UGI (UGI) - 2025 Q3 - Quarterly Report

FORM 10-Q Cover Page UGI Corporation filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025, as a large accelerated filer with 214,924,206 shares of Common Stock outstanding as of July 31, 2025[2][3] TABLE OF CONTENTS This section provides an organized listing of all chapters and sections within the Form 10-Q report GLOSSARY OF TERMS AND ABBREVIATIONS The glossary defines key terms and abbreviations used throughout the Form 10-Q, including company entities and financial/regulatory terms[6][7][8][9][10][11][12][13][14] PART I FINANCIAL INFORMATION This section presents UGI Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. FINANCIAL STATEMENTS (unaudited) This section presents the unaudited condensed consolidated financial statements for UGI Corporation and its subsidiaries, including balance sheets, statements of income, comprehensive income, cash flows, and changes in equity, along with detailed notes explaining the company's operations, accounting policies, and specific financial activities Condensed Consolidated Balance Sheets This section provides a snapshot of UGI Corporation's financial position, detailing assets, liabilities, and equity at specific reporting dates | Metric | June 30, 2025 (Millions of dollars) | September 30, 2024 (Millions of dollars) | June 30, 2024 (Millions of dollars) | |:---|:---|:---|:---| | Total current assets | 1,799 | 1,651 | 1,716 | | Property, plant and equipment, net | 8,934 | 8,763 | 8,571 | | Goodwill | 2,888 | 2,871 | 3,030 | | Total assets | 15,362 | 15,098 | 15,066 | | Total current liabilities | 2,552 | 2,060 | 1,886 | | Long-term debt | 5,683 | 6,443 | 6,288 | | Total liabilities | 10,478 | 10,744 | 10,376 | | Total UGI Corporation stockholders' equity | 4,874 | 4,345 | 4,681 | | Total equity | 4,884 | 4,354 | 4,690 | - Current maturities of long-term debt significantly increased to $905 million at June 30, 2025, from $235 million at September 30, 2024, primarily due to the reclassification of UGI Corporation Senior Notes[16][106][282] Condensed Consolidated Statements of Income This section reports UGI Corporation's financial performance over specific periods, detailing revenues, costs, and net income attributable to the company | Metric (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Revenues | 1,394 | 1,380 | 6,090 | 5,968 | | Cost of sales | 837 | 639 | 3,061 | 2,871 | | Operating income (loss) | (93) | 67 | 1,094 | 1,016 | | Net income (loss) attributable to UGI Corporation | (163) | (48) | 691 | 542 | | Basic EPS | (0.76) | (0.23) | 3.22 | 2.58 | | Diluted EPS | (0.76) | (0.23) | 3.16 | 2.52 | - The company reported a net loss attributable to UGI Corporation of $163 million for the three months ended June 30, 2025, a significant increase from the $48 million loss in the prior-year period. For the nine-month period, net income increased to $691 million from $542 million[18] Condensed Consolidated Statements of Comprehensive Income This section presents UGI Corporation's comprehensive income, including net income and other comprehensive income components, for the reported periods | Metric (Millions of dollars) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Net income (loss) attributable to UGI Corporation | (163) | (48) | 691 | 542 | | Other comprehensive income (loss) | 87 | (15) | 72 | (13) | | Comprehensive income (loss) attributable to UGI Corporation | (76) | (63) | 763 | 529 | - Other comprehensive income significantly improved for the three and nine months ended June 30, 2025, primarily driven by foreign currency adjustments[21] Condensed Consolidated Statements of Cash Flows This section details UGI Corporation's cash inflows and outflows from operating, investing, and financing activities for the reported periods | Metric (Millions of dollars) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | |:---|:---|:---|\ | Net cash provided by operating activities | 1,137 | 1,031 | | Net cash provided (used) by investing activities | (499) | (551) | | Net cash provided (used) by financing activities | (505) | (608) | | Cash, cash equivalents and restricted cash increase (decrease) | 142 | (129) | | Cash, cash equivalents and restricted cash at end of period | 370 | 211 | - Net cash provided by operating activities increased by $106 million for the nine months ended June 30, 2025, compared to the prior-year period. Cash used in investing activities decreased, while cash used in financing activities also decreased[24] Condensed Consolidated Statements of Changes in Equity This section outlines the changes in UGI Corporation's total equity, including stockholders' equity and noncontrolling interests, over the reported periods | Metric (Millions of dollars) | June 30, 2025 | June 30, 2024 | |:---|:---|:---|\ | Total UGI stockholders' equity | 4,874 | 4,681 | | Noncontrolling interests | 10 | 9 | | Total equity | 4,884 | 4,690 | - Total UGI stockholders' equity increased to $4,874 million at June 30, 2025, from $4,681 million at June 30, 2024, primarily due to net income and common stock issuances, partially offset by cash dividends and treasury stock repurchases[26] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements, clarifying accounting policies and specific transactions Note 1 — Nature of Operations UGI Corporation operates as a holding company with subsidiaries involved in distributing, storing, transporting, and marketing energy products and services across the U.S. and Europe. Its core businesses include natural gas and electric utilities, energy marketing, midstream infrastructure, and retail propane/LPG distribution - UGI's operations are diversified across four reportable segments: Utilities, Midstream & Marketing, UGI International, and AmeriGas