Good day, and thank you for standing by. Welcome to the UGI Corporation Q1 2026 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. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press 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, Tameka Morris, Vice President of Investor Relations in ESG. Please go ahead.

Good morning, everyone. Thank you for joining our fiscal 2026 first quarter earnings call. With me today are Robert C. Flexon, President and CEO, and Sean P. O'Brien, CFO. On today's call, we will review our first 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 now I'll turn the call over to Robert C. Flexon.

Thanks, Tameka. And good morning. Yesterday, we announced fiscal 2026 first quarter total reportable segments EBIT of $441 million, up 5% over the prior year period, which is in line with our expectation. Our natural gas businesses produced strong results driven by robust gas demand and the impact of the 2025 gas base rate case at our Pennsylvania utility. In our global LPG businesses, we capitalized on favorable weather in certain U.S. regions and more than offset the impact of the previously announced divestitures through effective margin management and disciplined cost control. Throughout the company, we continue to advance operational excellence, safety, and cultural transformation. Establishing the framework that will position UGI Corporation to further unlock intrinsic value. We are seeing early benefits from these efforts with improved safety metrics, better operational efficiency at AmeriGas, and continued strength in our natural gas businesses. In parallel, we are also positioning the company for the future through strong capital discipline with our LPG portfolio optimization substantially complete and our natural gas infrastructure well situated to capture growing demand in Pennsylvania. I'll turn to the next slide. Safety remains foundational to everything we do. And I believe this to be a leading indicator of a well-run company. Across the enterprise, we saw year-over-year improvement in our safety metrics and specifically at AmeriGas a 45% reduction in recordable incidents and 60% less lost time injuries compared to the prior year period. The operational transformation at AmeriGas continues to yield improved metrics. For instance, we've seen a reduction in our zero fill rates and average miles driven to serve customers. All while delivering slightly higher retail volumes than last year. We've also experienced a reduction in customer service call volumes and continued improvement in our customer satisfaction metrics. AmeriGas now has an A-minus ranking from…

Thanks, Bob, and good morning, everyone. For the fiscal 2026 first quarter, UGI delivered total reportable segment EBIT of $441 million, up $21 million over the prior year. Higher gas base rates in Pennsylvania, colder weather, and increased unit margins at UGI International were the primary drivers of this increase. Which was partially offset by higher operating and administrative expenses in our domestic segments and the effect of the previously announced LPG divestitures. Next, adjusted diluted EPS was $1.26 for the quarter, in comparison to $1.37 in the prior year. This anticipated decline reflects the absence of investment tax credits realized last year, higher interest expense, and lost earnings from the divestitures in Hawaii, Italy, and Austria. Partially offset by the strong segment level performance. Turning to the drivers of each segment's results. The utilities delivered EBIT of $157 million, up $16 million over the prior year. Gas utility service territories experienced temperatures that were approximately 21% colder than the prior year, and this drove a 16% increase in core market volumes. We also saw sustained customer additions, with over 3,500 residential, commercial, and industrial heating customers added during the quarter. Total margin increased $28 million primarily due to higher gas base rates that went into effect in Pennsylvania at the October 2025. While the colder weather contributed incremental margin, our weather normalization mechanism worked as designed. Mitigating a significant portion of the weather impact and providing bill stability for our customers. Operating and administrative expenses increased $9 million reflecting higher personnel and maintenance expenses. Next, Midstream and Marketing reported EBIT of $88 million in comparison to the $95 million in the prior year. While temperatures were 18% colder than the prior year period, which provided some incremental margin benefit, this was largely offset by pipeline rate increases, which we…

Thanks, Sean. UGI delivered a solid first quarter reflecting the continued execution of our strategic priorities. Total reportable segment EBIT increased by 5% year over year driven by strength in our natural gas businesses and disciplined margin management in our global LPG operations. At AmeriGas, we're making tangible progress. Safety incidents are down significantly, operational metrics are improving, and volume retention levels have largely stabilized. We remain focused on the crucial work ahead particularly during these winter months as our businesses work to meet the season's strong demand. We will continue to advance operational excellence and safety across our businesses, maintain disciplined capital allocation, and position our natural gas infrastructure to capture growth opportunities. I want to thank our employees for their dedication to safely serving our customers. And with that, I'll turn the call over to the operator for questions.

