Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to the UGI Corporation Q2 2023 Earnings Conference Call.

At this time, all participants are in listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded.

hand over to today, your like Morris. Tameka now the to conference speaker I'd ahead. go Please

Tameka Morris

and answer everyone. Sean the morning, then Second me Perreault, Operations results Financial Call. XXXX for and Beard, Bob an your Quarter With O'Brien, available Chief President be overview Officer; Roger our and are Roger Good will today you provide Earnings entire Thank and questions. team joining Officer. Sean to Chief will CEO; our Fiscal of

extensive that difficult today's release you affect statements, could of differ remind comments risks Actual me today uncertainties recent factors to forward-looking quarterly let most begin, we results. may certain of our Please an which be include read and to and Before that list our results our because significantly reasonable earnings are that date believes management as annual of and for predict. reports only.

We expectations. assume events update that reflect to circumstances are revise to statements or forward-looking no duties different from or

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

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

Roger Perreault

you, morning, and Tameka, Thank everyone. good

joined recently that CFO, I by sector. a brings let experience joined the pleased Sean of I in our forward in team Before energy to with begin, O'Brien, be am I Sean, who April. say me who look our working appointed to tremendous amount

and important insights past have the the also thank I and CFO, over I his Ted, contributions to years. over like leadership five outgoing few partnership would your you, years. our past appreciated really Ted. Thank for

for rest before financial results provide a discuss of will this a update, for the session. concluding today's question-and-answer with our and year call, review on we Now fiscal the quarter the outlook business

serve most as UGI This across demonstrated and the cost model extremely customers our of the one to and which several quarter in in where to war service its company energy severe conservation warm efforts impeded due in drive the Europe continued navigated headwinds. diversified events temperatures saw our of territories operating significant inflation. West, Russia-Ukraine weather growth, resiliency the We efficiently value ability is and US, ongoing the

It the is I to pressures, moment teams UGI's and like in in take diligently with and these on to to which difficult history providing was of energy execute midst worked who customers. teams resilience. line would thank our serve a with solutions continued a our have customers to and XXX-year plus quarter, strategy, essential our of

delivered EPS natural previously businesses, of our $X.XX, of UGI quarter, from the effects the the diluted our headwinds the gas businesses of that and with are adjusted pleased natural reflective For strong I we gas performance the In mentioned. we at that that continue fee-based due proportion the contract earnings to Pennsylvania structures we place gas marketing normalization at our and weather in our improved midstream and experience, the of reliability largely to large rider business. utility have

elements quarter. business diversified attractive during were our portfolio and are of These meaningful particularly the

Over gas portfolio. few the invest energy order you intent years, natural disproportionately we in in the solutions our to rebalance in renewable shared with businesses have to and past our

our are prices market that added in residential and expansion. construction invested utility impacted and tight fiscal X,XXX a growth growth we've heating commercial is attractive higher that than additions basis, On theme as sustained was rates. year-to-date increased a regulated more customer the of well mortgage new customers demonstrating XX% roughly and customer despite replacement spend, is utilities, by where capital as year-to-date infrastructure businesses the Of there through

our areas replacement territory. infrastructure capital reach The and to this in year a record service mains as replace remains within execute and infrastructure level to critical and on of to gas utilities we underserved track goal deploy on extend betterment fiscal also our our reinforce

the dividend increasing increased X% growth. to year announce UGI to shareholder a consecutive paying of we for of consecutively XXth strategy the that long-term and of is value. Yesterday, pleased Directors of share, were making $X.XXX dividends dividends. dividend proven our providing quarterly to year XXXth continues per this creating target its UGI Board exceed

the first implemented. a now of given the $X.XX results half of of to be the $X.XX, range diluted that adjusted EPS guidance we year, our actions revised in expense and Lastly, inclusive to teams the within management margin of effects expect have control

results Sean outlook. will fiscal now comment as our the well revised quarter XXXX on for the financial as

Sean O'Brien

some segment and our Roger, I'll Slide of quarter start key good Thanks, highlight by second with performance. X morning, everyone. and drivers

For adjusted the prior second the EPS in compared $X.XX quarter, UGI delivered XXXX fiscal to year. diluted of $X.XX

strong a year from businesses as warmer to utilities normalization gas optimize year-over-year, and quarter. the robust completed XX% had weather was rider, than that deliver and the weather from the for the acquisitions $X.XX In base year. Our offset rates natural we second our marketing, last and quarter, benefited midstream prior up benefited facilities storage gas gas higher earnings which

business previously marketing Next, energy to we year-over-year, anticipated on noncore from exit $X.XX UGI European benefits International work the the was aided strategy. where our continue by up

