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UGI (UGI) - 2023 Q2 - Earnings Call Transcript
UGIUGI (UGI)2023-05-04 15:48
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Financial Data and Key Metrics Changes - UGI reported adjusted diluted EPS of 1.68forQ22023,downfrom1.68 for Q2 2023, down from 1.91 in the prior year [9] - The company expects adjusted diluted EPS for fiscal 2023 to be within a revised range of 2.75to2.75 to 2.90 [8][14] Business Line Data and Key Metrics Changes - Natural gas businesses saw an increase of 0.09year−over−year,benefitingfromhighergasbaseratesandaweathernormalizationrider[9]−UGIInternational′searningsincreasedby0.09 year-over-year, benefiting from higher gas base rates and a weather normalization rider [9] - UGI International's earnings increased by 0.02 year-over-year, aided by the noncore European energy marketing business [9] - AmeriGas reported a decrease of 0.30inearningsyear−over−yearduetoadverseweatherimpactsanddrivershortages[9][10]MarketDataandKeyMetricsChanges−TheU.S.experiencedextremelywarmtemperatures,impactingcustomervolumes,particularlyintheEastandSouth[5][10]−SevereweathereventsintheWestalsoimpededgrowthandefficientservicedelivery[5][11]−EnergyconservationeffortsinEuropeduetotheRussia−UkrainewaraffectedLPGvolumes[12]CompanyStrategyandDevelopmentDirection−UGIisfocusingoninvestinginnaturalgasbusinessesandrenewableenergysolutionstorebalanceitsportfolio[7]−Thecompanyplanstomaintainoperationalexcellenceanddisciplineincapitalallocation,particularlyininfrastructurereplacementandrenewableprojects[17][18]−UGIiscommittedtotransformingAmeriGasoperationallytopositionforfuturegrowth[19]Management′sCommentsonOperatingEnvironmentandFutureOutlook−ManagementacknowledgedthechallengesfacedinQ22023,includingweather−relatedissuesandinflationarypressures[5][6]−Thecompanyremainsfocusedoncontrollingcostsandimprovingoperationalmetricsforthesecondhalfoftheyear[14][19]−UGIisoptimisticabouttheexitstrategyforthenoncoreenergymarketingbusinessandexpectstoseebenefitsfrommarginmanagementefforts[12][20]OtherImportantInformation−UGI′sBoardofDirectorsincreasedthequarterlydividendto0.30 in earnings year-over-year due to adverse weather impacts and driver shortages [9][10] Market Data and Key Metrics Changes - The U.S. experienced extremely warm temperatures, impacting customer volumes, particularly in the East and South [5][10] - Severe weather events in the West also impeded growth and efficient service delivery [5][11] - Energy conservation efforts in Europe due to the Russia-Ukraine war affected LPG volumes [12] Company Strategy and Development Direction - UGI is focusing on investing in natural gas businesses and renewable energy solutions to rebalance its portfolio [7] - The company plans to maintain operational excellence and discipline in capital allocation, particularly in infrastructure replacement and renewable projects [17][18] - UGI is committed to transforming AmeriGas operationally to position for future growth [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q2 2023, including weather-related issues and inflationary pressures [5][6] - The company remains focused on controlling costs and improving operational metrics for the second half of the year [14][19] - UGI is optimistic about the exit strategy for the noncore energy marketing business and expects to see benefits from margin management efforts [12][20] Other Important Information - UGI's Board of Directors increased the quarterly dividend to 0.375 per share, marking the 139th consecutive year of dividend payments [8] - The company had available liquidity of 1.9 billion at the end of the quarter, bolstered by renewed credit agreements [15] Q&A Session Summary Question: Measures in place for AmeriGas cost expenses - Management discussed inflation impacts and emphasized controlling costs across the company, particularly at AmeriGas [22][23] Question: Future capital contributions from corporate level - A 31 million equity cure was provided to AmeriGas in Q2, with plans for opportunistic debt management in the future [24] Question: Customer acquisition and market impressions for AmeriGas - Management noted active customer acquisition efforts and challenges due to severe weather impacting volumes [25][26] Question: Contribution from noncore assets in UGI International - The noncore energy marketing business is performing as expected, contributing positively to margins [28][29] Question: Strategic considerations for the LPG business - Management confirmed the LPG business remains a strong cash source, with a commitment to balance investments between LPG and natural gas [31] Question: Outlook for renewables investment - UGI is on track to invest 1billionto1 billion to 1.25 billion in renewables, with over $500 million already committed [32]