Certainly. Telephone and wait for your name to be announced. To withdraw your question, please press 11 on your telephone. Our first question will be coming from Gabriel Philip Moreen of Mizuho. Your line is open.

Hey, good morning team. Just wanted to ask a couple questions. Wanted to ask, I guess, first of all, in terms of the recent extreme winter weather, we've been having, which certainly seems like it has the potential to benefit some of your segments. So maybe if I can just ask about how you think AmeriGas has been performing through that extreme weather in terms of deliveries and ability, I think, in margins and the like. Then also, maybe if I can pivot to marketing and the extent to which some of the volatility in natural gas prices may have benefited that business or not?

Good morning, Gabe. Thanks for the question. On AmeriGas, I've talked about the past years in our preparation for this winter. We want to see a certainly a substantially improved performance from AmeriGas. And when I think about our ultimate goals, I want it to be about 60% improved this winter and then 100% by the time we get to next winter. And we've seen a lot of good data points on that. We've had record safety in AmeriGas. We've had fewer recordable injuries within AmeriGas than in the history of the company. Highest net promoter scores from customers, so we're seeing promoter scores in January significantly higher than where they were last January, and a lot fewer calls to customer service center. That said, we're seeing stress in the system in certain locations that have had extreme weather, and it's not so much the cold temperatures. It's conditions of the roads that really impact delivery and getting the propane to the right places. So in January, we saw warmer weather, nothing too exciting, and suddenly that really changed by about January. So now we're seeing significant demand. We've got drivers out there working long hours. We've got propane into the right places. So we're out there doing what we need to be doing. I'm sure that there's going to be areas when we look back that we know where we could perform better, but there's no question that the system is seeing very strong demand. Given the size of our footprint, we're able to take resources in the West, which have been experiencing a warm winter, and redeploy them to the East. So we've done a lot to make sure we've had the right resources in the area.

Hey, Gabe. Maybe to round out the a couple of the other divisions. I'll remind you, obviously, our utilities were in areas that saw mainly it's the customers that are really benefiting from the weather trackers. And then as you I think you mentioned our midstream marketing business, just a couple of thoughts there, weather definitely benefits that business typically. But at some point, the capacity that that business has is there for the utility. So when you see longer periods of extended weather, of cold weather, the utility will need some of that capacity. But Joe and his team I think, are doing a terrific job of taking advantage, obviously, of the environment, but also making sure that the utility has the gas that it needs.

Great. Thanks, Sean. I appreciate that, and then Bob as well. If I can pivot to the utility segment and in light of, I think, the Governor and Pennsylvania's comments earlier this week in his, I think, budget address around affordability and whatnot. Addressed some of that in your comments, Bob, but can you talk about the decision to come back for a rate case in Pennsylvania? I think relatively quickly relative to your historical cadence, and also are you asking for anything structurally here in the rate case I know you've got weather normal like, but anything around trackers and the like? Don't just leave it do it leave it at that.

Nothing extraordinary or unusual in there, Gabe. I would say that we as a company, from the very first day that I walked in the door, I've been talking with Hans Bell, our president of the utility, about affordability and really managing our OpEx. And part of what we're doing at AmeriGas, we're also doing throughout the company is driving efficiency as far as, you know, as much as we possibly can. And to the extent that we are more efficient, particularly on OpEx, that's a direct benefit to the customer bill. So we've been focusing on affordability long before people started talking about affordability. So the CapEx is more of what we've been doing in the past around infrastructure. So it's just keeping it safe in Pennsylvania and where we stand on the affordability ladder. We're below a lot of the other utilities in the state. We'll continue to focus keenly on that.

Thanks, Bob. If I could just sneak one more in around the commentary on being well positioned for increasing natural gas demand in PA and where things stand on I think, the NDAs you've mentioned in last couple quarters, how those are progressing and potential timing?

