Good day and thank you for standing by. Welcome to the UGI Corporation Q1 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tameka Morris, Senior Director, Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining our fiscal 2023 First Quarter Earnings Call. Today, I'm joined by Roger Perreault, President and CEO; Ted Jastrzebski, CFO; and Bob Beard, Chief Operations Officer. 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 and quarterly 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. 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, then Ted will provide an overview of our financial results and our liquidity position. We had a good start to fiscal 2023 as our reportable segments delivered a $63 million increase in EBIT over the prior-year period. In totality, UGI reported adjusted diluted EPS of $1.14 compared to $0.93 in the prior-year period. In fact, our adjusted diluted EPS would have been $0.08 higher without the noncore energy Marketing business. These results reflect the robust performance of our natural gas businesses including the effect of weather that was colder than the prior-year period, higher gas base rates at UGI Utilities and continued growth from our UGI Appalachia assets. In the global LPG businesses, we realized benefits from disciplined margin management and expense control efforts, which helped offset elevated inflationary pressures. These benefits, along with continued growth in National Accounts volumes at AmeriGas helped to offset the effects of significantly warmer weather in Europe. In addition to the strong earnings performance in the first quarter, I'd like to comment on several other key accomplishments across our business. First, we are off to a strong start in our utilities capital expenditure program, and we invested $117 million of capital during the quarter. We are deploying record levels of capital to support our growth and infrastructure replacement programs, and we expect to invest roughly $2.4 billion in this area between fiscal 2023 and 2026. We continue to see attractive customer growth at the Utilities with more than 4,500 new residential heating and commercial customers added during the quarter. Our recent acquisitions continue to perform well, and we realized increased earnings at Mountaineer when compared to the prior-year period as well as incremental margins from our UGI…

Thanks, Roger. As Roger mentioned, UGI delivered adjusted diluted EPS of $1.14 compared to $0.93 in the prior fiscal first quarter. This table lays out our GAAP and adjusted diluted earnings per share for the quarter in the comparable prior period. As you can see, our adjusted diluted earnings exclude adjustments totaling $5.68 that relate to a number of items, including the impact of mark-to-market changes in commodity hedging instruments, a loss of $4.73 this year versus $1.37 in the prior-year. The loss of $4.73 for Q1 fiscal '23 is largely attributable to the decline in natural gas and power prices in Europe between September 30 and December 31. This year, we had $0.14 loss on foreign currency derivative instruments compared to a gain of $0.02 in the prior-year. We also had $0.02 for external advisory fees associated with the AmeriGas operations enhancement for Growth project that Roger highlighted earlier, $0.72 related to the loss on disposal of the U.K. Energy Marketing business in October 2022. This loss was substantially related to the noncash transfer of commodity derivative instruments that underpin the customer contracts that were sold with that business. Consideration for the sale was a net cash payment of $19 million, which includes certain working capital adjustments. And lastly, $0.07 for impairment of certain PP&E and intangible assets in the energy marketing business located in the Netherlands. We're off to a good start in fiscal 2023 with a $0.21 increase in adjusted diluted EPS on a year-over-year basis. At a high level, Global LPG was up $0.02 due to effective margin management and strong expense control efforts, which offset the effects of significantly warmer weather in Europe and continued inflationary pressure, particularly in personnel-related costs. Our natural gas businesses were up $0.20 as both businesses benefited from colder weather…

Thanks, Ted. As we've been reminded over the past several years, we are living and operating in an ever evolving economic environment with sustained inflationary pressures and geopolitical tension. I am pleased with our teams who have worked tirelessly to manage through these headwinds. I also believe that our 3R strategy, which is to deliver reliable earnings growth, invest in renewables and rebalance our portfolio, provides the framework that we need to drive continued success. With an unwavering commitment to safety, creating operational efficiencies, customer focus and embracing a diverse and inclusive culture, we are well positioned for growth. I am grateful for our dedicated and committed employees and remain confident in our ability to generate attractive value for our customers, employees and shareholders. We thank you for your interest in UGI and your participation in today's call. And with that, we will open the line for your questions.

[Operator Instructions]. Our first question comes from Marc Solecitto with Barclays. Your line is now open.

