Apr 30, 2008
Executives
Robert Krick - VP and Treasurer Lon R. Greenberg - Chairman and CEO Peter Kelly - CFO, VP - Finance John L.
Walsh - President, COO, Director Eugene V.N. Bissell - President, CEO, Director of AmeriGas Propane, Inc.
Analysts
Shneur Gershuni - UBS Darren Horowitz - Raymond James
Operator
Good day and welcome everyone to the UGI and AmeriGas Partners Second Quarter fiscal year 2008 earnings results conference call and webcast. This call is being recorded.
At this time for opening remarks and introductions, I would like to turn the call over to Mr. Robert Kirck, Vice President and Treasurer, UGI.
Please go ahead, sir.
Robert Krick - Vice President and Treasurer
Good. Thank you, Shirley.
Good afternoon and thank you for joining us today. As we begin, let me remind you that our comments will contain certain forward-looking statements, which the management of UGI and AmeriGas believe to be reasonable as of today's date only.
Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond management's control. You should read the Annual Reports on Form 10-K for a fuller list of factors that could affect results, but among them are adverse weather conditions, price volatility, and availability of all energy products including natural gas, propane and fuel oil, increased customer conservation measures, political, economic, legislative, and regulatory changes in the US and abroad, currency exchange rates, and competition from the same and alternative energy sources.
UGI and AmeriGas undertake no obligation to release revisions to these forward-looking statements to reflect events or circumstances occurring after today. With me today are John Walsh, President and COO of UGI; Gene Bissell, President and CEO of AmeriGas; Peter Kelly, CFO of UGI; and your host, Chairman and CEO of UGI, Lon Greenberg.
Lon?
Lon R. Greenberg - Chairman and Chief Executive Officer
Thank you, Bob. Let me also welcome all of you to our call today.
I trust you've had the opportunity to review our press releases covering both our higher level of earnings and increases in dividends in the case of UGI and increases in distributions in the case of AmeriGas. To Summarize, UGI reported a 4.5% increase in earnings per share, which grew to $1.17 from $1.12 last year.
UGI also announced a 4% increase in the dividend on its common stock, which on an annualized basis now will be $0.77 per share. This is the 21st consecutive dividend year in which we have raised the dividend and we have been paying a dividend for six generations and I think 124 years.
With regard to AmeriGas, it was an excellent year as well. AmeriGas reported net income of $133 million compared to $119.9 million last year.
AmeriGas’ EBITDA grew to $172 million this year from $156 million for last year's quarter. Finally, AmeriGas announced a 5% increase in its distribution to $0.64 per unit from $0.61 quarterly and stated its intention to increase the distribution annually by 5%, which is an increase from the at least 3% policy, which was in effect prior to that time.
Just one brief comment on results and I will turn it over to the other folks and then come back. This quarter once again demonstrated the beneficial effects of business unit and geographical diversification that we have been talking about for sometime now.
As you may recall, we have pointed out many times that having four separate, but related energy distribution and marketing companies upscale, reduces risk for our owners. This quarter, significant improvements and earnings from our energy services and domestic propane business units offset relatively modest declines and performance in our regulated utilities and our International Propane segment.
At this point let me turn it over to Peter, John and Eugene and then I'll have more to say at the end of the call. So, Peter?
Peter Kelly - Chief Financial Officer, Vice President, Finance
Thanks Lon. For the quarter ended March, we earned $126.1 million or $1.17 per share, an increase of 4.5% versus the same quarter last year.
For the first six months of fiscal 2008, we earned $1.90 a share, an improvement of 12.4% on our performance for the same period in 2007 and putting this in good shape to achieve our full year target of between $1.95 and $2.05 per share. In the phase of record high commodity costs and mix weather we delivered a very credible performance in the second quarter.
AmeriGas and our Energy Services businesses did particularly well. Our utility business delivered results with similar level to last year, on weather there was over 4% warmer and although the weather in our European business was colder than last year, it was much warmer than normal, which resulted in weaker than expected results.
