UGI's Q4 2025 Earnings Call: Contradictions Emerge in Midstream Growth, AmeriGas Strategy, and Utility CapEx

Date of Call: November 21, 2025

Financials Results

• EPS: $3.32 adjusted diluted EPS, up $0.26 vs prior year

Guidance:

• Fiscal 2026 adjusted diluted EPS expected $2.85 to $3.15 (assumes normal weather and current tax environment)
• Target EPS CAGR of 5% to 7% for fiscal 2026–2029
• Expect 5% to 7% year-over-year EBIT growth in reportable segments
• Capital program $4.5B to $4.9B through 2026–2029
• Rate base growth targeted ~9%+
• Leverage targets: UGI Corporation at or below 3.75x; AmeriGas at or below 4.0x

Business Commentary:

* Strong Financial Performance: - UGI Corporation reported record adjusted diluted earnings per share of $3.32 in fiscal 2025, surpassing the revised guidance range of $3 - $3.15. - The growth was driven by improved operational performance at AmeriGas, solid performance from the utility segment, and significant tax benefits.

• AmeriGas Turnaround:
• AmeriGas achieved a 17% increase in EBIT, reporting $166 million, compared to the prior year.

• This improvement was due to operational momentum, income tax benefits, and strategic process improvements that enhanced service delivery and customer retention.

• Leverage and Financial Discipline:
• UGI ended the year with leverage at 3.9x, strengthening its balance sheet by reducing debt and generating approximately $530 million in free cash flow.

• The company disciplined debt reduction and improved top-line performance, leading to increased financial stability.

• Investment in Natural Gas Infrastructure:

• UGI deployed $900 million in capital, primarily in natural gas businesses, to enhance system integrity and future growth potential.

• Investments included critical pipeline upgrades and new LNG and renewable natural gas facilities, enhancing system reliability and revenue generation.

• Future Growth Outlook:

• UGI raised its long-term EPS growth expectations, aiming for a new EPS compound annual growth rate target of 5% - 7%.
• This increase reflects the intrinsic opportunities and confidence in executing strategic vision, supported by strong capital investments and operational improvements.

Sentiment Analysis:

Overall Tone: Positive

• Management reported "record adjusted earnings per share of $3.32," raised long-term EPS CAGR to "5% to 7%," cited ~$530 million of free cash flow and a 42% total shareholder return, and outlined capital and leverage targets supporting continued growth.

Q&A:

• Question from Gabriel Moreen (Mizuho Securities USA LLC): What do you expect from midstream and LPG businesses over the 5-year plan—should we expect continued growth?
  Response: Management expects growth across all business lines, including low double-digit growth over the planning horizon.

• Question from Gabriel Moreen (Mizuho Securities USA LLC): Any update on NDAs/activity in Pennsylvania and data-center–adjacent opportunities?
  Response: Company has advanced multiple projects, with NDAs north of 50 and active discussions ongoing, but cannot disclose specifics.

• Question from Gabriel Moreen (Mizuho Securities USA LLC): Reports about potentially selling your electric utility and general portfolio-optimization plans?
  Response: Management continuously reviews portfolio opportunities but declined to comment on specific potential transactions.

• Question from Julien Dumoulin-Smith (Jefferies LLC): How will AmeriGas get to sub-4x leverage—deleveraging or EBITDA improvement, and timeline?
  Response: Combination of EBITDA growth from operational improvements and continued debt reduction; expect to approach or beat ~4.5x in 2026 and trend lower thereafter.

• Question from Julien Dumoulin-Smith (Jefferies LLC): Clarify one-time tax/credit items and consistency ex-credits for 2026 onward?
  Response: One-time ITC benefit (~$0.40) recognized in fiscal 2025 won't recur; OB3 interest-deductibility impacts are resolved; ongoing forecast includes modest PTCs (~$0.09).

• Question from Julien Dumoulin-Smith (Jefferies LLC): Is the shift in CapEx relative to the $200M increase in shareholder return a reduction in utility CapEx or a pivot to midstream/dividends?
  Response: Utility CapEx is expected to be consistent or slightly higher versus prior plans, with modestly more midstream capital and continued dividend commitment.

