecting and continuing we we we in quarter

Shneur Gershuni

U.S. as come the reductions follow-up are rebounds? will sustainable Okay, reduction perfect. variable of Europe, respect the as how quick is both with then you the how as expense much seeing And that well business business that margins versus and LPG questions, two the in in in much to are back those

John Walsh

is have significant I Clearly, in the that recurring. Yes, expense is next I year it is of Europe, U.S. turn looking as There and and programs our a back will are to but higher Roger. And LPG volumes there through there we efforts some we kind ongoing more sort those this both U.S. will think come to then of with of will briefly significant drive I the go and in come. a of reducing into we as at we are is the element weather, associated comment get across cost. element restructuring consistent is average particularly normal over and fiscal our what ‘XX, that savings a businesses delivered for

let or of will proportion is a are comment a So, well. as seeing of detail lot what we and seeing sustainable we I significant Roger in more are what

Roger Perreault

just John to additional mentioned. a couple points just Yes. what And to maybe of add

when transformation those comes the it takeouts. to permanent are initiatives, So cost

to have much savings year. So what mentioned on track of very in $XX here million seen fiscal are we U.S. the and we the deliver this as year-to-date

year. $XX savings We million we by have the and we and to that as deliver €X trying will of of deliver to we the $XX seen will the we million year-to-date volumes in over savings end International, – At as flow seen and of about When plus have €X really costs, other the to of that million million now activities of year-to-date, some start materialize. the control it mentioned. have will back comes

We back that’s a to we right we clearly, off continue at International are now will somewhat, it But as increase they what improve. to relationship are volumes are to seeing with COVID see International. with And how will is and the in. some expense come how but starting now some at come over back starting volumes that towards in we in cautious to allow of minimizing overall, much of very careful back obviously work it we there

Shneur Gershuni

that so sense. Okay, makes

So that there be significant portion a will is maintained.

take I uncollectibles two understanding worth want I the heard one to all One the final saying just to that were heard prepared quarters correctly, make correctly great. question, of Were you level. for I at it in remarks, am about uncollectibles in forecast correctly? sure talking am that have not uncollectibles, the I you you the if I sure that quarter Okay, utility of

Ted Jastrzebski

You book our are, were the PUC Shneur. to in required We two quarters by QX. worth

for had in basically actuals and forecast QX. what QX So we for our

size the seeing in are step because our up of the that. of you so And uncollectibles

as ability in that’s are we dramatic, now It’s a beyond utilities. is but And up. regulatory anything create the rate as for aside related bit have it not to up to We asset be we to able that an planned what kick are starting had through ticking uncollectibles we Bob COVID customers. are see it shared, just a do we in and to

Shneur Gershuni

I a paraphrase, larger So, I QX right? in create be Did lower and from get effectively asset. to if hit would regulatory ability else nothing Ted you because the have changes taken if QX technically can have all, you a that here,

Ted Jastrzebski

Yes.

Shneur Gershuni

guys. you and color the much, day. Perfect. a Thank very appreciate safe Really today have

Ted Jastrzebski

Thanks, Shneur.

John Walsh

you. Thank

Operator

next Your Solecitto Barclays. with Marc comes from question

open. is Your line

Marc Solecitto

Hi, good morning.

and of impact $X.XX the some $X.XX management referenced? that how ‘XX sales on we up considering to think cylinder from when the in the about Following higher benefit COVID fiscal question, margin expense should Shneur’s you

John Walsh

will on this Ted let comment is again. Yes, I John it. I will –

– that also actually terms COVID are that that positive there In cylinder impacts. of we of elements in incremental are It’s contribution considering offset.

