Asked to reconcile improving volume retention with the quarter's performance, specifically if it was solely weather-related.

Bob Flexon emphasized year-to-date net attrition of 2% as a sign of stabilization. He attributed Q3 volume decline to warmer weather in March/April and highlighted significant improvements in safety, Net Promoter Score (up 63%), and winter preparedness. The goal is to move from net attrition to net growth. “Year-to-date, our net attrition of lost customers about 2%, which is about the lowest it's been for a very long time.”

Asked if the recent take-private activity of a European peer changes thinking on potential divestitures or if pruning is complete.

Bob Flexon stated they constantly evaluate the portfolio for shareholder value. He acknowledged the international business is valuable and that the competitor's transaction highlighted its worth, leading to inbound calls. He did not commit to a specific direction but emphasized ongoing portfolio review. “We constantly will look and evaluate our portfolio on what's the best thing to do for the overall portfolio for the company and what drives the most shareholder value.”

Asked about the importance of DSIC for recovery in '28 and '29 given the rate case stay-out through January '29, and potential CapEx changes.

Bob Flexon confirmed the DSIC is important for the latter part of the years, structured to kick in after the second rate increase tranche. “It is important in the latter part of the years for the DSIC to kick in. And so it's been structured that way where we've got the 2-stage increase.”

UGI

UGI (UGI) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Utilities· Aug 6, 2026

Source: earnings call transcript

Executive summary

UGI Corporation Q3 FY26 — Operational Strength and Strategic Execution

UGI Corporation demonstrated disciplined execution in Q3 FY26, with solid operational results at its utilities and significant improvements at AmeriGas, despite portfolio actions and unfavorable weather. The company reaffirmed its full-year adjusted EPS guidance, highlighting financial strength and strategic positioning for long-term growth, particularly in its natural gas businesses and the stabilized AmeriGas.

Highlights

Utilities segment EBIT increased by $10 million year-over-year in Q3 due to higher gas base rates.
AmeriGas demonstrated significant operational improvements, with lost time injuries down 50%, recordable injuries down 44%, and Net Promoter Score up 63% year-to-date.
UGI International delivered comparable year-to-date EBIT despite divestitures, maintaining a strong 23% EBITDA margin and 95% free cash flow conversion.
AmeriGas reduced net debt by approximately $270 million versus the prior quarter, achieving a 4.3x leverage ratio, its lowest in 10 years.
The company completed its cast iron replacement commitment several months ahead of schedule, enhancing pipeline safety and reliability.

Concerns

Total reportable segment EBIT decreased by $14 million year-over-year in Q3 ($58 million vs $72 million) primarily due to warmer weather and lower AmeriGas growth.
AmeriGas retail gallons decreased 10% in Q3, reflecting April temperatures that were 16% warmer than the prior year and continuing customer attrition.
Year-to-date adjusted diluted EPS declined to $3.17 from $3.55 in the prior year, mainly due to the absence of investment tax credits and higher interest expense.
Weather headwinds impacted year-to-date adjusted EPS by $0.05 compared to the prior year and $0.11 compared to normal weather patterns.

