Q1 2026 UGI Corp Earnings Call

February 5, 2026

Speaker #1: Good day, and thank you for standing by. Welcome to the 2026 earnings conference call. At this time, all participants are in a UGI Corporation Q1 listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to the UGI Corporation Q1 2026 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 that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Tameka Morris, Vice President of Investor Relations in ESG. Please go ahead.

Speaker #1: 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.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker, Tameka Morris, Vice President of Investor Relations in ESG. Please go ahead.

Speaker #1: I would now like to hand the conference over to your first speaker, Tameka Morris, Vice President of Investor Relations and ESG. Please go ahead.

Speaker #2: Good morning, everyone. Thank you for joining our fiscal 2026 first quarter earnings call. With me today are Bob Flexon, President and CEO, and Sean O'Brien, CFO.

Tameka Morris: Good morning, everyone. Thank you for joining our fiscal 2026 first-quarter earnings call. With me today are Bob Flexon, President and CEO, and Sean O'Brien, 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. 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. We will also describe our business using certain non-GAAP financial measures.

Q1 2026 UGI Corp Earnings Call

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Q1 2026 UGI Corp Earnings Call

UGI

Thursday, February 5th, 2026 at 2:00 PM

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Speaker #2: On today's call, we will review our first quarter financial results and key business highlights before concluding with a question-and-answer session. Before we begin, let me remind you that our comments today include certain forward-looking statements, which management believes to be reasonable as of today's date only.

Tameka Morris: 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. We will also describe our business using certain non-GAAP financial measures.

Speaker #2: As for results, they 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.

Speaker #2: As you know, we have a 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.

Speaker #2: Reconciliations of these measures to the comparable GAAP measures are available within our presentation. And now I'll turn the call over to

Tameka Morris: Reconciliations of these measures to the comparable GAAP measures are available within our presentation. Now I'll turn the call over to Bob.

Speaker #2: Bob. Thanks,

Bob Flexon: Thanks, Tameka, and good morning. Yesterday, we announced fiscal 2026 Q1 total reportable segments EBIT of $441 million, up 5% over the prior year period, which is in line with our expectation. Our natural gas businesses produce strong results driven by robust gas demand and the impact of the 2025 gas base rate case at our Pennsylvania utility. In our global LPG businesses, we capitalized on favorable weather in certain US regions and more than offset the impact of the previously announced divestitures through effective margin management and disciplined cost control. Throughout the company, we continue to advance operational excellence, safety, and cultural transformation, establishing the framework that will position UGI to further unlock intrinsic value. We are seeing early benefits from these efforts with improved safety metrics, better operational efficiency at AmeriGas, and continued strength in our natural gas businesses.

Speaker #3: Tameka. And good morning. Yesterday, we announced fiscal 2026 first quarter total reportable segments EBIT of $441 million up 5% over the prior year period, which is in line with our expectation.

Speaker #3: Our natural gas businesses produced strong results, driven by robust gas demand and the impact of the 2025 gas base rate case at our Pennsylvania utility.

Speaker #3: In our global LPG businesses, we capitalized on favorable weather and certain US impact of the previously announced regions and more than offset the divestitures through effective margin management and discipline cost control.

Bob Flexon: and disciplined cost control. Throughout the company, we continue to advance operational excellence, safety, and cultural transformation, establishing the framework that will position UGI to further unlock intrinsic value. We are seeing early benefits from these efforts with improved safety metrics, better operational efficiency at AmeriGas, and continued strength in our natural gas businesses.

Speaker #3: Throughout the company, we continue to advance operational excellence, safety, and cultural transformation. Establishing the framework that will position UGI to further unlock intrinsic value.

Speaker #3: We are seeing early benefits from these efforts with improved safety metrics, better operational efficiency at Amerigas, and continued strength in our natural gas businesses.

Speaker #3: In parallel, we are also positioning the company for the future through strong capital discipline with our LPG portfolio optimization substantially complete and our natural gas infrastructure well situated to capture growing demand in Pennsylvania.

Bob Flexon: In parallel, we are also positioning the company for the future through strong capital discipline, with our LPG portfolio optimization substantially complete and our natural gas infrastructure well situated to capture growing demand in Pennsylvania. I'll turn to the next slide. Safety remains foundational to everything we do, and I believe this to be a leading indicator of a well-run company. Across the enterprise, we saw year-over-year improvement in our safety metrics, and specifically at AmeriGas, a 45% reduction in reportable incidents and 60% less lost-time injuries compared to the prior year period. The operational transformation at AmeriGas continues to yield improved metrics. For instance, we've seen a reduction in our zero-fill rates and average miles driven to serve customers, all while delivering slightly higher retail volumes than last year. We've also experienced a reduction in customer service call volumes and continued improvement in our customer satisfaction metrics.

