UGI - Earnings call transcript Q1 2025

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Operator

Hello, and welcome to UGI Corporation Q1 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Tameka Morris.

You may begin.

Tameka Morris

Good morning, everyone. our first joining earnings for you fiscal quarter XXXX call. Thank President today and are me and Rob With Flexon, CEO; CFO. Sean O'Brien,

On our review key concluding we financial a call, with and before business first session. question-and-answer results highlights today's quarter will

our duty and me believes of are circumstances of we statements release management results our report or comments statements, be earnings may only. for affect risks Actual reasonable list that our read as differ you events that today Before Please remind to that because certain and include forward-looking extensive uncertainties annual difficult factors expectations. from results. an predict. or revise let forward-looking different reflect to date We significantly to could are that begin, to assume no which of today's update

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

turn Bob. And to with over I'll the that, call

Robert Flexon

Thanks, you. Tameka, and good of morning to all

fiscal results Yesterday, XX% prior reported share with year. higher than first $X.XX, per earnings our of we diluted the adjusted XXXX quarter

segments, performance with underlying reportable quarter to combined fiscal our by led effective tax results. the strong Solid management, first

West gas rates from higher benefited businesses, at natural utility. gas strong and Mountaineer, demand our In we our Virginia gas

opportunities underscore LPG results While drive the expenses reduced consistent operating advantages when relatively our at and to our businesses, These excellence. comparable of global portfolio administrative year growth prior compared realized we volumes the and period. and through to operational diverse the

our program, system quarter, support operational we natural experience businesses. in investment, strong and continue the capital additions note, modernization efficiency the gas during million enhancing that the advance investments customer primarily utilities. Also deployed we at safety and $XXX over of to reliability, These in infrastructure

approach as sector. the Utilities, UGI customer-centric Utility Cogent XXXX award places recognized top performers satisfaction Champion. a the Also, across us utility excellence customer being in validates the to This to our prestigious and among our Customer service company led at commitment

Midstream good facilities The our budget Superior completed acquired be & systems several RNG on local In long-term have have X we with and markets. time on systems we Pennsylvania. projects acreage completed attractive largest will which our owns Run substantially dedications, is gas investment Services tax are the and Appalachian, one of in and to gathering into operates are where Midstream been returns connected to Marketing segment, UGI in Energy credits. of delivered These the and XX%. joint has part & at immediate Also system, the segment, The was which systems, venture which Run, which $XXX providing now Marketing future as Pine synergies. business, additions in Gathering Pine to at valued gathering should a was by funded ratio transaction, debt-to-equity of enhance debt million, fully approximately our

year operations. Lastly, will the to accretive be the transaction first earnings of in modestly

to promote Public gas a rate filed Pennsylvania distribution of the we approximately week, system, the rate facilities safety and last Commission Next, case of rate increase gas to improve This for requesting supports be reliability. million natural base over Utility UGI case Utilities, technology made $XXX distribution will that investments million. with overall and an $XXX

Next, I'd priorities future our update provide that on XXXX drive like performance. an fiscal to will

thinking sustainable firmly and to this performance believe mindset training breakthrough providing will and mentioned financial and through significant Added improvements, performance. foundation on culture stronger to that our drive focus we our I translate for As business which earnings the thinking. renewed create to results. to that translates is people are QX to on a call, a and tools the encourages employees strengthening breakthrough that breakthrough the

transformation the firsthand align At a onboard leadership strengthen an Mike and chain the of on his Working before, with XXXX, worked designed revised and supply end have organizational inefficiencies of the At logistics and better is excellence. implementing I closely customer customer with road our decision-making with and his Mike the has and processes, AmeriGas, In accountability improved Mike its developed improve team, we to structure business, the Mike optimize needs practices experience. new map business has financial came key calendar Sharp experience, organizational his having drive strengthen first address commercial his AmeriGas. must streamline focusing month, elevate within to performance. operational X to and significantly commercial enhance President pillars seen create quality. as our And ability of to AmeriGas practices, network the processes, service

the the in pod footprint. between relationships. and with introduction to localized functions, the a structure greater of of benefits September, supporting its oversight accountability, different more centralized efficiency AmeriGas locally operations across while serving XX right customers providing strikes our field customer over model delivery pods its the Back transitioned believe driving We of balance

we address will this work processes, of Although our business improving and journey, our and the at greater this we insight and are has face. cause the of beginning challenges model that better workflow, the stages customers already way operational the root yielded

