Earnings call transcript Q3 2023

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Operator

Good day, and thank you for standing by. Welcome to the UGI Corporation Q3 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker’s 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 everyone. overview then morning, answer Third me Perreault, Sean team and Call. XXXX for will Roger COO. results Quarter With O'Brien, questions. and President your and Bob Roger entire Beard, are provide Good to today you our Earnings be Thank an available joining will Sean CFO; of CEO; our Fiscal the

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

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

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

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

Roger Perreault

withstand improvement the inflationary for a focus Thank quarterly reported basis. in questions. margin quarter, some execute and everyone. business performance, we and good quarter your time during adjusted highlights earnings call well to financial our Sean on high-level have our will I for as pressures on like quarter. us as and this will for of enabled we our pleased Tameka, for see We of year-to-date Yesterday, the strategy. to to continue as per diluted several important ample cost of and our aggregate key On $X.XX areas were solid would as share $X.XX share then a overview you, today. morning, the to we provide

in our relatively LPG increased unit increased that Year-to-date the the expenses. operating Pennsylvania midstream from the largely contract rates prior structures and margins, higher our fee-based rider businesses the gas weather to and attractive normalization impact EBIT utility, in in segments retail our year, with and offset reportable margins significant base segment, from higher consistent of volumes was lower and due benefits administrative gas global and LPG and marketing partially

earnings our focus were disciplined covenants. the and provides strengthening increasing With debt focused on at also our improving on sheet, million, additional AmeriGas reliability $XXX on with we by balance reducing execution our buffer pleased which debt

X%. in to long-term focus attractive and our shareholder continue demonstrated which dividend is exceeds target this We of on value, our of X.X%, creating growth

fourth of of expectations year-to-date Next, in our guidance that at the quarter. be given UGI's the our anticipate low for adjusted $X.XX to results range end EPS fiscal We diluted now will $X.XX.

year fiscal XXXX. out close we As

to volume We of and spend in and are a on earlier cost position management, discretionary employing offset control, impacts, year. removal the pressure weather discipline, strong including focus help

Beyond our earnings our last call. progress financial results, we've also since made some meaningful

growth, and continue utility We amount of pleased infrastructure area to of roughly of in betterment. addition XX,XXX we segment in significant million the with are year-to-date, continues be year-to-date. businesses residential organic and customers replacement primarily utilities heating $XXX capital approximately our regulated and to The invested an commercial deploy new with a

progress the rate filed also fiscal make on team year. continues cases utilities this Our to

on an utilities the is than joint Utility a electric mid-July, in of settlement which The greater will increase, million XXXX. rule First, our implementation for fall for case. the increase, revenue we fiscal rate anticipate in $X.X we filed the the in Public settlement XX% early requested reflects with QX Pennsylvania Commission commission rate and petition of settlement

new quarter expected, as year fiscal case rate non-par and Secondly, progress anticipate XXXX. continues to I

mechanism for included $XX normalization million in similar approximately and a to case rate a the Pennsylvania. this reminder, adjustment revenue weather we of a a As request increase have that

we've portfolios wind as XXXX businesses past pleased important and businesses, and the gas LPG the power Europe. Belgium make volumes few XX% in of months, of marketing of solar those respectively. Netherlands. expiration France, gas to exit XX% has We global shared our the by to customer natural we place agreements the divest and decline signing more for progress power non-core and natural business and area in been certain marketing additional energy at an that over contracts, and anticipate to by continued in this With in area than definitive marketing agreements fiscal were focus the Looking and in will

to security past at ahead that winter began UGI mandates energy to government that and trends Also, International, were we monitor season. energy concerns in issued this conservation continue response of

positions we the that future some volume to for on-time us we into as can are Similarly, behaviors monitor of winter, critical seeing head in so will deliveries, at zero quickly as the continue AmeriGas, customer well growth. and next operating improvement levels, react this we As metrics, and inefficient very possible. as staffing we fills, such our fills,

from to future. of to socially commitments an Lastly, I our TCFD, teams partners partnerships wanted report and ESG we better the a that that our and on operate manner. established update number report prior fifth highlight us note for that last responsible key in of enable sustainably new progress the this a initiatives. to and I across entitled proud we organized efforts we've month In the ESG provide am fact annual our of with released our make align the

for who comment results Now, to I'll over financial call the will the Sean, on the quarter. turn

