UGI Corporation

Ladies and gentlemen, thank you for standing by and welcome to the UGI Corporation first quarter fiscal year 20 earnings call and webcast. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Alana Zahora, Investor Relations Manager. Please go ahead.

Thanks, Kenzie. Good morning, everyone, and thank you for joining us. With me today are Ted Yastrzewski, CFO of UGI Corporation, Bob Beard, Executive Vice President, Natural Gas, and John Walsh, President and CEO of UGI. Before we begin, let me remind you that our comments today include certain forward-looking statements which management believes to be reasonable as of today's date only. Actual results may differ significantly because of risks and uncertainties that are difficult to predict. Please read our earnings release and our annual report on Form 10-K for an extensive list of factors that could affect results. We assume no duty to update or revise forward-looking statements to reflect events or circumstances that are different from expectations. We'll also describe our business using certain non-GAAP financial measures. Reconciliations of these measures to the comparable gap measures are available on slide seven of our presentation. Now let me turn the call over to John.

Thanks Alana and good morning and welcome to our call. I hope that you've all had a chance to review our press release reporting first quarter results. UGI posted a very strong Q1 with each of our businesses performing at a high level. Our teams did an outstanding job of delivering this strong performance while executing a set of key initiatives that will provide the foundation for superior long-term performance. This was a noteworthy quarter for a number of reasons. It was our first full quarter with the newly acquired CMG Asset Network and the first full quarter with Amerigas back in the fold as a wholly owned UGI subsidiary. It was also our first quarter with the combined rate structure for our gas utility as those new rates went into effect in October. We also made significant progress on the major restructuring programs across our LPG line of business. Roger Perrault described these programs on last quarter's call, and we've been hard at work over the past 90 days developing detailed plans that will be rolled out over the next 18 months. Those programs are delivering their initial results as planned and remain on track to deliver the committed savings and enhance customer service levels. I'll review our key activities in Q1 and then turn it over to Ted, who will provide you with an overview of UGI's financial performance in the quarter. Barb Beard, our Executive VP, Natural Gas, will provide an update on our natural gas businesses, including progress on the CMG system, and I'll wrap up with comments on our strategic initiatives. Our Q1 GAAP EPS was $1, while our adjusted Q1 EPS was $1.17. Our adjusted EPS was over 40% above our Q1 fiscal 19 adjusted EPS of 81 cents and significantly exceeded the prior high point for Q1 adjusted EPS of $1.01 achieved in Q1 fiscal 18. Both quarters have been adjusted for the mark-to-mark valuation of unsettled hedges and other items which Ted will cover later. As I noted earlier, this very strong earnings performance reflected the strength of our diversified businesses, with all four business units contributing in a major way. This performance was in a quarter when weather in the Mid-Atlantic and Europe was a bit of a challenge. Our French teams were managing the impact of the general strike activities, and there were no opportunities for incremental capacity margin at energy services. Despite those challenges, we delivered our highest adjusted Q1 EPS ever, by a wide margin. Our teams did an exceptional job executing as we managed our supply chain to optimize margin and saw the positive impact of our restructuring programs on operating expenses, all while maintaining high levels of service to our customers. Before I turn the call over to Ted, I'd like to comment on the progress achieved in several key areas with major developments in Q1. We had a very successful first full quarter with the Columbia Midstream systems and team. The positive impact of the new fee-based revenues is evident in the Q1 financial performance of midstream and marketing. Adjusted EBIT is up nearly 45% with CMG's contributions being the major growth driver. Also going forward, we will be referring to the acquired CMG assets as UGI Appalachia. Our utility had another busy quarter, adding over 4,000 new heating customers while continuing to execute our broad range of infrastructure replacement and reinforcement projects. Our long-term infrastructure replacement program remains on schedule. The combined focus on infrastructure replacement and customer growth will remain for the foreseeable future as we invest in the infrastructure to serve our expanding customer base. We expect CapEx for the utilities to exceed $400 million in fiscal 20. Amerigas had a solid Q1 with adjusted EBIT just below prior year despite weather that was slightly warmer. Amerigas continues to excel with our cylinder exchange and national accounts programs. National accounts volumes increased 12% versus Q1 fiscal 19, and cylinder exchange volumes were up almost 7%. We'll continue to look for opportunities to leverage our exceptional U.S. distribution infrastructure to drive growth in these two very successful programs. UGI International had an extremely strong first quarter. Adjusted EBIT was up substantially over Q1 fiscal 19 despite warmer weather. We benefited from higher grain drying volumes, lower propane and butane costs that enabled strong margin performance, and lower operating expenses resulting from our transformation program in Europe. I'll return later on the call to comment on our strategic initiatives, but I'd like to turn it over to Ted at this point for the financial review. Ted?