Good day and thank you for standing by. Welcome to the UGI Corporation's Third Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your speaker today, Tameka Morris. Please go ahead.

Thank you. Good morning everyone and thank you for joining our third quarter 2021 earnings call. With me this morning are Roger Perreault, President and CEO; Ted Jastrzebski, CFO; and Bob Beard, Executive Vice President, Natural Gas. 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 result 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 event or circumstances that are different from expectations. We'll also describe our business using certain non-GAAP financial measures. Reconciliation of these measures to the comparable GAAP measures are available within our presentation. And with that, I'll turn the call over to Roger.

Thanks Tameka and good morning everyone. UGI delivered strong third quarter results and performed well while managing the ongoing impact of the COVID-19 pandemic. Our third quarter GAAP EPS was $0.71, while adjusted earnings per share was $0.13, $0.05 over a $0.08 performance in the comparable prior year period, reflecting strong execution across our diversified business and increased margins at UGI International. On a year-to-date basis, our GAAP EPS of $4.48 and adjusted EPS of $3.30 represent record earnings through the first three quarters of the fiscal year. We are really pleased with this performance, which demonstrates the earnings strength of our diversified business. During the Q2 earnings call, we shared the revised EPS guidance of $2.90 to $3 for this fiscal year. Given the strong year-to-date performance, we expect to be at the top end of our guidance range. Next, I'll comment briefly on several key accomplishments during the quarter before turning it over to Ted, who will provide you with an overview of UGI's financial performance. I'll return to cover other key operational highlights before opening it up for questions. During the quarter, our teams continued to execute on our major business initiatives as we deliver reliable earnings growth, progress incremental opportunities related to renewables, and make investments to rebalance our portfolio. We are well-positioned to meet our objectives and are pleased with the pipeline of opportunities ahead. Turning to the key highlights for the quarter. UGI Utilities is on track for another record year of capital expenditure, where we will invest in infrastructure replacement and reinforcement. These investments, which are primarily focused on replacement of cast iron and bare steel, are expected to drive continued reliable earnings growth as our PA utility has seen a rate base CAGR of 11.4% over the past five years. The Utilities…

Thanks Roger. As Roger mentioned, we're pleased with the strong third quarter results. We delivered adjusted diluted EPS of $0.13, an increase of $0.05 over the prior year fiscal quarter. Our reportable segments had EBIT of $98 million compared to $81 million in the prior year. This table lays out our GAAP and adjusted diluted earnings per share for fiscal year 2021 compared to fiscal year 2020. As you can see, our adjusted diluted earnings exclude a number of items such as the impact of mark-to-market changes in commodity hedging instruments, a gain of $1.09 this year versus $0.55 in the third quarter of fiscal 2020. Last year, we recorded an $0.18 impairment of our ownership interest in the Conemaugh Station. This interest was divested as of September 30, 2020. Also last year, we had a $0.02 loss on foreign currency derivative instruments. We adjusted out $0.07 of expenses associated with our LPG business transformation initiatives compared to $0.02 in the prior year. Lastly, we had a $0.44 impairment related to our PennEast assets. In June, the U.S. Supreme Court ruled in favor of PennEast, which is categorically good news for the industry and consumers. Natural gas will continue to play an important role in meeting our energy needs. However, even with this positive news, it is unclear when other remaining issues, such as a decision by FERC on the request to phase the project will be resolved allowing the project to be brought into service. This has led us to impair our investment. While there is uncertainty regarding the timing of PennEast, we have ample opportunity to deploy capital in other areas that meet our return objectives as we have discussed in the past. Looking at our year-over-year quarterly performance, this chart provides some additional color to the $0.05…

Thanks Ted. Before we move to Q&A, I'll share with you some other key business updates since our last call. First, the Mountaineer acquisition continues to progress smoothly. In July, we completed a key milestone in the regulatory process by filing an agreement for settlement as well as providing testimony in a hearing before the commission. Our next step will be to file a proposed order by August 10th, seeking the commission's approval. While the precise timing of the commission's approval is uncertain, we have completed several key steps in the regulatory approval process, and now expect to close well before the end of the calendar year and even potentially within this fiscal year. We continue to expect the transaction will be accretive to earnings in the first full year of operation and believe Mountaineer will provide meaningful growth opportunities moving forward. During the quarter, our UGI Utilities Electric division reached a settlement agreement on its rate case and filed a joint petition for approval of that agreement with the Pennsylvania PUC on July 19th. Under the terms of the settlement agreement, the Electric division would be permitted to increase base rates by $6.15 million, and we anticipate new rates going into effect in November 2021. Separately, the second phase of the gas base rate increase of $10 million went into effect on July 1st. In July, UGI Utilities completed construction of a new state-of-the-art centralized safety training facility. Safety is our top priority and a core value at UGI. We are pleased to place this new facility in service as it reinforces our commitment to safety across the organization. Lastly, our AmeriGas team continues to increase the footprint of our home delivery service, Cynch. During the quarter, we launched Cynch in three additional markets, bringing the total to 23 cities across the U.S. As we look forward to the remaining quarter in this fiscal year and fiscal year 2022, we are pleased with the strong year-to-date performance and the investment opportunities available to us as we execute on our strategy. We have demonstrated our resiliency and our ability to operate effectively despite a challenging and volatile macro environment. I remain confident that we're well positioned both strategically and financially to continue executing and delivering reliable long-term EPS growth of 6% to 10% and return capital to shareholders through a robust dividend that we expect to grow at 4% over the long-term. To do this, we will remain committed to our core businesses, driving continuous improvements, and efficiencies in our operations and lean into investment opportunities in our natural gas business and in renewable energy solutions. And with that, we will open it up for questions.

