Good day and thank you for standing by. Welcome to the UGI Corporation 4th Quarter 2025 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. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Tamika Morris, Vice President of Investor Relations and ESG. Please go ahead.

Good morning, everyone. Thank you for joining our Fiscal 2025 Fourth Quarter Earnings Call. With me today are Bob Flexon, President and CEO, Sean O'Brien, CFO, and Mike Sharp, President of Amerigas Propane. On today's call, we will review our Fiscal 2025 financial results and key accomplishments, as well as the strategic priorities and financial outlook for Fiscal 26, 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 reports 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, Tamika, and good morning. UGI delivered record-adjusted earnings per share of $3.32 through strong execution across multiple fronts, surpassing a revised guidance range of $3 to $3.15. Continued improvements at Amerigas, which led to its higher EBIT coupled with solid operational performance from our utility segment and significant tax benefits drove these exceptional results. We strengthened our balance sheet, generated approximately $530 million of free cash flow, inclusive of cash generated from asset sales of selected LPG territories and returned value to shareholders through dividend payments. Within our natural gas businesses, we successfully upgraded critical pipeline infrastructure and completed several new LNG and renewable natural gas facilities. These investments not only enhance our system integrity, but also expand our revenue-generating capabilities for future growth. At Amerigas, we continue to make great strides in streamlining and transforming key business processes, better positioning the company for the upcoming winter. At UGI International, we successfully advanced our portfolio optimization strategy. This will allow us to more effectively utilize our resources on core customer segments where we can have competitive advantage and achieve superior returns. Most importantly, I am proud that we have begun to transform our organizational capabilities by investing in our people and fostering a performance-driven culture focused on driving extraordinary outcomes. This cultural evolution defines the way we work and is a critical driver of continued success. Building on this strong foundation, we are raising our long-term EPS growth expectations with a new EPS compound annual growth rate target of 5% to 7%. This increase underscores the multitude of intrinsic opportunities and our confidence in executing on our strategic vision. During fiscal 2025, we delivered on the strategic priorities we set at the beginning of the year. We are transforming the culture of UGI and embedding greater accountability and operational discipline across our teams and businesses. This is improving our competitive advantage to accelerate and realize success going forward. Our portfolio optimization initiatives were successful. We achieved approximately $150 million from LPG divestitures, excluding the impact of divesting the Austrian business, which is expected to close before the end of this calendar year. This year, we deployed roughly $900 million of capital, primarily in the natural gas businesses. at the utilities we invested approximately 560 million dollars largely towards replacing and upgrading our gas distribution infrastructure including replacing nearly 130 miles of pipeline at amerigas while the operational transformation is ongoing we're seeing meaningful results that mike will speak to shortly notably this fiscal year we achieved a 30 reduction in recordable incidents which not only inspires the safety environment but benefits the business we have deployed stringent project management discipline to drive more efficient business processes through analysis and redesign while increasing technological adoption including ai throughout the organization beginning with amerigas ultimately these initiatives are strengthening our overall financial profile, better positioning the company to deliver long-term shareholder value, which leads me to our strategic vision. Our vision is to create sustainable shareholder value by driving operational excellence throughout our businesses. There are many opportunities to allot intrinsic value throughout our portfolio. Amerigas is at the forefront of strategic evolution. The team has already made substantial progress in transforming operations that will cement Amerigas as the premier propane company in the U.S., one that optimizes and takes advantage of our distribution network and establishes a business that is safe, reliable, and highly efficient. At UGI International, we will maintain strong operational discipline while positioning LPG as a viable alternative to fuel oil. The strategic and operational transformations underway in our global LPG businesses will generate increased cash flows and provide greater flexibility for future capital allocation. Our natural gas businesses operate in a dynamic environment and are well positioned to capitalize on the significant energy expansion happening particularly in Pennsylvania. With the prolific investment coming into the region, we are capitalizing on the opportunities, whether through increased throughput for our utilities business or incremental opportunities for our midstream assets. All of these operational pillars are underpinned by our commitment to strengthen our balance sheet. Now I'll hand the call over to Mike to provide you with an update on the progress and efforts we are making at Amerigas.