Sean O'Brien

and Roger, third everyone. drivers highlighting morning, key start of the performance. our I'll good segment Thanks, some by of quarter by

increased AmeriGas comparison delivered in in in comparison XXXX year fiscal from the the lower offset energy $X.XX offset year. UGI earnings administrative diluted and prior was marketing business. International down LPG adjusted the as non-core margins by higher operating to margins UGI higher prior $X.XX flat $X.XX to third of were with EPS expenses. For quarter, was

than XXX quarter. management previous lower margins Also, non-cash values reversal an primarily of to the year, of the from year. post-acquisition, due rate current segment growth the higher by the the discount administrative a capacity driven in in expectations down during expenses And the of operating was charge Next reflecting marketing previously was midstream as finally, to saw we million $X.XX, prior and approximately environment. reduce the lower impairment anticipated interest recorded AmeriGas, carrying note, increase the and company pre-tax of rate our goodwill utility

to which On margin of weather, natural and basis, the weather rider, UGI, warmer gas due the our peaking the from $X.XX the cold Pennant, of East higher are partially and higher a year-to-date businesses incremental up margins acquisitions Benefits late normalization gas-based These of effect effects from Moraine and rates. offset management activities that increases were by in from and marketing administrative activities, December. from expenses. including extremely operating offset capacity gas weather natural higher benefited

down in a year-to-date lower attributable York. $X.XX due to are global Our well volumes LPG as basis, capacity constraints driver energy as to AmeriGas, on largely at conservation and businesses attrition

in saw Additionally, in as also we made and improving increase an higher on overtime AmeriGas operating expenses costs. focused investments metrics administrative experienced distribution

XX due lower That for efforts the to attrition reportable walk increase the in offset third results drivers and million X% up which softening AmeriGas, helped Total the continued prior each of down from driver heating when preparation with fuel administrative volumes expenses, key to continued I'll for compared inflation operating through quarter our you the increase LPG capacity, unit demand, in were continued effective due Next, segment, customer the upcoming and to to conservation. resulted margin of year. structure to higher season. was LPG margins. and Starting

effect which also At largely deposits. UGI OpEx unit efforts, $X effects cost increased environment of began largely total and due the to in expenses, of in as administrative colder increased operating partially weather the situation offset was reduced income, The of The energy margins by to LPG to experienced continued and non-core up account million inflationary the lower conservation in International, margin the the the cylinder expenses. of volumes geopolitical ongoing offset and LPG offset were primarily margin the higher The business. marketing X% increase other the segment uncollectible an year volumes release attributable effect global than from higher Europe. increased prior energy in response

EBIT natural down offset marketing and for realized margins. electric and quarter. business capacity from lower partially well which Pennant generation, marketing the as X was gas Next incremental margin management activities as from earnings midstream for million The increased

to last from benefited management earlier we noted volume. settling capacity of due timing certain stored year, the margin As contract for hedge multi-year

than utilities margin up rates offsetting the effects in a and to programs. X certain the margin where X EBIT depreciation in higher DISC over year X due as last as inflation. million, and of cost administrative was amortization, IRET versus to reduction the increased turned prior gas due More operating and we expenses higher increased were year. resulting million operating related expenses this million benefits well employee from the Pennsylvania, Lastly, and base to and timing Also, expenses were higher up in anticipated largely of of as

the quarter, liquidity facilities. billion at Turning end revolving the X.X available available liquidity on credit inclusive cash borrowing and cash and to capacity equivalents of of UGI of our had

use pleased the AmeriGas. quarter have to as the our refinance strengthen AmeriGas transaction million at deleveraging of were priority we few emphasized approximately and a Over past I'm months, sheet. the XXX to to we that that the balance at therefore during XXXX able opportunity reduce bonds debt

focus Before the spend area time on call I a for to Roger, want some of to back I key hand UGI.

