UGI - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to the UGI Corporation's Third Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your speaker today, Tameka Morris. ahead. go Please

Tameka Morris

and morning overview third Good to morning thank for entire Ted then Jastrzebski, you Roger Natural will Vice Thank Roger team our Gas. XXXX everyone your results earnings answer our and CFO; Ted CEO; quarter President provide this available Beard, call. joining questions. Executive Perreault, President, an you. will and and Bob of With be are the me and

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

Roger Perreault

and pandemic. quarter Thanks managing impact UGI COVID-XX Tameka everyone. and the performed well while results morning strong third delivered ongoing of good the

business the of first represent $X.XX $X.XX strong prior year-to-date EPS reflecting was of a basis, year fiscal quarter three GAAP and adjusted diversified year. record in per On across earnings was margins Our increased adjusted while GAAP our a the and EPS UGI comparable our quarters execution the through International. over third of $X.XX earnings EPS share at $X.XX performance $X.XX, $X.XX, period,

diversified of We earnings are business. which with our this demonstrates pleased strength really performance, the

year. for to During EPS revised guidance the $X.XX fiscal we call, earnings this of QX $X shared the

we performance, end range. year-to-date the Given expect guidance the to of top strong our at be

before return turning provide an key to Next, several I'll up I'll comment it questions. to will on overview opening briefly over with financial it during the before of performance. for UGI's cover other Ted, quarter highlights operational who key accomplishments you

our deliver to initiatives portfolio. earnings incremental business opportunities growth, quarter, our our to the make rebalance execute on teams as During investments continued reliable major related renewables, and we to progress

to objectives pleased are well-positioned ahead. with are opportunities We of and the meet our pipeline

rate CAGR on continues team PA system customers new across of focus base a has infrastructure our on Utilities another Turning growth bare to capital cast the to expenditure, The reliable UGI key heating commercial basis. our investments, year customers and added are expected utility primarily to seen and as which replacement focused the for and years. in drive QX also X,XXX continued These record for XX,XXX highlights on is track are where XX.X% iron Utilities added year-to-date more earnings of five with roughly quarter. the reinforcement. invest steel, than in and past will on a residential of we over adding new replacement

take over capital opportunities Marketing leverage the to of and will Our to that that Midstream and supply invest next business to assets continue years. continues several our substantial we arise, we expect advantage

quarter. the well, during system, in in including Run and strong the recent perform continue the system volumes Pine Our to were Appalachia production we investments UGI our interest with the pleased

demand remain rising our As growth and future opportunities. prices, us confident to assets in position continue well see for that midstream we we

execution continue a quarter had outlined. strong the to deliver previously of businesses Our as transformation initiatives LPG business on we we

excellence. focused on customer the operational and within will efficiencies drive experience, We our remain commercial improve operations, and

shareholder with continuous value. the International. are this customer We and And expect that both strategy, will track deliver targeted and AmeriGas UGI previously on coupled to generate for benefits improvement,

Yesterday, develop exciting are innovative investment execute to digestive previously that in into definitive the with renewable conjunction Kentucky local waste in quality attractive solutions projects natural gas that injected joint venture. has teams renewable into agreements you. will Energy project, entered Hamilton of progressing regional we the RNG announced that and Our Ohio renewable distribution shared a with to that and pipeline strategy food be we RNG on against we opportunities system. as produce In UGI range gas natural pipeline a through serves Services

off-taker which the will In to marketer are RNG, to RNG. able for with addition, we exclusive RNG of and be GHI, similar leverage the arrangement Hamilton Cayuga

a update, create joint we intent venture discussed addition, of the production our renewable investor the use In for to and last during ether. dimethyl

filing regulatory and as update with European venture. calls this on the we on progress our will started have an future the we authorities, We process provide

As you are a we making can businesses. strong number of on across our initiatives see, progress

We focused opportunities renewables rebalancing exploring will our of reliable against strategy and remain portfolio. on delivering growth, earnings executing our

of We turn us and X% to I'd business the later deliver Ted? XX% long-term over to to growth point, are return will it I'll growth. X% But confident call for discuss to other that review. to this like financial dividend updates. EPS Ted on this to allow at continue the