As better I work customers, doubt innings for transformation, ahead just AmeriGas the is but no there our will and shareholders. employees early noted, it's lead of that the to a

coupled allocation, balance Our strategy, businesses. strong longer-term strong better optimization position strategy and designed will strategic remains management, UGI natural to creation. disciplined sustainable value long-term grow sheet in gas portfolio businesses This and and drive optimize propane execution growth capital and and to operational with deliver premier our further transformation our

will you quarter. I'll that, over to turn call Sean, the for results the our walk with financial who through And

Sean O’Brien

Thanks, good and morning. Bob,

mentioned, foreign effect EPS The the noncore Midstream & operating as of period. a in Bob XXXX over associated credits year was As business. was rates energy base RNG was improvement of reporting Mountaineer. delivered down the at strong operating lower year. was placed this as prior the utilization tax segment higher up gas results with benefits tax investment $X.XX diluted offset from being benefited $X.XX higher as from the income the offset $X.XX, the up marketing effects fiscal associated UGI credits Utilities for income partially fiscal the business the projects $X.XX Marketing by service fully with International lower $X.XX UGI first quarter, of of adjusted

AmeriGas, while million expense a rate EPS. XXXX, $X to reflected XX% comparison period, prior expense fiscal decline AmeriGas to interest the corresponding in Corporation effect XX% for the fiscal In entity rate tax is normalize basis, due and consolidated adjusted period. that and there rate, year Similar of between $X.XX will corporation's EBIT to is effective Other. legal led the up year a diluted limitations to a is aggregate, Corp tax this we tax a the At UGI over prior XX% and higher in anticipate an with deductibility. tax at recognize to On was income XXXX associated higher experiencing in the offset

the of offset comments $X.XX, $X.XX higher Other, out year expense. by close the to lower over on and interest prior partially increase is $X.XX due Corporate Now taxes of income to

slide. prior next reportable now year. through the to for drivers Turning I'll the each compared to key you walk the segment when

month weather of Utilities Virginia the Overall, up depreciation XXXX. to with the the implemented higher West administrative largely higher rates accounts margin which and million, increased which due December. saw service in and EBIT slightly West Operating due $X personnel Virginia partially our expenses period Both margin, impact colder total have normalization year market million to expenses Pennsylvania January territory offset colder segment. Starting prior were reflecting rider, administrative and the higher the than the of our expense utility partially volumes. was $X and service in to us operating expenditure higher now experienced We in territories, in weather expenses. activity. weather up million, were and $X our gas core reduced continued gas capital that base uncollectible higher by from led higher

sale from reflecting Hunlock Creek generation comparison $XXX absence the margin Total of margin personnel-related margin and and million activities, in Marketing $XX down million XXXX maintenance and of gathering lower and activities Next, reported the Operating the million September $X was administrative management year. to due processing down were Midstream asset from in million, the to reduced given capacity expenses in & EBIT $XX margins. expenses. power of lower prior

over owned year, that renewable to in natural income $X impairment which California. with in was gas other a associated largely prior subsidiary Lastly, fiscal XXXX, markets GHI wholly our the increased due million Energy,

personnel global exiting lower and Total and energy margin period. impact campaigns were up that were administrative UGI due at drying $XX year, a weather lower volumes. costs to LPG from were down extent, marketing prior declines businesses down exit unit the higher volumes lesser marketing the by to the energy the to and and partially increased margins. the expenses at due crop we year International. this from than reflecting business lower and from was which to to the Operating offset LPG LPG was These margins LPG Turning noncore expect million fully end X% maintenance million, of expenses. colder lower business, $XX calendar of

realized Lastly, business other a energy the the million noncore in of and marketing in exiting UGI International gains. lower reflecting year income, currency the prior decline $X transaction foreign impact

from prior down volumes to by fee personnel the higher during down unit were the colder volumes asset year. the business of of expenses, X% and million was effect as lower the impact weather month offset when as to the income. due while and Operating margins gains were reduced the to margin At lower attrition lower comparable AmeriGas, prior LPG Total year of LPG was offset the LPG customer experienced expenses $X largely administrative December. sales compared reported