Thanks, Bob, and good morning, everyone. I'm excited to speak with you today about the actions we are taking at Amerigas. As can be seen on the slide, there are five strategic pillars which guide everything we do. First, our stand is that everyone and everything is always safe. We are committed to maintaining a zero-hump culture across operations because nothing is more important than ensuring everyone goes home safely each day. Our customer is at the heart of our strategy. We are building deeper relationships with our customers through reliable performance and improved customer service quality. We are driving efficiency through business process improvements as well as optimizing existing and employing new technology. Our success depends on our people and we are investing in the known. We are fostering an engaged culture that empowers our employees and encourages transparency, innovation, and ownership at every level. Finally, we are exercising financial discipline to enable investment in organic growth while delivering consistent value to our shareholders. These five pillars work together to position Amerigas for sustainable success. Over the past several months, you've heard Bob speak about the fact that we are focused on fundamentally transforming our operations and customer experience. This starts with our customer value and retention work stream where we are working to improve satisfaction and retention by looking at who we serve and how we may better serve them as part of these efforts we have segmented our customer base to better understand each group's unique characteristics and needs this allows us to tailor our service and pricing more effectively while staying true to our stand that every customer matters as an example after performing a customer profitability assessment we decided to exit the wholesale business that represented roughly 11 percent of our total volumes but was largely a break-even business this decision streams lines our system and removes operational clutter allowing us to focus squarely on profitable volumes ultimately our goal is to improve customer retention and growth while ensuring that our resources and infrastructure are deployed where they create the most value next is a supply and logistics work stream where our goal is to leverage our size and get the best value in our propane supply allowing us to offer more competitive prices to our customers while ensuring reliable service we've made great strides in this area and strengthened the team with individuals who have additional commercial expertise we have enhanced our forecasting analytics reassessed the number of our suppliers and strengthened our contracting process we have optimized our supply points and storage locations we have also improved our hedging practices to provide greater price stability for our customers. In October, we rolled out a new routing and delivery process to reduce inefficiencies

and increase reliability for our customers.

Our initial pilots demonstrated that we can achieve approximately 10% saving in fuel costs through this approach. By optimizing our scheduling and route planning, we will operate more efficiently and achieve a lower cost to serve our customers. Through dynamic routing, adjusting our scheduling period, and enhancing use of our existing technology, we have realized broader efficiency gains we intend to capture, including fuel savings. Next, we are working to improve both response quality and customer connection in our call center operations. We are in the process of reshoring our call centers to the United States. Today we are 40 to 50 percent complete with that process and will have a hybrid approach winner to ensure a smooth transition we've also invested in training and leveraging new technology including ai to provide better service for our customers finally we are simplifying our billing process to improve clarity and accuracy which will ultimately reduce call center volume and free our teams to handle more complex customer needs all of these operational improvements support our return to growth by strengthening our foundation we expect to retain existing customers In addition, we are creating a platform to achieve continued growth through organic customer additions. This strategy is already delivering results with 17% EBIT growth this year, and more importantly, we are expecting sustained year-over-year EBIT growth in the coming years. Each improvement we make builds on the others, creating a compounding effect that will drive sustainable, profitable growth. And with that, I'll hand the call over to Shah.