Ted Jastrzebski

Roger. Thanks

prior mentioned, the strong third $X.XX, year fiscal pleased with quarter of EPS we're results. increase $X.XX an adjusted of diluted Roger quarter. over We As delivered the

to $XX fiscal adjusted fiscal This year for GAAP earnings million Our table million the compared reportable XXXX. of diluted year. year and $XX share in per segments our lays had XXXX out EBIT prior compared to

Station. adjusted the a XXXX. associated $X.XX we XX, third $X.XX derivative business Last exclude was last This initiatives on compared the commodity fiscal impairment an in our number in instruments. of items to prior recorded As impact Conemaugh Also year. you September of adjusted $X.XX in gain divested mark-to-market of a we XXXX. our such quarter the our year, diluted of changes of $X.XX with versus of year year, this had currency interest out interest instruments, expenses earnings a as in of as ownership foreign hedging $X.XX loss transformation the LPG can see, $X.XX We

In Natural gas related Supreme will assets. ruled in PennEast impairment the is favor U.S. our play Court consumers. a and categorically for to June, role PennEast, news our energy continue had of to meeting good industry in an important needs. the which we Lastly, $X.XX

with project is phase as remaining even This service. led when to However, be on project to such FERC investment. us will our the positive unclear the brought issues, request decision a other into resolved this news, it be by allowing to the has impair

in While discussed our PennEast, the that we uncertainty there opportunity in have we meet of regarding capital is return areas objectives deploy to have as ample past. other the timing

also the we some LPG to this was at almost year year-over-year due year as Looking weather margin to performance, discipline was additional went improvement rate achieved the gas This this to as due performance prior volumes management an period. into XX% business on continued at colder prior than quarterly versus provides of that our the effect chart higher in $X.XX largely color was at in and Utilities well base our businesses. earnings beginning that year. calendar increase new our throughout at There OpEx international the

in benefits the and $X.XX $X, guidance realized saw impacted corporate than and that range from saw Our last tax we businesses due to Act domestic noted $X.XX of tax other Utilities. decrease shared AmeriGas actions. warmer FY of CARES $X.XX largely strategic that which a level, weather we CARES year we $X.XX were revised the period, XXXX year. prior versus prior demand benefits the to At When COVID planning tax year, included of this our roughly headwind anticipated at

reflected end deliver the Our year-to-date Roger experience items during results our and to of XXXX, by the prior at shared, entire amounts expect Delivering in period. we the with top quarter non-GAAP QX our we projected. top primarily see XXXX. And the compared In to the that that our align will range. of is of as tax when sizable of FY to GILTI expect QX, continues $X.XX, was while guidance in the range we reduction FY given results benefit the a that quarterly guidance benefit previously at year realized end driven is tax

this Act our In leverage of with performance reduced addition, CARES our the year. strong is

fully million, XX% period the of driven compared an account Retail currency in the Looking in margin improvement $XX higher COVID-XX wholesale increase margins and million an increase $XX reported average propane to drove There retail and slight time. businesses. This earlier. current million by sales volumes a volume to in decline volume $XX mix. We quarter, dollar UGI FY a there constant a gains total exchange prices attributable And total saw in increase X% or comparison our saw business that Overall, When bulk was $XX compared performance on $XX largely to XXXX. pandemic working year this with in offset in national higher foreign response the strategy that fiscal to year. described at and cylinder individual that the was prior a in of impacted and volumes segments. volumes in largely Separately, in roughly period. volumes colder EBIT. to hedging year. is by lower after over XX%, on motor currency saw I last total as multiyear year in million million which prior segments This volumes pandemic that lower to QX margin unit was by quarter. prior over the million the recovery the volumes partially largely cylinder intended Other were U.S. XX% and given customer normalized exchange increased impact year-over-year and significantly million a we in by in prior XX% than of to the to third by was were increase the that increased which certain period. due saw volume the in EBIT intended, the XXXX volume sales in onetime associated income $X reducing offset the cylinder EBIT increase year. decrease lower-margin XX% in generated shifts AmeriGas We increase the customer slightly weather finance XXXX. the significant volatility of year uptick in residential the cylinder from to exchanges in higher the customer suspended fuel the is commercial charges, asset COVID margin of prior as exchange International due $XX compared higher offset offset