Speaker #3: I'll turn to the next slide. Safety remains foundational to everything we do, and I believe this to be a leading indicator of a well-run company.

Speaker #3: enterprise, we saw year-over-year Across the improvement in our safety metrics and specifically at Amerigas of 45% reduction in recordable incidents and 60% less lost time injuries compared to the prior year period.

Speaker #3: operational transformation at The Amerigas continues to yield improved metrics. For instance, we've seen a reduction in our zero-fill rates and average miles driven to serve customers.

Speaker #3: All while delivering slightly higher retail volumes than last year. We've also experienced a reduction in customer service call volumes and continued improvement in our customer satisfaction metrics.

Bob Flexon: AmeriGas now has an A-minus ranking from the Better Business Bureau, and this quarter we achieved the highest Net Promoter Score since we launched the current methodology in 2023, reflecting better processes and the progress being made to create efficient operations and optimal customer service. Taken together, our progress is delivering results, and we are pleased that Moody's upgraded AmeriGas's outlook to positive from negative this quarter, further validating the operational and financial improvements that are underway. At UGI International, our previously announced portfolio rationalization efforts are now substantially complete. Since fiscal 2025, we'd entered into agreements to divest LPG operations in seven European countries, which represented approximately 5% of UGI International's EBIT in the prior year. These divestitures, which in total will generate approximately $215 million in cash proceeds, support our objective to strengthen the corporation's balance sheet.

Speaker #3: now has an A-minus ranking from the Better Business Bureau, and this Amerigas quarter we achieved the highest net promoter score since we launched the current methodology in 2023.

Speaker #3: Reflecting better processes and the progress being made to create efficient operations and service. Taken together, our optimal customer progress is delivering results, and we are pleased that Moody's upgraded AmeriGas' outlook to positive from negative this quarter.

Speaker #3: Further validating improvements that are International, our previously announced portfolio rationalization efforts are now substantially Since fiscal 2025, we'd entered into agreements to divest LPG operations in seven European countries which represented approximately 5% of UGI international's EBIT in the prior year.

Speaker #3: These divestitures, which in total will generate approximately $215 million in cash proceeds, support our objective to strengthen the importantly, this action allows us to sharpen our focus on the markets where we have the strongest competitive positions and growth corporation's balance sheet and, opportunities to create value for our stakeholders.

Bob Flexon: Importantly, this action allows us to sharpen our focus on the markets where we have the strongest competitive positions and growth opportunities to create value for our stakeholders. Within our natural gas business, our teams continue to execute well in the midst of cold weather temperatures, maintaining reliable service while investing in the system. In aggregate, during the quarter, we deployed $225 million of capital, with 73% going to our regulated utilities businesses, primarily for infrastructure replacement and system betterment. At UGI Energy Services, our new Carlisle LNG storage and vaporization facility is now operational, backed by a long-term contract with our utility segment. This investment strengthens our integrated natural gas platform and allows us to meet growing demand in the region.

Speaker #3: Within our natural gas business, our teams continue to execute well in the midst of cold weather temperatures. Maintaining reliable service while investing in the system.

Speaker #3: In aggregate, during the quarter, we deployed 225 million of capital with 73% going to our regulated utilities businesses primarily for infrastructure replacement and system betterment.

Speaker #3: UGI Energy Services, our new Carlisle At LNG storage and vaporization facility is now operational, backed by a long-term contract with our utility segment. This investment strengthens our integrated natural gas platform and allows us to meet growing demand in the region.

Speaker #3: Lastly, subsequent to the quarter, we filed a gas base rate case for UGI utilities and Mountaineer Gas Company requesting an overall distribution rate increase of approximately 99 million and 27 million respectively.

Bob Flexon: Lastly, subsequent to the quarter, we filed a gas base rate case for UGI Utilities and Mountaineer Gas Company, requesting an overall distribution rate increase of approximately $99 million and $27 million, respectively. Both rate cases support UGI's continued investment in over $500 million of system and technology upgrades as we prioritize safe and reliable natural gas service for our customers. While we continue to invest in our infrastructure, our teams work towards keeping natural gas service affordable. As an example, over the next three years, we will contribute $3 million to the UGI Utilities Operation Share Energy Fund, which assists low- and moderate-income customers with paying their heating bills. This funding for Operation Share is a donation from UGI and is not included in the company's rates. With that, I'll turn the call over to Sean, who will walk you through our financial results for the quarter.