Looking at each of our businesses in turn, AmeriGas Partners, our domestic propane business had another record-breaking quarter on weather that was virtually normal and 4% colder than last year. In the second quarter, net income attributable to UGI was $36 million, versus the $32.3 million delivered in the same quarter of last year.
AmeriGas' retail volumes were essentially unchanged from the same period as last year and the partnership EBITDA increased approximately 9.8% to $171.8 million. Net income from our international propane operations was $32.7 million, down from the $34.8 million reported in the same period last year.
Volumes in our French business increased from 95 million retail gallons to 97 million gallons of LPG, on weather that was 10% warmer than normal and 6.7% colder than last year. Although volumes did increase, it was less than expected due to the recent run of very warm weather in France.
And what could have been a very nice quarter for our International Propane group, turned out to be lower than expected on unit margins that was similar to last year, coupled with some planned increases in operating expense and D&A. Net income for our Gas Utility was $39.8 million for the quarter ended March compared to $41 million in the previous year.
Weather was 4.2% warmer than normal and 4.5% warmer than the previous year. System throughput was 49.6 billion cubic feet, only slightly lower than the previous year, as weather related declines in core-market throughput were offset by higher volumes associated with delivery service customers.
In our Electric Utility, net income at $3.5 million for the quarter was similar to the same quarter last year. Weather was 2.5% warmer than normal and 4.1% warmer than last year, with throughput down slightly from approximately 282 million kilowatt hours in the second quarter of last year to 279 million kilowatt hours during the second quarter of this year.
Last but not least our Energy Services group had an excellent quarter, expanding net income to $16.4 million from the $10.3 million reported in the second quarter of 2007. John Walsh will discuss this more fully later in the call, but our internal investments in this area are demonstrating a significant return.
We expanded our peaking capacity in the last year by $37 million cubic feet per day and pricing has improved. Electric generation margins further improved and we have also seen gains from our asset management capability.
Turning to the balance sheet, we closed the quarter with $241.7 million of cash, up slightly from the $232 million reported at December. Total debt was $2.3 billion, a small reduction from the $2.4 billion reported at the end of December.
Included in the $2.3 billion of debt-to-quarter-end AmeriGas closed at approximately $989 million including $56 million on its revolver. Utilities closed at approximately $628 million including $96 million on its revolver.
On Antargaz, our French operation closed at approximately $604 million with no use of its revolver and including the impact of currency translation. Overall, I'm confident we have the liquidity to run our business and our balance sheet is strong.
I was pleased that we were able to announce yesterday an increase in our quarterly dividend of 4%. We have raised our dividend in each of the last 21 years and also have the remarkable record of paying dividends for 124 consecutive years.
Overall, strong first half performance for 2008. And with that, let me pass the call over to John.
John L. Walsh - President, Chief Operating Officer, Director
Thanks Peter. Now that Peter has provided you with the details on our financial performance in Q2, I’d like to comment on our progress in three areas critical to achievement of UGI's long-term strategic objectives, growing our core businesses, continuously improving operations, and reinvesting cash in high-quality projects.
First, growing our core businesses, developing growth segments within each of our core businesses is a priority for us. Our market conditions in the second quarter presented us with some challenges.
We made excellent progress on a number of fronts. Our Gas Utility is delivering solid growth despite the slowdown in new home construction.
We expect to add approximately 11,000 new residential and commercial customers in FY '08. Our utilities marketing team has focused on residential conversions in mid-sized commercial accounts to largely offset the weakness in new home starts.
Antargaz has had great success with the national rollout of a lightweight composite cylinder marketed under the Clifso [ph] brand. Antargaz has placed 200,000 new Clifso cylinders with customers over the first 15 months of their national campaign.
The successful introduction of this new product strengthens the Antargaz's position in the critical cylinder segment and further reinforces their leadership position in new product development. As Peter commented, Energy Services had an outstanding winter peaking season as they successfully brought two new propane air projects on stream.
