UGI - Earnings call 1 2024 | UGI Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the UGI Corporation's Fiscal 2024 First Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Tameka Morris, Senior Director of Investor Relations. Please go ahead.

Tameka Morris

everyone. morning, Good joining for XXXX quarter first Thank our call. earnings you fiscal Interim are Beard, CEO; today me President COO. Mario Bob With and Longhi, and CFO; Sean O’Brien,

On question-and-answer session. priorities our the today's before will results quarter a financial for near-term with concluding call, we and discuss

statements, let of forward-looking difficult today's significantly Actual may management we date include begin, our because today be differ and predict. are remind only. to me Before believes uncertainties of that to you comments certain which as that risks reasonable results

earnings read annual events assume reflect revise Please affect factors our report or for release to expectations. We our and that or most circumstances an no results. of update statements recent duty that to extensive are list forward-looking from could different

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

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

Filho Longhi

everyone. and Tameka, you, good Thank morning,

engaging objective I interactions with financial key for performance. a our been all greater to the and organization, at people better improvements culture, understand of needed As strength have our levels these been has of

core what are evident Now on the our organization my the solid. is is that time of fundamentals engagement and the Board from with business

additions. reduced we infrastructure Virginia, normalization long Pennsylvania aging and weather customer Utilities due in deliver business runway that XX% replace attractive In West of sensitivity to and return These provide The operate due to earnings, continued growth rider. to regulated businesses over opportunities aggregate. equity on weather a stability and

contracts. the including many UGI and the significant and and top-tier own continue This optimize fee-based portfolio given from segment, utilities customers benefit earnings we Marketing and of gas our reliability, region. in electric business serves Midstream Mid-Atlantic to the At utilities proportion our

to distribution I have helps continues to cash paying and provide business propane doubt there the flow, International, attractive which capital the no dividends. meet needs free As to is that in move UGI

strong market business share in recognition. sensitivity and great considerations, brand in some is there countries regulatory While key has the weather

past few ultimately, our has Now segment, have and AmeriGas, final they years, challenges over affected the volumes experienced several earnings.

the were there While renewed execution. in needs a performance, made focus it efforts evident to on past to that is be address

operating adjustment a is processes examining business needed, positive the along we that are determine execution to a the and with to model change overall the As disciplined result, effect performance. in

and returns. taking have other become as credit priorities And us to the record capital the to embark metrics near-term our journey sustainable to me to more with for evolving actions, our to better well prudent flexibility should base performance of strengthen realign UGI track key capitalize as competitive sheet, position We're with us this that on providing in improve as opportunities. allocating to measures cost will takes actions to attractive cost These to enable organization and the long we on more a that solid balance business an underlying term. segments financial our allow a the along future manner

of advancing in who these accomplishing team instrumental dedicated goals a in have We UGI. employees are

a as unified collaborative high-performing is and a it customer-centric and with crucial operate is one forward, we organization Going that that culture.

in I to that, call cover Sean, the who our share before quarter key financial handing the With highlights for some the will results will details. of more

reflect For natural and the the in of customers, to businesses the International and and shareholders year. our commitment the performance to EPS prior quarter, UGI $X.XX UGI delivered our comparison employees. in gas of $X.XX adjusted underscores strong results These

in regulated and customers. X,XXX more earnings deploy heating on note, call, discussed As infrastructure a residential than capital, added to Utilities the betterment the in commercial replacement year-over-year year-end previously anticipated AmeriGas and its primarily and decline during experienced of our financial new results. team the Also quarter, and continue

for into Mountaineer, case In effect gas January December, X. on we received which approval went rate the of

part X% when approval receive customer October with than X%. benefit of a weather a normal from X, the from we normalization weather a As deviates more rider and to normalizes settlement, debt bills revenue by pleased also XXXX. were of This rider

we have finally, sale the several non-core XX%, France portfolios to thereby objective during on our further marketing by customer completed since And progressing reducing the Netherlands, our supply January taken exit The significantly exposure. over quarter, business. of in XXXX, energy the marketing energy locations our and we actions reduced

call over the with that, And to I'll hand Sean.

