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UGI CORP /PA/ (UGI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was seasonally weak but broadly in line with internal expectations: adjusted diluted EPS of $(0.01) vs. $(0.06) prior year and ahead of Wall Street EPS consensus, while revenue missed consensus meaningfully; management reiterated confidence to finish FY25 at the top end of $3.00–$3.15 adjusted EPS guidance . EPS estimate beat*; revenue estimate miss*.
  • Capital discipline and balance sheet remain strong: YTD free cash flow $558M, leverage 3.8x, and ~$1.9B available liquidity as of 06/30/2025 .
  • Strategic portfolio optimization progressing: ~$150M of LPG divestiture proceeds (Hawaiʻi, Italy, UK small cylinder), exiting AmeriGas wholesale to focus on profitable segments; PA rate case joint settlement for ~$69.5M revenue increase expected to be implemented in FY2026 .
  • Call catalysts: positive tax tailwinds expected from the “One Big Beautiful Bill Act,” active AI/data center-driven midstream opportunity pipeline (double-digit NDAs), and AmeriGas operational KPIs improving (safety, routing efficiency +8–10%) .

What Went Well and What Went Wrong

What Went Well

  • Record YTD adjusted diluted EPS of $3.55 (+$0.33 YoY) driven by contributions across segments, operating efficiencies, AmeriGas improvements, and tax credits .
  • Liquidity and free cash flow: ~$1.9B available liquidity and YTD free cash flow up 11% to $558M; corporate leverage at 3.8x with AmeriGas improving leverage by nearly one turn .
  • Strategic actions: ~$150M proceeds from LPG asset sales; exiting AmeriGas wholesale to focus on profitable customers; management: “We wouldn’t sell any asset that would be dilutive…equal or better than in our own hands” .

Management quotes:

  • “We expect to be at the top end of our fiscal 2025 adjusted EPS guidance range of $3 to $3.15” .
  • “This [tax law] is going to be a positive impact to the company” .
  • “We’re seeing substantial inquiries…data centers and the like; we have the right assets in the right place” .

What Went Wrong

  • Midstream & Marketing EBIT down $16M YoY on lower gathering/processing margins and absence of power generation (Hunlock Creek sale) despite stronger gas marketing .
  • UGI International volumes down 9% with 16% warmer weather and lower unit margins; EBIT down $14M YoY .
  • Utilities EBIT down $9M YoY as higher O&A (+$10M) and D&A (+$2M) outweighed modest margin gains (+$4M) .

Analyst concerns:

  • Revenue missed Wall Street consensus by ~$288M* (actual $1.394B vs. $1.682B estimate) and continued midstream margin compression signals near-term headwind to top line *.
  • AmeriGas retail gallons down 3% YoY; customer attrition remains a pressure point despite operational improvements .

Financial Results

Consolidated Results vs. Prior Periods (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($USD Billions)$2.030 $2.666 $1.394
GAAP Diluted EPS ($)$1.74 $2.19 $(0.76)
Adjusted Diluted EPS ($)$1.37 $2.21 $(0.01)
Total Margin ($USD Millions)$1,107 $1,365 $557
EBIT – Total (Earnings before interest & taxes, $USD Millions)$519 $696 $(127)

Segment Breakdown – Q3 2025

SegmentRevenues ($USD Millions)EBIT ($USD Millions)Key Volume/Weather
Utilities$287 $30 Throughput: Total 82 Bcf; Core 12 Bcf; Degree days 8.9% warmer vs normal
Midstream & Marketing$278 $27 Degree days 5.4% warmer vs normal; margin −$9M (lower gathering/processing, Hunlock sale), partially offset by gas marketing +$4M
UGI International$437 $43 LPG retail gallons 139M; Degree days 20.8% warmer vs normal; margin −$19M; O&A −$9M
AmeriGas Propane$434 $(28) Retail gallons 138M; Degree days 0.1% warmer vs normal; margin ~flat (higher unit margins offset lower volumes)

