UGI - Earnings call transcript Q4 2021

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Operator

Good day, ladies and gentlemen, and welcome to UGI Corporation Fourth Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later we'll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the call over to you to Tameka Morris, Director of Investor Relations. ahead. go Please

Tameka Morris

Engineering Natural our and Procurement. of Roger Construction, morning, fiscal President, Good to the and joined thank for Jastrzebski, you Roger Thank fourth entire everyone. quarter will Vice then & or an CFO, answer Ted CEO. XXXX, President I'm be questions. Beard, Ted available provide earnings and Global joining Gas, Executive overview results, and Perreault, team you. will and And Bob call. by Today. your

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

Roger. to to Now, over pleased call I'm the turn

Roger Perreault

morning, good you call for Thank And everyone. Tameka. Thanks joining the today.

and XXXX for fiscal We to results expectations our are discuss excited XXXX.

top at global and every the $X.XX, proud performance equity, that's will XXXX, was over achieved a year and the is further record moment. notable adjusted the XX,XXX non-cash uncertainty our to in to years and in been you higher to in Ted reported employees and to guidance, continued a revised that the may from in particularly of + business than XX% environment. dedicated and is XXX day, of up excellence. diversified is previous As EPS earnings, our what face $X.XX, end show which an release, our This prior detail of In seen the fiscal I'm built $X.XX testament earnings business the all-time GAAP related diversified of have EPS which discuss direct adjustment resilient, our safety of we challenges

of dividends. year due UGI of in All to higher which our reported results increasing margin to conditions comparison of strong marked the XXXX, businesses year consecutive weather XXth and normal record the a paying year XXXth efforts. fiscal dividends consecutively continued This performance relatively management particularly delivered International, and

have shareholders of an past dividend of rate years. a the and growth Our experienced X.X% EPS X.X% rate XX growth over

EPS for in be fiscal XXXX, range $X.XX. adjusted of we $X.XX forward Looking to to expect the

prospects We execute XXXX momentum of reliable our our of us we are and encouraged delivering continue solutions, rebalancing Gas. ahead strategy portfolio by as the more we and to a from in split LPG and the between Natural growth, well-positioned earnings equal investing towards are growth energy believe on renewable

more forward. range reliable that details XXXX growth over turning investment to several The we profile, capital record $XXX earnings replacement produce provide UGI's delivered performance. We rate-base executed noteworthy we Ted, comment of focused million PA the reliable and on Natural Gas growth business, level to at governance utilities, going a several reinforcement. In we that utility I'll and social, deployed average major our earnings and infrastructure X-year of as of the made on rate continued a leverage over and and in investing our progress an Next, new we before regulated who achievements strategic year, expect on gas existing the environmental, initiatives. course infrastructure financial This in attractive our call with being plus to driving gas fiscal expertise. XX% on continue growth opportunities investments, growth will on

commercial residential continuing Our our than new more annual strong heating customers, XX,XXX track added utility PA customer also growth. gas and record of

pleased the added we roughly on Virginia. in this September acquisition closed with utilities Mountaineer We of customers are Xst. and With increase footprint that regulated West X,XXX to pipeline XXX,XXX our acquisition, miles nearly

continue Midstream a the income. Marketing to Within & significant of fee-based segment, margin we amount see from

gathering we with February the the our fiscal strong We also Appalachian year. XXXX. interest production the performed Run volumes in in This expanded and with basin the investment in Pine are gas natural pleased systems investment its has during in well,

opportunities. With the future position rising confident us gas natural prices, well assets we that for Midstream our remain

to global Moving LPG the business.

International cities million mentioned remains realized to the volumes before, offered fiscal €XX its and benefits end in account over on business of approximately and continued on annual deliver this expand €XX AmeriGas XXXX. benefits to stated in in annual U.S. home million X% also financial year. the the XX results record national transformation previously initiatives of by track by generated UGI I delivery As service our now grew in The goal segment since, cylinder from

focused As teams customer at AmeriGas, on part are business initiative experience the and of transformation driving enhancing our our operational efficiency.

a by And These AmeriGas established of we XXXX. we incremental than management provide total benefits annual centralized now XXXX. enhanced $XX customer more fiscal of are end a cost services benefits the activities engagement tools, center, at and logistics million million $XXX routing In complete. $XXX introduced of fiscal expect total transformation in with those in new customer conjunction substantially to million year, the tool. realized and annual efforts, the During

committed XX% by year. base emissions Moving ESG initiatives, a gas Scope XXXX in team a commitment further greenhouse X using established as we demonstrating the XXXX, to our to our reduction and ESG sustainability, dedicated to

belonging, great pleased and on to commitment in and We our XX%. spend initiative also over by diverse we're inclusion, and equity made diversity, strides our advancing increase suppliers domestic with