These investments expanded our peak day capacity by 30 million cubic feet per day to a total of 140 million cubic feet per day and strengthened our peaking infrastructure. This increase in capacity coupled with improved peaking rates resulted in a significant increase in the contribution for peaking services in the first half of FY '08.
Now in terms of continuously improving operations, as a distributor and marketer of energy products and services we must consistently drive for improved productivity in each of our business units. Several of our productivity and efficiency initiatives deserve mentioned.
Our utilities business has completed Phase I deployment of automated meter reading. We are now conducting monthly automated reads for over 430,000 gas and electric customers.
This represents approximately 75% of our residential customer base. By automating this labor intensive process, we have been able to reduce our admin cost while enhancing customer service by significantly reducing the number of estimated billings.
Energy Services, in addition to increasing system capacity with the two new propane-air plants, has conducted a very successful initiative over the past 12 months to increase output within our existing peaking network. These debottlenecking projects increased capacity by about 7 million cubic feet per day while enhancing system reliability.
Both Utilities and AmeriGas have met all critical benchmarks for the delivery of synergies on our most recent large acquisitions... and Natural Gas for utilities and All Star Propane for AmeriGas.
Our disciplined approach to acquisition assessment and rigorous execution of our implementation plans are the keys to delivering strong returns on our acquisitions. Finally, in terms of reinvesting cash in high quality projects, UGI's businesses generate roughly $100 million annually in cash available for reinvestment.
In order to deliver on our commitment of 6% to 10% EPS growth, we must identify and develop quality projects. Our track record has been strong with the majority of our investments over the past decade being acquisitions.
As we look ahead, we are exited about the number and quality of both acquisition and capital projects in our business development pipeline. Earlier this year we announced our intention to purchase TPL's [ph] Gas Utility and their penn fuels propane business.
This acquisition would add 75,000 new customers to Gas Utilities' existing base of over 475,000 and significantly enhance AmeriGas' customer density and market coverage in our Northeast region by adding 33,000 new customers. We plan to close the transaction by year-end and expect the financial results of TPL Gas to be accretive to earnings in the first full year of ownership.
Energy Services is currently developing a strong portfolio of projects, these projects range in size from $10 million to a $100 million and are focused in several different segments, including peaking services, renewable energy and power generation. We are extremely pleased with Energy Services’ recent track record on capital investments and we are hopeful that will be announcing one or more new projects prior to year-end.
Antargaz is having very good success installing large metered systems in towns and villages across France, not served by a natural gas lane [ph]. These projects provide the convenience of central storage and immediate service for community and will serve as an attractive growth segment for Antargaz.
Finally, we continue to look for domestic and international propane acquisitions and we have a number of promising deals in our acquisition pipeline. I look forward to providing you with progress updates on these strategic objectives on future calls.
I'd now like to turn it over to Eugene, who will provide you with the details on AmeriGas' strong performance in Q2.
John L. Walsh - President, Chief Operating Officer, Director
Thanks, John. I am pleased that the AmeriGas team was able to deliver a 10.9% increase in net income for the second quarter despite the challenges presented by high energy prices.
Our net income increased from $119.9 million last year to $133 million. EBITDA increased by $15 million for the quarter from $156.4 million to $171.8 million.
This represents a 9.8% increase and is a new record for AmeriGas. For the six months, we were also ahead by $15 million and are on track to achieve our EBITA guidance for 2008 of $300 million to $310 million.
I'm even more excited about the announcement that we made yesterday of our intention to increase the distribution by 5% per year. This new policy reflects the confidence that the management team and the AmeriGas Board have in our ability to continue to deliver consistent growth and earnings and at the same time maintain a strong balance sheet.
Beyond good locking and tackling our track record of earnings growth has been the result of effective execution of our growth strategies. We have been able to leverage our scale and our industry leading geographic coverage through ACE strategic accounts and acquisitions.
We have also been focused on growing our traditional customer base of residential and commercial customers through improvements in customer service balanced with careful management of our prices. Our second quarter results reflect our focus on these strategies, the volume was essentially flat, the acquisitions we completed last year and slightly colder weather allowed us to largely offset the impact of lower propane usage due to a number of factors, including customer conservation in the days of 25% higher propane prices.