Speaker #3: Both rate cases support UGI's continued investment in over 500 million of system and technology upgrades as we prioritize safe and reliable natural gas service for our customers.

Speaker #3: While we continue to invest in our infrastructure, our teams work towards keeping natural gas service affordable. As an example, over the next three years, we will contribute $3 million to the UGI utilities operation share energy fund, which assists low and moderate-income customers with paying their heating bills.

Speaker #3: This funding for operational share is a donation from UGI and is not included in the company's rates. And with that, I'll turn the call over to Sean who will walk you through our financial results for the

Speaker #3: quarter. Thanks,

Sean O'Brien: Thanks, Bob, and good morning, everyone. For the fiscal 2026 first quarter, UGI delivered total reportable segment EBIT of $441 million, up $21 million over the prior year. Higher gas base rates in Pennsylvania, colder weather, and increased unit margins at UGI International were the primary drivers of this increase, which was partially offset by higher operating and administrative expenses in our domestic segments and the effect of the previously announced LPG divestitures. Next, adjusted diluted EPS was $1.26 for the quarter in comparison to $1.37 in the prior year. This anticipated decline reflects the absence of investment tax credits realized last year, higher interest expense, and lost earnings from the divestitures in Hawaii, Italy, and Austria, partially offset by the strong segment-level performance. Turning to the drivers of each segment's results, the utilities delivered EBIT of $157 million, up $16 million over the prior year.

Speaker #2: Bob, and good morning, everyone. For the fiscal 2026 first quarter, UGI delivered total reportable segment EBIT of $441 million. Up $21 million over the prior year.

Speaker #2: Higher gas base rates in Pennsylvania, colder weather, and increased unit margins at UGI International were the primary drivers of this increase, which was partially offset by higher operating and administrative expenses in our domestic segments and the effect of the previously announced LPG divestitures.

Sean O'Brien: Next, adjusted diluted EPS was $1.26 for the quarter in comparison to $1.37 in the prior year. This anticipated decline reflects the absence of investment tax credits realized last year, higher interest expense, and lost earnings from the divestitures in Hawaii, Italy, and Austria, partially offset by the strong segment-level performance. Turning to the drivers of each segment's results, the utilities delivered EBIT of $157 million, up $16 million over the prior year.

Speaker #2: Next, adjusted diluted EPS was $1.26 for the quarter, in comparison to $1.37 in the prior year. This anticipated decline reflects the absence of investment tax credits realized last year.

Speaker #2: Higher interest expense, and lost earnings from the divestitures in Hawaii, Italy, and Austria partially offset by the strong segment-level performance. Turning to the drivers of each segment's results, the utilities delivered EBIT of $157 million up 16 million over the prior year.

Speaker #2: Gas utility service territories experienced temperatures that were approximately 21% colder than the prior year, and this drove a 16% increase in core market volumes.

Sean O'Brien: Utility service territories experienced temperatures that were approximately 21% colder than the prior year, and this drove a 16% increase in core market volumes. We also saw sustained customer additions, with over 3,500 residential, commercial, and industrial heating customers added during the quarter. Total margin increased $28 million, primarily due to higher gas base rates that went into effect in Pennsylvania at the end of October 2025. While the colder weather contributed incremental margin, our weather normalization mechanism worked as designed, mitigating a significant portion of the weather impact and providing bill stability for our customers. Operating and administrative expenses increased $9 million, reflecting higher personnel and maintenance expenses. Next, midstream and marketing reported EBIT of $88 million in comparison to the $95 million in the prior year.

Speaker #2: We also saw sustained customer additions, with over 3,500 residential, commercial, and industrial heating customers added during the quarter. 28 million, primarily due to Total margin increased higher gas base rates that went into effect in Pennsylvania at the end of October 2025.

Speaker #2: contributed incremental margin, our While the colder weather weather normalization mechanism worked as designed. Mitigating a significant portion of the weather impact and providing bill stability for our customers.

Speaker #2: Operating and administrative expenses increased $9 million, reflecting higher personnel and maintenance expenses. Next, midstream and marketing reported the $95 million in the prior year.

Speaker #2: While temperatures were 18% colder than the prior year period, which provided some, was largely offset by pipeline rate incremental margin benefit. This increases, which we expect to recover over time starting in this fiscal year.

Sean O'Brien: While temperatures were 18% colder than the prior year period, which provided some incremental margin benefit, this was largely offset by pipeline rate increases, which we expect to recover over time starting in this fiscal year. Operating and administrative expenses increased $6 million, primarily due to higher personnel-related expenses and additional plants placed in service at the end of the last fiscal year. Turning to the global LPG businesses, UGI International reported EBIT of $124 million, up $14 million over the prior year period, largely due to continued operating efficiencies within the business, which also offset a decline due to divestitures. Retail LPG volumes were lower than the prior year due to reduced volume from crop drying campaigns, the divestiture of our LPG businesses in Italy and Austria, and continued structural conservation.