Library we established Brothers Urban Human relationships strengthened also and Big efforts, these of The with partnerships part existing Sisters. Coalition with As The and Affairs Big Organization,

strategy. our renewable our progress to Turning in advancing

$XXX Adding to a feedstocks, those and of committed produce during segment its Midstream New natural RNG to several outside million produce natural from October Upstate Marketing & over it the diversified in XXXX, in gas had RNG Services Energy to of entered of partnerships XXXX, our In historical strategic UGI fiscal investment York project attractive these dairy set announced into partnerships, that develop to also geographic boundaries. During third digester to the the from we investments, project RNG gas identified renewable venture. year. a RNG joint Cayuga renewable

with to with pleased In customer Renewable Dimethyl to biofuels. low begun that also and of Ether receive needs. to supply established bio-LPG to are sustainable joint announced we We U.S. a that the RDME, We liquid enabled meet a create lay or production arrangement May, intent for in Europe. foundation exclusive an carbon in the venture Europe the gas the use we've us and

are We European venture. the in this regulatory we'll process the authorities, and more provide filing on progress currently updates we with as

pleased investment we've initial these renewable made the with are that in strides opportunities. We

these build-out. existing the First, infrastructure to utilize our In we to investments most projects cases, deliver they us customers serve. incremental related natural allow and no LPG bio-LPG require and gas community to no our to distribution disruption customers RNG infrastructure and by

in in energy business over spend in strategy the more in as financial Secondly, our capital will to investments renewable drive through details guidance. Natural get rebalancing investment to and solutions portfolio the system. acquisition, Mountaineer These well Gas Ted and call lead our as betterment, Pine replacement the will similar into Run growth. midstream investments I'll the XXXX continued our forward the on turn and who now, earnings fiscal to And

Ted Jastrzebski

Roger. Thanks,

to adjusted $X.XX delivered, GAAP As compared per diluted prior results. and XXXX share Roger $X.XX XXXX in table with the This earnings our year. diluted period. UGI the pleased EPS for adjusted lays mentioned, year we're in of record fiscal the prior fiscal comparable out

exclude largely $X.XX, mark-to-market fiscal related number As changes year of $X.XX prices items a year. the to you is that impact this instruments, gain increase to can in of adjustments see, including diluted saw versus our adjusted in we in the in of hedging 'XX, significant attributable commodity commodity which the $X.XX which a totaling earnings

sales volatility. Our short-term fixed market and strategy manage reduced hedging associated the price to businesses with risk of a price commodity employ effects price programs,

commodity at XXXX. XX% than average X the U.S. XXXX, points were wholesale propane higher in supply fiscal During approximately of the prices Mount Texas Belvieu, major Fiscal

prices International adjustment current year. year. per This in higher to propane the in In over gain saw a Europe mark-to-market the XX% led increase prior addition, average wholesale UGI in

to adjusted we out expenses in the Next, compared year. $X.XX $X.XX of prior our initiatives, business associated transformation with

use transformation As $XX million adjusting of that business XXXX this substantially functions transformation complete, in for began those are cost expected fiscal XXXX year the in the ongoing our between to best and transformation fiscal the LPG result the fiscal initiatives by $XX our are will to roughly global and savings. more million will in corporate will the processes final annualized Adjustments will relate costs. be and of than across end and practices activities while The businesses. corporate platform leveraging functions of standardize efficiencies XXXX of

acquisition for a to customer intangible historical integration impairment volumes and of impairment $X.XX closed Gas We attributable year. we at Next, of adjusted Mountaineer this September $X.XX due in of anticipated to for DVEP, on a our Xst relationship $X.XX fiscal decline to customer. the had that PennEast related assets.