LNG [ph] prices also increased our expenses for the quarter along with the acquisitions that we completed last year. Of the $9 million increase in expenses about 95% can be attributed to acquisitions or to the effective higher energy prices on vehicle fuel, bad debt expense and travel expenses.
I should add that in the case of vehicle fuel we have been able to recover a portion of this expense through our fuel surcharge, which is included in other revenues. We managed pricing to offset the increase in the cost of propane and higher energy related expenses, but also with the objective of continuing to grow our residential and commercial customer base.
I would also like to share with you, our progress on our other growth strategies. Base volume was up 17% year-to-date driven primarily by the stores we gained as a result of our self-services dispensing machine, which we now have in place at about a 1000 locations.
Our strategic accounts team, which services over 19,000 locations for about 200 national original customers reported volume that was roughly flat to last year, but we were able to improve customer quality, which resulted in improved earnings contribution for this market segment. Both ACE and Strategic Accounts have recently won several major new customers and as a result we currently have a backlog of over 400 important, sorry, 4000-customer installations to complete that will add to volumes going forward.
Our other growth strategies of acquisition where we set a target of adding 20 million gallons a year. Last year we were able to exceed the target by adding 45 million gallons.
I am pleased to report that earnings from last year's acquisitions have exceeded our pro forma results for the first six months. For the Penn fuels deal that John mentioned as well as the deals we have in our pipeline we have a good shot of completing acquisitions that will add 20 million gallons for next year.
Looking forward, we believe we have a business model, balance sheet and a growth strategy that will allow us to continue deliver at least 3% annual growth in EBITDA. Now that we have reached the end of the heating season I would like to thank our employees for their hard work this winter, in particular I want to recognize our teams in the Rockies, the Upper Midwest, and New England, where our employees continue to do a great job of taking care of our customers despite heavy snowfalls.
With that Lon let me turn it back to you.
Lon R. Greenberg - Chairman and Chief Executive Officer
Okay. Thank you, Gene.
I would like to leave everyone with the following thoughts as we end our prepared remarks. First, with regard to our earnings per share for this fiscal year that is the year ended September 30 of this year.
Our earnings per share at $1.90 for the six-month period are over 12% higher than last year’s $1.69 for the similar period. We ended last year with earnings per share of $1.77 if you adjust out the 12% [ph] from AmeriGas’ sale of a terminal last year.
We believe our earnings per share this year will be in the $1.95 to $2.5 range, which would be an increase of approximately 13% over last year. We use the midpoint of that range and eliminate the one-time gain from last year.
Obviously this is in excess of our stated 6% to 10% earnings per share growth target. Similarly, we expect AmeriGas to have an outstanding year.
EBITDA for the six months this year stands at $265 million compared to $250 million last year, which is an increase of about 6%. We expect EBITDA as Gene said in the range of $300 million to $310 million this year, which would be an increase of $12 million or 4% over last year's $293 million, again after deducting the $46 million gain on the sale of the terminal last year.
We firmly believe this performance will contrast markedly with many of our competitors, as we have been successful and focusing on achieving our growth strategies, which we believe differentiate us from many in the marketplace. Our confidence attributable to both our performance this year as well as our prospects resulted in both a 4% dividend increase at UGI and a 5% distribution increase in AmeriGas.
Our goal going forward are to do the same in the future, raise UGI's dividend 4% annually and increase AmeriGas' distribution annually 5%. It is important to note that both the dividends at UGI and the distribution at AmeriGas are quite well covered.
Payout ratio at UGI is about 39%, which allows us to share cash with our owners, as we retain cash to meet our earnings per share growth goals and keep cash to invest. Similarly, the distribution at AmeriGas is extremely well covered.
