Q2 2024 UGI Corp Earnings Call

May 2, 2024

Okay.

Operator: Good day, and thank you for standing by. Welcome to the UGI Corporation Q2-2024 Earnings Conference Call.

Speaker Change: Good day and thank you for standing by welcome to the UGI Corporation Q2, 'twenty 'twenty four earnings conference call.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tameka Morris, Senior Director of Investor Relations. Please go ahead.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised.

Withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your first speaker today to Mika Morris Senior director of Investor Relations. Please go ahead.

Tameka Morris: Good morning, everyone. Thank you for joining our Fiscal 2024 Second Quarter Earnings Call. With me today are Mario Longhi, Interim President and CEO, Sean OBrien, CFO, and Bob Beard, CEO. On today's call, we will provide a strategic update on the business and discuss our financial results for the quarter before concluding with a question and answer session. Before we begin, let me remind you that our comments today include certain forward-looking statements which management believes to be reasonable as of today's date only.

Tameka Morris: Good morning, everyone. Thank you for joining our fiscal 2024 second quarter earnings call with me today are Mario Longhi interim President and CEO, Shawn O'brien, CFO and Bob Beard.

Speaker Change: On today's call, we will provide an update on the business and discuss our financial results for the quarter before concluding with a question and answer session.

Tameka Morris: Actual results may differ significantly because of risks and uncertainties that are difficult to predict. Please read our earnings release and our most recent annual report for an extensive list of factors that could affect results. We assume no duty to update or revise forward-looking statements to reflect events or circumstances that are different from expectations. We will also describe our business using certain non-GAAP financial measures. Reconciliations of these measures to the comparable GAAP measures are available in our presentation. Now, I'm pleased to turn the call over to Marius.

Speaker Change: Before we begin let me remind you that our comments today include certain forward looking statements, which management believes to be reasonable as of todays date only actual results may differ significantly because of risks and uncertainties that are difficult to predict please read our earnings release and our most recent annual report for an extensive list of facts.

Speaker Change: <unk> that could affect results.

Speaker Change: We assume no duty to update or revise forward looking statements to reflect events or circumstances that are different from expectation.

Speaker Change: We will also describe our business using certain non-GAAP financial measures reconciliations of these measures to the comparable GAAP measures are available within our presentation now Im pleased to turn the call over to Mario.

Marius: Thank you, Tameka, and good morning, everyone. I'd like to begin by commenting on UGI's second quarter and year-to-date financial results before providing a broader strategic update. UGI had a strong fiscal 2024 second quarter, reporting adjusted earnings per share of $1.97, which was a 29 percent increase over the prior year. This performance reflects the resilience of our portfolio and the dedication of our people, and was largely driven by the natural gas business.

Filho Mario Longhi: Thank you tamika and good morning, everyone.

Marius: These natural gas businesses delivered record second quarter earnings and a 32% increase in adjusted net income over the prior year. We also implemented effective cost control across the enterprise, and this resulted in a $27 million year-over-year reduction in operating and administrative expenses. With a robust performance in the first half of the fiscal year, we are on track to deliver within our fiscal 2024 adjusted EPS guidance range of $2.70 to $3.00. We are also pleased to mark the 140th year of consecutively paying dividends, demonstrating our commitment to returning value to shareholders.

Filho Mario Longhi: I'd like to begin by commenting on <unk> second quarter and year to date financial results before providing a broader strategic update.

Filho Mario Longhi: UGI had a strong fiscal 2024 second quarter Rick.

Filho Mario Longhi: <unk> adjusted earnings per share of $1 97.

Filho Mario Longhi: Which was a 29% increase over the prior year.

Filho Mario Longhi: This performance reflects the resilience of our portfolio and the dedication of our people and was largely driven by the natural gas businesses.

Filho Mario Longhi: These natural gas businesses delivered record second quarter earnings of 32% increase in adjusted net income over the prior year.

Filho Mario Longhi: We also implemented effective cost control across the enterprise.

Filho Mario Longhi: This resulted in a $27 million year over year reduction in operating and administrative expenses.

Filho Mario Longhi: With the robust performance in the first half of the fiscal year.

Filho Mario Longhi: We are on track to deliver within our fiscal 2024, adjusted EPS guidance range of $2 70 to $3.

Filho Mario Longhi: We are also pleased to mark the 140 <unk> here.

Filho Mario Longhi: Consecutively paying dividends, demonstrating our commitment to returning value to shareholders.

Marius: Sean will provide further commentary on the financial performance shortly, but now I will pivot to the broader strategic update. As we announced yesterday, we completed the strategic review of the LPG businesses, primarily focused on Amerigas, that was launched at the end of August 2023. The process was extensive, and together with our financial advisors, we considered different scenarios, including a potential sale, spin, and joint venture of Amerigas. Although we conducted a due diligence process with multiple strategic and financial parties, the board decided that in the current market, The company should focus on a restructuring and operational improvement plan for America. The board remains open to all opportunities to maximize shareholder value.

Filho Mario Longhi: Sean will provide further commentary on the financial performance shortly.

Sean: But now I'll pivot to the broader strategic update.

Filho Mario Longhi: As we announced yesterday.

Filho Mario Longhi: We completed the strategic review of the LPG businesses, primarily focused on Amerigas.

Filho Mario Longhi: That was launched at the end of August 2023.

Filho Mario Longhi: The process was extensive.

Filho Mario Longhi: And together with our financial advisors, we considered different scenarios, including a potential sale spin and joint venture of Amerigas.

Filho Mario Longhi: Although we conducted a due diligence process with multiple strategic and financial parties.

Filho Mario Longhi: The board decided that in the current market the company should focus on a restructuring and operational improvement plan for Amerigas.

Filho Mario Longhi: The board remains open to all opportunities to maximize shareholder value.

Marius: Also, in conjunction with the review, over the past few months, we have reassessed our operating strategy, evaluated whether there are opportunities to change the way we work to achieve greater operational efficiencies, and scrutinized how we allocate and prioritize resources. This assessment was based on our objective to create sustainable shareholder value by improving the earnings quality of our businesses to enable reliable earnings growth. Strengthen the balance sheet, and imprudently allocate the gap. As we move forward, we firmly believe that disciplined execution of our reposition strategy will accomplish these objectives.

Filho Mario Longhi: Also in conjunction with the review over the past few months, we have reassessed our operating strategy evaluated whether there are opportunities to change the way, we work to achieve greater operational efficiencies and scrutinize, how we allocate them prioritize capital.

Filho Mario Longhi: This assessment was based on our objective to create sustainable shareholder value by improving the earnings quality of our businesses to enable reliable earnings growth.

Filho Mario Longhi: Strength in the balance sheet and prudently allocate capital.

Filho Mario Longhi: As we move forward, we firmly believe that disciplined execution of our repositioning strategy, we will accomplish these objectives.