the opportunities to change, meet September project. further are return development Despite we're XXXX, that proposed our ample As announced other ceased pipeline deploy objectives. into of that PennEast this of has confident in there areas capital

came into a XXXX, the gain. one-time law fiscal Lastly, change that a $X.XX had due in to Italian tax effect we in

some provides color on that Looking $X.XX the at we this year-over-year chart in the earnings additional versus adjusted year. prior our performance, improvement achieved

went upcoming businesses from over year on the At versus were fiscal that saw prior to each benefited in for due Act pandemic volumes that $X.XX the XXXX. year on and also Roger an operating colder were some we'll the and that in The of $X.XX slides. impacted further higher CARES experienced corporate new by benefits higher recovery prior delivered our base the mentioned, year-over-year to tax segments was detail Overall, our International. the all COVID-XX our decrease than gas utility UGI discuss the performance contributed largely at year increase. As weather period, effect realized prior gas rates level, that into PA we

growth which our we therefore EPS be expect X% to to included for the our practice until reflects method, would shareholders. our be of treasury using unchanged underlying growth impact of the Despite providing treatment guidance our accounting million earnings increment, calculation reliable we the shares not outstanding XXXX, market XX% had XXXX, target the account and a and was stock impact This long-term fiscal calculation time. In settlement that expected discussed accounted equity $XXX the that units not issued from shares underlying average EPS we our on shares weighted dilutive Previously, the non-cash range. when XXXX. in addition, the in $X.XX May anticipated inclusion in guidance resulted to updated our the of of the Company and related we this with remains in of was consistent in continue at

Turning to individual by AmeriGas COVID-XX to volume and of EBIT residential reported increase and year. X% over other volumes, commercial the businesses. continued in impact volume due industrial on declined the an prior loss. Retail million $XX

the well as Some as volume margin of national in an increase prior margins by was increase volume, over impact year. offset a unit accounts on X% in

mentioned earlier, were I than significantly XXXX. prices commodity fiscal average As in higher

hedging Roger our deploying to customer $XX discussed and management realized from our due to lower addition of In margin affordability. continued business expenses transformation LPG million that on the strategy, initiatives are The largely operating earlier. to benefits focus

as On we X% EBIT than Fiscal the income year. had over an in were significantly to volatility Separately, and the XXXX. XX% colder offset along volumes million pandemic during associated prior higher the dollar a and higher volumes suspended is increased in strategy, effective basis, of year. the currency our fees by in due Retail the International other in or compared by impact improvement primarily time. is reducing the multiyear to unit early bulk shifts slightly increase prior that management by EBIT margin with over fiscal which also were changes, $XX that COVID-XX the the had margins largely weather to intended, margin hedging recovery volumes increased of with last late impacted efforts. increase This drove the due UGI due months the to working certain U.S. intended a year of is XXXX. to constant-currency of resumption pandemic XX% total We foreign

compared $XXX the business timing. million to improved energy experienced Conemaugh helped marketing to and renewable also to Improved margins offset from gathering gas and XXXX. marketing Gas margin in EBIT driven reported the comparison midstream $XXX activities, capacity the that divested of from loss management by XXXX. from fiscal margins million Natural Moving The mark-to-market in businesses, in HVAC year, were fiscal prior in

continues Run in increase contributed prior Pine perform Our versus our the recent investment to in to above expectations year. and EBIT

was phased implementation to due market now million costs and of which volume to than utilities and the the of contracted comprised the with dilutive of year PA expenses effective attributable had Higher million, million, operating our the largely year. new continued units. impact $XX our $X.XX Mountaineer increased recovery acquisition. prior segment, equity associated impact Core electric which Pennsylvania, of adjustment incremental driven of growth by new the Mountaineer the more $XXX year in in labor January core certain the prior and a Mountaineer and X, fiscal the COVID-XX. rates, higher gas costs to to base in the XXXX. customer base, decreases expenses EBIT $X.XX margin market non-cash and of to related and employee for for utility volume XX,XXX related reported the became were Our addition higher increased higher volume than Total $XX by customers

generate business $XXX flows to year-to-date had of prior Throughout approximately than in available liquidity, billion, prior year more period. Moving activities our operating million cash year. the continued we a cash XX% and liquidity year, over the UGI from saw strong to the $X.X flow increase

capacity Our with sheet to Company. active balance across the remains the and projects new investments strong fund

is XX-year mentioned, normal our average adjusted on $X.XX regime. guidance for EPS tax the a fiscal current $X.XX assumes Roger and As in weather range XXXX to based

to fiscal comparison actual the the midpoint On $X.XX. EPS a XXXX the adjusted you'll of see of slide, XXXX fiscal of guidance our

with of non-recurring roughly CARES QX call net of headwinds of The the effect several tax by you strategy full earnings of tax year, update but Act benefit roughly we benefits is from impacted items. were results and neutral, items provide our $X.XX. these XXXX an planning fiscal since to $X.XX, approximately experienced fiscal First, approximately COVID-XX $X.XX, the for

items that came with are acquisition. Mountaineer Next X the

dilutive approximately incremental $X.XX impact equity that for dilutive on the the the the have units treatment. based discussed the this equity impact The includes an we $X.XX Year-over-year, dilutive of full-year previously. units First, is I guidance accounting current of of impact.

