Fiscal 2025 First Quarter Earnings Presentation February 6, 2025 About This Presentation This presentation contains statements, estimates and projections that are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended). Such statements use forward-looking words such as "believe," "plan," "anticipate," "continue," "estimate," "expect," "may," or other similar words and terms of similar meaning, althou ...

Financial Performance - Q1 GAAP diluted EPS was $1.74 and adjusted diluted EPS was $1.37, compared to GAAP diluted EPS of $0.44 and adjusted diluted EPS of $1.20 in the prior-year period, representing a 14% increase in adjusted diluted EPS[4] - Net income attributable to UGI Corporation for the three months ended December 31, 2024, was $375 million, significantly up from $94 million in the same period of 2023[25] - Adjusted net income attributable to UGI Corporation for the twelve months ended December 31, 2024, was $695 million, compared to $625 million for the same period in 2023, reflecting an increase of 11.2%[26] - Earnings per share (diluted) for the three months ended December 31, 2024, was $1.74, compared to $0.44 for the same period in 2023, marking a substantial increase[25] Revenue and Segment Performance - Total revenues for the three months ended December 31, 2024, were $2,030 million, a decrease of 4.3% compared to $2,121 million in the same period of 2023[25] - Revenues for the Utilities segment were $485 million, a decrease of 2% from $493 million in the prior-year period[12] - UGI International revenues decreased by 12% to $638 million from $725 million in the prior-year period[18] - Total margin for the Midstream & Marketing segment decreased by 11% to $138 million from $155 million in the prior-year period[15] - AmeriGas Propane's total margin decreased by $15 million primarily due to lower margin from non-core energy marketing activities[22] - UGI International reported revenues of $638 million for the three months ended December 31, 2024, down from $725 million in the same period of 2023, a decrease of 12.0%[25] Capital Expenditures and Investments - Capital expenditures for the Utilities segment increased by 29% to $106 million from $82 million in the prior-year period[12] Liquidity and Financial Position - Available liquidity was approximately $1.5 billion as of December 31, 2024[4] Interest and Adjustments - The total interest expense for the twelve months ended December 31, 2024, was $396 million, slightly up from $387 million in 2023[25] - The company reported total adjustments of $145 million for the twelve months ended December 31, 2024, compared to $1,079 million in 2023, indicating a significant reduction in adjustments[26] Corporate and Other Segment - Corporate & Other segment reported a net income of $143 million for the three months ended December 31, 2024, compared to a loss of $183 million in the same period of 2023[25] Regulatory Filings - Filed a gas base rate case requesting an overall distribution rate increase of approximately $110 million with the PA Public Utility Commission[4] Sales Volume - Retail gallons sold in UGI International increased by 2% to 218 million gallons compared to 214 million gallons in the prior-year period[18] Earnings Before Interest and Taxes - Q1 reportable segments earnings before interest expense and income taxes (EBIT) were $420 million, slightly down from $425 million in the prior-year period[4] - The total reportable segments' earnings before interest expense and income taxes for the three months ended December 31, 2024, was $420 million, a slight decrease from $425 million in the same period of 2023[25] Shareholder Information - UGI Corporation's weighted average common shares outstanding (diluted) for the three months ended December 31, 2024, was 215,695 thousand, compared to 215,570 thousand in the same period of 2023[25]

Group 1 - UGI reported quarterly earnings of $1.37 per share, exceeding the Zacks Consensus Estimate of $1.21 per share, and up from $1.20 per share a year ago, representing an earnings surprise of 13.22% [1] - The company posted revenues of $2.03 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 5.45%, and down from $2.12 billion year-over-year [2] - UGI shares have increased approximately 10% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] Group 2 - The current consensus EPS estimate for the upcoming quarter is $1.86 on revenues of $2.5 billion, and for the current fiscal year, it is $3 on revenues of $7.78 billion [7] - The Utility - Gas Distribution industry, to which UGI belongs, is currently ranked in the top 15% of over 250 Zacks industries, indicating a favorable outlook [8]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for UGI, driven by higher revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - UGI is expected to report quarterly earnings of $1.21 per share, reflecting a year-over-year change of +0.8% [3]. - Revenue is projected to be $2.15 billion, an increase of 1.2% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. - A positive Earnings ESP of +0.42% suggests analysts have recently become more optimistic about UGI's earnings prospects [10]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - UGI currently holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [11]. Historical Performance - UGI has consistently beaten consensus EPS estimates, achieving this in the last four quarters [13]. - In the last reported quarter, UGI was expected to post a loss of $0.30 per share but instead reported a loss of $0.16, resulting in a surprise of +46.67% [12]. Conclusion - UGI is positioned as a compelling candidate for an earnings beat, but investors should consider other factors influencing stock performance beyond earnings results [16].

