Q1 2025 UGI Corp Earnings Call

February 6, 2025

Robert Flexon: The Utility. Also, at UGI Utilities, our commitment to service excellence led to the company being recognized as a Cogent 2024 Utility Customer Champion. This prestigious award validates our customer centric approach and places us among the top performers in customer satisfaction across the utility sector. In our midstream and marketing segment, we have substantially completed several RNG facilities where gas will be delivered into local markets. The project has been completed on time and on budget and are good additions to our business. providing immediate returns to investment tax credit. Also in the midstream and marketing segment as part of our joint venture in the Pine Run Gathering System.

Both of them at UGI utilities, our commitment to service excellence.

Led to the company being recognized as a co Gen 2024 utility customer champion.

This prestigious award validates our customer centric approach and places us among the top performers and customer satisfaction across the utility sector.

In our midstream and marketing segment, we had substantially completed several RMG facility, where gas will be delivered into local markets.

The projects have been completed on time and on budget and are good additions to our business providing immediate returns from investment tax credits.

Also in the midstream and marketing segment as part of our joint venture in the pipeline gathering system.

Robert Flexon: We acquired Superior Appalachian, which owns and operates three gathering systems in Pennsylvania. These systems are attractive with long term acreage dedications, and the largest is connected to one of UGI Energy Services gathering systems. which should enhance future synergy. The transaction, which was valued at $120 million, was fully funded by debt at Pine Run, which now has a debt-to-equity ratio of approximately 49%. Lastly, the transaction will be monthly accretive to earnings in the first year of operation.

We acquired superior Appalachian, which owns and operates three gathering systems in Pennsylvania.

These systems are attractive with long term acreage dedications and the largest is connected to one of UGI energy services gathering systems.

Which should enhance future synergies.

The transaction, which was valued at $120 million was fully funded by debt at Pine run, which now is the delta equity ratio of approximately 49%.

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

Robert Flexon: Next, last week we filed a gas base rate case with the Pennsylvania Public Utility Commission for EGI Utilities, requesting an overall distribution rate increase of approximately $110 million. This rape case supports over $750 million of investment. that will be made to improve the natural gas distribution system facilities and technology to promote safety and reliability.

Next last week, we filed a gas base rate case, with the Pennsylvania Public utility Commission for UGI utilities.

Requesting an overall distribution rate increase of approximately $110 million.

This rate case supports over $750 million of investments.

That will be made to improve the natural gas distribution system facilities and technology to promote safety and reliability.

Robert Flexon: Next, I'd like to provide an update on our fiscal 2025 priorities that will drive future performance. As mentioned on the Q4 earnings call, we are strengthening our foundation through renewed focus on our people and culture to create a mindset that encourages breakthrough thinking. added to that is providing the tools and training for employees to translate the breakthrough thinking to breakthrough performance. I firmly believe that this will drive significant and sustainable improvement, which translates stronger business performance and financial results.

Next I'd like to provide an update on our fiscal 2025 priorities that will drive future performance.

As mentioned on the Q4 earnings call. We are strengthening our foundation through renewed focus on our people and culture to create a mindset that encourages breakthrough thinking.

Added to that is providing the tools and training for employees to translate the breakthrough thinking to breakthrough performance.

I firmly believe that this will drive significant and sustainable improvement, which translate to stronger business performance and financial results.

Robert Flexon: At Amerigas, we must significantly enhance our business process. Commercial Practices and Service Quality. At the end of calendar 2024, Mike Sharp came on board as president of Amerigas, and having worked closely with Mike before, I have seen firsthand his ability to drive organizational transformation and operational excellence. In his first month, Mike has revised and is implementing his new organizational structure to better align with the needs of the business. Strengthen the Commercial Practices. Streamlined Decision-Making. and improve accountability to create an improved customer experience. Working with his leadership team, Mike has developed a roadmap focusing on five key pillars designed to elevate the customer experience, address the inefficiencies within our process, Optimize Amerigas supply chain and logistics network and strengthen its financial performance.

At Amerigas, we must significantly enhanced our business processes.

Commercial practices and service quality.

Speaker Change: At the end of calendar 2024, Mike Sharp came on board as President of Amerigas, and having worked closely with Mike before I have seen firsthand his ability to drive organizational transformation and operational excellence.

Speaker Change: In this first month, Mike is revised and is implementing this new organizational structure to better align with the needs of the business.

Speaker Change: Strengthened commercial practices streamer.

Speaker Change: Streamlining decision, making and improve accountability to create an improved customer experience.

Speaker Change: Working with the leadership team Mike has developed a roadmap focusing on five key pillars designed to elevate the customer experience.

Speaker Change: Address the inefficiencies within our processes Optum.

Speaker Change: Optimize amerigas supply chain and logistics network and strengthen its financial performance.

Robert Flexon: Back in September, America has transitioned its field operations to a more localized model with the introduction of over 90 different pods across its footprint. We believe the pod structure strikes the right balance between serving our customers locally, while providing the benefits of centralized supporting functions, driving greater accountability, delivery efficiency, and oversight of customer relationships. Although we are at the beginning stages of this journey, this model has already yielded greater operational insight and better workflow, improving the way we work and our business process. and will address the root cause of the challenges that our customers face.

Speaker Change: Back in September Amerigas, transitioning field operation to a more localized model with the introduction of over 90 different pause across its footprint we.

Speaker Change: We believe the pod structure strikes the right balance between serving our customers globally, while providing the benefits of centralized supporting functions driving greater accountability delivery efficiency and oversight of customer relationships.

Speaker Change: Although we were at the beginning stages of this journey. This model has already yielded greater operational insight and better workflow improving the way, we work and our business processes.

Speaker Change: And we will address the root cause of the challenges that our customers face.

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

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

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

Speaker Change: Our longer term strategy remains designed to further optimize and grow our premier natural gas businesses and drive operational transformation and strong execution in our propane businesses.

Speaker Change: This strategy, coupled with disciplined capital allocation strategic portfolio optimization.

Speaker Change: And strong balance sheet management will better position UGI to deliver sustainable growth and long term value creation.

Sean OBrien: And with that, I'll turn the call over to Sean, who will walk you through our financial results for the quarter. Thanks, Bob. And good morning. As Bob mentioned, UGI delivered strong results for the fiscal 2025 first quarter, reporting adjusted diluted EPS of $1.37, a 17 cents improvement over the prior year period. The utility segment was up one penny as the business benefited from higher gas base rates at Mountaineer. Mistreatment marketing was down two cents as lower operating income was partially offset by the effects of higher investment tax credit associated with the RNG projects being placed in service this fiscal year.

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

Sean: Thanks, Bob and good morning.

Sean: As Bob mentioned UGI delivered strong results for the fiscal 2025 first quarter <unk>.

Sean: Porting adjusted diluted EPS of $1 37, a 17 improvement over the prior year period.

Sean: The utility segment was up one penny as the business benefited from higher gas base rates at mountaineer midstream and marketing was down <unk> <unk> as lower operating income was partially offset by the effects of higher investment tax credits associated with the RMG projects being placed in service this fiscal year.

Sean OBrien: UGI International was up seven cents as benefits from the utilization of foreign tax credits fully offset the effect of lower operating income associated with the non core energy marketing. At Amerigas, while EBIT was up $3 million over the prior year period, the effect of higher income tax expense led to a $0.28 decline in adjusted diluted EPS. Similar to fiscal 2024, the Amerigas legal entity is experiencing a higher tax rate due to limitations associated with interest expense deductibility. On a consolidated basis, there is a corresponding offset to normalize the corporation's tax rate, and this is reflected at Corp Another.

Sean: UGI International was up seven as benefits from the utilization of foreign tax credits fully offset the effect of lower operating income associated with the non core energy marketing business.

Sean: At Amerigas, while EBIT was up $3 million over the prior year period, the effect of higher income tax expense led to a 28% decline in adjusted diluted EPS similar to fiscal 2024, the amerigas legal entity is experiencing a higher tax rate due to limitations associated with interest expense deductibility.

Sean: On a consolidated basis, there was a corresponding offset to normalize the corporation tax rate and this is reflected in corporate and other.

Sean OBrien: In aggregate, we anticipate that UGI Corporation will recognize an effective tax rate between 12 and 14% for fiscal 2025, in comparison to 16% in the prior year period. Now to close out the comments on Corp Another, the $0.39 increase over prior year is due to lower income taxes of $0.42, partially offset by $0.03 of higher interest.

Sean: In aggregate, we anticipate that UGI Corporation will recognize an effective tax rate between 12 and 14% for fiscal 2025 in comparison to 16% in the prior year period.

Sean: Now to close out the comments on corporate and other the 39% increase over prior year is due to lower income taxes of 42.

Sean: Partially offset by <unk> <unk> of higher interest expense.

Sean OBrien: Turning to the next slide, I'll now walk you through the key drivers for each reportable segment when compared to the prior year. starting with the utility set. We saw slightly colder weather than the prior year period in our service territories, which led us to higher core market volume. Both our Pennsylvania and West Virginia Service Territory now have the Weather Normalization Rider, which partially reduced the impact of colder weather experienced in the month of July. Overall, margin was up $9 million, largely due to higher gas base rates that were implemented in our West Virginia gas utility in January 2024.

Sean: Turning to the next slide.

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

Sean: Starting with the utility segment, we saw slightly colder weather than the prior year period, and our service territories, which led us to higher core market volumes.

Sean: Both our Pennsylvania, and West Virginia Service territory, now have the weather normalization rider, which partially reduced the impact of colder weather experienced in the month of December.

Sean: Overall margin was up $9 million largely due to higher gas base rates that were implemented in our west Virginia gas utility in January 2020 for opt.