Thanks, Mike, and good morning. First, let me highlight our strong financial performance for the year. UGI delivered impressive results in fiscal 2025 with adjusted diluted EPS of $3.32, 26 cents higher than the prior year. This achievement was largely driven by increased contribution from the Amerigas and midstream and marketing segments, partially offset by reduced EPS at UGI International. amerigas generated strong results with eps of 27 cents due to operational momentum and income tax benefits the segment achieved a 24 million dollar increase in ebit while also benefiting from the effect of the one big beautiful bill act which restored interest expense deductibility midstream and marketing was up 12 cents largely due to a 66 million dollar increase in investment tax credits associated with the RNG facilities placed into service this year, which offset the impact of lower midstream margins. UGI International declined by $0.12 due to higher income tax expense and lower margin contribution from the business. Turning to the key drivers for each reportable segment, our regulated utilities reported record EBIT of $403 million, up $3 million over the prior year, largely due to higher total margin offset by increased operating and administrative expenses as well as higher depreciation expenses total margin increased 39 million reflecting the 10 increase in core market volumes stemming from the colder than prior year weather higher gas base rates in west virginia and continued customer growth during the year the utility segment added over 11 500 residential heating and commercial customers increasing our customer base to roughly 967,000 customers in Pennsylvania, West Virginia, and Maryland. Operating and administrative expenses increased $25 million, reflecting, among other things, higher personnel expenses, general insurance costs, and maintenance expenses. In our midstream and marketing segment, EBIT was $293 million, down $20 million versus the prior year, largely due to lower margin and reduced income from equity method investments total margin decreased 11 million as lower margins from natural gas gathering and processing operations as well as the 2024 divestiture of our power generation asset hung up creek were partially offset by increased margins from gas marketing activities turning to the global lpg businesses ugi international reported 314 million of EBIT, $9 million below the prior year, as reduced margin and lower realized gain on foreign currency exchange contracts was partially offset by lower operating and administrative expenses. LPG volumes were down 4% from the effects of continued structural conservation and the absence of certain customers who previously converted from natural gas to LPG. These declines were partially offset by the effects of colder weather and higher crop drying campaigns. The effect of this volume decline was partially offset by higher LPG unit margins and the translation effects of stronger foreign currencies, leading to a $38 million decline in total margin. Operating and administrative expenses decreased $35 billion, primarily due to lower personnel-related distribution, maintenance, and uncollectible account expenses, as well as from the exit of the energy marketing business. These decreases were partially offset by the translation effects of the stronger foreign currency. Lastly, at Amerigas, the business reported EBIT of $166 million, $24 million, or 17% above the prior year. LPG volumes were largely consistent year-over-year, as the effect of customer attrition was offset by the effect of colder-than-prior-year weather. Total margin increased by $10 million due to higher LPG unit margins, partially offset by lower fee income and slightly lower retail volume sold. Operating and administrative expenses decreased $9 million, reflecting, among other things, lower uncollectible account and vehicle fuel costs. In summary, fiscal 2025 was a strong year marked by solid execution across the business. We delivered a 42% total shareholder return and year-over-year growth in adjusted diluted EPS, reflecting the strength of our operating strategy. Our cash generation was robust, exceeding $500 million in free cash flow, which enabled us to return approximately $320 million to shareholders through dividends while strengthening our balance sheet. We ended the year with leverage at 3.9 times for UGI Corporation and 4.9 times at Amerigas, the result of disciplined debt reduction combined with improved top-line performance. Additionally, we deployed approximately $900 million of capital, primarily in our natural gas business, positioning us for future earnings growth. Our performance through the year underscores the durability of our business model, and we look to build momentum in the coming year. yesterday we announced our fiscal 2026 guidance range for adjusted diluted eps of two dollars and 85 cents to three dollars and 15 cents which assumes normal weather based on a 10-year average as well as the current tax environment this guidance range demonstrates our continued growth trajectory with an expected five to seven percent increase in reportable segment ebit on a year-over-year basis. Our core business fundamentals remain strong, and we are well positioned to deliver solid operational performance. While we anticipate higher interest expense and normalization of our effective tax rate, largely due to the absence of approximately 40 cents of investment tax credits received in fiscal 2025, we expect to deliver strong top-line growth, positioning the company for long-term success looking at each segment specifically in our regulated utilities higher gas base rates went into effect this month and we anticipate similar trends in customer growth as we saw in fiscal 2025. at the midstream and marketing segment we expect continued earnings growth in the business which is underpinned by margins that are highly fee-based and with limited commodity exposure. At Amerigas, we expect to realize year-over-year growth in both retail volume and EBIT due to the operational transformation underway. Lastly, UGI International is expected to be fairly in line with the current year as strong margin management and organic growth initiatives offset the impact of continued structural conservation. Looking ahead to our fiscal 2026 to 2029 plan. We are targeting an EPS compound annual growth rate of five to seven percent, which is supported by a robust capital investment program of 4.5 to 4.9 billion. These investments support strategic growth opportunities and actions to modernize our infrastructure, enhance system reliability, and position us for long-term success across our portfolio. We continue to project a rate-based growth of 9% or higher, which demonstrates the significant regulated utility investments opportunities we see ahead. This strong rate-based expansion will provide increasingly predictable earnings and cash flows, further strengthening our business. From a balance sheet perspective, we remain committed to maintaining financial discipline. We are targeting a leverage ratio at or below 3.75 times at UGI Corporation, while our Amerigas business will operate at or below 4.0 times leverage. These targets ensure we maintain the appropriate degree of financial flexibility in order to take advantage of attractive investment opportunities. Taken together, these metrics reflect a clear path forward, one where disciplined capital deployment, operational excellence, and prudent financial management are the driving force to consistently create value. We are committed to executing our strategy and these targets represent our commitment to you, our shareholders, for sustainable long-term growth. And now I'll hand it back to Bob.