the a increasing in utmost environment being business we and that we across on we environment. business know, and organization, run the is continue profile you cost our the challenging said, efficiently important effectively. and our based As focus manage changing rationalizing it therefore optimizing on operate the global With that cost to are

employee flow the opportunities and and create capital leverage us shareholder reset We our processes, to These and technological innovation analytics cost identify achieve and and ultimately experience. headroom, improve baseline, sustainable are and actions use optimize challenging enhance our efficiencies improvements, customer operational ourselves cost create to cash incremental enable return. to simplify savings, structure, will to digital

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

Roger Perreault

Sean. Thanks,

want I that to As shared the we've of today. emphasize you I close, key with some messages

focus cost improving on business growth. the balance track we and remain And providing deliver transforming supports record our cost structure attractive the strengthening quality savings. earnings our this to of our sustainable First, sheet. sharpened of have dividend solid We committed to our

We Finally, prior positioned believe disciplined call. which over and enable in the your support commitments the including capital with well by growth interest best we on these earnings long-term. will today's foundation must UGI be higher you strategy Thank our key enhance on us deliver UGI to its participation and value. build that to opportunities, long-term allocating be your on concentrating and shareholder actions, in continued for solid

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

Operator

[Operator Instructions].

Jeffrey from line question first Mizuho at Securities. Christopher The comes of the

Christopher Jeffrey

that kind business. release the the as to of of far quality press focus mentioned the as wanted Just line improving on from one earnings

available levers and maybe UGI, thinking Just strategies earnings to kind high-level, on from quality? of curious the improving when a you're the about

Roger Perreault

continue at Yes, at at capital us in there's the to and carefully question. capital you we thank call, we're Continue which during be the to your good proceed about and as deploy very deploying our in to deploying we're Chris certainly good need OpEx morning, to continue as really our call projects, investments thoughtful look we for in business. regulated to emphasizing we capital we're Yes, our on progress. utility, the no looking renewables for during very manner a here as make a midstream continue talked thoughtful doubt,

expenses, focus right operating definitely throughout how quality and looking be into mix earnings next lot year. are of quarter to going on of of and there's the a we the deploying at So next now

Christopher Jeffrey

now? just that, earnings a such gas that are potential utility And of assets at for avenue to of as on given vein kind M&A in the then looking quality right some improving you sale maybe follow-up

Roger Perreault

improving are at we're the balance making on Yes, really when M&A. the going sheet sure to looking we liquidity potential and right now we that be focused have and appropriate looking

looking our always improving focused of I'll sheet. time is but come through, on opportunities call that we at M&A this part a are And to. very balance at So always present strategy, that, we're with

Sean O'Brien

that's to to bottom and why mix things our you falls line. that to I it. quick Roger the talk Chris, add think heard keep Roger on couple the him can we're shifting what OpEx, thing that said earnings focusing is of control, about hit But we things some. the in mind Well, other a maybe to Yes, is

looked the equation. midstream, more you saw gas utilities of the nat quarter, in the in If you growth side in at

some saw which we've the trends, you some obviously side and downward on the So, equation. addressed other diminishing, of

to thing other continues of the that's mix more gas, So The in LPG shift. mind. to keep nat

nod time. to to changing it's earnings. the is over some it's the on, of to And Some we're related that anticipate very the that growth, of but earnings we some also related of reliability that a and focused things the quality of

equation the marketing that of would adds, of more that out is thing the some out we energy the that earnings volatility is continue terms in the exit took deliverability taking of on execute portfolio. out as point Last I business of to

Christopher Jeffrey

maybe then on, you've just pivot that, just thinking And of more part billion about recently mentioned think maybe propane opportunities. that how follow-up you mentioned also the the Roger to you're as a and about sticking on one last focus also with from I kind investments renewable X.X know, RNG of investment

kind how an of on you're that set? Just renewables update on, about thinking opportunity