Sean O’Brien

good morning. Thanks, and Mario,

$X.XX operating the The base mentioned, expenses. up adjusted EPS and rates Mario first XXXX rider higher $X.XX weather the fiscal of prior slightly benefits segment the of for diluted Utility period. normalization impact quarter, from offset weather delivered As UGI the year higher as was $X.XX, over warmer and

LPG the to as the Midstream increase increased down partially business. income & to the and deal from increased an was taxes $X.XX up up in lower associated with the total due energy business $X.XX volumes exit from was non-core business International Marketing tax credits. investment $X.XX in operations. UGI AmeriGas and margins investment lower continued with continued marketing was with

due expense was Corporate and Lastly, taxes. interest Other $X.XX to down higher income &

now key drivers Now each turning you segment to through the for reportable the the to next Utility segment. walk year. slide. the when with I'll Starting prior compared

the rider of weather end Despite of the was EBIT benefited business normalization up period. million, XXXX. warmer Our that regulated $X the at year implemented significantly over utilities prior delivered weather, October the from $XXX million

personnel-related of gas benefits well the case warmer increase as Operating down in $X expenses million were and from total lower higher and due an customer were administrative programs from as the and base higher rate weather. continued IREP to $X Pennsylvania, with growth. margins to realized Utilities the million, as largely contract labor expenses. due incremental rates in DSIC of Electric costs settled the recently period comparable offset impact prior margins rates the base

segment the the margins the from higher weather energy gas Marketing reported million in of year-over-year of Operating from were natural year. in primarily to the and activities. the and largely Total recovery sales Next, from activities, $X comparison the to expenses flat million, in $XXX lower margins The lower realized million RIN offset year. renewable when the an & $XXX was year. warmer prior account to Midstream EBIT renewable the prior due marketing margin of margins as uncollectible administrative of prior effect due energy timing to compared up

impact colder was At and the $XX UGI also year. International, conversions up exit volumes. LPG amounting LPG approximately to of year-over-year million on translation higher stronger margin the impacted increased EBIT a marketing Total that volumes we X% energy $XX foreign of basis. $XX up to non-core realized margin was natural unit Total was effect the was gas benefit to $XXX by prior year-over-year million were million, business, increased LPG LPG the as slightly up than weather continued and from the margins currencies, million. of due

currency lower while the Next, offset personnel this costs, and due foreign effect constant expenses translation by to operating a maintenance was of and on basis were currencies. down administrative fully stronger the

realized a other International to decline translation due UGI largely million currency gains. lower in income, foreign $X Lastly,

business and This was Americas, at due year-over-year warmer XX% down a a due gains a increased result other employee-related the income, increase administrative customer Lastly, attrition $XX as LPG also margin $X a to attributable was of largely million, in to primarily EBIT costs decline to sales. from expenses in $XX decline capacity million business weather. Operating delivery down and was realized up volume largely volumes. on basis. its expenses. and higher asset were largely million, $X The million Total vehicle

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

you with debt important focus, and further are metrics. This AmeriGas, credit past the provide over shared the strengthening the at we expect where months, we balance more near-term buffer reduce focused on we've As is several sheet. to an on particularly

I'll now Mario. the over And back to hand call

Filho Longhi

was a Sean. the summarize, the that strategic on line also team our start strong continue I The earlier, on Thanks, expectation. the which is review. we execute To focused priorities with while in near-term to to had mentioned year,

are no additional the information call. time, of anticipate there updates earnings by at the new QX and providing this the latter While are review stages we in

Lastly, our the and enable to sheet, years in the provide and financial should the continue to shareholders which through business value dividends address actions value creation performance, flexibility to are come. intended strengthen returning balance

With to for our line back the to call the questions. I'll open operator turn that,

Operator

Instructions] Our [Operator question first comes from Moreen with Gabriel Mizuho.