AmeriGas Lastly, shortages. $X.XX pressures warmer year-over-year continued driver impacts adverse volume weather, to of earnings lower reported and due

on despite year. remainder the of looking commitments can our And for in three what continue reportable forward, challenging our of four segments Overall, teams our control to controlling focus we a delivered higher the results order to on quarter. deliver

heavily year. volumes the saw a you results through the we compared Next, key of second our in the where as AmeriGas. of regions and when this with key particularly a the challenge in quarter reportable very warm segment, walk each quarter weather Weather for Starting U.S. customers South prior to concentrated. East I'll are drivers and was our

the while ability year, deliver our growth drive West, to our customers. faced impeded weather to which the events, and prior severe than weather efficiently the region was In colder

experience and expenses. driver which for particularly led driver shortages, to inflationary contract volumes increased with we pressures, notable a higher quarter. continue overtime, expenses, coupled other operating addition, to on when shortages, In impact had and administrative These through the labor employee-related also

on that ultimately, which to and At macroeconomic began situation in by impacted our significant of the were general Europe. an centers saw ongoing conditions also customer affecting adverse usage packaging we volumes. LPG and AmeriGas, volumes response UGI energy in for efforts, geopolitical lastly, effects conservation distribution And impact the the International, had

lower mild that Additional early volumes place France factors took mid-March included the April. in the and and strike winter between driving weather

management to increased more exit on unit marketing administrative earnings International Secondly, experienced to expenses volumes segment and operating the by from to due strategy. and cost offset our impacts our margins the lower strong and adverse were noncore of UGI global focus average business we continue higher These higher increased inflationary costs environment. where due energy margin efforts LPG than

XX% the of prior year EBIT $XX earnings increased and business Next, over Midstream period. management increase in Marketing pipeline had storage The from a activities natural a gas or and through marketing strong quarter, our optimization network. peaking reporting capacity the including million experienced gas

assets there and addition, EBIT acquired Midstream the of Pennant asset our was in was we approximately that ownership Moraine East last In $X interest August January, incremental increased from million our where UGI's XXXX.

segment $XX quarter or Lastly, EBIT to year million the prior versus had up a strong utilities. we X% turn Utility period. with The

gas the While volumes by the normalization were weather to lower was our weather, than in the rider the prior effect utility. Pennsylvania year significantly offset largely due warmer

end base total Additionally, higher is $XX rates the of $XX to margins, effect October in of at million million that XXXX. gas the went into increase attributable

our to guidance. XXXX fiscal Pivoting

updated we $X.XX guidance to expect EPS Roger and range tighter diluted $X.XX. XXXX within for As mentioned, an adjusted of be fiscal to

Slide disciplined we've on mitigate been the focused guidance the pressures, At that controlling assumptions at on built expenses, volumes growth. look operational we as back we half of our maintaining into teams XXXX, X, in highlighted range. key on the true for we AmeriGas, continued are and near-term and To our stabilize being As pressure have revised and these position efficiencies, margins. attracting the drivers business identifying retaining expect

to are efforts in UGI volumes. For energy sustained impact International, conservation Europe expected

on management is activities. focused team on continuing the execute margin so to And strong

We the energy ongoing further expect benefits also exit the from business. noncore marketing of

projected marketing to the the remainder XXXX. and for solid on delivering utilities remain the and year the of midstream for track Both performance are a segments

focused we cost Finally, what efforts are can second control, half for mitigation the we the controlling of on executing year. on strong

of billion UGI quarter strong Services UGI billion, when had to I highlight company. our credit prior the liquidity proactive Previously, $X.X at year. X, Slide $X.X International, of we the taken strengthened by position Energy At driven steps to approximately and compared On position. UGI available by which want end, agreements renewed liquidity our

In supportive addition, business to units capital in contribution covenants. that customary, may, a make of time, is its remain UGI order to as in and we our from assure debt time with compliance

quarter, you'll see our for million the totaling As letter to in of a cure. equity an today, capital business after provided challenging close UGI at contributions market given support as made results second and the $XX the XX-Q AmeriGas filed

out. it over back to that, to with turn close And I'll this Roger

Roger Perreault

Thanks, Sean.

this key fiscal a few I concluding, the to Before spend back of minutes priorities our for would half on like year.

of importance utmost safe employees focus maintaining serve. core communities on UGI our and providing excellence, customers, we is of our this and operations a reliable as First, is the essential operational is for value

addition, to a In our people operational business, and our with commitment align have as metrics we customers. that key