Hi, good morning. Congrats on the quarter. Maybe just to start, I was wondering if you could give some context around how 1Q shaped up relative to your guidance expectations coming into the year. And obviously, we still have February and March still to go, but with warm weather in January. Any color on the trajectory of the business thus far into the quarter -- second quarter would be helpful as well?

Yes. Good morning, Marc. Thank you for your question. So as we stated, right, Q1 was a solid quarter, one where we saw some weather here in North America, offset, of course, with some very warm weather in Europe. However, very pleased with how our teams delivered margin management efficiencies, which led to the solid first quarter. So I would say solid first quarter, not a huge surprise, but robust, right? When that we certainly saw some upside given some of the volumes and some of the activities that we talked about. Moving on to the second quarter. As usual, we're going to provide an updated guidance at the end of the quarter. So we're not going to talk about guidance now. However, as you pointed out in your report this morning as well, which I noticed, Marc, January has been a warm month. So we have started the quarter with some warm. There's still a lot of heating degree days ahead of us. So we certainly continue to look forward to what February and March will do. And as I mentioned, at the end of the quarter, we'll be happy to talk about guidance and the impact that we will see after the first two quarters.

Got it. Appreciate the color there. And then in the Midstream and Marketing segment, you referenced the benefit from commodity marketing and capacity management. Could you talk about some of the dynamics there? And if you expect it to carry forward into 2Q? Or is that mostly just a function of the weather volatility in December?

Yes. Also a very good question, Marc. What we did see in December, we saw some spikes. We saw some pretty severe weather volatility at one period in time. So we did see some additional benefit that we highlighted for that period. Very difficult to know and say if that's going to carry through. I think we'll wait and see.

Got it. Appreciate the time.

Thank you, Marc.

Please standby for our next question. At this time, I'm showing no further questions. One moment for our next question. Our next question comes from Michael Gaugler with Janney. Your line is now open.

Good morning, everyone.

Good morning, Michael.

Good morning, Michael.

I guess I'll start first with the -- you had mentioned the Mountaineer gas rate case. Are you looking for that to be effective fiscal 2024 or calendar 2024?

Yes. So we -- as we mentioned in the earnings release, we are planning on doing a rate case filing with -- for Mountaineer. What I'll do is I'll ask Bob to comment a little more on some of the details. That's what we expect to be filing and in the period that we're going to be covering.

Sure. Yes, what we've said so far is that we filed the necessary paperwork to notify the commission that we will be filing a rate case in the not-too-distant future. We're not going to predict whether we're going to get it in FY '23 or calendar year '23. Since this is really under UGI's ownership, the first case that we'll execute in West Virginia. I will tell you, and I'll reiterate that as I have in the past, we find so far that the West Virginia Commission is very reasonable and very pragmatic, but we don't want to get out ahead of the process. So we'll have more in the coming months on that.

Okay. And then next question and last. Given where you are right now with the RNG projects that are already announced. Do you pretty much have the scale that you want? Or should we expect more?

Yes. As we highlighted, Michael, we're making good progress with our 3R strategy and more specifically the renewables portion of that strategy. So we've now committed over $450 million in RNG projects. I think we have a very healthy pipeline, right? So we have a pipeline of opportunities, but as we always stress, we are very, very disciplined looking at these projects. So we are targeting double-digit rates of return. We take conservative assumptions with RINs and LCFS values, and we're looking at these projects. So I certainly expect for us to continue to build on the very solid platform we've now built with the amount of capital we've invested. And also I would like to highlight that we certainly continue to work on bio LPG projects, and we certainly continue to work on renewable dimethyl ether as other renewable solutions to the products we serve. So overall, I think we can -- you can expect and we certainly expect to continue to see some momentum in this area.

All right. That's all I have gentlemen. Thank you.

Thank you very much, Michael. Appreciate the questions.

At this time, I am showing no further questions in the queue. I would now like to turn the conference back to Roger Perreault, President and CEO for closing remarks.

Thank you, Michelle, and I'd like to thank everybody for joining us today and your continued interest in UGI. We look forward to our next earnings call. Thank you.

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