Gabriel Moreen

out comments made the I AmeriGas' at about you Mario, Maybe, model. can start operating examining if

how I about curious guess looking going, would it also what you attrition business. If you're attrition And other see you're And just the at the metric care to want to customer on about see stands that metrics elaborate that of facets and where running moment? to just the improving you it where customer thinking also on for context of that. I'm within

Filho Longhi

bottom frame into a a deliver in elements to has those for a then come And order way and go more into evolve improvements. sustainable model what Their our to every to efficient to and number to us operating Gabriel, every single situation one created ability to to look interactivity get sustainable we line. need have is that the together of and define will elements. a of value

improve you don't are and If the on same other you not that, manner element just you it, but and get results one in you ones you pick evolving focus the look. the

to elements to we're line. in checking must of to every all contribution also these And have bottom things that bottom we're be and translate to actually line sustainable the expect starting with the those we get order So from there.

that's that in business. using to decisions we're improve to that the make place of So that kind how is train and

Gabriel Moreen

and about correctly -- talk at I evaluation covenants? repayment balance what further in an structure debt trying in this you may quarter the Mario. where Sean, yes, that I buffer, or Thanks accelerate standpoint? its relative think, not you mean And accelerate, be stands you then at capital Can comments current near And maybe mentioned the sheet. you to AmeriGas. long-term if leverage may your And term may and understood contemplating? create also Can about just you where to from AmeriGas on curious just

Sean O’Brien

couple Yes. of things. Sure A Gabe.

the start just the translate terms the with term, things long line. success, Mario In said to need of I'll into bottom

roughly taken debt So AmeriGas' million have of of -- off absolute balance sheet. we $XXX

we've be that continue remainder fair free AmeriGas So progress cash amount this year of a will off of is some excess generating take the excess indicate sheet. balance comments free to made still flow, flow, about My to to utilized the cash there. that all are

looking trying we're when maybe we're the somewhere -- an maybe we Step All debt X. to at range. X, as in below that range and get the effort going metric beyond $XXX-million-plus let's X.XX. off the is And sub-X into can total, that additional at in take balance still in above leverage also it sheet. moving say get sitting in to of I We're the looking to X.X. -- the range accelerated, off that close as -- down range start down covenant X.X their the Step X, to is and into

the capital I'll remind working the typically is QX metrics. quarter. you, quarter highest have we high It's

right the take debt and we the and below we will there anticipated the So year about get I continue that. into to over to that working X But would peaked the at We in covenant remainder what call QX. the metric of range. be try and off books right

Gabriel Moreen

UGI to did past cure clarify, I'm at an to have quarter. just presentation. AmeriGas the this just equity do [indiscernible] And

Sean O’Brien

Yes.

highlight. That quarters, let to is We for in me an of took I'll cure XXXX. X us yes, So QX equity -- Gabe. available

a of -- it was $XX million. So little we bit utilized

around $X in think, that's of utilized million we You QX utilized what recall, XXXX. may it. I of We

for it have you $X be quarter In we last which the utilized mentioned, around I had, quarters. million. would X we QX, As

Gabriel Moreen

we assume how business? that talk the as the may of repeat seems and may Okay. one if base million increase $XX business weather could Of electricity I let's decline. if say, appreciate prices with from margins. we continue can But did million around business International. marketing bit year-over-year, should have think to the just in that last that, non-core it European one about like better down, then margin come you that obviously, you wind the just maybe it. I the much and And $XX a And gas have

of $X.XX, that relative may in yearly you think I I'm impact? curious that business how just show about, the So negative exiting in to the much up talked

Sean O’Brien

Yes.