Roger Perreault

portfolio. nice When things on to for expect Ether, nicely. to stream the progress year, this do We on bring the of to to Yes, comes also we attention. Dimethyl to to that's so progress come for your portion continuing the couple projects Renewable it projects RMG continue so renewables make a the RNG

by be small be the UK going and year. There running year, facility and of is end fully expect are today. in Other end it by up worked this We of that portions portions on to going calendar that of the we're be running Europe to running. scale being the calendar the will are

in first the position very That'll to scale space facility. full well. assess really continue to in a we And bio-LPG of put as us active good also the course, be

what portions we on only the the thesis continue very continues renewables of R&G opportunities we have. with but We the portions to develop in prior the portfolio, calls. the focused So we LPG as also of highlighted remain not

Operator

comes question Julien America. of next of line Instructions] Dumoulin-Smith the Our of from Bank [Operator

Julien Dumoulin-Smith

the to that mix. just here wanted variance here earnings actually I just circle and on back improving

there's two-pronged Sounds like strategy here.

First, of make I'm corporate to efforts. get last, fair? the acquisitions that heard the some both try the reduce sure wide last trying then contracting to the level and to some looking those the in that at the appropriately? volatility reduce and variability business of response separately just Is I driven question

Sean O'Brien

Julien. start can I

fair. that's think I

nat differently, if think And doing energy to to looking baseline what significant looking maybe Nat at is it trying you, tends make company growth to out gas you're always which businesses take of then the sense. say the in marketing. is areas, with we're I obviously, things more volatility everything, if we're a at like

some focus stabilize the positive saw lot You on that of to were side of LPG. that taken this quarter a equation. those of the steps trying There's

nat you're growth All the side. actual gas while seeing the in

pretty the strong growth If you look pretty utility marketing side. strong the side on year to and date, you on growth saw

percentage all So of if larger, a larger I think much consideration, you take earnings. become the per that into you're the mix seeing nat a company's gas of becoming

thing was on hard taking other for cost only we're The quarter. book a really that Roger the added

You quite bit. saw pop-up cost a

take bottom-line company's in well. we look you're Some to was as that things I wanted make, increasing that really going an we investments environment controlling inflationary but those knew of think the to a and the hard at and

Roger Perreault

I we've one as about. just Julien was and to going is, additional add talked point,

energy our to fee more business type structures. disciplined very to be to in continue services contracts We move

one is our continue cetera, focus to or of take monthly which et pays of reliability the also to fees, areas improve earnings. So

combination just mentioned then discipline So quarter. highlighted and all capital. on as allocating see where you additional that of from what been can that we're the the we've and Sean talking about during and And focus

particular. on cases We inject utility continue regulated requirements to very to meeting capital in our in and focused rate our be

Julien Dumoulin-Smith

process, have through leverage think improving considering sort overall, would of will? on you last to the of maintain do terms that if or you threshold, this especially in a just acquisitions kind you Just kind And balance here, target response. that you sheet of of a follow-up maximum

Roger Perreault

consider. utilities, and look marketing about look very, in at focused you strong in strength energy all where when particular, in they're Obviously, We couple very balance million Where their at reduction. you relation we're debt on $XXX metrics. debt sheet of shape terms things we at. of is to sit in AmeriGas. highlighted if if a to international, talk they they the What Maybe

So were were was, with that. progress no on needed. make leverage X. We cure delevering we're ratio pleased get able that we very some to in trying by equity That additional that. focused queue below We're to some

And think then shape, AmeriGas we're but that think X.X. the as I through okay get metric, initiatives core I we're some that ultimate goal the other do with It's to trying doing. through is AmeriGas, below you in

liquidity up We also as have want to at try that to that increase we UGI get and four below that four the Corp and range. five well into metric three,