Sean OBrien: Operating and administrative expenses were up $2 million, reflecting higher personnel and uncollectible accounts. EBIT increased $6 million due to the higher total margin, partially offset by higher operating and administrative expenses, and higher depreciation expense from continued capital expenditure activity.

Sean: Operating and administrative expenses were up $2 million, reflecting higher personnel and uncollectible accounts expenses.

Sean: EBIT increased $6 million due to the higher total margin, partially offset by higher operating and administrative expenses and higher depreciation expense from continued capital expenditure activity.

Sean OBrien: Next. Midstream and Marketing reported EBIT of $95 million in comparison to $102 million in the prior year. Total margin was down $17 million due to lower margin from gathering and processing activity.

Sean: Next midstream and marketing reported EBIT of $95 million in comparison to $102 million in the prior year.

Sean: Total margin was down $17 million due to lower margin from gathering and processing activities. The absence of margin from power generation activities given the sale of the <unk> Creek asset in September 2024, and.

Sean OBrien: The absence of margin from power generation activities given the sale of the Hunlaw Creek asset in September 2024 and reduced capacity management. Operating and administrative expenses were down $2 million, reflecting lower personnel-related and maintenance.

Sean: And reduced capacity management margins.

Sean: Operating and administrative expenses were down $2 million, reflecting lower personnel related and maintenance expenses.

Sean OBrien: Lastly, other income increased over the prior year, largely due to a $4 million impairment in fiscal 2024, which was associated with GHI Energy, our wholly owned subsidiary that markets renewable natural gas and coal.

Sean: Lastly, other income increased over the prior year, largely due to a $4 million impairment in fiscal 2024, which was associated with <unk> energy our wholly owned subsidiary that market's renewable natural gas in California.

Sean OBrien: Turning to the Global LPG Businesses at UGI International. LPG volumes were up due to increased crop drying campaigns and weather that was 8% colder than the prior year period. Total margin was down $15 million due to lower margins from the energy marketing business, which we expect to fully exit at the end of this calendar year, and to a lesser extent from lower LPG units. These declines were partially offset by the impact of higher LPG. Operating and administrative expenses were down $13 million, reflecting lower costs from exiting the non-core energy marketing business and lower personnel and maintenance costs.

Sean: Turning to the global LPG businesses at UGI International LPG.

Sean: <unk> volumes were up due to increased crop drying campaigns and weather that was 8% colder than the prior year period.

Sean: Total margin was down $15 million due to lower margins from the energy marketing business, which we expect to fully exited at the end of this calendar year.

Sean: And to a lesser extent from lower LPG unit margins. These declines were partially offset by the impact of higher LPG volumes.

Sean: Operating and administrative expenses were down $13 million, reflecting lower costs from exiting the noncore energy marketing business and lower personnel and maintenance expenses.

Sean: Lastly, UGI international realized a $6 million decline in other income, reflecting the impact of exiting the noncore energy marketing business in the prior year and lower foreign currency transaction gains.

Sean OBrien: At Amerigash, LBG volumes were down 1% as the effect of customer attrition was largely offset by the colder weather experienced during the month of December. Total margin was comparable to the prior year as higher LPG unit margins offset the impact of lower LPG volumes and reduced fee income. Operating administrative expenses were down $7 million due to lower personnel expenses, while the business reported lower gains from asset sales when compared to the prior year.

Sean: At Amerigas LPG volumes were down 1% as the effect of customer attrition was largely offset by the colder weather experienced during the month of December.

Sean: Total margin was comparable to the prior year as higher LPG unit margins offset the impact of lower LPG volumes and reduced fee income.

Sean: Operating and administrative expenses were down $7 million due to lower personnel expenses, while the business reported lower gains from asset sales when compared to the prior year.

Sean OBrien: Moving to liquidity. At the end of the quarter, UGI had available liquidity of $1.5 billion, inclusive of cash and cash equivalents and available borrowing capacity on our revolving credit.

Sean: Moving to liquidity.

Sean: At the end of the quarter UGI had available liquidity of $1 5 billion.

Sean: Inclusive of cash and cash equivalents and available borrowing capacity on our revolving credit facilities.

Sean OBrien: Yesterday, we were pleased to announce that Amerigas has issued a notice of redemption on its $218 million of outstanding senior notes, which were due in May of 2025. The purchase will be funded by a two-year unsecured intercompany loan between UGI International and America. bearing an interest rate of 9.13%. Amerigas intends to use its free cash flow to fully repay the intercompany. Of note, the loan is unsecured and subordinated to other obligations of AmeriGas Partners LP and allows us to utilize UGI International's significant liquidity capacity at an optimal rate for the company.

Sean: Yesterday, we were pleased to announce that Amerigas has issued a notice of redemption on its $218 million about standing senior notes, which were due in may of 2025.

Sean: The purchase will be funded by a two year unsecured intercompany loan between UGI International and Americas <unk>.

Sean: Bearing an interest rate of 913% Amerigas intends to use its free cash flow to fully repay the intercompany loan.

Sean: Of note the loan is unsecured and subordinated to other obligations of Amerigas partners LP and allows us to utilize UGI international significant liquidity capacity at an optimal rate for the company.

Sean OBrien: With the 2025 senior notes fully repaid, Amerigas will further focus its attention on addressing the 2026 maturities, with the goal of completing that process in fiscal 2020.

Sean: With the 2025 senior notes fully repaid Amerigas will further focus attention on addressing the 2026 maturities with the goal of completing that process in fiscal 2025.

Sean OBrien: In summary, we've had a strong start to the fiscal year, but given the important months ahead, the guidance range of 275 to 305 remains intact.

Sean: In summary, we've had a strong start to the fiscal year, but given the important months ahead the guidance range of $2 75 to 305 remains intact.

Robert Flexon: With that, I'll turn the call over to Bob for his closing. Thanks, Sean. Let me close by highlighting the fundamental strengths of UGI's business portfolio.

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

Bob: Thanks, Shawn let me close by highlighting the fundamental strengths of UGI business portfolio.

Robert Flexon: are weather resilient utilities operating constructive regulatory environments that support crucial infrastructure investment and a strong 9% rate-based growth rate. We have a highly complimentary midstream business with an attractive mix of LNG peaking, pipeline and storage assets, which provides flexibility in varying market conditions and is strategically positioned to capitalize on growing natural gas demand. UGI International continues to demonstrate strong cash generation capacity, and we believe that transformation and optimization of both the domestic and international propane operation will drive improved performance. We remain committed to disciplined capital allocation, operational excellence, and creating long term value for our shareholders.

Bob: Our weather resilient utilities operate in constructive regulatory environments that support crucial infrastructure investment and a strong 9% rate base growth rates.

Bob: We have a highly complementary midstream business with an attractive mix of LNG, peaking pipeline and storage assets.

Bob: Each provides flexibility in varying market conditions and the strategic.

Bob: <unk> positioned to capitalize on growing natural gas demand.

Bob: UGI International continues to demonstrate strong cash generation capacity.

Bob: And we believe that transformation and optimization of both the domestic and international propane operation.

Bob: We will drive improved performance.

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

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

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

Unknown Executive: Thank you.

Unknown Executive: Ladies and gentlemen, as a reminder to ask the question, please press star 1-1 on your telephone, then wait for your name to be announced. to withdraw your question. Please press star 11 again. Please stand by while we compile the Q&A box.

Bob: Thank you.

Bob: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Bob: To withdraw your question. Please press star one again.

Bob: Please standby, while we compile the Q&A roster.

Gabriel Moreen: Our first question comes from the line of Julian Dumoulin Smith with Jeffrey, your line is open. Thank you guys very much for the time and congrats on the further progress here. Hey, maybe Bob, just kicking things off, I mean, nicely done on the 25 maturity here. How are you thinking about, you know, kind of the other larger maturities coming up ahead? Any preliminary thoughts as you're thinking about tackling those ones in 26 onward? I mean, I imagine there's a number of different levers that you can approach here, but sort of initial thoughts that they're in.

Our first question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is open.

Speaker Change: Okay. Thanks, very much Simon congrats on the further progress here.

Speaker Change: Maybe Bob just kicking things off really nicely done on the 25 maturity here how are you thinking about kind of the other larger maturities come out if it had any any preliminary thoughts.

Bob: Thinking about tackling those ones in 'twenty six onward.

Bob: Imagine there is a number of different levers that you can approach here, but sort of.

Bob: Initial thoughts are there and then also maybe to turn to the results quickly.

Gabriel Moreen: And then also maybe to turn to the results quickly, you know, nicely done here.

Gabriel Moreen: I guess there's some tax nuance, but when you're thinking about positioning for the full year here, you know, I know that you just reaffirmed the broader range, but, you know, how do you think about even within that range, how the latest quarterly results and weather trends could have contributed, you know, within that range?

Bob: Nicely done here, I guess, I guess theres, some tax nuance, but.

Bob: When you're thinking about positioning for the full year here.

Bob: I know that you just reaffirm the broader range, but how do you think about even within that range, how the latest quarterly results and weather trends could have contributed.

Bob: Within that range.

Robert Flexon: Good morning, Julian. Thanks for the questions. And I'll start out and then hand it to Sean as well. But we felt that doing the loan via the international business to Amerigas that an arm's length transaction was a good elegant way to deal with the near-term maturity. It allows us to essentially pay the spread in the interest rates to ourselves and we're confident over the next two years our cash flow from Amerigas far exceeds the value of that note so we'll be paying that back in the next two years. And then what it does is kind of clears the deck for discussions with banks on dealing with the 2026s.

Bob: Good morning, Julien Thanks for the questions and I'll start out and then handed the Charlotte as well, but we felt that doing the.

Bob: Yes.

Charlotte: Low via the international business to Amerigas at an arm's length transaction was it good elegant way to deal with the near term maturity.

Bob: Allows us to.