Financially, as Peter indicated we are in excellent shape, our existing businesses do not have any re-financing needs of scale for several years, we continue to generate nearly a $100 million of cash annually put to invest for the future and we expect to have approximately $200 million of cash at the holding company at the end of September of this year, of course that is pre-closing of the PPL Gas transaction. Our annual cash generation allows us to make acquisitions like PPL Gas without accessing equity markets, it also allows us to fund the equity portion of larger internal investment opportunities in our businesses at the time that John mentioned earlier on the call.
PPL Gas transaction continues to move along as anticipated and we remain committed to having that transaction closed by the end of this current fiscal year that is by September 30th of this year. Said succinctly, we remain optimistic about our future.
This is not to suggest that we don't have our share of challenges and many of those are external factors including quite extraordinary high cost of energy products, the slow economy here in the US and heightened levels of competition in all energy distribution markets as new policy initiatives from governments and regulatory bodies have evolved, yet we are alert not only for the challenges that result form this changing environment, but we are equally alert for opportunities which arise. In conclusion, we remain committed to growing our company, operating it with our usual unwavering focus on execution and of course meeting our financial targets of growing our earnings per share 6% to 10% a year and raising our dividend in the case of UGI, 4% a year and raising the distribution in the case of AmeriGas 5% a year.
With that Shirley, I am prepared to take some questions. Question and Answer
Operator
Thank you, sir. [Operator Instructions] We will take our first question from Shneur Gershuni from UBS..
Shneur Gershuni - UBS
Hi, good afternoon guys.
Lon R. Greenberg - Chairman and Chief Executive Officer
Hi.
Shneur Gershuni - UBS
A couple of questions... I guess the first one is just a big picture question.
One, with most recent acquisition are you done making acquisitions for this year and I guess a second part of that question was... given the right price are you willing to do something significantly larger than the most recent acquisitions?
Lon R. Greenberg - Chairman and Chief Executive Officer
Yeah. Let me talk about are we done for the year, which is, there are those who suggest whatever done.
You know our policy is to explore acquisitions that makes sense for the company, within our vision that are accretive and beneficial to our shareholders. So, I can tell you we are constantly in general on the look for acquisitions, but I can't comment on any specific acquisition that we may or may not be looking at, but it is our policy to be active in the acquisition area.
With regard to scale, we are mindful of scale, we've said that many times before. We certainly would look at transactions larger than TPL Gas or even the Southern Union transaction because as our scale grows, those transactions are the same scale that they would be three, four years ago.
So, we are mindful of scale in the aggregate and we are particularly mindful of large scale in the current financial environment where it’s very difficult to access capital markets even for a company as strong as we are. But we are in the look out and if we see a transaction that meets our hurdle rates that provides value for our shareholders that's within our vision for the company.
We will pursue those acquisitions.
Shneur Gershuni - UBS
Okay. If we can turn over to the International Propane segment for a second, I know, John gave some decent color on this and so forth, I was just wondering if you can expand a little bit on what's going to happen to margins on a go-forward basis?
Just want to understand I guess, how are they expected to grow a return to where they were a couple of years ago and also where you see volumes going as well, too [ph]?
Lon R. Greenberg - Chairman and Chief Executive Officer
Sure. Let's start with volumes.
Volumes, if you look at the first quarter was substantially above last year and we had little bit colder than normal weather in the first quarter. Second quarter, we met weather similar to last year in January and February, two critical months for this business.
And if you saw how the quarter evolved, December's weather was decent so, January was decent. January's weather was off of [ph], February was off of, and March's weather was decent and March’s results improved as the month went on.
I would tell you that we are not concerned with volume for say our bulk volumes behaved, probably better than we thought they would in this quarter given the weather. Cylinder volumes are holding up nicely in a very competitive market as well.
Behind the scenes we lost some share or lost some customers and the... I would say very large butane, very large propane side of the business where margins aren’t very high and few adjusted volumes to reflect those loss of higher volume, very low margin customers, the volume performance would look better that it even does now.
So, from a volume standpoint, we think the business is performing well and it is weather depended however. And if we go back to the years '05, '06, when we had normal second quarters, there is very ample and adequate opportunity for volumes to meet our expectations.