So couple of a things.

highlighted a quarter. In terms of, both strong obviously, and international, I very Mario,

Gabe, marketing. in of year, sizable benefit losses range business. were there that pretty may of the half of some last you anticipated was by Somewhere QX the recall, that, it, marketing in of driven We the

slight a actually So -- year. we and had positive this

-- the really really or that the that's efforts dividends. So the of and you're seeing done company that has really, to proud business pay majority just business, of it exit

the by the by driven was was company. that that Again, of energy half about marketing. So anticipated

other see to positive up. We our The stories, unit margins were were glad that.

from one the You're conversions. LPG And weather. the help then favorable, gas big definitely volumes to are natural seeing little some a

something International and the was happening So the of the over in there. seeing that been months, benefits that some last XX we're has volumes in

The to $X.XX you dialed would you I marketing is, I $X.XX the losing on last guidance in around thing the gave around business. we tell this think on -- year

two So things.

I is some timing think that. there to

to we favorable the as slight driver had, going It's big not be the of So for I remainder in mentioned, year, QX. a Gabe.

every it's I'll think loss. versus relatively remind $X.XX quarter, targeting a and improvement $X.XX to $X.XX, I the about the to in on year we're de prior going be marketing still you which minimis, is that

Operator

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

Julien Dumoulin-Smith

point that Can by something you said. point remarks, Maybe kind time In of this what just to at the talk that address talked prepared to? to XQ you ago. able there be be business about you in refining on revamping would kind to things picking what Is of -- how up expect expect X% the cash kind is XX% momentarily elaborate about and to you improve in elevate on the a you couple of your kind how to profile. both updating flow think far overall as time? would of streamlining as on you And do well versus to plans OpEx non of and core

Sean O’Brien

OpEx start maybe improving around profile the can I Julien.

We already call. taken I actions mentioned that on the have last some maybe

late at we're sustainable $XX taken QX. $XXX So They actions. some reductions. to looking We've obviously of million million were in

-- were see significant the year. didn't a impact want actions, actions do those those OpEx I will lower of actions drive point that remainder those to amount, continue but related you So the are to the out to in of

QX, to continuing We once have late significant and again, other efficiencies. we're actions drive QX, targeted for

go to think continues I OpEx big to the that, down. that theme it's Mario a that to ensure brings table trend

we see The It winter. QX to AmeriGas. QX, an but up be slightly we to of them I call not did did was the prepare OpEx. for some absolute spend is some, driver definitely in And -- going investments, reduction primary we make year-over-year. was that money

longer-term the I think review. of priorities, through of the to we you're not growth terms get any need or talking our about priorities, revised We've in longer-term dividend. think the whether the be the EPS -- strategic I it

and the And latter stages, give at the then we'll we that get end think said, the review update and the as in But I Mario another to some of we strategic want I we're we'll had. through you day, make QX. address think the of fully sure goals in and then the longer-term company

rebalancing that of In portfolio, to we've relation the higher very more terms been percentage of in nat gas of moving the we're clear a LPG. to

do XX%. the nat but Obviously, we gas are already. to, today way happened company And wanted maybe we a we we That's not more were above of anticipate than -- exact that help the the percentage review think I the us and clear, over of that few and in we've the strategic to been to utilizing effect. years, we're goal company increase next is

most your question, Julien. got I think I So of

Julien Dumoulin-Smith

here just follow bigger and bogey QX right? strategic fully of should in -- activity expect kind kind of of you the just kind divestment kind to some as that of update do about if how and you up the of update for is kind like of them So level leading think Indeed, Actually, a we clarify, prepare up here, I interim things? think into categorically. what's to hit here you

Filho Longhi

review on hear is that more Julien, all what we about, finished it table. everything is when the about you'll the That's off. strategic and

Julien Dumoulin-Smith

the real your mean Gabe to was response, speaking you marketing. you enough. to mind the quickly marketing? the bit All benefit a to -- I Do then was. little of on half think No, I just due back there to right. in And said sorry come where -- fair numbers, you

only I think been you roughly guys year the had here. contemplating $X.XX for

through of seems that in are it plan. that half benefit the the just like there's that you Is the So or some here year, of guys course ahead of year? maybe sustaining insinuating the back falloff