Everything's progressing as they should. I mean, we can't move faster than the power providers or the data centers, but we're engaged in a significant number of discussions. We've got a small group that have kind of moved to the next level. I'm hoping that we'll be able to announce something during this fiscal year. But there's a lot of discussion out there. And then also, I think most recently with the directions from the White House and the 13 state governors around emergency procurement of more power just is even an added benefit on top of that the data center, what was progressing anyway. So we're in a discussion with a number of power providers and we'll continue to engage in all that. Again, like I said, I hope that we'll be able to announce some things during the course of this fiscal year.

Thanks, Bob. Appreciate it.

And as a reminder to ask a question, please press 11 on your telephone. Our next question will be coming from Paul Andrew Zimbardo of Jefferies. Your line is open, Paul.

Thank you. Good morning, Paul. I was gonna ask, I saw the press release yesterday that you're bringing Sid on board, creating that chief strategic officer role. Just curious kinda why now, what are the mandates, talk a lot about growth in there, but just if you could give some color on why create that role at this time.

Sure, Paul. Thanks for the question. And know, one of the things that I worked up with the management team when I got here was four critical stands that we're taking out of the company. One of the stands that we've defined is building a sustainable future. And when I think about my first, whatever, fourteen, fifteen months here, focus relentlessly on day-to-day operations, putting the discipline and the skill set within the organization of strong business processes, putting quality into the system, getting rid of rework and things of that nature. And we are going to continue to do that. And that's because 99.9% of our employees have an impact on that every single day. This is the time though as we really have been building that set and building that, if you want, the muscle to do that within the company. Need to start looking I wanna start looking more to the medium term and longer term. So when I wanna live true to that span of building a sustainable future that we're looking what's the right portfolio for the company? Are there opportunities extrinsically for this company? How do we think about products? How do we think about maybe some of the issues from an environmental standpoint that could impact us at some point in the future, regulatory, things of that nature. So it's kind of lifting my head up a little bit and seeing what's a little bit further down the road for the company. So I think it's kind of the natural growth of what we wanna do as part of the company and building for that future. Sid and I have worked together in the past. He's very skilled, understands the energy industry very well. And I think he's gonna bring a lot of value to us when we start looking for long what are our longer-term objectives for the company, for the portfolio. For opportunity? So it's kind of, to me, just a natural evolution, but I will continue to spend the vast majority of my time on focusing on making sure when we have winters like this that we can be the best we possibly can be to keep all of our customers safe and warm. So that's kind of the background, Paul. It's just kind of where I feel time for a little bit further looks down the road.

Okay. I appreciate that. Glad to have him back. One other smaller one if I can. Just on the midstream business, you had a comment about margin was comparable year over year, and you said there was a lag in recovery of a pipeline. Transportation cost. Just if you could quantify what that is and should that create a tailwind in the rest of the fiscal year? Thank you.

Yeah, Paul. That increase is a rate increase on our FERC pipelines that we incurred. I think we anticipated it. So if you were to look at our budget, you would have seen that in there. But there is a timing line to it, so we will recover that. I think we indicated starting this year. I don't know that we'll get it all back in fiscal 2026, but we'll get, I think, a significant portion of it back in fiscal 2026.

Okay. Is there any way to kinda frame it roughly in terms of size?

I think it was somewhere in the $5 million range.

Okay. Okay. Great. Thank you very much, team.

Thanks, Paul. Thanks, Paul.

And I would now like to turn the conference back to Bob for closing remarks. Again, I would like to turn the call back to Bob for closing remarks.

Great. Thank you. So when I look at the first quarter, I feel we've got off to a very good start of the year. We've got year-over-year growth. Even when I consider the divestitures. Our leading indicators around AmeriGas are all in the right direction, safety net promoter scores. Where it all shakes out when it settles down, but, we're in the midst of it. Right now, and it's exciting times for us. But I appreciate the calls and the interest, and I look forward to providing more updates. Thank you everyone for dialing in. And this concludes today's program. Thank you for participating. You may now disconnect.