The just X improving focus inefficient in on on-time these want gain as momentum on is fills, metrics metrics few. times, and a these further response we to unwavering, deliveries, such to fills, name

the our Second, renewables are utilities capital crucial and of and replacement announced and UGI. capital This executing maintaining in commitments success projects. on betterment allocation infrastructure our to includes previously discipline in the of

drives focus on Investing bonds balance infrastructure in a XXXX to continue our near-term utilities cost our critical AmeriGas. the need recovery. for will We in strengthen sheet with refinancing at our

with rate As with $XX a gas anticipated we quarter, during our base filed is Virginia in this what at utility. Air, Pennsylvania a to by to case distribution rider have we Service a investment similar increase request rates the as Included request normalization West in approximately for such, our million. weather Commission Mountain the Public

there with conserving LPG energy seen in few and few mandates high we International, that years. customers mild the a overall no UGI volumes the response businesses, the to past the have prices. are it's at as government look particularly doubt Next, been challenges winter over global we've

how monitoring situation, look the adopt we'll to are as season. we winter prices approach We and customers next normalize the and

domestic expected a previously challenges XXXX for exit energy with Unfortunately, and we reset earnings we our driver weather-related unfolded last In noted earnings note, a we the how On AmeriGas business during with the business, shortages fiscal of call, are as flat encouraged marketing year-over-year that positive basis. year-end would with fiscal progressing. is European the our XXXX year propane be mentioned. relatively on a being

we ensuring a working And this turnaround. long what controlling we medium are term. volume that growth while staffed metrics operationally the extremely our in share and We are position that the market being so appropriately can on costs AmeriGas operating transforming remain to and continuously and and well. committed With slower-than-expected improving we can, control to focusing to customers company we serve led that for said, has

disclosures more prior providing are on next QX information advancing will and commitment and we look to earnings be Lastly, sustainability to that issued report in our our our forward ESG call.

As meet we our we I execute and we financial that confident wanted our long-term emphasize remain commitments. to close, that will strategy

strategy diversified your dividend and difference as interest dedication Our global to balance continue call. sheet and in they team model, growth. we today's that thank your a in our and a strength and their business serve. to I to want serve participation communities earnings customers We make thank solid provide for for our in support UGI the foundation you

with your questions. will open for the we line that, And

Operator

Christopher [Operator Instructions] And Jeffrey question of line comes the Securities. with first Mizuho your from

Christopher Jeffrey

Sean. And to welcome

on maybe a start. couple Just AmeriGas to

the is as left examples And cadence the of much capital maybe place in of put for measures of the there to cost corporate expenses. Kind far if will in after the wondering be. the as the some level you further put from do contributions place? also, how measures previous Just

Roger Perreault

Chris. Thank Yes. you,

what who talk talk leverage we're I'll second the and in and here we're then about that treating of it the will dealing kind the about I'll maybe to cost Sean, hand half topic. So and how over with profile

start me with So let cost here.

perspective, a the also are right? looked seen no the substantially. up seen inflation, products up first some there's we've be Driver at So year. of quite half doubt cost We've quite costs other from We substantially.

customer the as we talked has focus of as the that service. we to appropriately our control see about go on excellent as and volume we we business continue ensure how in evolution forward, cost to call, the of the can staffed So been are evolution meet we

at overall, not of on forward, I the when controlling of really look the lot controlling controllable only company the across and I but year, costs. a half think and So emphasis, entire there's AmeriGas, second

the diligent where we're able years company. at in You've being us here and a to track record that seen year the see costs, good not in do very prior prior of all of about but periods parameters, are we we going that's next and half only to as control across all the exactly of second AmeriGas, have what cost

hand talk to like about I'd can Sean, to who that, liquidity. over it With

Sean O'Brien

think to sort and things of needs. financing couple A of AmeriGas about the

you seen -- parent support the when that the over saw the it, needed. QX, First, years key, think, I and in parental is historically and we've

to So I start by equity UGI that. million There provided with cure Corp. was want a in $XX QX.

very a very, that's positive So step.

terms out future, Roger the I maturity. it, In taking we're we mentioned opportunistically of debt think at looking the it, $XXX million mentioned

positive I help a be over good in that event the I around all think very that could leading delevering the we AmeriGas future. EBIT the talked trends, seeing, indicators focus for things also future. And Roger that think can on the that the we're the about believe trend

AmeriGas. leverage on it. I at and We're comfortable. So got we debt feel the But focus good we've think the monitoring a to plan metrics pretty

Christopher Jeffrey

sticking Got it. maybe then AmeriGas. And with

views Just might time up? as be from when any first the I expect of customer far more? know impressions Or that up ramping ramp do as that line market and to of initial you kind acquisitions