Before we open the line for your questions, I want to reinforce three critical takeaways that demonstrate the strength of our current position and our trajectory going forward. First, this year we delivered record adjusted diluted earnings backed by a stronger balance sheet and enhanced liquidity position. This improved earnings profile represents the fundamental strengthening of our financial foundation that positions us for sustained success. Second, the operational and financial improvements underway at Amerigas and expanding throughout the company are showing meaningful results and will continue to drive year-over-year organic growth well into the future. Finally, our focused approach to talent management and development, along with our structured framework for driving operational change, is transforming our culture as to how we operate as a business. These initiatives will work together to unlock the intrinsic value within our portfolio as we strive to deliver positive energy every day. Thank you for your time with us today, and we will open the line for questions.

As a reminder, if you'd like to ask a question at this time, please press star 1-1 when you're touching on the phone, and wait for your name to be announced. To withdraw your questions, please press star 1-1 again. Please stand by that we compile the Q&A roster.

Our first question comes from Gabriel Maureen with Mizzou House.

Hey, good morning, everyone. If I could just ask maybe in terms of – good morning, Bob. Hey, if I could ask maybe on the guidance, you gave some assumptions for what you're looking for next year out of some of your segments. It seems like the utility growth is awfully transparent over the next couple of years, given the rate-based growth. But can you talk about what you're expecting from midstream in the LPG businesses in the five-year plan? Should we expect continued growth out of those businesses? and just your expectations there a little bit more?

Sure, Gabe. So over that planning horizon, we expect to have growth in all of the business lines overall. So we'll see low double-digit growth over that planning period. So we expect to have a continued growth rate in the businesses and our earnings over that planning horizon.

A couple things, Gabe, as well. So, you know, when you look at EBIT, we gave the 5% to 7% EBIT growth for this year. I want to make sure people understand that that guidance is not back-end loaded. You know, we've got consistent, fairly linear growth as you go from 26, 27 to 28 and to 29. And as Bob said, the NatGas businesses, you know, is more of the same. We've got that kind of locked and loaded. But one of the more exciting things is we feel very confident we've got a good outlook on the LPG side as well. Specifically Amerigas, we're seeing some very consistent growth in that plan over the years coming from that business line as well. Thanks, Sean. Thanks, Bob. If I could maybe follow up on

that on the natural gas side of things. Last quarter, Bob, you mentioned all the NDAs that you had signed around some of the activity happening in your backyard. If we can get an update on that and then anything, I guess, data center adjacent that might be embedded within your your midstream growth plan or utility growth plan over that outlook?

We still continue to see a lot of activity, even more so than when we last spoke about it. We've advanced some of the projects with some interested parties. We have NDAs, so we can't necessarily go into it. But again, the amount of NDAs that we have with counterparties is you know, north of 50. I mean, we've got significant discussions underway and in various stages with the various counterparties. So, these things take time, but we are definitely keenly focused on it and looking to be part of all the growth that we're expected to see in Pennsylvania.