intercompany that UGI the available be cash inclusive of the purchase on to has intercompany its X.XX%, notes, liquidity. of Bearing to of by of rate flow X-year funded end fully of credit which the to AmeriGas due International liquidity repay $XXX quarter, capacity unsecured UGI were intends Yesterday, cash available in an and senior free loan loan. between AmeriGas and a interest other announce optimal will Of AmeriGas. pleased on liquidity is borrowing of rate facilities. of issued Moving for subordinated equivalents, loan of notice The and million to XXXX. May the significant capacity we AmeriGas an outstanding revolving had At the cash our International's and billion, at its to were $X.X allows UGI Partners, us company. a redemption note, and obligations utilize L.P. to unsecured use

With on maturities, XXXX of senior focus the AmeriGas its XXXX. repaid, the addressing fiscal in the further fully attention process that completing XXXX with will goal notes

the but ahead, months fiscal start had a guidance $X.XX to year, we've to given summary, $X.XX intact. the important the range remains strong of In

for closing remarks. With to turn the that, over I'll his call Bob

Robert Flexon

Thanks, Sean.

portfolio. Let me of fundamental strength highlighting the business by UGI's close

growth weather-resilient environments Our operate base utilities a and support that constructive X% rate rate. investment strong in regulatory crucial infrastructure

optimization highly pipeline to positioned strategically which capitalize attractive mix peaking, in We a complementary Midstream and gas and both flexibility cash generation and with drive of on of LNG transformation demand. provides operations storage growing is and natural conditions, to propane UGI and believe strong demonstrate assets, varying have performance. we will continues business an market improved International the domestic capacity, that international

value We excellence remain operational and capital committed disciplined long-term to shareholders. for our creating allocation,

us you for questions. and your will line with Thank today, open time we for the

Operator

from with Instructions] comes first of [Operator the Our Julien Jefferies. question Dumoulin-Smith line

Julien Dumoulin-Smith

in Any I here, ones progress of off, coming 'XX you number onwards? maturities thoughts on you up those preliminary kind thoughts approach that here. there's Congrats but as can a imagine ahead? things Bob, Maybe, mean other about different the therein? you're I mean, kicking of here. I thinking nicely tackling thinking levers about on sort initial larger done 'XX are the just How the of maturity

thinking results tax range, to year And nuance. trends reaffirmed how done broader some turn range? I and that to just that positioning the could Nicely about for do that about quickly. then even results the you're full within know here, there's you you the the think how also weather quarterly but within contributed I range, here. have But latest when maybe guess

Robert Flexon

International far Julien, the loan near-term exceeds hand AmeriGas to confident, transaction years, But interest to flow next out over and maturity. that pay the cash we're rates at allows X us and Sean to questions, start and spread a the deal was as thanks the an way from the we felt value I'll business elegant it to with It note. that And of good then the our doing arm's the well. ourselves. length for the AmeriGas to essentially via

then on with XXXX. And the So be is years. kind of banks for it clears paying in X with does we'll that back the next dealing the deck discussions what

easier will this makes team So out work the with public, whole and kind and as to go thing is effective cost it on now XXXX, well. and that of just Sean deal in the to more

I'll So Sean in on let comment moment that. a

operational of had we send-out performance. demands done standpoint, natural the great from it what in is performance, saw natural On very gas. gas And on the was side a an manner, execution. just near record We excellent safe all

charging as we're there. seeing propane in it and structure International business confidence well. the with They of there business. natural gas very competitive And from team very as get model ground here, us the industry. that side, been well going. on created. to some X the business, have green teams over Mike really really very, the pod to on a very the on But we in business great significant leadership the all that that Mike initiated over shoots very on able early after innings. of side the should to those Sharp a the make see we AmeriGas of side run deck having ahead And time have there. then slide the is some is position the very And the early spend have that you'll processes effect the really I've the on key priorities. So and well thrilled business go executed well business It's really business and strong But we on initial to in

will up ourselves unlock key setting a that business. year. the where AmeriGas we that thing performance we're think we at good getting for really in be think I can So potential the And

it But the Sean comments, particularly any financing. turn on to me let additional for