Roger Perreault

Christopher. Yes,

So active but we are, obviously only yes, growth, efficiencies. right, build volume growing on have we also acquisitions, specific of segments markets we where not where course, and can in density customer in on very

a So the key focus for company. that's

the We seen sluggish. earnings be -- we have segments in as seen we bit about talked a call, certain have

we're warehousing, that's for example, We're seeing now, much like. down, quite forklift also a this the right that opportunity specific we're growth a as starts a in industry like be everybody as where bit housing we et not example an For seeing, seeing would and is are also of slowdown. cetera,

in That being growth do on we in said, very and areas where some momentum, we're -- the are we those focused that other have seeing momentum.

volume is continue. say, had first I What the with year was first seeing the weather weather. in really warm of where see in are very of did should that's deal the where a half have or South, transpire and severe we lot not East volume. the we events in second that unfortunately, growth to it of We the -- we And quarter, because

West, I out your talked well our getting impact lot ability our of there the and doubt for saw in that, were lot colder of We about, that severe. had serve snowfall, obviously really was as as there's impact and we it as weather applaud no to on a Although we teams events the did. a But rain, volumes. an delivering

Operator

Bank comes of question from next your And Julien Dumoulin-Smith with America.

Julien Dumoulin-Smith

I core. actually just from Lochridge wanted parse for on versus the start noncore off is international. Cameron this very to morning. This on Julian quickly the maybe And contribution out the assets

detail kind If margin you year-over-year the increase in a more two can give little of the of pieces wise? what around distinct

Roger Perreault

about much we actually take year. but is we we expected. to the is it, par marketing you're pretty on And as so the seeing it's planned, a which that Yes, little business going what year, date is better prior did right? perform noncore, better than We talked I what planned, exiting. It's actually to than what we're that as we business expect really referring are to, energy last see expect with

performance As particular, are trend the assisted marketing seeing and the well, in Europe what And that what's We've we very come quarter expected. respects, commodity as costs weather. in we've is happened we're in seen of all lower space commodity down. such, energy as in we that seeing business. seen energy our in warm That, many -- as

Julien Dumoulin-Smith

But it follow-up, challenges all Perfect. in LPG I just it's almost of appreciate your you is And would for about all and you I realize is the -- of that given of And or strategically, it or demand consider LPG control, business. part selling the there it all much then of -- structural either my spinning is it. some that out just where scenario and thinking weather think either maybe of just a business. nature. things with of

of Just you issues. that of curious the how think given some kind just structural about

Roger Perreault

of really cash Yes. are stated strong We a source before, we've -- Cameron, the businesses LPG for us. as

instrumental to like our the natural gas strategy. business. we our natural disproportionately are to where investing The we our businesses LPG behind of cash is So and continue LPG in engine balance gas

much to continue businesses investing continue LPG be maximize result, a LPG invest As is continue our to cash in that playbook our volume, clearly generation at look from the businesses, very we to to about continue we in as how smart -- to grow play the other. we

the benefits business. So we LPG utilization which our particular, then natural in playbook from engine our is and a that gas one committed strategically, are to that gas all to, cash have really but businesses, very between is natural across and cash balance that in

Julien Dumoulin-Smith

quick sense. makes Maybe that No, I follow-up. appreciate it. one just Yes.

of could those cash but talk so contribution. synergies or to much you about of synergies, businesses speaking the If not

far 'XX dollars look update there. mean goes, you're 'XX, as Any the into I on what outlook the could As the that like? injecting renewables frame, you time contribution business significant as there investment look

Roger Perreault

we've talked renewables, What billion on really in in now LPG million several a renewables. in to particular. Yes. over next trend quarters. over bio addition kind that is to We've the committed some a We're towards see expect RNG in in and trending to the RNG number. $X over of I about is investment gain $XXX the momentum hitting that of $X.XX areas some next billion

order result, on still par very billion we're committed, of $X.XX as an which billion. $X much is we So what of for think a to I the investment

Operator

will questions And further Instructions] this back now time. the [Operator turn to Perreault. no over I call at I see Roger

Roger Perreault

We Board. forward at seeing the a like you. call. to Sean for with very hearing all thank years, earnings I And another appreciate over look for his and you you. next and welcome you I you contribution Thank Ted to the X last call just of Bella, and much closing, of that, opportunity update all to would thank joining send really Thank today. to In the you, our all

Operator

This for Thank concludes participation. today's conference call. your you

now may Have day. disconnect. a You good

Tameka Morris	Senior Director of Investor Relations
Roger Perreault	President and Chief Executive Officer
Sean O'Brien	Chief Financial Officer
Bob Beard	Chief Operations Officer
Christopher Jeffrey	Mizuho Securities
Julien Dumoulin-Smith	Bank of America

UGI (UGI) 4 May 232023 Q2 Earnings call transcript