Propane[27][28][29][30][31] - UGI International exited substantially all of its European energy marketing business by the end of the first quarter of Fiscal 2024[30] Note 2 — Summary of Significant Accounting Policies This note outlines the significant accounting policies applied in preparing the condensed consolidated financial statements, including principles for restricted cash, earnings per common share, equity units, derivative instruments, use of estimates, goodwill impairment testing, and income taxes Cash, Cash Equivalents and Restricted Cash (Millions of dollars) | Metric | June 30, 2025 | June 30, 2024 | |:---|:---|:---|\ | Cash and cash equivalents | 350 | 183 | | Restricted cash | 20 | 28 | | Total | 370 | 211 | - Goodwill impairment tests are performed annually or when circumstances indicate impairment. A non-cash pre-tax goodwill impairment charge of $195 million was recognized in Fiscal 2024 for the AmeriGas Propane reporting unit[46][47] - The U.S. enacted the OBBBA on July 4, 2025, which will impact the Company's tax law starting Fiscal 2026, and the Company is evaluating its effects on deferred tax balances[50] Note 3 — Accounting Changes The company is assessing the impact of new accounting standards not yet adopted, including ASU 2024-03 on Disaggregation of Income Statement Expenses (effective Fiscal 2028), ASU 2023-07 on Improvements to Reportable Segment Disclosures (effective Fiscal 2025), and ASU 2023-09 on Improvements to Income Tax Disclosures (effective Fiscal 2026) - ASU 2023-07, 'Improvements to Reportable Segment Disclosures,' will be adopted effective for the year ending September 30, 2025, requiring enhanced disclosures on segment expenses and CODM's use of segment profit/loss measures[52] - ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective Fiscal 2026, will require disaggregated information on effective tax rate reconciliation and income taxes paid[53] Note 4 — Revenue from Contracts with Customers Revenue is recognized when control of goods or services is transferred to customers. The note provides disaggregated revenues by reportable segment for the three and nine months ended June 30, 2025 and 2024, and details contract balances and remaining performance obligations Total Revenues by Segment (Millions of dollars) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Utilities | 287 | 257 | 1,545 | 1,396 | | Midstream & Marketing | 278 | 253 | 1,232 | 1,130 | | UGI International | 437 | 455 | 1,725 | 1,853 | | AmeriGas Propane | 434 | 445 | 1,909 | 1,869 | | Corporate & Other | 2 | (2) | (1) | (41) | | Total Revenues | 1,394 | 1,380 | 6,090 | 5,968 | - Contract liabilities were $110 million at June 30, 2025, down from $140 million at September 30, 2024. Revenues recognized from contract liabilities were $99 million for the nine months ended June 30, 2025[66] - Midstream & Marketing and Utilities expect to record approximately $2.2 billion and $0.2 billion, respectively, in revenues from minimum future performance obligations through 2047 and 2053[67] Note 5 — Dispositions UGI Corporation is actively optimizing its global LPG business portfolio through strategic divestitures. Recent transactions include the sale of UniverGas (Italy) and an agreement to divest the UK cylinder business by UGI International, and an agreement to divest AmeriGas OLP's Hawaii propane business - UGI International completed the sale of UniverGas (Italy LPG distribution business) in June 2025, recording a pre-tax loss of $51 million[69] - UGI International entered an agreement to divest its UK cylinder business, classifying assets as held for sale and recognizing a $3 million impairment charge in Q3 Fiscal 2025[70] - AmeriGas OLP agreed to divest its Hawaii propane business, expecting a gain on sale in Q4 Fiscal 2025. Total net cash proceeds from these divestitures are expected to be approximately $150 million in Fiscal 2025[71][72] Note 6 — Inventories The company's inventories primarily consist of non-utility LPG and natural gas, Gas Utility natural gas, energy certificates, and materials/supplies Inventories (Millions of dollars) | Category | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | Non-utility LPG and natural gas | 159 | 195 | 186 | | Gas Utility natural gas | 38 | 50 | 29 | | Energy certificates | 64 | 69 | 60 | | Materials, supplies and other | 98 | 97 | 104 | | Total inventories | 359 | 411 | 379 | Note 7 — Utility Regulatory Assets and Liabilities and Regulatory Matters This note details the regulatory assets and liabilities of UGI Utilities and Mountaineer, primarily related to income taxes, pension plans, environmental costs, and deferred fuel/power costs. It also covers ongoing regulatory rate cases and IREP filings for PA Gas Utility and WV Gas Utility Total Regulatory Assets and Liabilities (Millions of dollars) | Category | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | Total regulatory assets | 319 | 319 | 311 | | Total regulatory liabilities | 323 | 329 | 341 | - PA Gas Utility filed a request to increase base operating revenues by $110 million annually, with a settlement proposing a $70 million increase filed in July 2025[82][304] - WV Gas Utility submitted its 2025 IREP filing requesting recovery of $24 million for capital investments, and its 2024 IREP filing for $19 million was approved with new rates effective January 1, 2025[83][84][305][306] Note 8 — Debt This note outlines significant financing activities during Fiscal 2025, including new senior notes issuances by UGI Utilities and Mountaineer, amendments to credit agreements, and the issuance and early repayment of senior notes by AmeriGas Partners. It also details the convertibility and classification of UGI Corporation Senior Notes - UGI Utilities expects