Sean O’Brien

I'll definitely clarify. No,

So year was big big flat. there driver, losses, year-over-year. Julien, was this primary there last were year The was relatively a and benefit

earnings we're -- is the business that exited chunks. seeing and as gone, the you're experiencing not the business, volatility big we've So

we're So your directly question, -- to flat. pretty but answer

and the We've X%, given that to X% a loss. was

some of that and timing. is -- So

remainder do QX going the spread out it's if fairly we and at of I it's for QX, big losses occurred a to flat business the be expect the have to So year, and in But $X.XX to look really forecast much driver QX pretty that QX, loss this a year. last not that that will get between really, a small to you $X.XX. versus --

Filho Longhi

we XX% what, supply down, we're from have. the original that locations Yes,

Sean O’Brien

the of table. the off XX% risk Yes. taken Yes,

Julien Dumoulin-Smith

Excellent. quick side. if post you of much you expect other flow this to Yes. said flow Nice. LPG that, think about year address on side interest this to you the if be talk deleveraging profile if prospectively, continue able business, the cash how will. about just you you you substantive delever Can super then to And on expense more cash would

comments heard that saw down bring here to clarify just earlier, quarter through course couple I being try think I to of but the prospective I the of to a versus what we principles. the year in able and versus want

Sean O’Brien

give the round keep couple quarter, things a numbers, points. just Julien. in AmeriGas closed data use And Yes. mind, to you to The some of

had million, we of think million I $XX cash $XX hand. on

AmeriGas -- So we position. in did a is have some cash

anticipate our cash take said deliver expect heads think can -- be We the delever. will in or past give $XXX to used we we out or about is that in million that year we of AmeriGas, of I the directly what if had I've from

know come So the million that's of $XXX that on debt the table. you off to going

we that $XXX target million million I'll clear total. we been off. on a may number I've you remind $XXX delevering, additional the the about in already delevering to -- million positive, Again, think we've provide to of taken $XXX some we as may closer then -- And

So quicker. some to that there may be continue additional delever support

XX% AmeriGas the to I important night. get a for leverage a AmeriGas a into can in to winter, sustain it -- that it level its below [ get into and sustain bump think it's can warm that ] the company get

million that from directly another to ought so then looking up feel So to $XXX give And the million a million, we're maybe for delevering. million or $XXX from at AmeriGas you Corp. $XXX $XXX year, to

Operator

[Operator comes with Sarah from Fargo. question Akers Instructions] Our next Wells

Sarah Akers

this for be Just if equity the cure I on AmeriGas, correctly, understand available QX. fiscal won't

another you any equity So anticipate just if do this size winter weather? given of so, the And sense cure quarter?

Sean O’Brien

-- think first we took -- took interpreting QX I would you it's of this yes, equity there. stays The it the Yes. in for right -- year X quarters and you're last been available have is you a when the QX have part cure When 'XX, that it -- one. into of

without We the equity we cures. trying -- equity this run additional have Look, based can been we agreements I've on clear, multiple company have, I cures. we're take think to

forward. And I debt. of think and see element. so as on important that outside just we the Mario reduction heard EBITDA about the working actually the then that's talk The model we the operating one volumes you grow lot go is debt a

improve not utilize are doing is we is can. -- can, everything cure not of the to have as kind work us, our equity available best we it we goal the But business. So cushion to to gives Good have we do continue some to us to but it. more we news, to to

Sarah Akers

of into the QX, to year, were AmeriGas can the impact you the I expected quantify And heading But at of attrition. know kind in it. volumes Got decline.

original attrition So worse or the to a your how plan? factor compared was that than that original line But was and well. obviously, that weather as in expectation impact

Sean O’Brien

do the everyone two -- start what know with can can I it I'll year-over-year because I see. in Yes, I'll ways. that's

than down. we warmer normal. Weather XX% So XX% was highlighted

impact a to also impact, large attrition. there had due that then So a but was meaningful pretty

So that's year-over-year.

you're Now okay, when anticipate. guidance, weather normal. you did our about Obviously, what asking, we it's talk

than So normal. that's and was warmer -- weather, I X% think,

So about last versus but half still year, what it was warmer.