So I will on have Ted more detail that. comment in

Ted Jastrzebski

it Yes, negatives, right. is the a net impact and of benefits

key in reduction forecast that’s cylinder by was but the we it volume the and of sales of certain of driver, increase segments reflected mitigated year for have what being our in our $X.XX. So, is in the seen kind

Marc Solecitto

to Got it, they projected half markets a in how – $X.XX where the year are headwind ‘XX, a given about $X.XX look normal then expect in would And hypothetically we and first anticipated business remain COVID greater think patterns? EPS we of you okay. the you impacts, impact for seasonality should indicated instance, today, the nominal seasonal just in XQ your and forward fiscal fiscal fiscal the as

John Walsh

on obviously we based that’s What assessment. all recovered We return still or a in the we on normal, a completely is I to to are haven’t we off-season, businesses would – regained see those a where that’s normal. to volumes. that’s critical say and this return are across – trajectory today our

it’s as sit we here recovering fully as So to opposed today, being normal. still

but base, flare-ups an changes And have that in the what normal – FY be based reoccurrences our demand, and operations of to observing. the significant impact of impact. or months it in because dramatic are is Our impact on will more significant the that resulted a are assumption continue path sit of we there across we here than significant of be changes closing would if levels in customer were facilities today on this not summer seeing are then the ‘XX that’s the we of just trends as a would or obviously, winter sort we would year

in are the And on a see the look status on but U.S., at depending those in see the specific of that rapid those consistent depending segments path alterations of then recovery of percentage the as serve, and of a the minor Europe of region sort we in sort which pandemic we markets a across developments. the on you the specific impacted, significant of more and very pretty recovering. localized As there recovery with the are Mid-Atlantic we are U.S. geography segments the markets, around recovery or slower a are markets

Ted Jastrzebski

that more sharing would is be we year, results changing will continues give into on for that the And are built year, the when we I that guidance only and next will for thing that provide. or trend when when are whether closing the add we informed be much our our – we guidance is we definitely

Marc Solecitto

helpful. you. Okay, Thank great. That’s

Operator

Chris from comes Jefferies. with question next Sighinolfi Your

open. is line Your

Chris Sighinolfi

good morning, Hey, everyone.

John Walsh

Good morning, Chris.

Ted Jastrzebski

morning. Good

Chris Sighinolfi

and If far I year. guess, are am I had you look so hope in $XX back million $XX year, initial you $XX transformation million is start, scope pace you hits to International investment at particularly spending about would and descriptions, roughly this implying I the seems the this to of well. I targeted your everyone hit across of curious I anticipated see OpEx. Roger, sort recorded it OpEx million guess, AmeriGas LPG amounts year, for the the I

going the expectations? mix the or costs I guess see and question shift being shift that mix said a So allocation lower CapEx, update you that spending and if between if there the amounts. it perhaps is and ‘XX shift or there is on comments between do helpful? program’s thought I between made that big if tracking a a be benefits in you that be or your OpEx would than CapEx curious suggests it quarter are the to you the any lower of expense maybe either – is, fourth or are just ‘XX is am a initial investments

Roger Perreault

vast The is the by AmeriGas. fiscal businesses both the at sure, the spend concluded fiscal whether of of end what of be Yes, – OpEx, you here will CapEx highlight international majority Chris. it be in Thanks mix for the or question.

to with at a So and as ‘XX our seen same have had was the we interacting execute do environment project, to with. business execute would throughout and a no more continuing while kind again drive can continue we some have there realignment of fiscal bit in surprise, continuing spend the we we ability that great for rate a digital the in are tracking ‘XX customer which where invest real lot concerns to news on organization, we efficiencies landing very the quarter a also spend in focus to on the to continue continue easier where fourth it the this more much this how we heavyweight then we COVID the is and fiscal projects really to at will it. is us how and But on with in provide year be clarity are exactly anticipated, of where

appropriate So, again, cadence talking with in at all we of been those are projects the line about. and have what

majority spend there So, of mentioned, end between will shift is no the next change, surprise, no year. and by as be concluding a the but CapEx, of OpEx we

Chris Sighinolfi

Okay.

be your next maybe maybe guide time update suggesting a next So that are comprehensive you would all on for time, for fiscal ‘XX?