Bob: Essentially pay the the spread in the interest rates to ourselves and we're confident over the next two years, our cash flow from amerigas far exceeds the.

Bob: The value of that note. So we'll be paying that back in the next two years.

Speaker Change: And then what it does is kind of clears the deck for discussions with with bank on dealing with the 2026. So now that this is kind of out in public Charlotte team will go to work on the 2026 and it just makes the whole thing easier to deal with them and more cost effective as well so I'll, let Sean comment in a moment on that on <unk>.

Robert Flexon: So now that this is kind of out in public, Sean and team will go to work on the 2026s. And it just makes the whole thing easier to deal with and more cost effective as well.

Robert Flexon: So I'll let Sean comment in a moment on that. On performance and what we saw on the natural gas side is just great execution. We had near record send out demands of the natural gas. And from an operational standpoint, it was all done in a very safe manner. Excellent performance. So very thrilled with the natural gas side of the business. And then on the propane side of the business, international executed well. They really run the business really well over there. I've got I've been able to spend some time over there as well to get compliments in that in that business and the business model we have there.

Speaker Change: Formats, and what we saw in the natural gas side is just great execution, we had near record send out demands of the natural gas and from an operational standpoint. It was all done in a very safe manner.

Our excellent performance, so very thrilled with the natural gas side of the business and then on the propane side of the business.

Speaker Change: International executed well.

Speaker Change: They really run the business really well over there I've got I've been able to spend some time over there as well to get confidence in that in that business and the business model we have there.

Robert Flexon: And on the Amerigas side, you know, we're seeing some initial green shoots from the pod structure that we created, but it is very, very early innings. And as you'll see in the slide deck that we initiated teams to go after five key business processes that will have it. should have a very significant effect on the business to make us very competitive and really have a really strong leadership position in the industry. But very early going, it's great having Mike Sharp on the team here and Mike is on the ground charging well ahead on all of those priorities.

Speaker Change: On the Amerigas side, we're seeing some initial green shoots from the pod structure that we created but it is very very early innings and as youll see in the slide deck that we initiate it teams to go after five key business processes that we will have it.

Speaker Change: Should have a very significant effect on the business to make us very competitive in.

Speaker Change: And really have a really strong leadership position in the industry, but early goings, it's great Evan.

Speaker Change: Mike Sharp on the team here and Mike is on the ground.

Charging charging well ahead on all of those priorities so.

Robert Flexon: Yeah, I think we're setting ourselves up for a good year. And the key thing will be getting that performance at Amerigas, where we think we can really unlock the potential in that business.

Speaker Change: Yes, I think we're setting ourselves up for a good year.

Speaker Change: The key thing will be getting that performance.

Speaker Change: At Amerigas, where we think we can really unlock potential net business, let me turn it to Shawn for any additional comments on particularly on the financing yeah morning, Julien I'm only going to add I think Bob hit it well I'm just going to add a couple of things.

Sean OBrien: Let me turn it to Sean for any additional comments on particularly on the financing. Good morning, Julian. I'm only going to add, I think Bob had hit it well, I'm just going to add a couple things. As Amerigas takes care of those, that intercompany loan, you know, I don't want it to be lost, we are de-levering. So that's a continued de-levering at Amerigas of that $218 million. And it also definitely starts to push Amerigas closer to the 5-0 on its debt to EBITDA. Even though we don't have a covenant, it's still, we still are very focused on getting their leverage target ratio down into the 5 range.

Speaker Change: As Amerigas takes care of those that they were a company loan.

Speaker Change: I don't want it to be lost we are delevering. So thats a continued delever that amerigas is at $218 million and it also definitely starts to push amerigas closer to the FIFO on its debt to EBITDA, even though we don't have a covenant. It's still we still are very focused on getting their leverage target ratio down into the five range.

Sean OBrien: And really taking care of those 25s gives us optionality in two ways. One, the types of products that we're going to go after to take care of the $664 million of 2026s. The other key thing is the timing. We have a lot of timing available to us, you know, because they don't go current until August of this year. So I think we're set up very well. All the tailwinds that Bob talked about, I think we're set up in the best position we could be as we go to take care of those 2026s.

Speaker Change: And really taking care of those 25 gives us optionality in two ways. One the types of products that we're going to go after to.

Speaker Change: To take care of the $664 million.

Speaker Change: 2026 is the other key thing is the timing we have a lot of timing available to us.

Speaker Change: Because they don't go current until August of this year. So I think we're set up very well all the tailwind that Bob talked about I think we're setup.

Speaker Change: Best position, we could be as we go to take care of those 2006.

Gabriel Moreen: Nice, guys. Thank you very much.

Speaker Change: Nice guys. Thank you very much.

Gabriel Moreen: And best of luck to you to Mike here. If I can just to follow up one more. I mean, you mentioned the continued success on the international. I mean, again, maybe another silo, if you will, to do, you know, the the activities ongoing, how do you think about the strategic direction for the international business, and businesses, maybe plural, adjacent to the US operations? Any thoughts on that front, especially if you think about these maturities? I think on the international side, you know, for the near term, they'll continue to look on how to best strategically position their business, where we can take advantage of our storage capability.

Speaker Change: Best of luck to you Mike here, if I can just following up one more I mean, you mentioned the continued success on the international.

Speaker Change: Again, maybe another.

Speaker Change: Silo, if you will to two.

Speaker Change: The activity is ongoing how do you think about the strategic direction for the international business and businesses, maybe plural adjacent to the U S operations.

Speaker Change: Any thoughts.

Speaker Change: On that front, especially as you think about these maturities.

Speaker Change: Well I think on the international side for the near term, we'll continue to local how do they best strategically position their business, where we can take advantage of our storage capability. That's the key thing in Europe is this is an important market for propane so we'll try to optimize our.

Robert Flexon: That's a key thing in Europe, since it's an import market for propane. So we'll try to optimize our flexibility around storage. And for those locations where we're not necessarily as competitive or have a competitive advantage, we'll continue to evaluate the portfolio and see to the extent we have as big of a footprint we have over there. And I think both on the international propane as well as domestic propane will continue to evaluate the makeup of the portfolio. And to the extent there are any asset sales that will be used, as Sean mentioned as well, to help with the lever.

Speaker Change: <unk> around storage and for those.

Speaker Change: The locations, where we're not necessarily as competitive or have a competitive advantage. We will continue to evaluate the portfolio and see.

Speaker Change: To the extent.

Speaker Change: We have as big of a footprint, we have over there and I think both on the international propane as well as domestic propane will continue to evaluate that.

Speaker Change: The makeup of the portfolio to the extent there are any asset sales that will be used as Sean mentioned as well to help with the Delever and Julian I would add you made me think of something I.

Robert Flexon: And Julie, I want to add, you made me think of something. I want to be clear that this intercompany loan international is, you know, we anticipate this year to generate between $130-$150 million of excess free cash flow. All of that is still going to Corp. So none of that is involved in this intercompany loan. So it's generating great cash flow and helping the company support its dividends.

Speaker Change: I want to be clear that this intercompany loan international as we anticipate this year to generate between 130 $150 million of excess free cash flow.

Speaker Change: All of that is still going to corp. So none of that is involved in this intercompany loans. So it's generating great cash flow and helping the company support its dividend.

Gabriel Moreen: Wonderful.

Gabriel Moreen: Excellent. I appreciate it very much.

Speaker Change: Wonderful excellent I appreciate it very much.

Gabriel Moreen: Take care, guys. Thank you.

Unknown Executive: I'd like to remind the ladies and gentlemen to start one line to ask a question. Please stand by for our next question.

Speaker Change: Thanks Jay.

Speaker Change: Okay.

Speaker Change: Scott.

Speaker Change: Questions.

Gabriel Moreen: Our next question comes from a man named Gabriel Moreen, with Mississippi Health Alliance.

Speaker Change: Okay.

Speaker Change: Yes.

Robert Flexon: Good morning, everyone. In terms of the intercompany loan and also the segmentation of the Amerigas structure into these pods. Given the language around paying off the intercompany loan with free cash flow and the emphasis there, does that preclude at all asset sales at the Amerigas level? And I'm just curious, you know, with the segmentation into pods, and maybe getting back to more regionalization, whether that's kind of revealed, you know, better regions or better performing regions or lesser performing ones and any implications for portfolio optimization. I can take the first half, Gabe. The short answer is no.

Speaker Change: Okay.

Speaker Change: Right.

Speaker Change: Okay.

Okay.

Speaker Change: Okay.

Speaker Change: The amerigas structure introduced pods.

Speaker Change: Given the language around paying off the intercompany loan with free cash flow and the emphasis there does that does that preclude it all asset sales at the amerigas level and I'm, just curious with the segmentation into pods and maybe getting back to more regionalization and whether that's kind of revealed.

Speaker Change: Better regions or better performing regions or lesser performing Watson.

Robert Flexon: And I'm going to expand that. So it does not preclude any asset, you know, potential divestitures, you know, in terms of things that we're looking at underperforming assets at Amerigas. And I want to be clear as well, on the other side of the fence, it does not preclude asset transactions at international either. Yeah, so I think it gave adding to that, so that any any sales, and as Sean mentioned, this doesn't preclude anything would really just accelerate the pay down of that in a company note. And we will continue to look at the portfolio and look where we have the right level of density and competitive advantage to the extent that we don't have the right level of density and we're just kind of a me too in some of these markets.

Speaker Change: Any implications for portfolio optimization.

Gabe: I can take the first half Gabe the short answer is no and I'm going to expand that so it does not preclude any asset potential divestitures.

Speaker Change: <unk>.

Speaker Change: In terms of things that we're looking at underperforming assets at Amerigas, and I wanted to be clear as well on the other side of the fence. It does not preclude asset transactions that international.

Speaker Change: Either.

Speaker Change: Yes, so I think it gave adding to that so.