Thanks, Bob. And then if I could just squeeze one last one. And I think there were some media reports about potentially putting your electric utility on the market. Just wondering if you could maybe comment on that and also within the role of just larger expectations around continued portfolio optimization, either, you know, utility, midstream, or LPG businesses?

Imagine, Gabe, when we take a look at our portfolio all the time, we did a lot of that this past year on the LPG side of the business to see where do we have particular assets or opportunities to see if there's greater value in holding or divesting. We will continuously look at our portfolio for those opportunities. I won't comment directly on anything in either the LPG side or the natural gas side, but looking at portfolio optimization continues to be one of the things that we will always consider. What I think really drives the value in this company for the next several years is we have just a lot of opportunities for intrinsic value growth. That's low risk, high return, things that I love to find, and you'll hear from Mike a little bit more this morning on what we're doing in Amerigas, but I see that across our portfolio, these opportunities, to really drive our growth rates that Sean was talking about by driving intrinsic value.

Thanks, Bob. Appreciate it. Thanks, Gabe.

Our next question comes from Julian Dumoulin-Smith with Jeffries.

Hey, good morning, team. Can you guys hear me okay? Yeah, Julian. Hey, thanks, Bob. So maybe just to follow up on a few of these things. First off, look, I just want to understand a little bit more about the Amerigas targets here. I mean, how do you think about getting to that sub-port science? And specifically, you know, is that deleveraging or is that principally going to be underlying adjusted EBITDA improvement? And how do you think about the timeline to get there to those sub four times target?

Well, I'll go first and I'll let Mike chirp in. But AmeriGest has a lot of opportunities to really drive value. And we're going to grow the AmeriGest business by winning business. We're not going to go out and buy business. But a lot of the things that Mike and team are working on have just outstanding returns. And if I think things like routing and delivery, the kind of work that Mike and his team is doing there, when you look at the NPV or something like that, it goes, according to my math, in triple digits. You know, you're talking $100-plus million NPV on that type of work because we're driving efficiencies in the business. and the work Mike and team are doing in these other work streams is just going to have Amerigas growing throughout that time period. I'll let Mike maybe comment on a little bit more of what's going on in Amerigas since this is his first call since joining about a year ago when I joined. And, you know, Mike and I have a history going backwards, and I knew he was the right person to drive the improvements in Amerigas that we're seeing. Mike?

Thank you, Bob. Good morning, Julian. Julian, as Bob said, there's a tremendous amount of intrinsic value here at Amerigas, right? And to unlock that value, we have the six PMO projects that are in progress right now at various stages from supply to rounded delivery, customer value proposition, billing. So the number of initiatives, again, that we're already seeing the results, the fruits from those projects. So really successfully executing those projects. And we have a number of other projects that we don't advertise outside the PMO, which are also creating tremendous intrinsic value. So a lot of effort around there. As Sean mentioned, we had a 70% EBIT growth last year. We foresee this year being in that ballpark, the same ballpark. And then going forward, there's additional value going forward. This isn't a one-time thing. It's an ongoing thing. There's a lot of improvement, you know, at Amerigast. I think, you know, anyone that's caught, it's not a secret, the last several years here at Amerigast have been difficult, but we have stabilized the business, right? So 17% growth in EBIT. Our volumes are virtually flat this year, which is the first time this has happened in five years. It's been a sustained decline, so we've flattened volumes. And then getting all these things right, as Bob says, is there's just a tremendous amount of intrinsic value growth ahead of us.

Hey, Julian, maybe to answer that last question, I'm just going to add on real quick. So this year we went from a leverage ratio of about six when you look back coming into the year to four nine, which we're incredibly proud of. That happened in two ways. Mike, you know, Mike and the team grew EBIT 24 million, 17 percent. Obviously, that has a positive impact. And we do ever to another 200 million came into the year with about a billion nine of debt. exit of the year close to 1.7. And you were asking in the future, where do we see that going? I'm pretty confident you're going to see us in 26 start to approach or even beat a four and a half leverage rate in Amerigas, somewhere in that range, maybe even a little lower. And that's going to come in the same way. We're continuing to delever a little bit more. And as Bob and Mike said, we're expecting low double-digit growth out of Amerigas in 26. So more of the same, and it'll be a pretty impressive day when that leverage rate is sub 4.5.