Julien Dumoulin-Smith

now. like. the piece, curious. aging, end at to transaction. So I up triggered today marker, will. mile just a AmeriGas just sheet mean, in I'm any or especially if of annual wouldn't year, to And It as I that decision, the fact, mean, versus maybe uh, you quarter why actually be that in at you come What sounds just you impairment looking at if balance will? the since into part bring you say

Roger Perreault

The a impairments, years. things have growth those into Julian. over or the we the a over that at was look forward, as shifted It that would moves taking Those you really transaction taking be, put new to, goodwill moving that that that kind obviously for, as of view A on impairment. it's time. of you typically lot levels look was view,

so or If transactions. back of some a you go through the decade

other were going modified have of we we that that expectations future we're Those big for to adjustment to be look QX, at gone. growth. rates diminished, And added As our would've it's interest is, we the those.

to where our ended in future things XXX off things about a take well the the to interest outlook. you had books. mind, position you like had rate million goodwill two as we those modify of growth So costs With as in up

Julien Dumoulin-Smith

you side, growth than range you understand the bit cadence have long-term the you you impairment. just on the you gas the little In if meaningfully your you the will? talk do just growth? wider about of a think different contributes but renewable AmeriGas how question. cadence of through here, getting think elaborate cadence since, the the especially it period there? most, the last piece that but of EPS five-year a do pieces I that fact, Can about Obviously sort and about to the How actually, of considering it contributing as

Roger Perreault

invite comment off Julian. Bob and as or it well, kick to and I'll certainly Sean

specifically. things So remain just long-term so to rate the A rate the add growth growth story. XX%, couple to of XX%. as about highlight, of we long-term we to Sean X% is to committed a AmeriGas to X% AmeriGas always I'd like talked

a outlook growth, to leading AmeriGas continue the taken very we've when we for we of nicely when different progress time of think Although see deliveries, levels, and we etc. customer service metrics business on think

that progress nicely. seeing We're

AmeriGas So place growth take are we certainly volume over projection towards that an looking will time.

this of that's OpEx are the the has results. us well clearly, our position and course for of season. increased monitoring that one is AmeriGas why very There see We operating really you coming AmeriGas some in efforts things to that

highlight So didn't I as want that answer. the to part of during,

Sean to Anything to add Bob? that or

Sean O'Brien

you just continues business my about I think, in Nat growth think per here know, time to Gas outlook, the as strengthen. we the

I the on taking are the balance sheet, we a is, focus We more thing have, to contemplate Julian, think so near-term. that's

of the a ago. I but two think would've that have wasn't a equation in we year ago that that something to or improving line outlook, sight been years

of. of company's bit but growth some on the and future to grow I change balance sheet, very so. going good the in something to next growth outlook continue Nat a the that's We've really got So ability do to see our Dividend stay has improving Gas terms in the been or side been proud trends on EPS. to focused your year little

balance puts that really next the mentioned something on well continue. mode remarks I sheet focus that probably expect I very, year and in in so. to that us the or and think Roger for very it But his company's delivered

Julien Dumoulin-Smith

period the for intact XX to still? Six five-year

Roger Perreault

Julien, around to seeing the this when the that's And in-depth at going quarter. on you always, as that more conversation lot plan as out a that's we much be fourth we're we're our a typically, providing we year-end color right, and time. more have what at finish years And

a quarter the more at of course. the expect of fourth So lot end

Julien Dumoulin-Smith

certainly. Yes,

Really for here around moving appreciate again you guys Thank are sure. for pieces like your it. patience. Sounds

Operator

Instructions] turn Roger showing time. Perreault, conference this at [Operator remarks. I no questions to I'm now further closing for like back to CEO the President would and

Roger Perreault

call, you mid-November. the and Rivka, us Have forward today, of weekend. to thanks, and week earnings next Thank we all for a joining look you, place will of which our Thanks. certainly good take and end

Operator

Thank This participating. call. you concludes conference for today's

now may disconnect. You

UGI (UGI) 3 Aug 232023 Q3 Earnings call transcript