Speaker Change: Any sales.

Speaker Change: As Sean mentioned this doesn't preclude anything would really just accelerate the pay down of that intercompany note and.

Speaker Change: And we will continue to look at the portfolio and look where we have the right level of density and competitive advantage to the extent that we don't have the right level of density and we're just kind of a me too in some of these markets.

Robert Flexon: Then I would then I would evaluate those for divestiture, so we have a lot of analysis we've done around that. You know, our thoughts around that are getting pretty crystallized at this point. So it's something that we'll continue to work towards as well.

Speaker Change: With that I would evaluate.

Speaker Change: Eight those for divestiture. So we have a lot of analysis, we've done around that.

Speaker Change: Our thoughts around that are getting pretty crystallized at this point, so it's something that.

Gabriel Moreen: Thanks, guys.

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

Speaker Change: We will continue to to work work towards as well.

Speaker Change: Thanks, guys and then if I can maybe follow up you mentioned, Bob in terms of the performance of the winter.

Speaker Change: And how how well you've done operationally, but kind of a drill down on some of the cold weather we have experienced here in January.

Speaker Change: You feel in terms of how amerigas has it been performing and handling maybe capturing some of the opportunity from higher degree days and then also clearly marketing benefits from Nat gas market volatility how that business performed in the quarter given some of the wholesale gas market volatility it's been out there.

Robert Flexon: Sure. So I think on the Amerigas side, we certainly have benefited from the colder weather in January. I would say it does strain the system in Amerigas with some of the issues we have in our business processes. So. We're doing okay, but we have room for a lot of improvement. And as you notice on the one slide in the deck, slide five, where we talked about five key areas that the business process needs to improve. And, and that's so we can handle months like January, better than what we did. So again, I think we've performed relatively well but there's substantial room for improvement and that's that's going to be the focus of Mike and team for the balance of this year and get us in a better position to do even.

Speaker Change: Sure. So I think on the Amerigas side.

Speaker Change: We certainly have benefited from the colder weather in January I would say it does strain the system in amerigas with some of the issues we have in our business processes. So.

Speaker Change: We're doing okay, but we have room for a lot of improvement.

Speaker Change: As you noticed on the one slide in the deck slide five where we talked about.

Speaker Change: Five key areas that the business process needs to improve.

Speaker Change: And that's so we can handle months late January better than what we did so again I think we've performed.

Speaker Change: Relatively well, but there is substantial room for improvement and that's going to be the focus of Mike and team for the balance of this year and get us in a better position to do even.

Robert Flexon: better performance as we approach next winter. So this is the time where we really have to make a difference on how we run the business process. on the natural gas side and taking the taking advantage of volatility to the extent you have extended periods of cold. Basically, the utility is taking virtually all of the gas from energy services and to the extent it you know, more short, brief bouts of cold than we do take advantage of volatility in the marketplace. So what we saw in January is a bit of both. So we'll see some opportunity there on volatility versus wealth.

Speaker Change: Better performance as we approach next winter so.

Speaker Change: This is the time, where we really have to make a difference on how we run the business processes.

Speaker Change: On the natural gas side has taken the taken advantage of volatility to the extent you have extended periods of cold.

Speaker Change: Basically the utility is taking virtually all of the gas from.

Speaker Change: Energy services and to the extent it.

Yes, more short brief bouts of coal than we do take advantage of volatility in the marketplace. So what we saw in January is a bit above or below.

Robert Flexon: Make sure we meet our obligations to the utility. I think one of the best things I can say about the utility and its cold snap was we're talking to the team out there. We're assuming near record send out of gas demand. Operationally, everything was calm in place, executing well, safely. So, you know, kudos to to our utility here in Pennsylvania and to West Virginia in dealing with. Extreme cold weather and doing so in a way that was seamless to our customers.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Last question.

Speaker Change: Okay.

Speaker Change: We will record send out of gas demand operationally everything was calm in place executing well safely so.

Robert Flexon: Thanks, Bob.

Gabriel Moreen: And if I could just squeeze one more question on midstream, can you maybe expand a little bit on The midstream margins being a little bit lower here on year is that a little bit lower volumes due to depressed gas prices, maybe some MVCs expiring and kind of what you're expecting there. And then also the allocating additional capital to the acquisition you made there. Is that something that, you know, is active and ongoing? Should we expect?

Speaker Change: Kudos to our utility here in Pennsylvania, and West, Virginia and dealing with.

Speaker Change: Extreme cold weather and doing so in a way that was seamless to our customers.

Bob: Thanks, Bob and if I could just squeeze one more.

Speaker Change: Question on midstream can you, maybe expand a little bit on that.

Speaker Change: The midstream margins being a little bit lower year on year is that a little bit lower volumes due to depressed gas prices, maybe some MVC is expiring and kind of what youre expecting there and then also the.

Sean OBrien: Are you looking at potentially more deals and consolidation opportunities there? Yeah, Gabe, I'll take the first part. So we'll talk about the margin and everything in terms of the margin, in general, was faked into our guidance, was anticipated. We did have one contract, you know, where we renewed at lower pricing. That actually happened last year. So there was some impact last year. Obviously, it's embedded into our guidance this year. In terms of, I'll remind you, we have a generally about a seven year tenure, on average, on our contracts, and we don't have, you know, there's stuff being renewed, but we don't see any, any massive risk or any specific risk in terms of pricing.

Speaker Change: Allocating additional capital to the acquisition you made there or is that something that.

Speaker Change: It is active and ongoing should we expect or are you looking at potentially more deals and consolidation opportunities there.

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

Gabe: So we'll talk about the margin and everything in terms of the margin in general was baked into our guidance was anticipated we did have one contract.

Gabe: Yes.

Gabe: We renewed and lower pricing that actually happened last year. So there was some impact last year, obviously, it's embedded into our guidance. This year in terms of I'll remind you we have a generally about a seven year tenure.

Sean OBrien: Matter of fact, in that area, with what's going on, we may even see some opportunities with the demand increase, for some better pricing. So that was part of it, we did sell Humlock. So when you're looking year over year, we had those earnings last quarter, we don't have those earnings from that asset this quarter. And then capacity management was down a little bit. So you talk about the opportunistic, you know, ability to make some margin, that's the one that probably wasn't in the guidance, but it was not material.

Gabe: On average on our contracts and we don't have.

Gabe: There is stuff being renewed but we don't see any any massive risk or any specific risk in terms of pricing matter of fact in that area with what's going on we may even see some opportunities with the demand increase for some better pricing. So that was part of it we did sell how locked so when youre looking year over year, we had those earnings last quarter, we don't have those earnings.

Sean OBrien: So all in all, most of this we had baked in the Humlock, the contract expiration, but we're still feel pretty good about the year, as we look forward on the margin for the midstream business.

Gabe: From that asset this quarter, and then capacity management was down a little bit. So you talk about the opportunistic.

Gabe: Ability to make some margin that's the one that probably wasn't in the guidance, but it was not material. So all in all most of this we had baked in the whole lock the contract exploration, but we still feel pretty good about the year as we look forward on the margin for the midstream business.

Sean OBrien: and Gabe appreciate the question on energy services and first on the Superior Acquisition. All of that was financed at the JV level. So it didn't utilize any of our capital capacity as a pair. But in general, as we look at opportunities, in that territory where we see a lot from third parties with data centers and new power generation and the like. And then also combine that with the fact that a lot of the infrastructure funds that own pipelines and storage that get near the end of life, which was the situation where the funds got near end of life, which is the situation that we had here.

Gabe: Gabe I appreciate the question on energy services and first on the superior acquisition.

Gabe: All of that was financed at the JV level. So it didnt utilize any of our capital capacity at the parent.

Gabe: In general as we look at opportunities.

Gabe: In that territory, where we see a lot interest from third parties with data centers.

Gabe: New power generation and the like.

Gabe: And then also combine that with the fact that a lot of the infrastructure on that one.

Sean OBrien: To the extent we've got synergies and it touches our existing infrastructure, these are good opportunities for energy services. So they will continue to be looking for those opportunities and assuming it meets our threshold for returns to add economic value, that we would we would pursue those opportunities. So we'll continue to look from an opportunistic point of view in the area and and strike when it makes sense for us to do so.

Gabe: Pipelines and storage.

Gabe: Near the end of life, which was the situation we were.

Gabe: Where the funds got near end of life.

Gabe: Is the situation that we had here.

Gabe: To the extent, we've got the synergies and it touches our existing infrastructure. These are good opportunities for energy services. So they will continue to be looking for those opportunities and assuming it meets.

Gabe: Our threshold for returns to add economic value that we would we would pursue those opportunities. So we will continue to look from an opportunistic point of view.

Gabriel Moreen: Great.

Gabriel Moreen: Thanks, everyone, and go Eagles. Yeah, I hear you. Thank you.

Unknown Executive: Ladies and gentlemen, I'm showing no further questions in the queue.

Gabe: In the area and.

Robert Flexon: I would now like to turn the call back over to Bob for closing remarks. Okay, well, thank you for your interest and participation in the call. Just leaving a couple of thoughts. First, on our natural gas side of the business, as I was just mentioning, we'll continue to be opportunistic and look for those investments that can drive further returns for the business, utilizing our scale and our location out there. We'll be a relentless focus on performance and safety and for our natural gas utility, both in West Virginia and in Pennsylvania. It's just critical for us to make it a seamless.

Gabe: Strike when it makes sense for us to do so.

Gabe: Great. Thanks, everyone go Eagles.

Gabe: Yes, I hear you.

Gabe: Thank you.

Gabe: Ladies and gentlemen, Im showing no further question from Q I would now like to turn the call back over to Bob for closing remarks.

Okay well. Thank you for your interest in participate participation in the call is late with a couple of thoughts first of our natural gas side of the business as I was just mentioning we will continue to be opportunistic and look for those.