to issue $275 million in senior notes by November 2025 for refinancing and general corporate purposes[88][269] - AmeriGas Partners issued $550 million of 9.5% Senior Notes due June 2030, using proceeds to repay $664 million of 5.875% Senior Notes early, resulting in a $9 million pre-tax loss on extinguishment[95][97][273][275] - UGI Corporation's $700 million 5.00% Senior Notes due June 2028 became convertible at noteholders' option from July 1, 2025, through September 30, 2025, leading to their classification as 'Current maturities of long-term debt'[103][105][106][280][281][282] Note 9 — Commitments and Contingencies This note addresses UGI Corporation's environmental liabilities, particularly for former manufactured gas plant (MGP) sites, and ongoing legal matters, including the West Reading, Pennsylvania explosion incident. It also covers restructuring costs at UGI International - UGI Utilities has an aggregate estimated accrued liability of $53 million for environmental investigation and remediation costs related to MGP sites in Pennsylvania, with recovery probable through ratemaking[113][114][115] - AmeriGas OLP has an undiscounted environmental remediation liability of $8 million related to a former MGP site in Saranac Lake, New York[118] - The NTSB concluded a UGI Utilities service tee fracture caused the West Reading, PA explosion. The Company is involved in lawsuits but believes third-party claims in excess of its deductible are recoverable through insurance[120][121] Note 10 — Defined Benefit Pension and Other Postretirement Plans This note details the components of net periodic pension benefit cost (income) for UGI Corporation's defined benefit pension plans Net Periodic Pension Benefit Cost (Income) (Millions of dollars) | Component | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Service cost | 2 | 2 | 7 | 6 | | Interest cost | 9 | 9 | 26 | 27 | | Expected return on plan assets | (12) | (11) | (36) | (33) | | Amortization of actuarial loss (gain) | 1 | — | 3 | 1 | | Net benefit cost (income) | — | — | — | 1 | Note 11 — Fair Value Measurements This note provides information on financial assets and liabilities measured at fair value on a recurring basis, categorized by the fair value hierarchy (Level 1, 2, or 3). It also covers nonrecurring fair value measurements related to asset impairments and the fair value of long-term debt Fair Value of Derivative Instruments (Millions of dollars) | Category | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | Total derivative assets — net | 16 | 38 | 56 | | Total derivative liabilities — net | (82) | (59) | (50) | Long-term Debt Fair Value (Millions of dollars) | Metric | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | Carrying amount | 6,644 | 6,733 | 6,633 | | Estimated fair value | 6,743 | 6,663 | 6,312 | - Non-cash, pre-tax impairment charges of $3 million and $62 million were recognized for UGI International's UK cylinder business and UGID, respectively, to reduce carrying amounts to estimated fair values (Level 2)[129] Note 12 — Derivative Instruments and Hedging Activities This note details UGI's use of derivative financial and commodity instruments to manage commodity price risk, interest rate risk, and foreign currency exchange rate risk, emphasizing that these instruments are not used for speculative purposes. It also provides quantitative disclosures on notional amounts and credit risk - UGI uses NYMEX natural gas futures and option contracts to reduce commodity price volatility for PA Gas Utility's retail core-market customers, with gains/losses included in regulatory assets/liabilities[134] - The company uses pay-fixed, receive-variable interest rate swap agreements, designated as cash flow hedges, to fix underlying short-term market interest rates on variable-rate debt[138][139] - Forward foreign currency exchange contracts are used to reduce volatility in net income from foreign operations, aiming to hedge approximately 90% of anticipated UGI International foreign currency earnings before income taxes[142] Gross Notional Amounts of Open Derivative Contracts (Millions) | Type | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | LPG swaps (Gallons) | 536 | 458 | 416 | | Natural gas futures, forward, basis swap, options and pipeline contracts (Dekatherms) | 241 | 325 | 320 | | Electricity forward and futures contracts (Kilowatt hours) | 791 | 1,113 | 651 | | Interest rate swaps (USD) | 1,446 | 1,231 | 1,260 | | Forward foreign currency exchange contracts (USD) | 440 | 389 | 367 | Note 13 — Accumulated Other Comprehensive Income (Loss) This note presents the changes in Accumulated Other Comprehensive Income (Loss) (AOCI), net of tax, for postretirement benefit plans, derivative instruments, and foreign currency adjustments Changes in AOCI (Millions of dollars) | Category | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | AOCI — beginning of period (9 months) | (253) | (256) | (256) | | Other comprehensive income (loss) attributable to UGI (9 months) | 72 | (13) | (13) | | AOCI — end of period | (181) | (253) | (269) | - AOCI improved significantly from $(253) million at September 30, 2024, to $(181) million at June 30, 2025, primarily due to positive foreign currency adjustments[154] Note 14 — Equity Method Investments This note provides details on UGI's equity method investments, primarily in biomass and renewable energy projects within the Midstream & Marketing segment Equity Method Investments Carrying Value (Millions of dollars) | Investee | June 30, 2025 | September 30, 2024 | June 30, 2024 | |:---|:---|:---|:---|\ | Aurum Renewables | 46 | 47 | 46 | | Pine Run | 96 | 86 | 83 | | MBL Bioenergy | 222 | 206 | 190 | | Other Midstream & Marketing | 23 | 20 | 20 | | UGI International | 4 | 10 | 10 | | Other | 1 | 1 | — | | Total investments | 392 | 370 | 349 | - Total equity method investments increased to $392 million at June 30, 2025, from $370 million at September 30, 2024, driven by investments in Pine Run and MBL Bioenergy[156] Note 15 — Segment Information This note presents financial information for UGI's four reportable segments: Utilities, Midstream & Marketing, UGI International, and AmeriGas Propane, along with Corporate & Other. It details revenues, cost of sales, operating income, and capital expenditures for both three-month and nine-month periods Operating Income by Segment (Millions of dollars) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Utilities | 29 | 37 | 407 | 396 | | Midstream & Marketing | 27 | 41 | 269 | 291 | | UGI International | 43 | 57 | 288 | 294 | | AmeriGas Propane | (28) | (27) | 200 | 182 | | Corporate & Other | (160) | (41) | (63) | (147) | | Total Operating Income (Loss) | (93) | 67 | 1,094 | 1,016 | Capital Expenditures by Segment (Millions of dollars) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Utilities | 146 | 126 | 352 | 299 | | Midstream & Marketing | 30 | 40 | 89 | 92 | | UGI International | 24 | 24 | 55 | 55 | | AmeriGas Propane | 20 | 21 | 59 | 65 | | Total Capital Expenditures | 220 | 211 | 555 | 511 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on UGI Corporation's financial performance and condition, including an executive overview, detailed analysis of segment results for the three and nine months ended June 30, 2025 and 2024, and discussions on liquidity, financing activities, and regulatory matters. It also includes forward-looking statements and non-GAAP financial measures Forward-Looking Statements The report contains forward-looking statements subject to various risks and uncertainties, including weather, energy prices, regulatory changes, and geopolitical factors - The report contains forward-looking statements subject to risks and uncertainties, including weather conditions, energy product cost volatility, regulatory changes, competitive pressures, and geopolitical factors[166][167] ANALYSIS OF RESULTS OF OPERATIONS This section analyzes UGI's consolidated results of operations, highlighting the impact of seasonal business, non-GAAP financial measures (adjusted net income and diluted EPS), and an executive overview of recent developments and performance for the three and nine months ended June 30, 2025, compared to the prior-year periods Non-GAAP Financial Measures UGI uses non-GAAP financial measures, 'adjusted net income attributable to UGI Corporation' and 'adjusted diluted earnings per share,' to provide investors with a clearer view of performance by excluding gains/losses on commodity and certain foreign currency derivative instruments not associated with current-period transactions and other significant discrete items Adjusted Net Income (Loss) Attributable to UGI Corporation (Millions of dollars) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Utilities | 5 | 13 | 260 | 254 | | Midstream & Marketing | 19 | 22 | 258 | 234 | | UGI International | 36 | 39 | 229 | 213 | | AmeriGas Propane | 37 | (36) | 16 | 17 | | Corporate & Other | (260) | (86) | (72) | (176) | | Adjusted Net Income (Loss) | (3) | 12 | 776 | 693 | Adjusted Diluted Earnings (Loss) Per Share | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | |:---|:---|:---|:---|:---|\ | Utilities | 0.02 | 0.06 | 1.19 | 1.18 | | Midstream & Marketing | 0.09 | 0.10 | 1.18 | 1.09 | | UGI International | 0.17 | 0.19 | 1.05 | 0.99 | | AmeriGas Propane | 0.17 | (0.17) | 0.07 | 0.08 | | Corporate & Other | (1.21) | (0.41) | (0.33) | (0.82) | | Adjusted Diluted EPS | (0.01) | 0.06 | 3.55 | 3.22 | Executive Overview The executive overview highlights recent global LPG business divestitures, including the sale of UniverGas and the planned divestiture of the UK cylinder business by UGI International, and the Hawaii propane business by AmeriGas Propane, as part of portfolio optimization efforts - UGI International completed the sale of its Italian LPG distribution business (UniverGas) in June 2025, incurring a $51 million pre-tax loss[180] - UGI International plans to divest its UK cylinder business, recognizing a $3 million impairment charge in Q3 Fiscal 2025[181] - AmeriGas Propane entered an agreement to divest its Hawaii propane business, expecting a gain on sale in Q4 Fiscal 2025[184] 2025 three-month period compared with 2024 three-month period For the three months ended June 30, 2025, UGI Corporation reported a net loss of $163 million, significantly higher than the $48 million loss in the prior-year period, primarily due to derivative instrument losses and losses on business disposals. Adjusted net loss was $3 million, compared to adjusted net income of $12 million in the prior year, reflecting lower contributions from Utilities, Midstream & Marketing, and UGI International, partially offset by AmeriGas Propane - Net loss attributable to UGI Corporation increased to $163 million (diluted EPS $(0.76)) in Q3 Fiscal 2025 from $48 million (diluted EPS $(0.23)) in Q3 Fiscal 2024[186] - The 2025 three-month period included a $53 million loss on disposals of non-core LPG assets and an $8 million loss on debt extinguishments[187] - Adjusted net loss was $3 million (diluted EPS $(0.01)) in Q3 Fiscal 2025, down from adjusted net income of $12 million (diluted EPS $0.06) in Q3 Fiscal 2024, mainly due to lower segment earnings, partially offset by lower income tax expenses[189] 2025 nine-month period compared with 2024 nine-month period For the nine months ended June 30, 2025, UGI Corporation's net income increased to $691 million from $542 million in the prior-year period. Adjusted net income rose to $776 million from $693 million, driven by higher earnings contributions from Midstream & Marketing, UGI International, and Utilities, along with significantly lower income tax expenses - Net income attributable to UGI Corporation increased to $691 million (diluted EPS $3.16) for the nine months ended June 30, 2025, from $542 million (diluted EPS $2.52) in the prior-year period[193] - Adjusted net income increased to $776 million (diluted EPS $3.55) from $693 million (diluted EPS $3.22), reflecting higher earnings from Midstream & Marketing, UGI International, and Utilities, and lower income tax expenses[197] - Lower income tax expenses were primarily due to increased investment tax credits in Midstream & Marketing and the release of a valuation allowance on deferred tax assets in UGI International[197] Analysis of Segment Results This section provides a detailed analysis of the financial performance of UGI's four reportable segments—Utilities, Midstream & Marketing, UGI International, and AmeriGas Propane—for both the three-month and nine-month periods ended June 30, 2025, compared to the prior-year periods, including consolidated interest expense and income taxes 2025 Three-Month Period Compared with the 2024 Three-Month Period For the three months ended June 30, 2025, Utilities saw increased revenues and total margin but decreased operating income due to higher expenses. Midstream & Marketing experienced revenue growth but a decline in total margin and operating income. UGI International's revenues and total margin decreased, leading to lower operating income. AmeriGas Propane's revenues and total margin were comparable, with operating loss remaining stable. Consolidated interest expense increased, while the income tax rate decreased Utilities Utilities' operating income decreased by $8 million for the three months ended June 30, 2025, despite increased revenues and total margin, due to higher operating and administrative expenses Utilities Segment Performance (3 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 287 | 257 | 30 | 12% | | Total margin | 168 | 164 | 4 | 2% | | Operating income | 29 | 37 | (8) | (22)% | | Gas Utility system throughput—bcf (Total) | 82 | 78 | 4 | 5% | | Electric Utility distribution sales - gwh | 216 | 225 | (9) | (4)% | - Utilities' operating income decreased by $8 million, primarily due to higher operating and administrative expenses ($10 million) and depreciation ($2 million), partially offset by a $4 million increase in total margin[209] Midstream & Marketing Midstream & Marketing's operating income decreased by $14 million for the three months ended June 30, 2025, driven by a decline in total margin and lower other operating income Midstream & Marketing Segment Performance (3 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 278 | 253 | 25 | 10% | | Total margin | 77 | 86 | (9) | (10)% | | Operating income | 27 | 41 | (14) | (34)% | - Operating income decreased by $14 million, mainly due to a $9 million decrease in total margin, lower other operating income ($6 million), and slightly higher operating and administrative expenses[216] UGI International UGI International's operating income decreased by $14 million for the three months ended June 30, 2025, primarily due to lower LPG retail volumes and average unit margins UGI International Segment Performance (3 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 437 | 455 | (18) | (4)% | | Total margin | 192 | 211 | (19) | (9)% | | Operating income | 43 | 57 | (14) | (25)% | | LPG retail gallons sold (millions) | 139 | 152 | (13) | (9)% | - Operating income decreased by $14 million, reflecting a $19 million decrease in total margin (due to lower LPG retail volumes and average unit margins) and higher depreciation, partially offset by lower operating and administrative expenses[223][224] AmeriGas Propane AmeriGas Propane's operating loss remained comparable for the three months ended June 30, 2025, as slightly lower total margin was offset by higher gains on asset sales AmeriGas Propane Segment Performance (3 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 434 | 445 | (11) | (2)% | | Total margin | 227 | 228 | (1) | —% | | Operating loss | (28) | (27) | (1) | (4)% | | Retail gallons sold (millions) | 138 | 142 | (4) | (3)% | - Operating loss was comparable to the prior-year period, as slightly lower total margin was offset by slightly higher gains on asset sales. Retail gallons sold decreased by 3% due to customer attrition[227][231] Interest Expense and Income Taxes Consolidated interest expense increased for the three months ended June 30, 2025, due to higher average long-term debt, while the income tax rate decreased due to investment tax credits and valuation allowance release - Consolidated interest expense increased to $101 million in Q3 Fiscal 2025 from $96 million in Q3 Fiscal 2024, driven by higher average long-term debt at Utilities and UGI Corporation[232] - The company's income tax rate decreased, reflecting an increase in investment tax credits in Midstream & Marketing and the release of a valuation allowance on deferred tax assets in UGI International[233] 2025 Nine-Month Period Compared with the 2024 Nine-Month Period For the nine months ended June 30, 2025, Utilities saw increased revenues, total margin, and operating income. Midstream & Marketing's revenues increased, but total margin and operating income decreased. UGI International experienced declines in revenues, total margin, and operating income. AmeriGas Propane reported increased revenues, total margin, and operating income. Consolidated interest expense increased, while the income tax rate decreased Utilities Utilities' operating income increased by $11 million for the nine months ended June 30, 2025, driven by