Roger Perreault

Yes, absolutely.

Chris Sighinolfi

as talk in just against maybe I What up of volumetric like? experience, have we contemplated? does the originally some margin with little mechanisms And this how make the should program, guess customers, compression other that of that that you benefits about just think see I a a have some success the of I program bit to fuel happen? the was okay. or of that pace sort this the about part made customers the plan that of improve look well comments, arrest maybe Is perhaps and bonuses is yourself Okay, Roger, more then, of you maybe of sources. what Can or sharing back decline you sign to competitive, would – of guess sort result

Roger Perreault

essentially, our And again, there bringing of real where And we exists customers. new provide where to some the Chris, we we a but customers different inefficiency well, there market, on evaluating segments in us. are of is elasticity are will Yes. the customers and are looking color continue of in we as that are leaving more that at process

some are is are on effectively of itself A and that churn elastic So what we some we that that get that that we being customers, that pricing lot those manifest build more we how of highlight. surgical more want to will really margin. of stopping you here in so efficiency ensure rebalance it of in after

some of evaluating, the likely transformation of we much end process the how to that is of be are add So this continue more kind think view next we going of fiscal. so gave detail gave see part a year in initiative. that of area between And that’s putting going to guidance at our quarter the we the are the are today, will And now for compression. we again, we into where – to we level some high an we

John Walsh

the add, with and we said, data it improvement maximizing and tools And interacting which and us have job has have take with what terms of focused – and think of we up a of enhanced I to really segment surgical kind we great make and our strategy I and the of think provide kind information us to that’s the of drive can actually the the take significant we others using that lifetime in the and sort as done sure, and Roger be also the customers to the these enhanced have of pricing approach challenges just margin our our digital adoption will team new will them, it’s our the a that access customers from of on the tools of our to pandemic ability of coupled and customers. to focus significantly the by and by value our and options will of to how differentiate in and tools some customers rollout customers tools accelerated tools and

some been offering interact to customers digitally So those new for and are the benefits tools. more need to there has

to and then be service our of to it’s long-term sort impact do believe customers we excited are customers. a really the we laying have path, on out of to our those this because value So retention high going positive

Chris Sighinolfi

that it comments about what mean, And legacy shorter your adoption forecasting can about then variance weather frameworks trying these control efforts, the question Yes. Ted’s your to John, how like business timeframe, legacy the I guess greater for a you guide control. widespread weather address just and customer mentioned, in handle try seems set it to a by moving I and seems and you all for you do

addressed, right be so. of cost churn customer the seem of acquisition and to So, obviously pace

John Walsh

Yes, okay, yes.

Chris Sighinolfi

about and I get pivot maybe sense energy John, investments make. the to and the to and think shifting think Well, is for of you, Alright. a landscape want want how the you you board this I and that about team

their numerous improvements the mentioned heavily Conemaugh and footprint. of rely earnings selling are and on the explanations UGI’s the and ESG call we night, times in on materials emissions will process this the make have You morning you GHI for last in those acquired actions appear in

a focused utility fuel We very have environmentally out now those wishing underwritten. in see been etcetera. to natural as companies renewable, as to over the customers to of always the seen gas investments, investments themselves has you guys all gas, the things team’s a But have convert years Hunlock, returns wave support there component clear you We the to examples. landfill clean past, stand and oil conversion of re-brand the the

scale pursuing You couple night, full pivots. Dominion of last they are see weeks a ago BP

of about old and you are long-term returns, XXX-year put that AUM the compound disciplined that, So and I on wave a to title investments incentive the focused in anti-hydrocarbon ESG company, to appreciate things fantastic understand the but also that underwrite. you remaining participate economics a

those a two maybe between conflicts there I if things? I So things, wondering are just get potential how, the conflicts sense two between if of am those