Marius: We must operate as a high-performing, customer-centered, and results-driven organization, where we capitalize on our market-leading positions, optimize our strategically located assets, and sustainably grow earnings through strong execution, effective cost control, and disciplined capital deployment. It is clear to us that we have an attractive business portfolio. Our growth-oriented regulated utilities business, which operates constructive regulatory environments can have a long runway of investment opportunities that provide top-tier return on equity.

Filho Mario Longhi: We must operate as a high performing customer center and results driven organization.

Filho Mario Longhi: Where we capitalize on our market leading positions optimize our strategically located assets and sustainably grow earnings through strong execution effective cost control and disciplined capital deployment.

Filho Mario Longhi: It is clear to us that we have an attractive business portfolio.

Filho Mario Longhi: Our growth oriented regulated utilities business' operating constructive regulatory environments and they have a long runway of investment opportunities that provide top tier return on equity.

Marius: Our midstream and marketing business holds LNG peaking facilities, natural gas and propane storage, gathering systems, and pipeline assets that enable the business to sustain earnings growth, as evidenced in the second quarter results. While these natural gas businesses continue to deliver strong results, we are committed to further optimizing their performance, holding the businesses to higher levels of operational excellence. Turning to the global LPG business, at UGI International, we have market-leading positions in select markets with strong brand loyalty, which supports our ability to achieve strong margins through attractive free cash flow generation. Similarly, in the U.S., Amerigas has a market-leading position in retail propane distribution in a highly competitive market.

Filho Mario Longhi: Our midstream and marketing business holds LNG, peaking facilities natural gas and propane storage gathering systems and pipeline assets that enabled the business to sustain earnings growth as evidenced in the second quarter results.

Filho Mario Longhi: While these natural gas businesses continued to deliver strong results. We are committed to further optimizing their performance holding the businesses to higher levels of operational excellence.

Filho Mario Longhi: Turning to the global LPG business.

Filho Mario Longhi: At <unk> International we have market, leading positions and strong brand loyalty select markets, which supports our ability to achieve strong margins and attractive free cash flow generation.

Filho Mario Longhi: Similarly in the U S.

Filho Mario Longhi: I guess as a market leading position in retail propane distribution in a highly competitive market.

Marius: We must run the business differently and better to realize the benefits of that position. And so, shortly, Bob will walk you through the basic approach to accomplish that objective. Moving forward, we will pursue opportunities to streamline our global LPG footprint and create more operational efficiencies. And specifically, at Amerigas, we will share an overview of our plan to turn around that business with the intent to achieve stability and growth, ultimately leading to organic growth and continued investment.

Filho Mario Longhi: We must run the business differently and better to realize the benefits of that position.

Filho Mario Longhi: So sharply Bob will walk you through the basic approach to accomplish that objective.

Robert F. Beard: Moving forward, we will pursue opportunities to streamline our global LPG footprint and create more operational efficiencies and specifically at Amerigas, We will share an overview of our plan to turnaround the business with the intent to achieve stability and growth.

Robert F. Beard: Ultimately through organic growth and continued investment we intend to further shift the portfolio to become a more predominantly the natural gas business in the future.

Marius: We intend to further shift the Portugal view to become more predominantly a natural gas business in the future. And now that takes me to four strategic actions culminating from the review, and these strategic actions are, one, to pursue opportunities to enhance our portfolio and drive reliable earnings growth. 2. Stabilize and Optimize the Marriage Act. 3. Achieve operational efficiency, and four, strengthen the balance sheet. Looking at our foot.

Filho Mario Longhi: And now that takes me to four strategic actions, culminating from their review.

Filho Mario Longhi: And these strategic actions are.

Filho Mario Longhi: One.

Filho Mario Longhi: To pursue opportunities to enhance our portfolio and drive reliable earnings growth.

Filho Mario Longhi: To stabilize and optimize the married yes.

Filho Mario Longhi: Three achieve operational efficiencies and for strength in the balance sheet.

Filho Mario Longhi: Looking at our footprint, we operate in 18 countries and the U S and Europe as well as across several customer segments.

Marius: We operate in 18 countries in the U.S. and Europe, as well as across several customer segments within the portfolio, particularly in the LPG business. We will continue to explore options for the underperforming and less strategic areas or customer segments. As an example, in April, we entered into an agreement to divest our LPG businesses in Switzerland, which services approximately 3,800 customers, and we anticipate receiving net cash proceeds of approximately $27 million.

Filho Mario Longhi: Within the portfolio, particularly in the LPG businesses, we will continue to explore options for the underperforming <unk> strategic areas or customer segments.

Filho Mario Longhi: As an example in April we entered into an agreement to divest of our LPG businesses in Switzerland, which service approximately 3800 customers and we anticipate receiving net cash proceeds of approximately $27 million.

Marius: Next, over the past few months, we have shared our intention to permanently reduce costs and strengthen the balance sheet. We have made clear progress in both areas, as evidenced by a $60 million decline in our year-to-date upgrading expenses, as well as various financing and debt reduction actions taken in the past year. Those efforts will continue, and the team will provide further insight shortly. I will now hand the call to Bob, who was integrally involved in the strategic review. He will take the lead in implementing the action plan to stabilize and optimize America. Thanks Mario, and good morning everyone.

Filho Mario Longhi: Next over the past few months, we have shared our intention to permanently reduce cost and strengthen the balance sheet.

Filho Mario Longhi: We have made clear progress in both areas as evidenced by our $60 million decline in our year to date operating expenses as well as various financing and debt reduction actions taken in the past year.

Filho Mario Longhi: Those efforts will continue and the team will provide further insight shortly.

Filho Mario Longhi: I will now hand, the call to Bob who was integrally involved in the strategic review.

Robert F. Beard: He will take the lead in implementing the <unk> plan to stabilize and optimize amerigas.

Robert F. Beard: Thanks, Mario and good morning, everyone.

Bob: As you are aware, Amerigas has encountered operational challenges over the past several years that have impacted our service standards, resulted in higher customer attrition rates, and placed significant pressure on our debt cover. The strategic review helped us better understand the weaknesses in our operating model. While these challenges are not new, you've heard us discuss several of them over time.

Robert F. Beard: As you are aware amerigas has encountered operational challenges over the past several years that have impacted our service standards.

Robert F. Beard: <unk> and higher customer attrition rates and placed significant pressure on our debt covenants.

Speaker Change: The strategic review helped us better frame the weaknesses in our operating model.

Robert F. Beard: While these challenges are not new and you've heard us discuss several of them over time.

Bob: The strategic review identified a level of detail that was necessary for us to formulate a more comprehensive and effective action plan to address those shortcomings. We gained more clarity on what needs to be done, and we're committed to doing that. Our overall focus will be on improving our performance and customer satisfaction, service reliability, and overall operational efficiency. We are committed to addressing these. To initiate this journey, we have streamlined our operational model, creating a simpler and more focused model that enables us to anticipate and more effectively address the evolving needs of our customers.

Robert F. Beard: The strategic review identified a level of detail that was necessary for us to formulate a more comprehensive and effective action plan to address those shortcomings.

Robert F. Beard: We gained more clarity on what needs to be done and we're committed to doing.