Gabe: Investments that can drive further returns for the business utilizing our scale and our location out there there'll be a relentless focus on performance and safety for our natural gas utility.

Robert Flexon: Seamless delivery to our customers and recognizing, getting the recognition of the Cogen Award for Customer Service, something that we watch closely. On the LPG side, again, we're going to just make sure we're performing as well as we can. I think International is doing a very nice job running their business.

Gabe: Both in West, Virginia, and Pennsylvania, It's just critical for us to make it a seamless.

Gabe: Seamless delivery to our customers and recognizing you are getting the recognition of the co. Gen Award for customer service is something that we watch closely on the LPG side again, we're going to just make sure we're performing.

Robert Flexon: And on Amerigas, we're at the beginning of a long journey here for calendar 2025. But we have the structure in place, we know the areas that we need to target, and we feel we can really drive a lot of value in doing so.

Gabe: Well as we can I think international is doing a very nice job running their business.

Robert Flexon: So with that, again, I thank you for your interest and look forward to further conversation.

Gabe: And on Amerigas, where at the beginning of a long journey here for calendar 2025, but we have the structure in place we know the areas that we need to target and.

Unknown Executive: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. and more. Thank you.

Gabe: And we feel we can really drive a lot of value in doing so so with that again I. Thank you for your interest and look forward to further conversations.

Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

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Unknown Executive: Hello, and welcome to UGI Corporation Q1 2025 earnings conference call. 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Speaker Change: Hello, and welcome to the UGI Corporation Q1, 2025 earnings Conference call.

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.

Tameka Morris: I would now like to turn the conference over to Tameka Morris, you may begin. Good morning, everyone. Thank you for joining our Fiscal 2025 First Quarter Earnings Call. With me today are Bob Flexon, President and CEO, and Sean OBrien, CFO. On today's call, we will review our first quarter financial results and key business highlights before concluding with a question and answer session.

Speaker Change: To ask the question during the session you will need to press star one on your telephone.

Speaker Change: You would then here automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Tamika Morris: I would now like to turn the conference over to Tamika Morris you may begin.

Speaker Change: Good morning, everyone and thank you for joining our fiscal 2025 fourth quarter earnings call with me today are <unk>, President and CEO and Sean O'brien CFO on today's call. We will review, our first quarter financial results and key business high.

Tameka Morris: 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. Actual results may differ significantly because of risks and uncertainties that are difficult to predict. Please read our earnings release and our 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.

Tamika Morris: Right before concluding with a question and answer session.

Tamika Morris: 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 annual report for an extensive list of facts.

Tameka Morris: We will also describe our business using certain gap financial measures. Reconciliations of these measures to the comparable gap measures are available within our presentation.

Tamika Morris: <unk> that could affect results.

Tamika Morris: 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 within our presentation and with that I'll turn the call over.

Robert Flexon: And with that, I'll turn the call over to Bob. Thanks, Tameka, and good morning to all of you. Yesterday, we reported our fiscal 2025 first quarter results. with adjusted diluted earnings per share of $1.37. 14% higher than the prior year. Solid underlying performance by a reportable segment. combined with effective tax management led to the strong fiscal first quarter results. In our natural gas businesses, we've benefited from strong demand and higher gas rates at Mountaineer, our West Virginia gas utility. While at our global LPG businesses, we realize relatively comparable volumes and reduced operating and administrative expenses when compared to the prior year period.

Tamika Morris: <unk>.

Tamika Morris: Thanks Tommy.

Tamika Morris: And good morning to all of you.

Tamika Morris: Yesterday, we reported our fiscal 2025 first quarter results.

Tamika Morris: With adjusted diluted earnings per share of $1 37.

Tamika Morris: 14% higher than the prior year.

Tamika Morris: Solid underlying performance.

Tamika Morris: Google segment.

Tamika Morris: Combined with effective tax management most of the strong fiscal first quarter results.

Tamika Morris: In our natural gas businesses, we benefited from strong demand and higher gas rates at mountaineer.

Robert Flexon: These results underscore the advantages of our diverse portfolio and the opportunities to drive consistent growth through operational excellence. Also of note during the quarter, we deployed over $200 million in capital investment, primarily in the natural gas business. These investments advance our infrastructure modernization program, enhancing system reliability, safety, and operational efficiency, and support strong customer additions that we continue to experience at the utility. Also, at UGI Utilities, our commitment to service excellence led to the company being recognized as the Cogent 2024 Utility Customer Champion. This prestigious award validates our customer-centric approach and places us among the top performers in customer satisfaction across the utility sector.

Tamika Morris: Virginia gas utility.

While our global LPG businesses, we realized relatively comparable volumes and reduced operating and administrative expenses when compared to the prior year period.

Tamika Morris: These results underscore the advantages of our diverse portfolio and the opportunities to drive consistent growth through operational excellence.

Tamika Morris: Also of note during the quarter, we deployed over $200 million in capital investment primarily in the natural gas businesses.

Tamika Morris: These investments advanced our infrastructure modernization program.

Tamika Morris: Dancing system reliability safety and operational efficiency and support strong customer additions that we continued to experience at the utilities.

Tamika Morris: Also at UGI utilities, our commitment to service excellence led to the company being recognized as a cogent 2024.

Robert Flexon: In our midstream and marketing segment, we have substantially completed several RNG facilities where gas will be delivered into local markets. The projects have been completed on time and on budget and are good additions to our business, providing immediate returns to investment tax credit. Also, in the midstream and marketing segment, as part of our joint venture in the Pine Run Gathering System. We acquired Superior Appalachian, which owns and operates three gathering systems in Pennsylvania. These systems are attractive with long-term acreage dedications, and the largest is connected to one of UGI Energy Services' gathering systems, which should enhance future synergy.

Tamika Morris: <unk> customer champion.

Tamika Morris: This prestigious award validates our customer centric approach and places us among the top performers.

Tamika Morris: Customer satisfaction across the utility sector.

Tamika Morris: In our midstream and marketing segment, we had substantially completed several LNG facilities, where guests will be delivered into the local markets.

Tamika Morris: The projects have been completed on time and on budget and are good additions to our business.

Tamika Morris: Providing immediate returns to investors with tax credits.

Tamika Morris: Also in the midstream and marketing segments as part of our joint venture in the <unk> gathering system.

Tamika Morris: We acquired superior Appalachian, which owns and operates three gathering system.

Robert Flexon: The transaction, which was valued at $120 million, was fully funded by debt at Pine Run, which now has a debt-to-equity ratio of approximately 49%. Lastly, the transaction will be monthly accretive to earnings in the first year of operation.

Tamika Morris: Pennsylvania.

Tamika Morris: These systems are attractive with long term acreage dedications and the largest is connected to one of UGI energy services gathering systems.

Tamika Morris: Which should enhance future synergies.

Tamika Morris: The transaction, which was valued at $120 million.

Tamika Morris: Was fully funded by debt at Pine run, which now has a debt to equity ratio of approximately 49%.

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

Tamika Morris: Next last week, we filed a gas base rate case, with the Pennsylvania Public utility Commission for UGI utilities.

Tamika Morris: Requesting an overall distribution rate increase of approximately $110 million.

Robert Flexon: Next, I'd like to provide an update on our fiscal 2025 priorities that will drive future performance. As mentioned on the Q4 earnings call, we are strengthening our foundation to release focus on our people and culture to create a mindset that encourages breakthrough thinking. added to that is providing the tools and training for employees to translate the breakthrough thinking to breakthrough performance. I firmly believe that this will drive significant and sustainable improvement, which translates stronger business performance and financial results.

Tamika Morris: This rate case supports over $750 million of investments.

Tamika Morris: That will be made to improve the record gas distribution system facilities and technology to promote safety and reliability.

Tamika Morris: Next I'd like to provide an update of our fiscal 2025 priorities that will drive future performance.

As mentioned on the Q4 earnings call. We are strengthening our foundation through renewed focus on our people and culture to create a mindset that encourages breakthrough thinking.

Tamika Morris: Added to that is providing the tools and training for employees to translate the breakthrough thinking to breakthrough performance.

Robert Flexon: At Amerigas, we must significantly enhance our business processes, commercial practices and service quality. At the end of calendar 2024, Mike Sharp came on board as president of Amerigas, and having worked closely with Mike before, I have seen firsthand his ability to drive organizational transformation and operational excellence. In his first month, Mike has revised and is implementing his new organizational structure to better align with the needs of the business. Strengthen the commercial practices. streamlined decision-making and improved accountability to create an improved customer experience. Working with his leadership team, Mike has developed a roadmap focusing on five key pillars designed to elevate the customer experience, address the inefficiencies within our processes, optimize Amerigas supply chain and logistics network, and strengthen its financial performance.

Tamika Morris: I firmly believe that this will drive significant and sustainable improvement, which translate to stronger business performance and financial results.

Tamika Morris: At Amerigas, we must significantly enhanced our business processes.

Tamika Morris: <unk> practices and service quality.

Speaker Change: At the end of calendar 2024, Mike Sharp came onboard as president of Amerigas, and having worked closely with Mike before I have seen firsthand his ability to drive organizational transformation and operational excellence.

Speaker Change: In this first month, Mike is revised and is implementing this new organizational structure to better align with the needs of the business.

Speaker Change: <unk> commercial practices.

Speaker Change: Streamlining decision, making and improve accountability to create an improved customer experience.

Speaker Change: Working with the leadership team Mike is develop the roadmap focusing on five key pillars.

Robert Flexon: Back in September, AmeriGas transitioned its field operation to a more localized model with the introduction of over 90 different pods across its footprint. We believe the pod structure strikes the right balance between serving our customers locally, while providing the benefits of centralized supporting functions, driving greater accountability, delivery efficiency, and oversight of customer relationships. Although we were at the beginning stages of this journey, this model has already yielded greater operational insight and better workflow, improving the way we work and our business process. and will address the root cause of the challenges that our customers face. As I just noted, it's the early innings of transformation, but there is no doubt that the work ahead will lead to a better Amerigas for our customers, employees, and shareholders.