had we have driven weather. baked than what into saw higher attrition attrition what our baked QX, impact customer the in We did by was levels our Sarah. we of some So of in. the forecast, versus But were expectations

have So of the our more And in on that. It we is had forecast. around attrition have focus, -- wouldn't our did we weather working in. spoke obviously, that But attrition would baked team Mario, than some been have what budgeted. saw the we you was

Sarah Akers

UGI down the that issues of are terms on external in debt still confident level AmeriGas And equity pay weather it. at company Got execute and financing, that you without UGI. can the

Sean O’Brien

a things. mean, I couple the businesses. Yes. UGI of of all consolidates

give International the think highlighted debt-to-cap being, in low Xs. where is low in in I metrics the leverage, our of I've you My at the very, it's Utilities, past look to Energy strong. terms in Xs. you Services strong. on very ratios just that incredibly International, the the its they're sits of XX%. It's in point some When it's

Corp. we is, point reasons need really roll have AmeriGas, all Sarah, -- yes, consolidate that's my these to one improve and the So up we of into entities

So it AmeriGas, continue can at we helps well. sooner inroads the improve make Corp we to sooner Corp. And the

been are to below -- and metrics AmeriGas Corp. the Corp then is Xs our improve now. clear, focuses: we So sitting right the and we're in I've Xx, get those low two to improve debt goal continue

we So do of bit there. a work have to little

Sarah Akers

is without as that Okay. a is table tool? the clear, just to And stock? plan on issuing UGI to the get be there Or

Sean O’Brien

on been not models of as in run any that the table the tool. has That a

Sarah Akers

And Unit continue comments The Okay. sustainable? the underlying a on up think International. to any there? quarter. It's To the do Perfect. And were what's that's throughout were volumes margins for the shifting what extent year? that driving you then up. might strength trend

Sean O’Brien

we Mario, I there, can some volumes, seeing in over bit the of a little highlight conservation. terms from maybe we're But a weather. what from benefited can start, of

the winter. Those LPG of continue. that I conversions X-year dependent we that's the we So The to those should nat conversion. going X- are mentioned, what see on gas to be -- on that remainder contracts

out. that's continue to So tailwind should us that help a

And up the are unit year-over-year. margins, they

had at some much. look when of I they're think as that in. I versus We it expectation, up baked not

and about I we're Barry about know you seeing, conservation... I talk don't want some I pretty So good if of the drivers think feel

Robert Beard

has other shown Italy of see there potentially trend to about bit to over a but least have it say countries. situation Austria Certainly, early of whether we And try little beginning of at continue, this it's sign of on a that. to will and But start easy. been more conservation vocal we're The kind signs it. some

Sarah Akers

I more in the one modeling side. squeeze just could And on if then

have it, EBITDA you the can If is trailing adjusted quarter for AmeriGas for you and provide? something that months, the XX

Sean O’Brien

Yes, will released today, our financials be Sarah.

Tameka happy those will be So call. the give here to after you to

Operator

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

Cameron Lochridge

is I provide This to year. how actually realize you're Can thing. I you kind can Cameron and see this after just And missed guide to results full any quarter squeezing of if the you follow in color for wanted year trending one quick. you on we Julien into relative real But it. on one quarter? up fiscal sorry --

Sean O’Brien

mean we started out Mario that But guidance said, there. I had -- we're Yes. the we're to -- we're a off, happy as see we quarter. holding solid

Cameron Lochridge

Okay.

to on lower like high higher guess, trending the or commentary, I real low end maybe no So or end?

Sean O’Brien

Cameron, it's said the quarter in. we're you one think I best

So we're point, this pleased no change. at with the -- we're quarter. But

Operator

time. Thank remarks. showing questions Mario and you. I CEO, to would it turn this like Interim no Longhi, for back closing I'm to now President at further

Filho Longhi

you and conversation we today, to you, thank look again. time Everyone, next spending us quarter. forward for well. be continuing Well, Thank with our

Operator

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

now may You disconnect.

UGI (UGI) 1 Feb 242024 Q1 Earnings call transcript