Robert F. Beard: Our overall focus will be on improving our performance and customer satisfaction.

Robert F. Beard: Service reliability and overall operational excellence.

Robert F. Beard: We are committed to addressing these challenges.

Robert F. Beard: To initiate this journey, we have streamlined our operational model.

Robert F. Beard: Creating a simpler and more focused model that enables us to anticipate and more effectively address the evolving needs of our customers.

Bob: While there are many key indicators associated with measuring these continued operational improvements, the ultimate measure of our success will be the financial results of the business. To support this overarching goal, we're actively pursuing efficiency measures to ensure that our cost structure remains aligned with the earnings trajectory of the business. In line with this objective, we have initiated permanent cost reduction measures that do not compromise our operational capability. A number of these actions were completed in late April 2020.

Robert F. Beard: While there are many key indicators associated with measuring these continued operational improvements the ultimate measure of our success will be the financial results of the business.

Robert F. Beard: To support this overarching goal, we're actively pursuing efficiency measures to ensure that our cost structure remains aligned with the earnings trajectory of the business.

Robert F. Beard: In line with this objective we have initiated permanent cost reduction measures that do not compromise our operational capabilities.

Robert F. Beard: A number of these actions were completed in late April 2024.

Bob: Next, as Mario shared, we remain open to opportunities to streamline our footprint and focus on core customer segments. Also of importance, we are working to adjust our capital structure and address Amerigas's balance sheet, which is currently constrained. Sean will speak to the progress we've made and additional actions that will be taken in the near term. Overall, with diligent execution of our new operating strategy and a renewed commitment to our values, we anticipate that Amerigas will begin to see stability in its operating performance and resume being a cash contributor to UGI by fiscal 2026. And now, I'll hand the call over to Sean. Thanks.

Robert F. Beard: Next as Mario shared.

Robert F. Beard: We remain open to opportunities to streamline our footprint and focus on core customer segments.

Robert F. Beard: Also of importance, we are working to adjust our capital structure and address amerigas as balance sheet, which is currently constrained.

Robert F. Beard: Sean will speak to the progress we've made in additional actions that will be taken in the near term.

Robert F. Beard: Overall with diligent execution of our new operating strategy and our renewed commitment to our values.

Robert F. Beard: We anticipate that Amerigas will begin to see stability in its operating performance and.

Sean: And resumed being a cash contributor to UGI by fiscal 2026.

Sean: And now I'll hand, the call over to Sean.

Sean P. OBrien: Thanks, Bob, and good morning. First, I will provide my comments on the performance for the quarter before turning to the midterm outlook for UGI. As Mario mentioned, for the fiscal 2024 second quarter, UGI delivered adjusted diluted EPS of $1.97 in comparison to $1.68 in the prior year period. The utility segment was up six cents, largely due to higher gas rates in both Pennsylvania and West Virginia, as well as higher electric rates that were implemented during the fiscal year. Midstream and marketing was up 25 cents as the business realized higher margins from natural gas marketing activities and the effect of investment tax UGI International was down a penny from lower earnings attributable to the non-core energy marketing business.

Sean: Thanks, Bob and good morning, first I will provide my comments on the performance for the quarter before turning to the mid term outlook for UGI.

Sean: As Mario mentioned for the fiscal 2024 second quarter UTI delivered adjusted diluted EPS of $1 97 in comparison to $1 68 in the prior year period the.

Sean P. OBrien: And this was partially offset by higher LPG unit margins and lower operating and administrative expenses. Amerigas was down 17 cents, predominantly due to higher income taxes resulting from limitations on interest deductibility. Lastly, Corporate Other was up $0.16, where tax benefits were realized, offsetting the effects of the tax headwind faced at America. While there was variability in the segment level tax expense, UGI's annual effective tax rate is expected to be slightly lower than last year. Turning to the next slide.

Sean: The utility segment was up <unk> <unk>, largely due to higher gas rates in both Pennsylvania, and West Virginia, as well as higher electric rates that were implemented during the fiscal year.

Sean: Midstream and marketing was up 25 census, the business realized higher margins from natural gas marketing activities and the effect of investment tax credits uncompleted RMG projects UGI International was down a penny from lower earnings attributable to the non core energy marketing business and this was partially offset by higher LPG.

Sean: Unit margins and lower operating and administrative expenses Amerigas was down 17, predominantly due to higher income taxes, resulting from limitations on interest deductibility.

Sean: Lastly, corporate and other was up 16 were tax benefits were realized offsetting the effects of the tax headwind based at Amerigas.

Sean: While there was variability in the segment level tax expense Ugi's annual effective tax rate is expected to be slightly lower than prior year.

Sean: Turning to the next slide.

Sean P. OBrien: I will now walk you through the key drivers for each reportable segment when compared to the prior year. For the utility segment, EBIT was $226 million for the fiscal second quarter, up $21 million over the prior year period. We saw a modest increase in core market volumes, with weather for the quarter being 5% colder than the prior year. Utilities realized an increase of $25 million in total margins due to higher gas and electric base rates, incremental benefits from the DISC program, as well as continued customer growth. The business continues to expand its customer base and added more than 3000 new residential heating and commercial customers during the quarter.

Speaker Change: I now will walk you through the key drivers for each reportable segment when compared to the prior year.

Speaker Change: At the utility segment EBIT was $226 million for the fiscal second quarter up $21 million over the prior year period we.

Speaker Change: We saw a modest increase in core market volumes with weather for the quarter being 5% colder than the prior year.

Speaker Change: Utilities realized an increase of $25 million in total margins due to higher gas and electric base rates incremental benefits from the disc program as well as continued customer growth.

Speaker Change: The business continues to expand its customer base and added more than 3000, new residential and commercial customers during the quarter.

Sean P. OBrien: Operating and administrative expenses were comparable with the prior year as the lower uncollectible account expense and contract labor costs were largely offset by higher employee benefit expense. There was also increased depreciation and amortization expense due to the continued investment in the distribution system. On a year-to-day basis, we invested roughly $170 million at the regulated utilities, primarily in replacing aging infrastructure. Midstream and Marketing reported EBIT of $153 million, a $48 million increase over the prior year.

Speaker Change: Operating and administrative expenses were comparable with the prior year as the lower uncollectible account expense and contract labor costs were largely offset by higher employee benefit expense.

Speaker Change: There was also increased depreciation and amortization expense with the continued investment in the distribution system.

Sean: On a year to date basis, we invested roughly $170 million at the regulated utilities, primarily in replacing aging infrastructure next midstream and marketing reported EBIT of 153 million a $48 million increase over the prior year.

Sean P. OBrien: Total margin was up $41 million on higher margins from natural gas marketing activities, including the effects of peaking and capacity management margins. Operating and administrative expenses were down $6 million due to lower salary and benefits, as well as maintenance expenses. At UGI International, even with $131 million, up $3 million on a year-over-year basis. However, LPG volumes were comparable to the prior year, as the effect of warmer weather was offset by natural gas to LPG conversions and higher auto gas volumes sold.