higher total margin, despite increased operating expenses and depreciation Utilities Segment Performance (9 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 1,545 | 1,396 | 149 | 11% | | Total margin | 827 | 792 | 35 | 4% | | Operating income | 407 | 396 | 11 | 3% | | Gas Utility system throughput—bcf (Core market) | 96 | 87 | 9 | 10% | | Electric Utility distribution sales - gwh | 737 | 732 | 5 | 1% | - Operating income increased by $11 million, largely due to a $35 million increase in total margin (higher core market volumes and WV Gas Utility base rate increase), partially offset by higher operating and administrative expenses ($19 million) and depreciation ($8 million)[239][240] Midstream & Marketing Midstream & Marketing's operating income decreased by $22 million for the nine months ended June 30, 2025, primarily due to a decline in total margin and the absence of UGID margins Midstream & Marketing Segment Performance (9 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 1,232 | 1,130 | 102 | 9% | | Total margin | 417 | 441 | (24) | (5)% | | Operating income | 269 | 291 | (22) | (8)% | - Operating income decreased by $22 million, primarily due to a $24 million decrease in total margin (lower midstream margins and absence of UGID margins), partially offset by lower depreciation and amortization expenses[245][246] UGI International UGI International's operating income decreased by $6 million for the nine months ended June 30, 2025, reflecting a decline in total margin, largely offset by lower operating and administrative expenses UGI International Segment Performance (9 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 1,725 | 1,853 | (128) | (7)% | | Total margin | 758 | 795 | (37) | (5)% | | Operating income | 288 | 294 | (6) | (2)% | | LPG retail gallons sold (millions) | 570 | 587 | (17) | (3)% | - Operating income decreased by $6 million, reflecting a $37 million decrease in total margin (lower LPG retail volumes and energy marketing activities), largely offset by lower operating and administrative expenses ($35 million)[251][252] AmeriGas Propane AmeriGas Propane's operating income increased by $18 million for the nine months ended June 30, 2025, driven by higher total margin and lower operating and administrative expenses AmeriGas Propane Segment Performance (9 Months Ended June 30) | Metric (Millions of dollars) | 2025 | 2024 | Increase (Decrease) | % Change | |:---|:---|:---|:---|:---|\ | Revenues | 1,909 | 1,869 | 40 | 2% | | Total margin | 1,020 | 1,007 | 13 | 1% | | Operating income | 200 | 182 | 18 | 10% | | Retail gallons sold (millions) | 611 | 609 | 2 | —% | - Operating income increased by $18 million, driven by a $13 million increase in total margin (higher average retail propane unit margins) and lower operating and administrative expenses ($7 million)[258][259] Interest Expense and Income Taxes Consolidated interest expense increased for the nine months ended June 30, 2025, due to higher average long-term debt, while the income tax rate decreased due to investment tax credits and valuation allowance release - Consolidated interest expense increased to $305 million in the 2025 nine-month period from $296 million in the prior-year period, mainly due to higher average long-term debt at Utilities and UGI Corporation[260] - The company's income tax rate decreased, reflecting increased investment tax credits in Midstream & Marketing and the release of a valuation allowance on deferred tax assets in UGI International[261] FINANCIAL CONDITION AND LIQUIDITY UGI Corporation maintains sufficient liquidity through cash on hand and available borrowing capacity to support its commitments and operations. This section details the company's debt structure, recent financing activities, credit facilities, receivables facility, dividend policy, share repurchases, and cash flow analysis Long-term Debt and Credit Facilities UGI Corporation's total available liquidity increased to $1.9 billion at June 30, 2025, with current maturities of long-term debt including $700 million of UGI Corporation Senior Notes - Total available liquidity was approximately $1.9 billion at June 30, 2025, up from $1.5 billion at September 30, 2024[263] - Current maturities of long-term debt at June 30, 2025, include $700 million of UGI Corporation Senior Notes due to early conversion eligibility[263] Total Debt by Segment (Millions of dollars) | Segment | June 30, 2025 | September 30, 2024 | |:---|:---|:---|\ | Utilities | 2,186 | 2,186 | | Midstream & Marketing | 823 | 823 | | UGI International | 1,092 | 1,092 | | AmeriGas Propane | 1,775 | 1,775 | | Corp & Other | 1,278 | 1,278 | | Eliminations | (200) | (200) | | Total Debt | 6,954 | 7,143 | Significant Financing Activities Fiscal 2025 saw UGI Utilities issuing new senior notes and Mountaineer entering a new credit agreement and issuing senior notes. AmeriGas Partners issued new senior notes to repay existing debt, and UGI Corporation amended its credit agreement and classified its senior notes as current maturities due to early conversion eligibility - UGI Utilities expects to issue $275 million in senior notes by November 2025 for refinancing and general corporate purposes[269] - AmeriGas Partners issued $550 million of 9.5% Senior Notes due June 2030, using proceeds to repay $664 million of 5.875% Senior Notes early, resulting in a $9 million pre-tax loss on extinguishment[273][275] - UGI Corporation's $700 million Senior Notes became convertible at noteholders' option from July 1, 2025, through September 30, 2025, leading to their classification as 'Current maturities of long-term debt'[281][282] Credit Facilities UGI Corporation and its subsidiaries maintain various credit facilities, with total available borrowing capacity