$XX and year of marketing fiscal and with energy to Moving EBIT improved million, management, activities gas Midstream The the reported which to Marketing the prior gas XXXX. in consistent fairly capacity margins was comparison from business period. natural renewable experienced businesses. gathering

Utilities primary EBIT base customer and base Our $X quarter of Pine recent million the of to higher IT continued largely the with was expense strong $XX This than versus due line expectations Depreciation increase increased our Run capital is the prior the expenditure prior to gas a reported implementation Xst. for year. quarter's UGI year. our and and driver in January activity. million, EBIT this increased performance continues delivered investment increase in and growth in deliver fiscal on continued system attributable rates to distribution in for

remained over the in cash to flows liquidity. a Turning strong corresponding prior our X% activities provided the Cash year-to-date operating period. increase by with year

the of available of billion, As prior UGI than more $X.X million the liquidity had of the end year $XXX period. quarter, approximately

balance Our sheet remains strong.

the comfortable capacity We are our business within covenants. with all financing continue well of and units our to debt across be

that, part now mix a past. back the preferred completed consisting is shared the close and with which hand financing stock, with Roger. debt in needed units the convertible the and that in to to of that equity over And we have the mix Mountaineer call We financing consistent acquisition, I'll includes of

Roger Perreault

Ted. Thanks

Q&A, Before since other our some we I'll updates share with key last business to you call. move

continues settlement First, for an In the filing Mountaineer key progress testimony completed commission. milestone a by in we as hearing to the smoothly. in before process well the providing as agreement regulatory July, acquisition a

a August will Our XXth, next approval. the commission's to step order be proposed file seeking by

we even commission's year. key the fiscal the uncertain, have the completed potentially and several end of timing steps this of in to well calendar process, precise the close year within regulatory While is approval now and before expect the approval

provide operation and We transaction will continue the full Mountaineer in will year first meaningful to forward. believe the growth of accretive opportunities moving to be earnings expect

with Utilities quarter, agreement base the rates safety top second Under and reached the In division the of our UGI. anticipate in rate filed July going completed gas $X.XX effect phase a went increase rates million, $XX Separately, training the UGI we Utilities into value new construction Electric to our on settlement the During base division be centralized petition Electric its priority million XXXX. core would is settlement Safety into July, PUC on agreement a UGI terms state-of-the-art joint for at effect facility. November and Pennsylvania of by permitted XXth. of July of rate new increase the the Xst. agreement, and on that a approval case a of

this the We place reinforces our are in pleased organization. to it facility to service commitment as new safety across

Lastly, our home continues increase team the footprint Cynch. our delivery AmeriGas to of service,

to During we Cynch in the total three across XX launched the cities quarter, markets, the bringing U.S. additional

look strong investment to to we the the execute year-to-date this quarter fiscal year the year As forward strategy. we we and available in XXXX, our with opportunities on are us pleased and fiscal as performance remaining

the to operations this, renewable long-term. driving efficiencies improvements, a in X% that, have robust demonstrated will and well and to investment strategically into businesses, our And XX% our questions. lean energy reliable and of confident delivering resiliency open do X% to capital core remain that solutions. return natural continue continuous in expect gas ability our volatile dividend We executing business despite To I we're and remain effectively positioned to to challenging macro we operate long-term over it for and our environment. will and to at with opportunities through in up growth that our committed and both we a and EPS shareholders grow financially we

Operator

[Operator Solecitto first of question Instructions] the Marc come will from Barclays. Our line from

You may begin.