Guidance & targets

Category	Target	Timeline	Confidence
Adjusted diluted EPS	$2.75 to $2.90 high materiality	FY26	High
Consolidated EPS CAGR	5% to 7% high materiality	through FY29	High
AmeriGas cash distributions to parent	Meaningful cash distributions medium materiality	FY27	High
Midstream well pad expansions	Two expansions medium materiality	FY27	Medium
Auburn Pipeline in-service	Operational medium materiality	FY27	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Utilities EBIT was up $10 million versus the prior year period as increased margin from higher gas base rates was partially offset by increased depreciation and amortization expense, reflecting the effects of continued investment in pipeline replacement activity. Higher gas base rates effective October 2025Increased depreciation and amortization expense reflecting continued investment in pipeline replacement activity	—	—	—	EBIT up $10 million
Midstream & Marketing EBIT increased $3 million on a year-over-year basis. Total margin increased $13 million, largely due to the timing of capacity margin and the recovery of higher pipeline costs as previously anticipated. Operating and administrative expenses were $8 million higher, primarily due to LNG and renewable energy projects placed in service last year. Total margin increased $13 million due to timing of capacity margin and recovery of higher pipeline costsOperating and administrative expenses $8 million higher due to LNG and renewable energy projects placed in service last year	—	—	—	EBIT increased $3 million
UGI International EBIT was $41 million for the quarter compared to $43 million in the prior year period. Retail volumes were 10% lower, driven by the recent LPG divestitures in Austria and Eastern Europe. Total margin decreased $6 million, primarily reflecting the lower retail volumes sold, which were partially offset by higher average unit margins and the translation effects of the stronger foreign currencies. EBIT down $2 million YoYRetail volumes decreased 10% due to LPG divestitures in Austria and Eastern EuropeTotal margin decreased $6 millionHigher average unit marginsTranslation effects of stronger foreign currenciesOperating and administrative expenses lower due to divestitures and lower personnel expenses, offset by currency translation	—	—	—	EBIT $41 million
AmeriGas EBIT was down $25 million over the prior year period, largely due to the decrease in total margin stemming from lower volumes. Retail gallons decreased 10%, reflecting April temperatures, which were 16% warmer than the prior year as well as continuing customer attrition. Retail gallons decreased 10%April temperatures 16% warmer than prior yearContinuing customer attritionLower fee incomeWeather-adjusted retail gallons (excluding Hawaii divestiture) decreased 6% vs prior year in Q3Weather-adjusted retail gallons (excluding Hawaii divestiture) decreased 2% year-to-date vs prior year	—	—	—	EBIT down $25 million

Deals & partnerships

Various LPG businesses in Austria and Eastern Europe

These previously announced non-core divestitures impacted UGI International's Q3 performance, contributing to a 10% decrease in retail volumes and a $2 million EBIT decline year-over-year.

Various Hawaii LPG business

The Hawaii divestiture was excluded when calculating weather-adjusted retail gallons for AmeriGas, which decreased 6% versus the prior year period in Q3 and 2% year-to-date.

Capital programs

Multi-year capital investment plan (Natural Gas businesses) underway

Period spend: 76% of total capital expenditures

Benefit:Advancing pipeline safety, reliability and modernization; adding more than 8,500 new heating customers; completing cast iron replacement ahead of schedule.

Year-to-date, UGI directed approximately 76% of total capital expenditures to its natural gas businesses, advancing its commitment to pipeline safety, reliability and modernization while adding more than 8,500 new heating customers across its regulated utilities service territories. This includes completing cast iron replacement several months ahead of schedule.

Risks & headwinds

Unfavorable weather conditions Q3 FY26, Year-to-date FY26

Q3 total reportable segment EBIT down $14 million; AmeriGas retail gallons down 10% in Q3, with April 16% warmer YoY; Year-to-date adjusted diluted EPS impacted by $0.05 weather headwind vs prior year, and $0.11 vs normal weather patterns.

Mitigation:Diversified energy footprint; operational improvements at AmeriGas for winter preparedness.

Slower growth in domestic propane business / Customer attrition at AmeriGas Q3 FY26, Year-to-date FY26

AmeriGas retail gallons decreased 10% in Q3; Year-to-date net attrition of lost customers ~2%.

Mitigation:Transformation efforts at AmeriGas, including improved customer service, retention, call centers back in U.S., sales and marketing efforts, targeting net growth for coming winter.

Absence of investment tax credits and higher interest expense Year-to-date FY26

Year-to-date adjusted diluted EPS down to $3.17 from $3.55.

Mitigation:Strategic debt transactions to extend maturity profile and reduce borrowing costs by ~$30 million annually.