Speaker #2: Operating and administrative expenses increased $6 million. Primarily due to higher personnel-related expenses and additional plants placed in service at the end of the last fiscal year.

Speaker #2: global LPG businesses, Turning to the UGI International reported EBIT of $124 million, up 14 million over the prior year period, largely due to the business, which also continued operating efficiencies, within offset a decline due to divestitures.

Speaker #2: volumes were lower than the prior year due to reduced volume from crop-drying Retail LPG campaigns, the divestiture of our LPG businesses in Italy and Austria, and continued structural conservation.

Speaker #2: Total margin increased $20 million, primarily due to effective margin management and favorable foreign currency translation effects partially offset by the lower retail volumes. Operating and administrative expenses were comparable on a year-over-year basis, as benefits from the divestitures previously mentioned, as well as lower distribution and maintenance expenses, were fully offset by unfavorable foreign currency translation effects.

Sean O'Brien: Total margin increased $20 million, primarily due to effective margin management and favorable foreign currency translation effects, partially offset by the lower retail volumes. Operating and administrative expenses were comparable on a year-over-year basis, as benefits from the divestitures previously mentioned, as well as lower distribution and maintenance expenses, were fully offset by unfavorable foreign currency translation effects. At AmeriGas, the business reported EBIT of $72 million, down $2 million versus the prior year period. Total retail LPG volume was up 1 million gallons due to the effects of colder weather in the east, which was partially offset by warmer weather in the west, and the divestiture of our Hawaii operations. In addition, there was an improvement in net customer attrition on a year-over-year basis, stemming from the operational transformation taking place in the business.

Speaker #2: At Amerigas, the business reported EBIT of $72 million down $2 million versus the prior year period. Total retail LPG volume was up $1 million gallons, due to the effects of colder weather in the East, which was partially offset by warmer weather in the West, and the divestiture of our Hawaii operations.

Speaker #2: net customer attrition on a year-over-year basis, stemming from the In operational transformation taking place in the the business, total margin was up LPG unit margins were partially offset by $2 million, as higher lower fee income.

Sean O'Brien: In aggregate for the business, total margin was up $2 million, as higher LPG unit margins were partially offset by lower fee income. Operating and administrative expenses increased $8 million, largely due to continued investment in customer-facing initiatives to drive retention and improve the customer's experience, and this led to higher personnel-related and advertising expenses. Moving to liquidity, at the end of the quarter, UGI had available liquidity of $1.6 billion, up $100 million over the prior year, inclusive of cash and cash equivalents, and available borrowing capacity on our revolving credit facilities. We continue to make progress on our balance sheet objectives. On the credit front, we were pleased that Moody's upgraded AmeriGas Partners' outlook to positive while affirming the B1 corporate family rating.

Speaker #2: Operating and administrative addition, there was an improvement in due to continued investment in customer-facing initiatives to drive expenses increased $8 million, largely retention and improve the customer's experience, and this advertising led to higher personnel-related and expenses.

Speaker #2: Moving to had available liquidity of $1.6 billion, up $100 million over the prior year. Inclusive of cash and cash equivalents, and available borrowing capacity on our revolving credit facilities.

Speaker #2: On the balance sheet objectives, we continue to make progress on our balance credit front. We were pleased that Moody's upgraded AmeriGas Partners' outlook to positive while affirming the B1 corporate family rating.

Speaker #2: This reflects the progress we're making in stabilizing and improving the business. And we remain focused on reducing leverage to achieve our long-term target of sub-4.5 times through a combination of debt reduction, an EBIT growth.

Sean O'Brien: This reflects the progress we're making in stabilizing and improving the business, and we remain focused on reducing leverage to achieve our long-term target of sub-4.5 times through a combination of debt reduction and EBIT growth. Now I'll turn the call over to Bob for his closing remarks.

Speaker #2: Now, I'll turn the call over to Bob for his closing remarks.

Bob Flexon: Thanks, Sean. UGI delivered a solid first quarter reflecting the continued execution of our strategic priorities. Total reportable segment EBIT increased by 5% year-over-year, driven by strength in our natural gas businesses and disciplined margin management in our global LPG operations. At AmeriGas, we're making tangible progress. Safety incidents are down significantly, operational metrics are improving, and volume retention levels have largely stabilized. We remain focused on the crucial work ahead, particularly during these winter months, as our businesses work to meet the season's strong demand. We will continue to advance operational excellence and safety across our businesses, maintain disciplined capital allocation, and position our natural gas infrastructure to capture growth opportunities. I want to thank our employees for their dedication to safely serving our customers. And with that, I'll turn the call over to the operator for questions.