is XXXX. Next over fiscal accretion increase an which Mountaineer, is $X.XX from the of

includes initiatives, Lastly, drivers the some price This provide we've taken as over our fiscal from which incremental into XXXX. we are benefits to $X.XX to chain constraints, guidance, transformation weather the well in U.S. an other the consideration inflation, impact have as from increases. establishing normal expected commodity return business In supply and

guidance to approach of XXXX, fiscal long-term the the mitigate growth top at X% and commitment which rate over of a In margin X.X%, of impact expense is global X.X% growth us disciplined solid challenges. management of XX%. the helped earnings and these end Our summary, XX-year midpoint represents the to our annual fiscal a increase of XXXX

opportunities to earnings that ahead excited further trajectory, continue We consistent expect drive are to growth about expansion. the and

Now, over I'll back Roger. hand the call to

Roger Perreault

marked people in that the global in several was with are proud to resiliency year Ted. business and able results in we were Thanks, deliver economy. we In closing, our the of a of the strong challenges

advanced our our strategy, our environment, about our commitment very the to customers. and our continued dividend commitments. strategy growth on optimistic against EPS accelerated We our am in our execution and growth long-term and our operations, to people will future the I and deliver expand

in up December. We Investor at long-term that, strong And ahead for of forward those open you investments our and have to with we discussing Day a opportunities our will progress outlook pipeline and Virtual against look with it investment questions.

Operator

Instructions]. stand we while the you. Please Q&A Thank [Operator compile by roster.

from of Dumoulin-Smith Bank line America. with comes question first Our Julien of the

Your open. line is now

Julien Dumoulin-Smith

to couple got here, if team. your I a just you suppose have my of but know I questions try morning, here. I update bigger going Good luck Hey. can. coming guys I'm

accounting. [Indiscernible] in new the on just off, First

the led perhaps. did get practice. SEC Given entered anything you when change you the were from were And to there that it, -- accounting potential you this you the of backdrop, into aware

Ted Jastrzebski

So time there the the right This put point is aware let that out We me that. in we at take engaging creating inquiries Ted new were subject, morning. were Good which instrument. were and Jastrzebski. this on in being

that in use the in Stock accounting books recognize QX, became As QX it the the needed close Treasury we that we to we released we it time dilution clear Method. account of you the where shares. If-Converted was and quarter these for earnings, the Between the appropriate the the Method you saw did for last and that

market that create now with in will recognized we method in 'XX, impact on practice and next we that But million It $X.X shares Did of issued will of our So, is no incorporated move We that that incorporated underlying equity consistent going for the year, and assume average as long-term shares Method needed and using a our it we they're was impact the this say impact. accounting, growth. recognizes clearly issued full not the Stock wouldn't Under of included treatments, at always new have that until reflected 'XX forward. in units this expectations that the $XXX weighted May we'll that immediately in for happen of always been long-term of would the $X.XX time. forward, on though using to that number I our FYXXXX results. thinking Treasury of outstanding, created impact and we question? your answer shares the therefore, I thinking were dilutive in the has release, old be our a accounting those incorporate If-Converted year. it's we our calculation

Julien Dumoulin-Smith

I little it's know Yes. nuance a Thank That's you. here. fine.

given limited investment How offtake the System? you extend existing talk environment keep particularly perhaps Columbian here about you System, on price on I to elevated the do capacity gas going if muted And and the the appetite or this Midstream in Midstream Excellent. specifically, Can acquired much just geography? can. have Okay. unutilized capacity

Bob Beard

Sure.

take you to you me that, Roger, want take or -- think I want it? to that

Roger Perreault

was go state to please ahead, to No, your Bob, line. I call going

Bob Beard

Perfect. Good Yeah. everyone. morning,

still We question to for be have in a System acquired move. I business, like able Columbia volume's Midstream macro excess us And good we the Midstream Midstream it's capacity and meaningful the on to general, think on the to business. to we think available continue relative activity