Midstream growth delays / lower Appalachian production volumes Mid- to back-end of planning horizon (through FY29)

Midstream growth is now 'a little more mid- to back-end loaded' for the 5-7% EPS CAGR.

Mitigation:Well pad expansions planned for early and late FY27, Auburn Pipeline by late FY27, capitalizing on rising natural gas demand from data centers and power generation.

What to watch in Q4 FY26

AmeriGas net customer growth

Coming winter (FY27)

Current ~2% net attrition (YTD)

Target Net growth

Why it matters

Indicates successful stabilization and turnaround of AmeriGas, impacting future cash distributions to parent.

Our goal for this coming winter is to take it from net attrition to net growth.

Find out whether UGI delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired if midstream delays were resolved and if the 5-7% consolidated EPS CAGR through '29 remains confident.

Bob Flexon confirmed more production from Appalachia, with well pad expansions starting early and late FY27, and Auburn Pipeline by late FY27. Sean O'Brien reaffirmed the 5-7% EPS CAGR, noting midstream growth is more mid- to back-end loaded but other divisions compensate.

“The 5% to 7% remains intact. There are moving pieces. We've seen some of the business units even since we gave that guidance with stronger outlooks.”

asked by Whitney Mutalemwa · answered by Sean O’Brien

2 min read 6 chapters

Detailed narrative

Strategic Priorities & Capital Allocation

UGI continues to execute against its strategic priorities, allocating approximately 76% of its total capital expenditures year-to-date to natural gas businesses. This investment focuses on pipeline safety, reliability, and modernization, including the completion of the cast iron replacement commitment several months ahead of schedule. These efforts have also resulted in adding over 8,500 new heating customers across regulated utility service territories.

Utilities Rate Case Settlement

Administrative law judges have recommended approval of UGI Utilities' gas rate case settlement, pending final approval by the Pennsylvania Public Utility Commission (expected late September/early October). The settlement proposes a 2-step rate increase totaling $65 million, with $40 million effective in October 2026 and $25 million in October 2027, including a stay-out provision through January 2029.

It also introduces a pilot program for debt relief for customers earning between 150% and 300% of the federal poverty level and commits a minimum of $1.5 million annually to Operation Share, reflecting a balanced outcome for both the company and its communities.

AmeriGas Transformation Progress

AmeriGas is undergoing a significant transformation, showing improved volume retention and positive trends in leading indicators. Year-to-date, lost time injuries are down 50%, recordable injuries are down 44%, out-of-gas events are down 21%, and zero fills are down 17% compared to fiscal 2024.

The average Net Promoter Score has increased by 63%. With call centers now back in the U.S., the business is ramping up sales and marketing, positioning it for anticipated meaningful cash distributions to UGI Corporation in fiscal 2027.

UGI International Resilience and Value

UGI International delivered comparable year-to-date EBIT despite non-core divestitures, achieving a strong 23% EBITDA margin and 95% free cash flow conversion. The business maintains a leading market position with over 90% tank ownership. Management highlighted a recent take-private transaction of a primary competitor in Europe, which underscored the significant embedded value and market potential of UGI's international platform, leading to increased inbound interest.

Midstream Growth Opportunities

The midstream business is strategically positioned for growth, with several well-pad expansions planned on the UGI Appalachia system, including one starting early in fiscal 2027 and another later in the year. The Auburn Pipeline is also expected to be FERC regulated and operational by late 2027.

These investments aim to capitalize on rising natural gas demand across the region, driven by economic development and the growing energy needs of data centers and power generation, creating a robust funnel of opportunities later in the decade.

Financial Strength and Deleveraging

UGI has made substantial progress in strengthening its balance sheet and enhancing financial flexibility. Strategic debt transactions have extended its maturity profile and reduced borrowing costs by approximately $30 million on an annualized basis. Notably, AmeriGas reduced its net debt by about $270 million versus the prior quarter, achieving a consolidated leverage of 3.8x and AmeriGas Propane's leverage at 4.3x, its lowest point in 10 years.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.