Speaker #1: Sean. UGI delivered Thanks, continued execution of our strategic priorities. a solid first quarter reflecting the EBIT increased by 5% year-over-year, driven by strength in our natural gas businesses and disciplined margin management in our global LPG operations.

Speaker #1: At Amerigas, we're making tangible incidents are down levels have largely stabilized. We remain focused on the crucial work ahead, particularly during these winter months, as our businesses work to meet progress.

Bob Flexon: We remain focused on the crucial work ahead, particularly during these winter months, as our businesses work to meet the season's strong demand. We will continue to advance operational excellence and safety across our businesses, maintain disciplined capital allocation, and position our natural gas infrastructure to capture growth opportunities. I want to thank our employees for their dedication to safely serving our customers. And with that, I'll turn the call over to the operator for questions.

Speaker #1: the season's strong operational excellence and safety across our businesses, maintain disciplined capital demand. We will continue to advance allocation, and position our significantly, operational metrics are natural gas infrastructure to opportunities.

Speaker #2: I want to thank our employees for their dedication to

Speaker #2: safely serving our

Speaker #2: call over to the operator for

Speaker #2: questions. Certainly.

Operator: Certainly. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile our Q&A roster. Our first question will be coming from Gabriel Moreen of Mizuho. Your line is open.

Speaker #3: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your question, please press star 11 again.

Speaker #3: Please stand by while we your name to be announced. capture growth compile our Q&A roster. Our first question will be coming from Gabrielle Maureen.

Speaker #3: Of Mizuho, your line is

Speaker #4: Hey, good morning,

Gabriel Moreen: Hey, good morning, team. Just wanted to ask a couple of questions. Wanted to ask, I guess, first of all, in terms of the recent extreme winter weather we've been having, which certainly seems like it has the potential to benefit some of your segments. So maybe if I can just ask about how you think AmeriGas has been performing through that extreme weather in terms of deliveries and ability, I think, in margins and the like. And then also maybe if I can pivot to marketing and the extent to which some of the volatility in natural gas prices may have benefited that business or not.

Speaker #4: Team, I just wanted a couple of terms of the recent extreme winter safety questions. Open weather we've been having, wanted to ask, I guess, first of all, in which certainly seems like it has the potential to benefit some of your segments.

Speaker #4: So maybe if I can just ask about how you think AmeriGas has been performing through that extreme weather, in terms of things like margins and the like.

Gabriel Moreen: benefited that business or not.

Speaker #4: not.

Speaker #5: Good morning, Gabe.

Bob Flexon: Good morning, Gabe. Thanks for the question. On AmeriGas, I've talked about the past years in our preparation for this winter. We want to see certainly a substantially improved performance from AmeriGas. And when I think about our ultimate goals, I want it to be about 60% improved this winter and then 100% by the time we get to next winter. And we've seen a lot of good data points on that. We've had record safety in AmeriGas. We've had fewer recordable injuries within AmeriGas than in the history of the company, highest Net Promoter Scores from customers. So we're seeing promoter scores in January significantly higher than where they were last January and a lot fewer calls to customer service center. That said, we're seeing stress in the system in certain geographic locations that have had extreme weather.

Speaker #5: Thanks for the question. On Amerigas, I've talked about the past years in our preparation for this winter. We want to see certainly a substantially improved performance from Amerigas.

Speaker #5: And when I think about our ultimate goals, 60% improved this winter and then I want it to be about 100% by the time we get to next winter.

Speaker #5: And we've seen a lot of good data points on that. We've had record safety in Amerigas. We've had less recordable injuries within Amerigas than in the history of the really in the history of the company.

Speaker #5: Highest net promoter scores from customers. So we're seeing promoter scores in January significantly higher than where they were—a lot fewer calls to the customer service center.

Bob Flexon: Scores from customers. So we're seeing promoter scores in January significantly higher than where they were last January and a lot fewer calls to customer service center. That said, we're seeing stress in the system in certain geographic locations that have had extreme weather.

Speaker #5: That said, we're seeing stress in the system in certain geographic locations that have had extreme weather. And it's last January. And a not so much the cold temperatures.