Excellent. Thank you, guys. And then just following up a little bit on the credits and reset here with 26 here in a little bit, can you speak a little bit more to just the consistency, you know, X credits, and just confirm effectively that going forward, you don't have any kind of one-time tax credit items that will roll off or what have you. I just want to make sure that we're abundantly transparent and on the same page about this.

Yeah. And I think you've got it pretty right. I mean, there's OB3. I'll start with OB3. It's the smaller of the two. We lost interest deductibility at Amerigas. So there was about 10 cents in the numbers this year. They're related to 24 and 23. So those are hits we took in 2024 and 2023. They will not be ongoing. So there's no more detriment or benefit, right? We were just recouping some hits we took on our interest deductibility. And then the other big one, and I think you picked up on it, Julian, is the ITCs. You know, the bulk of our RNG projects went into service this year. This was all anticipated. We optimized it a little bit, But the bulk of the projects went into service. That was very large. You know, we talked about 40 cents of positive impact. So that kind of timing is out of the forecast. We have no expectations going forward on any ITCs, although we do have, and we've been clear, we have about nine cents of PTCs in the ongoing forecast, you know, so much lower So OB-3 out of the picture, and then the timing of the ITC is essentially out of the picture. You're seeing a very normalized run rate as you think about 26 through 29 coming out of the company.

Awesome. And then lastly, the shift in CapEx relative to the $200 million increase in shareholder return, is that meant to be a reduction in utility CapEx and then an increase in dividends or pivot towards midstream CapEx? I know a lot of different moving things, but just super quick if you can.

Yeah, I mean, Julian, the way I look at it, you know, the utility capex, and I know you're comparing to a prior plan, I see it pretty consistent, maybe even slightly up, so we can go offline with you, but, you know, we pulled back a little bit in 23, but when you look at 24 through 27, and including 28 and 29, we're actually growing the utility capex a little bit, so we feel really confident there. One thing I'll say on that is we're a few miles away from completing our cast iron program. So that's a pretty big milestone for the team. You do see a little more midstream capital coming into the equation, and I think you've picked up on our commitment to the dividend in the out years as well. So I think you've got a model pretty quickly, but pretty accurately. But we do see the utility capital at or above the levels that we would have had, I think, the last time I gave guidance on that.

Awesome. Thank you, guys.

Our next question comes from Paul Fremont with Ladenburg-Fellman.

Thank you very much. I just wanted to sort of follow up on the 45Z credits. Is the first year that you're going to be collecting that in 26? Or did you collect any in 25?

It'll be 26 will be the first time.

And then the other question I have is, were you using sort of a negative credit score to calculate the 45Z credits going forward?

Yeah, not sure about that, but we'll need to get back to you on that.

Great. I think that's it. Thank you very much. Great. Thank you.

That concludes today's question and answer session. I'd like to turn the call back to Bob Flexin for closing remarks.

Well, great. Well, thank you for dialing in. And just to reiterate on our year, we had a very strong fiscal year 25 adjusted EPS 332 record earnings for us. Really love seeing the EBIT growth of 17%, our leverage getting back in line, and of course, the TSR to our shareholders of 42%. So a great year for us. We continue to be focused very much on our operations across the board we've got great progress in amerigas leading the way on improvement so that's going to be driving our growth in these in these future years uh talent management we've got new people in the right spots and combined with the existing workforce we've got the right people to to bring this forward so i really look forward to more discussions within the future we'll see a lot of intrinsic growth we'll be capitalizing on what's happening in pennsylvania with the data center investments, and the future looks very bright for us. So with that, thank you very much for your time, and we'll be speaking to you more in the future. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.