Sean: Total margin was up $41 million on higher margins from natural gas marketing activities, including the effects of peaking and capacity management margins.

Sean: Operating and administrative expenses were down $6 million due to lower salary and benefits as well as maintenance expenses.

Sean: At UGI International EBIT was $131 million up $3 million on a year over year basis.

Sean: LPG volumes were comparable to the prior year as the effect of warmer weather was offset by natural gas to LPG conversions and higher auto gas volumes sold.

Sean P. OBrien: Total margin was down $10 million, driven by lower margin as we exit the non-core energy marketing business. This was partially offset by higher LBG unit margins and the translation effect of stronger foreign currencies amounting to approximately $5 million. Operating administrative expenses were down $16 million due to lower personnel and maintenance costs, partially offset by the translation effects of the stronger foreign currency. Lastly, at AmeriGas, EBIT was comparable with the prior year as reductions in total margin were all set by reduced operating and administrative expense. For the quarter, we saw warmer weather, which when coupled with customer loss led to a 6% reduction in retail volumes over the prior year.

Sean: Total margin was down $10 million driven by lower market as we exit the non core energy marketing business.

Sean: This was partially offset by higher LPG unit margins and the translation effect of stronger foreign currencies amounting to approximately $5 million.

Sean: Operating and administrative expenses were down $16 million due to lower personnel and maintenance costs, partially offset by the translation effects of the stronger foreign currencies.

Sean: Lastly at Amerigas.

Sean: EBIT was comparable with prior year as reductions in total margins were offset by reduced operating and administrative expenses for.

Sean: For the quarter, we saw warmer weather, which when coupled with customer loss led to a 6% reduction in retail volumes over the prior year.

Sean P. OBrien: There was a modest increase in silver exchange volumes and a slight reduction in national accounts, with lower usage in the railroad customer segment. The effects of lower volumes were partially offset by higher LPG unit margins, leading to a $4 million reduction in total margin when compared to the prior year. Operating and administrative expenses were down $5 million, reflecting, among other things, lower compensation and advertising expenses, partially offset by higher vehicle costs. Moving to liquidity.

Sean: There was a modest increase in cylinder exchange volumes and a slight reduction in national accounts with lower usage in the railroad customer segment the.

Sean: The effects of lower volumes were partially offset by higher LPG unit markets, leading to a $4 million reduction in total market when compared to the prior year.

Sean: Operating and administrative expenses were down $5 million, reflecting among other things lower compensation and advertising expenses, partially offset by higher vehicle expenses.

Sean P. OBrien: At the end of the quarter, UGI had available liquidity of $1.7 billion, inclusive of cash and cash equivalents and available borrowing capacity on our revolving credit facility. During the quarter, we executed $38 million of open market bond repurchases at Amerigas, and the business ended the period with approximately $100 million of cash on hand. Since the beginning of fiscal 2023, we have reduced absolute debt at Amerigas by approximately $340 million, executing on our objective to strengthen and provide more buffer on the credit.

Sean: Moving to liquidity at the end of the quarter UGI had available liquidity of $1 7 billion inclusive of cash and cash equivalents and available borrowing capacity on our revolving credit facilities.

Sean: During the quarter, we executed $38 million of open market bond repurchases at Amerigas and the business ended the period with approximately $100 billion of cash on hand.

Sean: Since the beginning of fiscal 2023, we have reduced absolute debt at amerigas by approximately $340 million.

Sean: Executing on our objective to strengthen and provide more buffer on the credit metrics.

Sean P. OBrien: During the back half of fiscal 2024, our goal was to reduce debt by another $350 to $450 million using both free cash flow generated from Amerigas and between $200 to $300 million of parental contributions. As Bob mentioned, he is spearheading the action to stabilize and optimize America. To support those actions, we will pursue options to address the revolver that, while undrawn, has restrictive debt covenants. This will enable the business to work through the planned operational improvements without quarterly covenant compliance pressure.

Sean: During the back half of fiscal 2024, our goal is to reduce debt by another $350 million to $450 million using both free cash flow generated from amerigas and between $2 billion to $300 billion of parental contribution.

Sean: As Bob mentioned, he is spearheading the action to stabilize and optimize amerigas to support those actions, we will pursue options to address the revolver debt. While undrawn has restrictive debt covenants. This will enable the business to work through the planned operational improvements without quarterly covenant compliance pressures.

Sean P. OBrien: As I pivot to our outlook, let me briefly remind you of our core financial objectives that Mario shared at the beginning. Our objectives are to improve the earnings quality of our business and deliver reliable earnings growth, strengthen the balance sheet, and be disciplined in how we allocate capital, which will facilitate sustainable shareholder value creation, starting with our fiscal 2024 guidance. For the fiscal year to date, UGI has delivered $3.16 of adjusted EPS, led by increased margins from natural gas marketing activities in the US, higher base rates at the regulated utilities, increased LPG volumes and EU margins at UGI International, and lower operating and administrative expenses across the enterprise. However, these benefits were partially offset by the effects of warmer weather in the LPG businesses and reduced total margins at Amerigas propane.

Sean: As I pivot to our outlook, let me briefly remind you of our core financial objectives that Mario shared at the offset.

Sean: Our objectives are to improve the earnings quality of our business and deliver reliable earnings growth strengthened the balance sheet and be disciplined in how we allocate capital, which will facilitate sustainable shareholder value creation.

Sean: Starting with our fiscal 2020 for guidance.

Sean: For the fiscal year to date UGI has delivered $3 16 of adjusted EPS.

Sean: Brian increased margins from natural gas marketing activities in the U S.

Sean: Higher base rates at the regulated utilities increased LPG volumes in year margins at UGI International and lower operating and administrative expenses across the enterprise.

Sean: These benefits were partially offset by the effects of warmer weather and the LPG businesses and reduce total margins at Amerigas propane.

Sean P. OBrien: We are pleased with the strong start to the year. Based on the cyclical nature of the business and our earnings projection for the back half of the year, we are holding our fiscal 2024 adjusted EPS guidance range of $2.70 to $3. Now, this slide summarizes several financial targets between fiscal 2024 and fiscal 2027. Over that period, we are targeting a four to six percent EPS growth rate. Fiscal 2025 and 2026 will be rebuilding years, where we continue to execute a strategy that was previously outlawed.

Sean: We are pleased with the strong start to the year based on the cyclical nature of the business and our earnings projection for the back half of the year. We are holding our fiscal 2024, adjusted EPS guidance range of $2 70 to $3.

Sean: Now this slide summarizes several financial targets between fiscal 2024, and 2027% over that period, we are targeting a 4% to 6% EPS growth rate.

Sean: Fiscal 2025, and 2026, we'll be we're building years, where we continue to execute a strategy that was previously outlined.

Sean P. OBrien: We anticipate investing capital of approximately $3.9 billion across UGI during that period. A primary driver of the targeted EPS growth is our planned investment of approximately $2.6 billion at the regulated utilities, which will facilitate 9% plus rate-based growth, as well as organic growth throughout the remaining portfolio. As I'll address shortly, the outlook does not include incremental debt, and we anticipate that UGI will achieve its targeted leverage ratio during the planned period.