Bob Flexon: It's not so much the cold temperatures. It's conditions of the roads that really impact delivery and getting the propane to the right places. So the first part of January, we saw warmer weather, nothing too exciting, and suddenly that really changed by about the third week of January. So now we're seeing significant demand. We've got drivers out there working long hours. We've got propane into the right places. So we're out there doing what we need to be doing. I'm sure that there's going to be areas, when we look back, that we know where we could perform better. But there's no question that the system is seeing very strong demand. Given the size of our footprint, we're able to take resources in the west, which have been warmer, that have been experiencing a warm winter, and redeploy them to the east.

Speaker #5: It's conditions of the roads that delivery. And getting the propane really impact to the right places. So the first part of January, we saw warmer weather, nothing too exciting.

Speaker #5: And suddenly that really changed by about the third week of January. So now we're seeing significant demand we've got drivers out there working long hours.

Speaker #5: We've got propane into the right places. So we're out there doing what we need to be doing. I'm sure that there's going to be areas when we look back that we know where we could perform better.

Speaker #5: But there's no So And a lot of So we'll see where we are on that right now.

Speaker #5: question that the system is seeing very strong demand given the size of our footprint. We're able to take resources in the West, which have been warmer, that have been experiencing a warm East.

Speaker #5: winter, and redeploy them to the we've done a lot to make sure we've got the right resources in the area. I think right now we're in the middle of that battle.

Bob Flexon: So we've done a lot to make sure we've got the right resources in the area. We're in the best battle, and a lot of the demand that has surged, that people will see through the end of January, will end in the past quarter. So we're there right now. We're glad for the improved state in the last winter. We're glad we're prepared for this winter. So we'll see what we can do to finally shake things up where we are on that. But right now, we're still in the midst of an opportunity in the Atlantic states.

Speaker #5: the demand that's surged we're seeing end of January. So we're at it right now. I'm glad for the improvement last winter. We have prepared for this winter.

Speaker #6: Hey, Gabe, maybe to round out a couple of the other divisions. I'll remind you, obviously, our utilities were in areas that saw extreme cold weather.

Sean O'Brien: Hey, Gabe, maybe to round out a couple of the other divisions, I'll remind you, obviously, our utilities were in areas that saw extreme cold weather. So we're thrilled to see that track record. Great quarter. And number one, we do have small gains in both Pennsylvania and West Virginia. We do benefit selectively, but mainly, it's the customers that are really benefiting from the weather trackers. And then, as I think you mentioned, our midstream marketing business, just a couple of thoughts there. Weather definitely benefits that business, typically. But at some point, the capacity that that business has is there for the utility. So when you see longer periods of extended weather, of cold weather, the utility will need some of that capacity.

Speaker #6: So we're seeing in both benefit to mainly the customers that are really benefiting from the weather trackers. And then as you I think you mentioned our midstream marketing business, just a couple of thoughts there, weather definitely benefits that business typically.

Sean O'Brien: Weather definitely benefits that business, typically. But at some point, the capacity that that business has is there for the utility. So when you see longer periods of extended weather, of cold weather, the utility will need some of that capacity.

Speaker #6: But at some point, the capacity that that business has is there for the utility. So when you see longer periods of extended weather, cold weather, the utility will need some of that capacity.

Speaker #6: But Joe and his team, I think, are doing a terrific job of taking advantage, obviously, of the environment, but also making sure that the utility has the gas that it needs.

Sean O'Brien: But Joe and his team, I think, are doing a terrific job of taking advantage, obviously, of the environment, but also making sure that the utility has the gas that it needs.

Speaker #4: Great. Thanks, John. I appreciate that. And then Bob as well. Maybe if I can pivot to the utility segment and in light of, I think, the governor in Pennsylvania's comments earlier this week and his, I think, budget address around affordability and whatnot.

Gabriel Moreen: Great. Thanks, Sean. I appreciate that and Bob as well. Maybe if I can pivot to the utility segment. In light of, I think, the governor and Pennsylvania's comments earlier this week in his, I think, budget address around affordability and whatnot, you addressed some of that in your comments, Bob. But can you talk about the decision to come back for a rate case in Pennsylvania, I think, relatively quickly, relative to your historical cadence? And also, are you asking for anything structurally here in the rate case? I know you've got weather norm and the like, but anything around trackers and the like? So I'll just leave it at that.

Speaker #4: You addressed some of that in your comments, Bob. But can you talk about the decision to come back for a rate case in Pennsylvania?

Speaker #4: I think relatively quickly, relative to your historical cadence. And also are you asking for anything structurally here in the rate case? I know you've got weather norm and like?

Gabriel Moreen: I know you've got weather norm and the like, but anything around trackers and the like? So I'll just leave it at that.

Speaker #4: So I'll just leave it at that.