• Question from Paul Fremont (Ladenburg Thalmann & Co. Inc.): Will 45Z credits begin to be collected in 2026 or were any collected in 2025?
  Response: Management: 2026 will be the first year to collect 45Z credits.

• Question from Paul Fremont (Ladenburg Thalmann & Co. Inc.): Were you using a negative credit score to calculate the 45Z credits going forward?
  Response: Management did not answer on the call and said they will follow up with details.

Contradiction Point 1

Midstream Business Growth Expectations

It involves differing expectations for the growth of the Midstream business, which can impact strategic planning and investor expectations.

What are your expectations for midstream and LPG businesses in the 5-year plan? Will these businesses continue to grow? - Gabriel Moreen (Mizuho Securities USA LLC)

2025Q4: We expect to have growth in all of the business lines overall. So we'll see low double-digit growth over that planning period. We expect to have a continued growth rate in the businesses and our earnings over that planning horizon. - Robert Flexon(CEO)

How are you approaching the 2026 maturities? How do you plan for the full year given Q4 results and weather trends? - Julien Dumoulin-Smith (Jefferies)

2025Q1: The overall U.S. market continues to be very robust, and we remain optimistic about opportunities in our midstream segment. - Robert Flexon(CEO)

Contradiction Point 2

AmeriGas Growth Strategy

It involves changes in the strategic approach for AmeriGas, which could impact operational efficiency and financial performance.

How do you plan to achieve the sub-4x leverage target for AmeriGas? Is the reduction primarily through deleveraging or underlying adjusted EBITDA growth? What is the expected timeline to reach this target? - Julien Dumoulin-Smith(Jefferies LLC)

2025Q4: AmeriGas has a lot of opportunities to really drive value. 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. - Robert Flexon(CEO)

What metrics are you prioritizing for AmeriGas ahead of the winter heating season? - Questioner's Name(Company Name)

2025Q3: We believe the mid-Atlantic region will be an area of strategic focus. We are actively assessing tuck-in acquisition opportunities to further enhance our core business and strengthen our industry leading position. - Robert C. Flexon(CEO)

Contradiction Point 3

Utility Capital Expenditure

It concerns the budgeting and prioritization of utility capital expenditure, which is vital for maintaining and expanding UGI's utility infrastructure.

Does the shift in CapEx related to the $200 million increase in shareholder return indicate a reduction in utility CapEx and an increase in dividends or a pivot towards midstream CapEx? - Julien Dumoulin-Smith(Jefferies LLC)

2025Q4: The utility CapEx, we see it pretty consistent, maybe even slightly up. So 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. - Sean O'Brien(CFO)

Can you discuss the second-half fiscal drivers and the elevated implied net loss compared to historical levels? - Paul Zimbardo(Jefferies)

2025Q2: We're delaying certain capital and operational expenditures from the first half to the second half due to prioritizing production and distribution over planned investments during colder weather. - Sean O'Brien(CFO)

Contradiction Point 4

Midstream Growth Opportunities

It directly impacts expectations regarding the growth potential of the midstream business, which is critical for future revenue projections and investor confidence.

Can you outline expectations for midstream and LPG businesses in the 5-year plan, including potential for sustained growth? - Gabriel Moreen(Mizuho Securities USA LLC)

2025Q4: We still continue to see a lot of activity even more so than when we last spoke about it. We have NDA so we can't necessarily go into it, but we have significant discussions underway and in various stages with the various counterparties. - Robert Flexon(CEO)

What do you see as the investment opportunity set for the Pennsylvania Midstream business, considering nearby activity? - Questioner's Name(Company Name)

2025Q3: The Pennsylvania Midstream business has well into the double digits of NDAs with potential generators and other opportunities for utilizing infrastructure. There are multiple counterparties with in-depth discussions underway, presenting robust opportunities for the business. - Robert Flexon(CEO)