UGI Corporation

Good day, and thank you for standing by. Welcome to the UGI Corporation Third Quarter 2022 Earnings Conference Call. 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 1-1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today.

Good morning, everyone, and welcome to UGI Corporation's fiscal 2022 third quarter earnings call. Joining me today are Roger Perot, President and CEO, Ted Yastrzewski, 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, Tamika, and good morning, everyone. I hope that you've all had the opportunity to review our earnings release reporting the third quarter results. On today's call, will provide a business update, review our financial results for the quarter, and discuss the outlook for the rest of this fiscal year before concluding with a question and answer session. For the fiscal third quarter, UGI's reportable segments delivered adjusted EBIT of $100 million versus $98 million in the prior fiscal year. We were pleased with the strong results from our natural gas businesses, largely driven by increased margins from capacity management and commodity marketing. as well as higher disc margin. The global LPG businesses were impacted by warmer-than-prior-year weather in Europe, rising cost inflation, and difficulty in filling key delivery-related positions in the US. These impacts were partially offset by benefits from the disciplined cost control actions that were implemented earlier in the year. UGI delivered adjusted diluted EPS of $0.06 compared to $0.13 in fiscal 2021. And this was largely attributable to $0.07 of CARES Act and other tax benefits realized in the prior fiscal year. Based on the year-to-date results and our expectations for the fourth quarter, we now expect to deliver at the bottom end or slightly below the fiscal 2022 guidance range of $2.90 to $3. There is continued economic uncertainty due to persistent inflation, commodity price volatility, customer price sensitivity, and labor shortages. Nevertheless, we believe in the resiliency of our base business designed to minimize the impact of those risks over the long term and remain focused on executing our strategy to meet shareholder commitments. Ted will provide more details on our fiscal third quarter results, but first I'd like to highlight some key accomplishments. The utility segment, which has an attractive rate-based growth rate of approximately 11%, remains on track to deploy a record level of capital this fiscal year. with infrastructure replacement and betterment being the primary component of the capital spend. Year to date, we've also added over 11,000 new residential heating and commercial customers at the utilities, demonstrating sustained and attractive customer growth within our service territories. On July 28th, we received the recommended decision from the administrative law judge assigned to our current rate case. We are very pleased with the ALJ's recommendation that the Commission approve the settlement in its entirety and without modification. The terms of the settlement include an increase in gas base rates of $49.45 million in two phases, $38 million effective on October 29th of this year, and another increase of $11.45 million in October of 2023. The settlement also includes a weather normalization adjustment rider that would also be effective on October 29th under a five-year pilot program. This program would reduce our sensitivity to weather fluctuations as it allows us to adjust the customer's bill to reflect normal weather conditions if weather deviates more than 3% from the 15-year average. Mountaineer Gas Company continues to meet our expectations and we're pleased with the record year-to-date performance from the business. Demand for natural gas within our region remains strong, and we have been pleased with the incremental earnings from UGI Moraine East, the legal entity holding the Stonehenge assets acquired in January of this year. At UGI International, our LPG business has shown tremendous resiliency in the face of higher commodity prices and sustained inflationary pressures. There is robust underlying demand despite the impact of significantly warmer weather year over year. And our domestic propane business, Amerigas, continued to experience strong demand for cylinder exchange and national account volumes during the quarter, showing sustained increases in comparison to pre-pandemic volumes. Turning to our renewables and rebalancing strategy. During the quarter, we made progress in expanding our renewables footprint with a commitment to fully fund three projects converting dairy waste to RNG in South Dakota. These projects are expected to produce approximately 300 million cubic feet annually when completed by the end of calendar 2024. Our previously announced RNG projects are also on track with two projects expected to be completed and operational in this fiscal year. Our business development teams are assessing a healthy pipeline of potential renewables investments as we look for opportunities to leverage our scale and expertise and continue to build our platform. Finally, in June, we were pleased to issue our fourth annual ESG report entitled Transparency, Action, and Progress. I encourage you to review the report that highlights our commitments and the strong progress that we've made on all key performance indicators. Now, I'll turn the call over to Ted to walk through our financial results.