Core Viewpoint - UGI Corporation reported a narrower operating loss in Q4 fiscal 2024 compared to expectations, but total revenues fell short of consensus estimates and declined year-over-year Financial Performance - The operating loss for Q4 fiscal 2024 was 16 cents per share, better than the Zacks Consensus Estimate of a loss of 30 cents, and down from earnings of 3 cents per share in the same quarter last year [1] - Total revenues were $1.24 billion, missing the consensus estimate of $1.54 billion by 19.5%, and decreased 11.5% from $1.44 billion in the year-ago quarter [2] Investment and Dividends - UGI invested nearly $900 million in fiscal 2024, with 80% allocated to regulated utilities for infrastructure replacement and the Midstream and Marketing segment [3] - The company maintained its legacy dividend payment, marking the 140th consecutive year of dividends, with a 10-year compound annual growth rate of 6% [3] Cost Management - Efficient management allowed UGI to reduce operation and maintenance expenses by $75 million compared to the previous year [4] Segment Performance - AmeriGas Propane: EBIT of $142 million, down 47% year-over-year, with retail gallons sold decreasing 10% due to warmer weather and customer attrition [5] - UGI International: EBIT of $323 million, up 38% year-over-year, driven by higher LPG unit margins and favorable currency translation effects [6] - Midstream & Marketing: EBIT of $313 million, up 7.6% year-over-year, attributed to increased capacity management and lower operational expenses [6] - UGI Utilities: EBIT of $400 million, up 9.6% year-over-year, due to increases in gas and electric base rates and higher DSIC revenues [7] Future Guidance - UGI anticipates adjusted earnings for fiscal 2025 to be in the range of $2.75-$3.05 per share, with the Zacks Consensus Estimate at $3.14 per share [8] - The company plans to invest between $800-$900 million in fiscal 2025 to strengthen operations [8] Long-term Outlook - UGI's long-term earnings growth rate is projected to be in the range of 4-6%, with planned investments of $3.7 billion to $4.1 billion from fiscal 2024 to 2027 [9]

Financial Performance - UGI's FY24 GAAP Diluted EPS was $1.25, compared to ($7.16) in FY23[8, 10] - Adjusted Diluted EPS increased from $2.84 in FY23 to $3.06 in FY24[8, 10] - The company achieved a 4% reduction in operating and administrative expenses, amounting to $75 million[8] - Debt reduction of approximately $460 million was achieved, along with key financing activities to provide covenant relief at AmeriGas[8] Segment Results - Utilities FY24 EBIT increased due to higher margin from increased base rates and DSIC revenues, and lower OPEX[12] - Midstream & Marketing FY24 EBIT increased due to higher margins from capacity management activities[12] - UGI International experienced slightly lower volumes due to warmer weather, offset by higher LPG unit margin and stronger foreign currencies[12] - AmeriGas Propane saw lower retail volumes due to customer attrition and warmer weather, and lower OPEX[12] Capital Allocation and Strategy - $318 million was allocated to dividend payments to shareholders[9] - Capital expenditure of $897 million, with 80% invested in the natural gas businesses[9] - The company is targeting long-term EPS growth rate of 4-6%[21] - The company is targeting over 75% of earnings from the Natural Gas Businesses[21]