Sean: We anticipate investing capital of approximately $3 9 billion across UGI during that period, a primary driver of the targeted EPS growth as our planned investment of approximately $2 6 billion at the regulated utilities, which will facilitate 9% plus rate base growth as well as organic growth throughout the remaining portfolio.

Sean: <unk>.

Sean: As I will address shortly the outlook does not include incremental debt when we anticipate the UGI will achieve its targeted leverage ratio during the plan period.

Sean P. OBrien: As we shared previously, our team is focused on increasing efficiencies and lowering our operating costs. We are on track to deliver the targeted permanent cost savings of $70 to $100 million by the end of fiscal 2025, using fiscal 2023 as the base year. We have a line of sight into the labor and non-labor actions required to achieve these targets. We've already executed on actions that are intended to deliver the savings projected for fiscal 2024. On a fiscal year-to-date basis, these measures have already contributed to a $16 million reduction in total OPEX when compared to the prior year.

Sean: As we shared previously our team is focused on increasing efficiencies and lowering our operating cost. We are on track to deliver the targeted permanent cost savings of $70 million to $100 million by the end of fiscal 2020 Fi using fiscal 2023 is the base year.

Sean: We have line of sight into the labor and non labor actions required to achieve these targets and we've already executed on actions that are intended to deliver the savings projected for fiscal 2024.

Sean: On a fiscal year to date basis. These measures have already contributed to the $16 million reduction in total opex when compared to the prior year.

Sean P. OBrien: Turning to capital allocation, we will continue to apply a disciplined framework where we prioritize returns to shareholders, actions that will strengthen the balance sheet and improve financial flexibility and invest in areas with the highest potential returns to our shareholders, which will also benefit our customers. On the next two slides, I'll comment on our outlook through to fiscal 2027 as we adhere to this framework. UGI has a long track record of paying dividends.

Sean: Turning to capital allocation, we will continue to apply a disciplined framework, where we prioritize returns to shareholders actions that will strengthen the balance sheet and improved financial flexibility and invest in areas with the highest potential returns to our shareholders, which will also benefit our customers on the next two slides.

Sean: Ill comment on our outlook through to fiscal 2027, as we adhered to this framework.

Sean P. OBrien: As we balance our priorities over the next two years, we remain committed to preserving that history. Between fiscal 2024 and 2026, as we focus on strengthening the balance sheet and stabilizing Amerigas, we expect that dividends will stay flat, while Law still achieves a payout ratio close to 50%.

Sean: UGI has a long track record of paying dividends as we balance our priorities over the next two years, we remain committed to preserving that history.

Sean: <unk> fiscal 2024, and 2026 as we focus on strengthening the balance sheet and stabilizing Amerigas, we expect that dividends will stay flat.

Sean: While still achieving a payout ratio of close to 50%.

Sean P. OBrien: Now, as we move to fiscal 2027, we anticipate returning to our targeted 4% dividend growth rate over the long term. Slide 21 walks you through our targeted cash deployment plan for fiscal 2024 through to 27, which aligns with the priorities that we shared previously. The plan will be fully funded by cash flow from operations as we do not anticipate any additional equity, while reducing absolute debt for UGI. In addition, of the roughly $3.9 billion in capital expenditures, approximately 85% will be invested in our natural gas businesses, predominantly in our regulated utilities, where we have ample opportunities to deploy growth capital.

Sean: Now as we move to fiscal 2027, we anticipate returning to our targeted 4% dividend growth rate over the long term.

Sean: Slide 21 walks you through our targeted cash deployment plan for fiscal 2024 through to 2007, which aligns with the priorities that we shared previously.

Sean: The plan will be fully funded by cash flow from operations as we do not anticipate any additional equity needs, while reducing absolute debt for UGI. In addition of.

Sean: Of the roughly $3 9 billion and capital expenditures approximately 85% will be invested in our natural gas businesses predominantly in our regulated utilities, where we have ample opportunities to deploy growth capital and with that I'll hand, the call back over to Mary.

Mary: And with that, I'll hand the call back over to Mary.

Mary: Thanks, Sean.

Mary: As I close, I want to emphasize our conviction that the diligent execution of the fundamentals will enable UGI to build a strong momentum of balanced growth and value creation. We have embarked on that journey and are taking the necessary actions to achieve the financial commitments that we have outlined. We have the financial capacity to maintain investments in the natural gas businesses, particularly in the regulated utilities, which are expected to deliver 9% plus in rate-based growth.

Mary: As I close I want to emphasize our conviction that diligent execution of the fundamentals will enable UGI to build a strong momentum of balanced growth and value creation.

Mary: We have embarked on that journey and are taking the necessary actions to achieve the financial commitments that we have outlined.

Mary: We have the financial capacity to maintain investments in the natural gas businesses, particularly in the regulated utilities, which are expected to deliver 9% plus in rate base growth.

Mary: These businesses provide strong return and benefit from the free cash flow generating LPG businesses.

Mary: With this model between fiscal 2024, and 2027, we will target a 4% to 6% EPS growth rate in.

Mary: And leverage ratio between three five to four times.

Mary: We will also preserve our commitment to the dividend, which has been synonymous with our brand over the past 140 years, keeping the amount flat through fiscal 2026.

Mary: The intent is to return to a long term dividend growth rate of 4% in fiscal 2027.

Mary: These businesses provide strong returns and benefit from the free cash flow-generating LPG business. With this model, between fiscal 2024 and 2027, we will target a 4 to 6% EPS growth rate and a leverage ratio between 3.5 to 4%. We will also preserve our commitment to dividends, which has been synonymous with our brand over the past 140 years, keeping the amount flat through fiscal 2026. Our intent is to return to a long-term dividend growth rate of 4% in fiscal 2026. I thank you for your continued interest and support of UGI. And I'll now turn the call back to our operator to open the line for questions. Thank you.

Mary: These businesses provide strong returns and benefit from the free cash flow-generating LPG business. With this model, between fiscal 2024 and 2027, we will target a 4 to 6% EPS growth rate and a leverage ratio between 3.5 to 4 times. We will also preserve our commitment to dividends, which has been synonymous with our brand over the past 140 years, keeping the amount flat through fiscal 2026. Our intent is to return to a long-term dividend growth rate of 4% in fiscal 2026. I thank you for your continued interest and support of UGI. And I'll now turn the call back to our operator to open the line for questions. Thank you.

Speaker Change: Thank you for your continued interest and support of UGI.

Speaker Change: I'll now turn the call back to our operator to open the line for questions.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press Star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 1 1 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Christopher Jeffrey of Mizuho Securities. Your line is now open.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Christopher Jeffrey of Mizuho Securities. Your line is now open.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Christopher Jaffray.

Christopher Francis Jeffrey: <unk> Securities. Your line is now open.

Christopher Francis Jeffrey: Hi everyone. Good morning.

Christopher Francis Jeffrey: Hi, everyone. Good morning Nathan.

