UGI Corporation

Good day, and thank you for standing by. Welcome to UGI Corporation Q2 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. After all participants, 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your questions, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tamika Morris.

Good morning, everyone. Thank you for joining our fiscal 2026 second quarter earnings call. With me today are Bob Flexman, President and CEO, and Sean O'Brien, CFO. On today's call, we will review our second quarter financial results and key business highlights before concluding with a question and answer session. 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 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. And with that, I'll turn the call over to Bob.

Thanks, Danica, and good morning. Fiscal 2026 is shaping up to be a year of meaningful progress against the strategic priorities we laid out at the start of the year. Our natural gas businesses continue to anchor the portfolio, supported by strong customer demand and operational execution. We continue to have a robust pipeline of data center opportunities, much like the announcement of our partnership with Prime Data Centers. UGI International continues to demonstrate the strength of its business, generating strong free cash flow and effectively managing margins through a dynamic operating environment. Of note, we do not anticipate any full-year impact to margins or supply availability issues from the ongoing conflict in the Middle East. Due to the nature of our sales contracts and our risk management hedging program, The operational transformation at Amerigas is delivering substantial measurable results and on target to set the business up for a successful heating season at the start of fiscal year 2027. Our balance sheet ended the quarter with consolidated leverage below the targeted range of that or below 3.75 times. Sean will cover in more detail the leverage milestones we expect to achieve this fiscal year. Our year-to-date reportable segments EBIT is up $17 million over prior year, largely from higher gas space rates at our utilities and effective margin management at UGI International, which offset the impact of warmer weather in our global LPG service territories. At our utilities, we deployed approximately $280 million of capital year-to-date, advancing our commitment to pipeline safety, reliability, and modernization, while adding more than 6,000 new heating customers across our service territories. Through our weather normalization riders in Pennsylvania and West Virginia, customers were able to save $26 million on heating bills this past winter. At Amerigas, we are excited that in select cities, our barbecue cylinders are now available online through Amazon. We are rolling this out in a phased approach across the markets where we currently operate Amerigas's cylinder home delivery service called Cinch, leveraging our established direct-to-consumer delivery infrastructure. Turning to the next slide, I want to spend a few minutes on several strategic actions that together reflect the deliberate execution of our long-term value creation strategy, sharpening our focus on natural gas and deploying capital into the most attractive growth opportunities we see in our service territories. First, subsequent to the quarter, we entered into a definitive agreement to sell our electric division at UGI Utilities. The transaction valued at approximately $470 million with further potential earnouts prior to working capital adjustments, is expected to close in the first quarter of calendar 2027, subject to customary closing conditions and applicable regulatory approvals. The strategic rationale here is clear. The transaction sharpens UGI's focus in our area of greatest competitive advantage, and the after-tax proceeds will be used to reduce UGI debt and for general corporate purposes. further strengthening the balance sheet and providing greater financial flexibility for natural gas capital investment. We're excited to announce the strategic partnership between UGI Energy Services and Prime Data Centers to develop major natural gas supply infrastructure in Pennsylvania's northern tier. Under a purchase and sale agreement, UGI Energy Services will sell Prime property to build a proposed on-site gas fuel electric generation facility. UGI will retain the storage capacity and oil and gas rates associated with the property and is expected to supply the Dana Center with reliable, large-scale gas supply. Prime's natural gas demand is expected to exceed 100,000 decatherms per day within three to five years, a scale that underscores the importance of the project for the region's energy infrastructure. This partnership is a powerful example of how UGI's integrated natural gas platform is uniquely positioned to support the next wave of energy demand. The northern tier of Pennsylvania offers direct access to locally produced natural gas and multiple redundant interstate pipeline pathways, a combination of supply, security, and infrastructure depth. And importantly, prime is one of many opportunities we are actively pursuing. Our team is in active conversations with numerous parties across the data center and large load industrial space with over 75 nondisclosure agreements directly related to potential future projects signed today. While we don't expect that every one of those will translate into contracted opportunity, the breadth of inbound interest continues to be a strong signal of the demand environment in our service territories and UGI's position to be a strategic partner for large-scale natural gas infrastructure. Lastly, during the quarter, we ran a successful oversubscribed open season for the projected Auburn pipeline expansion which is pending FERC approval. The level of customer demand validates our expansion strategy. Taken together, these announcements provide additional avenues to creating long-term value, sharpening focus, strengthening the balance sheet, and deploying capital where the demand exists. Now, let me spend a few minutes on UGI International because this segment really embodies what discipline execution looks like over the long term. When you look at the financial and operational profile of this business, there are several metrics worth highlighting. First, the return on capital employed of approximately 15% indicates that we're earning attractive returns on the capital invested in this business, reflecting the quality of our market positions. a thoughtful approach to capital allocation, and an operating model that has been refined over many years to drive efficiency at every level. We've also continued to expand operating margin, drive cost productivity, and improve on already strong safety and customer metrics, areas where this team has long set a high bar and continues to raise it. Free cash flow generation is equally important, and over the past three years, UGI International has generated more than $800 million in free cash flow. Free cash flow that has been used to fund dividends to shareholders, invest in growth initiatives in our natural gas line of business, and maintain a strong balance sheet with net leverage consistently below two times. This reflects disciplined CapEx, working capital rigor, and the structural cost improvements this team has driven consistently over time. Together, these metrics describe a business that is efficient, generates strong returns on the capital it deploys, and built to perform through changing economic cycles. Turning to slide seven, the operational transformation is fully underway at Amerigas and making a significant difference. We continue to advance many active improvement work streams across six focus areas with measurable improvements compared to fiscal 2024. Over the past two years, we have reduced the recordable incident and lost time injury rates by roughly 50%. In operations, the percentage of zero fill stops and out of gas events are down considerably while we've become more efficient in the number of miles driven to serve customers. And when I think of customer satisfaction, our customer service call volume are down 32%, while our net promoter score is up 67%, significant progress when compared to fiscal year 24. A major milestone on our turnaround for Amerigas is the full reshoring of our call center to the U.S. at the end of the second quarter. We now have over 250 agents dedicated to serving customers and regional teams that are closer to our customers and can better understand and respond to our customers' needs. This was a multi-quarter effort, and we executed it on schedule, on budget, and well ahead of the upcoming heating season. Our route optimization program is fully implemented, and the productivity benefits are showing up in miles driven and on-time delivery metrics. Although we've seen strong improvements, our established PMO team remains focused on efforts to improve our cylinder exchange business customer segmentation, pricing and billing, service operations improvement, supply chain optimization, and inventory modernization. Taken together, the operational transformation at Amerigas is delivering tangible results with volumes stabilized and a 9% improvement in EBIT over the two-year period. And with that, I'll hand the call over to Sean to walk through our financial results for the quarter and year-to-date in more detail.