Good day, and thank you for standing by. Welcome to the UGI Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Tameka 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 '25 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 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, Tameka, and good morning. UGI delivered record adjusted earnings per share of $3.32 through strong execution across multiple fronts, surpassing our 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. We generated approximately $530 million of free cash flow, inclusive of cash generated from asset sales of selected LPG territories and return 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…

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 5 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 harm culture across operations because nothing is more important than ensuring everyone goes on safely each day. Our customers are 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 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 5 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% of our total volumes, but was largely…

Before we open the line for your questions, I want to reinforce 3 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.

[Operator Instructions] Our first question comes from Gabriel Moreen with Mizuho.

Just if I could just ask may be in terms of -- if I can 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 base growth. But can you talk about what you're expecting from midstream in the LPG businesses in the 5-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. Sean O’Brien: A couple of things Gabe as well. When you look at EBIT, we gave the 5% to 7% EBIT growth for this year. I want to make sure people understand that guidance is not back-end loaded. We've got consistent fairly linear growth as you go from '26, '27 to '28 into '29. And as Bob said, the nat gas businesses is more of the same. We've got that kind of locked and loaded. But one of the more exciting things is we do -- 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.

If I could maybe follow up 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 maybe if you can get an update on that. And then anything, I guess, data center adjacent that might be embedded within your midstream growth plan or utility growth plan over that outlook?

Yes, 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 NDA so we can't necessarily go into it. But again, the amount of NDAs that we have with counterparties is 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.

And then if I could just squeeze 1 last one in. 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 at utility, midstream or LPG businesses.

As you know, Gabe, 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 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 as we have just a lot of opportunities for intrinsic value growth. That's low risk, high return things that I'd love to find and you'll hear from Mike a little bit more this morning on what we're doing at 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.

Our next question comes from Julien Dumoulin-Smith with Jefferies.

Can you guys hear me okay? So maybe just a follow-up on a few of these things. First off, look, I just wanted to understand a little bit more about the AmeriGas targets here. I mean how do you think about getting to that sub 4x. And specifically, is that deleveraging? Or is that principally going to be underlying adjusted EBITDA improvement? And how do you think about the time line to get there at those sub 4x target?

Well, I'll go first, and I'll let Mike chirp in. But AmeriGas has a lot of opportunities to really drive value. And we're going to grow the AmeriGas 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'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 a little bit more of what's going on in AmeriGas since it's his first call since joining about a year ago when I joined and 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.

Thank you, Bob. Julien, as Bob said, there's a tremendous amount of intrinsic value here at AmeriGas, right? And to unlock that value, we have the 6 PMO projects that are in progress right now at various stages from supply to around the delivery, customer value proposition, billing. So a number of initiatives, again, that we're seeing -- already seeing the results or 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 -- will create -- 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, right, the same ballpark. And then going forward, there's additional value going forward. But this isn't a onetime thing. It's an ongoing thing. There's a lot of improvement at AmeriGas. I think anyone this call, it's not a secret that the last several years here at AmeriGas has 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 5 years. It's been a sustained decline. So we 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. Sean O’Brien: Julien, 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 6 when you look back coming into the year to 4.9, which we're incredibly proud of. That happened in 2 ways. Mike and the team grew EBIT $24 million, 17%. Obviously, that has a positive impact. And we delevered another $200 million, came into the year with about $1.9 billion of debt exited the year close to $1.7 billion. 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 4.5 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. And then just following up a little bit on the credits and the reset here with '26 here a little bit. Can you speak a little bit more to just the consistency ex credits and just confirm effectively that going forward, you don't have any kind of onetime tax credit items that will roll off or what have you. I just want to make sure that we're abundantly transparent on the same page about this. Sean O’Brien: Yes. Yes. I think -- 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 2. We lost interest deductibility at AmeriGas. So there was about $0.10 in the numbers this year that 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, Julien, is the ITCs. 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. We talked about $0.40 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 $0.09 of PTCs in the ongoing forecast so much lower level. So OB3 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. Sean O’Brien: Yes. I mean, Julien, the way I look at it, 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 off-line with you. But 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.

Our next question comes from Paul Fremont with Ladenburg Thalmann.

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 will 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?

Yes. Not sure about that one. We'll need to get back to you on that.

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

Well, thank you for dialing in. And just to reiterate, on our year, we had a very strong fiscal year '25, adjusted EPS $3.32, 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 future years. Talent management, we've got new people in the right spots and combined with the existing workforce, we've got the right people to bring this forward. So I really look forward to more discussions with you in 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.