Christopher Francis Jeffrey: Maybe just starting with the <unk>.

Christopher Francis Jeffrey: Maybe just starting with the, you know, around 400 million in debt reduction at Amerigas. Just kind of curious what the approach will be to accomplishing that. How much is involved with, you know, internally generated cash flows at Amerigas versus doing something more? External, you know, intervention.

unknown: Maybe just starting with the, you know, around 400 million in debt reduction at Amerigas. Just kind of curious what the approach will be to accomplishing that. How much is involved with, you know, internally generated cash flows at Amerigas versus doing something more? External, you know, intervention.

Christopher Francis Jeffrey: Around $400 million of debt reduction at the Amerigas.

Christopher Francis Jeffrey: Just kind of curious what the approach will be to accomplishing that.

Christopher Francis Jeffrey: How much of the loan with <unk>.

Christopher Francis Jeffrey: Internally generated cash flows at amerigas versus doing something more.

Christopher Francis Jeffrey: This journal.

Christopher Francis Jeffrey: Intervention.

Sean P. OBrien: Good morning, Chris. This is Sean. I can hit that.

Sean: Good morning, Chris. This is Sean. I can hit that.

Christopher Francis Jeffrey: Yes. Good morning, Chris This is Sean I can hit that.

Sean P. OBrien: Maybe I'll take you back historically. We took about 300 million out last year. Amerigas contributed, you know, somewhere around 20-30 million of that last year. As we look at this year, First and foremost, we were able to take almost 40 million out through the OMR, you know, repurchases that we did in Q3. That was all with Amerigas cash. So that 40 million came from Amerigas. As we look to the back half of the year and our goal to continue to improve the balance sheet, we see Amerigas cash providing maybe another $150 million of debt reduction, and then another maybe $200 to $300 from Corp. And that should get you to that total that we're looking for.

Sean: Maybe I'll take you back historically. We took about 300 million out last year. Amerigas contributed, you know, somewhere around 20-30 million of that last year. As we look at this year, First and foremost, we were able to take almost 40 million out through the OMR, you know, repurchases that we did in Q3. That was all with Amerigas cash. So that 40 million came from Amerigas. As we look to the back half of the year and our goal to continue to improve the balance sheet, we see Amerigas cash providing maybe another $150 million of debt reduction, and then another maybe $200 to $300 from Corp. And that should get you to that total that we're looking for.

Sean: Maybe I'll take you back historically, we took about 300 million out last year <unk>.

Sean: Amerigas contributed somewhere around $20 million to $30 million of that last year as we look at this year.

Sean: First and foremost we were able to take almost 40 million out through the <unk>.

Sean: Repurchases that we did in Q3 that was all with Amerigas cash at that $40 million came from Amerigas.

Sean: As we look to the back half of the year and our goal to continue to improve the balance sheet, we see amerigas.

Sean: Cash, providing maybe another $150 million of debt reduction so and then another maybe two to 300 for Corp, and that should get you to that total that we're looking for one thing to keep in mind.

Sean: As we achieve all this we will have taken over $700 million of amerigas debt off the balance sheet. So we're pretty proud of that but directly to answer your question Youre looking at about $200 million coming from Amerigas cash and another 200 or so coming from.

Sean P. OBrien: One thing to keep in mind, as we achieve all this, we'll have taken over $700 million of Amerigas debt off the balance sheet, so we're pretty proud of that. But directly to answer your question, you're looking at about $200 million coming from Amerigas cash and another $200 or so coming from a corporate injection.

Sean: One thing to keep in mind, as we achieve all this, we'll have taken over $700 million of Amerigas debt off the balance sheet, so we're pretty proud of that. But directly to answer your question, you're looking at about $200 million coming from Amerigas cash and another $200 or so coming from a corporate injection.

Sean: Corporate injection.

Sean P. OBrien: Got it. And maybe just to clarify that coming from support, is that just cash on hand? Or would that be involved with the asset sales that you've mentioned? Or? Yeah, all of the above.

Sean: Got it. And maybe just to clarify that coming from support, is that just cash on hand? Or would that be involved with the asset sales that you've mentioned? Or? Yeah, all of the above.

Speaker Change: Got it and maybe just.

Speaker Change: By that comment.

Sean: For the quarter.

Sean: Is that just cash on hand.

Sean: Be involved with the asset sales that you've mentioned.

Sean: All and all of the above so so.

Sean P. OBrien: All the above. But, you know, we're also optimizing the structure. Obviously, that cash can be more optimally raised or utilized from corporate fungibility. But we also, you know, as Mario mentioned, we had a $27 million asset sale. I think if you listen to the remarks that Mario made, you know, we're continuing to look at the portfolio and opportunities to generate cash through some potential asset sales. So all of the above, and the good news is we've already executed on almost $30 million of asset sales that will contribute to that cash coming down.

Sean: All of the above. So, obviously, we're also optimizing the structure so that cash can be more optimally raised or utilized from corporate fungibility. But we also, as Mario mentioned, we had a $27 million asset sale. I think if you listen to the remarks that Mario made, you know, we're continuing to look at the portfolio and opportunities to generate cash through some potential asset sales. So all of the above. And the good news is we've already executed on almost $30 million of an asset sale that will contribute to that cash coming down.

Sean: We're also optimizing the structure, obviously that cash can be more optimally.

Sean: Raised or utilized from corporate Fungibility, but we also as Barry mentioned, we had a $27 million asset sale.

Sean: I think if you listen to the remarks that.

Sean: <unk> made.

Sean: We're continuing to look at the portfolio and opportunities to generate cash through some potential asset sales. So all of the above and the good news is we've already executed on almost $30 million of an asset sale.

Sean: That will contribute to that cash coming down.

Sean P. OBrien: Got it. Great. And then maybe just last one on this, as far as options to kind of adjust the revolver at Amerigas, as you mentioned, any early insights into that?

Sean: Got it. Great. And then maybe just last one on this, as far as options to kind of adjust the revolver at Amerigas, as you mentioned, any early insights into that?

Speaker Change: Got it great.

Speaker Change: And then maybe just last one on this as far as the options too.

Speaker Change: Kind of adjust the revolver at Amerigas as you mentioned.

Speaker Change: Early insights into that.

Sean P. OBrien: Yeah, I think a couple things. You heard Bob and Mario lay out a plan to stabilize and optimize Amerigas. We want to be able to buy some time, so we are looking pretty heavily at replacing the revolver with another instrument that does not have a quarterly covenant that puts us under that quarterly pressure. That gives us some time as we work through this turnaround and gives us time to basically execute on the things we want to without having that quarterly pressure on Amerigas and, probably more importantly, on corporate as well. So we have started down that path. We have some strategies that we've been working on for a little while, and, you know, we'll give you a hint, but I'm hopeful that we can be successful.