I I of think out something the record, period our an I winter, fundamentals production the third XX-month think business. was of on warmer heels a of handful it read Appalachia coming article ago, that you a tells was normal for really of the and than that weeks about that

perhaps always systems are So, systems, complementary. onto either we or looking are that opportunities existing buy our at to build

very we So, looking. got for are to But that a we us, always is make much be sense it's as we got appropriate. everything do, and to deal it's think

Julien Dumoulin-Smith

it. shown just just that lastly, Obviously, here; in in Got you business? implications? guidance? your on here policies? year cards what procurement your for pricing hedging global adjusting you or are more higher importantly, making, around are X you how are and then ahead, you've you've squeeze environment margins Again, how Fair And price managing the I Are are backdrop. you got here at if LPG subsequent And reflecting you enough. the can ultimately global more -- assumptions you ultimately, what the volumetric therein, picked what gas

Roger Perreault

take I'll Julien. answering. Yeah, Roger is question. This that

and a management, really of going forward. and see change in that we have don't margin our history We any good approach maintaining

fixed-price. to obligations reminder, meet want that product customers -- those in a we do lock typically with lock a those in fixed-priced as cost Those of So customers. the customers we that have

we a customers have have on want hedging do published priced contracts. on And that index. that we to is an fixed-price process index, be then a So, recognizing

to the section customers the price from to an So is category revealing. on which we've we reflect the and modify to could we in you we are And move the of price a because that commodity marketplace we about. costs those posted pay model around but certain be a prices is place. that carefully There price continue that equated the the the leg ongoing those back-to-back at we then past do have like taking station, That post demonstrated continue very we is be manage often basis. categories to see another markets really as where customers, there adjusting what to effectively, we will gas go talk up, give notice where of price; what time-to-time of near indexes we essentially what whatever margins a to that customers small

Julien Dumoulin-Smith

you, Thank guys, I'll it Fair it. enough. I appreciate leave there.

Operator

[Operator Solecitto of Thank Marc next with you. from Barclays. Our line Instructions] comes question the

Your line now open. is

Marc Solecitto

Hi, good morning.

on Obviously, any But based part it. start the at small Marketing business? business. a how not given that all to Gas that's wanted understand risk and gas impact your the I of has markets, you're Just commodity European much on in fairly the volatility taking spread just International portfolio had or on

Roger Perreault

Let me and kick pass to it off I'll well. as Ted

commodity -- seen substantial and in Ted? in to which that in mark-to-market economics of we highlighted Mark, in model Is add I same we right. P&L we to in back-to-back is the concept or of to go today. anything you're what we margins pickup to where statement first lot in your was Clearly, we where margin led of you we in gains, mean, costs earnings the essentially that all, lock So, with our along validate model, first what that, you mark-to-market as -- there GAAP space. yes, in have a a we've unrealized thing pickups shared business have the the kind the marketing see energy a

Ted Jastrzebski

Yeah. to we $X.XX Roger for made and GAAP did mark-to-market. No, it's our -- you I would accounting that as just adjustment direct

happening So, pricing reflection gas seeing in And dramatically by it a what is international. sizable. is in of in fairly Europe. we're impacted It direct that is

Marc Solecitto

Got it.

Okay. RNG. And respect then to with

that guys lately forward You serving of moving the projects marketer GHI with as of lot small-scale gas. have a had several success exclusive with

to framework think about think about just as larger how some framework? we wondering Just need how of are you Would should third-party scalability of scalability, sort thinking or support that investments, about you you commercial GHI.

Roger Perreault

on Yes. opinion that. Marc, I'll give you my

very, space we projects will handle $X of well-positioned very investing We gas, of to well-positioned facilities and line of bringing the in renewable renewables, of attributes GHI the this dimethyl also sight of assets. about GHI billion think very continue we capabilities in projects that provide that's a to we're renewable those and onboard I bio-LPG is with talked the potentially to continue. over facilities. into that California as continue get so natural invest of renewable types -- ether of gas the is marketing to natural combination but pipeline we

Marc Solecitto

time. for it. Got the Thanks

Roger Perreault

Thank Marc. you,

Operator

There turn I [Operator Perreault further call to will are Instructions] no now for the questions. you. Thank back Roger remarks. closing

Roger Perreault

Thank January. joining to And today. will forward all Investor now Day you, in to take for Sarah. our place thanks We call that look the

really forward Thanksgiving. you So wish there. everybody of to Happy all look seeing And we just a like you. to Thank

Operator

this Ladies Thank you conference for call. today's your participation. and gentlemen, concludes

You may now disconnect.

UGI (UGI) 19 Nov 212021 Q4 Earnings call transcript