Speaker Change: Designed to elevate the customer experience.

Speaker Change: To address the inefficiencies within our processes after.

Speaker Change: Optimize amerigas supply chain and logistics network and strengthen its financial performance.

Speaker Change: Back in September Americas, transitioning field operations to a more localized model with the introduction of over 90 different pause across its footprint we.

Speaker Change: Although we were at the beginning stages of this journey. This model has already yielded greater operational insights and better workflow improving the way, we work and our business processes.

Speaker Change: And we will address the root cause of the challenges that our customers face.

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

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

Sean OBrien: And with that, I'll turn the call over to Sean, who will walk you through our financial results for the quarter. Thanks, Bob, and good morning. As Bob mentioned, UGI delivered strong results for the fiscal 2025 first quarter, reporting adjusted diluted EPS of $1.37, a $0.17 improvement over the prior year period. The utility segment was up one penny as the business benefited from higher gas base rates at Mountaineer. Mistreatment marketing was down two cents as lower operating income was partially offset by the effects of higher investment tax credit associated with the RNG projects being placed in service this fiscal year.

Speaker Change: This strategy, coupled with disciplined capital allocation strategic portfolio optimization.

Speaker Change: Our strong balance sheet management will better position UGI to deliver sustainable growth and long term value creation.

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

Sean: Thanks, Bob and good morning.

Sean: As Bob mentioned UGI delivered strong results for the fiscal 2025 first quarter reporting adjusted diluted EPS of $1 37, a 17 improvement over the prior year period.

Sean: The utility segment was up one penny as the business benefited from higher gas base rates at mountaineer.

Sean OBrien: UGI International was up seven cents as benefits from the utilization of foreign tax credits fully offset the effect of lower operating income associated with the non-core energy marketing. At Amerigas, while EBIT was up $3 million over the prior year period, the effect of higher income tax expense led to a $0.28 decline in adjusted diluted EPS. Similar to fiscal 2024, the Amerigas legal entity is experiencing a higher tax rate due to limitations associated with interest expense deductibility. On a consolidated basis, there is a corresponding offset to normalize the corporation's tax rate. And this is reflected at Corp Another.

Sean: Midstream and marketing was down <unk> <unk> and lower operating income was partially offset by the effects of higher investment tax credits associated with the RMG projects being placed in service this fiscal year.

Sean: At Amerigas, while EBIT was up $3 million over the prior year period, the effective higher income tax expense led to a 28% decline in adjusted diluted EPS similar to fiscal 2024, the amerigas legal entity is experiencing a higher tax rate due to limitations associated with interest expense deductibility.

Sean OBrien: In aggregate, we anticipate that UGI Corporation will recognize an effective tax rate between 12 and 14 percent for fiscal 2025, in comparison to 16 percent in the prior year period. Now to close out the comments on Corp Another, the $0.39 increase over prior year is due to lower income taxes of $0.42, partially offset by $0.03 of higher interest.

Sean: On a consolidated basis, there was a corresponding offset to normalize the corporation tax rate and this is reflected at corporate and other.

Sean: In aggregate, we anticipate that UGI Corporation will recognize an effective tax rate between 12 and 14% for fiscal 2025 in comparison to 16% in the prior year period.

Sean OBrien: Turning to the next slide, I'll now walk you through the key drivers for each reportable segment when compared to the prior year. Starting with the utility segment, we saw slightly colder weather than the prior year period in our service territories, which led us to higher core market volume. Both our Pennsylvania and West Virginia Service Territory now have the Weather Normalization Rider, which partially reduced the impact of colder weather experienced in the month of July. Overall, margin was up $9 million, largely due to higher gas base rates that were implemented in our West Virginia gas utility in January 2024.

Sean: Now to close out the comments on corporate and other the 39% increase over prior year is due to lower income taxes of 42.

Sean: Partially offset by <unk> <unk> of higher interest expense.

Sean: Turning to the next slide.

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

Sean: <unk> with the utility segment, we saw slightly colder weather than the prior year period, and our service territories, which led us to higher core market volumes.

Sean: Both our Pennsylvania, and West Virginia Service territory, now have the weather normalization rider, which partially reduce the impact of colder weather experienced in the month of December.

Sean OBrien: Operating and administrative expenses were up $2 million, reflecting higher personnel and uncollectible accounts. even increased $6 million due to the higher total margin, partially offset by higher operating and administrative expenses, and higher depreciation expense from continued capital expenditure activity.

Sean: Overall margin was up $9 million largely due to higher gas base rates that were implemented in our west Virginia gas utility in January 2020 for opt.

Sean: Operating and administrative expenses were up $2 million, reflecting higher personnel and uncollectible accounts expense.

Sean OBrien: Midstream and Marketing reported EBIT of $95 million in comparison to $102 million in the prior year. Total margin was down $17 million due to lower margin from gathering and processing activity.

Sean OBrien: The absence of margin from power generation activities given the sale of the Hunlaw Creek asset in September 2024 and reduced capacity management. Operating and administrative expenses were down $2 million reflecting lower personnel related and maintenance.

Sean: Next midstream and marketing reported EBIT of $95 million in comparison to $102 million in the prior year.

Sean: And reduced capacity management margins.

Sean: Operating and administrative expenses were down $2 million, reflecting lower personnel related and maintenance expenses.

Sean OBrien: Turning to the Global LPG Businesses at UGI International. LPG volumes were up due to increased crop drying campaigns and weather that was 8% colder than the prior year period. Total margin was down $15 million due to lower margins from the energy marketing business, which we expect to fully exit at the end of this calendar year, and to a lesser extent from lower LPG units. These declines were partially offset by the impact of higher LPG Operating and administrative expenses were down $13 million, reflecting lower costs from exiting the non-core energy marketing business and lower personnel and maintenance costs.

Sean: Turning to the global LPG businesses at UGI International LPG.

Sean: LPG volumes were up due to increased crop drying campaigns and weather that was 8% colder than the prior year period.

Sean: Total margin was down $15 million due to lower margins from the energy marketing business, which we expect to fully exited at the end of this calendar year and.

Sean: And to a lesser extent from lower LPG unit margins. These declines were partially offset by the impact of higher LPG volumes.

Sean OBrien: Lastly, UGI International realized a $6 million decline in other income, reflecting the impact of exiting the non-core energy marketing business in the prior year, and lower foreign currency transactions. At AmeriGas, LVG volumes were down 1% as the effect of customer attrition was largely offset by the colder weather experienced during the month of Total margin was comparable to the prior year as higher LPG unit margins offset the impact of lower LPG volumes and reduced fee income. Operating administrative expenses were down $7 million due to lower personnel expenses, while the business reported lower gains from asset sales when compared to the prior year.

Sean: Operating and administrative expenses were down $13 million, reflecting lower costs from exiting the noncore energy marketing business and lower personnel and maintenance expenses.

Sean: At Amerigas LPG volumes were down 1% as the effect of customer attrition was largely offset by the colder weather experienced during the month of December.

Sean: Total margin was comparable to the prior year as higher LPG unit margins offset the impact of lower LPG volumes and reduced fee income.

Sean: Operating and administrative expenses were down $7 million due to lower personnel expenses, while the business reported lower gains from asset sales when compared to the prior year.

Sean: Moving to liquidity at.

Sean: At the end of the quarter UGI had available liquidity of one 5 billion.

Sean: Inclusive of cash and cash equivalents and available borrowing capacity on our revolving credit facilities.

Sean: Yesterday, we were pleased to announce that Amerigas has issued a notice of redemption on its $218 million about standing senior notes, which were due in may of 2025.

Sean OBrien: Of note, the loan is unsecured and subordinated to other obligations of Amerigas Partners LP and allows us to utilize UGI International's significant liquidity capacity at an optimal rate for the With the 2025 senior notes fully repaid, Amerigas will further focus its attention on addressing the 2026 maturities, with the goal of completing that process in fiscal 2020.

Sean: The purchase will be funded by a two year unsecured intercompany loan between UGI International and Americas bearing an interest rate of 913% Amerigas intends to use its free cash flow to fully repay the intercompany loan.

Sean OBrien: In summary, we've had a strong start to the fiscal year, but given the important months ahead, the guidance range of 275 to 305 remains intact.

Sean: With the 2025 senior notes fully repaid Amerigas will further focus his attention on addressing the 2026 maturities with the goal of completing that process in fiscal 2025.

Robert Flexon: With that, I'll turn the call over to Bob for his closing remarks. Thanks, Sean. Let me close by highlighting the fundamental strengths of UGI's business portfolio. are weather resilient utilities operating constructive regulatory environments that support crucial infrastructure investment and a strong 9% rate-based growth rate. We have a highly complementary midstream business with an attractive mix of LNG peaking, pipeline and storage assets, which provides flexibility in varying market conditions and is strategically positioned to capitalize on growing natural gas demand. UGI International continues to demonstrate strong cash generation capacity, and we believe that transformation and optimization of both the domestic and international propane operations will drive improved performance.

Sean: In summary, we've had a strong start to the fiscal year, but given the important months ahead the guidance range of $2 75 to 305 remains intact.

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

Bob: Thanks, Shawn let me close by highlighting the fundamental strengths of UGI business portfolio.

Bob: Our weather resilient utilities operate in constructive regulatory environments that support crucial infrastructure investment and a strong 9% rate base growth rates.

Bob: We have a highly complementary midstream business track.

Bob: Attractive mix of LNG, peaking pipeline and storage assets, which provides flexibility in varying market conditions and.