John Walsh

aligned. much Yes, Chris. more as it I’d see

us. make history happening customers customers looks and for environment in company and and we that two our our received first, And economic understands has our are with opportunities us our see are deliver sale new area and to that supply GHI which then to GHI ask in feels in our the the is natural significant – a don’t terms case portfolio I’d well our in portfolio these the develop that really power for that attractive but customers today, an There of this needs been sources a to new what’s Because aligned management which investment of very have see suits think and the acquisition for market of identify by specific focus. to regulators – a addresses I be we then us first us and think operational further for supply provides who supply questions looking of terms and incorporating from we going operationally can investments with solutions the are and foremost renewable meeting also is of standpoint an it non-core that to and coal-fired that facility solutions in gas, closely I provision investors, I a natural an close business. great as aspect us a that renewable think position a while opportunity I investment business. to but operations It’s of in Conemaugh also which is we do generation into of gas really well talked our commercial are sense. overall and about growth in

and positioned attractive So deliver gas about renewable participate natural be extremely excited utilities that. really incentivize And portfolio, incorporate well we to different be to opportunity to will the states the positioned natural going that into evolves, to those example, to want a we in supply determine renewable market they are as investments. think for to attractive to gas and develop we and projects commissions be are should invest in

core investments ESG to deliver deliver I we reflect positioned the well attractive believe time. also changing and over believe that standpoint, in are So really our to terms deliver but and to we strategy of environment. And from really are and aligned think we market these an with from investments

Chris Sighinolfi

Okay.

to a So on characteristics return the eroding finer shouldn’t underwrite put initiative, you profile company point things the it I mean, historically it of this sort might think we guess, about the return I on of of

John Walsh

certainly key capability renewable fits No, the a us see find networks returns to to, gas And that. deliver and to core already opportunities natural and no, exist that that. in us where strong because and we for we assets leverage core company some that don’t it’s can in enables cases,

Chris Sighinolfi

Roger, point appetite UGI’s investments participate this is or a about Okay. continent and or for know you, electrification guess in I so renewable and John curious And on arm? for for as ability has I a and a if don’t as works transition Europe but framework major distribution become focus hydrogen maybe related related hydrogen just to in that

John Walsh

Yes, comment. of more has do Roger little Chris, interest a let of briefly Roger I got and a us. past my an very past. hydrogen to will got experience have I and that than bit definitely lot And hydrogen is in comment with area experience then it’s in his with I

renewable our If look that for driving of with and definitely hydrogen, at green leverage produced case, to sort would I power, or or our, but our comment this supplement in us Again, process I the assets users leverage our, Roger renewable we alternative an as incorporate made, is our infrastructure just supply it’s to in electrolytically hydrogen all end it’s renewable to hydrogen the the core electrolytic opportunity connection we interest. portfolio, have point serve to sort hydrogen, of you our an what will be of to let well.

Roger Perreault

governments fairly when hydrogen Everything been industrial promoting maybe when you a add lot in come a But here. an electricity of electricity, highlighted, is it’s intensity do the very a hydrogen also fuel. what process. alternative Europe demanding interest As Chris. Hydrogen electrolytic renewable. hydrogen companies happen. have certainly of of the have you to power And And process. couple think capital to points is to from produced. on embrace certainly point the capital for lot than forefront of you has intensive been Want to has not a things high A It’s John see made, more but Yes, the to decades. and we gas

an cost going infrastructure capital there So fairly there on due existing and more safety inject etcetera to these concerns then much embrittlement where without power all And all what the are depends and some how to renewable challenges the of modifications, limits the intensive power, managing more course downstream has and the be making in then pipeline to is and conversion hydrogen plants, of system it. of to such hydrogen. aspects of into would to one opportunities adapted

opportunity again, potential able participate, So for happening to continues will one evolution. it’s the because for several mix. infrastructure and best an new, as into come this been It’s our the encouraging monitoring we that definitely be to we us to decades, molecule will it’s looking be what’s not leverage at new energy

Chris Sighinolfi

Great. thoughts comments morning. I appreciate the this all and

John Walsh

Chris. Thanks,

Operator

Gaugler with Your next Montgomery Janney from Michael question comes Scott.

is Your line open.