Core Insights - UGI reported a quarterly loss of $0.16 per share, better than the Zacks Consensus Estimate of a loss of $0.30, representing an earnings surprise of 46.67% [1] - The company posted revenues of $1.24 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 19.50% and down from $1.4 billion year-over-year [2] - UGI has surpassed consensus EPS estimates for the last four quarters but has not beaten revenue estimates during the same period [2] Company Performance - UGI shares have declined approximately 1.2% year-to-date, contrasting with the S&P 500's gain of 24.1% [4] - The current consensus EPS estimate for the upcoming quarter is $1.27 on revenues of $2.15 billion, and for the current fiscal year, it is $3.14 on revenues of $7.64 billion [8] Industry Context - The Utility - Gas Distribution industry, to which UGI belongs, is currently ranked in the bottom 46% of over 250 Zacks industries, indicating potential challenges ahead [9] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact UGI's stock performance [6]

Core Viewpoint - UGI Corporation is highlighted as an attractive investment for income investors due to its high dividend yield, low valuation, and potential for share price growth [2][11]. Company Overview - UGI Corporation is a utility company involved in natural gas transmission and distribution, electricity generation and distribution, and propane distribution, with a history dating back to 1882 [3]. Dividend and Valuation - UGI offers a forward dividend yield of 6.42% and has a long history of paying dividends for 139 consecutive years, increasing them for 36 consecutive years [4]. - The stock is valued at 7.4 times forward earnings, with a price-to-sales ratio of 0.68 and a price-to-book ratio of 1.07, indicating it is attractively priced compared to peers [4][5]. Market Performance - UGI's share price has decreased by approximately 5% year-to-date, while the Utilities Select SPDR ETF has increased by nearly 22% in 2024 [6]. - Despite this underperformance, analysts project a 12-month price target reflecting a 32% upside potential for UGI [6][8]. Analyst Sentiment - Among five analysts surveyed, only one rated UGI as a strong buy, while three recommended holding and one suggested it as an underperformer [7]. - The lowest 12-month price target among analysts is still 16% higher than the current share price, indicating a general expectation of price appreciation [8]. Investment Suitability - UGI may not appeal to growth investors due to its business model, but it is considered attractive for value investors due to its low valuation [9][10]. - Income investors are likely to find UGI appealing due to its secure ultra-high dividend yield and strong track record of dividend payments [11].

Core Viewpoint - UGI Corporation is viewed as a resilient investment opportunity due to its stable business model, impressive dividend yield, and attractive valuation, despite recent challenges faced by its AmeriGas segment [1]. Group 1: Resilient Business - UGI operates a diversified utility business, including AmeriGas, the largest retail propane distributor in the U.S., and natural gas utilities in Pennsylvania, Maryland, and West Virginia [2]. - The company has a long history of 142 years and anticipates long-term earnings-per-share growth of 4% to 6% [2]. - UGI is actively working to stabilize AmeriGas by controlling costs and improving its balance sheet, which is reflected in its solid fiscal 2024 third-quarter results [3]. Group 2: Impressive Dividend - UGI offers a forward dividend yield of 5.95% with a payout ratio of 47.8%, showcasing its commitment to returning value to shareholders [4]. - The company has maintained a consistent dividend payment for 140 consecutive years, with a compound annual growth rate of 6% over the last decade [4]. - Although UGI does not plan to increase its dividend in fiscal 2025 or 2026, it aims to resume a 4% annual increase starting in fiscal 2027 [4]. Group 3: Attractive Valuation - UGI's share price has declined over the past three years, primarily due to challenges with AmeriGas, leading to an attractive valuation [5]. - The stock is currently trading at 8 times forward earnings, significantly lower than the S&P 500 utilities sector average of 18.8 [5]. - Zacks Equity Research rates UGI with an "A" for valuation, indicating strong potential for future earnings growth [5]. Group 4: Management Leadership - UGI appointed Bob Flexon as its new CEO, effective November 1, 2024, bringing valuable experience from previous leadership roles [6]. - Flexon's background includes serving as CEO of Dynegy and CFO of UGI, which is expected to enhance the company's stability and performance [6].

UGI Corporation's (UGI) strategic investment plans will help upgrade and replace its aging infrastructure, thereby boosting customer reliability and performance. Given its growth opportunities and strong return on equity (ROE), UGI makes for a solid investment option in the Zacks Utility sector. Let's focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment. UGI's Growth Projections & Surprise History The Zacks Consensus Estimate for UGI's fiscal 2024 earnings p ...