[Operator Instructions] Our first question will come from the line of Marc Solecitto from Barclays. You may begin.

Hi, good morning. So, your gross margin percentage came in a bit light at APU this quarter. Just wondering, was that a function of LPG prices sharply rising during the quarter, business mix with lower cylinder sales or perhaps with your LPG transformation? I know part of the strategy was to share some of your cost savings with customers. So, just wondering if you could comment on the drivers there?

Yes, good morning Marc. Thank you for that question. I think you hit it during your question. The main element that drove margins down is what we've seen in the quarter is an increase in national account activity as the economies continue to improve. While at the same time, we've seen a decrease in cylinder volumes as, obviously, barbecuing or the -- not obviously, but the utilization of cylinders for propane for heating and patios, et cetera, has decreased. So, a large component of the margin period-over-period is really due to a mix effect. We continue to have good pricing control as we see commodity prices come up. We continue to always have an approach where we will go recover that. There could be a small timing gap between when commodity prices are coming up and when we're effectively able to drive the prices through to the market. But as we've shown in the past, we continue to see good margin and consistent margin evolution as commodities go up and down.

Got it. And then on your guidance, it seems like there's some nice momentum in the business with you now tracking toward the upper end of the revised range. But obviously, sometimes it's a bit opaque in terms of quantifying weather impacts versus more structural drivers, at least from an outside perspective. So, just wondering if you could comment on how underlying or weather-normalized results year-to-date as compared to your budget, and how that's trending for next year?

Yes. So, I'll start and I'll pass it over to Ted for a few additional comments. So, as we've highlighted during the quarter and now it's been several quarters in a row, we continue to have very good performance. We continue to track well compared to our budgets, our plans and the guidance that we've provided to The Street. It's driven with a lot of components. And I think one point that I'd like to highlight is it demonstrates the power of the diversification we have as a business. The fact that we operate across 17 European countries, we operate across the U.S., not only geographic diversification, but also business activity. So, we continue to see all of these puts and takes provide us with very solid robust earnings growth, and it really largely explains the strong performance we've had now over several quarters. But I'll pass it to Ted for additional comments.

Yes, the only thing I would add is, I think it's very fair to say that we have underlying strong momentum. It has been enhanced with really great weather in Europe. So, international is especially strong, but the underlying momentum is strong. We are very much on track on our transformation efforts at LPG, our capital spending and therefore, our ratable spending at the Utilities continues to be strong. We're hitting yet another record year in investments in Utilities. And while we may be a little bit short on capital spending against our initial projections, we will be delivering on the mileage expectations for replacement and betterment that get charged through our rate base. And so yes, very strong momentum for the business.

Great. And then maybe just lastly on PennEast. Would you be able to just provide an update with where that project stands? And I guess, steps forward following the Supreme Court ruling?

Yes. Well, certainly. And Bob Beard is on the call, so I'll let him add further color. But certainly, this really does not change our belief that PennEast is an important project for the region, and that it's a project that should be built. And we certainly remain committed to the partnership agreement. But with that, what I'd like to do is to let Bob explain in a little more detail as to the decisions we made and how we see the future on that project. Bob?

Yes. Thanks Roger. Yes, I agree with Roger. I think the partnership still firmly believes that New Jersey needs another source of natural gas. But what's in question now is the timing? Even though we got a really good what we consider to be necessary ruling from the Supreme Court, there still remains quite a few hurdles from a regulatory standpoint. So, the timing of the project remains in question.

Great. Thanks for the time.

Sure.

[Operator Instructions] I'm currently not showing any further questions in the queue at this moment.

Great. Thank you. Well, I'd like to just thank everybody for joining us on the call today and we certainly look forward to seeing you on our next call. Thanks and have a good day.

This concludes the conference call. You may now disconnect.