Bob: And we are strategically positioned to capitalize on growing natural gas demand.

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

Bob: UGI International continues to demonstrate strong cash generation capacity and.

Bob: And we believe that transformation and optimization of both the domestic and international propane operations.

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

Unknown Executive: Thank you.

Bob: We will drive improved performance.

Bob: We remain committed to disciplined capital allocation operational excellence and.

Bob: And creating long term value for our shareholders.

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

Bob: Thank you.

Bob: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Gabriel Moreen: Our first question comes from the line of Julian Dumoulin-Smith with Jeffrey. Your line is open. Thank you guys very much for the time and congrats on the further progress here. Hey, maybe Bob, just kicking things off, I mean, nicely done on the 25 maturity here. How are you thinking about, you know, kind of the other larger maturities coming up ahead? Any preliminary thoughts as you're thinking about tackling those ones in 26 onwards? I mean, I imagine there's a number of different levers that you could approach here, but sort of initial thoughts that they're in.

Bob: Please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is open.

Speaker Change: Okay. Thanks, very much Simon congrats on the further progress here.

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

Speaker Change: There's a number of different levers that you can approach here, but sort of.

Speaker Change: Initial thoughts are there and then also maybe to turn to the results quickly.

Speaker Change: Nicely done here, I guess, I guess theres, some tax nuance, but.

Robert Flexon: Good morning, Julian. Thanks for the questions. And I'll start out and then hand it to Sean as well. But we felt that doing the loaned via the international business to Amerigas that an arm's length transaction was a good elegant way to deal with the near term maturity. It allows us to essentially pay the spread in the interest rates to ourselves and we're confident over the next two years our cash flow from Amerigas far exceeds the value of that note so we'll be paying that back in the next two years. And what it does is kind of clears the deck for discussions with banks on dealing with the 2026s.

Speaker Change: When you're thinking about positioning for the full year here.

Speaker Change: I know that you just reaffirmed the broader range, but how do you think about even within that range, how the latest quarterly results and weather trends could have contributed.

Speaker Change: Within that range.

Speaker Change: Good morning, Julien Thanks for the questions and I'll start out and then ended the Charlotte as well, but we felt that doing the.

Speaker Change: Low via the international business to Amerigas at arms length transaction was a good elegant way to deal with the near term maturity that allows us to.

Speaker Change: Essentially pay the spread in the interest rates to ourselves.

Speaker Change: And we're confident over the next two years, our cash flow from Amerigas far exceeds.

Robert Flexon: So now that this is kind of out in public, Sean and Tameka will go to work on the 2026s. And it just makes the whole thing easier to deal with and more cost effective as well.

Speaker Change: The value of that note. So we'll be paying that back in the next two years.

Speaker Change: And then what it does is kind of clears the deck for discussions with with bank on dealing with the 2026 or so now that this is kind of out in public Charlotte team will go to work on the 2026 and it just makes the whole thing easier to deal with in a more cost effective as well so I'll, let Sean comment in a moment on that on <unk>.

Robert Flexon: So I'll let Sean comment in a moment on that. On performance and what we saw on the natural gas side is just great execution. We had near record send out demands of the natural gas. And from an operational standpoint, it was all done in a very safe manner. Excellent performance. So very thrilled with the natural gas side of the business. And then on the propane side of the business, international executed well. They really run the business really well over there. I've got I've been able to spend some time over there as well to get confidence in that in that business and the business model we have there.

Speaker Change: <unk> and what we saw in the natural gas side is just great execution, we had near record send out demands of the natural gas and from an operational standpoint. It was all done in a very safe manner excellent performance. So very thrilled with the natural gas side of the business and then on the propane side of the business.

Speaker Change: International executed well.

Speaker Change: Should have a very significant effect on the business to make us very competitive in.

Speaker Change: And really have a really strong leadership position in the industry, both very early going straight Evan.

Speaker Change: Mike Sharp on the team here and Mike is on the ground.

Speaker Change: Charging charging well ahead on all of those priorities so.

Sean OBrien: Let me turn it to Sean for any additional comments on particularly on the financing. Good morning, Julian. I'm only going to add, I think Bob had hit it well, I'm just going to add a couple things. As Amerigas takes care of those, that intercompany loan, you know, I don't want it to be lost, we are delevering. So that's a continued delevering that Amerigas is at 218 million. And it also definitely starts to push Amerigas closer to the 5-0 on its debt to EBITDA, even though we don't have a covenant. It's still we still are very focused on getting their leverage target ratio down into the five range.

Speaker Change: Yes, I think we're setting ourselves up for a good year.

Speaker Change: The key thing will be getting that performance.

Speaker Change: At Amerigas, where we think we can really unlock the potential net business, let me turn it to Shawn for any additional comments on particularly on the financing yeah morning, Julien I'm only going to add I think Bob hit it well I'm just going to add a couple of things.

Speaker Change: As Amerigas takes care of those that are a company loan.

Sean OBrien: And really taking care of those 25 gives us optionality in two ways. One, the types of products that we're going to go after to take care of the 664 million of 2026s. The other key thing is the timing, we have a lot of timing available to us, you know, because they don't go current until August of this year. So I think we're set up very well. All the tailwinds that Bob talked about, I think we're set up in the best position we could be as we go to take care of those 2026s.

Speaker Change: And really taking care of those 25 gives us optionality in two ways. One the types of products that we're going to go after to.

Speaker Change: To take care of the $664 million.

Speaker Change: 2026 is the other key thing is the timing we have a lot of timing available to us.

Gabriel Moreen: Nice, guys. Thank you very much.

Robert Flexon: And best of luck to you to Mike here. If I can just to follow up one more. I mean, you mentioned the continued success on the international. I mean, again, maybe another silo, if you will, to do, you know, the activities ongoing. How do you think about the strategic direction for the international business and businesses, maybe plural, adjacent to the US operations? Any thoughts on that front, especially if you think about these maturities? Well, I think on the international side, you know, for the near term, they'll continue to look on how to best strategically position their business, where we can take advantage of our storage capability.

Speaker Change: Because they don't go current until August of this year. So I think we're set up very well all the tailwind that Bob talked about I think we're setup.

Speaker Change: Best position, we could be as we go to take care of those 2006.

Speaker Change: Nice guys. Thank you very much.

Speaker Change: Best of luck to you Mike here, if I can just following up one more I mean, you mentioned the continued success on the international.

Speaker Change: Again, maybe another.

Speaker Change: Silo, if you will.

Speaker Change: The activity is ongoing how do you think about the strategic direction for the international business and businesses, maybe plural adjacent to the U S operations.

Speaker Change: Any thoughts.

Speaker Change: On that front, especially as you think about these maturities.

Speaker Change: Well I think on the international side for the near term, we'll continue to local how do they best strategically position their business, where we can take advantage of our storage capability. That's the key thing in Europe is that there is an important market for both propane so we'll try to optimize our flexibility.

Speaker Change: <unk> around storage and for those.

Speaker Change: Locations, where we're not necessarily as competitive or have a competitive advantage will continue to evaluate the portfolio and see.

Speaker Change: To the extent.

Speaker Change: We have as big of a footprint we have over there I think both on the international propane as well as domestic propane will continue to evaluate that.

Robert Flexon: And, Julio, I want to add, you made me think of something. I want to be clear that this intercompany loan international is, you know, we anticipate this year to generate between $130,000,000, $150,000,000 of excess free cash flow. All of that is still going to Corp. So none of that is involved in this intercompany loan. So it's generating great cash flow and helping the company support its dividends.

Speaker Change: I want to be clear that this intercompany loan international as we anticipate this year to generate between 130 $150 million of excess free cash flow.

Gabriel Moreen: Wonderful.

Gabriel Moreen: Excellent. I appreciate it very much.

Gabriel Moreen: Take care, guys. Thanks, Julia.

Speaker Change: All of that is still going to corp. So none of that is involved in this intercompany loans. So it's generating great cash flow and helping the company support its dividend.

Unknown Executive: Thank you.

Unknown Executive: As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question.

Speaker Change: Wonderful excellent I appreciate it very much take care guys.

Gabriel Moreen: Our next question comes from the line of Gabriel Moreen with Mizzou Hall. Your line is open. Hey, good morning, everyone.

Julien: Thanks Julien.

Speaker Change: Thank you.

Robert Flexon: Maybe I can start out in terms of the intercompany loan and I think also the segmentation of the Amerigas structure into these pods. Given the language around paying off the intercompany loan with free cash flow and the emphasis there, does that preclude at all asset sales at the Amerigas level? And I'm just curious, you know, with the segmentation into pods and maybe getting back to more regionalization, whether that's kind of revealed, you know, better regions or better performing regions or lesser performing ones and any implications for portfolio optimization.

Speaker Change: As a reminder, ladies and gentlemen that start one wanted to ask a question.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from a line of Gabriel Moreen with Mizuho. Your line is open.

Gabriel Moreen: Hey, good morning, everyone, maybe I can start out in terms of the inter company loan and I think also the segmentation of the amerigas structure introduced pods.

Speaker Change: Given the language around paying off the intercompany loan with free cash flow and the emphasis there does that does that preclude at all.

Speaker Change: Asset sales at the Amerigas level and I'm, just curious, it's a segmentation into pods and maybe getting back to more regionalization, whether that's kind of revealed.

Robert Flexon: I can take the first half, Gabe. The short answer is no. And I'm going to expand that. So it does not preclude any asset potential divestitures, you know, in terms of things that we're looking at underperforming assets that Amerigas and I want to be clear as well.

Speaker Change: Better regions or better performing regions, where our lesser performing Watson any implications for portfolio optimization.

Speaker Change: I can take the first half Gabe the short answer is no and I'm going to expand that so it does not preclude any asset potential divestitures.

