UGI CORP /PA/ Q2 FY2025 earnings call

• Adjusted diluted EPS increased 12% year-over-year, the highest for the second quarter and year-to-date. - Increased fiscal 2025 adjusted diluted EPS guidance to $3 to $3.15. - LNG infrastructure operated at peak capacity during cold weather. - Initiated expansion project to double liquefaction capacity at Manning facility, expected to be fully operational by fiscal 2026. - Deployed $160 million in capital investment primarily in natural gas businesses. - Utilities customer base grew by over 6,600 new accounts. - AmeriGas operational improvements with POD model reducing customer attrition. - UGI International reduced jetty damage headwind estimate.

The Utility segment had an EBIT of $241 million for the quarter, up $15 million year-over-year, driven by colder weather but offset by higher operating and administrative expenses. The Midstream & Marketing segment reported EBIT of $154 million, comparable to the prior year, with total margin up $2 million due to strong capacity management and gas marketing. UGI International saw LPG volumes decline 4%, but EBIT grew $12 million due to operational efficiencies. AmeriGas had EBIT up $16 million year-over-year, fueled by colder weather and margin improvements, though partially offset by customer attrition.

• Increased fiscal 2025 adjusted diluted EPS guidance range to $3 to $3.15, driven by favorable weather, AmeriGas operational improvements, and UGI International headwind reduction. - Weather conditions in fiscal Q2 drove incremental earnings, with planned operational investments to be executed in the second half. - AmeriGas operational improvements contributing to lower customer attrition and increased year-to-date EBIT. - UGI International revised jetty damage headwind estimate to approximately $0.04 from prior $0.05 to $0.08.

• Weather impacts on earnings. - Customer attrition at AmeriGas. - Foreign currency volatility affecting UGI International. - Trade and tariff policies potentially impacting propane prices and costs.

Q: Hi, good morning. Just wanted to start out with AmeriGas. Clearly some improved performance with some benefits from some weather here. Can you just talk about kind of, I guess, learnings coming out of the winter and also maybe what you're targeting kind of going into this upcoming fiscal year? And then on a related question, I think, last quarter you talked about your targeting trying to refinance the '26 maturities by the end of this fiscal year. Can you just give us an update there? Are you still comfortable with that objective?

A: Sure. On AmeriGas, focused on improving business processes between now and next year, working on routing, purchasing, customer value proposition, etc. On refinancing, still focused on refinancing $664 million due in late August, cash generation at AmeriGas supporting deleveraging, bonds holding well, still comfortable with objective.

Q: Hi, Bob, thank you for all that color on AmeriGas. Is there any quantification that you'd be willing to put on? How much incremental margin or EBITDA you see from AmeriGas as you turn into fiscal 2026? I know that there's been a little bit weaker performance, but there's been some strong performance in the past. Do you think you can get back to some of that EBITDA level that you've seen in the historical periods?

A: Can't put a number on it now, but focusing on strengthening business processes, customer value proposition, expecting to see improvement by next winter, no cost required, just structured problem-solving.

Q: Just if you could comment a little bit on the fiscal second half drivers, just know that the implied net loss is particularly high versus historical levels. It sounded like you're pulling forward some costs into the second half of the fiscal year from the next fiscal year, but just if you could discuss the drivers that would be helpful.

A: Some work, both capital and OpEx, delayed and pushed into second half due to colder weather. Company typically earns most earnings in first half, but guidance raised, AmeriGas performing better than expected, focusing on sustainable efficiencies, timing of costs is key.