UGI Corporation

Hello, thank you for standing by and welcome to the UGI Corporation first quarter fiscal 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Tameka Morris, Director of Investor Relations. Please go ahead.

Thanks, Josh, and good morning, everyone, and thank you for joining our fiscal 2022 first quarter earnings call. Today, I'm joined by Roger Perot, President and CEO, Ted Yastrzepski, CFO, and Bob Beard, Executive Vice President, Natural Gas, Global Engineering and Construction, and Procurement. Roger and Ted will provide an overview of our results and the entire team will then be available to answer your questions. 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 most recent annual report 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 will also describe our business using certain non-GAAP financial measures. Reconciliations of these measures to the comparable GAAP measures are available within our presentation. Now I'm pleased to turn the call over to Roger.

Thank you Tameka, and good morning everyone. I'll start today by providing an update on the quarter, including our progress on several strategic initiatives. Ted will then provide an overview of first quarter's financial results and liquidity position. I believe everyone is aware of the extremely challenging macroeconomic environment experienced in the first quarter. Significant increases and volatility in commodity prices, Thank you for joining us. The impact of customer service challenges from the prior year after establishing the new operating model and the effect of higher commodity prices on customer usage. UGI International had lower average LPG unit margins and lower energy marketing margins that were largely due to higher commodity costs. Our natural gas businesses delivered strong results despite the warmer weather due to incremental earnings from Mountaineer, The higher gas base rates that went into effect last year and higher margin for renewable energy marketing activities. Per our historical practice, we are not discussing full fiscal year guidance after a single quarter given the amount of heating degree days remaining. However, we are executing on a robust plan, leveraging our proven capabilities of focused margin and expense management and we expect these actions will have a disproportionate benefit in the back half of the fiscal year. Additionally, we are encouraged that January was colder than normal in the US. We are confident in the strength and resilience of our business and our ability to deliver against our long-term commitment of providing six to 10% EPS growth. Turning to slide five. In the first quarter, We continue to advance our strategy to deliver reliable earnings growth, invest in renewables, and rebalance our business. We are off to a strong start in our utilities capital expenditure program, which is an area of significant growth for the company. During the quarter, we deployed over $110 million of capital, and we expect to execute on our plan of investing over $500 million in fiscal 2022. Our goal is to continue replacing cast iron and bare steel pipes to promote the long-term safety and integrity of our infrastructure, drive operational efficiency, provide access to reliable and affordable natural gas to our customers, while reducing emissions. We continue to see attractive customer growth at the utilities, in particular with conversions from other fuel sources, the most predominant of which is fuel oil. During the quarter, we added more than 4,500 new residential heating and commercial customers. Mountaineer performed in line with our expectations, delivering solid results for the quarter. We also saw that in the midst of significant increases in commodity prices in comparison to the prior year period, Amerigas benefited from disciplined margin management efforts. Late last week, UGI Utilities filed a request with the Pennsylvania Public Utility Commission to increase natural gas rates by approximately $83 million. This requested rate increase is driven by the record cap level of capital that UGI Utilities is deploying to upgrade and expand our piping systems. Included in this rate case is a request for a weather normalization adjustment mechanism that is intended to stabilize the utility's revenue and customer distribution charges as we continue to execute our strategy of delivering reliable earnings growth. Turning to our renewables strategy. In December 2021, we received approval from the European Commission for the intended joint venture with SHV Energy that will advance the production and use of renewable dimethyl ether in the US and Europe. With this approval, we've now begun the process of forming the joint venture and expect to provide more details in the coming months. We anticipate that the first production facility will be located in the UK. We also entered into a multi-year agreement with Vertimas to utilize their catalytic technology to produce and distribute renewable fuels within the US and Europe. The intent is to bolt on the technology to existing bioethanol facilities in order to produce the renewable fuels. The first production facility is expected to be operational in fiscal year 2024 with an annual production target of approximately 50 million gallons of combined renewable fuels. We are pleased with the momentum that we've built upon fiscal 2021 in identifying renewable investment opportunities. In addition, Our previously announced projects remain on track with the Idaho and Spruce Haven RNG projects expected to be completed in calendar 2022. We are moving forward our ESG programs as well as the commitment to lower our own carbon emissions and help our customers to do the same. I am proud of our efforts to maintain robust governance practices and improve greenhouse gas mitigation strategies were recognized, with UGI being upgraded to AA rating by MSCI. This rating positions us among the leading companies worldwide for action across ESG matters. Turning to the third prong of our strategy, rebalancing our portfolio. On January 27th, we completed the previously announced Stonehenge acquisition for a total cash consideration of $190 million. The Stonehenge business includes a 47-mile natural gas gathering system and associated compression. It is located in western Pennsylvania and complements our UGI Appalachia assets. This transaction is immediately accretive to earnings and has stable cash flows underpinned by a long-term contract with minimum volume commitments. And now, I'll turn the call over to Ted, who will get into more details on our financial results.