Sean: Yeah, I think a couple things. You heard Bob and Mario lay out a plan to stabilize and optimize Amerigas. We want to be able to buy some time, so we are looking pretty heavily at replacing the revolver with another instrument that does not have a quarterly covenant that puts us under that quarterly pressure. That gives us some time as we work through this turnaround and gives us time to basically execute on the things we want to without having that quarterly pressure on Amerigas and, probably more importantly, on corporate as well. So we have started down that path. We have some strategies that we've been working on for a little while, and, you know, we'll give you a hint, but I'm hopeful that we can be successful.

Speaker Change: Yeah, I think a couple of things you heard Bob and Mary I'll lay out a plan to get.

Speaker Change: To stabilize and optimize amerigas, we want to be able to buy some time. So we are looking pretty heavily at removing.

Speaker Change: Replacing the revolver with another instrument that does not have a quarterly covenant that puts us under that quarterly pressure that gives us some time as we work through this turnaround and gives us time to basically execute on the things we want to without having that quarterly pressure on amerigas and probably more importantly.

Speaker Change: On corporate as well so we have started down that path. We have some strategies that we've been working on for a little while and we will keep you abreast, but I'm hopeful that we can be successful.

Sean P. OBrien: Thank you, John. And if I just squeeze one last one, just a four to six growth rate. Should we be thinking about that as, you know, kind of a laggard from 24 to 27? Are you looking at like kind of a midpoint of guidance, anything in particular as far as base?

Sean: Thank you, John. And if I just squeeze one last one, just a four to six growth rate. Should we be thinking about that as, you know, kind of a laggard from 24 to 27? Are you looking at like kind of a midpoint of guidance, anything in particular as far as base?

Speaker Change: Okay.

Speaker Change: One last one just before that.

Speaker Change: The growth rate should we be thinking about that as well.

Speaker Change: Kind of a CAGR from 2004 to 2007.

Speaker Change: Are you looking at like kind of midpoint of guidance anything in particular as far as base.

Sean P. OBrien: Yeah, I think it's a yes to most of that. I mean, it is a 24 to 27, Chris.

Sean: Yeah, I think it's a yes to most of that. I mean, it is a 24 to 27, Chris.

Speaker Change: Yes, I think it's yes to most of that I mean, it is a 24 to 27, Chris I think the way to think about that four to six is we're in a period.

Sean P. OBrien: I think the way to think about that four to six is, you know, we're in a period of balance sheet repair. We're in a period of, you know, being very disciplined with capital. So, you know, that's why that range came down a little bit, I think from historical for the company, but it is that period where we feel comfortable, you know, on one side of the fence, we have businesses growing quite a bit. We've got 9% rate base growth, you know, you've got NatGas performing really well. So we do think of it as, you know, kind of we've got a midpoint in there, but it is 24 to 27.

Sean: I think the way to think about that four to six is, you know, we're in a period of balance sheet repair. We're in a period of, you know, being very disciplined with capital. So, you know, that's why that range came down a little bit, I think from historical for the company, but it is that period where we feel comfortable, you know, on one side of the fence, we have businesses growing quite a bit. We've got 9% rate base growth, you know, you've got NatGas performing really well. So we do think of it as, you know, kind of we've got a midpoint in there, but it is 24 to 27.

Speaker Change: <unk> balance sheet repair, we're in a period of being very disciplined with capital. So that's why that that range came down a little bit I think from historical for the company, but it is that period.

Speaker Change: We feel comfortable.

Speaker Change: One side of the fence, we have business is growing quite a bit you've got 9% rate base growth you got Nat gas performing really well. So we do think of it as a.

Speaker Change: We've got a midpoint in there, but it is 24 to 27.

Sean P. OBrien: Great, thank you and congratulations on the announcement and for all the help throughout the process.

Sean: Great, thank you and congratulations on the announcement and for all the help throughout the process.

Speaker Change: Great. Thank you and congratulations on the announcement.

Speaker Change: While the help throughout the process.

Speaker Change: Okay.

Operator: All right, thank you for your question. Again, as a reminder, to ask a question, you will need to press Star 1-1 on your telephone. One moment for our next question. Our next question comes from the line of Paul Fremont of Leidenberg. Your line is now open.

Operator: All right, thank you for your question. Again, as a reminder, to ask a question, you will need to press star one one on your telephone. One moment for our next question. Our next question comes from the line of Paul Fremont of Leidenberg. Your line is now open.

Speaker Change: Alright. Thank you for your question again as a reminder to ask a question you will need to press star one on your telephone.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from the line of Paul Fremont scope of Ladenburg. Your line is now open.

Paul Fremont: Thank you very much. I guess my question relates to the midstream and marketing. So if total margin is up 41 and marketing is 46, can you just walk us through what would be the sort of the chart would look like if it was just midstream? What the sort of comparator would look like.

Paul Fremont: Thank you very much I guess my question relates to the midstream and marketing so.

Paul Fremont: Total margin is up 41 and marketing. Its 46 can you just walk us through what would be sort of the what the chart would look like if it was just midstream and.

Paul Fremont: What the sort of comparator would look like.

Sean P. OBrien: Yeah, Paul, this is Sean. A couple of things. I think you're looking at a big increase. The drivers, the biggest driver, I think, as we tried to elude, are capacity values on our, you know, we've got basis differentials on the gas pipelines that we contract, and, you know, we saw some pretty good spreads on the basis, so we were able to take advantage of those contracts, those capacity contracts, and that drove a significant portion of the value.

Sean: Yeah, Paul, this is Sean. A couple of things. I think you're looking at a big increase. The drivers, the biggest driver, I think, as we tried to elude, are capacity values on our, you know, we've got basis differentials on the gas pipelines that we contract, and, you know, we saw some pretty good spreads on the basis, so we were able to take advantage of those contracts, those capacity contracts, and that drove a significant portion of the value.

Paul Fremont: Yes, Paul this is Sean.

Sean: A couple of things I think youre looking at a big increase the drivers.

Sean: The biggest driver I think as we tried to allude to is capacity values on our we got basis differentials on the gas pipelines that we contract and we saw some pretty good spreads on the basis. So we were able to take advantage of those contracts as capacity contracts and that drove a significant portion of the value.

Speaker Change: I think the other piece to consider is we have a storage business. If you look at this year that storage business.

Sean P. OBrien: I think the other piece to consider is we have a storage business. If you look at this year, that storage business was in the black, you know, and last year, based on the timing of the contracts, we lost money. So that's one of the bigger drivers as well. You had a loss sitting in 23 and you had, you know, a modest earnings this year.

Sean: I think the other piece to consider is we have a storage business. If you look at this year, that storage business was in the black, you know, and last year, based on the timing of the contracts, we lost money. So that's one of the bigger drivers as well. You had a loss sitting in 23 and you had, you know, a modest earnings this year.

Sean P. OBrien: Those are the two biggest drivers of that $48 million. You know, I know you didn't ask about it, but the other highlight would be that OPEX across the company is down. There's a pretty big focus on that, and the midstream business contributed to that goal as well. So hopefully that answers your question, but those are the drivers of what is happening in the energy services business.