Sean O’Brien

Julien, only just going think add, Bob going things. couple add to a I of it well. I'm I'm to hit

lost, that As we AmeriGas to of care I it loan, takes don't delevering. are intercompany be want

getting debt million. delevering of at the closer And don't that we its EBITDA. to take products Xx ratio taking to their go optionality a the the have And care we of also focused down it starts range. to going in of after are still definitely $XXX AmeriGas on on that the AmeriGas $XXX continued those really types Even push One, covenant, us to that's of a we're though X.Xx leverage XXXXs. So care ways. to target two 'XXs of million into gives very

thing The key other is timing. the

go We to of don't current until timing available have lot a of they because August year. us this

So up care up well. as that position I be we we're those go think the about, 'XXs. All Bob set we're best take in the think I talked very could of set tailwinds we to

Julien Dumoulin-Smith

you on you I Best silo, to Mike guys. the if I strategic here. is, how thoughts and If direction continued the the you Nice, up do I to especially again, will, on luck that just mean, businesses, more. these International mentioned of maturities? ongoing can, about adjacent for mean, another follow the maybe business the activities think about success to one to as plural, International. Any U.S. maybe think operations? front, you

Robert Flexon

storage take for best Europe for to the our strategically it's on market on the continue an their near think position advantage of they'll International import where they propane. look term, in I side, thing how we can do capability. business key That's the since

as as I with And competitive to on the advantage, of there. Sean are we'll as the extent help both makeup competitive as extent So see continue not necessarily the portfolio delevering. any optimize well, of to as propane, used, we'll as the we evaluate and and locations that over propane footprint those And have asset be to to sales to a continue have will think mentioned have storage. or we'll flexibility we're well try where the international domestic portfolio evaluate around the to we for big our a there

Sean O’Brien

year flow. we million something. be between $XXX Julien, excess want free International, may million that anticipate thinking intercompany and clear generate add, $XXX And to be of cash want to I you this of to this loan, I

that to of Corp. still going is All

that in involved this intercompany loan. none So is of

helping flow the and cash great dividend. generating its support company it's So

Operator

Mizuho. from next line Our of comes with Gabriel question Instructions] the [Operator Moreen

Gabriel Moreen

Maybe intercompany pods. I out of of these in can start the the also and the segmentation terms AmeriGas loan I into think structure

Given or I'm performing emphasis more and AmeriGas ones, at intercompany preclude level? loan and the the performing at cash language portfolio paying for And with the better around segmentation kind pods that's lesser does of with maybe back whether flow sales regions optimization. the the and regionalization, off revealed curious, getting there, into implications free asset all to any just that

Sean O’Brien

can The I'm that. And answer I half, short is first Gabe. the take expand no. to going

any divestitures looking underperforming assets at clear not at it as the International does terms that transactions to well, I potential And preclude we're of not on side does of in the So things be it want AmeriGas. preclude asset other either. fence, at

Robert Flexon

Yes.

So I adding to Gabe, think, that.

accelerate have and portfolio right mentioned, really the To I level then and level as divestitures. intercompany of and look of Sean we're extent just in me-too a the would any that those just and we evaluate markets, advantage. the don't at competitive preclude paydown anything, note. these density density for continue kind right have look of of of So we sales, doesn't we And will that where the to this the would some

of So lot around this getting are that we've pretty a at that thoughts point. analysis our done we have crystallized around and

work something as that we'll it's continue to well. So towards

Gabriel Moreen

maybe can follow I if then up. And

maybe You there. AmeriGas performance Marketing that And the days? have terms winter you nat done from then mentioned, and higher out clearly, the performing degree on that's some some some how well of you've terms benefits operationally, volatility been both of the quarter has market in given of how how I Bob, we've in also, here gas has and performed business handling, drill-down January, can opportunity maybe gas from of experienced market in wholesale capturing a volatility, the but been of of the in cold feel the how weather

Robert Flexon

Sure.

the at system AmeriGas think benefited I weather it in I side, January. of colder we does from in processes. we have on our say AmeriGas the business with the the have issues certainly So some strain would