And the expectations we had when we bought this business several years ago. So I don’t think it’s necessarily a volume issue, John mentioned, some initiatives we have in the pipe-gas side and help collective housing helps the cylinder side, we have been very innovative.
So, think on the volume side to summarize again. We are doing okay.
It’s not that, we don't have our share of issues with competition from other fuels. But you won’t see market declines in volume.
On the margin side, as Peter mentioned, the margins were close to last year this time, what you see by segments. If you look at things there is some segments doing a little better, other segments doing a little worse overall.
And if you looked at the sort of the margins that we registered this year for this quarter and added a little, or subtracted a little depending upon what cost was cost was doing, it would be in a ballpark for our expectations for margins. Overseas as we have said many times, if you get a rapid increase in cost, it's harder for them to catch up that it is in the US for us, because of competitive norms, contracts with customers and just a culture.
US were much more rapid in our response to those cost increases. If you looked at the first quarter margins year-over-year, they were quite a bit lower in first quarter this year, compared to first quarter last year.
Second quarter margins nearly caught up, they were slightly behind last year. So, they were able to catch up to close to last year's levels.
And again by segment, some segments are clearly going to have lower margins, other segments are doing fine. So, on balance, as I said, margins within a striking range of where they are this past quarter rational.
Shneur Gershuni - UBS
Okay. If I can just turn over to AmeriGas for one minute, just with respective to margins there clearly they segmented very well this past quarter.
What's your belief on being able to maintain those margins and is there any concern with respect to uncollectables?
Lon R. Greenberg - Chairman and Chief Executive Officer
First let me talk about the margins first. I think we would expect margins to continue to be above last year, but lower than they have been, just because of the seasonal change in the mix of business that we have in the last six months of the year.
That said obviously we are going to manage margins in line with competitive situations. So one of our goals is to continue to grow our base business.
So we will have to manage our pricing in line with that. On the bad debt side, year-to-date we've seen only a very small increase in the percentage of our receivables, that's over 60 days.
We haven't seen that much impact, really when you would see that would be in the last six months of the year. So it's too early to declare victory in that area.
But today we haven't seen a big impact on the receivables, the balances are bigger, because the revenue is bigger on a higher selling price.
Shneur Gershuni - UBS
Okay, great. Thank you very much guys.
Lon R. Greenberg - Chairman and Chief Executive Officer
For sure.
Operator
Next we will move to Darren Horowitz from Raymond James.
Darren Horowitz - Raymond James
Thanks. Lon, I'm trying to get a sense of how retail propane bonds you are tracking?
When you look at your results this quarter, they were down slightly year-over-year similar to how the December quarter numbers were and obviously you are facing some commodity price head wins there as well as end-user curtailment. But offsetting that to a certain extent have been just in aggregate, the amount of customers that you've added last year.
Can you give us a sense for the expectations in the back half of this fiscal year as you currently said today, i.e., do you think that it's possible based on a perpetuating higher sustainable commodity price environment that margins might be flat to slightly down year-over-year?
Lon R. Greenberg - Chairman and Chief Executive Officer
Let me just give a ballpark and then Eugene jump in. If you adjust for acquisitions and all the puts and takes that go into the process, volumes are probably up on the order of 4% to 5% year-over-year and that ballpark combination is clearly some conservation out there.
The difficulty in the propane business of estimating conservation is you don't know relative levels of customer storage of your product. So you can estimate...
you can try to estimate that, but it's not a perfect flow like it is in the Gas Utility for example. And so, I think it's clear evidence of conservation.
I think there is clear evidence at least in my mind that the economies slowed a little and different categories get affected by that to some degree. And I think as well just the nature of the weather patterns here affects volumes, when it's real warm in the southeast for example you get a different result in our models and if it's real warm in somewhere else.
And so it's just the way the weather hits. Overall, I’d guess, Eugene in volumes kind of trending as they have trended.
I don't think we see anything accelerated now?
Eugene V.N. Bissell - President, Chief Executive Officer, Director of AmeriGas Propane, Inc.