Speaker #5: Nothing extraordinary. Or unusual in there. Gabe, I would say that we as a company and from the very first day that I walked in the door, I've been talking with Hans Bell, our president of the utility, about affordability.

Bob Flexon: Nothing extraordinary or unusual in there, Gabe. I would say that we, as a company, and from the very first day that I walked in the door, I've been talking with Hans Bell, our president of the utility, about affordability and really managing our OpEx. Part of what we're doing at AmeriGas, we're also doing throughout the company, is driving efficiency as much as we possibly can. To the extent that we are more efficient, particularly on OpEx, that's a direct benefit to the customer bill. So we've been focusing on affordability long before people started talking about affordability. So the CapEx is more of what we've been doing in the past around infrastructure. So it's just keeping it safe in Pennsylvania and where we stand on the affordability ladder.

Speaker #5: And really managing our OPEX. And part of what we're doing at Amerigas, we're also doing throughout the company is driving efficiency as far as as much as we possibly can.

Speaker #5: And to the extent that we are more efficient, particularly on OPEX, that's a direct benefit to the customer bill. So we've been focusing on affordability long before people started talking about affordability.

Bob Flexon: So we've been focusing on affordability long before people started talking about affordability. So the CapEx is more of what we've been doing in the past around infrastructure. So it's just keeping it safe in Pennsylvania and where we stand on the affordability ladder.

Speaker #5: So the CAPEX is more of what we've been doing in the past around infrastructure. So it's just keeping it safe in Pennsylvania and where we stand on the affordability ladder.

Speaker #5: We're below a lot of the other utilities in the state. And we'll continue to focus keenly on

Bob Flexon: We're below a lot of the other utilities in the state, and we'll continue to focus keenly on that.

Gabriel Moreen: Thanks, Bob. If I could just sneak one more in around the commentary on being well-positioned for increasing natural gas demand and PA and where things stand on, I think, the NDAs you've mentioned the last couple of quarters, how those are progressing and potential timing.

Speaker #4: more in around the

Speaker #4: Thanks, Bob. And if I could just sneak one in on being well-positioned for increasing natural gas demand in PA and where things stand on, I think, the NDAs you’ve mentioned in the last couple of timings.

Speaker #5: Everything's progressing as they should. I mean, we can move faster than the power providers or the data centers. But we're engaged in a significant number of discussions.

Bob Flexon: Everything's progressing as they should. I mean, we can't move faster than the power providers or the data centers, but we're engaged in a significant number of discussions. We've got a small group that has kind of moved to the next level. I'm hoping that we'll be able to announce something during this fiscal year. But there's a lot of discussion out there. And then also, I think, most recently, with the directions from the White House and the 13 state governors around emergency procurement of more power, just is even an added benefit on top of the data center, what was progressing anyway. So we're in a discussion with a number of power providers, and we'll continue to engage in all that. And again, like I said, I hope that we'll be able to announce some things during the course of this fiscal year.

Speaker #5: We've got a small group that have kind of moved to the next level. I'm hoping that we'll be able to announce something during this fiscal year.

Speaker #5: But it's there's a lot of discussion out there. And then also, I think most recently with the directions from the White House and the 13 state governors around emergency procurement of more power, just is even an added benefit on top of that, the data center, what was progressing anyway.

Bob Flexon: top of the data center, what was progressing anyway. So we're in a discussion with a number of power providers, and we'll continue to engage in all that. And again, like I said, I hope that we'll be able to announce some things during the course of this fiscal year.

Speaker #5: So we're in a discussion with a number of power providers. And we'll continue to engage in all that. And again, like I said, I hope that we'll be able to announce some things during the course of this fiscal

Speaker #5: So, we're in a discussion with a number of power providers, and we'll continue to engage in all that. And again, like I said, I hope that we'll be able to announce some things during the course of this fiscal year. Thanks, Bob.

Gabriel Moreen: Thanks, Bob. Appreciate it.

Speaker #4: Appreciate

Speaker #1: And as a

Operator: As a reminder, to ask a question, please press star 11 on your telephone. Our next question will be coming from Paul Zimbardo of Jefferies. Your line is open, Paul.

Speaker #1: reminder to ask a question, please press star 11 on your telephone. Our next question will be coming from Paul Zimbardo of Jefferies. Your line is open,

Speaker #1: Paul. Hi, good morning, team.

Paul Zimbardo: Hi. Good morning, team. Thank you.

Speaker #7: Thank you.

Speaker #5: Good morning, Paul.

Gabriel Moreen: Good morning, Paul.