KPIs and Balance Sheet

KPIQ3 2025
Available Liquidity ($USD Billions)~$1.9
Leverage (Net Debt / Adjusted EBITDA)3.8x
YTD Free Cash Flow ($USD Millions)$558
YTD Adjusted Diluted EPS ($)$3.55
YTD Reportable Segments EBIT ($USD Millions)$1,184
Customer Additions (Utilities, YTD)~9,000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSFY2025$2.75–$3.05 (Nov 2024) $3.00–$3.15 (May 7, 2025) Raised
Adjusted Diluted EPS OutcomeFY2025n/aManagement expects “top end” of range Upward bias
PA Gas Utility Rate Case (Revenue Increase)FY2026 implementationn/a$69.5M settlement filed July 9; pending PUC approval Positive (pending)
Dividend (Quarterly)Payable Oct 1, 2025n/a$0.375/share; record Sep 15, 2025 Declared
LiquidityAs of 06/30/2025~$1.5–$1.9B earlier in FY ~$1.9B Maintained/improved
LeverageAs of 06/30/20253.8x earlier in FY 3.8x Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
AI/data center-driven demandHighlighted midstream flexibility; opportunistic investments in Marcellus/Utica Active discussions with generators/data centers; LNG peaking expansion (Manning) “Double digits of NDAs”; right assets in right place; utility & midstream expected to benefit Strengthening opportunity pipeline
Tariffs/macroLimited exposure; propane pricing pressure manageable Tariff costs “insignificant”; pricing pressure can benefit customers; hedging mitigates FX No material change; continued monitoring Stable/benign
Regulatory/legalWV rate increase benefits; PA base rate filing ~$110M Manning LNG capacity doubled; strong ops; PA Utilities resilient PA rate case settlement filed for $69.5M; implementation expected FY2026 Positive regulatory momentum
AmeriGas operationsPod structure roll-out; process transformation priorities Weather tailwinds; attrition low single-digits; cash generation improving Exiting wholesale; routing efficiency +8–10%; safety KPIs “dramatic” improvement Operational improvement gaining traction
RNG/Tax creditsRNG projects nearing completion; ITCs strategy RNG ITCs boosted midstream; strong FCF “One Big Beautiful Bill Act” tax tailwinds (interest deductibility, bonus depreciation, R&D, 45Cs) Incrementally positive
Portfolio optimizationEvaluating LPG portfolios; potential asset sales Hunlock sale; Superior Appalachian JV ~$150M LPG divestiture proceeds; non-dilutive sale discipline Ongoing/constructive

Management Commentary

  • CEO: “UGI’s year to date adjusted diluted earnings per share of $3.55 is a record performance…from strategic investments…operating efficiencies…AmeriGas…income tax credits” .
  • CFO: “We expect…top end of fiscal 2025 adjusted EPS guidance…[and] available liquidity of approximately $1.9 billion as of 06/30/2025” .
  • CEO on AmeriGas: “We will be substantially exiting the wholesale business…volumes have little to no earnings contributions” .
  • CFO on tax law: “Retroactively…remove some of the [interest deductibility] valuation allowance…ability…to utilize bonus depreciation…R&D credits…strengthening…45Cs” .

Q&A Highlights

  • Tax legislation tailwinds: Management expects retroactive and ongoing benefits from interest deductibility restoration, optional bonus depreciation, R&D credits, and stronger 45Cs positioning; magnitude not quantified yet but trend positive .
  • Midstream opportunities: Robust AI/data center power-gen demand in PA; double-digit NDAs; UGI positioned with gas and LNG infrastructure; no significant contract expiries anticipated in next 12–18 months beyond prior renewal .
  • Divestiture discipline: Asset sale multiples evaluated vs. NPV “in our hands”; won’t sell dilutively; leverage impact considered .
  • AmeriGas focus: Exiting wholesale; high-grading customer mix; routing efficiency +8–10%; domestic call center reshoring; safety as leading KPI; leverage improved by nearly one turn .
  • Balance sheet and maturities: Liquidity strengthened; AmeriGas delevering; optionality to address 2026 maturities; AmeriGas bonds trading resiliently .

Estimates Context

MetricQ1 2025Q2 2025Q3 2025
EPS Consensus Mean ($)1.193*1.807*(0.093)*
EPS Actual ($)1.37 2.21 (0.01)
Revenue Consensus Mean ($USD Billions)2.647*3.217*1.682*
Revenue Actual ($USD Billions)2.030 2.666 1.394
EPS – # of Estimates3*3*3*
Revenue – # of Estimates1*1*1*

Notes: Values retrieved from S&P Global.*

Implications:

  • Q3: EPS beat vs. consensus (−$0.01 vs. −$0.093); revenue miss (−$288M vs. consensus).
  • Pattern: Consistent EPS beats with recurring revenue shortfalls suggest better cost/tax execution relative to top-line expectations.

Key Takeaways for Investors

  • Near-term: Expect seasonal weakness in Q4 but management guides to top end of FY25 adjusted EPS range; tax legislation may add upside optionality beyond guidance .
  • Trading setup: Potential positive catalysts include formal confirmation of PA rate case settlement, incremental detail on tax law impacts, and additional AI/data center project wins .
  • Thesis: Strength in regulated utilities and midstream fee-based contracts plus disciplined portfolio actions underpin balance sheet improvement; AmeriGas execution is key swing factor .
  • Watchlist KPIs: AmeriGas attrition and routing efficiency, LNG peaking utilization (Manning), midstream contract renewals/pricing, FX/unit margins at International .
  • Risk factors: Warm weather sensitivity, continued midstream margin pressure, LPG structural conservation in Europe, and timing of regulatory approvals .
  • Dividend: $0.375 declared; balance sheet and FCF support ongoing dividend reliability (141 consecutive years) .

Cross-References and Disclosures

  • Cross-checked 8-K press release and investor presentation with earnings call narrative for Q3 2025; segment details align across sources .
  • Non-GAAP adjustments materially impacted quarterly EPS; reconciliations provided in exhibits .
  • Asset sale proceeds (~$150M) and AmeriGas wholesale exit are strategic levers to sharpen focus and support deleveraging .
  • Liquidity and leverage metrics cited as of 06/30/2025 from company materials .