We will have ACE volumes up a bit year-over-year for last six months. But generally about the same kind of trend that we've seen.
Lon R. Greenberg - Chairman and Chief Executive Officer
Yeah, as Eugene said, you get a little bit less weather sensitivity in your volumes. But there is a strong incentive for people to delay buying as long as they can, given the high price there is...
out there. So...
Eugene V.N. Bissell - President, Chief Executive Officer, Director of AmeriGas Propane, Inc.
And then weather in September.
Lon R. Greenberg - Chairman and Chief Executive Officer
And then weather in September, as Eugene pointed out. So I think if you are looking at volume performance for rest of the year, it’s kind of flat to last year, give or take a little bit would be a rational expectation.
Darren Horowitz - Raymond James
Okay. That's helpful.
I appreciate it. And then just switching gears to the operating and maintenance side, relative to your earlier comments, when you look at O&M on a year-over-year basis and sequentially in absolute terms it was up, but obviously as a percent of revenue generated it was a little bit lower.
So as we factored in the recent acquisitions, how do we think about O&M going forward?
Lon R. Greenberg - Chairman and Chief Executive Officer
For operating expenses going forward I think the trend will be fairly consistent with what you've seen year-to-date. There is nothing particularly unusual this year about the expenses year-to-date.
Peter Kelly - Chief Financial Officer, Vice President, Finance
The big increase year-over-year is of course the acquisitions is a big part of it?
Lon R. Greenberg - Chairman and Chief Executive Officer
Is acquisitions, it's a vehicle fuel, it's bad debt because we reserve on the basis of a percent of revenues. So you will see expenses continue to be higher just as a result of those same factors.
But in line with what you have been saying.
Darren Horowitz - Raymond James
Okay. So this quarter should be used as a pretty good platform then?
Lon R. Greenberg - Chairman and Chief Executive Officer
Yes.
Darren Horowitz - Raymond James
Okay. Thanks guys, I appreciate it.
Lon R. Greenberg - Chairman and Chief Executive Officer
Yes.
Operator
[Operator Instructions] And next we will go to William Ju [ph] from Janney Montgomery Scott.
Unidentified Analyst
Good afternoon.
Lon R. Greenberg - Chairman and Chief Executive Officer
Hi.
Unidentified Analyst
I have a question about the Gas Utility.
Lon R. Greenberg - Chairman and Chief Executive Officer
Sure.
Unidentified Analyst
I believe that there was a decline in retail core market margin, could you just provide a little insight about that please? Thank you.
Lon R. Greenberg - Chairman and Chief Executive Officer
Well, certainly unit margins don't change on the retail core market... margin if it change too much it would be weather-oriented, that is that the weather was 4.5% warmer than the prior year and so throughput on the retail core market was down, which is offset by higher delivery service volumes that ran through, so volume in an aggregate basis throughput was relatively flat.
But the only change that you would see in that retail core market would be weather related really. You didn't have a huge fly up in gas price...
natural gas prices like you did propane, heating oil, any oil-based product, natural gas prices year-over-year until recently had to moved to whole lots. So for the winter months it wasn't a big issue and you got your normal conservation I suspect, which we always think of this on the order of 1%, but the big difference is all weather related.
Unidentified Analyst
Thank you very much.
Lon R. Greenberg - Chairman and Chief Executive Officer
Sure.
Operator
It appears to be no further questions at this time gentlemen.
Lon R. Greenberg - Chairman and Chief Executive Officer
Okay. Well, thank you all very much for dialing in and listening to what we have to say and those of you who would listen to it otherwise again we are really optimistic about what our future looks like.
We are exceeding our earnings goal for this year, raised our dividend as we said we would, have some business performance that looks promising for the future, and an earnings estimate for both businesses as we go forward that looks pretty much as we thought it would and increases our goal yet again. So we look forward to talking to all of you and we will be in touch hopefully soon.
Thank you very much.
Operator
That concludes today's conference. We appreciate your participation.
You may now disconnect.