detailed for each entity as of June 30, 2025 Credit Facilities Summary (Millions of dollars or euros) | Facility | Total Capacity | Borrowings Outstanding | Available Borrowing Capacity (June 30, 2025) | |:---|:---|:---|:---|\ | AmeriGas OLP | $170 | $34 | $135 | | UGI International, LLC | €500 | €220 | €280 | | Energy Services | $300 | $— | $300 | | UGI Utilities | $375 | $44 | $331 | | Mountaineer | $150 | $16 | $134 | | UGI Corporation | $475 | $196 | $279 | - UGI Corporation amended its 2025 Credit Agreement in August 2025 to add a $300 million revolving credit facility specifically for funding cash consideration in case of early conversion requests of its Senior Notes[279][284] Receivables Facility Energy Services utilizes a Receivables Facility, extended to October 2025, allowing it to borrow against eligible receivables to fund working capital, margin calls, capital expenditures, and dividends. The facility's interest rate was replaced with a SOFR-based rate - The Receivables Facility provides Energy Services with borrowing capacity up to $150 million (Oct 2024-Apr 2025) and $75 million (May 2025-Oct 2025), with an option to increase by $50 million[289] - At June 30, 2025, $13 million of ESFC trade receivables were sold to the bank, compared to none at June 30, 2024[293] Dividends and Repurchases of Common Stock UGI's Board of Directors declared quarterly cash dividends of $0.375 per common share. The company also repurchased 0.5 million shares for approximately $17 million during the nine months ended June 30, 2025, under its authorized share repurchase program - UGI declared quarterly cash dividends of $0.375 per common share for payments in January, April, July, and October 2025[294] - The company repurchased 0.5 million shares of UGI Common Stock for approximately $17 million during the nine months ended June 30, 2025, under a program authorized through February 2026[295] Cash Flows Cash flows from operating activities increased to $1,137 million for the nine months ended June 30, 2025, from $1,031 million in the prior-year period. Cash used in investing activities decreased, while cash used in financing activities also decreased, reflecting various debt issuances and repayments - Cash flow provided by operating activities increased to $1,137 million in the 2025 nine-month period from $1,031 million in the 2024 nine-month period[297] - Cash used by investing activities decreased to $499 million from $551 million, while cash used by financing activities decreased to $505 million from $608 million[298][300] - Financing activities in 2025 included $50 million and $125 million senior notes issuances by UGI Utilities, $550 million senior notes issuance by AmeriGas Propane, and the repayment of $664 million of AmeriGas Propane's 5.875% Senior Notes[302] UTILITY REGULATORY MATTERS This section provides updates on regulatory filings and approvals for UGI Utilities and Mountaineer. PA Gas Utility's rate increase request is under review, with a settlement proposal for a $70 million annual increase. WV Gas Utility's IREP filings for capital investment recovery have been submitted and approved, with new rates effective January 1, 2025, and a weather normalization adjustment rider implemented - PA Gas Utility filed for a $110 million annual base operating revenue increase, with a settlement proposing a $70 million increase filed in July 2025, pending PAPUC approval[304] - WV Gas Utility submitted its 2025 IREP filing for $24 million in capital investment recovery and had its 2024 IREP filing for $19 million approved, with new rates effective January 1, 2025[305][306] - WV Gas Utility implemented a weather normalization adjustment rider as a five-year pilot program starting October 1, 2024, following WVPSC approval[308] OTHER MATTERS This section addresses the West Reading, Pennsylvania explosion incident, including the NTSB's final report which concluded a UGI Utilities service tee fracture caused the natural gas leak. The company is involved in related lawsuits but believes claims in excess of its deductible are recoverable through insurance - The NTSB's final report on the West Reading, PA explosion concluded a fracture in an R.M. Palmer steam pipe caused thermal degradation of a UGI Utilities service tee, leading to a natural gas leak[311] - UGI Utilities was recommended to inventory and address risks to plastic gas assets in high-temperature environments[311] - The company maintains liability insurance for personal injury and property damage and believes third-party claims exceeding its deductible are recoverable[312] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK UGI Corporation is exposed to commodity price risk, interest rate risk, and foreign currency exchange rate risk. The company uses derivative instruments to manage these risks, not for speculative purposes, and maintains credit policies to mitigate counterparty risk Commodity Price Risk UGI manages commodity price risk for LPG, natural gas, and electricity through various hedging instruments, including forward contracts, fixed-price agreements, and derivative instruments - The Partnership and UGI International use forward purchase/sale contracts, fixed-price supply agreements, and over-the-counter derivative commodity instruments (price swap and option contracts) to manage LPG market price risk[317] - Utilities have limited commodity price risk due to tariffs allowing recovery of prudently incurred natural gas costs, including hedging instrument costs[318] - Midstream & Marketing uses various natural gas and electricity futures, options, and forward contracts to manage market price risk for fixed-price sales contracts[319] Interest Rate Risk UGI manages interest rate risk on variable-rate debt using