Michael Gaugler

morning, Good everyone.

John Walsh

Good morning.

Michael Gaugler

the on Congrats quarter.

John Walsh

you. Thank

Michael Gaugler

think you seeing volumes Just trough pre-COVID kind C&I out are we returning of you those period? to are bottomed wondering if in do have still or the levels, a

John Walsh

in typically so those area the virtually briefly, would Mike, clear fleets, I as geographies school fall LPG of sub path to as summer comment we I a it but on will comment recovery, as again impacted and cease virtue bottomed are and we really of transport U.S. the difficult by have briefly minor a timing different different but will were every of anyway, we Bob overall, be assess see right and – pretty only start with impacts see Roger rates on path sort area. which – issues, are will see bus pandemic the now recovery we of and let is in of say differing Certainly, well. in and they really across touched out school recovery is The I I recovering the localized. that But that. slowed districts involving are up

the an significantly at look from we recovered in is current of both majority be area of to has serve the vast you concentration in activity U.S., positive If continued COVID in at terms the point that Europe and and conditions. relatively of of the geographies impacts our this

Bob that, We of they will are saying. and will keep an Roger terms let offer on comments in what but I they also any eye have

Michael Gaugler

Okay. Thanks, John.

Bob Beard

normal, a the bit is involved John This though, volumes the some than recovered. indicated small little where was with Michael. weather food see different discern, Bob. but in that manufacturing are some and we consumer a increase starting call declines. was little processing saw April’s have those what as are actually we to pandemic those tough commercial Interestingly customers we customer our good morning, rate and market, to customers are throughout because bit up. It Good Yes, in who seen we

see kind we will but such. said areas hospitality, and So just that John for a what recovery, are this restaurants and time in to we in I echo pattern of starting are the the of see wait

Roger Perreault

At just pandemic. COVID recovery add have couple we will of Yes, of International, a comments seen coming Michael. more I out here. the

We flare-ups been at yet. seen at commercial but where that recovery, in we quantify start we to trough, we have the are COVID as where the still that school impacted in I still recovery, that It are would seen volume done move have particular are buses, low off we not AmeriGas, is far and not autogas where of seen there look course, some period some has we U.S. but have accounts. of geographies. some and that and in we we recoveries has evolution some parts When in in over the industrial as

that’s with we So the other see see of etcetera, and very will especially prior low we wait still being continue we to restaurant then demand an to happens commercial hotels, area And well, in segment periods. as to schools. relative have that reopening that to see the commercial what and continue area that

Michael Gaugler

And PennEast, and potential any could more, on that’s the Phase X to give us helpful. issues Okay, outstanding portion then that line? specific one update of of just an timelines maybe you

John Walsh

X of by at a XXXX. a we the – on was – of end environmental release Phase continue coming current Michael. week we positive FERC, would service this that’s so assessment, most an secure for recent step end the commitments. development the Sure, and which the forward Yes, was to PennEast continue of calendar look that, to will very gotten into PennEast The plan have having that to assessment

So, we – that I just as received just assessment. environmental we said,

X side of sort on work from the that taking a and those are on and continue assessment forward favorable we to it’s commitments. So Phase in, will commercial we move but there

Michael Gaugler

gentlemen. you Thank Okay. very I That’s all had, much.

John Walsh

you. Thank Great.

Operator

turn no back remarks. Walsh to John are I for will time. now the closing call questions at this There over further

John Walsh

updating you look to call you on Stay to very much. you call in thank and next look with Thanks forward Thank time Okay, your on for morning. forward ‘XX that We touch this I being our on our guidance. you. safe. fiscal

Operator

concludes for Ladies you today’s this call. participating. conference and Thank gentlemen,

disconnect. You may now

UGI (UGI) 4 Aug 202020 Q3 Earnings call transcript