Speaker #7: I was going to ask, I saw the press release yesterday that you're bringing Tameka Morris on board, creating that Chief Strategic Officer role. Just curious, kind of, why now?

Paul Zimbardo: I was going to ask, I saw the press release yesterday that you're bringing Sid on board, creating that chief strategy officer role. Just curious kind of why now? What are the mandates? You talk a lot about growth in there, but just if you give some color on why create that role at this time.

Speaker #7: What are the mandates? You talk a lot about growth in there. But just if you give some color on why create that role at this

Speaker #7: time?

Speaker #5: Sure, Paul.

Bob Flexon: Sure, Paul. Thanks for the question. One of the things that I worked up with the management team when I got here was 4 critical stands that we're taking as a company. One of the stands that we've defined is building a sustainable future. When I think about my first, whatever, 14, 15 months here, focused relentlessly on day-to-day operations, putting the discipline and the skill set within the organization of strong business processes, putting quality into the system, getting rid of rework, and things of that nature. We are going to continue to do that. That's because 99.9% of our employees have an impact on that every single day.

Speaker #5: Thanks for the question. And one of the things that I worked up with the management team when I got here was four critical stands that we're taking as a company.

Speaker #5: One of the stands that we've defined is building a sustainable future. And when I think about my first, whatever, 14, 15 months here, focus relentlessly on day-to-day operations, putting the discipline and the skill set within the organization of strong business processes, putting quality into the system, getting rid of rework and things of that nature.

Speaker #5: And we are going to continue to do that. And that's because 99.9% of our employees have an impact on that every single day. that, if you will, the muscle to do that building that skill set and building within the company.

Bob Flexon: We are going to continue to do that. That's because 99.9% of our employees have an impact on that every single day.

Bob Flexon: This is the time, though, as we really have been building that skill set and building, if you will, the muscle to do that within the company. [We] need to start looking. I want to start looking more to the medium term and longer term. So when I want to live true to that stand of building a sustainable future, that we're looking, what's the right portfolio for the company? Are there opportunities extrinsically for this company? How do we think about products? How do we think about maybe some of the issues from an environmental standpoint that could impact us at some point in the future, regulatory, things of that nature? So it's kind of lifting my head up a little bit and seeing what's a little bit further down the road for the company.

Speaker #5: Need to start looking I want to start looking more to the medium term and longer term so when I want to live true to that stand of building a sustainable future that we're looking what's the right portfolio for the company?

Speaker #5: Are there opportunities, extrinsically, for this company? How do we think about products? How do we think about maybe some of the issues from an environmental standpoint that can impact us at some point in the future?

Speaker #5: Regulatory, things of that nature. So it's kind of lifting my head up a little bit and seeing what's a little bit further down the road for the company.

Speaker #5: So I think it's kind of the natural growth of what we want to do as part of the company and building for that future.

Bob Flexon: So I think it's kind of the natural growth of what we want to do as part of the company and building for that future. Sid and I have worked together in the past. He's very skilled, understands the energy industry very well, and I think he's going to bring a lot of value to us when we start looking for what are our longer-term objectives for the company, for the portfolio, for opportunities. So it's kind of, to me, just the natural evolution. But I will continue to spend the vast majority of my time on focusing on making sure when we have winters like this that we can be the best we possibly can be to keep all of our customers safe and warm. So that's kind of the background, Paul.

Speaker #5: Sid and I have worked together in the past. He's very skilled, understands the energy industry, very well. And I think he's going to bring a lot of value to us when we start looking for long what our longer-term objectives for the company, for the portfolio, for opportunity.

Speaker #5: So it's kind of, to me, just the natural evolution. But I will continue to spend the vast majority of my time on focusing on making sure when we have winters like this that we can be the best we possibly can be to keep all of our customers safe and warm.

Speaker #5: So that's kind of the background, Paul. It's just kind of where I feel it's time for a little bit further looks down the road.

Bob Flexon: It's just kind of where I feel it's time for a little bit further looks down the road.

Speaker #7: Okay. I appreciate that. Glad to have him back. One other smaller one, if I can, just on the midstream business. You had a comment about margin was comparable year over year.

Paul Zimbardo: Okay. I appreciate that. Glad to have him back. One other smaller one, if I can. Just on the midstream business, you had a comment about margin was comparable year-over-year, and you said there was a lag in recovery of a pipeline transportation cost. Just if you could quantify what that is, and should that create a tailwind in the rest of the fiscal year? Thank you.

Speaker #7: And you said there was a lag in recovery of a pipeline transportation cost. Just if you could quantify what that is and should that create a tailwind in the rest of the fiscal year?

Speaker #7: Thank you.

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