Marc Solecitto

morning. good Hi,

So, percentage your bit in light quarter. at came APU gross a this margin

customers. LPG share cost that your part was was sales mix function a know transformation? with your prices savings of the quarter, LPG I or perhaps rising during wondering, of the of with Just cylinder to lower strategy some sharply business with

could just you the wondering comment if drivers on there? So,

Roger Perreault

Yes, Thank that for good morning you Marc. question.

account question. I hit think what is as economies the during element national your margins activity the it down in to seen main that quarter is The you increase drove continue we've an improve. in

obviously, While and volumes cetera, same -- cylinders heating in decrease or we've of utilization for at for but as, the patios, obviously, not the time, seen barbecuing has cylinder decreased. propane the et a

effect. period-over-period really to due a is mix a So, large component the of margin

to control we as prices continue commodity We up. come have see good pricing

down. be But to prices continue the the as could able go where will as an margin coming we gap There and up We a the up to go always consistent and margin we're commodities when market. have to through small see in and we've prices past, we good effectively commodity drive when timing approach are continue recover to that. between evolution shown

Marc Solecitto

business versus some on seems a end guidance, range. it. upper Got momentum the tracking with toward And it's nice in perspective. structural from now an your you of it revised of weather the then But there's like sometimes drivers, at impacts terms in least more the outside obviously, bit opaque quantifying

So, compared year-to-date wondering or how that's year? and your on how weather-normalized underlying comment could if next as for budget, you to results just trending

Roger Perreault

Yes.

additional start I'll Ted it few I'll So, and to pass for over a comments.

quarter we and as several So, performance. the during a highlighted now row, good we've in very been to it's quarters have continue

diversification driven operate The demonstrates well to to the guidance highlight our business. Street. XX track to to I also we the like budgets, The It's of provided components. power that a geographic And it we've think continue point the the We only a compared U.S., have European I'd we is with one across plans that our and that business but not countries, diversification, as across operate fact activity. we of lot

now it and very for strong to with several I'll these pass we really over we've to solid robust comments. puts earnings performance and But additional all see continue So, takes the explains growth, it provide us of quarters. largely Ted had

Ted Jastrzebski

fair we Europe. weather only to add has strong thing really I It momentum. with would I enhanced that it's is, have very the in Yes, great think been underlying say

but especially strong. the is international So, is underlying momentum strong,

our at continues short Utilities. charged that our our spending spending transformation investments on And rate the capital our mileage efforts through therefore, on while we ratable initial be spending very and in we strong. may get be in We're for bit LPG, our delivering much will base. betterment year be are a on little against the Utilities expectations capital and projections, to yet record on replacement We at track hitting another

strong so And business. very momentum yes, the for

Marc Solecitto

able provide maybe Supreme And ruling? that following update Would just PennEast. project I forward lastly with just guess, Court an the be Great. And stands? you steps to on then where

Roger Perreault

like on in let that we Yes. little change to belief Well, does partnership do the Bob should for we we project. that, this certainly the him But really Bob? let I'll with But not the call, region, And an the on certainly. add to and And see project certainly, what remain it's I'd explain that committed Bob further that PennEast a Beard so the important detail more decisions made as and how that to future project is color. our be built. to is is a agreement.

Bob Beard

Yes. Roger. with Thanks Roger. Yes, I agree

believes natural question we a what's hurdles consider really in remains still Supreme a Jersey the timing? though regulatory think gas. another to Court, Even of source I we that necessary quite a from partnership is firmly the standpoint. few there still the ruling now But from New what needs got be good

in timing project the So, of question. the remains

Marc Solecitto

the for Thanks Great. time.

Bob Beard

Sure.

Operator

[Operator Instructions] this further queue any in questions not at I'm the currently showing moment.

Roger Perreault

you. on just look joining and Thanks certainly day. to Well, like next good thank and have call to today call. I'd a on everybody we Thank Great. for the you our seeing forward us

Operator

call. conference the concludes This

You disconnect. now may

UGI (UGI) 5 Aug 212021 Q3 Earnings call transcript