pay-fixed, receive-variable interest rate swap agreements, with combined variable-rate borrowings totaling $599 million at June 30, 2025 - UGI manages interest rate risk on variable-rate debt through pay-fixed, receive-variable interest rate swap agreements, designated as cash flow hedges[321] - Combined borrowings outstanding under variable-rate debt agreements (excluding effectively fixed-rate debt) totaled $599 million at June 30, 2025[321] Foreign Currency Exchange Rate Risk UGI's primary foreign currency exchange rate risk is associated with the USD versus the euro and British pound sterling, managed through forward foreign currency exchange contracts - The primary foreign currency exchange rate risk is associated with the USD versus the euro and British pound sterling[324] - Forward foreign currency exchange contracts are used to reduce volatility in net income, aiming to hedge approximately 90% of anticipated UGI International foreign currency earnings before income taxes[325] Derivative Instrument Credit Risk UGI is exposed to credit risk from derivative instrument counterparties, primarily large energy companies and financial institutions, which is managed through credit policies and netting agreements - UGI is exposed to credit risk from derivative instrument counterparties, primarily large energy companies and financial institutions, and manages this through credit policies and netting agreements[326] - The maximum potential loss from counterparty nonperformance was $114 million at June 30, 2025, mitigated by collateral received ($21 million) and offsetting derivative liabilities[327] Fair Values of Unsettled Market Risk Sensitive Derivative Instruments (Millions of dollars) | Risk Type | Fair Value (June 30, 2025) | Change in Fair Value (10% adverse change) | |:---|:---|:---|\ | Commodity price risk | (46) | (101) | | Interest rate risk | (13) | (12) | | Foreign currency exchange rate risk | (25) | (54) | ITEM 4. CONTROLS AND PROCEDURES Management concluded that UGI Corporation's disclosure controls and procedures were not effective as of June 30, 2025, due to a previously disclosed material weakness in internal control over financial reporting related to validating cash flows for goodwill impairment tests. Remediation efforts are ongoing, but the unaudited financial statements are fairly stated Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness, though financial statements are fairly stated - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[331] - Despite the material weakness, the unaudited interim consolidated financial statements are fairly stated in all material respects[332] Internal Control over Financial Reporting A material weakness exists in internal control over financial reporting related to the timely validation of cash flows for goodwill impairment tests, with ongoing remediation efforts - The material weakness relates to the timely validation of cash flows used in goodwill impairment tests[333] - Management is designing and implementing additional controls and has engaged a third-party specialist to assist in developing valuation models and establishing reasonable assumptions[333] Change in Internal Control over Financial Reporting No change in internal control over financial reporting occurred during the most recent fiscal quarter, except for the previously described material weakness - No change in internal control over financial reporting occurred during the most recent fiscal quarter, except for the material weakness described[334] PART II OTHER INFORMATION This section provides additional information not covered in Part I, including legal proceedings, risk factors, other material disclosures, and exhibits ITEM 1. LEGAL PROCEEDINGS This section incorporates by reference the information on legal proceedings detailed in Note 9 to the Condensed Consolidated Financial Statements, which includes environmental matters and the West Reading, Pennsylvania explosion - Legal proceedings information is incorporated from Note 9, covering environmental matters and the West Reading, Pennsylvania explosion[336] ITEM 1A. RISK FACTORS This section advises readers to consider the risk factors discussed in the Company's 2024 Annual Report on Form 10-K, as these factors could materially affect the business, financial condition, or future results - Readers should carefully consider the risk factors outlined in the Company's 2024 Annual Report on Form 10-K, as well as other unknown or unpredictable factors, which could materially affect future results[337] ITEM 5. OTHER INFORMATION This section discloses a material amendment to the UGI Corporation 2025 Credit Agreement, which occurred after the reported quarter end, as further detailed in Note 8 to the financial statements - On August 6, 2025, the Company entered into a material amendment to its UGI Corporation 2025 Credit Agreement, as discussed in Note 8[338] ITEM 6. EXHIBITS This section lists all exhibits filed as part of the Form 10-Q, including indentures, note purchase agreements, credit agreements, and certifications by the Chief Executive Officer and Chief Financial Officer - Exhibits include the Indenture for AmeriGas Partners' 2030 Notes, a Note Purchase Agreement for UGI Utilities, and the Credit Agreement for Mountaineer Gas Company[339] - Certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included[339][343] SIGNATURES This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of UGI Corporation by its Chief Financial Officer and Vice President, Chief Accounting Officer and Corporate Controller - The report was signed on August 7, 2025, by Sean P. O'Brien, Chief Financial Officer, and Jean Felix Tematio Dontsop, Vice President, Chief Accounting Officer and Corporate Controller[346]