UGI

• Amerigas
  • Year-to-date net customer attrition is 2%, the lowest level in a long time, indicating the business has stabilized after years of decline
  • Key operational improvements have been delivered: call centers have been reshored to the U.S., net promoter scores are 63% higher than July 2024 and 4.5x higher than July 2023, safety performance has improved dramatically, and the business is ahead of last year on securing sufficient delivery drivers
  • Management is preparing for the coming winter heating season and has set a target to achieve net customer growth from the current net attrition
  • Capex will remain at a modest, steady level focused on reducing the average age of the delivery fleet and upgrading facilities and storage infrastructure, with no expected large spikes in spending
• International LPG
  • The business has shifted from a shrinking profile to a growth orientation, with expansion plans targeting the larger European heating oil market
  • It is a high-performing business with mid-teens return on capital employed, low-to-mid 20% EBITDA margin, and 95% free cash flow conversion
  • Recent private take-private activity of European LPG peers has highlighted the undervalued nature of this franchise, attracting outside investor interest
• Midstream
  • Two well pad expansion projects are scheduled to launch in fiscal 27, one early in the year and one in the latter half
  • The Auburn pipeline is expected to reach first regulation towards the end of fiscal 27, with production growth returning to the Appalachia Basin territory
  • Management sees a strong pipeline of long-term growth opportunities driven by increasing power generation demand in Pennsylvania, particularly from data centers
• Utilities
  • A natural gas rate case settlement has been reached, structured with a two-stage rate increase and reliance on a regulatory formula (disk) for bridge recovery in 2028 and 2029 after the second tranche takes effect
  • The settlement is structured to address affordability concerns raised by the state governor, and the Public Utility Commission is expected to review it in late September to early October

• The company's 5-to-7-year long-term outlook framework remains intact, though midstream growth is now expected to be more mid-to-back-end loaded than previously projected; other business segments are expected to offset this delayed midstream growth in the interim
  • Management expects Amerigas to begin making meaningful cash distributions to parent company UGI starting in 2027, which would be the first such distribution during CFO Sean's tenure
  • Amerigas is on track to reach a leverage ratio below 4x by the end of the current year, and is projected to decline to the mid-to-low 3x range in subsequent years, supporting the planned distribution start
  • Management expects no major changes to capex for Amerigas, only continued modest, steady investment to upgrade assets

No explicit absolute financial figures or revenue contribution percentages for individual business segments were disclosed in the provided transcript. Only operational and qualitative performance updates are shared across segments.

• Amerigas quarterly results can be volatile due to unexpected weather patterns, which impact heating demand and volume, creating variability in annual performance
  • Midstream growth projects are tied to external power generation development, which depends on lengthy third-party permitting and grid interconnection processes, pushing growth out further into the planning horizon

Q: The quarter's Amerigas results were weak despite improving volume retention. Is this only due to weather, or are there other factors? / A: Year-to-date net customer attrition is only 2%, the lowest it has been in many years, confirming the business has stabilized. The weak quarterly results stem from unseasonably warm weather in March and April that reduced heating demand. Key leading indicators like safety, net promoter scores, and driver staffing have all improved significantly, and management is targeting net customer and volume growth this coming winter.

Q: Has the recent take-private activity of European LPG peers changed your approach to potential divestiture of the international segment, or is portfolio pruning complete? / A: Management constantly evaluates the portfolio to maximize shareholder value, so no definitive direction on future moves is given. The international business is a high-quality, efficiently run growth-oriented franchise, and recent third-party activity has highlighted its hidden value. The business is currently focused on preparing for winter and executing its expansion into the heating oil market.

Q: What is the leverage framework for planned Amerigas distributions to UGI starting in 2027, and how much growth capex will be required? / A: Amerigas is on track to hit a sub-4x leverage ratio by the end of the current year, a key milestone that will allow distributions to begin. Weather volatility is always a factor, but management is confident distributions will start in 2027 even under a modest weather outlook. Capex will remain at a steady modest level for fleet modernization and facility upgrades, with no major unexpected spending spikes planned.