Paul Fremont: Those are the two biggest drivers of that $48 million. You know, I know you didn't ask about it, but the other highlight would be that OPEX across the company is down. There's a pretty big focus on that, and the midstream business contributed to that goal as well. So hopefully that answers your question, but those are the drivers of what is happening in the energy services business.

Sean: In the black.

Sean: And last year based on the timing of the contracts we lost money. So that's one of the bigger drivers as well you had a loss sitting in 'twenty three and you had a modest.

Sean: Earnings this year those are the two biggest drivers of that $48 million.

Sean: I know you didn't ask about it but the other the other highlight would be the opex across the company, we see operating cost coming down there is a pretty big focus on that and the midstream business contributed.

Sean: To that goal as well so hopefully that answers your question, but those are the drivers of what was happening in the energy services business.

Sean P. OBrien: Okay, I guess I'm still not understanding. So was midstream up quarter over quarter over quarter by itself if you exclude marketing from the picture?

Sean: Okay, I guess I'm still not, I'm still not understanding. So, was Midstream up quarter over quarter by itself, if you exclude marketing from the picture?

Speaker Change: Okay, I guess im still on.

Sean: I'll, let understanding so with midstream up quarter over quarter over quarter.

Sean: <unk> itself, if you exclude marketing from the picture.

Sean: Yes.

Sean P. OBrien: If you exclude marketing from the picture, midstream was up quarter over quarter.

Sean: If you exclude marketing from the picture, midstream was up quarter over quarter.

Sean: If you exclude marketing from the picture midstream was up quarter over quarter, yes.

Paul Fremont: And by how much?

Sean P. OBrien: And by how much?

Sean: And by how much.

Sean P. OBrien: It's going to be as much, the majority of the gain was on the marketing side of the equation, so it's going to be less than $10 million.

Sean: It's going to be as much, the majority of the gain was on the marketing side of the equation, so it's going to be less than $10 million.

Sean: It's going to be a much is the majority of the gain was the marketing side of the equation, so it's going to be less than $10 billion.

Paul Fremont: Okay, and then I guess one of your peers seems to have experienced a significant uplift in storage margins during the quarter. Did you experience any significant changes in storage margins?

Speaker Change: Okay, and then I guess one of your peers.

Sean: Seem to.

Sean: Experience, a significant uplift and storage.

Sean: Margins during the quarter.

Sean: Did you experience any significant changes in storage margins.

Sean P. OBrien: As I mentioned, we were positive we saw some gains in storage. I wouldn't call them outsized gains, but the big delta in the storage business was the fact that we had losses last year. So a solid quarter from a storage perspective, but I wouldn't say it was outsized.

Sean: As I mentioned, we were positive we saw some gains in storage. I wouldn't call them outsized gains, but the big delta in the storage business was the fact that we had losses last year. So a solid quarter from a storage perspective, but I wouldn't say it was outsized.

Sean: No as I mentioned, we were positive we saw some gains in storage I wouldn't call them outsized gains, but the big Delta on the storage business was the fact that we had losses last year, so a solid quarter from a storage perspective, but I wouldn't say it was outsized gains.

Paul Fremont: And then I guess my last question, with sort of very strong rate-based growth and sort of the time that it's going to take you to sort of focus on balance sheet repair, have you considered, you know, the possibility of issuing equity? Essentially rebasing and doing the balance sheet repair up front as opposed to doing it sort of over time.

Paul Fremont: And then I guess my last question, with sort of very strong rate-based growth and sort of the time that it's going to take you to sort of focus on balance sheet repair. Have you considered, you know, the possibility of issuing equity? Essentially rebasing and doing the balance sheet repair up front as opposed to doing it sort of over time.

Sean: And then I guess last question with sort of a very strong rate base growth and sort of.

Sean: The time that it's going to take you to sort of focus on balance sheet repair.

Sean: Have you considered the possibility of issuing equity.

Sean: Essentially re basing.

Sean: And doing the balance sheet repair upfront as opposed to doing it sort of over time.

Sean P. OBrien: Yeah, we've considered, you know, many, many scenarios. Paul, I think at this moment, in our written remarks, I believe we mentioned that equity, we don't have equity in the equation currently. You know, but we are definitely taking a lot of steps to improve the balance sheet, we're doing a lot of cost reductions, we're being very careful on where we're going to deploy capital. You know, we did announce that we're going to hold the growth on the dividend flat.

Speaker Change: Yes, we have considered.

Sean: Yeah, we've considered, you know, many, many scenarios. Paul, I think at this moment, in our written remarks, I believe we mentioned that equity, we don't have equity in the equation currently. You know, but we are definitely taking a lot of steps to improve the balance sheet, we're doing a lot of cost reductions, we're being very careful on where we're going to deploy capital. You know, we did announce that we're going to hold the growth on the dividend flat.

Speaker Change: Many many scenarios Paul I think at the moment.

Sean: In our written remarks, I believe we've mentioned that equity we don't have equity in the equation currently.

Sean: But we are we are definitely taking a lot of steps to improve the balance sheet. We're doing a lot of cost reductions, we're being very careful on where we're going to deploy capital.

Sean: We did announce that we're going to hold the growth on the dividend flat. So we're doing all and lastly, we're looking at some portfolio optimization to generate cash. So those are the avenues, we are using to not put debt on improve the balance sheet at the moment.

Sean P. OBrien: So we're doing all of these things, and lastly, we're looking at some portfolio optimization to generate cash. So those are the avenues we're using to not put debt on the balance sheet at the moment. Right now, we do not have equity in the equation.

Sean: So we're doing all of these things, and lastly, we're looking at some portfolio optimization to generate cash. So those are the avenues we're using to not put debt on the balance sheet at the moment. Right now, we do not have equity in the equation.

Sean: Right now we do not have equity in the equation.

Paul Fremont: Great, thank you very much. All right, thank you.

Paul Fremont: Great, thank you very much. Thanks. All right, thank you.

Speaker Change: Great. Thank you very much.

Speaker Change: Thanks.

Filho Mario Longhi: Alright, thank you. I am showing no further questions at this time. I would now like to turn it back to Mario Longhi for closing remarks.

Speaker Change: Alright, thank you.

Speaker Change: Showing no further questions at this time I would now like to turn it back tomorrow longing for closing remarks.

Filho Mario Longhi: I want to thank everyone for taking the time to participate with us on this call, and we look forward to the next conversation we're going to have. So, wish everyone a good day.

Filho Mario Longhi: I want to thank everyone for taking the time to participate with us on this call. And we look forward to the next conversation we're going to have. So, wish everyone a good day.

Speaker Change: I want to thank everyone for taking the time to participate with us in this call.

Tomorrow: We look forward to the next conversation, we're going to have so I wish everyone. A good day.

Speaker Change: Alright.

Operator: This concludes the program, so thank you for your participation in today's conference. You may now disconnect.

Speaker Change: This concludes the.

Speaker Change: Program. So thank you for your participation in today's conference you may now disconnect.

Speaker Change: Goodbye.

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Speaker Change: Okay.

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Operator: [music].

Q2 2024 UGI Corp Earnings Call

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