And one as we months handle process we doing can for X Slide so what on improvement. than So a we needs like the lot X, improve, in business the and where slide noticed about areas but you room the did. better we talked okay, deck, of key that have we're that's to January

again, improvement, this focus next a of Mike as do So performed better going and substantial I and in even we for the there's for and but position winter. well, to better us the we that's room to be performance get year approach relatively of team think balance

difference the is this make business really So have to a we where run processes. how time the we on

you taking of extent to gas advantage side then the utility On Services. short extent taking the do take basically, all of virtually marketplace. have bouts we the is from to the Energy cold, natural the gas of cold, of extended and more periods of volatility the volatility, in of And advantage brief

is what bit So in a of we January both. saw

we'll there, our sure of say safely. volatility, the utility obligations think foremost, best in And calm, meet make was So to of near-record everything utility. when opportunity was, there they're the some where first operationally, one cold the about out executing on the place, snap I and sending I this we things see but over team to send-out gas talking it's to demand can well

to West to seamless our Pennsylvania Virginia extreme cold customers. to and weather in so dealing with way So our in a kudos was here in utility doing that and

Gabriel Moreen

there? that more is what you're acquisition additional there? and being If that I expecting opportunities to maybe question gas prices, allocating looking capital on lower bit some and little something a Are one you Midstream. kind there, to active expand depressed you also And bit and potentially that Midstream year-on-year? consolidation is could Can a little Is lower margins ongoing? at more you made on maybe just squeeze of little deals expiring, volumes due then MVCs the bit a the

Sean O’Brien

part. Gabe, Yes, the I'll first take

it margin about everything margin at We have into the that baked general happened did our talk lower renewed one we anticipated. So in guidance, was terms actually we'll was that year. in contract and pricing the of last

remind massive risk impact on some last pricing. being stuff risk I'll of a renewed, was average generally any contracts. have our embedded you, on X-year our into Obviously, there it's don't in So specific year. There's this guidance we or tenure but see we about any terms year.

opportunities area, some pricing. that may what's better As on, of fact, in a we with for the see going increase some with demand matter even

So that of was it. part

Hunlock. We sell did

year-over-year, then last quarter. management from a when quarter. So was those And that you're bit. looking this earnings don't we capacity little had asset those earnings We have down

was some So you the the ability wasn't That's that in but talked make material. not the to opportunistic probably margin. about guidance, it one

the all still contract Hunlock, margin in the most we the Midstream the feel this as good pretty baked all, So expiration, had year look we we in of about on the business. for but forward

Robert Flexon

the that which of the then also got where situation combine here, life, territory and we appreciate our the it the JV interest these life, on lot centers of the that And the infrastructure Energy generation acquisition, near at got of fact parent. where and is near synergies Services. with for opportunities Energy that and which at at in it storage, But financed end look Gabe, our with a of of like, the the utilize pipelines opportunities see are own didn't a level, to any power first, lot that all so we've on get was we was And extent infrastructure, of third good in the I that that data question the the Services. the funds, that capital general, we touches capacity parties and as end from new funds existing situation had and Superior

to pursue So that opportunities. those for be they we our for value And returns assuming those add it continue opportunities. will economic threshold would meets looking that

an so. the for from view strike us to of makes we'll sense opportunistic point So look when and continue do area it in to

Operator

and like call further I gentlemen, remarks. turn to would no showing questions the back for I'm in the Bob now Ladies over closing to queue.

Robert Flexon

call. Okay. for interest participation in and Well, you thank the your

of couple a with thoughts. leave just I

our of Pennsylvania, delivery out focus that returns natural a can and West award a And for further just critical closely. the relentless make our for I business, Cogent the it getting natural on And location mentioning, Virginia it's be safety. be our to look and and scale just and as drive in business, is investments we'll gas customers. watch was opportunistic on us continue recognition utilizing performance our to the for There of First, service side there. for those utility, that seamless gas our something customer both the to we in for will

On sure as we make again, just can. we're well we're side, LPG going as the performing to

business. I on beginning at structure think XXXX, place, a their very for we're the that doing we running we doing can AmeriGas, International the of journey and but And is drive so. target, a need value know we the long nice really in in have job here areas feel calendar we to we a lot of

So with that, interest forward again, further your for look and I thank you to conversations.

Operator

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

You may now disconnect.

UGI (UGI) 6 Feb 252025 Q1 Earnings call transcript