Robert Flexon: On the other side of the fence, it does not preclude asset transactions at international either. Yeah, so I think it gave adding to that. So that any any sales, and as Sean mentioned, this doesn't preclude anything would really just accelerate the pay down of that in a company note. And we will continue to look at the portfolio and look where we have the right level of density and competitive advantage to the extent that we don't have the right level of density. And we're just kind of a me too in some of these markets, that I would that I would evaluate those for divestiture.

Speaker Change: <unk>.

Speaker Change: In terms of things that we're looking at underperforming assets at Amerigas, and I want to be clear as well on the other side of the fence. It does not preclude asset transactions at international.

Speaker Change: Either.

Speaker Change: Yes, so I think it gave adding to that so that any any sales.

Speaker Change: As Sean mentioned this doesn't preclude anything would really just accelerate the pay down of that intercompany note and.

Robert Flexon: So we have a lot of analysis we've done around that. You know, our thoughts around that are getting pretty crystallized at this point. So it's something that we'll continue to work towards as well.

Speaker Change: With that I would evaluate those for divestiture. So we have a lot of analysis, we've done around that.

Gabriel Moreen: Thanks, guys.

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

Speaker Change: Our thoughts around that are getting pretty crystallized at this point. So it's something that we will continue to to work work towards as well.

Speaker Change: Thanks, guys and then if I can maybe follow up Bob you mentioned, Bob in terms of the performance of the winter.

And how how well you've done operationally, but kind of a drill down on some of the cold weather we have experienced here in January.

Speaker Change: How you feel in terms of how amerigas has been performing and handling maybe capturing some of the opportunity from higher degree days and then also.

Robert Flexon: Sure, so I think on the Amerigas side, we certainly have benefited from the colder weather in January. I would say it does strain the system in Amerigas with some of the issues we have in our business processes. We're doing okay, but we have room for a lot of improvement. And as you notice on the one slide in the deck, slide five, where we talked about five key areas that the business process needs to improve. And, and that's so we can handle months like January, better than what we did. So again, I think we've performed relatively well but there's substantial room for improvement and that's that's going to be the focus of Mike and team for the balance of this year and get us in a better position to do even better performance as we approach next winter.

Speaker Change: Clearly marketing benefits from from Nat gas market volatility.

Speaker Change: That business has performed in the quarter given some of the wholesale gas market volatility that it's been out there.

Speaker Change: Sure. So I think on the Amerigas side.

Speaker Change: We certainly have benefited from the colder weather in January I would say it does strain the system in amerigas with some of the issues we have in our business processes. So.

Speaker Change: We're doing okay, but we have room for a lot of improvement.

Speaker Change: As you notice on the one slide in the deck slide five where we talked about.

Speaker Change: Five key areas that the business process needs to improve.

Speaker Change: And that's so we can handle months late January better than what we did so again I think we performed.

Robert Flexon: So this is the time where we really have to make a difference on how we run the business process. On the natural gas side and taking advantage of volatility, to the extent you have extended periods of cold, basically the utility is taking virtually all of the gas from energy services. you know, more short, brief bouts of cold, then we do take advantage of volatility in the marketplace. So what we saw in January is a bit of both. So we'll see in some opportunity there on volatility, but first and foremost, make sure we meet our obligations to the utility.

Speaker Change: Relatively well, but there is substantial room for improvement and Thats, what thats going to be the focus of Mike and team for the balance of this year and get us in a better position to do even.

Speaker Change: Better performance as we approach next winter so this.

Speaker Change: This is the time, where we really have to make a difference on how we run the business processes.

Speaker Change: On the natural gas side, and taking the taking advantage of volatility to the extent you have extended periods of old.

Speaker Change: Basically the utility is taking virtually all of the gas from <unk>.

Speaker Change: Energy services and to the extent it.

Robert Flexon: And I think one of the One of the best things I can say about the utility over this cold snap was when talking to the team out there, where they're sending, you know, near record send out of gas demand operationally, everything was calm in place, executing well, safely. So, you know, kudos to our utility here in Pennsylvania and to West Virginia in dealing with Extreme cold weather and doing so in a way that was seamless to our customers.

More short brief bouts of coal than we do take advantage of volatility in the marketplace. So what we saw in January is a bit of both so we're seeing some opportunity there on volatility, but first and foremost make sure we meet our obligations to the utility and I think one of the.

Speaker Change: One of the best things I can say about the utility over this cold snap was when talking to the team out there where they're sending near record send out of gas demand operationally everything was calm in place executing well safely. So.

Robert Flexon: Thanks, Bob.

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

Speaker Change: Kudos to our utility here in Pennsylvania, and West, Virginia and dealing with.

Speaker Change: Extreme cold weather and doing so in a way that was seamless to our customers.

Bob: Thanks, Bob and if I could just squeeze one more.

Speaker Change: Question on midstream can you maybe expand a little bit on.

Sean OBrien: Yeah, Gabe, I'll take the first part. So we'll talk about the margin and everything in terms of the margin, in general, was faked into our guidance, was anticipated. We did have one contract, you know, where we renewed at lower pricing. That actually happened last year. So there was some impact last year. Obviously, it's embedded into our guidance this year. In terms of, I'll remind you, we have a generally about a seven year tenure, on average, on our contracts. And we don't have, you know, there's stuff being renewed, but we don't see any, any massive risk or any specific risk in terms of pricing.

Speaker Change: Allocating additional capital to the acquisition you made there is that something that.

Speaker Change: It is active and ongoing should we expect.

Speaker Change: You're looking at potentially more deals and consolidation opportunities there.

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

Gabe: So we'll talk about the margin and everything in terms of the margin in general was baked into our guidance was anticipated we did have one contract.

Gabe: Yes.

Gabe: On average on our contracts and we don't have.

Gabe: From that asset this quarter, and then capacity management was down a little bit. So you talk about the opportunistic.

Sean OBrien: and Gabe appreciate the question on energy services and first on the Superior Acquisition. All of that was financed at the JV level, so it didn't utilize any of our capital capacity as a pair. But in general, as we look at opportunities. in that territory where we see a lot from third parties with data centers and new power generation and the like.

Speaker Change: Gabe I appreciate the question on energy services and first on the superior acquisition.

Speaker Change: All of that was financed at the JV level. So it didnt utilize any of our capital capacity at the parent.

Sean OBrien: And then also combine that with the fact that a lot of the infrastructure funds that own pipelines and storage that get near the end of life, which was the situation where the funds got near end of life, which is the situation that we had here. To the extent we've got synergies and it touches our existing infrastructure, these are good opportunities for energy services. So they will continue to be looking for those opportunities and assuming it meets our threshold for returns to add economic value, that we would we would pursue those opportunities. So we'll continue to look from an opportunistic point of view in the area and and strike when it makes sense for us to do so.

Speaker Change: In general as we look at opportunities.

Speaker Change: In that territory, where we see a lot just from third parties with data centers.

Speaker Change: New power generation and the like.

Speaker Change: And then also combine that with the fact that a lot of the infrastructure on that one.

Speaker Change: Pipelines and storage.

Speaker Change: Near the end of life, which was the situation we were.

Speaker Change: Where the funds got near end of life.

Speaker Change: Is the situation that we had here.

Speaker Change: To the extent, we've got the synergies and it touches our existing infrastructure. These are good opportunities for energy services. So they will continue to be looking for those opportunities and assuming it meets our threshold for returns to add economic value that we would we would pursue those opportunities. So we will continue to look from an opportune.

Gabriel Moreen: Great.

Gabriel Moreen: Thanks, everyone. And go Eagles. Yeah, I hear you.

Unknown Executive: Thank you. Ladies and gentlemen, I'm showing no further questions in the queue.

Speaker Change: Just a point of view in.

Speaker Change: In the area and.

Robert Flexon: I would now like to turn the call back over to Bob for closing remarks. Okay, well, thank you for your for your interest in participate participation in the call. Just leaving a couple of thoughts first on our natural gas side of the business, as I was just mentioning, we'll continue to be opportunistic and look for those investments that can drive further returns for the business utilizing our scale and our location out there will be a relentless focus on performance and safety and for our natural gas utility both in West Virginia and in Pennsylvania. It's just critical for us to make it a seamless Seamless delivery to our customers and recognizing, getting the recognition of the Cogen Award for Customer Service is something that we watch closely.

Speaker Change: Strike when it makes sense for us to do so.

Speaker Change: Great Thanks, everyone and co Eagles.

Speaker Change: I hear you.

Speaker Change: Thank you.

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

Bob: Okay, well thank you.

Bob: For your interest in participate participation in the call is late with a couple of thoughts first of our natural gas side of the business as I was just mentioning will continue to be opportunistic and look for those.

Bob: Investments that can drive further returns for the business utilizing our scale and our location out there there'll be a relentless focus on performance and safety for our natural gas utility.

Robert Flexon: On the LPG side, again, we're going to just make sure we're performing as well as we can. I think International is doing a very nice job running their business. And on Amerigas, we're at the beginning of a long journey here for calendar 2025, but we have the structure in place. We know the areas that we need to target and and we feel we can really drive a lot of value in doing so.

Bob: Both in West, Virginia, and Pennsylvania, It's just critical for us to make it a seamless.

Bob: Seamless delivery to our customers and recognizing you are getting the recognition of the co. Gen Award for customer service is something that we watch closely on the LPG side again, we're going to just make sure we're performing.

Bob: Well as we can I think international is doing a very nice job running their business and.

Robert Flexon: So with that, again, I thank you for your interest and look forward to further conversation.

Speaker Change: And on Amerigas, where at the beginning of a long journey here for calendar 2025, but we have the structure in place we know the areas that we need to target and.

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

Unknown Executive: You may now disconnect.

Speaker Change: And we feel we can really drive a lot of value in doing so so with that again I. Thank you for your interest and look forward to further conversations.

Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

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